Microsoft Power Platform Build Tools for Azure DevOps throwing error overriding the agent proxy settings in pipeline

Description:
We are experiencing consistent failures with Microsoft Power Platform Build Tools when executed on a self-hosted Windows Azure DevOps agent behind an authenticated enterprise proxy.

Despite:

• Proxy tests (curl) succeeding
• HTTP_PROXY / HTTPS_PROXY variables set at task level
• Correct proxy credentials and allowlists
• Identical pipelines working on Microsoft-hosted agents
• Tried configuring pac.exe.config through power-shell code through pipeline in agent machine

PAC CLI commands invoked via Power Platform Build Tools (e.g. WhoAmI, SetSolutionVersion, ImportSolution) fail with identity / endpoint resolution errors when executed on the self-hosted agent.

Observed behaviour:

• PAC CLI does not consistently respect proxy configuration supplied via environment variables
• Proxy override at pipeline/task level appears ineffective
• Authentication/token acquisition against Entra ID fails

Expected behaviour:
PAC CLI should respect standard proxy configuration mechanisms when executed as part of Power Platform Build Tools on self-hosted agents.

Environment:

• Azure DevOps: Self-hosted Windows agent
• Extension: Power Platform Build Tools v2
• Authentication: Service Principal
• Network: Authenticated outbound proxy
• Microsoft-hosted agent: Works
• Self-hosted agent: Fails

Impact:
This blocks CI/CD pipelines in enterprise environments where outbound internet access requires proxy authentication.

Request:

• Please confirm whether this is a known limitation
• Provide supported guidance or workaround
• Clarify proxy support expectations for PAC CLI in enterprise DevOps environments

Error:

2026-04-24T17:10:01.3325525Z ##[section]Starting: DIAG - Power Platform WhoAmI (service connection test)
2026-04-24T17:10:01.3349504Z ==============================================================================
2026-04-24T17:10:01.3349887Z Task : Power Platform Who Am I
2026-04-24T17:10:01.3350073Z Description : Who Am I for quick connection testing to Power Platform org/environment instance.
2026-04-24T17:10:01.3350401Z Version : 2.0.132
2026-04-24T17:10:01.3350586Z Author : Microsoft
2026-04-24T17:10:01.3350771Z Help : https://aka.ms/buildtoolsdoc Ideas, feedback: https://github.com/microsoft/powerplatform-build-tools/discussions
2026-04-24T17:10:01.3351144Z ==============================================================================
2026-04-24T17:10:01.6758290Z Discovered environment url from explicit input parameter 'Environment': $(BuildTools.EnvironmentUrl)
2026-04-24T17:10:01.6797293Z Discovered Azure DevOps variable expression that needs resolving: $(BuildTools.EnvironmentUrl) -> BuildTools.EnvironmentUrl
2026-04-24T17:10:01.6798220Z Falling back to url from service connection, using: https://org405a9c51.crm11.dynamics.com/
2026-04-24T17:10:01.6835832Z [
2026-04-24T17:10:01.6837657Z 'authN to env. authType:SPN authScheme:None; cloudInstance: Public; envUrl: https://org405a9c51.crm11.dynamics.com/'
2026-04-24T17:10:01.6838284Z ]
2026-04-24T17:10:28.2365105Z [ 'Microsoft PowerPlatform CLI' ]
2026-04-24T17:10:28.2366302Z [ 'Version: 1.52.1+gcca51f4 (.NET Framework 4.8.4795.0)' ]
2026-04-24T17:10:28.2367296Z [ 'Online documentation: https://aka.ms/PowerPlatformCLI' ]
2026-04-24T17:10:28.2368032Z [
2026-04-24T17:10:28.2368761Z 'Feedback, Suggestions, Issues: https://github.com/microsoft/powerplatform-build-tools/discussions'
2026-04-24T17:10:28.2382666Z ]
2026-04-24T17:10:28.2391603Z [ '' ]
2026-04-24T17:10:28.2392328Z [
2026-04-24T17:10:28.2393441Z "Error: Can't resolve Entra ID/OAuth authority for https://org405a9c51.crm11.dynamics.com/api/data/v9.0. Failed to get response from: https://org405a9c51.crm11.dynamics.com/api/data/v9.0; error: An error occurred while sending the request.; details: Unable to connect to the remote server (ConnectFailure)"
2026-04-24T17:10:28.2396125Z ]
2026-04-24T17:10:28.2396669Z [ '' ]
2026-04-24T17:10:28.6071961Z ##[error]error: 1
2026-04-24T17:10:28.6090389Z ##[error]failed: Microsoft PowerPlatform CLI
Version: 1.52.1+gcca51f4 (.NET Framework 4.8.4795.0)
Online documentation: https://aka.ms/PowerPlatformCLI
Feedback, Suggestions, Issues: https://github.com/microsoft/powerplatform-build-tools/discussions

Error: Can't resolve Entra ID/OAuth authority for https://org405a9c51.crm11.dynamics.com/api/data/v9.0. Failed to get response from: https://org405a9c51.crm11.dynamics.com/api/data/v9.0; error: An error occurred while sending the request.; details: Unable to connect to the remote server (ConnectFailure)

Start by reproducing the failure with Power Platform Build Tools v2 and PAC CLI 1.52.1 on a self-hosted Windows Azure DevOps agent behind an authenticated proxy. Compare the proxy behavior with the working Microsoft-hosted agent and review the provided Entra ID authority-resolution error. Done means confirming the limitation or documenting supported proxy guidance or a workaround.