CICA stays revisited: keys to successful overrides.
I. INTRODUCTION
II. BACKGROUND
A. The Year the Courts Pushed Back: 2006
B. COFC Cases 2007 to Present
III. RECOMMENDATIONS REVISITED IN LIGHT OF MORE RECENT CASE LAW
A. Issues Involving National Security
B. Supplementing the Administrative Record
1. Contemporaneious Documentation
2. Supplementation by Plaintiffs or Intervenors
C. Likelihood, Risks, and Costs of GAO Sustaining Protest
D. Use of Reilly's Factors
E. Reasonable Alternatives
F. Cost-Benefit Analysis and Impact on Federal Procurement System
G. Declaratory v. Injunctive Relief
H. The Bridge Contract: The Non-Override
IV. CONCLUSION
I. INTRODUCTION
Three years ago, we published an article in the Air Force Law Review (1) to provide practical advice to Air Force contracting decision makers and reviewers regarding mandatory, automatic stays of award or performance pursuant to the Competition in Contracting Act (CICA) of 1984. (2) CICA 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. (3) Agencies must withhold contract award when they receive notice of a protest from GAO before contract award, and suspend performance of an awarded contract when GAO notifies them within ten calendar days of the contract award date or within five days of a required debriefing. (4)
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." (5) 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." (6)
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 aimed 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, we have received numerous requests from fellow military and civilian practitioners of government contract law to provide updates, if any, to CICA stay jurisprudence. 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. (7)
In Section II, we will set the context for this article, addressing the cases that, beginning in 2006, further defined CICA stay requirements. As we noted in our original article, our practical tips were not stand-alone factors; rather they overlapped and were intertwined. Therefore, we will not distinguish between whether these "new" factors are additional factors or subfactors to our previously articulated factors for consideration or simply amorphous concepts that span multiple factors or inherent assumptions. In Section III, we set forth observations and recommendations based on the 2007 to 2009 (8) case law. Finally, in Section IV we conclude that the current state of unsettled law and court analyses surrounding CICA stay overrides requires extremely comprehensive analysis and thorough documentation. We further conclude that properly tailored bridge contracts (9) may therefore provide a stronger and better alternative for maintaining necessary services, thereby preserving the spirit and intent of CICA while ensuring needed services continue while the stay is pending.
II. BACKGROUND
A. The Year the Courts Pushed Back: 2006
2006 was a watershed year for CICA stay override cases. The U.S. Court of Federal Claims (COFC) overturned four CICA stay overrides. (10) 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." (11) 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. (12)
Most notable among the 2006 cases is Reilly's Wholesale Produce v. United States. In Reilly's, (13) 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 "off-limits"--i.e., "irrelevant." (14) The "must consider" factors include:
(i) whether significant adverse consequences will necessarily occur if the stay is not overridden; (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. (15)
Judge Allegra's two "irrelevant" factors are (i) that the new contract would be better than the old one, and (ii) that the agency would prefer override and continuation of the contract. (16) As 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." (17) 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." (18)
We took issue with the court's conclusion that prior cases established "irrelevant factors" that agencies could not consider. (19) We concluded that case law supported the finding that such factors alone did not justify an override, (20) and if these two factors were the only considerations in support of an override decision, they may not be sufficient. We recommended that agency override deliberations include careful, thorough, and objective consideration of all factors, including the so-called irrelevant factors.
B. COFC Cases 2007 to Present
Over the last three years seven published COFC opinions involved CICA stay overrides: Superior Helicopter v. United States (2007), (21) EOD Technology v. United States (2008), (22) e-Management Consultants v. United States (2008), (23) Nortel Government Solutions v. United States (2008), (24) Access Systems v. United States (2008), (25) PlanetSpace v. United States (2009), (26) and Analysis Group, LLC v. United States. (27) CICA stay override cases directly involving the Air Force are almost nonexistent, and we hope this is because past Air Force decisions were handled correctly--decisions to override stays were so strong legally that protesters did not challenge the overrides, or because the government left automatic stays in place because the legal basis to override was shaky. (28)
The seven cases mentioned above 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. (29) The court in the other cases, Superior Helicopter and Nortel Government Solutions, 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." (30)
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. (31) Contrary to EOD Technology, the PlanetSpace court specifically ignored the Reilly's factors, saying, "We did not consider the Reilly (32) 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." (33) 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." (34) 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." (35)
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. (36)
III. RECOMMENDATIONS REVISITED IN LIGHT OF MORE RECENT CASE LAW
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. For brevity's sake, this section only refers practitioners to the previous article for a complete recitation of our findings and recommendations ("keys"). This section supplements such advice and gives cites back to the relevant section of the previous article.
A. Issues Involving National Security (37)
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.
