Afghan Yar International Construction Company Limited v. US Department of State

• Court: District Court, District of Columbia
• Decided: August 6, 2021
• Docket: Civil Action No. 2021-1740
• Status: Published

Opinion

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

AFGHAN YAR INTERNATIONAL CONSTRUCTION COMPANY LIMITED d/b/a ACCL INTERNATIONAL, et al., Plaintiffs, v. Civil Action No. 21-1740 (CKK)

UNITED STATES DEPARTMENT OF STATE, Defendant.

MEMORANDUM OPINION (August 6, 2021)

Afghan Yar International Construction Company Limited and Afghan Yar International

Logistics Services Company (collectively doing business as “ACCL International”) are diversified

multinationals that contract with the United States government, including with the State

Department, in Afghanistan. On June 30, 2021, ACCL International sued the State Department

claiming that it caused a de facto debarment of ACCL International, in violation of certain federal

debarment regulations. ACCL International simultaneously moved for a preliminary injunction to

reverse the effects of the State Department’s alleged de facto debarment. Upon consideration of

the pleadings, the relevant legal authorities, and the record as a whole, 1 the Court will DENY

ACCL International’s [4] Motion for a Preliminary Injunction.

1 This Memorandum Opinion focuses on the following documents: • Compl., ECF No. 1; • Pls.’ Mem. in Supp. of Mot. for Preliminary Inj. (“Pls.’ Mot.”), ECF No. 4; • Def.’s Opp’n to Mot. for Preliminary Inj. (“Def.’s Opp’n”), ECF No. 10; • Pls.’ Reply in Supp. of Mot. for Preliminary Inj., (“Pls.’ Reply”), ECF No. 12; • Def.’s Response to Pls.’ Reply in Supp. of Mot. for Preliminary Inj., (“Def.’s Reply”), ECF No. 15; and, • Administrative Record (“ACCL-UC”), ECF No. 17–22. In an exercise of its discretion, the Court finds that holding oral argument in this action would not be of assistance in rendering a decision. See LCvR 7(f).

1 I. BACKGROUND

A. State Department Vetting

The State Department is responsible for funding and overseeing numerous international

programs and contracts. But before financing these global programs and contracts, the State

Department understandably requests that its various bureaus “assess the likelihood” that such

government funding will incidentally benefit terrorists or terrorist organizations. ACCL-UC at 1.

To safeguard against this concern, the State Department directs its bureaus to establish risk

mitigation measures, which will neutralize the risk of inadvertent terrorist financing. See id.;

Farrell Decl., ECF No. 10-1, at ¶ 4. One such mitigation measure that the State Department has

developed is a counterterrorism namecheck vetting system for government contractors, operated

by the Office of Risk Analysis Management (“RAM”), within the State Department’s Bureau of

Administration. See Farrell Decl., ECF No. 10-1, at ¶¶ 2–4. RAM currently conducts

counterterrorism namecheck vetting “for certain programs and activities in Afghanistan, Syria,

Pakistan, Iraq, Lebanon, the West Bank/Gaza, Yemen, and for the Near East Regional Democracy

Program and programs implemented by the Global Engagement Center.” Id. at ¶ 3.

Counterterrorism namecheck vetting, however, is not required for all State Department programs

within these countries, nor is RAM namecheck vetting required for all State Department programs

globally. Id. at ¶ 4.

To administer its system of namecheck vetting, the State Department’s RAM office collects

contractor personnel data and cross-references it against relevant databases reflecting known

terrorist organizations, members, and affiliates. See ACCL-UC at 4. Where applicable, RAM

conducts namecheck vetting before the State Department awards contracts and periodically

thereafter, including in the event of significant personnel change by a government contractor. See

2 id. at 5. If namecheck vetting uncovers “derogatory” information, then RAM will inform the State

Department bureau responsible for the particular contract or program under review. See id. at 4;

Farrell Decl., ECF No. 10-1, at ¶ 6. It is then the responsibility of that specific State Department

bureau, at the direction of its Assistant Secretary, to determine the ultimate effect of the

“derogatory” material uncovered. See Farrell Decl., ECF No. 10-1, at ¶ 5; ACCL-UC at 4. Based

on the risk factors associated with the State Department program in question, a bureau may decide

to refuse a government contract because of derogatory material or, instead, to issue an award

despite the existence of that material. See Farrell Decl., ECF No. 10-1, at ¶ 5. “The State

Department does not maintain a ‘blacklist’ of prohibited partners based on counterterrorism

namecheck vetting.” Id. at ¶ 10.

B. ACCL International Subcontracts

Afghan Yar International Construction Company Limited (“Afghan Yar Construction”)

and Afghan Yar International Logistics Services Company (“Afghan Yar Logistics”) are

diversified multinational companies incorporated under the laws of Afghanistan and headquartered

in Kabul, Afghanistan. See Pirzada Decl., ECF No. 4-1, at ¶ 4. Afghan Yar Construction and

Afghan Yar Logistics, known collectively as “ACCL International,” carry out global operations

and maintain offices in Germany, Iraq, and the United Arab Emirates. Id. at ¶¶ 3–4. Mr.

Habibullah Pirzada, a native and citizen of Afghanistan, is the President and owner of ACCL

International. Id. at ¶¶ 1–2. Mr. Pirzada runs ACCL International with the assistance of his

brothers, Mr. Mukhsen Mokhammad, who oversees ACCL International’s operations in the UAE,

and Mr. Mahmood Pirzada, who oversees ACCL International’s operations in Afghanistan. Id. at

¶ 3.

3 “Since 2006, the majority of ACCL International’s business [has been] U.S. government-

related.” Id. at ¶ 17. In particular, ACCL International has performed services in support of the

United States government and its operations in Afghanistan, through subcontracts with prime

contractors of both the State Department and Defense Department. Id. at ¶ 5. For example, ACCL

International has “provided food and other vital life support to United States diplomats and armed

forces personnel serving . . . in Afghanistan pursuant to subcontracts with prime contractors of the

State Department.” Id. And “[o]ver the past decade, ACCL International has received more than

60 letters from a variety of sources, including the State Department, commending, recommending,

or otherwise praising ACCL International’s performance and expertise.” Id. ¶ 6.

The present case involves a dispute over ACCL International’s subcontracts with two of

the State Department’s prime contractors in Afghanistan. First, ACCL International maintained a

subcontract in Afghanistan with a prime contractor called DynCorp International LLC

(“DynCorp”). The State Department originally awarded a prime contract to DynCorp in 2014 for

the Afghanistan Life Support Services (“ALiSS”) contract, to service the United States embassy

in Kabul. See Stever Decl., ECF No. 10-5, at ¶¶ 4–5. Although performance on this prime contract

ended in September 2020, see id. at ¶ 5, DynCorp is currently serving on an interim “bridge”

contract for the ALiSS prime contract, until the Department of State is able to award a new

competitive “follow-on ALiSS contract,” id. at ¶ 8. On this ALiSS bridge contract, DynCorp has

subcontracted with ACCL International for “food services” to be provided to the embassy in

Kabul. Id. at ¶ 9; see also Merrill Decl., ECF No 10-4, at ¶ 5; ACCL-UC at 425. ACCL

International’s current ALiSS subcontract is operative between August 20, 2020 and August 19,

2021. Id. According to ACCL, however,“[t]he State Department will soon award a renewal of

4 the ALiSS contract” that has an expected “base period commencing on 20th August 2021, with

four option years” thereafter. Pirzada Suppl. Decl., ECF No. 12-1, at ¶ 7.

ACCL International also maintained subcontracts with another State Department

contractor called Pacific Architects and Engineers, Inc. (“PAE”). In 2018, the State Department

awarded PAE a task order, labeled as the “SaSS Task Order,” under which PAE was to provide

“security and mission support services” for the State Department in Afghanistan. Menard Decl.,

ECF No. 10-3, at ¶¶ 4–5. Under the SaSS Task Order, PAE subcontracted with ACCL

International to provide “facility, operations, maintenance, and life support services” for the State

Department’s Criminal Justice Task Force and its Counter Narcotics Justice Center, Sensitive

Investigative Unit, and National Interdiction Unit Compounds in Kabul, Afghanistan. Pirzada

Decl., ECF No. 4-1, at ¶ 14. ACCL’s most recent subcontract with PAE on the SaSS Task Order

was originally to remain operative until September 18, 2021. Pirzada Suppl. Decl., ECF No. 12-

1, at ¶ 10.

Finally, in addition to the SaSS Task Order, PAE also holds a prime contract with the State

Department for “operations and maintenance” services at the embassy in Kabul (the “O&M

Contract”). Jackson Decl., ECF No. 10-2, at ¶ 4. In support of its O&M Contract, PAE awarded

ACCL International two small subcontracts. See id. at ¶ 6. One of ACCL’s O&M subcontracts

was to perform painting work on the exterior of the United States embassy in Kabul. Id. Similarly,

ACCL’s second O&M subcontract involved painting work on the Marine Security Guard Quarters

and Arian Buildings in the U.S. Embassy Compound in Kabul. Id. Both of ACCL International’s

O&M subcontracts with PAE terminated on July 31, 2021. Id.

Each of ACCL International’s subcontracts with DynCorp and PAE was subject to a

personnel background vetting provision. Section H.16 of ACCL’s ALiSS subcontract with

5 DynCorp states: “Contractors shall advise the Contracting Officer of any changes in personnel

listed in DS Form 4184 and shall provide vetting information on new individuals. The

Government reserves the right to vet these personnel changes and to terminate contracts for

convenience based on vetting results.” ACCL-UC at 478. Section H.17 of PAE’s O&M Contract

with the State Department contains an identical vetting provision. See id. at 679. Lastly, Section

8.8.1.1 of the SaSS Task Order with PAE subjects all subcontractors thereunder to security vetting

requirements, including that “all personnel meet the approved criteria and satisfactorily complete

all screening and selection process requirements.” Id. at 572.

