Google sues U.S. over government contract exclusion

The Google Inc logo is projected on a screen during the unveiling of ''Google Instant'' at a news conference in San Francisco, California in this September 8, 2010 file photo.

SAN FRANCISCO (Reuters) - Google is suing the U.S. government for excluding its products from being considered for a five-year contract worth about $59 million to upgrade the Department of the Interior's email system.

In a complaint filed on Friday, Google said the government abused its discretion and acted in a manner that was "arbitrary and capricious" by only considering sales proposals with email technology based on Microsoft Corp technology.

The suit comes as Google, the Internet search leader, steps up efforts to court federal, state and local government customers for its online email and productivity products.

Google said the Department of the Interior's move ran contrary to "assurances to Google representatives that DOI would conduct a full and open competition for its messaging requirements."

"The RFQ (request for proposal) specified that only the Microsoft Business productivity Online Suite-Federal ("BPOS-Federal") could be proposed," Google's complaint read.

The Department of the Interior declined comment.

In July, Google introduced a special version of its Web-based productivity software designed to meet stringent U.S. government security requirements. Google's Apps for Government is certified under the Federal Information Security Management Act, which the company said means it can handle government information deemed sensitive, but not classified.

Google generates 97 percent of its annual revenue of nearly $24 billion from advertising. The company has said in the past its Apps business generates "hundreds of millions" of dollars in annual revenue and is profitable.

(Reporting by Alexei Oreskovic; Editing by Gary Hill)