The courts give legitimate interests of national security and national defense significant weight. In EOD Technology, which involved vital contract working dog (CWD) services in Afghanistan, (38) the court noted up front that "the action was heavily infused with national-security concerns, of an immediate tactical nature." (39) Of course, Judge Hewitt also emphasized that "the all too evident national-security considerations here present no bar to the court's exercise of jurisdiction." (40) He noted, "When considering national security interests in procurement cases, the court has typically done so in determining whether to provide injunctive relief after exercising jurisdiction adjudicating the merits.... The court must balance national security concerns with the 'overriding public interest in preserving the integrity of the procurement process by requiring the government to follow its procurement regulations.'" (41)
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." (42) As it did with EOD Technology, the Nortel Government Solutions court balanced the impact of the override on competition and the integrity of the procurement system with the asserted national security concerns. This time, however, the court found that "the record fail[ed] to demonstrate that abiding by the CICA stay [would] compromise the safety and welfare of agency personnel." (43) 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." (44)
Even where a court rules in the agency's favor regarding issues of national security, it does not give the agency not carte blanche. Although the national security concerns in EOD Technology were of "an immediate tactical concern" and "all too evident," and the court declined to preliminarily enjoin the override of the automatic stay, the court nevertheless prohibited the Army from extending the six-month bridge contract with the awardee on a sole-source basis. "For additional CWD requirements, the Army must consider [the protester] and other potential suppliers of CWD services, absent exigent circumstances." (45)
In Analysis Group, the court did not expressly address "national security" nor does the decision make clear that the agency asserted such basis the "significant adverse consequences" criterion. The agency determined that
significant lapses in the continuous services provided would be comprised, such as its ongoing international treaties, health and welfare of military personnel, H1N1 virus planning, troop deployments, air flight planning for military operations in Afghanistan and similar locations, Air Force Counter-Radiological Warfare capabilities, and the implementation of toxins handling procedures and recommendations. (46)
The court found the agency's "decision--that significant adverse consequences would likely occur absent to override--was not an unreasonable conclusion." (47)
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.
B. Supplementing the Administrative Record (48)
1. Contemporaneous Documentation
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.'" (49) 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.'" (50) The court also found that "the Supplemental Declarations [were] written, intentionally or not, with the perspective obtained through the 'lens of litigation'" (51) and so should be treated with skepticism.
Similarly, in EOD Technology, the Government unsuccessfully tried to submit a post-hearing declaration after the court raised questions about the sole-source nature of a bridge contract. The court noted that the reasons had not appeared in the agency's prior memoranda. "Accordingly, the [contracting officer's] reasons ... must be examined with a critical eye." (52) The court also cited the Supreme Court, stating "a reviewing court must critically examine any post hoc rationalization." (53)
Finally, in Nortel Government Solutions, the Government tried to enter documents for the first time at oral argument. Over plaintiff's "strenuous objection," the court allowed the exhibits but warned that it would "value the weight of each exhibit only as the Court deems appropriate." (54) The court found "presentation of the exhibits problematic" and ultimately invalidated the override and reinstated the automatic stay. (55)
Finally, the record must substantiate the findings providing the basis for the override. In both Nortel Government Solutions and e-Management Consultants, the court noted that the agency-asserted significant impacts that would occur were "without support in the record." (56) Additionally, an agency must "render findings ... that do not 'run[] counter to the evidence before the agency.'" (57) In Superior Helicopter, the court deemed the agency's justifications as conclusory and ultimately rejected them because the administrative record did not support the rationale. The guarantee that the exclusive use contract would provide the required number of helicopters "might justify the override if the administrative record demonstrated that the [agency] would not be able to acquire sufficient helicopter services if remitted to reliance on CWN contracts, but ... the administrative record contains no such supporting data." (58) Thus, at all levels, reviewers must ensure the record contains accurate, supporting data.
2. Supplementation by Plaintiffs or Intervenors
The government cannot overlook the possibility that plaintiffs and intervenors may seek to supplement the administrative record. In Superior Helicopter, the court denied the plaintiff's request to supplement the record with transcripts and declarations because they were "not before the [agency] as it made its determination to override the automatic stay, and consequently, the administrative record may not be properly submitted with them." (59) In Nortel Government Solutions, however, the court allowed both plaintiff and intervenor supplement the administrative record with declarations. The court decided this supplementation "will assist the Court in conducting a 'thorough, probing, in-depth' review of the agency action." (60) The Government must be prepared to address such requests but should expect that the court may not welcome "help" from intervenors without plaintiffs' input as well.
C. Likelihood, Risks, and Costs of GAO Sustaining Protest (61)
All contracting officers would like to believe that GAO will deny any protest of their contract award decisions. However, if the contracting officers believed that in the four cases that went to GAO published decisions, two of them guessed wrong. (62) The agency must make an objective litigation assessment when deciding whether to override the CICA stay. Of course, if the decision to override is the first time in the acquisition process anyone has made such an assessment, it is probably too late. However, even an overdue litigation assessment can be useful where it leads to corrective action in the form of cancelling a solicitation or contract award. Another viable remedy may be a bridge contract, which is discussed in Section H below.
The agency must consider the costs associated with a sustained protest regardless of the "likelihood" of a sustained protest. As the court said in Advanced Systems Development, the agency cannot "ignore[] the possibility that the protest may have merit." (63) The Nortel Government Solutions court also addressed deficiencies in an agency's treatment of costs of a sustained protest, where it found that the agency had given "unacceptably brief treatment to the potential costs of a GAO recommendation sustaining the protest." (64) The Cigna Government Services court slapped the agency for "not evaluat[ing] the ramifications of [the protester] prevailing on its protest at all--even in the most cursory fashion." (65)
Agency consideration of the likelihood of prevailing on the merits may actually undercut the override itself. In e-Management Consultants, the agency's override memorandum stated the costs of an override were low because the agency "has a reasonable chance of prevailing on the merits." (66) The court found this "an impermissible consideration. This type of balancing would allow an agency to employ the very reasoning that CICA sought to prevent." (67) So, however strong the agency's case on the merits is or reasonably appears to be, agency officials must be careful to always consider the likelihood of losing at GAO and, even if the likelihood of a sustained protest is infinitesimally small, fully consider the costs associated with a sustained protest.