C. Derogatory Material on ACCL International

The State Department’s RAM office conducted counterterrorism namecheck vetting on

ACCL International, with respect to certain of its contracts and awards. See Farrell Decl., ECF

No. 10-1, at ¶ 7. In February 2021, a State Department officer named Mr. Patrick Merrill was

informed that RAM had uncovered derogatory information about ACCL International. See Merrill

Decl., ECF No. 10-4, at ¶ 3. Mr. Merrill serves as the Post Management Officer for Afghanistan

within the Joint Executive Office for Near Eastern Affairs and South and Central Asian Affairs,

which is responsible for the State Department’s diplomatic platform in Afghanistan. See id. at ¶¶

1–2. On February 23, 2021, Mr. Merrill visited the RAM office and reviewed the derogatory

information on ACCL International, which has been classified at a Top Secret level. Id. at ¶ 4. To

date, the State Department has publicly disclosed only that the derogatory material on ACCL

International indicates that the company has “contracted with the enemy.” Ervin Decl., ECF No.

12-2, at ¶ 6.

Sometime between February and April 2021, Mr. Merrill provided a Secret-level summary

of this derogatory information to “select members of the Management Section” at the Kabul

6 embassy, as well as to individuals from the Joint Executive Office for Near Eastern Affairs and

South and Central Asian Affairs and the Bureau of Administration, Office of the Procurement

Executive, Office of Acquisitions and Management. Merrill Decl., ECF No. 10-4, at ¶ 5. Upon

review, the South and Central Asian Affairs (“SCA”) Bureau determined that because of the

derogatory information uncovered by RAM, ACCL International should not serve as a

subcontractor for the ALiSS contract for services at the embassy in Kabul. Id.

In April 2021, Mr. Merrill conveyed the SCA Bureau’s decision regarding ACCL

International to Mr. John Stever, the Division Director for World Wide Contracts, within the State

Department’s Bureau of Administration, Office of the Procurement Executive, Office of

Acquisitions Management. See id. at ¶ 6; Stever Decl., ECF No. 10-5, at ¶ 1. As Division Director

for Worldwide Contracts, Mr. Stever is responsible for the State Department’s acquisition program

and contract operations. Merrill Decl., ECF No. 10-4, at ¶ 6. In April 2021, Mr. Stever contacted

the Vice President of Contracts for DynCorp and informed him that the State Department had

uncovered derogatory information on ACCL International that would require DynCorp to “sever

its relationship with ACCL with regard to the ALiSS contract.” Stever Decl., ECF No. 10-5, at ¶

11. Mr. Stever’s discussions with DynCorp regarding ACCL International were specific to the

State Department’s ALiSS contract in Afghanistan. Id. at ¶ 14. In response to Mr. Stever’s

directive, DynCorp proposed keeping ACCL International as a subcontractor on the ALiSS

contract until the end of its term in August 2021, and then declining to renew ACCL International’s

subcontract going forward. Id. at ¶ 12. Mr. Stever approved of this approach, see id., and on April

29, 2021, DynCorp provided ACCL International with a Notice of Disposition from DynCorp

declaring that DynCorp would not exercise its renewal options with ACCL International under the

ALiSS contract, see Pirzada Decl., ECF No. 4-1, at ¶ 13.

7 The derogatory information RAM uncovered on ACCL International also impacted the

company’s subcontracts with PAE. In April 2021, Mr. Stever notified a member of PAE’s Client

Executive and Advisory Council that the State Department had uncovered derogatory information

on ACCL International. See Stever Decl., ECF No. 10-5, at ¶ 15. Subsequently, the State

Department contracting officer assigned to the O&M Contract informed PAE that it could retain

its subcontracts with ACCL International through July 31, 2021, but that it should not exercise

ACCL’s next option year for either of ACCL’s O&M subcontracts. Jackson Decl., ECF No. 10-

2, at ¶ 11. Later, on May 7, 2021, another contracting officer from the State Department emailed

personnel from PAE and informed them that ACCL International was designated: “Do not

Consider (not authorized) Any existing projects need to immediately end.” Menard Decl., ECF

No. 10-3, at 96.

On May 18, 2021, the State Department’s assigned contracting officer for the SaSS Task

Order talked formally with a senior contracts manager for PAE about PAE’s subcontract with

ACCL International on the SaSS Task Order. See id. at ¶¶ 11–12. During that meeting, the State

Department’s contracting officer confirmed that ACCL International had failed RAM vetting and

agreed that PAE should terminate ACCL’s subcontract on the SaSS Task Order. See id. at ¶ 13.

On May 20, 2021, PAE informed ACCL International that it was terminating for convenience

ACCL International’s subcontract based on “written direction” from the State Department “to

terminate immediately all ongoing work with [ACCL International] in support of” the SaSS

contract. Pirzada Decl., ECF No. 4-1, at ¶ 15. On that same day, “PAE informed ACCL

International that it would not be renewing its options to extend [ACCL’s] subcontracts [for the

O&M Contract] as a result of an instruction from the State Department.” Pirzada Suppl. Decl.,

ECF No. 12-1, at ¶ 14.

8 ACCL International “has attempted without success, to obtain information from the State

Department about the specific basis on which [it] instructed DynCorp and PAE to cease doing any

business with ACCL International.” Pirzada Decl., ECF No. 4-1, at ¶ 16; see also Ervin Decl.,

ECF No. 12-2, at ¶¶ 3–9. The State Department has informed ACCL nothing more than that “the

State Department’s vendor vetting office had been informed through classified intelligence

channels that there were indications that ACCL International had ‘contracted with the enemy.’”

Ervin Decl., ECF No. 12-2, at ¶ 6. ACCL International also discovered that the Department of

Defense changed ACCL International’s status within its vendor vetting database from

“Acceptable” to “Unacceptable without Mitigation.” Pirzada Decl., ECF No. 4-1, at ¶ 16. ACCL,

however, has been unable to obtain “information from the Defense Department regarding the basis

for th[is] status change” or “what mitigation measures are necessary.” Id.

D. ACCL International’s Motion for a Preliminary Injunction

On June 30, 2021, ACCL International filed a civil action against the State Department,

accompanied by a motion for a preliminary injunction. In its motion for a preliminary injunction,

ACCL International argues that the State Department effectuated a de facto debarment of ACCL

International as a federal contractor, without affording it the notice and opportunity to respond

allegedly required by the federal acquisition regulations governing debarment procedures. See

Pls.’ Mot. at 1. Accordingly, ACCL International asserts that the State Department’s de facto

debarment violated the Administrative Procedure Act (“APA”) and was ultra vires, i.e., beyond

the scope of the State Department’s authority. See id.; Compl. at ¶ 33.

Furthermore, ACCL International contends that the State Department’s procedurally

improper de facto debarment will cause the company irreparable harm. To demonstrate this harm,

ACCL International explains that 80% of its annual revenue and 90% of its total gross margin is

9 attributable to the company’s subcontracts with DynCorp and PAE. See Pirzada Suppl. Decl., ECF

No. 12-1, at ¶¶ 3–4. Accordingly, ACCL states that because of the State Department’s de facto

debarment and the termination of the PAE and DynCorp subcontracts, the company expects to lose

at least $30 million in the next year, and $120 million over the course of the next four years. Id.

at ¶ 5. Additionally, ACCL International argues more generally that its purported debarment will

prevent the company from competing for “any” State Department contract, including as a

subcontractor on the upcoming Baghdad Life Support Services (“BLiSS”) contract in Iraq, as well

as potential projects in East Africa, Kuwait, and Qatar. Pirzada Decl., ECF No. 4-1, at ¶ 18. Lastly,

ACCL International asserts that its de facto debarment will negatively impact its ability to pursue

contracts with NATO in Germany. Id. at ¶ 19. Under these circumstances and absent injunctive

relief to reverse its purported de facto debarment, ACCL International anticipates “having to cease

business operations no later than the end of 2021.” Id. at ¶ 22.

On July 2, 2021, the Court held an initial status conference to address ACCL International’s

newly filed motion for a preliminary injunction. During that conference, the Court set a briefing

schedule on the motion and specifically advised the government to file the complete administrative

record regarding the State Department’s conduct at issue in this case. See Order, ECF No. 8, at ¶

8(d) (citing Am. Bioscience, Inc. v. Thompson, 243 F.3d 579, 582 (D.C. Cir. 2001) (“We hold only

that the court, before assessing American Bioscience’s probability of success on the merits, should

have required the FDA to file the administrative record and should have determined the grounds

on which the FDA granted Baker Norton’s application.”), and LCvR 7(n)). The parties have now

completed their briefing and the State Department has filed the relevant administrative record on

the docket. Accordingly, ACCL International’s motion for a preliminary injunction is now ripe

for this Court’s review.

10 II. LEGAL STANDARD

Preliminary injunctive relief is “an extraordinary remedy that may only be awarded upon

a clear showing that the plaintiff is entitled to such relief.” Sherley v. Sebelius, 644 F.3d 388, 392

(D.C. Cir. 2011) (quoting Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 22 (2008)); see also

Mazurek v. Armstrong, 520 U.S. 968, 972 (1997) (per curiam) (“[A] preliminary injunction is an

extraordinary and drastic remedy, one that should not be granted unless the movant, by a clear

showing, carries the burden of persuasion.”) (internal quotation marks omitted).

Plaintiffs seeking preliminary injunctive relief “must establish (1) that [they are] likely to

succeed on the merits, (2) that [they are] likely to suffer irreparable harm in the absence of

preliminary relief, (3) that the balance of equities tips in [their] favor, and (4) that an injunction is

in the public interest.” Aamer v. Obama, 742 F.3d 1023, 1038 (D.C. Cir. 2014) (quoting Sherley,

644 F.3d at 392) (internal quotation marks omitted). When seeking such relief, “the movant has

the burden to show that all four factors, taken together, weigh in favor of the injunction.” Abdullah

v. Obama, 753 F.3d 193, 197 (D.C. Cir. 2014) (quoting Davis v. Pension Benefit Guar. Corp., 571

F.3d 1288, 1292 (D.C. Cir. 2009)) (internal quotation marks omitted).

