CBCA 5866

GRANTED IN PART: December 18, 2020 CBCA 5866 IMMIXTECHNOLOGY, INC. ON BEHALF OF SOFTWARE AG GOVERNMENT SOLUTIONS, INC., Appellant, v. DEPARTMENT OF THE INTERIOR, Respondent. Tenley A. Carp and Sara M. Lord of Arnall Golden Gregory, LLP, Washington, DC, counsel for Appellant. Murphy H. Peterson, Jr., Office of the Solicitor, Department of the Interior, Herndon, VA; and Sam Q. Le, Office of General Counsel, Small Business Administration, Washington, DC, counsel for Respondent. Before Board Judges BEARDSLEY, HYATT, and ZISCHKAU. ZISCHKAU, Board Judge. immixTechnology, Inc. (Immix), appellant, alleges that the Small Business Administration (SBA) breached various software licensing terms in a contract modification issued by the Department of the Interior (DOI), respondent, under a General Services Administration (GSA) Federal Supply Schedule (FSS) contract, entitling appellant to a damages award of approximately $14 million. The DOI contracting officer issued a final decision denying the claim. Immix, on behalf of Software AG, the firm that developed the software at issue here, has appealed the claim to the Board. We conclude that Immix is entitled to $1,024,184 in compensation resulting from the overdeployment of Software AG’s webMethods software beyond the contract terms. CBCA 5866 2 Background This dispute concerns the terms of the January 28, 2014 contract modification GS- 35F-0265X (“Mod 1”) of a March 26, 2013 contract. Mod 1 was for the purchase of new licenses for webMethods software having virtualization capabilities to be used in accordance with the SBA’s infrastructure improvement plan, called the “hardware refresh.” The SBA has an extended history of using prior versions of the webMethods software under licenses purchased by SBA in 2003 and 2006. One of the key issues in the appeal is whether Mod 1 provided for licensing of the webMethods software according to the number of server central processing units (CPUs) or by the number of server processor cores. On April 1, 2003, Systems Research and Applications Corporation (“SRA”), a separate contractor for the SBA, purchased directly from webMethods, Inc., on behalf of the SBA, two perpetual licenses for “webMethods Integration Platform CPUs” for use in the SBA’s production environment, and one license for its use in the development environment. A CPU, also called processor, is the component of a computer system that performs the basic operations (such as processing data) of the system, that exchanges data with the system’s memory or peripherals, and that manages the system’s other components. The contract contained an additional line item for the purchase of software support. Later that year, on September 16, 2003, webMethods entered into a Government Reseller Agreement with Immix, making Immix a non-exclusive reseller of webMethods software to government entities. SRA assigned the 2003 webMethods software licenses to the SBA on August 31, 2004. In 2006, the SBA issued a purchase order amending the 2003 agreement that purchased an additional ten webMethods licenses for the production environment, bringing the total number of licensed production platforms to twelve. The SBA also purchased an equivalent amount of licenses for use in three other software environments: development, testing/staging, and backup/disaster recovery. The line item description for the ten licensed CPUs states: “SOFTWARE, WEBMETHODS, INTEGRATION PLATFORM (10 CPU).” The licenses were priced at $85,390.43 each, and the total contract price was $2,384,614. The 2006 purchases also included line items for software maintenance and support–not broken down by quantity–totaling $865,688. Software AG acquired webMethods in 2007. From 2008 through 2010, SBA continued to procure from Software AG annual maintenance and software support for the webMethods software. In March 2011, Immix and the General Services Administration (GSA) entered into a schedule contract, which included pricing for webMethods software licenses and software support services. The SBA ordered $452,696.80 in annual software support services for its webMethods software directly from Software AG on April 30, 2012, and CBCA 5866 3 did not use the FSS contract. The support services were procured for the period May 1, 2012 through April 30, 2013.