D. Use of Reilly's Factors
In 2007's Superior Helicopter and then in 2008's EOD Technology, Judge Lettow referenced Reilly's as the basis for considering the additional relevant factors under Administrative Procedures Act (APA) review. (68) In both cases, Judge Lettow advised, "The override determination may not be based simply on the agency's view that the new contract is better than the old one or that the agency simply prefers to override the stay rather than await GAO's decision." (69) In EOD Technology, Judge Lettow states: "When determining if an agency's override decision was 'arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law,' courts have looked to the agency's consideration of factors that include" the Reilly's factors. (70) The Nortel Government Solutions and e-Management Consultants courts also reference the Reilly's factors. In Nortel Government Solutions, Judge Futey stated, in no uncertain terms, "Failure of an agency to consider just one of these factors is fatal to an override decision based on urgent and compelling circumstances." (71) Regarding best interests of the United States determinations, Judge Futey declared that "there must be some rationale asserted by the agency that is above and beyond its original purpose when it solicited bidders for the procurement, and 'that absolves the agency of its obligation to await the GAO's recommendation.'" (72)
The three other post-2006 cases did not apply the Reilly's factors. In Access Systems, the court found that a bridge contract was not a de facto override. Because the court therefore did not have to reach the merits of an override," the court dismissed the complaint. (73) In the two published override cases of 2009, PlanetSpace and Analysis Group, the judges expressly rejected consideration of the "four additional 'Reilly factors.'" The PlanetSpace court stated,
Plaintiff offered arguments regarding four factors courts normally consider in deciding whether to grant an injunction. It contended that [the agency] did not consider four additional 'Reilly factors' in making its decision. We did not consider the Reilly [sic] factors at the hearing because Congress limited the court's review of an agency's decision in a CICA override action to the Administrative Procedures Act standards. (74)
PlanetSpace is clearly inconsistent with the other four cases that reached the merits of the override, whereas Analysis Group acknowledges Reilly's factors are "helpful" but states they are "not dispositive." The "Reilly's factors" moniker is arguably a misnomer. These factors were considerations of prior courts, and Judge Allegra merely consolidated and applied them. However, since Reilly's, the courts addressing the factors have required that agencies consider all four of the relevant factors to pass judicial scrutiny. The most recent COFC cases, however, suggest limits to the factors' usefulness. Despite the recent case law, agencies fail to consider these factors at their own risk.
E. Reasonable Alternatives (75)
The courts continue to reiterate that they will not substitute their judgment for the agency's. "In conducting a review under [the APA] standards, the court may not 'substitute its judgment for that of the agency,' and may overturn an agency's decision only if 'the procurement official's decision lacked a reasonable basis; or ... the procurement procedure involved a violation of regulation or procedure.'" (76) Additionally, "[t]he test for whether a decision was made on a rational basis is 'whether the contracting agency provided a coherent and reasonable explanation of its exercise of discretion.'" (77)
Thus, provided the agency offers a coherent and reasonable explanation, the courts appear to be more concerned that the agency considered and ruled out all other options rather than the agency's ultimate decision. In Superior Helicopter, the court stated that "the [agency's] failure to evaluate an alternative provided in the contracts substantially undercuts the agency's override decision." (78) In EOD Technology, the court found the agency's reasoning "at least partially deficient" because the agency failed to consider multiple contract awards. (79) The court thus prohibited the agency from continuing its sole source contract with the awardee and instead directed the agency to consider all potential suppliers "absent exigent circumstances." (80) In Nortel Government Solutions, the court found that current bridge contracts were a reasonable alternative and noted the agency "failed to even consider whether reasonable alternatives to the override exist." (81)
If one or more reasonable alternatives exist or appear to exist, the agency must show the significant adverse effects avoided by overriding the stay rather than choosing an apparently reasonable alternative. Recent cases maintained the "zone of acceptable results" language articulated in Reilly's. It is not necessarily a zone of "only one acceptable result" if the agency's decision is to override the stay, although it is a narrow zone. (82) According to Judge Hewitt in e-Management Consultants, "If the agency had reasonable alternatives to engaging the awardee, adverse consequences to the agency's mission would not necessarily result from the stay." That said, Judge Hewitt then noted that evidence in the administrative record "indicates that there may have been reasonable alternatives and NHTSA choose [sic] not to pursue them. This decision could be considered 'arbitrary and capricious.' Nevertheless, it is possible that the discussion about alternatives in the [override memorandum]fits into the 'zone of acceptable results.'" (83)
The court failed to dispose of the case at that point of its analysis (where other reasonable alternatives existed but were not chosen) and turned to the cost-benefit analysis. The court appears to allow for reasonable alternatives to exist if the agency performed a proper cost-benefit analysis: "If, after considering reasonable alternatives, an agency believes that significant adverse consequences will result if the stay is not overridden, then the 'benefit' variable to be used in the calculation is the benefit of avoiding the significant adverse consequences." (84)
Independent, objective review during the override decision making process is essential. For this reason, decision makers and reviewers/advisors must become intimately familiar with the current status of automatic stay override case law. This familiarity with the standards and with objective review must start at the "bottom" with the contracting officers and their documentation, because this serves as the basis for the "higher-ups" ultimate override decision.
