IG Report: Energy overspending on software licenses

IG Report: Management of the Department's Desktop Computer Software Enterprise License Agreements

In the past five years, the Energy Department has needlessly spent $4.1 million by buying software packages at higher prices than necessary, not taking advantage of existing enterprise license agreements and paying for unused licenses, according to an inspector general’s report released this week.

Seven of 16 sites reviewed paid 325 percent more on software licenses through their own agreements than they would have by using the department’s enterprise contract, according to the Jan. 30 report. For example, Brookhaven National Laboratory paid $248 to $573 per license for two separate versions of the same product rather than $176 per license through the departmentwide contract, the report states.

Eight of the sites reviewed also established separate agreements for document imaging software even though an enterprise agreement existed. As an example, Sandia National Laboratories officials paid 300 percent more for a particular version of an imaging package than the price listed in the departmentwide agreement, the report states.

Sites did not effectively track the number and use of software licenses maintained, according to the report. Officials from Los Alamos National Laboratory said they could have saved at least $800,000 through more effective management of software purchases and better maintenance, the report states.

In another example, five department sites purchased 38,000 encryption software licenses but never used 14,000. Some of these sites, including the department’s headquarters, paid maintenance fees of more than $625,000 on the unused licenses over five years, the report states.

In other instances, sites negotiated license agreements for common software products for which the department had not established enterprise license agreements, according to the report. In one case, several sites negotiated 11 separate agreements for commonly used encryption software with prices ranging from $70 to $208 per license.

“As noted by the vendor for this encryption product, savings of about $630,000 per year in maintenance costs alone could be realized by negotiating a department-level enterprise agreement,” the report states. If the department had created such an agreement, it probably could have negotiated a price equal to or lower than the lowest cost among the individual agreements, the IG concluded.

The IG recommends that DOE develop a formal policy for coordinated usage of enterprise license agreements for its agencies and labs. It also recommends developing a central repository of information where sites can identify the best available contracts or agreements. Additionally, the department should develop desktop software standards and uniform processes for buying software and ensuring that sites are effectively tracking the use of software licenses.

DOE officials agreed with the report’s findings and recommendations and have taken several steps already, including launching an initiative to consolidate software license agreements for a common office automation suite.

“In light of current budget constraints and the department’s nearly $2.4 billion in annual expenditures on information technology, it is important that management focus on methods to increase the effectiveness of software acquisition and utilization,” wrote Gregory Friedman, DOE’s IG.