Agencies are losing out on software savings, GAO finds

Federal agencies need to improve how they track software licensing specifics to be able to save money on duplicative or unneeded purchases, the Government Accountability Office says in a new report. 

In fiscal 2022 alone, the government spent $72 billion on IT, with over half going to software, according to the White House’s Better Contracting Initiative. For years, the government has attempted to cut down on the costs of software licenses — agreements with software developers that establish the terms and rights to use their product. 

But agencies don’t have good information on which software products under those licenses are most widely used and which ones they paid the most for, according to the Jan. 29 report.

The 24 agencies in the report — those under the Chief Financial Officers Act — were able to identify what vendors had the most licenses installed on agency systems and which ones were  paid the most. 

The report found that 10 vendors accounted for about 73% of the most used licenses, per July 2022 data, and nine vendors accounted for about 77% of the highest amount paid for licenses, according to fiscal 2021 data. Microsoft came in first for both. 

But specifics on the most widely used and highest paid software products in particular under those license agreements are harder to come by, according to the report, because of inconsistent and incomplete agency data.

Among the reasons: Software licenses from one vendor can include multiple products that might not be separately priced, making it hard to break down usage or price among products. 

GAO also found that, of nine agencies it looked into further, none of them were fully checking to ensure that they weren't purchasing too many or too few licenses, the former of which can result in unused products and wasted money and the latter in extra fees. 

Doing so requires agencies to track licenses being used and compare that inventory to purchase records, according to the report. Until this is done, “agencies are likely to miss opportunities to reduce costs on duplicative or unnecessary software licenses,” GAO says. 

A recent watchdog report at NASA, which found that the agency had spent about $15 million on unused software licenses over the last five years, serves as an example of what can happen if agencies continue with the status quo, according to GAO. 

GAO included 18 recommendations across those nine agencies.

The report comes as some officials are pushing the federal government to reap cost savings by better managing software licenses. 

Last fall, the White House announced a push to get lower prices on common goods and services it buys. That includes some action items for software licensing, namely that the General Services Administration work out a governmentwide licensing agreement with an unnamed vendor to capture efficiencies across agencies.

Rep. Gerry Connolly, D-Va. — ranking member of the House Oversight and Accountability Committee’s Subcommittee on Cybersecurity, IT and Government Innovation — told Nextgov/FCW via email that “this is an area of great concern, and one I expect to keep a close eye on going forward.”

“Agencies have begun to backslide” after progress made in implementing the MEGABYTE Act of 2016, he said. That law required agency chief information officers to set up software licensing policies and inventories. 

“Agencies must meet GAO’s recommendations by tracking widely used licenses and comparing software license inventories with purchasing records to reduce costs and better inform licensing investment decisions,” Connolly said.

Others on Capitol Hill continue to push for the passage of a follow-up to the MEGABYTE Act: the Strengthening Agency Management and Oversight of Software Assets Act — or SAMOSA, for short — sponsored by Sen. Gary Peters, D-Mich. 

That proposal would require agencies to perform more detailed reporting on software spending, assets, use rates and more. It would also require agencies to plan on how to consolidate licenses and use enterprise licensing.

SAMOSA passed out of the Senate Homeland Security and Governmental Affairs Committee and House Oversight and Accountability Committee last year. It was first introduced in 2022.

GAO notes in the report that, “if enacted and effectively implemented,” the bill includes actions “that could address the data challenges related to identifying specific software license products that are widely used and have the highest amounts paid across the government.”

Matthew Cornelius — a former senior staffer in the Homeland Security and Governmental Affairs Senate Committee, who now works at Workday — previously argued in a Nextgov/FCW op-ed that the bill “will increase competition by stopping harmful vendor lock-in and transform the way agencies buy and use the most cutting edge American technology capabilities.”