F. Cost-Benefit Analysis and Impact on Federal Procurement System (85)
Recent cases point to particular costs and benefits that the agency must be considered as well as some costs and benefits that it should not considered as part of the cost-benefit analysis. The e-Management court addresses a variety of government-asserted costs and benefits. First, the benefits of override must be those that avoid the significant adverse consequences of the other reasonable alternatives. (86) Second, a decision that the cost of override was low because the agency had "a reasonable chance of prevailing on the merits" was impermissible and "would allow an agency to employ the very reasoning that CICA sought to prevent." (87) Third, "avoiding 'termination costs' and uninterrupted performance beyond the calendar year" (88) are not the sorts of benefits envisioned in the cost-benefit calculation. (89) Fourth, while not technically a "cost," the agency decision must show it considered the impact of the override on the procurement system--which the court viewed as "an important aspect of the problem." (90) Because the agency ignored this factor, the court ruled that the agency "therefore, failed to act rationally and in accordance with law." (91)
In Superior Helicopter, the agency's "override findings did not seek to place its override action respecting the ... contracts within the broad context of federal procurement law. The court must do so...." Based on this analysis that the agency's overarching justification was that service under the new contract was better than the old contract, "along with an assessment of how the override affects competition and the integrity of the procurement system, the court concludes that the override determination was arbitrary and not in accordance with law." (92) Again, an agency's failure to consider the integrity of the procurement system can prove fatal to the override determination.
The Superior Helicopter court also addressed the nature of the costs. Plaintiff objected that the agency "did not quantify the costs of the override versus the benefits of allowing the ... awardees to proceed with their performance." (93) The court noted the agency had "based its decision on the effectiveness ... not on the cost effectiveness of those contracts." (94) The court found "the fact that the [agency's] findings lacked quantitative calculations of costs ... not itself problematic." (95) Whereas costs and benefits must be balanced, this is not solely a dollars and cents analysis but also a qualitative judgment by the decision makers, within a maze of the permissible and impermissible.
G. Declaratory v. Injunctive Relief (96)
The debate within the case law of whether proof to justify an injunction is required or whether that for a declaratory judgment is sufficient continues. (97) The injunctive relief burden is on the plaintiff; however, the trend appears to be toward relieving the plaintiff of this additional burden. (98) The Nortel Government Solutions court said declaratory relief was sufficient, deciding that "Congress did not require any evaluation of injunctive relief factors as a prerequisite to a stay of contract performance.... Declaratory relief preserves the scheme that Congress enacted." (99) The court also found an "incongruity in forcing a plaintiff to meet the high burden necessary for obtaining extraordinary relief, when the statute gives presumptive weight to the otherwise required showings of irreparable harm and public interest." (100)
Notwithstanding this perceived trend, agencies should be mindful of, and continue to assess, the requirements for injunctive relief. (101) A plaintiff may prevail under the APA analysis and still fail to meet the requirements for injunctive relief, thus allowing the override to remain intact. Additionally, the trend toward shifting the injunctive relief burden off of the plaintiff is not universal. In Superior Helicopter, the court considered declaratory relief but still applied the injunctive relief standards. The court cited the Federal Circuit, stating "that if a declaratory judgment and an injunction would have the same practical effect in a case, consideration of declaratory relief under injunctive relief standards is appropriate." (102)
Unfortunately, as we mentioned in our first article, it may come down to the luck of the draw as to whether a plaintiff will be required to meet the injunctive relief burdens. Therefore, the agency must recognize that the U.S. Department of Justice will in all likelihood have to defend the agency's decision. Accordingly, the agency should continue to consider the four-factor test for injunctive relief as part of any litigation assessment associated with override decision making.
H. The Bridge Contract: The Non-Override
When faced with a protest, an agency will frequently turn to a bridge contract to meet the agency's acquisition needs while the protest is pending. Because of this heavy reliance, both the COFC and the GAO have intensified their scrutiny of these crucial stop-gap measures.
In Reilly's and EOD Technology, the courts treated the bridge contracts as de facto overrides and applied the same scrutiny and standards as they do to actual overrides. (103) The sole exception to this approach was the 2008 Access Systems case where the court found a bridge contract to be so separate and distinct from the original contract that it was not a de facto override. (104) The Access Systems court entered a judgment in favor of the United States and dismissed the complaint. (105) Although the plaintiff, Access Systems, did not find relief at COFC for the bridge contract, it ultimately prevailed in the underlying bid protest at the GAO. (106) The Access Systems court recognized that it was in new territory with this line of reasoning and addressed the dilemma this way:
This case is ... unlike traditional override cases in that we are asked to decide whether the bridge contract represents the functional equivalent of an override. We have not been presented with any decisions discussing this question, but in our view the relevant question is whether the bridge contract shares the same character or function as a formal override and, thus, whether the bridge contract could prejudice plaintiff in its protest before the GAO or in subsequently performing the work if it is successful in its protest. (107)
Judge Bruggink recognized that some bridge contracts are de facto overrides and should be reviewed as such. Here, however, he found, "The facts ... demonstrate that the character of the bridge contract is distinctly different from an override because the bridge contract does not disturb the status quo with respect to the original contract." (108) In deciding that the bridge contract to the original contract awardee was "distinct from the original contract," the judge looked to the following: (1) a stop-work order that had been issued to the awardee preventing further performance on the original contract; (2) the bridge contract was designed as a separate, self-contained contract; (3) services were only to be performed during the pendency of the protest; (4) the appropriation used to fund the bridge contract was separate from that used to fund the original contract and the appropriated funds for the original contract remained untouched; and, (5) the bridge contract's term of 120 days was independent of the term of the original contract and would not lessen the amount of work on the original contract. (109) Given all of these specific differences, the court decided to dismiss the plaintiff's complaint that the bridge contract was for the identical services involved in the original contract. "Contracts may share the same subject matter and yet remain separate and distinct from one another." (110) The court also concluded, "There is no reason to think that the award ... will prejudice plaintiff in the action before the GAO. Moreover, if the plaintiff is successful at the GAO, the original contract, in its entirety, will still be available to plaintiff." (111)
Thus, when fashioning a bridge contract to maintain necessary services in the face of protests and perhaps corrective actions (up to and including re-procurement), agencies would be wise to consider this analysis. Most bridge contracts will not be approved by the agency override authority (generally the head of contracting activity) unless the dollar amount independently triggers such approval under applicable procurement regulations. Agencies award non-competitive bridge contracts based on a justification and approval process apart from the override determination. Because the court may treat bridge contracts as de facto overrides, agency personnel at all levels should document their considerations carefully under the FAR and CICA stay override case law so as to withstand scrutiny under both GAO bid protest and COFC stay override review. (112)
IV. CONCLUSION
The Court of Federal Claims jurisprudence in CICA stay override cases remains unsettled. The prudent approach in deciding whether to override a stay would be to (1) start with the four APA factors, (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. Nothing short of such a comprehensive analysis will do.
