```

[Senate Report 114-289]
[From the U.S. Government Publishing Office]

                                                       Calendar No. 533
114th Congress    }                                      {       Report
                                 SENATE 
 2d Session       }                                      {      114-289             
_______________________________________________________________________

                                     

                                                       

                      MAKING ELECTRONIC GOVERNMENT

       ACCOUNTABLE BY YIELDING TANGIBLE EFFICIENCIES ACT OF 2015

                               __________

                              R E P O R T

                                 of the

                   COMMITTEE ON HOMELAND SECURITY AND

                          GOVERNMENTAL AFFAIRS

                          UNITED STATES SENATE

                              to accompany

                                S. 2340

          TO REQUIRE THE DIRECTOR OF THE OFFICE OF MANAGEMENT
AND BUDGET TO ISSUE A DIRECTIVE ON THE MANAGEMENT OF SOFTWARE LICENSES, 
                         AND FOR OTHER PURPOSES

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                 June 28, 2016.--Ordered to be printed
                                  ______

                         U.S. GOVERNMENT PUBLISHING OFFICE 

59-010                         WASHINGTON : 2016                  
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

                    RON JOHNSON, Wisconsin, Chairman
JOHN McCAIN, Arizona                 THOMAS R. CARPER, Delaware
ROB PORTMAN, Ohio                    CLAIRE McCASKILL, Missouri
RAND PAUL, Kentucky                  JON TESTER, Montana
JAMES LANKFORD, Oklahoma             TAMMY BALDWIN, Wisconsin
MICHAEL B. ENZI, Wyoming             HEIDI HEITKAMP, North Dakota
KELLY AYOTTE, New Hampshire          CORY A. BOOKER, New Jersey
JONI ERNST, Iowa                     GARY C. PETERS, Michigan
BEN SASSE, Nebraska

                  Christopher R. Hixon, Staff Director
                Gabrielle D'Adamo Singer, Chief Counsel
       Patrick J. Bailey, Chief Counsel for Governmental Affairs
    Ann F. Van Houten, U.S. Department of Homeland Security Detailee
              Gabrielle A. Batkin, Minority Staff Director
           John P. Kilvington, Minority Deputy Staff Director
               Mary Beth Schultz, Minority Chief Counsel
      Matthew R. Grote, Minority Senior Professional Staff Member
                     Laura W. Kilbride, Chief Clerk

                                                       Calendar No. 533
114th Congress    }                                      {       Report
                                 SENATE 
 2d Session       }                                      {      114-289
=======================================================================

 
     MAKING ELECTRONIC GOVERNMENT ACCOUNTABLE BY YIELDING TANGIBLE 
                        EFFICIENCIES ACT OF 2015

                                _______
                                

                 June 28, 2016.--Ordered to be printed

                                _______
                                

 Mr. Johnson, from the Committee on Homeland Security and Governmental 
                    Affairs, submitted the following

                              R E P O R T

                         [To accompany S. 2340]

    The Committee on Homeland Security and Governmental 
Affairs, to which was referred the bill (S. 2340) to require 
the Director of the Office of Management and Budget to issue a 
directive on the management of software licenses, and for other 
purposes, having considered the same, reports favorably thereon 
with an amendment in the nature of a substitute and recommends 
that the bill, as amended, do pass.

                                CONTENTS

                                                                   Page
  I. Purpose and Summary..............................................1
 II. Background and Need for the Legislation..........................2
III. Legislative History..............................................4
 IV. Section-by-Section Analysis......................................5
  V. Evaluation of Regulatory Impact..................................5
 VI. Congressional Budget Office Cost Estimate........................5
VII. Changes in Existing Law Made by the Bill, as Reported............6

                         I. PURPOSE AND SUMMARY

    The purpose of S. 2340, the Making Electronic Government 
Accountable By Yielding Tangible Efficiencies (MEGABYTE) Act of 
2015, is to improve software license management across the 
Federal Government to achieve tangible cost savings. The bill 
requires the Office of Management and Budget (OMB) to issue a 
directive to each Executive agency to develop a comprehensive 
software licensing policy. The policy must require each 
agency's Chief Information Officer (CIO) to: (1) establish a 
comprehensive inventory of software licenses; (2) track and 
maintain such licenses; (3) analyze software usage to make 
cost-effective decisions; (4) provide software license 
management training; (5) establish goals and objectives for the 
agency's software license management program; and (6) consider 
the software license management life cycle phases to implement 
effective decision making and incorporate existing standards, 
processes, and metrics.

