“Educating the Government Contracting Community”

Court Finds Agency Desire for Better Contractual Terms in New RFP Not Ground to Override Automatic Stay

The Court of Federal Claims issued a decision on the limits of an agency’s ability to override the automatic stay of contract award upon the receipt of a protest. In Supreme Foodservice GmbH v. U.S. and Anham FZCO the contracting agency, Defense Logistics Agency Troop Support (DLA) issued a written “Determination and Findings” (D&F)” concluding that an override of the automatic stay as required by statute upon the filing of a protest with the Government Accountability Office was “in the best interest of the United States” and given the “urgent and compelling circumstances” in the matter. As a result, the plaintiff-protester filed its protest in the Court of Federal Claims challenging DLA’s decision to override the automatic stay and seeking declaratory judgment and an injunction to enforce the automatic stay.

After a review of the administrative record and briefs by the parties, the Court found that DLA’s decision to override the automatic stay was “arbitrary and capricious” and therefore, ordered the re-imposition of the stay of contract performance as mandated by law. In reaching its conclusion, the Court found no “urgent or compelling circumstances” or situations that would “significantly affect” the government’s interest where: (a) the agency and its D&F did not demonstrate any “immediate harm to health, welfare, or safety,” even though the services were to be provided in support of military operations in Afghanistan; and (b) where “a stay of [awardee’s] performance would not interfere with the feeding of our troops in Afghanistan” because, as the Court noted, “the same services are currently being capably performed by the plaintiff under [a] bridge contract,” especially where the contracting officer had also acknowledged that performance by plaintiff-protester bridge contract was “reasonable alternative” to the override.

In reinstating the automatic stay, the Court noted that DLA’s other grounds for overriding the automatic stay--namely pricing and internal controls fraud-related issues with the agency’s prior contract with plaintiff-protester--were not sufficient grounds to override the legally mandated automatic stay. The Court reaffirmed its position that “a weakness address by the terms of a new contract” and “efficiencies with a new contract are not enough to justify overriding the CICA automatic stay.” Thus, as the Court concluded, “[a] bridge contract with a capable contractor, issued after the agency was well aware of the pricing issues and fraud vulnerabilities, which can cover any period of delay in implementing [awardee’s] contract (if implementation is even necessary) is certainly a ‘reasonable alternative’ to performance during the pendency of the protest.


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