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Appeal alleging the government violated a software license is dismissed. The appellant developed software but didn’t sell the software directly to the government. Instead, a third party sold the software under an FSS contract. The FSS contract incorporated the appellant’s software license. The appellant alleged the government had violated the license. But the board found that it lacked jurisdiction over the claim. While the software license may have been a binding contract, it was not a procurement contract under the CDA because it was not a contract for the purchase of goods or services. The actual purchase occurred under the FSS contract. The appellant’s software license merely defined the scope of what the government purchased under the FSS contract. The board can’t hear a claim brought by a software licensor who is not the prime contractor.

Background

Avue Technologies Corporation developed software that allows government agencies to automate federal job classifications. Avue sells the software for a fixed annual subscription. But Avue does not sell subscriptions to the government directly. Instead, another company, Carahsoft Technology Corp. sells the software under its FSS contract with GSA. Carahsoft’s FSS contract incorporates Avue’s master subscription agreement.

In 2015, the FDA placed an order under Carahsoft’s FSS contract for Avue’s software. A few years later, Avue submitted a $41 million claim to the FDA, alleging the agency had violated the master subscription agreement incorporated into Carahfost’s FSS contract. The FDA denied the claim. Avue appealed to the CBCA.

Legal Analysis

The board determined that it lacked jurisdiction over the appeal. The board’s subject matter jurisdiction under the Contract Disputes Act is limited to disputes arising under procurement contracts. In this case, there was a contract—namely, Avue’s master subscription agreement. Moreover, the board assumed that this contract, which was incorporated into an FSS contract, was binding on the government as the end user of the software.

But the board reasoned that while the subscription agreement was a contract, it did not fall within the ambit of the Contract Disputes Act. To be a “procurement contract” under the CDA, the contract must be for the acquisition, by purchase, lease, or barter, of property or services for the benefit of the government. Moreover, under the FAR, a contract must create a binding legal relationship that obligates the seller to furnish supplies and services, and the government to pay for them.

Here, Avue subscription agreement lacked core aspects of a procurement contract. Most importantly, the contract was not for the purchase of property or services. Indeed, the government was not buying the software directly from Avue under the subscription agreement. The subscription agreement merely defined what the government could procure from Carahsoft. The actual purchase of the software occurred when an agency orders a subscription from Carahsoft. Because Avue was not directly selling the software to the government, it could not maintain a claim, in its own capacity, against the government.

Avue argued the board had jurisdiction because the subscription agreement was related to procurement contract. The board, however, reasoned that even if the agreement was related to a procurement contract, a claim arising out of a related contract can only be brought by a contractor holding a CDA contract. It cannot be brought by someone who is not a party to an underlying procurement contract.

Avue is represented by Andy Liu and Andrew Victor of Nichols Liu LLP. The government is represented by Lucy G. MacGabhann and Douglas W. Kornreich of the Department of Health and Human Services as well as by Fallyme E. Guerrero and James T. Van Biber of the General Services Administration.