In summary, we supplement our 2007 observations and recommendations with the following from 2007-2009 cases:
* Use national security as a basis when legitimate concerns, paramount to the procurement itself, are supported by contemporaneous documentation.
* Make sure the record contemporaneous with the decision is complete. After-the-fact supplementation will be difficult and given little weight. Be prepared to address supplementation requests from protesters and intervenors.
* Consider costs if GAO sustains the protest, even if the likelihood the protester will prevail is infinitesimally small. Considering the likelihood of success on the merits of the protest itself may actually undercut the override argument and .jeopardize the decision.
* Ignore the Reilly's factors at your own risk. Although courts may find them only helpful and not dispositive, they continue to be part of the courts' analysis.
* Consider all reasonable alternatives. Some courts drew back from "last resort" language, and allowed for a "zone of reasonableness." But, if the agency chooses override, it must justify why the awardee of the new contract must perform the services.
* Analyze each case in light of its own costs and benefits with an eye toward the general categories of permissible and relevant versus the impermissible and/or irrelevant considerations. Courts have specifically addressed numerous specific costs and benefits asserted by agencies.
* Be prepared to defend against the arguments for injunctive relief. The trend of the courts is toward declaratory relief, which carries with it a lesser standard than injunctive relief. An injunction would require the agency to petition the court to lift the injunction in order to continue performance rather than simply preparing another determination and finding and putting the burden on the protester to challenge the override. Agencies, therefore, need to be prepared to make the fight initially or concede that declaratory relief is proper if the agency may need another "bite at the (override) apple."
* Expressly consider a properly tailored bridge contract as a reasonable alternative to continue performance of necessary services.
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.
(1) Kevin J. Wilkinson & Dennis C. Ehlers, Ensuring CICA Stay Overrides are Reasonable, Supportable. and Less Vulnerable to Attack: Practical Recommendations in Light of Recent COFC Cases, 60 A.F.L. Rev. 91 (2007). Maj Dennis Ehlers retired from the U.S. Air Force Reserve in 2008. When discussing the previous article, "we" refers to Maj Wilkinson and Maj Ehlers; in the context of this article, it refers to the current authors. However, for ease of reading, we will not differentiate between the two in the body of the text.
(2) 31 U.S.C. §§ 3551-56 (2007).
(3) Id. at § 3553.
(4) See Wilkinson & Ehlers, supra note 1, at 92 (text and accompanying notes).
(5) 31 U.S.C. § 3553(c)(2)(A); see also FAR 33.104(b)(i). The finding must also include that "[a]ward is likely to occur within 30 days of the written finding." FAR 33.104(b)(ii).
(6) 31 U.S.C. § 3553(d)(3)(C); FAR 33.104(c)(2). The agency must first notify GAO before it can proceed with performance.
(7) For an excellent review of CICA stay case law and "lessons to be learned," see Kara M. Sacilotto, Is the Game Worth the Candle? The Fate of the CICA Override, 45 PROCUREMENT LAW. 3 (Fall 2009); see also Jason P. Matechak, Lawrence S. Sher, & Steven D. Tibbets, GAO Protestors: Stand Up for Your Right to a Stay of Performance, 22 . ANDREWS GOV'T CONT LITIG. REP. No. Issue 17 (Dec. 29, 2008).
(8) At the time of article submission, there were no published CICA stay cases in 2010.
(9) A bridge contract is generally a stop-gap measure to fill a temporary need for services and is a crucial part of government contracting. See RALPH C. NASH, JR. ET. AL., THE GOVERNMENT CONTRACTS REFERENCE BOOK: A COMPREHENSIVE GUIDE TO THE LANGUAGE OF PROCUREMENT 71 (2007).
(10) Reilly's Wholesale Produce v. United States, 73 Fed. Cl. 705 (Allegra, J., 2006); Automation Tech., Inc. v. United States, 72 Fed. Cl. 723 (Horn, J., 2006); Advanced Sys. Dev., Inc. v. United States, 72 Fed. Cl. 25 (Baskir, J., 2006); Cigna Gov't Servs., LLC v. United States, 70 Fed. Cl. 100 (Williams, J., 2006).
(11) Maden Tech Consulting, Inc. v. United States, 74 Fed. Cl. 786, 792 (Braden, J., 2006).
