The software license alone does not provide ADC jurisdiction to the CBCA

In Avue Technologies Corp. against HHS and GSA, CBCA 6360, 6627 (January 14, 2022), the Civil Contracts Appeal Board dismissed an appeal alleging breach of a license agreement based on a new jurisdictional issue: a software license agreement, taken on its own, does it constitute a contract for the purposes of finding the jurisdiction of the Contract Disputes Act (“CDA”). The Food and Drug Administration (“FDA”) originally purchased a commercial subscription for Avue’s software under a Federal General Services Administration (“GSA”) supply contract held by another contractor, Carahsoft Technology Corp. (“MSA”), in the form of an End User License Agreement (“EULA”), which the Board determined to be incorporated into the FDA order. Avue then submitted certified claims directly to FDA and GSA contract officials, accusing the FDA of misappropriating Avue Digital Services’ proprietary data in violation of the MSA.

Before the Commission, the government challenged jurisdiction on several occasions, the last time questioning whether the MSA license was a “supply contract” within the meaning of the LOC. The Board concluded that the MSA license contained the elements of a contract and was binding on the government. However, the MSA did not constitute a “market contract” submitted to the CDC because, in itself, it was not a contract for the acquisition of goods or services. The Commission found that Avue was not obliged to provide services unless the MSA has been incorporated into a separate federal contract. Here, the government had purchased the subscription from Carahsoft, and Carahsoft did not sponsor Avue’s claims. View Avue Technicians. Corp. against HHS, CBCA 6360, 19-1 BCA ¶ 37,375 at 181,706. The Commission also singled out other cases in which jurisdiction over similar agreements “related to” a public procurement was highlighted by noting that in these cases, the plaintiffs were unquestionably the contractors under the public contracts to which the ancillary agreements were linked. Although the Board did not discuss whether the MSA (EULA) established the confidentiality of the contract between Avue and the FDA, the Board noted that the MSA appeared to contain “commercially significant promises that could be considered contractual”.

This ruling is a good reminder to contractors to first assess what type of claim(s) they may have against the government in order to then determine the proper avenue to seek redress. For example, aggrieved software licensors could consider a potential copyright infringement claim in the Federal Court of Claims pursuant to 28 USC §1498(b). Similarly, a subcontractor who does not hold a supply contract directly with the government may submit transfer requests through the prime contractor under the CDA. The ruling also reminds contractors that the government may be bound by the terms of a commercial software license so long as, among other things, it conforms to terms customarily provided to the public and is not otherwise inconsistent with federal public markets.