Uncle Sam's software sprawl: Billions wasted, time to go pro

The U.S. federal government, the world's largest consumer of commercial software, is hemorrhaging billions of taxpayer dollars annually. This astonishing waste is not merely a consequence of aggressive vendor tactics, but a self-inflicted wound rooted in a disjointed, opaque, and fundamentally flawed procurement system. For too long — decades in some cases — agencies have been locked into agreements with a handful of the biggest software giants, as outlined in a 2024 Government Accountability Office report — Microsoft, Adobe, Oracle, Salesforce and ServiceNow — without the benefit of genuine competition.

As I discovered in doing research for a recent white paper for NetChoice, the scale of this mismanagement is breathtaking. Consider the U.S. Department of Veterans Affairs, which recently committed $4.7 billion to Microsoft over five years, probably to repurchase software it has used for decades. This new contract obligates $940 million a year, almost double their previous $1.6 billion, three-year agreement. That’s about $27 for every tax-filer in America. It also means the VA's spending on Microsoft has nearly doubled in just three years. Multiply this across many agencies and different vendors and the true cost to taxpayers becomes staggering.

At the heart of the problem is a "data vacuum." Most agencies simply don't know what software they own, what they use or what they truly need. GAO reports repeatedly confirm this systemic failure: no federal agency can accurately match purchases with deployed software or actual requirements. There are no itemized receipts, no central databases, no unified price benchmarks. This widespread ambiguity allows price disparities, like the $200 per user variation for Microsoft Office 365 between agencies, as recently reported by the Trump administration. 

While Microsoft's overall corporate revenue grew 162% since 2015, a query of federal procurement data indicates its federal revenue surged almost 300% in the same period – a potential signal that a lack of competition can result in hefty price premiums. Other software giants are likely doing the same.

This crisis isn't new; its roots trace back to the 1996 Clinger-Cohen Act, which fractured centralized IT procurement at the General Services Administration. While well-intentioned to speed up acquisitions, it inadvertently splintered software purchasing, scattering expertise and data across agencies. Without a unified strategy, agencies operating in silos created a landscape of "zombie competitions" — procurement processes that appear legal but are functionally meaningless. Solicitations often ask for specific brand names "or equivalent," but competitors with equivalent products rarely bid, knowing the incumbent has already won. Software resellers compete for the contracts, but the real money — the lion's share paid to the software company — is often established without genuine competitive pressure and goes directly to the incumbent brand. 

The challenges are compounded by the government’s cultural resistance to change. Government IT workers often cite switching costs as an insurmountable obstacle, overlooking the deep discounts challenger brands offer when true competition exists. Furthermore, a risk-averse culture, where compliance is prioritized over innovation and savings, discourages exploring alternatives. There are few incentives to save money, and the perpetual urgency of renewing expiring software-as-a-service licenses leaves little time for strategic thinking. While it may be hard to switch products, and in some cases impossible, it is rarely, if ever, explored. The government almost always contracts for what it already uses, cementing a form of vendor lock-in. 

Despite congressional attempts to fix this, like the MEGABYTE Act and the proposed SAMOSA Act, agencies continue to fall short. A long history of GAO reports proves this. The truth is, buying and managing software is incredibly complex. Licensing terms are incomprehensible, part numbers constantly change, and subtle usage limitations can lead to unexpected fines during audits. No single agency can or should be expected to be an expert in navigating the software acquisition labyrinth. It’s not malfeasance or laziness on the part of the government.  It’s simply a deficiency of resources and skills to manage extremely savvy software giants who continue to have the upper hand. The government has been outmatched for years.

The solution is clear: It’s time for the government to turn professional. The government needs a federally mandated, centrally funded initiative for Software Accountability, Value, and Efficiency, or SAVE. Housed at GSA, SAVE would build on previous "OneGov" strategies to:

• Centralize Data: Create a unified database of all software purchases, usage and pricing across the government.
• Develop Expertise: Establish a corps of specialized supplier managers — some perhaps ex-employees of the dominant brands — with deep knowledge of leading software products and their substitutes.
• Standardize and Optimize: Develop playbooks for reducing renewal costs, evaluating switching options and standardizing licensing terms for government-wide use.
• Advocate for Competition: Actively assist agencies in creating bona fide, open, standards-based competitions, limiting "brand name or equivalent" justifications.
• Report and Scorecard: Provide annual reports to Congress on spending, utilization, savings opportunities and agency performance.

Even bolder, to break vendor lock-in for good, OMB or Congress should mandate requirements for interoperability between software providers and require agencies to award contracts to multiple vendors, even if it's an 80-20 split. This would force competition and foster resilience, ensuring that a viable, interoperable alternative is always lurking, keeping prices low and services high. Critics might fear inefficiency, but the current fragmented system is already wildly inefficient. It would be hard to get worse.

The cost of implementing SAVE would be insignificant compared to the billions waiting to be saved. The GAO reported $2 billion in cost savings from 2014-2019 through "better" software asset management, even with poor data and fragmented expertise. Imagine the savings when the government truly "goes pro." It won't happen overnight, but professional expertise and focused action are the only way to regain control of our government’s commercial software spending.

Michael Garland is an industry expert in government software procurement, having worked in private sector executive leadership. He has run acquisition consulting firm Garland LLC since 2015.