In Avue Technologies Corp. v. HHS & GSA, CBCA 6360, 6627 (January 14, 2022), the Civilian Board of Contract Appeals dismissed an appeal alleging breach of a license agreement based on a novel jurisdictional issue: Whether a software license agreement, in isolation, qualifies as a contract for the purpose of finding Contract Disputes Act (“CDA”) jurisdiction. The Food and Drug Administration (“FDA”) originally purchased a commercial subscription for Avue’s software off of a General Services Administration (“GSA”) Federal Supply Schedule contract held by another contractor, Carahsoft Technology Corp. The schedule contract incorporated Avue’s Master Subscription Agreement (“MSA”), in the form of an End-User License Agreement (“EULA”), which the Board found to be incorporated into the FDA’s order. Avue later submitted certified claims directly to the FDA and GSA contracting officers, accusing the FDA of misappropriating proprietary Avue Digital Services data in violation of the MSA.
At the Board, the Government challenged jurisdiction several times—the final time questioning whether the MSA license was a “procurement contract” within the meaning of the CDA. The Board found that the MSA license had the elements of a contract and was binding on the Government. However, the MSA did not constitute a “procurement contract” subject to the CDA because, by itself, it was not a contract for the acquisition of property or services. The Board reasoned that Avue was not obligated to furnish any services unless the MSA was incorporated in a separate federal contract. Here, the Government had purchased the subscription from Carahsoft, and Carahsoft did not sponsor Avue’s claims. See Avue Techs. Corp. v. HHS, CBCA 6360, 19-1 BCA ¶ 37,375 at 181,706. The Board also distinguished other cases which found jurisdiction over similar agreements “related to” a procurement contract by highlighting that in those cases the claimants were undisputedly the contractors under the procurement contracts with which the ancillary agreements were enmeshed. Although the Board did not discuss whether the MSA (EULA) established privity of contract between Avue and the FDA, the Board commented that the MSA appeared to contain “commercially significant promises that might be deemed contractual.”
This decision is a good reminder to contractors to first evaluate what type of claim(s) they may have against the Government in order to then determine the right path to seek relief. For example, aggrieved software licensors could consider a potential copyright infringement claim before the Court of Federal Claims pursuant to 28 USC §1498(b). Similarly, a subcontractor who does not hold a procurement contract directly with the Government may submit pass-through claims through the prime contractor under the CDA. This decision also reminds contractors that the Government may be bound by the terms of a commercial software license as long as, among other things, it is consistent with those terms customarily provided to the public and is not otherwise inconsistent with federal procurement law.