The lawsuit was filed by Google and Onix Networking Corp, a reseller of Google products, in the US Court of Federal Claims.
Google argues that the terms of the bid for an email, calendar and document collaboration system for some 88,000 Interior Department employees implicitly rule out a Google product and favor one from software giant Microsoft.
The company is promoting its Internet-based suite of office tools, Google Apps, for the contract over Microsoft's solution.
It said it was told there would be a "full and open competition" for the contract but the bid request "specified that only the Microsoft Business Productivity Online Suite-Federal could be proposed."
Google said it was bringing suit on the grounds "that such specification is unduly restrictive of competition" and in violation of US law.
The Internet giant said it was told its product was "not compliant with (Interior Department) security requirements," but that is not the case.
Google announced in September that three million businesses and more than 30 million people are using Google Apps, which are hosted on the Internet "cloud" as services on demand.
Google Apps include products or services such as Gmail, Google Calendar and Google Docs and are seen as the Mountain View, California company's challenge to Microsoft's popular Office software.
The Wall Street Journal said the Department of the Interior contract is estimated to be worth $58 million over five years.
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