The Challenge has brought the legal action after its contract to deliver the government-backed programme for 16- and 17-year olds in London, the South East and the West Midlands was not renewed earlier this year.
The charity, which had been locked in a disagreement with the NCS Trust over a shared IT system, said it had witnessed the programme being "profoundly mismanaged" by the trust.
It said it wrote to the Department for Digital Culture, Media and Sport (DCMS) in July outlining its concerns.
In a statement, the charity's chief executive Oliver Lee said: "On 31 July, our awards for future contracts were withdrawn.
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