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CFC Still Split on Override Review Standard

Reconsideration of an order setting aside the government's override of an automatic stay of contract performance was denied by the Court of Federal Claims because the court was not required to apply the four-factor test for injunctions. The government moved for reconsideration of the court's ruling that the override of the automatic stay that became effective upon the filing of a General Accounting Office bid protest was arbitrary, capricious, and an abuse of discretion ( 56 CCF 79,718). According to the government, a declaration that an override is unlawful has the same effect as an injunction, so the court should have applied the traditional four-factor analysis for injunctions.

Different from Injunction

The court noted the CFC's decision in Superior Helicopter LLC v. U.S. ( 51 CCF 78,811) required applying the four-factor injunction test before issuing a declaratory judgment. However, other CFC decisions have declined to apply this standard, and the Court of Appeals for the Federal Circuit authority cited in Superior Helicopter ( 49 CCF 78,305) was distinguishable. Superior Helicopter also recognized an injunction requires the government to seek the court's permission before issuing any subsequent override, but declaratory relief does not. Thus, there is a critical difference between the two remedies. Since Congress did not require evaluation of the injunctive relief factors as a prerequisite to a stay of performance, it would be contrary to the legislative scheme to impose this type of requirement in reviewing a government override.

Factors Still Met

Moreover, even if use of the four-factor test was required, the protester would still be entitled to injunctive relief. Under the test restated by the Supreme Court (547 US 388), the irreparable competitive injury suffered by the protester was not appropriate for monetary damages, due to the difficulty of quantifying the appropriate amount, so an automatic stay was an appropriate remedy. Balancing the hardships, the government may be required to pay more for the services, but the public benefit from a competitive procurement system is more important. The government's contention it would suffer a harmful interruption of services was unsupported. ( URS Federal Services, Inc. v. U.S., et al., FedCl, 56 CCF 79,729)




(The news featured above is a selection from the news covered in the Government Contracts Report Letter, which is published weekly and distributed to subscribers of the Government Contracts Reporter. )


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