The Government Accountability Office (“GAO”) released a decision on Friday finding that the Department of Homeland Security (“DHS”) followed the wrong order of succession after Secretary Kirstjen Nielsen resigned in April 2019.  As a result, the Acting Secretaries who have served since then were invalidly selected.  In particular, GAO has questioned the appointments of Acting Secretary Chad Wolf, former Acting Secretary Kevin McAleenan, and Deputy Secretary Kenneth Cuccinelli.

GAO’s decision tees up a thorny question for DHS contractors:  If these officials were invalidly selected, what does it mean for the agency’s policies and procurement decisions made during their tenure?

The implications of this question are potentially significant.  If an agency official was not validly appointed in the first instance, then certain of that official’s actions may be void or otherwise unlawful.  And complicating matters further, GAO’s decision is not binding, which means DHS could dispute its conclusions and continue to operate under the now-questionable authority of Acting Secretary Wolf.  Indeed, GAO indicated that DHS defended its actions in response to GAO’s inquiry.  Nonetheless, a court could find GAO’s reasoning persuasive and use it as a basis to invalidate a wide range of DHS actions.

This is not the first time in recent history that an agency’s succession planning raised these questions.  In 2018, we wrote about similar issues at the Department of Veterans Affairs, after a dispute arose over whether Secretary David Shulkin resigned or was fired by the President.  Similarly, in March 2020, Judge Randolph Moss of the U.S. District Court in Washington, D.C. ruled that Mr. Cuccinelli was “not lawfully” appointed last year in his former position as acting director of U.S. Citizenship and Immigration Services (“USCIS”), the agency within DHS that administers and vets benefits for non-citizens like refugees, asylum-seekers, and green card holders applying for U.S. citizenship.  As these experiences demonstrate, contractors doing business with DHS should pay careful attention to whether these types of issues may affect their contracts.

Background Legal Standards:  The Federal Vacancies Reform Act and DHS

DHS’s succession puzzle takes place against the background of the Federal Vacancies Reform Act of 1998 (“Vacancies Act”).  The Vacancies Act sets out “the exclusive means for temporarily authorizing” an agency head to replace a Senate-confirmed officer of an Executive agency who leaves the post.  5 U.S.C. § 3347(a).  As a general matter, if such an officer “dies, resigns, or is otherwise unable to perform the functions and duties of the office[,]” “the first assistant to the office of such officer” shall serve as the acting leader of the agency.  5 U.S.C. § 3345(a)(1).

However, the President may in these circumstances appoint another federal officer or employee to run the agency until the Senate confirms a new officer.  See 5 U.S.C. § 3345(a).  On December 9, 2016, President Obama issued Executive Order 13753 under the authority of the Vacancies Act, setting out a default succession plan for DHS.

Despite these rules, if another “statutory provision expressly” permits the “head of an Executive department” to select a temporary appointee, then that individual can use that statute as a means of appointing an interim replacement.  5 U.S.C. § 3347(a)(1).  DHS happens to have a such a statute, which authorizes the Secretary to “designate such other officers of the Department in further order of succession to serve as Acting Secretary.”  6 U.S.C. § 113(g)(2).  In other words, the Secretary can establish the controlling succession order, rather than following the statutory succession order.

What GAO Found

GAO’s findings were focused on the actions of the last Senate-confirmed DHS Secretary,  Kirstjen Nielsen.  Secretary Nielsen issued a succession plan under § 113(g)(2) in February 2019, providing for two grounds by which someone might ascend to the position of Acting Secretary.  First, in the event of the Secretary’s death, resignation, or inability to perform, Secretary Nielsen ordered that the succession plan would follow Executive Order 13753.  Second, if the Secretary was unavailable to act during a disaster or catastrophic emergency, then succession would follow “Annex A” of her February order.

At that time, Annex A and Executive Order 13753 had the same order of succession:  (1) Deputy Secretary of DHS; (2) Under Secretary for Management; (3) the Administrator of the Federal Emergency Management Agency (“FEMA”); and (4) the Under Secretary for National Protection and Programs (re-designated in 2018 to the Director of the Cybersecurity and Infrastructure Security Agency (“CISA”)).

However, on April 9, 2019 — the day before Secretary Nielsen resigned — she issued a new order of succession that amended Annex A to state that the Commissioner of Customs and Border Protection (“CBP”) would be number (3), with the FEMA Administrator at number (4), and removing the CISA Director.  But Annex A applied only in the event of a disaster or catastrophe, apparently leaving Executive Order 13753 to control in cases of resignation.