(12) See Wilkinson & Ehlers, supra note 1, at n. 13 and accompanying text.
(13) The Reilly's case was the impetus behind our initial 2007 article.
(14) Reilly's Wholesale Produce, 73 Fed. Cl. at 710-711.
(15) Id. at 711 (citations omitted).
(16) Id. (citations omitted).
(17) Id. (citations omitted).
(18) Id. at 711 n.10.
(19) Wilkinson & Ehlers, supra note 1 at 104-105. Other commentators also expressed concern for such a "broad" and "inflexible" interpretation. See Michael F. Mason & Christopher G. Dean, Living the Life of Reilly's: Recent U.S. Court of Federal Claims Decisions Highlight Need for Improved Regulatory Guidance in CICA Override Determinations, 87 FED. CONT. REP. (BNA) 90 (Jan. 23, 2007). But see Paul E. Pompeo, Feature Comment, Establishing Trends in Override Case Law, 49 No. 9 GOV'T CONT. ¶ 87, 4 (Mar. 8, 2007) (warning that "[i]n proving these factors, the Government must be wary to issue a complete D&F addressing the approved factors and avoiding the others" (emphasis added)). A "D&F" is a "Determination and Findings," which is "special form of written approval by an authorized official that is required by statute or regulation as a prerequisite to taking certain contract actions." GEN. SERVS. ADMIN. ET AL., FEDERAL ACQUISITION REG. pt. 1.701 (July 2010) [hereinafter FAR]. In this case, the "determination" that an override is justified must be supported by "findings" of fact or rational that cover each requirement. See id.
(20) Wilkinson & Ehlers, supra note 1, at 105. In note 75, we observed:
In Automation Technologies, Judge Horn found that a $103,000 per month savings on a five-year $46.6 million contract did not warrant overriding the stay. 72 Fed. Cl. 723, 730 (2006). However, she expressly stated that "cost savings may be sufficient to support an override in the proper case." Id. But the savings must be balanced against other factors, "including the ramifications of an agency loss in the GAO protest." Id. In Cigna, Judge Williams stated that "[t]he prospect of newer, better contracts is not itself a sufficient basis to override a stay." 70 Fed. Cl. 100, 113 (2006). In Advanced Sys. Dev., Judge Baskir found the fact that "the new contract is better than the old one in terms of cost or performance is not enough to justify a best interests determination." 72 Fed. Cl. 25, 31 (2006). Therefore, it appears unlikely that these factors will be treated as "broadly and inflexibly" as Judge Allegra's opinion may suggest. However, they are two of several factors to consider.
Id. at note 75.
(21) Superior Helicopter v. United States, 78 Fed. Cl. 181 (Lettow, J., 2007).
(22) EOD Tech. v. United States, 82 Fed. Cl. 12 (Lettow, J., 2008).
(23) e-Mgmt. Consultants v. United States, 84 Fed. Cl. 1 (Hewitt, J., 2008).
(24) Nortel Gov't Solutions v. United States, 84 Fed. Cl. 243 (Futey, J., 2008).
(25) Access Sys. v. United States, 84 Fed. Cl. 241 (Bruggink, J., 2008).
(26) PlanetSpace v. United States, 86 Fed. Cl. 566 (Hodges, J., 2009).
(27) Analysis Group, LLC, No. 09-542C, Nov. 5, 2009 (Smith, J., 2009).
(28) We also hope that our advice may have contributed to thorough analysis and correct decisions. Although the authors have learned anecdotally that the article has been a valuable reference tool to some Air Force practitioners, we imagine that the hoped-for impact of our practical advice is more wishful thinking than empirically confirmed.
(29) In response to one of the 2008 cases, e-Management Consultants, commentators heralded the plaintiff's victory and made a clarion call for GAO protestors to stand up for their rights to a stay of performance. See Matechak et al, supra note 7. Two of the authors, Mr. Matechak and Mr. Sher, were counsel and of counsel for plaintiff in the case.
(30) Nortel Gov't Solutions, 84 Fed. Cl. at 247 (2008).
(31) Note that Access Systems was not an override case but a challenge to a bridge contract as tantamount to an override. The court found that the bridge contract was not the functional equivalent of an override because it did not disturb the status quo with respect to the original contract. Access Systems, 84 Fed. Cl. at 243.
(32) The courts sometimes refer to the case as "Reilly" and to the factors as the "Reilly factors." We view "Reilly's" as the more correct shortened reference but leave direct quotes unchanged.
(33) PlanetSpace, Inc., 86 Fed.Cl. 566, 567 (2009). The Administrative Procedures Act (APA), 5 U.S.C. §§ 701-706, provides for judicial review of government agency action. In short, the courts may
"hold unlawful and set aside agency action, findings, and conclusions found to be (A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; (B) contrary to constitutional right, power, privilege, or immunity; (C) in excess of statutory jurisdiction, authority, or limitations, or short of statutory right; (D) without observance of procedure required by law; (E) unsupported by substantial evidence in a case subject to sections 556 and 557 of this title or otherwise reviewed on the record of an agency hearing provided by statute; or (F) unwarranted by the facts to the extent that the facts are subject to trial de novo by the reviewing court.
Id. at 706.
(34) Analysis Group, No. 09-542 at 4.
(35) Id. "This Court agrees. Even so, if the Court applied the Reilly factors in this case, it is clear that [the agency] justified its override of the stay." Id.