In this jurisdiction, “[t]he four factors have typically been evaluated on a sliding scale”: if

the “movant makes an unusually strong showing on one of the factors, then it does not necessarily

have to make as strong a showing on another factor.” Davis, 571 F.3d at 1291–92 (internal

quotation and citation omitted). It is unclear whether the sliding-scale approach to assessing the

four preliminary injunction factors survives the Supreme Court’s decision in Winter. See Save

Jobs USA v. U.S. Dep’t of Homeland Sec., 105 F. Supp. 3d 108, 112 (D.D.C. 2015). Several judges

on the D.C. Circuit have “read Winter at least to suggest if not to hold ‘that a likelihood of success

is an independent, free-standing requirement for a preliminary injunction.’” Sherley, 644 F.3d at

11 393 (internal citation omitted). However, the D.C. Circuit has yet to hold definitively that Winter

has displaced the sliding-scale analysis. See id.; see also Save Jobs USA, 105 F. Supp. 3d at 112.

In light of this ambiguity, the Court shall consider each of the preliminary injunction factors and

shall only evaluate the proper weight to accord the likelihood of success on the merits if the Court

finds that its relative weight would affect the outcome.

III. DISCUSSION

For the reasons set forth below, the Court concludes that ACCL International has not shown

a substantial likelihood of success on the merits, a certainty of irreparable harm, or that the balance

of the equities and the public interest tilts in its favor. Accordingly, the Court will DENY ACCL

International’s motion for a preliminary injunction.

A. Likelihood of Success on the Merits

First, “[i]n order to obtain a preliminary injunction, a party must show, among other things,

‘a substantial likelihood of success on the merits.’” Food & Water Watch, Inc. v. Vilsack, 808

F.3d 905, 913 (D.C. Cir. 2015) (quoting Mills v. District of Columbia, 571 F.3d 1304, 1308 (D.C.

Cir. 2009)). The D.C. Circuit has identified a “likelihood of success on the merits” as the “most

important factor” for courts to consider when reviewing a motion for a preliminary injunction.

Aamer v. Obama, 742 F.3d 1023, 1038 (D.C. Cir. 2014).

In this case, ACCL International’s chance of success on the merits rests on the company’s

claim that the State Department improperly caused its de facto debarment from federal contracting.

See Pls.’ Mot. at 7. As discussed in detail below, a de facto debarment “occurs when a contractor

has, for all practical purposes, been suspended or blacklisted from working with a government

agency.” Phillips v. Mabus, 894 F. Supp. 2d 71, 81 (D.D.C. 2012). Here, ACCL International

argues that the State Department caused its de facto debarment, and did so without providing the

12 company notice or an opportunity to respond, as required by the both the Federal Acquisition

Regulation (“FAR”) and the Department of State Acquisition Regulations (“DOSAR”). See 48

C.F.R. § 9.406-3 (directing federal agencies to provide notice and opportunity to respond to official

debarment); 48 C.F.R. § 609.406-3 (providing debarment procedures for the State Department).

ACCL International contends, therefore, that this procedurally improper debarment violated the

APA, because it constituted an “agency action” “in excess of” the State Department’s statutory

“authority” or “limitations.” 5 U.S.C. § 706(2)(C). Alternatively, ACCL International argues that

the State Department’s procedurally deficient debarment was ultra vires. See Pls.’ Mot. at 7.

1. Subject Matter Jurisdiction

The first hurdle ACCL International’s de facto debarment claim faces is jurisdictional. The

State Department argues that ACCL International’s claim is nothing more than a contractual

dispute over the terms of ACCL’s subcontracts with DynCorp and PAE, and that the Court lacks

subject matter jurisdiction over such breach of contract claims. See Def.’s Opp’n at 11–12. As a

general matter, the State Department is correct to raise subject matter jurisdiction as a potential

barrier to ACCL’s request for injunctive relief, given that “the ‘merits’ on which [a] plaintiff must

show a likelihood of success encompass not only substantive theories but also establishment of

jurisdiction.” Food & Water Watch, Inc., 808 F.3d at 913. Furthermore, this Court has “an

independent obligation to determine whether subject matter jurisdiction exists, even when no party

challenges it.” Hertz Corp. v. Friend, 559 U.S. 77, 94 (2010).

The State Department’s jurisdictional argument turns on its attempt to frame ACCL’s claim

as purely contractual. In the State Department’s view, ACCL International’s claim “arises from

[the company’s] subcontracts under certain prime contracts with the Department and challenges

actions taken by the Department and the prime contractors under those contracts and subcontracts.”

13 Def.’s Opp’n at 11. Accordingly, the State Department asserts that “the present lawsuit is a

contract action disguised as an administrative action.” Id. To support this position, the State

Department relies on the reasoning of Ingersoll-Rand Co. v. United States, 780 F.2d 74 (D.C. Cir.

1985), which instructs that “[t]he classification of a particular action as one which is or is not ‘at

its essence’ a contract action depends both on the source of the rights upon which the plaintiff

bases its claim, and upon the type of relief sought (or appropriate).” Id. (quoting Megapulse, Inc.

v. Lewis, 672 F.2d 959, 968 (D.C. Cir. 1982)). In Ingersoll-Rand, for example, the plaintiff’s

nominal statutory claim ultimately sounded in contract, because “it [wa]s possible to conceive of

[the plaintiff’s] dispute as entirely contained within the terms of the contract” at issue. Ingersoll-

Rand Co., 780 F.2d at 78. Here, the State Department similarly contends that “the only actions at

issue are those that arise from ACCL’s subcontracts [with DynCorp and PAE] and the contracting

process,” matters over which this Court lacks jurisdiction. Def.’s Reply at 5.

The Court is unpersuaded by this argument. Unlike in Ingersoll-Rand, ACCL International

expressly asserts a de facto debarment claim, a cause of action which is necessarily broader than a

specific contractual right. ACCL’s claim is not confined to any single contract, but instead asserts

that the State Department has violated its due process rights by functionally blacklisting the

company from all future government contracting. See Pls.’ Mot. at 6–7; see also Phillips v. Mabus,

894 F. Supp. 2d 71, 81 (D.D.C. 2012) (“De facto debarment occurs when a contractor has, for all

practical purposes, been suspended or blacklisted from working with a government agency without

due process, namely, adequate notice and a meaningful hearing.”). While disputes over specific

ACCL subcontracts may be “embedded” within this de facto debarment claim, it does not sound

in breach of contract. See, e.g., Com. Drapery Contractors, Inc. v. United States, 133 F.3d 1, 4

(D.C. Cir. 1998) (“The basis of Commercial’s and Milford’s claim is that GSA’s repeated attempts

14 to extricate the government from financial dealings with them constituted unlawful ‘blacklisting.’

The dispute over the termination clause in their contracts is embedded within this broader claim,

and is not an independent cause of action. . . . The claim and the type of relief requested thus reveal

that this is not ‘at its essence’ a contract action.”). Accordingly, the Court rejects the State

Department’s attempt to frame ACCL International’s de facto debarment claim as a contractual

matter over which the Court lacks jurisdiction.

Quite to the contrary, the Court finds that it affirmatively possesses subject matter

jurisdiction over ACCL International’s de facto debarment claim. First, ACCL International

presents its de facto debarment claim as a cause of action under either the APA, asserting that the

State Department’s debarment constituted an “agency action” “in excess of” the State

Department’s statutory “authority” or “limitations,” 5 U.S.C. § 706(2)(C); see also Pls.’ Mot. at 7,

or, alternatively, as an ultra vires claim. While these claims may well be flawed on the merits,

they are still federal claims over which the Court has federal question jurisdiction. See 28 U.S.C.

§ 1331; SRS Techs. v. United States, 843 F. Supp. 740, 742 (D.D.C. 1994) (“Plaintiff is seeking

judicial review of agency actions allegedly in violation of agency regulations, the classic case for

APA jurisdiction.”); Dart v. United States, 848 F.2d 217, 224 (D.C. Cir. 1988) (“When an

executive acts ultra vires, courts are normally available to reestablish the limits on his authority.”).

Furthermore, as addressed in detail below, claims of de facto debarment ultimately derive from a

plaintiff’s constitutional due process rights, a matter over which this Court unquestionably

possesses jurisdiction. See disc. infra at 25–30; 28 U.S.C. § 1331. For these reasons, the Court

finds that it possesses subject matter jurisdiction over ACCL International’s de facto debarment

claim.

15 2. Success on the Merits

Having determined that jurisdiction exists, the Court now proceeds to the substance of

ACCL International’s claim for relief. ACCL International’s claim is succinct: The State

Department effectuated a de facto debarment of ACCL International, but failed to give the

company notice and an opportunity to respond to the debarment, as required by the federal

regulations governing debarment proceedings. See, e.g., Pls.’ Mot. at 6–7; Pls.’ Reply at 2–3.

According to ACCL International, the State Department’s procedural non-compliance rendered its

de facto debarment “unlawful—whether viewed under the . . . APA or as ultra vires.” Pls.’ Reply

at 3.

ACCL International’s de facto debarment claim relies on two essential predicates: (1) that

the State Department actually effectuated a de facto debarment of ACCL, and (2) that the State

Department’s de facto debarment was unlawful because it did not comply with the procedures

required by the federal debarment regulations. As explained below, ACCL International has failed

to establish a substantial likelihood that either predicate is correct. This shortcoming prevents

ACCL International from establishing a “substantial likelihood of success on the merits.” Food &

Water Watch, Inc. v. Vilsack, 808 F.3d 905, 913 (D.C. Cir. 2015).

a. De Facto Debarment

The first predicate to ACCL International’s de facto debarment claim is that the company

was actually de facto debarred by the State Department. The existence of a de facto debarment by

the State Department is central to ACCL International’s claim for relief and, therefore, critical to

its chance of success on the merits. On the present record, the case for a de facto debarment

presents a close question. But for the purposes of a preliminary injunction, the Court finds that

16 ACCL International has not established with sufficient certainty that the State Department did, in

fact, cause ACCL’s de facto debarment.

“De facto debarment occurs when a contractor has, for all practical purposes, been

suspended or blacklisted from working with a government agency without due process, namely,

adequate notice and a meaningful hearing.” Phillips v. Mabus, 894 F. Supp. 2d 71, 81 (D.D.C.