On April 10, 2019, Secretary Nielsen and the Under Secretary for Management resigned.  Moreover, the Deputy Secretary had resigned a year earlier.  Thus, Executive Order 13753 would control the succession order.  But as GAO found, “DHS mistakenly referred to Annex A, rather than [Executive Order] 13753.”  As a result, GAO explained that the agency wrongly assumed that the CBP Commissioner, Kevin McAleenan, had become the Acting Secretary.

Making matters more complicated, Commissioner McAleenan then issued a new succession order before resigning in November 2019, revising the order such that the Under Secretary for Strategy, Policy, and Plans, Chad Wolf, would become the new Acting Secretary.  In turn, Mr. Wolf revised the order of succession for Deputy Secretary, under which Ken Cuccinelli became the Senior Official Performing the Duties of the Deputy Secretary.

Surveying these facts, GAO found that McAleenan, Wolf, and Cuccinelli did not validly assume their offices.  GAO stopped short of finding who should have assumed the duties of Acting Secretary, but it indicated that the CISA Director — as number (4) on the list — may have been the correct official.

What Does This Mean for Contractors?

All of this may have real world effects on agency policy, including procurement decisions and policies.  If Messrs. McAleenan, Wolf, and Cuccinelli did not have authority to serve, then their performance of certain functions may be void.

However, this point is nuanced.  See 5 U.S.C. § 3348(d).  Legislative history and court precedents suggest that an invalid appointment of an official would void only that official’s performance of non-delegable functions or duties.  Stated differently, the Vacancies Act appears not to affect the validity of an official’s performance of delegable duties.  Under this view, many run-of-the-mill procurement functions presumably would be valid, even if the Acting Secretary’s appointment was deemed invalid.  That said, scholars, commentators and government officials currently are engaged in a fierce debate over these questions, and the issues ultimately are likely to be tested in court.

In the meantime, GAO expressly reserved judgment about “the question of the consequences of actions taken by these officials, including consideration of whether actions taken by these officials may be ratified by the Acting Secretary,” but it has referred these issues for review by the Inspector General for DHS.  Contractors doing business with DHS would be wise to continue monitoring this issue closely.

Update (8/17/20):  DHS has filed a response that sharply criticizes GAO’s report and asserts that Acting Secretary Wolf and Senior Official Performing the Duties of Deputy Secretary Cuccinelli are lawfully performing their current roles at DHS.  DHS’s response requests that GAO “immediately rescind its report.”

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Photo of Susan B. Cassidy Susan B. Cassidy

Susan Cassidy co-chairs Covington’s Aerospace and Defense Industry Group, and has been advising government contractors for more than 35 years on the requirements imposed on companies contracting with the U.S. Government.

Susan’s practice focuses on the intersection of cybersecurity, national security, and supply…

Susan Cassidy co-chairs Covington’s Aerospace and Defense Industry Group, and has been advising government contractors for more than 35 years on the requirements imposed on companies contracting with the U.S. Government.

Susan’s practice focuses on the intersection of cybersecurity, national security, and supply chain risk management for companies that sell products and services to the U.S. Government. Susan advises contractors at all phases of the procurement cycle, and regularly:

advises clients on compliance obligations imposed by the FAR, DFARS, and other agency regulatory requirements;
leads internal and government False Claims Act (FCA) investigations addressing allegations of violations of government cybersecurity, national security, supply chain, quality, and MIL-SPEC requirements; and
advises clients who have suffered a cyber breach where U.S. government information may have been impacted.

In her work with global, national, and start-up contractors, Susan advises companies on all aspects of government supply chain issues including:

Government cybersecurity requirements, including the Cybersecurity Maturity Model Certification (CMMC), DFARS 252.204-7012, FedRAMP, controlled unclassified information (CUI), and NIST SP 800-171 requirements;
Evolving sourcing issues such as Section 889, counterfeit part requirements, Section 5949 semiconductor product and service restrictions, and limitations on sourcing a variety of products from China; and
Federal Acquisition Security Council (FASC) regulations and product exclusions.

 

Susan previously served as senior in-house counsel for two major defense contractors (Northrop Grumman Corporation and Motorola Incorporated) and is Chambers rated in both Government Contracts and Government Contracts Cybersecurity. Chambers USA has quoted sources stating that “Susan’s in-house experience coupled with her deep understanding of the regulatory requirements is the perfect balance to navigate legal and commercial matters.”

Susan is a former Public Contract Law Procurement Division Co-Chair, former Co-Chair and current Vice-Chair of the ABA PCL Cybersecurity, Privacy and Emerging Technology Committee.

Susan’s pro-bono work extends to assisting veterans in a variety of matters, as well as providing advice to elderly clients on their wills and other end-of-life planning documents.