(36) See Wilkinson & Ehlers, supra note 1, at n. 32. We were specifically referring to whether a judge would apply the elements of injunctive relief. However, from CICA stay case law we can see that "luck of the draw" decisions may also extend to other such elements as review of national security cases on the merits, application of Reilly's factors, or application of CICA stay to bridge contracts.
(37) See Wilkinson & Ehlers, supra note 1, at nn. 60-64 and accompanying text.
(38) EOD Tech. v. United States, 82 Fed. Cl. 12, 12-13 (Lettow, J., 2008) ("Contract working dogs are used by Special Forces teams to detect improvised explosive devices ('IEDs') and narcotics and to deal with terrorists and other combatants forces.").
(39) Id. at 13.
(40) Id. at 18.
(41) Id. (emphasis added). "Although the government has cited [Kropp Holdings and Maden Tech Consulting] as decisions indicating that a case may involve such strong interests of national security that this court may decline to exercise jurisdiction, even assuming that they are correct, may be distinguished from this case."
(42) Nortel Gov't Solutions v. United States, 84 Fed. Cl. 243, 251 (Futey, J., 2008).
(43) Id.
(44) Id.
(45) EOD Tech. v. United States, 82 Fed. Cl. 12, 22 (Lettow, J., 2008).
(46) Analysis Group, No. 09-542 at 4.
(47) Id.
(48) See Wilkinson & Ehlers, supra note 1, at 111-12.
(49) e-Mgmt. Consultants v. United States, 84 Fed. Cl. 1, 11 (Hewitt, J., 2008). Interestingly, the court did not cite or refer to other CICA stay override cases that addressed and denied requests to supplement the administrative record. It did, however, turn to cases from the Court of Appeals for the District of Columbia Circuit and Court of Appeals for the Federal Circuit, and non-procurement related cases in the Court of Federal Claims.
(50) Id. at 12.
(51) Id.
(52) EOD Tech. v. United States, 82 Fed. Cl. 12, 21 (Lettow, J., 2008).
(53) Id.
(54) Nortel Gov't Solutions v. United States, 84 Fed. Cl. 243, 249 (Futey, J., 2008). Practitioners of government contract law, especially bid protests before the GAO, are familiar with this principle. "While we consider the entire record, including statements and arguments made in response to a protest in determining whether an agency's selection decision is supportable, we accord greater weight to contemporaneous source selection materials rather than judgments, such as the selection officials' reevaluation here, made in response to protest contentions." Boeing Sikorsky Aircraft, B-277263.2, B-277263.3, Sept. 29, 1997.
(55) Nortel Gov't Solutions, 84 Fed. Cl. at 249.
(56) Id. at 251.
(57) Id.
(58) Id. at 15 (emphasis added).
(59) Superior Helicopter v. United States, 78 Fed. Cl. 181, n. 14 (Lettow, J., 2007).
(60) Nortel Gov't Solutions, 84 Fed. Cl. at 247.
(61) See Wilkinson & Ehlers, supra note 1, at 107-08.
(62) GAO sustained the protests in Nortel Gov't Solutions, B-299522.5, B-299522.6, 2009 CPD ¶ 10 (Dec. 30, 2008), and Access Sys. , B-400623.3, 2009 CPD ¶ 56 (Mar. 4, 2009).
(63) Advanced Sys. Dev., Inc. v. United States, 72 Fed. Cl. 25, 32 (Baskir, J., 2006); see also Sacilotto, supra note 7, at 3 (observing that success on the merits is largely irrelevant).
(64) Nortel Gov't Solutions, 84 Fed. Ct. at 251. The GAO sustained the protest.
(65) Cigna Gov't Serv., 70 Fed. Cl. at 111.
(66) e-Mgmt. Consultants v. United States, 84 Fed. Cl. 1,9 (Hewitt, J., 2008).
(67) Id. (emphasis added). The GAO ultimately dismissed one of e-Management's complaints and denied the other on the merits. Id.
(68) See Superior Helicopter v. United States, 78 Fed. Cl. 181, 189 (Lettow, J., 2007); EOD Tech. v. United States, 82 Fed. Cl. 12, 20 (Lettow, J., 2008).
(69) See EOD Tech. 82 Fed. Cl. at 20 (citing Reilly's, 73 Fed Cl. at 711 (apparently agreeing with conclusion that the fact that the new contract is better than the old one is completely irrelevant)); Superior Helicopter, 78 Fed. Cl. at 11.
(70) EOD Tech., 82 Fed. Cl. at 19-20.
(71) Nortel Gov't Solutions v. United States, 84 Fed. Cl. 243, 247 (Futey, J., 2008). Although the court does not adopt an "irrelevant," must not consider approach, it does find that the agency's assertions with regard to the necessity of the override amount to nothing more than defendant's strong preference to begin performance of the protested contract" and similarly-asserted cost savings had been found insufficient to support a best interests override. Id. at 252.
(72) Id. at 247-248.
(73) Access Sys. v. United States, 84 Fed. Cl. 241, 243 (Bruggink, J., 2008).
(74) PlanetSpace v. United States, 86 Fed. Cl. 566, 567 (Hodges, J., 2009).
(75) See Wilkinson & Ehlers, supra note 1, at pp. 106-07.
(76) Superior Helicopter, 78 Fed. Cl. at 187 (quoting Keeton); see also e-Mgmt, 84 Fed. Cl. at 4 ("reviewing court may not substitute its judgment for that of the agency").
