WASHINGTON: A new report by government procurement lawyer and software industry expert Michael Garland, published by NetChoice, reveals that the federal government’s broken software procurement system, a relic from the 1990s, is costing taxpayers billions each year by locking agencies into overpriced contracts with entrenched vendors like Microsoft and Oracle.
The report, “Defeating Vendor Lock-in and Gaining Buying Power: Why the U.S. Government Must Consolidate Expertise to Fix its Broken Software Procurement System,” finds that the federal government spends nearly $20 billion annually on commercial software yet agencies and lawmakers lack even the most basic information on what software the government buys and how much it pays.
“A lack of competition for government software contracts is costing taxpayers billions and undermining the quality and security of our government’s work,” said Michael Garland, author of the report. “Congress can save billions for taxpayers by professionalizing and reforming how the government buys software.”
The Status Quo
Garland argues the Trump Administration has a unique opportunity to build on OneGov efforts to remake federal procurement from the ground up. Among the report’s key findings:
- Billions wasted: Real competition could save at least $3 billion annually.
- Data vacuum: Individual licenses for the same software can differ across agencies by as much as $200, because no agency can fully account and report for its licenses, usage, or costs. Policymakers have no idea how much taxpayers are wasting on contracts that uniquely benefit dominant firms like Microsoft, Oracle and others.
- Zombie competitions: Attempts to keep the government’s software market competitive are failing. Procurements labeled as “competitive” are often wired for incumbents, ensuring the same vendors win without pressure to compete on prices.
- Enterprise agreements entrench lock-in: Multi-year omnibus deals bundle products like Office 365 with potentially wasteful add-ons such as Azure cloud, blocking competition in adjacent markets.
The result? Dominant vendors win. Taxpayers lose. Microsoft’s revenue from the Federal Government has grown nearly 300% since 2015, almost double the rate of its overall corporate growth.
The Path Forward: SAVE Taxpayer Dollars
The report calls for Congress to create a central simplified procurement authority called the Software Accountability, Value, and Efficiency (SAVE) initiative. SAVE would:
- Consolidate software-buying expertise across government.
- Build a unified database of licenses, usage, and pricing.
- Employ supplier managers for top vendors.
- Require interoperability and multi-vendor contracts to restore competition.
“For years taxpayers have paid billions for opaque and unaccountable government software contracts that are not fit for purpose in today’s high-tech economy,” said Robert Winterton, Vice President of Public Affairs at NetChoice. “The government’s outdated approach to buying software leaves taxpayers footing the bill for billions of dollars in bloated contracts, wasted licenses, and competitors locked-out of a system dominated by a handful of incumbents.”
Read the new report: “Defeating Vendor Lock-in and Gaining Buying Power: Why the U.S. Government Must Consolidate Expertise to Fix its Broken Software Procurement System.”
The author of the report, Michael Garland, is available for interviews on request. To enquire, please email press@netchoice.org.
Additionally, take a look at NetChoice’s supplementary materials for the report, “The Federal Government’s Costly Subscription Problem,” and “What is Government Software Procurement and Why Should Taxpayers Care?“