Under the federal Competition in Contracting Act, an automatic stay of a federal procurement goes into effect if an unsuccessful bidder files a bid protest with the GAO either within ten days after a contract award is made or within five days of an agency debriefing to the bidder, whichever is later.  During the stay, “the contracting officer may not authorize performance of the contract to begin while the protest is pending.”  Nonetheless, the agency may override the automatic stay under certain conditions:

The head of the procuring activity may authorize the performance of the contract (notwithstanding a protest of which the Federal agency has notice under this section) –

(i) upon a written finding that –

(I) performance of the contract is in the best interests of the United States; or

(II) urgent and compelling circumstancesthat significantly affect interests of the United States will not permit waiting for the decision of the Comptroller General concerning the protest; and (ii) after the Comptroller General is notified of that finding. 31 U.S.C. § 3553(d)(3)(C).

Proesters offen fear that an agency will seek to override the automatic stay because of national security or other exigent circumstances, but an override rarely occurs because of the need to obtain higher authority approval.  (The Army Acuisition Corps actually published a manual in 2004 entitled the "The Competition in Contracting Act Automatic Stay Override Guide.")  Recently, in a case decided by the United States Court of Federal Claims, Superior Helicopter LLC and Ranier Heli-Lift, Inc. v. United States, three unsuccessful bidders protested a solicitation issued by the Forest Service (the “Service”), a component of the United States Department of Agriculture, for exclusive-use contracts for helicopter services to support firefighting efforts.  The three unsuccessful bidders for awards – Superior Helicopter LLC (“Superior”), Ranier Heli-Lift, Inc. (“Ranier”), and Erickson Air-Crane, Inc. (“Erickson”) – filed bid protests with the Government Accountability Office (“GAO”), triggering an automatic stay under the Competition in Contracting Act, 31 U.S.C. §§ 3551-56, of the contracts awarded in the procurement.  After the Forest Service acted on July 9, 2007 under 31 U.S.C. § 3553(d)(3)(C) to override the stay based on findings of exigent circumstances and the best interests of the government, the three helicopter operators filed suit in the United States Court of Federal Claims on July 11, 2007, seeking a temporary restraining order, a declaratory judgment, and preliminary and permanent injunctive relief from the Forest Service’s decision to override the stay.

The Court found that the Forest Service’s assertion that exclusive-use contracts were needed to face the significant risks posed by the 2007 fire season was misleading. No one doubted that the risks of fire this season were significant, but exclusive-use contracts would not have added more resources to combat that risk. The Forest Service’s overarching justification as to why the override was in the “best interests” of the United States and based on “urgent and compelling circumstances” was that the exclusive-use contracts were better than the CWN contracts at guaranteeing helicopter availability.  But, the Service provided no data showing that more resources would be made available than were otherwise at the Federal Service’s disposal under the pre-existing exclusive-use contracts and the CWN contracts upon which the Forest Service had previously relied in the immediately prior firefighting seasons.

The Service’s consideration of continued use of CWN contracts as an alternative was arbitrary because the Service did not credit its ability under those contracts to order helicopters for pre-positioning in places where conditions were conducive to lightening-strike induced fires, just as it wanted to do with helicopters provided under exclusive-use contracts.  Finally, the Forest Service’s reliance on a desire to establish a “national” base of helicopters not subject to control by the Forest Service’s regional or local managers or incident commanders was not a sufficient basis for the override. Management of all helicopters, whether supplied by contractors under exclusive-use or CWN contracts, rested with the Service’s Contracting Officer.  Nothing in either of those contracts barred the Forest Service from managing helicopter and other resources effectively to carry out the Service’s mission and objectives.  Based on this analysis along with an assessment of how the override affected competition and the integrity of the procurement system, the court concluded that the Forest Service’s override determination was arbitrary and not in accordance with law.

The Court determined that judicial review in this override case was governed by a provision of the Administrative Procedure Act (“APA”), 5 U.S.C. § 706.  The pertinent standard requires a court to determine whether an agency’s decision is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A).  The court’s review under the APA is limited to an evaluation of whether the agency’s “decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment.”  In conducting a review under these 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 rational basis; or . . . the procurement procedure involved a violation of regulation or procedure.”

If a protestor succeeds in making these showings, the court “may award any relief that the court considers proper, including declaratory and injunctive relief except that any monetary relief shall be limited to bid preparation and proposal costs.” 28 U.S.C. § 1491(b)(2).  The decision of whether injunctive relief should issue is governed by traditional factors, viz., “(1) whether . . . the plaintiff [protestor] has succeeded on the merits of the case; (2) whether the plaintiff will suffer irreparable harm if the court withholds injunctive relief; (3) whether the balance of hardships to the respective parties favors the grant of injunctive relief; and (4) whether it is in the public interest to grant injunctive relief.”

In determining whether 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 various factors, including: (1) whether significant adverse consequences would occur if the agency did not override the stay, (2) whether reasonable alternatives to the override were available, (3) how the benefits of overriding the stay compared to the potential cost of the override, including the costs associated with the potential that the protestor might prevail before GAO, and (4) the impact of the override on the competition and integrity of the procurement system. Moreover, the government’s decision to override the stay may not be based simply on its view that the new contract is better than t
he old one or that the agency simply prefers to override the stay rather than await GAO’s decision.