DLT Solutions, LLC

CourtArmed Services Board of Contract Appeals
DecidedApril 29, 2024
Docket63069
StatusPublished

This text of DLT Solutions, LLC (DLT Solutions, LLC) is published on Counsel Stack Legal Research, covering Armed Services Board of Contract Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
DLT Solutions, LLC, (asbca 2024).

Opinion

ARMED SERVICES BOARD OF CONTRACT APPEALS Appeal of - ) ) DLT Solutions, LLC ) ASBCA No. 63069 ) Under Contract No. W52P1J-18-A-0001 )

APPEARANCES FOR THE APPELLANT: Francis E. Purcell, Jr., Esq. Joseph R. Berger, Esq. Mona Adabi, Esq. Thompson Hine LLP Washington, DC

Brian Lamb, Esq. Thompson Hine LLP Cleveland, OH

APPEARANCES FOR THE GOVERNMENT: Craig D. Jensen, Esq. Navy Chief Trial Attorney Antonio T. Robinson, Esq. Trial Attorney

OPINION BY ADMINISTRATIVE JUDGE SWEET ON THE PARTIES’ CROSS-MOTIONS FOR SUMMARY JUDGMENT

This appeal involves a purchase order between the United States Marine Corps (Marine Corps or government) and DLT Solutions, LLC (DLT) to provide perpetual software licenses and maintenance services for a base year, and four option years of software maintenance. The Marine Corps declined to exercise the options.

DLT filed a sponsored claim on behalf of its assignee—Key Government Finance, Inc. (Key)—alleging that the Marine Corps breached the contract, ratified the option year maintenance requirement, and breached the duty of good faith and fair dealing. After the contracting officer denied those claims, this appeal followed.

The complaint alleged five counts. First, the complaint alleges that the Ordering Activity breached the Bona Fide Needs Provision and the covenant of good faith and fair dealing by failing to exercise the options when there was a bona fide need for the software or a functionally similar product (Count I) (compl. ¶¶133- 36). Second, the complaint alleges that the Ordering Activity breached the Certification Provision of the Order and the covenant of good faith and fair dealing by failing to provide a certification that the software had been deleted or disabled if the option was not exercised (Count II) (id. at ¶¶ 137-41). Counts III, IV, and V were dismissed for lack of jurisdiction (see, DLT Solutions, LLC, ASBCA No. 63069, 22- 1 BCA ¶ 38,144, familiarity with the facts is presumed). The government filed its answer, alleging an affirmative defense of “release, accord and satisfaction, assumption of the risk, payment, and waiver” (answer at 9).

Both parties move for summary judgment. Because there are no genuine issues of material fact supporting the breach of contract, ratification, and part of breach of the duty of good faith and fair dealing allegations, we grant the government’s motion for summary judgment—and deny DLT’s motion for summary judgment—on those issues. However, because there is a genuine issue of material fact as to the remaining part of the breach of the duty of good faith and fair dealing allegation, we deny both parties’ cross-motions for summary judgment as it pertains to that separate issue. For the reasons stated below, the breach of the Bona Fide Needs Provision portion of the complaint is stricken from Count I; however, the breach of the covenant of good faith and fair dealing remains. Count II is stricken in its entirety.

STATEMENT OF FACTS (SOF) FOR PURPOSES OF THE MOTION

I. The Federal Supply Schedule Contract, the Blanket Purchase Agreement, and the Quest Agreement

1. From April 11, 2016 to April 10, 2021, DLT had a General Services Administration Federal Supply Schedule Contract for various software licenses and maintenance, including Quest software (R4, tab 115-9 at 1-2). The Quest software consisted of three components: (1) the Recovery Manager for Active Directory; (2) the Change Auditor for Windows Files Servers; and (3) GPO Admin (app. supp. R4, tab 102 at 1581, tab 199 at 911). Under the heading “Period of Term Licenses . . . and Maintenance,” the Federal Supply Schedule Contract stated that:

(b) Term licenses and/or maintenance may be discontinued by the ordering activity on thirty (30) calendar days written notice to the contractor.

....

(e) Ordering activities should notify the contractor in writing thirty (30) calendar days prior to the expiration of an order, if the term licenses and/or maintenance is to be terminated at that time.

(R4, tab 115-9 at 24)

2 2. On November 20, 2017, the Army Contracting Command, Rock Island, Illinois—on behalf of the United States Department of Defense Enterprise Software Initiative—awarded Blanket Purchase Agreement W52P1J-1B-A-001 (the Blanket Purchase Agreement) to DLT in order to reduce the administrative cost of acquiring commercial products and services from the Federal Supply Schedule Contract (R4, tab 1 at 1, 3). The Blanket Purchase Agreement allowed the government “to evaluate license usage at the end of option periods and terminate, without penalty, unused licenses upon mutual agreement that the identified licenses are unused” (R4, tab 1 at 9). The Blanket Purchase Agreement’s order of precedence clause stated that “[t]he provisions of [Federal Acquisition Regulation] 52.212-4 specified in [Federal Acquisition Regulation] 12.302, as required by Federal law, shall prevail over any terms of the commercial license or any additional negotiated terms at the order level” (R4, tab 1 at 4-5). Federal Acquisition Regulation (FAR) 52.212-4, in turn, stated that the schedule of supplies and services took precedent over attachments. FAR 52.212- 4(s), CONTRACT TERMS AND CONDITIONS – COMMERCIAL ITEMS (OCT 2017).

3. Included with the Blanket Purchase Agreement was the Quest software transaction agreement (Quest Agreement). The Quest Agreement defined the term “software” as “the object code version of the software that is provided or made available to Customer pursuant to an Order as well as any corrections, enhancements, and upgrades to such software that are made available to Customer pursuant to this Agreement, and all copies of the foregoing.” (R4, tab 115-8 at 16) Under the “Software License” section, the Quest Agreement stated that “[s]ubject to the terms of this Agreement, Quest grants to Customer, and Customer accepts from Quest, a non- exclusive, non-transferable . . . and non-sublicensable license to access and use the quantities of each item of Software identified in the applicable Order within the parameters of the Product Terms associated with the applicable Software and License Type” (id.).

4. The Quest Agreement separately defined “maintenance Services” as “Quest maintenance and support offering for the Products as identified in the Maintenance Services Section below” (id.). The Quest Maintenance Services Section stated that:

(a) Except as otherwise stated in an Order or an amendment to this Agreement, during any Maintenance Period and for the applicable fees, Quest shall:

(i) Make available to Customer new versions and releases of the Software, including Software corrections, enhancements and upgrades, if and when Quest makes them generally available without charge as part of Maintenance Services.

3 (ii) Respond to communications from Customer that report Software failures not previously reported to Quest by Customer. . . .

(iii) Respond to requests from Customer’s technical coordinators for assistance with the operational/technical aspects of the Software unrelated to a Software failure. . . .

(iv) Provide access to Quest software support web site . . . .

(Id. at 18) 1 The Quest Agreement did not impose the parameter on the Marine Corps’ access and use of the Quest software of requiring that the software license include maintenance. On the contrary, the Maintenance Services Section also stated that “[c]ancellation of Maintenance Services for perpetual Licenses for On-Premise Software will not terminate Customer’s rights to continue to use the On-Premise Software.” (Id. at 19)

II. Purchase Order

5. We take judicial notice of the fact that the Marine Corps Systems Command was the procuring agency, and the Marines Force Cyberspace Operations Group was the client agency.

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Bluebook (online)
DLT Solutions, LLC, Counsel Stack Legal Research, https://law.counselstack.com/opinion/dlt-solutions-llc-asbca-2024.