Feds Turn a ‘Blind Eye’ as Millions Wasted on Software
Policy + Politics

Feds Turn a ‘Blind Eye’ as Millions Wasted on Software


Two dozen major government agencies have failed to put in place the kind of systems needed to manage the hundreds of millions of dollars in software that they purchase and license each year, according to the Government Accountability Office

The fact that federal agencies are bad at monitoring their software use isn’t just annoying, it’s expensive, the GAO found. One agency that managed to consolidate its licensing agreements in 2012 saved approximately $181 million, even though the GAO determined the process it used to do so was ad hoc. 

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On the whole, the GAO said in a letter to Sen. Tom Carper (D-DE), the head of the Senate Committee on Homeland Security & Governmental Affairs, “Federal agencies are not adequately managing their software licenses because they generally do not follow leading practices in this area.” 

The agency identified five best practices that major companies follow to monitor their software contracts: centralized management, established software license inventory, tracking and maintaining inventory, analyzing software license data, and providing sufficient training. 

GAO’s investigation found that none of the agencies had implemented all of the standards, and that few had fully implemented even one of them. Of the 24 agencies, not one had fully implemented the tracking, analysis, or management practices recommended by GAO. 

The report laid the blame for the problem on the Office of Management and Budget, the executive branch agency in charge of riding herd on the various agencies and departments that fall under the president’s authority. 

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GAO found that the budget office has failed to issue a policy directive to guide executive branch agencies on managing licenses. In an interview with GAO investigators, an official from OMB’s Office of E-Government and Information Technology said the agency has “no plans to develop such guidance at this time.” 

In the letter to Carper, the GAO concluded, “Until the agencies have sufficient direction from OMB, opportunities to systematically identify software license related cost savings across the federal government will likely continue to be missed.”

It’s an opportunity to reduce costs that most businesses would jump at, said Jim Ryan, chief operating officer of Flexera Software, which advises private-sector businesses on the issue of software licensing management. 

“It’s a little shocking to me that the OMB isn’t putting out the necessary guidance,” he said. “I would call software supply chain management the single most dysfunctional part of the supply chain today.” 

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OMB, he said, is “seemingly turning a blind eye” to the problem. 

Companies that take steps to comprehensively address their software purchase plans tend to see a savings of between 5 percent and 30 percent of the budget, he said. The savings comes from understanding what software is or is not actually being used, and making sure that the agency isn’t buying unnecessary licenses or software that won’t get used (known as “shelfware.”) 

OMB officials challenged the GAO’s finding, claiming that additional guidance is unnecessary. 

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