              II. BACKGROUND AND THE NEED FOR LEGISLATION

    OMB launched the PortfolioStat initiative in March 2012.\1\ 
The initiative requires Federal agencies to conduct an annual, 
agency-wide IT portfolio review to, among other things, 
``reduce commodity IT spending and demonstrate how their IT 
investments align with their missions and business 
functions.''\2\ To implement these goals, OMB directed agencies 
to reduce duplicative IT commodities that could include 
software.\3\ Subsequently, Congress asked the Government 
Accountability Office (GAO) to evaluate Federal agencies' 
management of software licenses. GAO found that ``. . . while 
PortfolioStat can assist agencies in identifying cost savings 
and avoidance related to software licensing, this initiative, 
combined with the key executive order on more efficient 
software spending, is not enough to guide the agencies in 
developing comprehensive licensing management policies.''\4\
---------------------------------------------------------------------------
    \1\Steven Vanroekel, PortfolioStat 2.0: Driving Better Management 
and Efficiency in Federal IT, The White House Blog, https://
www.whitehouse.gov/blog/2013/03/27/portfoliostat-20-driving-better-
management-and-efficiency-federal-it.
    \2\Gov't Accountability Office, GAO-15-404SP: Additional 
Opportunities To Reduce Fragmentation, Overlap, And Duplication And 
Achieve Other Financial Benefits 25 (2015), available at http://
gao.gov/assets/670/669613.pdf [hereinafter GAO-15-404SP: Additional 
Opportunities]; see also Jason Miller, OMB launches PortfolioStat to 
reduce commodity IT spending, Federal News Radio (Apr. 2, 2012 5:22 
a.m.), http://federalnewsradio.com/defense/2012/04/omb-launches-
portfoliostat-to-reduce-commodity-it-spending/.
    \3\Office of Management and Budget, Memorandum M-12-10: 
Implementing PortfolioStat (2012) https://www.whitehouse.gov/sites/
default/files/omb/memoranda/2012/m-12-10_1.pdf.
    \4\Gov't Accountability Office, GAO-14-413, Federal Software 
Licenses Better Management Needed to Achieve Significant Savings 
Government-Wide (2014), available at http://www.gao.gov/assets/670/
663560.pdf [hereinafter GAO-14-413, Federal Software Licenses].
---------------------------------------------------------------------------
    Portfolio Stat does not guarantee savings through 
prudently-managed software licenses. Under this initiative it 
is up to the agencies to decide whether to prioritize software 
licenses as part of the PortfolioStat review.\5\ Several 
agencies, including the Department of Housing and Urban 
Development (HUD), the Department of State (State), the 
Department of Homeland Security (DHS), and the Department of 
Veterans Affairs (VA) included software license management as 
part of Portfolio Stat, but other agencies did not.\6\ The GAO 
noted that the agencies that created an inventory of software 
licenses and actively managed it needed additional guidance 
from OMB to save money.\7\ The corollary cautions that if 
agencies are not required to manage their software licenses and 
there is no central policy on software management, some 
agencies will forgo the associated savings.\8\ In its 2014 
report, GAO recommended specific action for OMB and for the 
agencies to obtain savings from better management of software 
licenses. Specifically, these recommendations included: 
directing OMB to guide agencies in managing software licenses, 
and for agencies to develop software license policy, inventory 
software licenses, train staff on software license management, 
and use the information from the inventory to make good 
management decisions and reduce agency costs.\9\ As stated by 
GAO,
---------------------------------------------------------------------------
    \5\Id. at 7.
    \6\Id.
    \7\Id.
    \8\Id.
    \9\Id. at 62.

        [W]hile agencies were able to identify millions in 
        savings for software, there is the potential for even 
        greater savings and additional opportunities to reduce 
        software license spending and duplication than what 
        agencies have reported. Until OMB and the agencies 
        focus on improving policies and processes, they will 
        not have the data to manage software licenses and will 
        likely miss opportunities to reduce costs.\10\
---------------------------------------------------------------------------
    \10\Id. at 21.
---------------------------------------------------------------------------
    In 2015, the GAO listed software license management as a 
top priority in its annual duplication report for the second 
year in a row.\11\ The GAO report found that Government-wide 
there could be greater savings if all agencies better managed 
all of their software licenses.\12\
---------------------------------------------------------------------------
    \11\GAO-15-404SP: Additional Opportunities at 181-82.
    \12\Id. at 183.
---------------------------------------------------------------------------
    Following the release of the GAO report, Senator Bill 
Cassidy sent a letter to the Director of OMB expressing his 
concerns about the report's findings and requesting that the 
Director take action to implement GAO's recommendations.\13\ 
According to Director Donovan, OMB has requested that agencies 
provide information on their software inventories, thus 
satisfying the first recommendation from the 2014 GAO report. 
