Talk about a dream job—being paid to do nothing. Trouble is, if your company has hired someone to run a project who can’t start work because of a bid protest, you may be stuck paying for nothing and be left holding the bag. That’s pretty much the bottom-line outcome of a recent case at the Armed Services Board of Contract Appeals. See Appeal of Advanced Global Resources, LLC, 19-1 BCA ¶ 37433, ASBCA No. 62070, 2019 WL 4729433 (2019).

Without diving into tempting rabbit holes, the contractor in this case was awarded an IT support services contract at an army depot. The next day, the contractor hired an individual who was initially tasked with working on the transition from the predecessor contractor as well as pulling together management and security plans. A few days later, the army issued a task order, the first activity of which was to start phase in work and cross training with the outgoing contractor prior to the beginning of the first performance period. A few days after that, the army issued a stop work order on account of the fact that a protest had been filed and that performance was being stayed. The contractor stopped work but decided not to lay off its employee or assign him other work; it just kept him on the payroll with no specific assignments pending the resolution of the protest. Sweet—golf anyone?

Roughly three months later, the army notified the contractor that the protest had been denied and that the contractor could resume work. Essentially, the contractor could pick up where it left off—to pick up with transition prior to the commencement of the first performance period that presumably was pushed back on account of the protest. And, that’s what it did. Later, in hopes of recovering the cost of the delay, the contractor asked for a price adjustment—most notably for our purposes, the cost of keeping the manager on its payroll.

Let’s pause here. Generally, the FAR contract clause applicable to what happens when there’s been a protest after award provides that a contractor “shall” be granted an “equitable adjustment in the delivery schedule or contract prices, or both [if the] stop-work order results in an increase in the time required for, or in the Contractor’s costs properly allocable to, the performance of any part of this contract.” See FAR 52.233-3. Parenthetically, if you read the decision, you’ll note that I’m avoiding the issue of whether this clause was in the contract. It wasn’t, but the Board read it into the contract notwithstanding its omission under the Christian doctrine.

Thus, hope springs eternal? Nope. In the Board’s view, the contractor was not entitled to an adjustment under the clause. There was no compression of the schedule, no extension of the contract, and no need for the contractor to incur costs so as to remain poised to jump back into performance without warning. Among other reasons, the Board noted that the incumbent contractor had been performing the work while the protest was pending and continued performance while the incoming contractor completed the transition process. And, it didn’t help that the employee wasn’t doing anything.

To me, this case highlights a dilemma that regularly confronts service contractors. You go to all the trouble to identify a qualified management team that you propose to the Government. You’ve got their letters agreeing to work for you if the contract is awarded. You get the award and then, poof, a protest is filed and you have to keep this team on ice.  But how? Do you furlough them and keep your fingers crossed they don’t go away? Do you find other slots for them to fill in the interim? Or, do you bite the bullet and just keep them on the payroll much as the contractor did in this case?

I don’t think there’s a good answer to what essentially is a business judgment. However, it might be wise to keep this case in mind to better inform your judgment should you encounter this situation. The result might be the same and you might have to eat the costs of a protest-caused delay. But… things could play out differently.