Logic Apps Standard designer does not auto-bind existing Office 365 API connection when using Managed Identity

[gunnala-sri]

Severity

P3 - Medium (Minor functionality affected)

Describe the Bug with repro steps

When using Azure Logic Apps Standard with an Office 365 Outlook (V2) API connection configured for Managed Identity authentication, the Logic Apps designer fails to automatically bind the existing API connection to triggers and actions.

Although the API connection is correctly deployed, authorized, and accessible at runtime, the workflow definition generated by the designer contains a null connection reference. This causes the designer to prompt for a new connection or appear misconfigured, even though the workflow runs successfully once corrected.

This behavior is consistently observed in both:
Azure Portal Logic Apps designer
VS Code Logic Apps Standard extension

Steps to Reproduce

1. Deploy an Office 365 Outlook (V2) API connection using ARM/Bicep.
2. Authorize the connection and add an access policy for the Logic App’s Managed Identity.
3. Configure connections.json in a Logic Apps Standard app with:
   -Logical connection name (e.g., office365)
   -authentication.type set to ManagedServiceIdentity
   4.Create a workflow in Logic Apps Standard.
   5.Add the trigger “When a new email arrives in a shared mailbox (V2)” using the designer.
   6.Inspect the generated workflow JSON..

Actual Behavior
The workflow is generated with a null connection reference:

"host": {
  "connection": {
    "referenceName": null
  }
}

As a result:

• The designer cannot recognize the existing connection
• The trigger appears broken or unconfigured
• The user is prompted to create or select a new connection

Expected Behavior
The designer should automatically bind the trigger to the existing Office 365 API connection defined in connections.json, generating:

"host": {
  "connection": {
    "referenceName": "office365"
  }
}

This would allow the designer to load correctly without requiring manual edits.

A detail write-up is here https://srigunnala.com/office365-connection-standard-logic-app/

What type of Logic App Is this happening in?

Standard (VSCode)

Are you experiencing a regression?

No response

Which operating system are you using?

Windows

Did you refer to the TSG before filing this issue? https://aka.ms/lauxtsg

Yes

Workflow JSON

Screenshots or Videos

No response

Environment

VS Code Version 1.106.2

Additional context

No response