The government can choose to override the automatic stay when it is in the government's "best interest" or, alternatively but similarly, there are "urgent and compelling circumstances that significantly affect the [government's] interest".
A body of law is developing from cases reviewing the government's decisions to override the automatic stay. This serves a broader purpose as an analogous approach to analyze other cases in procurement law of actions that can only be taken in the "best interest" of the government. +
For instance, under Guam law, the government can only cancel a bid if there is a written determination, made by the highest procurement authority in the purchasing agency, that such cancellation is in the "best interest of the Territory". Also, comparable to the "significant interest" prong in federal law, Guam law allows, among other requirements, the automatic stay to be lifted upon a showing by the agency or Attorney General of substantial government interest. Though the standards of review may vary, the analysis may be similar in either case.
The following is excerpted from an outstanding review of the developing body of law regarding the override of agency override of the automatic stay in the Air Force Law Review, Vol 66, beginning at page 135, written by highly credentialed authors, Lieutenant Colonel Kevin J. Wilkinson and Captain John M. Page. It is a follow-up work done by them from a previous article in the Air Force Law Review in 2007.
You really need to read the whole article from the linked Volume 66 to fill in the many blanks created by this brief excerpting. The footnotes in the article are especially helpful.
CICA STAYS REVISITED: KEYS TO SUCCESSFUL OVERRIDES
The Competition in Contracting Act (CICA) of 1984 provides for the automatic stay of a contract award and suspension of performance of a newly awarded contract after the timely filing of a bid protest at the Government Accountability Office (GAO) and notice to the procuring agency. Agencies must withhold contract award when they receive notice of a protest from GAO.
Although the “CICA stay” is automatic, there are narrow ways around it. Under both CICA and the Federal Acquisition Regulation (FAR), agencies may override a CICA stay if they meet certain defined circumstances. If the protest is in the pre-award stage, an agency may only override the stay where “urgent and compelling circumstances that significantly affect interest of the United States will not permit waiting for the decision of the Comptroller General.” If the protest comes post-award, the urgent and compelling circumstances standard still applies, but CICA adds an alternative “best interests” standard as well. Under the “best interests” standard, an agency may override the stay “upon a written finding that performance of the contract is in the best interests of the United States.”
In the original article, we showed how, in the beginning, CICA stay overrides had become so common that it appeared that the exceptions were swallowing the rule.
Agencies commonly justified an override with procurement circumstances that did not present truly urgent, compelling, or sufficiently significant Government interests, as least not as the courts interpreted and applied those standards.
As a result, a protester (frequently the incumbent) often turned to the only avenue of relief available and filed suit in federal court alleging a CICA violation. Faced with obvious examples of Government overreaching in CICA stay overrides, the courts did not hesitate to prevent agencies from awarding or continuing the performance of an awarded contract where the court found the agency’s justification for an override decision to be weak or unsupported.
Since our article was published, seven published opinions addressing CICA stays provide exclamation marks to our existing recommendations and expressly address other areas of emphasis. These recent cases all highlight the need for thorough, objective decision making in the CICA stay override process.
2006 was a watershed year for CICA stay override cases. The U.S. Court of Federal Claims (COFC) overturned four CICA stay overrides. In a fifth override-related case, the court let the agency’s override stand, but only after the agency’s third attempt at demonstrating that the contract at issue involved “interests of national defense and national security.” Before 2006, the history of CICA stay jurisprudence in the federal courts was deferential to the agency, and sustaining agency overrides was the rule more than the exception.
Most notable among the 2006 cases is Reilly’s Wholesale Produce v. United States. In Reilly’s, Judge Allegra distilled from prior COFC cases the “relevant” factors—i.e., factors the agency “must consider” and address when considering an override decision—and those that are “offlimits” —i.e., “irrelevant.” The “must consider” factors include:
(i) whether significant adverse consequences will necessarily occur if the stay is not overridden;Judge Allegra’s two “irrelevant” factors are
(ii) conversely, whether reasonable alternatives to the override exist that would adequately address the circumstances presented;
(iii) how the potential cost of proceeding with the override, including the costs associated with the potential that the GAO might sustain the protest, compare to the benefits associated with the approach being considered for addressing the agency's needs; and
(iv) the impact of the override on competition and the integrity of the
procurement system, as reflected in the Competition in Contracting Act.
(i) that the new contract would be better than the old one, andAs noted, for its override decision to be upheld, the agency must not only sort through relevant and irrelevant factors, addressing the relevant ones; it must also base its decision and findings on the relevant factors that do not “run[] counter to the evidence before the agency.”
(ii) that the agency would prefer override and continuation of the contract.
The court did note that some of the cases it cited for the factors that are legally relevant and irrelevant were cases in which the agency override decision was based upon the “best interests” standard. However, “in the court’s view, the rationale employed in those cases has, where indicated, application to the review of an override decision based upon urgent and compelling circumstances.”
Over the last three years [2007 - 2010] seven published COFC opinions involved CICA stay overrides. The seven cases show mixed results when the Government attempts to override a CICA stay.
In e-Management Consultants, Superior Helicopter, and Nortel Government Solutions, the court found against the Government, holding in each case that the Government’s decision to override was arbitrary, capricious, and contrary to law. In e-Management, the National Highway Traffic Safety Administration (NHTSA) justified its override by claiming that continuing with the contract was within the Government’s best interests. The court methodically went through each of the Reilly’s factors and found that the Government had not passed the test.
The court in the other cases came to similar conclusions, again relying on a thorough analysis of the Reilly’s factors to determine whether the Government complied with the law. In each case, the court found that the Government had failed to meet all of the factors, noting in Nortel Government Solutions that “[f]ailure by an agency to consider just one of these factors is fatal to an override decision based on urgent and compelling circumstances.”
