Claim for Costs Incurred During Stop-Work Order Denied by the ASBCA

In December 2017, the Army awarded a contract for information technology support services to Advanced Global Resources (AGR). A few days later, the award was protested to the GAO (Government Accountability Office) so the Army issued a stop-work order (SWO) pending the outcome of the protest. After GAO denied the protest, the Army lifted the stop-work oder. AGR then filed a claim for direct costs it expended during the stop-work order period plus extended home office overhead costs.

The day after contract award, AGR entered into an employment contract with Mr. McKissick. A week later, the Army issued its stop-work order which stated, in part, that AGR was not authorized to purchase materials or services until further notified and to stake all reasonable steps to minimize incurring costs associated with the stop-work order.

Eventually the protest was denied and on March 26, 2018 the Army lifted the stop-work order and advised that AGR was free to start the process of obtaining a clearance to manage cleared personnel. It took an additional two months for AGR to receive its clearance.

During the stop-work order period, AGR continued to pay Mr. McKissick's salary even though the employment agreement allowed the company to release him, furlough him, or put him on unpaid leave. Additionally, during the stop-work order, AGR continued to pursue other opportunities, bidding on at least six requests for proposals, winning one of them.

AGR filed a claim for the direct wages paid to Mr. McKissick during the stop-work period as well as unabsorbed overhead. AGR appealed to the ASBCA. The Army asserted that AGR was not entitled to the direct costs because it failed to minimize costs during the stop work period and was not entitled to unabsorbed overhead because the performance period was not extended as a result of the order. Additionally, AGR was not on standby, not subject to a delay of indefinite duration, was not required to be able to resume work immediately at full speed and did not demonstrate that it was impractical for it to obtain replacement work.

The ASBCA sided with the Government and denied AGR's claim. You can read the full decision here.