Each year, the federal government invests more than $100 billion in information technology — with a growing emphasis on cloud computing to drive efficiency, agility, and modernization. But a new report from the U.S. Government Accountability Office (GAO) reveals a major roadblock: restrictive software licensing practices are undermining agencies’ ability to fully leverage the benefits of cloud solutions.
GAO’s 15th Annual Duplication Report: Billions in Savings on the Table
In its 15th annual report to Congress, GAO spotlights 43 key areas where federal agencies can reduce duplication, cut costs, and improve performance. If fully implemented, these recommendations could save over $100 billion in taxpayer dollars.
A notable focus in this year’s report is on how restrictive software licensing practices are draining agency budgets and slowing cloud adoption. GAO found multiple cases where licensing terms led to significant, and often avoidable, expenses.
Real-World Impacts of Restrictive Licensing
GAO’s findings underscore just how costly these practices can be:
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- Double-Dipping on Licenses: Four federal agencies were forced to repurchase software licenses they already owned just to use them in the cloud.
- Bundled Software, Ballooned Costs: At one agency, a vendor bundled essential software with less-needed tools, making the package available only at a much higher bundled price.
- Sticker Shock Over Time: Another agency saw their total investment cost skyrocket when a vendor initially offered a low introductory license rate — only to sharply raise prices for future license additions.
- Cloud Taxation: Some vendors charged extra fees for running their software on third-party cloud infrastructure.
- Costly Conversions: One agency was hit with a conversion fee to transition a license from on-premise to cloud use.
- Double-Dipping on Licenses: Four federal agencies were forced to repurchase software licenses they already owned just to use them in the cloud.
GAO’s Call to Action
To tackle these challenges, GAO urges federal agencies to:
- Identify and assess restrictive licensing practices during procurement and across ongoing IT investments.
- Develop proactive strategies to mitigate their financial and operational impact.
These steps are crucial, especially as Congress considers the SAMOSA Act, which aims to increase oversight and transparency of software licensing practices across the federal government.
Looking Ahead
Taxpayer dollars are on the line. The shift to cloud computing should empower agencies to do more with less, but only if they can navigate and overcome the obstacles posed by restrictive and anticompetitive software licensing practices. With GAO’s roadmap, there’s a clear path forward to smarter spending and more effective government.