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Agency May Have Violated Law With Microsoft Contract, Judge Says

September 01, 2011

Sept. 1 (Bloomberg) -- A federal agency may have violated U.S. procurement laws when it selected Microsoft Corp.’s products over Google Inc.’s without full competition for a planned $59.3 million e-mail services contract, a judge said.

Google, vying with Microsoft to gain a foothold in the $20 billion government cloud-computing market, sued the U.S. Interior Department in October over the contract. In a complaint filed in the U.S. Court of Federal Claims in Washington, lawyers for Google said the agency didn’t fully consider the company’s “Google Apps for Government” product.

“There is a justifiable basis for me to find” violations of procurement laws, Judge Susan Braden said today at a hearing.

Braden said she had written a 41-page opinion and will issue it next week after deciding whether to require the agency to hire an independent expert. That expert would evaluate whether Google’s products meet the agency’s security needs, she said.

“The public interest would be well-served by doing that,” she said.

Braden ordered the Interior in January to hold off on making an award while she considered the case.

The federal government spends $80 billion a year on information technology and plans to move as much as one quarter of that to so-called cloud computing, which allows governments and businesses to have software and data delivered as a service over the Internet.

In July 2010, Interior officials signed a decision establishing the Microsoft product as the agency’s choice for cloud e-mail.

‘Private Cloud’

The agency issued a request on Aug. 30, 2010, for bids seeking a Microsoft product, Business Productivity Online Services-Federal, from resellers. Interior officials said the agency required a “private cloud” for security reasons, and noted Microsoft offered the only such product available.

Google filed a protest of the contract with the Government Accountability Office, which decides contract-award disputes. Google sued after the GAO rejected its protest.

Google said in court filings that the government’s request was overly restrictive because its products meet federal security standards. The Mountain View, California-based company said Interior Department officials refused to provide details of its requirements to shut it out of the market.

Microsoft, based in Redmond, Washington, isn’t a party in the case. Softchoice Corp. based in Toronto, a reseller of Microsoft products and other software, is involved in the litigation.

Andrew Kovacs, a Google spokesman, declined to comment after the hearing.

The case is Google Inc. v. U.S., 10-743, U.S. Court of Federal Claims (Washington).

--With assistance from Nishad Majmudar and Tom Schoenberg in Washington. Editors: Michael Hytha, Mary Romano

To contact the reporter on this story: Leah Nylen in Washington at

To contact the editor responsible for this story: Anne Laurent at

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