US government agency overspent on software and licenses

The U.S. Department of Energy (DOE) spent US$4.1 million morethan necessary during the last five years to acquire and maintaindesktop software, according to a report by Gregory Friedman, thedepartment’s inspector general (IG).

The DOE and its facility contractors operate more than 110,000desktop computers at various locations, running commercialoff-the-shelf software that includes office automation, recordsmanagement, document imaging and antivirus products, the IG said inthe report.

“Although the department had established several enterprisesoftware agreements, we found that it had not adequately managedthe acquisition and maintenance of desktop software computerlicenses,” Friedman said.

In particular, he said that seven of 16 organizations in thedepartment bought software through locally established agreementsor contracts that were as much as 300 percent higher than thoseavailable through department-level agreements. Despite thepotential for savings, enterprise agreements for common productssuch as security and antivirus software were not established.Friedman also said that various agencies bought encryption softwarelicenses, paid annual maintenance fees but never used them.

“Despite pressure from the Office of Management and Budget andknown best practices of other organizations, the [Energy]Department had not developed complex-wide standards for desktopsoftware, implemented a common method for acquiring such softwareand did not require organizations to actively manage theirinventory of existing licenses,” the IG said.

As an example, Friedman said Brookhaven National Laboratory paidbetween $248 and $573 per license for two separate versions of thesame office automation product — even though it was availablethrough a department-level agreement for $176 per license. AndSandia National Laboratories paid $292 for a particular version ofa popular imaging package, even though it could have been purchasedthrough the department’s agreement for only $90.

In addition, Friedman said that most agencies did noteffectively track their software licenses and related use.Officials at Los Alamos National Laboratory acknowledged that theycould have saved at least $800,000 by more effectively managingsoftware acquisition and maintenance.

In another example, the inspector general said thatapproximately 38,000 encryption software licenses were bought foruse at five DOE offices. But more than a third of them, or 14,000,weren’t used. But over a five-year period, some of the agenciespaid maintenance fees totalling more than $625,000 on the unusedlicenses, he said.

The inspector general also found that DOE agencies negotiated 11separate purchase deals for the department’s most commonly usedencryption software at prices ranging from $70 to $208 per license.But the vendor for the product said the department could have saved$630,000 a year in maintenance costs alone if it had simplynegotiated a department-level enterprise agreement.

“Such an agreement could also likely match or exceed the lowestprice observed, potentially saving $138 per license,” Friedman saidin the report. “When applied to the existing universe of desktopsin use across the department, such savings could besignificant.”

Friedman recommended that the DOE develop and implement a formalpolicy for ensuring that all software purchases are coordinatedbetween headquarters and its various agencies and labs; implementagency-wide desktop software standards and consistent processes foracquiring such software; and ensure that labs and agencies designand implement asset management systems to track software licenseinventories and the use of existing licenses.

Officials at the DOE could not be reached for comment. But in awritten response that was included in Friedman’s report, AdrianGardner, the DOE’s deputy CIO, said his office concurred with theIG’s findings and recommendations and indicated that steps havealready been taken to address the problems — including efforts torenegotiate and consolidate software license agreements for acommon office automation suite.

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