If you’ve ever lost track of a few streaming subscriptions or realized you’re still paying for a service you no longer use, you know the feeling: small charges add up quickly over time, costing you money for services you don’t even use.
The federal government has a similar problem, only the stakes are far higher. Instead of a handful of forgotten subscriptions, taxpayers are footing the bill for billions of dollars in software contracts that agencies renew by default, often without a clear picture of what they own, what they use, or whether better deals are available.
A new NetChoice report by Michael Garland, Defeating Vendor Lock-in and Gaining Buying Power, finds that the federal government spends nearly $20 billion every year on commercial software, yet no agency can say with confidence what licenses it holds or how much it really pays.
- Price disparities: Individual licenses for the same software can differ across agencies by as much as $200. And 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: Procurements are often labeled “competitive,” but they’re written to favor incumbents like Microsoft, Adobe, Oracle, Salesforce, and ServiceNow.
- Enterprise lock-in: Multi-year omnibus deals bundle products together, entrenching vendors and blocking competition in adjacent markets like cloud services.
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 growth.
Just as individuals often don’t know how many subscriptions they’re paying for, the federal government has no unified database of software licenses, usage, or pricing. Vendors, those selling software to the government, know everything down to the dime. Agencies and lawmakers, on the other hand, know almost nothing.
That imbalance of information explains why taxpayers are losing out on potential savings of at least 15%, about $3 billion every year.
But unlike consumers, the government doesn’t have an easy way to cancel or renegotiate its “subscriptions.” The system is fragmented, expertise is siloed, and risk-averse procurement officers fall back on the status quo.
The report recommends a clear solution: professionalize, simplify, and centralize federal software procurement.
NetChoice is calling for Congress to create a new authority — the Software Accountability, Value, and Efficiency (SAVE) initiative — that would:
- Consolidate expertise in one shared service funded by Congress.
- Build a governmentwide database of licenses, usage, and pricing.
- Employ dedicated supplier managers for the top vendors.
- Require interoperability and multi-vendor contracting to restore competition.
Just as subscription tracking apps help consumers cancel unused services and find better deals, SAVE would help the federal government cancel wasteful contracts and finally demand better prices.
Vendor lock-in isn’t destiny. It’s a choice. And without reform, the federal government will see waste rather than accountability over its software licenses.
By centralizing expertise, tracking what it buys, and putting real competition back into the process, Congress can save taxpayers billions every year. That’s money that should go back into serving the American people — not padding the margins of software monopolies.