2012) (citing Trifax Corp. v. Dist. of Columbia, 314 F.3d 641, 643–44 (D.C. Cir. 2003); TLT

Constr. Corp. v. United States, 50 Fed. Cl. 212, 215 (2001)). “The standard for proving de facto

debarment is high.” Phillips v. Spencer, 390 F. Supp. 3d 136, 155 (D.D.C. 2019). “‘Two options

exist to establish a de facto debarment claim: 1) by an agency’s statement that it will not award the

contractor future contracts; or 2) by an agency’s conduct demonstrating that it will not award the

contractor future contracts.’” Mabus, 894 F. Supp. 2d at 81 (quoting TLT Constr., 50 Fed. Cl. at

215–16). Ultimately, “[t]o demonstrate de facto debarment, plaintiffs must show ‘a systematic

effort by the procuring agency to reject all of the bidder’s contract bids.’” Id.

In this case, ACCL International’s de facto debarment claim rests on the specific actions

taken by the State Department regarding ACCL’s subcontracts in Afghanistan with DynCorp and

PAE. To begin, the record clearly reflects that the State Department took action because of

classified, derogatory vetting information on ACCL International uncovered by the State

Department’s RAM office. See Farrell Decl., ECF No. 10-1, at ¶¶ 7, 9. The RAM office uncovered

this derogatory information some “years ago,” but the State Department’s SCA Bureau, which is

responsible for the diplomatic platform of the United States in Afghanistan, first learned of the

information in February 2021. See Merrill Decl., ECF No. 10-4, at ¶¶ 2–3. After receiving and

considering this derogatory information, the SCA Bureau ultimately determined in April 2021 that

17 “ACCL should not be used as a subcontractor to provide services at Embassy Kabul under the

ALiSS contract.” Id. at ¶ 5.

To show a de facto debarment, ACCL International points to the SCA Bureau’s decision

and its direct impact on ACCL’s subcontracts with both DynCorp and PAE. First, the SCA Bureau

notified Mr. John Stever, the State Department’s Director of Worldwide Contracts, that ACCL

“should not be used as a subcontractor on DynCorp’s [ALiSS] contract in Afghanistan, in light of

certain derogatory information discovered.” Stever Decl., ECF No. 10-5, at ¶ 10. This caused Mr.

Stever to inform Mr. Robert Caldwell, the Vice President of Contracts for DynCorp, that

“DynCorp would need to sever its relationship with ACCL with regard to the ALiSS contract, and

find a replacement subcontractor.” Id. at ¶ 11. Mr. Stever and Mr. Caldwell later agreed that

DynCorp would maintain ACCL as a subcontractor until August 2021, but would then decline to

renew ACCL’s subcontract on the ALiSS contract. Id. at ¶ 12. ACCL International now confirms

that, in accordance with the State Department’s directive, DynCorp has not offered ACCL an

opportunity to submit a renewal bid as a subcontractor for the renewed ALiSS contract, set to begin

on August 20, 2021. See Pirzada Suppl. Decl., ECF No. 12-1, at ¶ 9.

The State Department also took steps to limit ACCL’s subcontracts in Afghanistan with

PAE. In April 2021, Mr. Stever telephoned an executive from PAE and informed him that the

State Department had uncovered derogatory information on ACCL. See Stever Decl., ECF No.

10-5, at ¶ 15. Thereafter, a contracting officer representative from the State Department contacted

PAE and directed the company not to exercise ACCL’s next option year for its subcontracts for

painting services at the Kabul embassy, under the O&M Contract. Jackson Decl., ECF No. 10-2,

at ¶¶ 9–11. On May 7, 2021, a contracting officer from the State Department informed PAE

personnel that ACCL International had been designated: “Do not Consider (not authorized) Any

18 existing projects need to immediately end.” Menard Decl., ECF No. 10-3, at 96. Finally, on May

18, 2021, another State Department contracting officer met with PAE to confirm that ACCL

International had failed RAM vetting and that PAE should terminate ACCL’s subcontract on the

SaSS Task Order. See id. at ¶¶ 11–13. On May 20, 2021, PAE informed ACCL International that

it was terminating for convenience ACCL’s SaSS subcontract based on “written direction” from

the State Department “to terminate immediately all ongoing work with [ACCL International] in

support of” the SaSS contract. Pirzada Decl., ECF No. 4-1, at ¶ 15. On that same day, “PAE

informed ACCL International that it would not be renewing its options to extend [ACCL’s]

subcontracts [for the O&M Contract] as a result of an instruction from the State Department.”

Pirzada Suppl. Decl., ECF No. 12-1, at ¶ 14.

ACCL International argues that this record demonstrates a “systematic” effort by the State

Department to debar ACCL as a federal contractor. See Pls.’ Mot. at 7; Pls.’ Reply at 14–15. In

particular, ACCL emphasizes that the record, as outlined above, reflects efforts by the State

Department (1) to prevent ACCL from renewing its ALiSS subcontract with DynCorp, (2) to

prevent ACCL from renewing its O&M subcontracts with PAE, and (3) to cause the termination

of ACCL’s SaSS subcontract with PAE. See Pls.’ Reply at 14. According to ACCL, these adverse

developments with multiple of the company’s Afghanistan subcontracts had a comprehensive

effect on ACCL’s contracting business, particularly because the company “performs all of its work

in Afghanistan and the vast majority in support of the U.S. government there.” Pls.’ Reply at 15;

see also Pirzada Suppl. Decl., ECF No. 12-1, at ¶ 3 (“ACCL International conducts 100% of its

business in Afghanistan.”). As further evidence of its purported debarment, ACCL International

notes that the State Department alerted U.S. Central Command of the derogatory information it

uncovered on ACCL International, see Farrell Decl., ECF No. 10-1, at ¶ 9, and that the Defense

19 Department elected to change ACCL’s vendor status within its vendor database from “Acceptable”

to “Unacceptable without Mitigation,” Pirzada Decl., ECF No. 4-1, at ¶ 15. Altogether, ACCL

International contends that the State Department’s actions have caused it to lose “100% of [its]

current and future State Department work,” thereby presenting “a clear-cut case of de facto

debarment.” Pls.’ Reply at 15.

Unfortunately for ACCL International, the case for de facto debarment on the present

record is not as “clear-cut” as it suggests. To start, the Court is unpersuaded by ACCL

International’s reliance on the Defense Department’s decision to downgrade ACCL’s status within

its internal vendor database. To establish a de facto debarment, a plaintiff must point to some

statement or conduct by the agency in the case, indicating that the agency has comprehensively

precluded the plaintiff from participating in that agency’s contracts. See Phillips v. Mabus, 894 F.

Supp. 2d 71, 81 (D.D.C. 2012) (quoting TLT Constr., 50 Fed. Cl. at 215–16). As such, the distinct

conduct of the Defense Department (not even a party to this action) does not support ACCL

International’s assertion that the State Department effectuated a de facto debarment against it.

Moreover, the State Department specifically refutes the claim that it shared the content of the

derogatory material on ACCL International with the Defense Department, or that it directed the

Defense Department to downgrade ACCL International’s vendor status. See Farrell Decl., ECF

No. 10-1, at ¶ 9. For these reasons, the Court does not find that the Defense Department’s decision

to downgrade ACCL International’s vendor status establishes that the State Department has

effectuated a de facto debarment against ACCL.

At bottom, the gravamen of ACCL International’s case for de facto debarment turns on the

State Department’s treatment of ACCL as a subcontractor to DynCorp and PAE in Afghanistan.

The State Department does not refute that it informed both DynCorp and PAE that derogatory

20 vetting information on ACCL International had surfaced. See, e.g., Stever Decl., ECF No. 10-5,

at ¶¶ 10–15. The record also demonstrates that because of this derogatory information, the State

Department directed PAE to terminate its subcontract with ACCL on the SaSS Task Order, see

Menard Decl., ECF No. 10-3, at ¶ 13, and not to renew its subcontracts with ACCL on the O&M

Contract, see Jackson Decl., ECF No. 10-2, at ¶11. Similarly, the record shows that the State

Department directed DynCorp not to renew ACCL’s subcontract for the ALiSS contract. See

Stever Decl., ECF No. 10-5, at ¶ 12. At first blush, these adverse contract actions, including the

State Department instructions not to renew multiple future subcontracts with ACCL, present a

colorable basis for a de facto debarment claim. But to receive a preliminary injunction, ACCL

must show a substantial likelihood of success on the merits, and the unique facts surrounding

ACCL’s subcontracts with PAE and DynCorp cast doubt on ACCL’s claim that a de facto

debarment actually occurred.

To reiterate, the key feature of de facto debarment is a “systematic effort by the procuring

agency to reject all of the bidder’s contract bids.” TLT Const. Corp. v. United States, 50 Fed. Cl.

212, 215 (2001) (emphasis added). Put otherwise, “de facto debarment occurs when a contractor

or a subcontractor has, for all practical purposes, been suspended or blacklisted from working with

a government agency.” Phillips v. Spencer, 390 F. Supp. 3d 136, 155 (D.D.C. 2019). A critical

distinction must be drawn, therefore, between government conduct that comprehensively

precludes a company from all government work based on a holistic assessment of the company’s

status as a federal contractor and, conversely, government conduct that merely targets discrete

contractual matters. See, e.g., Old Dominion Dairy Prod., Inc. v. Sec’y of Def., 631 F.2d 953, 964

(D.C. Cir. 1980) (“[I]t cannot be disputed that the Government action in this case effectively

21 foreclosed Old Dominion’s freedom to take advantage of other Government employment

opportunities, and barred ODDPI from all public employment.”) (emphasis added).

