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 GAOs 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.

Photo of Susan B. Cassidy Susan B. Cassidy

Ms. Cassidy represents clients in the defense, intelligence, and information technologies sectors.  She works with clients to navigate the complex rules and regulations that govern federal procurement and her practice includes both counseling and litigation components.  Ms. Cassidy conducts internal investigations for government…

Ms. Cassidy represents clients in the defense, intelligence, and information technologies sectors.  She works with clients to navigate the complex rules and regulations that govern federal procurement and her practice includes both counseling and litigation components.  Ms. Cassidy conducts internal investigations for government contractors and represents her clients before the Defense Contract Audit Agency (DCAA), Inspectors General (IG), and the Department of Justice with regard to those investigations.  From 2008 to 2012, Ms. Cassidy served as in-house counsel at Northrop Grumman Corporation, one of the world’s largest defense contractors, supporting both defense and intelligence programs. Previously, Ms. Cassidy held an in-house position with Motorola Inc., leading a team of lawyers supporting sales of commercial communications products and services to US government defense and civilian agencies. Prior to going in-house, Ms. Cassidy was a litigation and government contracts partner in an international law firm headquartered in Washington, DC.

Photo of Jennifer Plitsch Jennifer Plitsch

Jennifer Plitsch leads the firm’s 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…

Jennifer Plitsch leads the firm’s 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.

Photo of Michael Wagner Michael Wagner

Mike Wagner helps government contractors navigate high-stakes enforcement matters and complex regulatory regimes.

Combining deep regulatory knowledge with extensive investigations experience, Mr. Wagner works closely with contractors across a range of industries to achieve the efficient resolution of regulatory enforcement actions and government…

Mike Wagner helps government contractors navigate high-stakes enforcement matters and complex regulatory regimes.

Combining deep regulatory knowledge with extensive investigations experience, Mr. Wagner works closely with contractors across a range of industries to achieve the efficient resolution of regulatory enforcement actions and government investigations, including False Claims Act cases. He has particular expertise representing individuals and companies in suspension and debarment proceedings, and he has successfully resolved numerous such matters at both the agency and district court level. He also routinely conducts internal investigations of potential compliance issues and advises clients on voluntary and mandatory disclosures to federal agencies.

In his contract disputes and advisory work, Mr. Wagner helps government contractors resolve complex issues arising at all stages of the public procurement process. As lead counsel, he has successfully litigated disputes at the Armed Services Board of Contract Appeals, and he regularly assists contractors in preparing and pursuing contract claims. In his counseling practice, Mr. Wagner advises clients on best practices for managing a host of compliance obligations, including domestic sourcing requirements under the Buy American Act and Trade Agreements Act, safeguarding and reporting requirements under cybersecurity regulations, and pricing obligations under the GSA Schedules program. And he routinely assists contractors in navigating issues and disputes that arise during negotiations over teaming agreements and subcontracts.

Photo of Evan R. Sherwood Evan R. Sherwood

Evan Sherwood helps government contractors to resolve disputes with the federal government, prime and subcontractors, and contractor employees. He has helped clients to successfully navigate large federal contract claims, cost/pricing audits, contract terminations, and related litigation and investigations. He looks for constructive solutions…

Evan Sherwood helps government contractors to resolve disputes with the federal government, prime and subcontractors, and contractor employees. He has helped clients to successfully navigate large federal contract claims, cost/pricing audits, contract terminations, and related litigation and investigations. He looks for constructive solutions to disputes between contractors and their customers/business partners, so that companies can achieve their strategic goals.