Stays of Contract Award and Performance (Pre-Award Protest Primer #6)

by Morrison & Foerster LLP - Government Contracts Insights
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Today we’ll discuss stays of award and performance during the pendency of a bid protest.  There are two kinds of protest stays:  pre-award stays and post-award stays.  Although the former are outside the scope of this primer, we’ll briefly address them first for the sake of completeness.

Stay of Contract Award

Pre-award protests, as a reminder, usually involve challenges to the terms of a solicitation or to exclusion of an offeror from the competitive range.  Generally, in GAO and agency-level protests, challenges to the solicitation must be filed before the date set for submission of proposals (or, for improprieties introduced by an amendment, by the date set for the next revisions to proposals), and all other grounds must be raised within ten days of when the protester knew or should have known of the basis of protest.

When a protest is filed with the GAO or directly with an agency before contract award, the contracting officer is generally prohibited from proceeding to award the contract until the protest is resolved.  FAR 33.103(f)(1); FAR 33.104(b)(1).  This is the pre-award stay of contract award.  It does not apply to protests filed at the Court of Federal Claims.

This stay prevents contract award, but it does not prevent the agency from proceeding with the other pre-award stages of the procurement, including receiving proposals, conducting discussions, and evaluating offers.  And, as we’ll see in a moment, agencies can override both the pre-award and post-award stays under certain circumstances.

Stay of Contract Performance

For protests filed with an agency or the GAO after contract award, there is a stay of contract performance, provided the protester meets special timeliness standards.  This is sometimes referred to as the “Competition in Contracting Act (CICA) stay.”  It does not apply to protests filed at the Court of Federal Claims.  Congress intended the CICA stay to preserve the status quo during the pendency of a GAO bid protest.  Without the stay (as was often the case before the stay was instituted), the challenged awardee might begin and perhaps complete a substantial portion of the work by the time the protest is adjudicated.  If the protest was meritorious, the absence of the performance stay often would result in the victorious protester being left with a less meaningful remedy, or no meaningful remedy at all.  That remains true today in protests where the stay is not triggered or is overridden.

When a protest is received by the agency within ten days after contract award or within five days after a required debriefing (when that exception applies), the contracting officer must direct the awardee to stop performance of the contract until the protest is resolved.  FAR 33.103(f)(3); FAR 33.104(c)(1).  Pursuing an agency-level protest first does not toll the clock for obtaining a stay of a later-filed GAO protest:  If your post-award agency-level protest is denied after the ten-day/five-day clock has run out (as it almost always will have done), you can still go to the GAO for a second try, but you will not get a stay of performance.

Note that, to trigger the stay in a GAO protest, the agency must receive notice of the protest from the GAO within ten days after award or within five days after a required debriefing.  If the agency receives notice directly from the protester on the last day, but does not hear from the GAO until the following day, the agency is not required to stay performance.  That means a protester cannot wait until the close of business on the last day to file its protest.  To be sure to obtain the stay, it is a good practice to aim for a filing no later than noon on the last day.  That gives the GAO ample time to notify the agency of the protest, and gives the protester the opportunity to contact the GAO after a few hours to be sure that the Agency has been notified.

It’s also worth repeating a point we made when discussing GAO timelines in general:  the deadline for triggering a stay of performance runs on different rules from the deadline for filing a timely GAO protest.  Usually (but not always), the deadline for the CICA stay is prior to the deadline for filing a timely GAO protest.

A practical effect of the performance stay is that an incumbent contractor often is given a contract extension (or a bridge contract) to continue the old contract while award of the new contract is sorted out.  Some critics of the current bid protest system have pointed out the moral hazard presented if an incumbent that has lost a recompetition can eke out 100 more days of performance simply by filing a protest.  Although that sort of litigation gamesmanship undoubtedly occurs, in our experience it is quite rare that an incumbent will protest a loss unless the incumbent believes in good faith that the procurement was flawed.

COFC Protests

Neither of the automatic stays applies to protests filed at the Court of Federal Claims.  To get a “stay” at the court, the protester must file for a preliminary injunction.  The court considers injunctions to be extraordinary equitable relief, to be granted only upon an initial showing that the usual injunction factors (likelihood of success on the merits, balance of hardships, irreparable harm, and the public interest) weigh in favor of the protester.  That is a very high bar to meet, especially before the administrative record has been produced.  Occasionally the Department of Justice, working with the procuring agency, will voluntarily agree to a stay, thus avoiding the need to file and argue a motion for a preliminary injunction.  The difficulty in obtaining a preliminary injunction at the court is one of the reasons that GAO is a far more popular forum for filing protests.

Stay Overrides

As with most things in this primer, the award and performance stays occur as a general rule, and there are exceptions.  The governing statute and regulations provide that an agency may override stays.  It is fairly rare for this to happen, and the statute foresees that only extraordinary circumstances will justify an override, but overrides do occur.

For pre-award protests, an agency may override a stay of award if the head of the contracting activity, on a nondelegable basis, makes a written finding that:  (i) urgent and compelling circumstances which significantly affect the interest of the United States will not permit awaiting the decision of the GAO; and (ii) award is likely to occur within 30 days of the written finding.  FAR 33.104(b)(1).  For post-award protests, an agency may override a stay of performance if the head of the contracting activity, on a nondelegable basis, authorizes performance upon a written finding that (i) performance will be in the best interests of the United States; or (ii) urgent and compelling circumstances that significantly affect the interests of the United States will not permit waiting for the GAO’s decision.  FAR 33.104(c)(2).

In the unlikely event of a stay override, a protester may bring a direct challenge against the override by filing a new suit in the Court of Federal Claims.  A significant body of case law has developed tracing the contours of what an agency may (and what it must) consider when determining that “the best interests of the United States” or “urgent and compelling circumstances” justify an override of the statutory stays.  That discussion is outside the scope of this GAO protest primer, but we will dedicate a future blog post to this topic.

*    *    *

Up until now, we’ve mainly been discussing procedural matters.  Our next post will begin to dive into the substantive grounds of protest.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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