In this case, there is material in the present record to suggest that the State Department’s

conduct was specific to ACCL International’s subcontracts with DynCorp and PAE, and was not

targeted at ACCL’s overall ability to contract with the federal government. First, while the State

Department’s conduct impacted multiple ACCL subcontracts, each of the affected subcontracts

pertained to a specific type of work: support services performed at diplomatic facilities in Kabul,

Afghanistan. Under the ALiSS contract with DynCorp, ACCL International provides food

services for the United States Embassy in Kabul. See Merrill Decl., ECF No. 10-4, at ¶ 3. Under

the O&M Contract with PAE, ACCL International carried out painting work on the exterior of the

U.S. Embassy in Kabul, including the Marine Security Guard Quarters and Arian Buildings in the

U.S. Embassy Compound. Jackson Decl., ECF No. 10-2, at ¶ 6. And finally, under the SaSS Task

Order with PAE, ACCL International provided “facility, operations, maintenance, and life support

services” for the State Department’s Criminal Justice Task Force and its Counter Narcotics Justice

Center, Sensitive Investigative Unit, and National Interdiction Unit compounds in Kabul,

Afghanistan. Pirzada Decl., ECF No. 4-1, at ¶ 14.

The overlapping focus of ACCL International’s affected subcontracts with DynCorp and

PAE reveals a common denominator. Each subcontract involved ACCL’s work at a State

Department facility in Kabul, Afghanistan, including the United States Embassy itself. This fact

is significant for the Court’s de facto debarment analysis because it plausibly limits the scope of

the State Department’s actions to a narrow set of similar contracts in Kabul, rather than to ACCL

International’s overall status as a contractor with the State Department. Reinforcing this

conclusion is record evidence showing that the State Department only took steps to address ACCL

22 International’s subcontracts in Afghanistan after the SCA Bureau received Top Secret derogatory

counterterrorism material indicating that ACCL had “contracted with the enemy.” Ervin Decl.,

ECF No. 12-2, at ¶ 6. Such information presents obvious security concerns that are uniquely linked

to ACCL International’s specific contracts for work on diplomatic facilities in Kabul, Afghanistan,

the epicenter of an active war zone presently enveloped in a complex withdrawal of U.S. troops.

See ACCL-UC at 715 (email from State Department personnel noting “security threats related to

the . . . military withdrawal”).

Next, the record demonstrates that the State Department’s decision-making process

surrounding ACCL International’s subcontracts was also tailored to the unique conditions in

Kabul. The State Department took action against ACCL International because of “derogatory”

information uncovered on the company through a counterterrorism namecheck vetting program

run by the Department’s RAM office. See Farrell Decl., ECF No. 10-1, at ¶ 7. But importantly,

the effect of this “derogatory” vetting information was neither absolute nor comprehensive.

Instead, it was up to the State Department’s SCA Bureau, which is specifically responsible for

diplomatic affairs in Afghanistan, to make its own assessment of the derogatory information on

ACCL, in light of the risk factors applicable in Kabul at the time. See Farrell Decl., ECF No. 10-

1, at ¶ 5. If the contracts at issue were, instead, based in a different region or country, then the

State Department bureau responsible for that area would have to make a distinctive assessment of

the derogatory information on ACCL International, based on “the particular risks and other factors

associated with the programs and activities” in question. Id. Furthermore, counterterrorism

namecheck vetting is not even applicable to all countries or State Department programs. See id.

at ¶ 4. In short, the effect of derogatory vetting information, like the information uncovered on

ACCL International, is not consistent across all State Department contracts or programs.

23 Taken together, this record material suggests that the State Department’s conduct towards

ACCL’s subcontracts with DynCorp and PAE was uniquely linked to classified counterterrorism

intelligence implicating the security of diplomatic facilities in Kabul, Afghanistan, at a time of

considerable tumult in that country. And the State Department’s assessment of ACCL’s

subcontracts in this salient context was not agency-wide, but rather was made by the State

Department bureau specifically responsible for diplomatic affairs in Afghanistan. Indeed, the State

Department did not place ACCL International on any agency-wide “blacklist” for all State

Department business, see Stever Decl., ECF No. 10-5, at ¶¶ 19–20, but instead precluded ACCL

from specific contracts for work on diplomatic facilities in Kabul during a time of war. It does not

clearly follow from these distinctive circumstances that the State Department set in motion “‘a

systematic effort . . . to reject all of [ACCL International’s] contract bids.’” Mabus, 894 F. Supp.

2d at 81 (quoting TLT Constr., 50 Fed. Cl. at 215).

For example, while ACCL International asserts that its current contracting work occurs

entirely in Afghanistan, it also states that it is preparing to compete for a State Department contract

in Iraq. See Pirzada Decl., ECF No. 4-1, at ¶ 18. ACCL International also complains that the

State Department’s de facto debarment has “foreclose[d] potential work on projects in East Africa,

Kuwait, and Qatar where the United States government has a presence.” Pls.’ Mot. at 9 (emphasis

added). Finally, ACCL International states that it “has licenses in Germany for NATO contracts.”

Pirzada Decl., ECF No. 4-1, at ¶ 19 (emphasis added). Collectively, this record evidence reveals

ACCL International’s capacity and desire to compete for State Department contracts outside of

Afghanistan, and it is not clear on the present record that ACCL International would be

categorically excluded from such contracting opportunities. As explained above, the contract

actions taken against ACCL International in Afghanistan specifically involved work on diplomatic

24 facilities in Kabul, amidst highly unique and country-specific conditions. The Court cannot

confidently conclude, therefore, that the State Department’s actions targeted ACCL International’s

“overall status . . . as a contractor” writ large. Phillips v. Mabus, 894 F. Supp. 2d 71, 82 (D.D.C.

2012).

Given this ambiguity, the Court is unable to find, for the purposes of a preliminary

injunction, a substantial likelihood that ACCL International has met what is already a “high . . .

standard for proving de facto debarment.” Phillips v. Spencer, 390 F. Supp. 3d 136, 155 (D.D.C.

2019); see also IFONE NEDA Internet Serv., Inc. v. Army & Air Force Exch. Serv., No. 4:21-CV-

330, 2021 WL 1148345, at *5 (S.D. Tex. Mar. 25, 2021) (concluding that movant had not

established a “substantial likelihood of proving a de facto debarment claim.”). And, as noted

above, ACCL International’s claim that the State Department denied it adequate process, i.e.,

notice and an opportunity to respond, relies entirely on the assertion that a de facto debarment

actually occurred. See Pls.’ Mot. at 7. Absent a viable demonstration of a de facto debarment,

therefore, ACCL International’s ability to show a substantial likelihood of success on the merits

quickly breaks down. Food & Water Watch, Inc. v. Vilsack, 808 F.3d 905, 913 (D.C. Cir. 2015).

b. Constitutional Due Process

Even if ACCL International had established that the State Department caused its de facto

debarment, the success of ACCL’s claim also relies on a second predicate. Specifically, ACCL

International claims that the State Department’s de facto debarment was unlawful because it failed

to follow the notice procedures required by federal debarment regulations. See Pls.’ Mot. at 6–7;

Pls.’ Reply at 2–3. But as explained below, the Court disagrees with this premise in one critical

respect. ACCL International’s de facto debarment claim does not derive from federal debarment

regulations, but rather from constitutional due process. And the scope of ACCL International’s

25 due process rights presents yet another impediment to the preliminary injunction the company has

requested.

ACCL International’s claim assumes that when the State Department causes a de facto

debarment, it must follow the notice procedures set forth in the applicable federal procurement

regulations, i.e., the Federal Acquisition Regulation (“FAR”) and the Department of State

Acquisition Regulations (“DOSAR”). See Pls.’ Mot. at 6–7; Pls.’ Reply at 17–20; 48 C.F.R. §

9.406-3(c); 48 C.F.R. § 609.406-3. According to ACCL, when the State Department causes a de

facto debarment without following the notice procedures required by the FAR and the DOSAR,

the agency has acted unlawfully. See Pls.’ Mot. at 6–7; Pls.’ Reply at 17–20. But the Court is not

convinced that this foundational assumption is correct. The notice procedures codified in the FAR

and the DOSAR apply where the State Department has taken formal steps towards debarment. For

example, the State Department’s regulations specifically provide that “upon receipt of a complete

referral [for consideration of debarment] and after consulting with the Office of the Legal Adviser,

the debarring official shall decide whether to initiate a debarment action.” 48 C.F.R. § 609.406-

3(c)(1). Then, “when a determination is made to initiate action, the debarring official shall provide

to the contractor and any specifically named affiliates written notice.” Id. at § 609.406-3(c)(2)

(emphasis added). Similarly, the FAR calls for notice procedures specifically where there has

been a “proposed debarment,” 48 C.F.R. § 9.406-3(c), or a formal decision to “impose debarment,”

id. at § 9.406-3(e).

But in this case, ACCL International does not contend that the State Department initiated

any formal debarment proceedings against it. See, e.g., Stever Decl., ECF No. 10-5, at ¶ 19 (“As

far as I am aware, DOS has not debarred ACCL or taken any actions to do so.”). The absence of

any formal debarment action by the State Department distinguishes ACCL International’s present

26 claim from those cases where the federal debarment regulations clearly apply. For example, ACCL

International relies heavily on Friedler v. GSA, 271 F. Supp. 3d 40 (D.D.C. 2017), to demonstrate

that agencies carrying out debarment actions must comply with the attendant notice requirements

set forth in the Federal Acquisition Regulation. Critically, however, Friedler involved a formal

debarment action, which explicitly triggered the applicable notice requirements provided by the

FAR. Id. at 50 (“[O]n September 4, 2015, Swaby issued a Final Debarment Notice to Friedler,

which debarred him until May 20, 2019.”). In similar cases, courts in this jurisdiction have

required compliance with the FAR, where agencies effectuate a formal debarment. See, e.g.,

Caiola v. Carroll, 851 F.2d 395, 397–99 (D.C. Cir. 1988); Burke v. EPA, 127 F. Supp. 2d 235,

239–40 (D.D.C. 2001). But here there has been no such formal debarment proceeding. It is not

clear, therefore, that the State Department is bound by the attendant federal debarment regulations,

as ACCL International now argues.

