Requested Stay Unreasonable and Prejudicial to Contractor

The government's motion to stay three appeals pending False Claims Act litigation was denied by the Armed Services Board of Contract Appeals, except for a discrete portion of one appeal, because the government failed to demonstrate its need for the suspension outweighed the harm the contractor would suffer by delaying the appeals. The dispute arose from a contract to provide bomb fuzes, which the government terminated for default after revoking its acceptance of a large number of defective fuzes. The contractor subsequently filed three appeals: the first involved a deemed denial of four contract interpretation questions, the second challenged the default termination, and the third contested the government's demand for payment. The government sought to stay the appeals pending proceedings in an FCA civil lawsuit against the contractor.

Negative Stigma

In ruling on a request for a stay, a board must weigh the competing interests of the parties and assess any relevant prejudice. To make this determination, the board looked to four factors: (1) whether the facts, issues, and witnesses in both proceedings were substantially similar; (2) whether the parallel proceeding would be compromised in going forward with the appeal; (3) whether the proposed stay could harm the non-moving party; and (4) whether the duration of the requested stay was reasonable. The FCA action involved issues with bellows motors that overlapped with only a portion of the payment demand appeal. The government failed to show how a part of one appeal warranted a stay in all three appeals. The government also argued continuing with discovery in the appeals would compromise the FCA litigation, but the board had already stayed discovery. Also, the board concluded the contractor would suffer great prejudice while the default termination, and its associated negative stigma, remained in place, and the Contract Disputes Act's policy of expeditious board action would be thwarted by granting a stay. In this context, the duration of the requested stay --eight months --was unreasonable. (Kaman Precision Products, Inc., ASBCA, 92,933)




(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. )