Federal software procurement overhaul could force Microsoft to make changes

(Bloomberg) – The top Democratic senator responsible for government oversight is drafting legislation that would overhaul how the federal government buys software, a move that could force Microsoft Corp., Oracle Corp. and other tech companies to remove limits on how their products interact with those made by rivals.

The bill, a copy of which was obtained by Bloomberg, would require agencies to purchase unlimited software licenses, rather than those for a specific number of employees. Known as “enterprise licenses,” these contracts can save money by eliminating additional costs when software is overused.

The legislation, drafted by Sen. Gary Peters, the Michigan Democrat who chairs the Senate Homeland Security and Governmental Affairs Committee, would require government buyers to review all of their software, including any rules that limit its use on computers. , servers or the cloud. suppliers.

The bill is still being finalized, according to an aide to Peters, and is subject to change. His office did not say when the measure will be introduced. But the senator’s sponsorship increases the likelihood that the bill will pass, given his role as head of the key committee.

Although the bill does not identify any of the software makers by name, if passed, it would affect how companies like Microsoft and Oracle sell their products to the federal government.

Microsoft has come under fire from competing cloud customers and vendors like Amazon Web Services and Alphabet Inc.’s Google Cloud Platform for licensing rules that make it harder, more expensive or in some cases impossible to run products like Windows and Office in rival clouds, even though customers have already purchased licenses to use these programs.

A 2014 GAO study found that most agencies did not properly manage their software licenses, resulting in higher costs when they purchased duplicate licenses or paid fees for violating license terms. Two years later, Congress passed a law requiring every agency to establish a software licensing policy and track its purchases.

Peters’ bill would build on that law, which his office says has saved the federal government $450 million since it was enacted. In addition to requiring each agency to move to unlimited software licenses wherever possible, the legislation also proposes that the administration consider adopting government-wide licenses for popular software to further reduce costs and use its buying power to promote interoperability — the seamless transfer of data and information between systems.

The bill also asks agencies to identify software license limitations on how programs can be used and find ways to minimize those restrictions.

The federal government has budgeted approximately $92.2 billion for information technology spending in fiscal year 2021. Each of the federal government’s 24 agencies issues its own contracts, purchasing thousands of licenses software every year, according to the Government Accountability Office.

Last month, Microsoft detailed some changes to its licensing policies to make it easier to run existing programs in clouds run by smaller vendors, but the company didn’t address licensing restrictions related to the manufacturer’s joint customers. of software with Google, Amazon.com Inc. and the Chinese Alibaba. Amazon said in a statement last month that the new changes, the exact language of which has yet to be released, add new limits that affect them and their partners.

A lack of software interoperability has also hampered some government projects such as efforts to connect the Department of Defense’s electronic medical records system to that operated by Veterans Affairs. The VA signed a $10 billion contract in 2018 to switch from its own electronic health records system to a system developed by Cerner Corp., which was recently acquired by Oracle.