Instead, ACCL International’s de facto debarment claim against the federal government

implicates an entirely separate source of rights: the due process liberty interest under the Fifth

Amendment. While the parties in this case appear to disregard this point, both binding and

persuasive authority on de facto debarment claims reinforce the conclusion. To begin, the Court

looks to the D.C. Circuit’s jurisprudence on de facto debarment. In the seminal case Old Dominion

Dairy Products, Inc. v. Secretary of Defense, a company named Old Dominion was denied two

federal contracts because of a determination by the government that Old Dominion “lacked

integrity.” 631 F.2d 953, 955 (D.C. Cir. 1980). This non-responsibility designation “effectively

foreclosed Old Dominion’s freedom to take advantage of other Government employment

opportunities, and barred [Old Dominion] from all public employment.” Id. at 964. Put otherwise,

Old Dominion was de facto debarred. On these facts, the D.C Circuit found that the government’s

27 de facto debarment of Old Dominion called into question the company’s “good name and

integrity” and, therefore, implicated Old Dominion’s “due process liberty right” under the Fifth

Amendment to be free from a government-imposed stigma that foreclosed future employment

opportunities. Id.; see also Board of Regents v. Roth, 408 U.S. 564, 573 (1972). Accordingly, it

was Old Dominion’s due process liberty interest, rather than any federal regulation, that entitled

the company to notice of the charges against it and an opportunity to respond to its de facto

debarment. Old Dominion, 631 F.2d at 969.

The D.C. Circuit’s analysis in Kartseva v. Dep’t of State, 37 F.3d 1524 (D.C. Cir. 1994),

is also instructive. In Kartseva, a Russian translator was fired by her private employer after the

State Department declared her ineligible to work on certain State Department contracts due to

“several significant counterintelligence concerns.” Id. at 1525. As in Old Dominion, the D.C.

Circuit reasoned that if Ms. Kartseva’s derogatory designation by the State Department had the

effect of broadly excluding her from future government employment opportunities, then her due

process “liberty interest” would be implicated. Id. at 1528. Specifically, the D.C. Circuit

explained that while a formal debarment would entitle Ms. Kartseva to the “procedural safeguards

mandated by regulation,” a de facto debarment affecting her “eligibility to work on future State

Department contracts” would provide her with “a cause of action for violation of her due process

liberty interest.” Id. (emphasis added).

The reasoning set forth in Old Dominion and Kartseva is essential. These two cases

demonstrate that de facto debarment claims do not rest on alleged violations of federal debarment

regulations, but rather on constitutional due process rights. And subsequent de facto debarment

cases in this jurisdiction have followed precisely this legal framework. See Phillips v. Spencer,

390 F. Supp. 3d 136, 156 (D.D.C. 2019) (“The undisputed facts do not demonstrate that Plaintiffs

28 have been de facto debarred on a systematic basis from government contracting work in violation

of the Due Process Clause of the Fifth Amendment . . . ”); Bannum, Inc. v. Samuels, 221 F. Supp.

3d 74, 86 (D.D.C. 2016) (“The D.C. Circuit has acknowledged that there are circumstances when

the government could effectively bar a contractor from receiving government business without

invoking formal debarment proceedings, and it has held that de facto debarment, ‘government

stigmatization that broadly precludes individuals or corporations from a chosen trade or business[,]

. . . deprives them of liberty in violation of the Due Process Clause.’”) (quoting Trifax Corp. v.

District of Columbia, 314 F.3d 641, 644 (D.C. Cir. 2003)).

Curiously, and despite direct prompting from this Court, neither party accepts this

foundational premise. 2 Yet, the parties’ respective motion papers ultimately belie their own

positions. For example, ACCL International argues that “the State Department’s de facto

debarment amounts to a due process violation, and the violation of a constitutional right such as

this is per se irreparable.” Pls.’ Reply at 21 (citation omitted and emphasis added). Furthermore,

it is quite telling that the de facto debarment cases cited in the parties’ own briefs explicitly

consider the claim of de facto debarment as one grounded in constitutional due process. See, e.g.,

Phillips, 894 F. Supp. 2d at 82 (considering claim of “de facto debarment in violation of the due

process clause of the Fifth Amendment”); IFONE NEDA Internet Serv., Inc. v. Army & Air Force

Exch. Serv., Civ. A. No. 21-330, 2021 WL 1148345, *6 (S.D. Tex. Mar. 25, 2021) (explaining that

“de facto debarment implicates constitutionally protected liberty interests”); Highview Eng’g, Inc.

2 On July 23, 2021, the Court issued a minute order expressly asking the parties for supplemental briefing addressing “[w]hether Plaintiffs’ de facto debarment claim is grounded in constitutional due process?” The State Department responded that it “does not understand Plaintiffs’ claims in the instant action to be grounded in constitutional due process.” Def.’s Reply at 17. The Department’s position is “based on the evident failure of the Complaint to plead a constitutional due process basis for the claims and of the Motion for Preliminary Injunction to rely on this ground.” Id. In turn, ACCL International elected not to file any supplemental briefing on the due process issue at all.

29 v. U.S. Army Corps of Eng’rs, 864 F. Supp. 2d 645, 653 (W.D. Ky. 2012) (addressing a de facto

debarment claim and noting that “the Corps is not permitted to debar a person or entity from

competing to win government contracts without affording the process due under the Fifth

Amendment”). In accordance with this precedent, the Court finds that ACCL International’s de

facto debarment claim rests on the company’s Fifth Amendment due process rights.

The conclusion that ACCL International’s de facto debarment claim is grounded in

constitutional due process carries significance in this case for two principal reasons. First, ACCL

International faces a unique challenge in establishing that it has any constitutionally protected due

process rights at all. The present record reflects that ACCL International comprises two corporate

entities, Afghan Yar Construction and Afghan Yar Logistics, which are both “incorporated under

the laws of Afghanistan [and] headquartered in Kabul, Afghanistan.” Pirzada Decl., ECF No. 4-

1, at ¶ 4. Outside of Afghanistan, ACCL International also maintains “offices in Germany, Iraq,

and the United Arab Emirates.” Id. And importantly, ACCL International has not made a clear

attempt to demonstrate some form of “substantial connection” through which the company might

have otherwise “come within” or developed a “presence” in the United States. 32 Cty. Sovereignty

Comm. v. Dep’t of State, 292 F.3d 797, 799 (D.C. Cir. 2002) (quoting Nat’l Council of Resistance

of Iran v. Dep’t of State, 251 F.3d 192, 202 (D.C. Cir. 2001)).

These facts are significant because “[a] foreign entity without property or presence in this

country has no constitutional rights, under the due process clause or otherwise,” People’s

Mojahedin Org. of Iran v. U.S. Dep’t of State, 182 F.3d 17, 22 (D.C. Cir. 1999), and the D.C.

Circuit “has consistently refused to extend extraterritorial application of the Due Process Clause,”

Al Hela v. Trump, 972 F.3d 120, 139 (D.C. Cir. 2020). To this point, the State Department

explicitly argues that “Plaintiffs [are] nonresident aliens without connections to the United States”

30 and, therefore, “do not possess due process rights.” Def.’s Reply at 17. ACCL International,

however, has remained silent on this issue throughout its preliminary injunction briefing, even

after the Court specifically requested briefing on the question of “what due process rights [ACCL

International] possesses as [a] foreign entit[y].” See July 23, 2021 Min. Order. As such, it is

unclear at this early stage of the proceedings whether ACCL International can even establish a

constitutional due process right to support its de facto debarment claim.

Second, even if ACCL International established a constitutional right to due process, the

scope of that right is not immediately apparent, given the distinctive facts of this case. ACCL

International argues that it should have been afforded notice of its de facto debarment and an

opportunity to respond to the reasoning behind the State Department’s debarment decision. See

Pls.’ Mot. at 7. While such procedural safeguards are generally not uncommon, the concept of

due process remains “flexible and calls for such procedural protections as the particular situation

demands.” Morrissey v. Brewer, 408 U.S. 471, 48 (1972); see also Mathews v. Eldridge, 424 U.S.

319, 334–35 (1976). It is especially relevant, here, that the amount of due process afforded must

account for the government’s compelling interest in preserving national security. See Gonzalez v.

Freeman, 334 F.2d 570, 580 n.21 (D.C. Cir. 1964)); Kouadio v. Decker, 352 F. Supp. 3d 235, 240

(S.D.N.Y. 2018) (“It is well-established that national security concerns affect the scope of due

process.”).

In MG Altus Apache Co. v. United States, 111 Fed. Cl. 425 (2013), for example, the

Federal Court of Claims addressed the effect of national security concerns on the due process rights

of a private contractor subject to a de facto debarment. There, a Department of Defense vetting

program used in Afghanistan had “rejected” the private defense contractor based on the discovery

of derogatory intelligence that called into question the contractor’s ethics and integrity. Id. at 443.

31 In turn, the private contractor argued that this negative vetting designation effectuated a de facto

debarment because it functionally disqualified the company from all Department of Defense

contracts in Afghanistan. Id. The contractor argued further that this de facto debarment violated

its due process rights because the Department of Defense had not afforded the company any notice

of the derogatory vetting or an opportunity to respond. Id. at 444. But the Court of Federal Claims

disagreed, emphasizing the unique impact of national security concerns on the private contractor’s

due process rights in that particular context:

Although the vendor vetting rating process does not provide a contractor either notice of its ineligible status or an opportunity to present rebuttal evidence, requiring traditional due process in the CJ2X rating process would adversely affect national security. In the environment of a warzone when the required notice would necessarily disclose classified material and could compromise national security, normal due process requirements must give way to national security concerns. Not only would affording due process here require disclosure of classified information and endanger military intelligence sources, it would provide information to entities that pose a potential threat to the United States, thereby placing United States forces and operations at risk.

Id. at 444–45. Because of these salient national security concerns within the Afghanistan theatre

of war, the Court of Federal Claims determined that the defense contractor “was not entitled to

receive formal notice of, or an opportunity to respond to, its vendor vetting rating.” Id. at 445.

The national security considerations in this case are immediately apparent and similar to

those in MG Altus Apache Co. Here, ACCL International is requesting notice of and an

opportunity to respond to derogatory counterterrorism intelligence, presently classified at a Top

Secret level. See Farrell Decl., ECF No. 10-1, at ¶ 7. Disclosing classified intelligence to ACCL

International, a private foreign corporation, clearly implicates serious national security concerns.

