Analyzing Bad Software Contracts Can Deliver Savings and a Bipartisan Win

There are two things that don’t seem to happen a lot on Capitol Hill these days. The first is genuine and constructive bipartisan compromise when there isn’t a government funding deadline. The other rarity is any honest attempt to reduce taxpayer costs by the federal government. Fortunately, there is currently an under-the-radar bill, the Strengthening Agency Management and Oversight of Software Assets (SAMOSA) Act, that would help legislators accomplish both objectives and would deliver a win for government efficiency and taxpayers.

The SAMOSA Act would require federal agencies to report their software assets, spending and utilization rates, and share their findings with agency inspectors general. This would be a helpful accountability measure for agencies across government. It would also be a very useful tool in identifying wasteful spending on information technology (IT) programs and areas ripe for reform.

Since 1994, the federal government has spent a whopping $2 trillion on IT. A recently released report by software expert Michael Garland shows that waste in government software and cloud purchases can reach up to 30 percent. If that rate were spread across the government’s entire IT purchases, that would be roughly $600 billion in wasted taxpayer money in just less than 30 years.

Roughly $300 billion of that $2 trillion has been on software classified as commercial off-the-shelf (COTS) software. Currently, the government spends between $10 and $15 billion annually on COTS software, a large number even by Washington, D.C. standards.

Many of these COTS contracts and purchases come without any sort of competition or meaningful oversight. For example, the Garland research report shows that Microsoft and Oracle – among the world’s largest software companies – received roughly 30 percent of their government contracts without competition.

Beyond that, these companies often structure their contracts such that it is prohibitively expensive to get out of them once entered into. This type of arrangement is known as “vendor lock” when a customer cannot easily get out of a less than suitable contract. In this instance, the customer is the federal government, and the American taxpayer is left footing the excess bill every year.

Thankfully, a solution exists. The Garland report notes that even a five percent increase in efficiency in these contracts would conservatively save the American people $750 million annually. Better reporting and analysis required by bills like the SAMOSA Act are among the policy recommendations in that report.

The federal government needs to know where it is getting the most bang for its buck and where it is only spending billions of taxpayer dollars because it is difficult to get out of a contract. Given the pressures of a struggling economy and inflation, the American people should not be funneling their hard-earned dollars towards funding bad IT systems and software for the government, merely because agencies were too lazy to determine whether they had a good contract. Identifying these areas of waste is key, and the bi-partisan SAMOSA Act is the clearest avenue to deliver these savings for taxpayers.