(77) e-Mgmt. Consultants v. United States, 84 Fed. Cl. I, 4 (Hewitt, J., 2008) (quoting Impreza Construzioni Geom. Domenico Garufi v. United States, 238 F.3d 1324, 1332-33 (Fed. Cir 2001)).
(78) Superior Helicopter, 78 Fed. Cl. at n.24.
(79) EOD Tech. v. United States, 82 Fed. Cl. 12, 22 (Lettow, J., 2008).
(80) Id. at 23.
(81) Nortel Gov't Solutions v. United States, 84 Fed. Cl. 243, 251 (Futey, J., 2008) (emphasis added).
(82) According to Reilly's, the bridge contract to the awardee should have been viewed as "a last resort, undertaken only after all reasonable alternatives were fully explored." Reilly's, 73 Fed. Cl. at 715.
(83) e-Mgmt., 84 Fed. Cl. at 8.
(84) Id. at 9. Emphasis added or in original
(85) See Wilkinson & Ehlers, supra note 1, at 108-09.
(86) e-Mgmt., 84 Fed. Cl. at 9.
(87) Id.
(88) Id.
(89) Id. at 9-10.
(90) Id. at 10-11.
(91) Id. at 10.
(92) Superior Helicopter v. United States, 78 Fed. Cl. 181, 194 (Lettow, J., 2007).
(93) Id. at 193.
(94) Id. emphasis added?
(95) Id. "[T]he [agency's] override decision did not rely oil the quantitative costs associated with [its] decision[; the] administrative record is silent on quantitative costs generally, and ... the termination and transition costs do not qualitatively appear to be significant."
(96) See Wilkinson & Ehlers, supra note 1, at nn. 31-32 & p. 108.
(97) See id. at n.32.
(98) See James Y. Boland, Feature Comment, CICA Override Practice--The Case Against Injunctive Relief, 50 GOV'T CONTRACTOR ¶ 1 (Jan. 9. 2008). "This is a welcome trend because injunctive relief imposes an unnecessary burden on plaintiffs and diverts attention from the paramount issue-whether an agency's decision to override the statutory suspension of contract performance is arbitrary, capricious or irrational." Id.
(99) Nortel Gov't Solutions v. United States, 84 Fed. Cl. 243, 252 (Futey, J., 2008) (citing Chapman Law Firm v. United States, 65 Fed. Cl. 422, 424 (2005), Automation Techs. v. United States, 72 Fed. Cl. 723, 730 n.5 (2006), and CIGNA Gov't Servs. LLC v. United States, 70 Fed. Cl. 100, 114 (2006)).
(100) Id. at 252 (quoting Advanced Sys. Dev. v. United States, 72 Fed. Cl. 25, 32 (2006)).
(101) Although injunctive relief carries with it additional burden to the plaintiff, once an injunction is granted, it may place a burden on the government. One commentator observes that CICA does not limit the government to "a one strike and you're out" rule. Boland, supra note 95, at 4. "CICA does not restrict an agency's ability to override a stay to a single D&F. If urgent and compelling circumstances exist, the government should not have its hands tied during the GAO protest period simply because the agency's documented rationale for the override was deficient the first time around." Id. The 2006 Maden Tech Consulting case is illustrative. Had an injunction been imposed, the government might have prevented the agency issuing a new override. Id. (citing Maden Tech Consulting, Inc., v. United States, 74 Fed. Cl. 786 (2006)).
(102) Id. (citing PGBA, 389 F.3d at 1228) ("by declaratory judgment, plaintiff is 'asking to have the award set aside, which is coercive and has the same practical effect as an injunction;' [sic] thus the trial court's analysis under injunctive relief standard was correct").
(103) In Reilly's, the court found the agency's "action actually taken was tantamount to overriding the automatic stay on the initial contract." Reilly's, 73 Fed. Cl. at 715.
(104) Access Sys. v. United States, 84 Fed. Cl. 241, 243 (Bruggink, J., 2008).
(105) Id.
(106) Access Systems, B-400623.3, 2009 CPD ¶ 56 (Mar. 4, 2009).
(107) Access Sys., 84 Fed. Cl. at 243.
(108) Id.
(109) Id.
(110) Id.
(111) Id.
(112) The GAO recognizes the role bridge contracts play as stop-gap measures. In Chapman Law Firm Co., B-296847, September 28, 2005, the GAO denied a protest of a bridge contract. The GAO found the sole source stop-gap measure was not due to the agency's lack of advance planning. Furthermore, the term of four months with two four month options was reasonable in that it "did not exceed the agency's minimum needs at the time of the award." Id.
LIEUTENANT COLONEL KEVIN J. WILKINSON *
CAPTAIN JOHN M. PAGE **
* Lieutenant Colonel Kevin J. Wilkinson (B.A. Brigham Young University (1994); J.D., cum laude, J. Reuben Clark Law School, Brigham Young University (1997); LL.M. in Government Procurement Law, with highest honors, The George Washington University Law School (2006)) is the Deputy Staff Judge Advocate at the 86th Airlift Wing Office of the Staff Judge Advocate, Ramstein Air Base, Germany.
** Captain John Page (B.A., magna cum laude, Shippensburg University (1996); J.D., Duquesne University School of Law (2000)) is a trial attorney with the Contract Law Field Support Center (KLFSC), part of the Air Force Commercial Law and Litigation Directorate (AFLOA/JAQ).
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| Author: | Wilkinson, Kevin J.; Page, John M. |
|---|---|
| Publication: | Air Force Law Review |
| Date: | Dec 22, 2010 |
| Words: | 9158 |
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