To start, “[t]he government has a compelling interest in protecting both the secrecy of information

important to our national security and the appearance of confidentiality so essential to the effective

operation of our foreign intelligence service.” Snepp v. United States, 444 U.S. 507, 509 n.3

32 (1980). Moreover, the disclosure of the derogatory information on ACCL International may

jeopardize the safety of State Department personnel in Afghanistan. The derogatory information

on ACCL International suggests that the company has “contracted with the enemy.” Ervin Decl.,

ECF No. 12-2, at ¶ 6. Given that Afghanistan remains an active war zone presently enmeshed in

a complex withdrawal of U.S. troops, the security concerns raised by this information are readily

discernable. These security concerns are only further compounded, given that ACCL International

has contracted to work directly on diplomatic facilities in Kabul. See Pirzada Decl., ECF No. 4-1,

at ¶ 11 (“ACCL International uses its own drivers and vehicles to transport material from its

warehouse in Kabul to the U.S. embassy there.”). Yet, throughout its preliminary injunction

briefing, ACCL International has not addressed how the Court should approach these national

security concerns when considering the contours of ACCL’s putative due process rights. See July

23, 2021 Min. Order (requesting briefing on constitutional due process issues).

In sum, ACCL International’s de facto debarment claim derives from its constitutional due

process rights, and the scope of those rights are far from clear on the current record. As a threshold

matter, ACCL’s foreign status calls into question whether it possesses any Fifth Amendment due

process rights at all. And even if such rights exist, the amount of process constitutionally due to

ACCL International in this case involves a complex question implicating serious national security

concerns. At the preliminary injunction stage, the Court need not resolve these questions. Rather,

it is sufficient to note that they present formidable obstacles to the success of ACCL International’s

de facto debarment claim, which ACCL International has not addressed with any specificity,

despite direct prompting from this Court. These unanswered due process questions present yet

another reason why ACCL International has not established a “substantial likelihood of success

on the merits.” Food & Water Watch, Inc. v. Vilsack, 808 F.3d 905, 913 (D.C. Cir. 2015).

33 B. Irreparable Harm

The Court next considers whether ACCL International has demonstrated “irreparable

harm.” CityFed Fin. Corp. v. Office of Thrift Supervision, 58 F.3d 738, 747 (D.C. Cir. 1995). To

constitute “irreparable harm,” the injury alleged must be “both certain and great, actual and not

theoretical, beyond remediation, and of such imminence that there is a clear and present need for

equitable relief.” Mexichem Specialty Resins, Inc. v. EPA, 787 F.3d 544, 555 (D.C. Cir. 2015)

(quotation omitted). And “[p]laintiffs seeking preliminary relief [must] demonstrate that

irreparable injury is likely in the absence of an injunction.” Winter v. Nat. Res. Def. Council, Inc.,

555 U.S. 7, 22 (2008) (emphasis in original) (internal citations omitted). “[P]ossibility of

irreparable harm” is not enough. Id. “[P]roving ‘irreparable’ injury is a considerable burden,

requiring proof that the movant’s injury is ‘certain, great and actual—not theoretical—and

imminent, creating a clear and present need for extraordinary equitable relief to prevent harm.’”

Power Mobility Coal. v. Leavitt, 404 F. Supp. 2d 190, 204 (D.D.C. 2005) (quoting Wis. Gas Co.

v. FERC, 758 F.2d 669, 674 (D.C. Cir. 1985)).

To establish irreparable harm here, ACCL International points to four potential sources of

injury: (1) the violation of ACCL’s due process rights, (2) ACCL’s de facto debarment, (3)

ACCL’s non-recoverable economic losses, and (4) ACCL’s potential dissolution as a company.

See Pls.’ Reply at 20–23. As explained below, the Court ultimately finds these grounds insufficient

at the preliminary injunction stage to satisfy ACCL International’s considerable burden of clearly

demonstrating a likelihood of certain and imminent harm absent an injunction.

First, the Court is unpersuaded by ACCL International’s attempt to show irreparable injury

by pointing to the alleged violation of ACCL International’s constitutional due process rights. See

Pls.’ Reply at 21. As described in detail above, ACCL International is a foreign entity based in

34 Afghanistan, see disc. supra at 30, and “[a] foreign entity without property or presence in this

country has no constitutional rights, under the due process clause or otherwise.” People’s

Mojahedin Org. of Iran v. U.S. Dep’t of State, 182 F.3d 17, 22 (D.C. Cir. 1999). The Court

specifically asked the parties to address this issue in its July 23, 2021 Minute Order, and in

response the State Department took the position that “Plaintiffs [are] nonresident aliens without

connections to the United States” and, therefore, “do not possess due process rights.” Def.’s Reply

at 17. ACCL International has presented no countervailing argument, nor has it pointed to any

record evidence that might support the existence of its due process rights. Accordingly, the Court

finds that ACCL International cannot now rely on its unestablished due process rights to

demonstrate irreparable harm for the purposes of a preliminary injunction.

Second, the Court is similarly unpersuaded by ACCL International’s argument that

“debarment constitutes an irreparable injury.” Pls.’ Reply at 21. To begin, this argument assumes

that a debarment took place. But as explained above, ACCL International has not demonstrated

with sufficient certainty that the State Department effectuated a de facto debarment against it. See

disc. supra at 16–25. Moreover, it goes too far to broadly assume that all debarments constitute

irreparable injuries. In the normal course, debarment serves as a legitimate tool used by agencies

to “exclude[] non-responsible contractors from government contracting.” Caiola v. Carroll, 851

F.2d 395, 397 (D.C. Cir. 1988). Instead, ACCL’s argument appears to assert that an improper

debarment constitutes an irreparable injury. See Pls.’ Reply at 21–22. But this position presumes

both that ACCL International was debarred and that this debarment was improper. Because neither

proposition is sufficiently clear on the present record, the Court finds that ACCL International

cannot show irreparable harm merely by pointing to its yet unsubstantiated claim of a potentially

unlawful debarment.

35 ACCL International’s final two sources of irreparable harm blend together. ACCL

International’s third source of putative injury rests on the argument that because the State

Department is immune from a suit for economic damages, those damages are irretrievable and,

consequently, irreparable per se. Id. at 22. “This issue often arises in suits against government

defendants, where sovereign immunity or other laws or doctrines may preclude monetary relief.”

Save Jobs USA v. U.S. Dep’t of Homeland Sec., 105 F. Supp. 3d 108, 114 (D.D.C. 2015). Courts

in this jurisdiction, however, have rejected the broad position that any non-recoverable damages

against a government defendant qualify as irreparable per se. See, e.g., Xiaomi Corp. v. Dep’t of

Def., No. CV 21-280 (RC), 2021 WL 950144, at *10 (D.D.C. Mar. 12, 2021); Air Transp. Ass’n

of Am., Inc. v. Exp.–Imp. Bank of the U.S., 840 F. Supp. 2d 327, 336 (D.D.C. 2012); Nat’l Min.

Ass’n v. Jackson, 768 F. Supp. 2d 34, 52 (D.D.C. 2011). Instead, the “wiser formula requires that

the economic harm be significant, even where it is irretrievable because a defendant has sovereign

immunity.” Air Transp. Ass’n, 840 F. Supp. 2d at 336. In the case of a corporation seeking a

preliminary injunction, the movant must still make “a strong showing that the economic loss would

significantly damage its business, . . . would cause extreme hardship to the business, or even

threaten destruction of the business.” Id. (citations omitted). In this way, therefore, ACCL

International’s third source of harm (i.e., non-recoverable damages that are per se irreparable)

merges with the company’s fourth and final source of harm, which is that the State Department’s

de facto debarment “threaten[s] ACCL International’s very existence.” Pls.’ Reply at 23.

The question of ACCL International’s case for irreparable harm then, ultimately turns on

whether the company has adequately established that severe and imminent economic injury is

“likely” absent a preliminary injunction. Winter, 555 U.S. at 22. “For [such] economic harm to

constitute irreparable injury,” ACCL International “must ‘adequately describe and quantify the

36 level of harm it[] . . . face[s].” Air Transp. Ass’n, 840 F. Supp. 2d at 336 (quoting Nat’l Ass’n of

Mortg. Brokers v. Bd. of Governors of Fed. Rsrv. Sys., 773 F. Supp. 2d 151, 181 (D.D.C. 2011)).

In this case, ACCL International attempts to do so by explaining that 80% of its annual revenue

and 90% of its total gross margin is attributable to the company’s subcontracts with DynCorp and

PAE. See Pirzada Suppl. Decl., ECF No. 12-1, at ¶¶ 3–4. Accordingly, ACCL contends that “as

a result of the State Department’s de facto debarment and the termination of the PAE and DynCorp

subcontracts, ACCL International expects to lose at least $30 million in the next year alone, and

$120 million over the course of the next four years.” Pls.’ Reply at 22. Based on these projected

revenue losses, ACCL International “anticipates having to cease business operations no later than

the end of 2021.” Pirzada Decl., ECF No. 4-1, at ¶ 22.

At first glance, ACCL International’s base line economic forecasts appear substantial.

Upon a closer review, however, the current record reveals two sources of ambiguity that call into

question the certainty of ACCL’s projected economic harm. The first source of ambiguity relates

to the apparent methodology behind ACCL’s forecasted economic losses. Again, ACCL projects

losses of $30 million in the next calendar year and $120 million over four years, based on its

revenue losses from subcontracts with DynCorp and PAE. But how exactly did ACCL

International calculate these totals? The record indicates that only one source of projected revenue

loss comes from the termination of a current subcontract. Specifically, on May 20, 2021, PAE

terminated its subcontract with ACCL International for the SaSS Task Order. See Pirzada Suppl.

Decl., ECF No. 12-1, at ¶ 10. As a result of this termination, ACCL International has lost

approximately $70,000 in billing per month. Id. at ¶ 11. Therefore, because the SaSS subcontract

with PAE was scheduled to continue through September 18, 2021, ACCL International can

reasonably claim future losses of approximately $175,000 in monthly billing, during the period

37 between the date of its preliminary injunction motion (June 30th) through the end of the SaSS

subcontract’s current term (September 18th).

