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Agency Fails To Justify Override Of Automatic Stay

by | Mar 12, 2019 | Government Contracts

Because it usually makes sense to not start a new contract or task order until after any protests over that award have been resolved, protesters at the Government Accountability Office (GAO) have the right to an “automatic stay” of performance of the protested award if they file their protest within a specific timeframe. The term “automatic” is, however, a misnomer because an agency can override the automatic stay if it has “urgent and compelling reasons” to start contract performance immediately, regardless of the pending protest. A protestor can then challenge the agency’s override decision at the U.S. Court of Federal Claims (COFC), where they agency must justify the basis for its decision. Recently, the Transportation Security Administration (TSA) failed to justify why it tried to override the automatic stay.

First, TSA did not prove that “significant adverse consequences would necessarily occur” if the stay was not overridden. The agency claimed that it needed the superior performance of the awardee. However, because the incumbent’s employees were likely to remain on the new contract as employees, the agency could not prove that the awardee’s performance would be better.

Second, the agency had not taken into account “reasonable alternatives to the override.” Specifically, TSA did not consider the alternative that the incumbent contractor’s employees would continue to performance until the protest ended.

Third, TSA couldn’t prove that the benefits of the override out-weighed the cost of proceedings with the stay in place. Specifically, the agency didn’t consider the additional costs to the agency if GAO sustained the protest.

Finally, the court believed that overriding the stay would “adversely impact the integrity of the procurement system.” According to the court, the automatic stay “is intended to preserve the status quo during the pendency of the protest so that an agency would not cavalierly disregard GAO’s recommendations to cancel the challenged award. “Letting the override in this case stand would be harming the GAO process “rendering it a government body with a bark but no ability to bite.” The court declared the override to be invalid.

The case is a rare example of successful litigation overturning the override of the automatic stay. It shows how closely a court reviews the agency’s arguments. Courts demand that the government justify an override and will not hesitate to declare one invalid if the agency cannot justify it.

Technica LLC v. The United States, COFC No. 18-2003, February 4, 2019.

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Terry O’Connor is a Partner at Berenzweig Leonard. Terry and Stephanie Wilson  lead the firm’s Government Contracts practice. Terry can be reached at  [email protected].