Opinion ID: 209723
Heading Depth: 2
Heading Rank: 1

Heading: Omnicast Software, the Letter of Essential Need, and the Software Lease

Text: Starburst Software (Starburst) created Omnicast, a software program designed to minimize the bandwidth required to send data over a network to multiple recipients. In 1999, a Starburst salesman made a marketing call to Joseph Johnson, an employee in the Army's Communication-Electronics Command (CECOM), offering to license the Omnicast software to the Army. Johnson thought that Omnicast had the potential to increase efficiency in communications between different CECOM computer systems, and agreed to license the software. Johnson, however, was not a contracting officer authorized to bind the government, and no contract document was signed by him. Starburst, moreover, did not have an existing contract with the Army, so the parties planned to use a pre-existing contract between the Air Force and Logicon to effect the lease as follows: Starburst would sell the software to Logicon; Logicon would lease the software to the Air Force; CECOM would receive the software; and CECOM would transfer money to the Air Force to support Air Force lease payments to Logicon. Before consummating this transaction, and allegedly to satisfy Logicon that the transaction would be worthwhile, a Logicon representative drafted a Letter of Essential Need to be signed by CECOM. The letter read in relevant part (emphasis added): This letter is intended to clarify the essential need of the Program Executive Office, Command, Control and Communications (PEO C3S) for the Starburst Software License Lease Agreement currently being prepared for implementation.... PEO C3S has decided to enter into a lease agreement for the Starburst database products to support [Army Battle Command System] 6.0 and beyond. These products are essential to the operation of ABCS 6.0 as they are integral to the system. After considering the alternatives, it was determined that a lease was the most cost-effective means of providing long-term, Program-wide access to the Starburst products.... Johnson signed the Letter of Essential Need on behalf of CECOM on or about September 22, 1999. On October 20, 1999, the Air Force issued a delivery order to Logicon, under their pre-existing contract, for the Omnicast software. The delivery order provided for a base period of approximately one month for $100,000, two successive one-year renewal terms for $285,000 each, and a final purchase option for an additional $285,000. The delivery order also recited that [t]he `LEASING TERMS AND CONDITIONS' to Special Offer # 330 Revision 03 ... were incorporated... in order to facilitate this [Delivery Order]. Those LEASING TERMS AND CONDITIONS (Terms and Conditions), in turn, contained the following opening paragraph (emphasis added). These lease terms and conditions are hereby incorporated by reference in their entirety within the [Air Force-Logicon contract]. The [] applicable Delivery Order and these lease terms and conditions constitute the entire agreement between Logicon, Inc. (Contractor) and the U.S. Government (Government) relative to the CECOM Starburst lease transaction under the aforementioned contract. It is hereby mutually understood and agreed that as inducement for Contractor entering into this Agreement, the Government has provided required information relative to the essential use of the software Asset which includes, but is not limited to, a description of the currently identified applications to be supported and planned life-cycle operations for the leased software. The Terms and Conditions also contained the following clausein the words of the Court of Federal Claims, the Escape Clauseunder the heading Lease. [T]he government shall be relieved from all obligations under the lease, if the Bona Fide Needs of the Government for the Asset cease to exist and such need is not fulfilled within the succeeding twelve (12) months from the date of non-renewal/termination, with an asset performing similar functions which the leased Asset was intended to perform. CECOM accepted delivery of the Omnicast software in November of 1999, and the Army (through the Air Force) paid for the base period and the first one-year renewal term. Upon testing the software at Fort Hood in Texas, however, the Army discovered that Omnicast did not work effectively with CECOM's ABCS computer systems in a tactical environment. In March of 2000, Starburst announced that it was being acquired by another software company and that there would be no more updates to the Omnicast software. After discussions with Logicon, CECOM stopped using Omnicast and decided it would not renew the software lease after the first one-year renewal term. The Army uninstalled Omnicast, offered to return it to Logicon, and did not renew the software lease when the first one-year renewal term expired in November of 2001.