The remaining portion of ACCL International’s projected revenue loss, however, derives

from ACCL’s anticipated subcontracts with DynCorp and PAE. First, ACCL projects a loss of

approximately $117 million over five years ($23.4 million per annum) because it will not receive

a subcontract with DynCorp for the new ALiSS prime contract in Afghanistan, which is set to

begin on August 20, 2021 and carry four option years. Id. at ¶ 7. ACCL then notes that it had

options with PAE “to extend the SaSS subcontract through 18th March 2024” and the termination

of its SaSS subcontract, therefore, will result “in an expected loss of USD 3.5 million . . . in revenue

that would have been made under the SaSS subcontract between May 2021 and May 2022.” Id.

at ¶ 12. Similarly, ACCL International states that its O&M subcontracts with PAE also had option

years through March 18, 2024, and that ACCL’s inability to perform on these option year

subcontracts will result “in an expected loss of USD 3.5 million . . . in revenue that would have

been made between 19th September 2021 and 18th March 2024.” Id. ¶ 15.

Altogether then, ACCL International has only shown that around $175,000 of its projected

revenue loss, calculated from the time of its motion for a preliminary injunction, is tied to a current

contract. The remainder of ACCL’s projected revenue loss of $120 million over the next four

years ostensibly relies on anticipated losses the company expects to sustain based on subcontracts

it hopes to renew with DynCorp and PAE. In fact, almost the entirety of ACCL International’s

projected loss derives solely from the $117 million in revenue the company expects to receive

from the renewed ALiSS contract with DynCorp. See id. at ¶ 7. But it is not certain, on the present

record, whether ACCL International would have been entitled to this contract revenue. ACCL

indicates that the “State Department will soon award a renewal” of the five-year ALiSS prime

38 contract in Afghanistan, and because DynCorp and ACCL International “are the incumbents” on

the earlier ALiSS contract they “were expected to continue in their roles.” Id. Yet, the Court

cannot simply assume, based on ACCL’s “expectation,” that the State Department will award the

new ALiSS prime contract to DynCorp, or that DynCorp would have selected ACCL again as a

subcontractor for its bid on the new ALiSS prime contract. See, e.g., Figg Bridge Engineers, Inc.

v. Fed. Highway Admin., No. CV 20-2188 (CKK), 2020 WL 4784722, at *7 (D.D.C. Aug. 17,

2020) (“[T]here is no guarantee that Figg, particularly as a likely subcontractor, would, in fact,

participate or succeed in a bid for any given contract.”). And finally, there is no certainty that the

State Department will exercise every option year for DynCorp on the new ALiSS prime contract,

or that DynCorp would have exercised each of ACCL International’s option years as a

subcontractor thereunder. See Hi-Shear Tech. Corp. v. United States, 55 Fed. Cl. 418, 423 (2003),

aff’d, 356 F.3d 1372 (Fed. Cir. 2004) (“The unique function of an option contract is that it obligates

the option giver, not the option holder. It does not create a legal obligation . . . to exercise the

option.”). For these reasons, the Court finds that the methodology behind ACCL International’s

projected economic losses is demonstrably speculative, as it relies heavily on hypothetical revenue

derived from subcontracts the company has not yet received.

The second ambiguity clouding ACCL International’s case for irreparable harm relates to

the overall effect that its projected revenue losses would have on the company and its prospective

viability. ACCL International’s theory of irreparable harm is tied to the loss of its contracts with

DynCorp and PAE in Afghanistan. See Pirzada Suppl. Decl., ECF No. 12-1, at ¶¶ 3–15. But even

assuming that the DynCorp and PAE contracts do represent a substantial source of lost revenue

for ACCL International, the record suggests that ACCL International might offset these losses

with new or preexisting revenue streams. For example, the company is currently preparing

39 subcontract bids for the “Baghdad Life Support Services (“BLiSS”) contract, which is nearly four

times the size of the ALiSS contract.” Pirzada Decl., ECF No. 4-1, at ¶ 18. And contrary to ACCL

International’s assertion, the record does not indicate with any certainty that the company will be

barred from bidding on the BLiSS contract. See Stever Decl., ECF No. 10-5, at ¶ 14. Furthermore,

ACCL International’s motion papers reference additional business that the company is pursuing

with NATO in Germany, see Pirzada Decl., ECF No. 4-1, at ¶ 19, as well as potential projects for

ACCL International in East Africa, Kuwait, and Qatar, id. at ¶ 18. And, as explained above, see

disc. supra at 16–25, the present record does not clearly demonstrate that ACCL International will

be unable to compete for or participate in such projects going forward. Consequently, these

projects outside of Afghanistan might well serve as alternative sources of revenue for ACCL

International, which could sustain the company’s financial viability going forward.

In brief, the present record reflects significant ambiguities surrounding the nature and scope

of ACCL International’s purported injury. In particular, ACCL International’s theory of economic

harm relies heavily on speculative revenue streams, while also discounting the company’s ability

to offset such losses in the future. ACCL International, therefore, has not sufficiently demonstrated

an irreparable injury that is both certain and imminent in the absence of a preliminary injunction.

Mexichem Specialty Resins, Inc. v. EPA, 787 F.3d 544, 555 (D.C. Cir. 2015).

C. Balance of the Equities and the Public Interest

“The final two factors the Court must consider when deciding whether to grant a

preliminary injunction are the balance of harms and the public interest.” Sierra Club v. United

States Army Corps of Engineers, 990 F. Supp. 2d 9, 41 (D.D.C. 2013). Where, as here, the

government is a party to the litigation, these two factors merge and are “one and the same, because

the government’s interest is the public interest.” Pursuing Am.’s Greatness v. Fed. Election

40 Comm’n, 831 F.3d 500, 511 (D.C. Cir. 2016). “Although allowing challenged conduct to persist

certainly may be harmful to a plaintiff and the public, harm can also flow from enjoining an

activity, and the public may benefit most from permitting it to continue.” Sierra Club, 990 F.

Supp. 2d at 41. Therefore, when “balanc[ing] the competing claims of injury,” the Court must

“consider the effect on each party of the granting or withholding of the requested relief.” Winter,

555 U.S. at 24.

ACCL International has not demonstrated that the balance of the equities and the public

interest weigh in its favor. In its motion, ACCL International points generally to “the significant

harm to ACCL International absent injunctive relief.” Pls.’ Mot. at 10; see also Pls.’ Reply at 23–

25. ACCL International also asserts, without explanation, that “the harm to the Government from

issuing such an injunction would be slight at best.” Pls.’ Mot. at 10. Finally, ACCL International

appeals to the public’s general interest in ensuring that the government “abide by the federal laws

that govern their existence and operations.” Id. (quoting League of Women Voters v. Newby, 838

F.3d 1, 12 (D.C. Cir. 2016)); see also Pls.’ Reply at 23–25.

These arguments are unpersuasive. As an initial matter, ACCL International’s reliance on

the State Department’s purported violation of the law is undercut by ACCL’s inability to show a

likelihood that the State Department, in fact, violated either the federal debarment regulations or

ACCL’s due process rights. See disc. supra at 16–33. Similarly, the harm ACCL International

relies upon is speculative, given the present record. See disc. supra at 34–39. More fundamentally,

however, ACCL International’s balancing of the equities fails to directly engage with the State

Department’s position and the broader public interests at play. Namely, ACCL’s argument does

not account for the potentially grave effect that a preliminary injunction would have on the State

Department in Afghanistan. Following the Supreme Court’s instruction, however, this Court must

41 take pains to “consider the effect on [the State Department] of granting . . . the requested relief.”

Winter, 555 U.S. at 24.

The State Department’s challenged conduct in this case resulted from the discovery of

derogatory information on ACCL International through a counterterrorism vetting program aimed

at the prevention of inadvertent terrorist financing. See Farrell Decl., ECF No. 10-1, at ¶ 7; Merrill

Decl., ECF No. 10-4, at ¶ 3. This derogatory information indicated that ACCL International had

potentially “contracted with the enemy.” Ervin Decl., ECF No. 12-2, at ¶ 6. The information was

also of sufficient importance and sensitivity to merit a Top Secret level classification. See Farrell

Decl., ECF No. 10-1, at ¶ 7. And based on the State Department’s risk assessment of this

derogatory counterterrorism material, the State Department ultimately determined that ACCL

International should not be used as a subcontractor for select contracts in Afghanistan, including

contracts connected to work on the United States Embassy in Kabul. See Merrill Decl., ECF No.

10-4, at ¶¶ 1–6.

Under these circumstances, the Court cannot agree with ACCL International’s assessment

that the effect of a preliminary injunction on the State Department would be “slight at best.” Pls.’

Mot. at 10. To the contrary, such an injunction would threaten the confidentiality of classified

intelligence, undermine the State Department’s ability to make region-specific risk assessments in

furtherance of personnel security, and thwart the Department’s effort to prevent inadvertent

terrorist support. These concerns are especially pronounced here, given the State Department’s

current diplomatic role in Afghanistan at a time when the U.S. military is undertaking a full-scale

troop withdrawal.

Correspondingly, there is a clear public interest associated with preserving the nation’s

diplomatic security abroad and limiting the possibility of inadvertent terrorist financing through

42 government contracts. As such, the potential “effect on [the State Department] of the granting . .

. the requested relief” is significant and implicates substantial matters of diplomatic security and

foreign affairs. Winter, 555 U.S. at 24; see also Holder v. Humanitarian L. Project, 561 U.S. 1,

33–34 (2010) (“That evaluation of the facts by the Executive . . . is entitled to deference. This

litigation implicates sensitive and weighty interests of national security and foreign affairs.”). For

these reasons, the Court finds that the balance of the equities and the public interest do not weigh

in favor of ACCL International’s request for a preliminary injunction.

IV. CONCLUSION

For the reasons set forth in this Memorandum Opinion, the Court concludes that ACCL

International has failed to satisfy its burden of demonstrating that it is entitled to preliminary

injunctive relief. Accordingly, the Court shall DENY ACCL International’s Motion for a

Preliminary Injunction. An appropriate Order accompanies this Memorandum Opinion.

Dated: August 6, 2021

/s/ COLLEEN KOLLAR-KOTELLY United States District Judge