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Photo of Jennifer Plitsch Jennifer Plitsch

Jennifer Plitsch is a member of the Government Contracts Practice Group, where she works with clients on a broad range of issues arising from both defense and civilian contracts including contract proposal, performance, and compliance questions as well as litigation, transactional, and legislative…

Jennifer Plitsch is a member of the Government Contracts Practice Group, where she works with clients on a broad range of issues arising from both defense and civilian contracts including contract proposal, performance, and compliance questions as well as litigation, transactional, and legislative issues.

She has particular expertise in advising clients on intellectual property and data rights issues under the Federal Acquisition Regulations (FAR) and obligations imposed by the Bayh-Dole Act, including march-in and substantial domestic manufacturing. Jen also has significant experience in negotiation and compliance under non-traditional government agreements including Other Transaction Authority agreements (OTAs), Cooperative Research and Development Agreements (CRADAs), Cooperative Agreements, Grants, and Small Business Innovation Research agreements.

For over 20 years, Jen’s practice has focused on advising clients in the pharmaceutical, biologics and medical device industry on all aspects of both commercial and non-commercial agreements with various government agencies including:

the Department of Veterans Affairs (VA);
the Department of Health and Human Services (HHS), including the Biomedical Advanced Research and Development Authority (BARDA), the National Institutes of Health (NIH), and the Centers for Disease Control (CDC);
the Department of Defense (DoD), including the Defense Threat Reduction Agency (DTRA), the Defense Advanced Research Projects Agency (DARPA), and the Joint Program Executive Office for Chemical Biological Defense (JPEO-CBRN); and
the U.S. Agency for International Development (USAID).

She regularly advises on the development, production, and supply to the government of vaccines and other medical countermeasures addressing threats such as COVID-19, Ebola, Zika, MERS-CoV, Smallpox, seasonal and pandemic influenza, tropical diseases, botulinum toxin, nerve agents, and radiation events. In addition, for commercial drugs, biologics, and medical devices, Jen advises on Federal Supply Schedule contracts, including the complex pricing requirements imposed on products under the Veterans Health Care Act, as well as on the obligations imposed by participation in the 340B Drug Pricing program.

Jen also has significant experience in domestic sourcing compliance under the Buy American Act (BAA) and the Trade Agreements Act (TAA), including regulatory analysis and comments, certifications, investigations, and disclosures (including under the Acetris decision and Biden Administration Executive Orders). She also advises on prevailing wage requirements, including those imposed through the Davis-Bacon Act and the Service Contract Labor Standards.

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Photo of Michael Wagner Michael Wagner

Mike Wagner represents companies and individuals in complex compliance and enforcement matters arising in the public procurement context. Combining deep regulatory expertise and extensive investigations experience, Mike helps government contractors navigate detailed procurement rules and achieve the efficient resolution of government investigations and…

Mike Wagner represents companies and individuals in complex compliance and enforcement matters arising in the public procurement context. Combining deep regulatory expertise and extensive investigations experience, Mike helps government contractors navigate detailed procurement rules and achieve the efficient resolution of government investigations and enforcement actions.

Mike regularly represents contractors in federal and state compliance and enforcement matters relating to a range of procurement laws and regulations. He has particular experience handling investigations and litigation brought under the civil False Claims Act, and he routinely counsels government contractors on mandatory and voluntary disclosure considerations under the FAR, DFARS, and related regulatory regimes. He also represents contractors in high-stakes suspension and debarment matters at the federal and state levels, and he has served as Co-Chair of the ABA Suspension & Debarment Committee and is principal editor of the American Bar Association’s Practitioner’s Guide to Suspension & Debarment (4th ed.) (2018).

Mike also has extensive experience representing companies pursuing and negotiating grants, cooperative agreements, and Other Transaction Authority agreements (OTAs). In this regard, he has particular familiarity with the semiconductor and clean energy industries, and he has devoted substantial time in recent years to advising clients on strategic considerations for pursuing opportunities under the CHIPS Act, Inflation Reduction Act, and Bipartisan Infrastructure Law.

In his counseling practice, Mike regularly advises government contractors and suppliers on best practices for managing the rapidly-evolving array of cybersecurity and supply chain security rules and requirements. In particular, he helps companies assess and navigate domestic preference and country-of-origin requirements under the Buy American Act (BAA), Trade Agreements Act (TAA), Berry Amendment, and DOD Specialty Metals regulation. He also assists clients in managing product and information security considerations related to overseas manufacture and development of Information and Communication Technologies & Services (ICTS).

Mike serves on Covington’s Hiring Committee and is Co-Chair of the firm’s Summer Associate Program. He is a frequent writer and speaker on issues relating to procurement fraud and contractor responsibility, and he has served as an adjunct professor at the George Washington University Law School.

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