New GAO Report Finds Widespread US Federal Government Waste in Software Spending

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Lack of software license management policy from the Office of Management & Budget is resulting in $2 billion wasted annually on shelfware, underutilization, and non-optimized software use

A new US Government Accountability Office (GAO) report has found waste in software spending widespread across the federal government due to lack of coherent and proactive software license management policies.  Based on common inefficiencies we see in the private sector, we estimate that the US government wastes up to $2 billion per year, or 25 percent of its annual $8 billion software budget, on shelfware (unused software), under-utilized software, and non-optimized management of software licenses.

Unlike a typical government budget cut or savings initiative, the billions of dollars the federal government could save by implementing a coherent software license management policy would not cut people or programs.  The savings are immediately available and waiting to be realized. The GAO report’s recommendations to solve the problem and eliminate this waste are prudent, reasonable and would eliminate the unacceptable risk and cost that result when the federal government doesn’t know how much software it has and how it’s being used.  The Office of Management and Budget (OMB) should follow the GAO Report’s recommendations and create a government-wide software license management and license optimization policy.

The GAO report found that the vast majority of federal government agencies do not have adequate policies for managing software licenses, due in large part to lack of leadership and direction from OMB – whose core mission is to serve the President of the United States in implementing his vision across the Executive branch.

The current Administration has prioritized eliminating wasteful use of IT resources in its November 9, 2011, Executive Order 13589 promoting efficient agency spending, which states in part that, “Agencies should assess current device inventories and usage, and establish controls, to ensure that they are not paying for unused or underutilized IT equipment, installed software, or services.”  Paradoxically, despite its mission to support the President’s vision, report commentary stated that the OMB disagreed with the GAOs findings and had “no plans to develop federal guidance on software license management.”

The GAO report outlines seven core software license management recommendations:

  • Identify clear roles, responsibilities, and central oversight authority within each department or agency  for managing software;
  • Establish a comprehensive inventory by […] using automated discovery and inventory tools;
  • Regularly track and maintain software licenses to assist the agency in implementing decisions throughout the software license management life cycle;
  • Analyze software usage and other data to make cost-effective decisions;
  • Provide training relevant to software license management;
  • Establish goals and objectives of the software license management program; and
  • Consider the software license management life-cycle phases to implement effective decision making and incorporate existing standards, processes, and metrics.

The GAO report recommendations mirror the increasing awareness in Congress that unacceptable risk and waste is hidden within the Federal government’s software budget.  Section 935 of the 2014 National Defense Authorization Act (NDAA), includes language outlining Software License Optimization requirements for our nation’s defense agencies.  And the US House of Representatives passed, HR 1232 – the Federal Information Technology Acquisition Reform Act (FITARA), a bipartisan bill to reform how the US acquires and manages its IT assets.  FITARA includes a Software License Optimization provision calling for the government to implement best practices to eliminate wasted spend on software.  That bill is now waiting for consideration by the Senate Homeland Security and Governmental Affairs Committee.

Software is unlike any other IT asset because of the difficulty involved in tracking application installation and usage, the complexity of software license agreements, and the complexity of modern IT environments. All of these issues have a direct impact on cost and efficiency.  The GAO report correctly outlines these challenges, and recommends reasonable best practices that would alleviate them.  The OMB should take the lead in establishing the necessary government policies for software license management that will enable federal agencies to realize huge potential savings on software.


To learn more, read our white paper: What Does it Take to Achieve Software License Optimization?