Surviving USA Stop Work Orders: recovery tactics and legal recourse with Katherine Gentic a Government Compliance, Contracts and Pricing Specialist

This episode of DevelopmentAid Dialogues examines the rising trend of USAID stop work orders and the difficulties they pose for implementing partners. These unexpected pauses in project activity have left organizations struggling with the urgent need to continue essential development work, financial uncertainty, and compliance challenges. Stop work orders (SWOs), which USAID has been using more frequently lately, have left partners juggling compliance, financial survival, and the urgent need to continue essential projects.To discuss this pressing issue, our host Hisham Allam is joined by Katherine Gentic, an expert in USAID compliance and contract management. With over 20 years of experience and a track record of advising more than 50 USAID partners, Katherine provided critical insights into how organizations can navigate these disruptions while protecting their teams, subcontractors, and project continuity.The episode begins with a breakdown of USAID’s stop work orders—what they entail, how they should be implemented under Federal Acquisition Regulation (FAR), and why recent instances deviate from best practices. According to Katherine, these orders have been issued hastily, often with vague language and little opportunity for contractors to seek clarification.“USAID staff have largely been instructed not to discuss these orders outside the agency,” Katherine explained. “This has left contractors interpreting them on their own, with no clear guidance on what costs they can continue to incur.”The financial repercussions are profound. Many USAID-funded partners, particularly small businesses and subcontractors, are struggling to stay afloat while waiting for clarity on cost reimbursement.“Stop work orders are not terminations, but many partners expect the worst. “The financial burden of waiting for resolution is frequently unsustainable,” Katherine warned.With uncertain timelines and delayed communication, how can organizations reduce expenses without jeopardizing future operations? Katherine outlined reasonable steps that partners can take to balance compliance with financial sustainability. She emphasizes that organizations must carefully assess staffing costs, as many field offices operate in countries where termination of employment comes with significant severance obligations.“Organizations must weigh whether layoffs or retaining staff is the most cost-effective option. In some cases, it is cheaper to keep staff on payroll than to incur severance and rehiring costs later,” she says.Reevaluating office leases is another major concern. Rent and utilities remain a fixed burden, and while some organizations may consider terminating leases, they must first secure USAID approval to dispose of government-funded assets.“A stop work order is not a termination. If partners start liquidating assets without approval, they risk severe compliance violations,” Katherine cautioned.Subcontractors, many of whom are small businesses, are particularly vulnerable when stop work orders take effect. Some prime contractors have refused to reimburse subcontractors for ongoing costs, a practice Katherine criticized as both unethical and non-compliant.“Primes must advocate for their subs,” she insists. “The work these businesses do is integral to development efforts. They should not be left to shoulder the financial risk alone.”As organizations prepare for the resumption of work, Katherine stressed the imporThe podcast is sponsored by DevelopmentAid. Procurement notices, funding and grants to opportunities, lists of potential partners, insights into market trends, databases of development professionals, webinars, latest news, and much more. Stay informed and connected. Subscribe and Stay Connected