On the other hand, in three other cases, EOD Technology, PlanetSpace, and Analysis Group, the court sided with the Government and upheld the Government’s decision to override the CICA stay. Contrary to EOD Technology, the PlanetSpace court specifically ignored the Reilly’s factors, saying, “We did not consider the Reilly factors at the hearing because Congress limited the court’s review of an agency’s decision in a CICA override action to the Administrative Procedure Act standards.”
This was followed by the October 2009 Analysis Group case in which the court listed the “four Reilly factors” and stated “while these four additional factors may be helpful in analyzing the agency’s override decision, they are not dispositive.” The court cited PlanetSpace, following its holding that “when considering injunctive relief in override cases, the Court should only apply the APA four-factor test for injunctive relief and not the additional four Reilly factors.”
These cases make clear (whether the override is upheld or not) that the analytical approaches cross the spectrum. They range from the assertion of strict APA review and express rejection of any consideration of the Reilly’s factors, (PlanetSpace and Analysis Group) all the way to considerably heightened scrutiny and the full application of the Reilly’s factors (Superior Helicopter and Nortel Government Solutions).
As we acknowledged in the 2007 article, the outcome seems to rest largely on which judge has been assigned to the case. The lack of unified precedence among COFC cases seems to prompt “luck of the draw” decisions, although there have been no appeals of the COFC decisions and no demand in academic circles for the Court of Appeals for the Federal Circuit to lay the factors to rest.
In light of the 2006 cases, we labeled our advice as “keys to ensuring overrides are reasonable, supportable, and less vulnerable to attack” and heavily footnoted our observations and recommendations with case law. This [article] supplements such advice.
The agency should assert interests of national defense and national security when they are present; however, be sure not to overstate the interest, because the courts are clearly wary when this assertion is made and demand that the record back it up. Also remember that all other issues pertaining to overrides must be addressed as well.
In Nortel Government Solutions, the court recognized that the Drug Enforcement Agency was “essentially asserting a national security argument regarding the necessity of the override.” The court quoted Superior Helicopter, saying, “Ultimately, the public’s interest in a fair, competitive federal procurement system outweighs unsubstantiated claims, even those related to the public safety.”
Again, a word of caution: justifications cited as “interests of national defense and national security” must be legitimate, significant— paramount to the procurement itself—and above all supported by the record. Do not overstate or make bald assertions that the record cannot support.
Some of the recent cases addressed supplementing the administrative record, usually with discouraging results for the Government. The e-Management Consultants court decided that “in an override case ‘the focal point of judicial review should be the administrative record already in existence.’” The court denied the agency’s request to add to the record with Supplemental Declarations, finding that “the information contained in the [administrative record] and [override memorandum] is sufficient for this court to conduct ‘meaningful judicial review.’” The court also found that “the Supplemental Declarations [were] written, intentionally or not, with the perspective obtained through the ‘lens of litigation’” and so should be treated with skepticism.
Our observations and recommendations are to inform decision makers and reviewers that their decisions to override CICA stays must be made judiciously and are subject to intense scrutiny. Gone is the era of extreme deference to the agency.
Access Systems demonstrates a reasonable compromise between competing interests of necessary performance of a contracted service and complying with the letter and spirit of Congressionally mandated CICA stays. Agencies will have to consider the reasonableness of properly tailored bridge contracts as an alternative for each override. As Reilly’s showed, courts are willing to treat bridge contracts as overrides and overturn them. Therefore, just as with overrides themselves, agencies should not abuse the use of bridge contracts.
In terms of general fairness and integrity of the procurement system, bridge contracts are plausible alternatives to overrides provided they are tailored appropriately to bridge gaps in necessary services and not to circumvent federal procurement law.
The Court of Federal Claims jurisprudence in CICA stay override cases remains unsettled. The prudent approach [for an agency] in deciding whether to override a stay would be to:
(1) start with the four APA factors,Nothing short of such a comprehensive analysis will do.
(2) because the “Reilly's factors” still linger, agencies must consider them, and,
(3) because the courts are mixed on whether injunctive relief or declaratory relief is necessary, agencies have to consider that the court will apply the four factors for injunctive relief.
POST UPDATE October 2014 (posted 9 September 2015):
Court Upholds Bid Protest Stay Override
The U.S. Court of Federal Claims ruled against a bid protester seeking to stop performance on NASA's $6.8 billion commercial space program. The court's ruling upheld NASA's unusual decision to override the automatic stay of contract performance during a GAO bid protest. In addition to highlighting an unusual wrinkle in the normal bid protest process, this case also underscores the importance of venue selection in bid protests. Protests generally may be filed with the GAO, the Court of Federal Claims or the agency itself. Filing at the court usually is slower, more expensive and does not trigger the automatic CICA stay. On the other hand, as part of its bid protest procedure, the court can grant an injunction prohibiting the agency from moving forward. An agency might well face a tougher fight arguing against an injunction than it would in overturning the CICA stay.
While a GAO protest triggers the CICA stay, only a federal court maintains the authority to direct a federal agency to enforce the stay. So, if an agency like NASA decides to override the stay, then the protester's only recourse is to request an injunction from the U.S. Court of Federal Claims. The court could have enjoined NASA from continuing in performance of its contract. Instead, the court sided with NASA and allowed NASA to continue working with Boeing and SpaceX pending the protest decision.
POST UPDATE 16 JUNE 2012:
See, also the ARMY CONTRACTING AGENCY CICA Automatic Stay Override Guide April 2004.
POST UPDATE 6 April 2012:
WIFCON.com has a page devoted to "4 CFR 21.6: Withholding Award, Suspending Contract Performance, Override of Stay, Injunction", which keeps an ongoing review of cases related to the topic in this post above.
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