CAFC Releases Decision Addressing CBCA's Jurisdiction Over Software Developers Claiming To Be Parties To A Procurement Contract

• Published date: 15 March 2024
• Subject Matter: Government, Public Sector, Government Contracts, Procurement & PPP
• Law Firm: Wiley Rein
• Author: Scott A. Felder and Lisa Rechden

In Avue Technologies Corporation v. Secretary of Health and Human Services, Administrator of the General Services Administration (Case No. 22-1784), the United States Court of Appeals for the Federal Circuit vacated the Civilian Board of Contract Appeals' (CBCA) dismissal of a software developer's claim for lack of jurisdiction on the basis that the software license, standing alone, was not a procurement contract for purposes of the Contract Disputes Act (CDA). The Court found that Avue Technologies Corporation (Avue) non-frivolously pleaded the existence of a procurement contract, and that the question of whether such a contract actually existed was a merits issue not appropriately resolved on a motion to dismiss. The Court's decision establishes that companies that indirectly license their software to the Federal government through third-party authorized resellers will not be jurisdictionally barred from trying to enforce their license agreements against the Government under the CDA as long as they can plausibly allege the existence of a contract with the Government.

Avue is a software developer specializing in software that allows users to automate administrative tasks while complying with any relevant regulatory or policy requirements. Avue offers annual subscription licenses to its Avue Digital Services (ADS) software through a third-party reseller, Carahsoft Technology Corporation (Carahsoft), via Carahsoft's Federal Supply Schedule (FSS) contract. These licenses are subject to Avue's master subscription agreement (MSA), a software End User License Agreement (EULA).

In 2015, the FDA obtained a license to ADS through a task order under Carahsoft's FSS contract. Just before the end of the base year, Avue learned that that the FDA did not intend to renew its subscription. In response, Avue reviewed the FDA's account use and accused the FDA of violating "Avue's end user terms and conditions, intellectual property rights, and the Trade Secrets Act."

Avue sent a "Cease and Desist Letter" and a claim letter to the FDA's contracting officer, who responded that the FDA's contract was with Carahsoft, not Avue, so only Carahsoft could pursue a claim against the FDA under the contract. Avue disagreed and filed an appeal, which Carahsoft did not sponsor, at the CBCA.

The CBCA sua sponte ordered briefing on whether the Board had jurisdiction over the claims, and, more particularly, whether a software license, such as Avue's MSA could, by itself, be considered a...