However the response only addressed OMB's activities; it did 
not confirm that agencies have developed software license 
policy, developed training or are inventorying their software 
licenses or are using the inventory information to make prudent 
management decisions.\14\
---------------------------------------------------------------------------
    \13\Letter from Senator Bill Cassidy to Mr. Shaun Donovan (June 2, 
2015) (on file with Comm. staff).
    \14\Letter from Mr. Shaun Donovan to Senator Bill Cassidy (July 16, 
2015) (on file with Comm. staff).
---------------------------------------------------------------------------
    S. 2340 provides the legislative support for OMB's 
directive to agencies to manage their software licenses. The 
bill goes beyond OMB's efforts to include a mandate that 
agencies implement the GAO recommendations that OMB did not 
address. This bill will ensure that agencies inventory their 
software licenses, train their IT management workforce on how 
to manage software licenses, and use the software license 
information to manage the agency's software licenses in 
accordance with agency policy. It also goes beyond the OMB 
directive by requiring agencies to account for the savings 
achieved through better software license management.
    The bill also supports the Federal Information and 
Technology Acquisition Reform Act (FITARA),\15\ which requires 
the General Services Administration (GSA) to develop 
Government-wide strategic sourcing vehicles so agencies can 
procure software licenses efficiently and at a reasonable 
price. Before GSA can develop new strategic sourcing vehicles 
for agencies to use, there must be a government wide inventory 
of the software licenses the government has and an assessment 
of what it needs. According to GAO, this type of analysis is 
rarely done within agencies.\16\ Without S. 2340, FITARA 
implementation could be delayed or sub-optimized due to the 
lack of information about software licenses.
---------------------------------------------------------------------------
    \15\As enacted in Section 837 within Title VIII Acquisition Policy, 
Acquisition Management and related Matters, Subtitle D, Federal 
Information Technology Acquisition Reform of the National Defense 
Authorization Act of 2015.
    \16\ GAO-15-404SP: Additional Opportunities at 183 (2015).
---------------------------------------------------------------------------
    In June 2016, the United States Chief Acquisition Officer 
and United States Chief Information Officer issued a joint 
memorandum entitled, Category Management Policy 16-1: Improving 
the Acquisition and Management of Common Information 
Technology: Software Licensing.\17\ This policy was intended to 
be responsive to the software requirements in FITARA. It 
creates the Enterprise Software Category Team which is 
comprised of GSA, the Department of Defense and OMB. The team 
is intended to help the government acquire software with less 
overlap, fragmentation and duplication. It also requires each 
agency to appoint a software manager, create an agency-wide 
software inventory and analyze the data to identify 
opportunities for savings.\18\
---------------------------------------------------------------------------
    \17\Office of Management and Budget, Memorandum M-16-12: Category 
Management Policy 16-1: Improving the Acquisition and Management of 
Common Information Technology: Software Licensing (2016) https://
www.whitehouse.gov/sites/default/files/omb/memoranda/2016/m-16-
12_1.pdf.
    \18\ Id.
---------------------------------------------------------------------------
    Accordingly, S. 2340 requires the agency CIO to inventory 
at least 80 percent of the software licenses using automated 
tools. By requiring agencies to inventory software licenses 
using automated tools, software licenses that are on the 
agencies networks can be easily found without a manual 
search.\19\ Software installed on stand-alone computers is not 
always discoverable using automated tools and could require a 
long manual search if it was required to be in the inventory. 
While management of stand-alone licenses must also be improved, 
the 2014 GAO report found that savings could be achieved 
through consolidating enterprise-wide (on the network) software 
licenses.\20\ This finding means that agencies will save money 
without necessarily inventorying 100 percent of the off network 
software licenses.\21\
---------------------------------------------------------------------------
    \19\U.S. CERT, SWAM Illustrative Process v2 (2014) available at 
https://www.us-cert.gov/sites/default/files/cdm_files/
SWAMIllustrativeProcess.pdf.
    \20\ GAO-14-413, Federal Software Licenses at APPENDIX III.
    \21\ Id. at 7.
---------------------------------------------------------------------------
    S. 2340 establishes a framework to find the savings by 
requiring training for software license managers and requiring 
the life cycle costs be considered in management decisions. 
These savings are reported to OMB and posted publically which 
holds the Director of OMB ultimately accountable for results 
while informing the American public of the progress being made 
to reduce wasteful spending. When these GAO recommendations are 
implemented throughout the government, GAO estimates the 
savings.

                        III. LEGISLATIVE HISTORY

    The MEGABYTE Act of 2016, S. 2340, was introduced December 
2, 2015, by Senators Bill Cassidy (R-LA) and Gary Peters (D-
MI). The bill was referred to the Committee on Homeland 
Security and Governmental Affairs.
    The Committee considered S. 2340 at a business meeting on 
February 10, 2016. During the business meeting, Senator Peters 
offered a substitute amendment to the bill that would directly 
hold each CIO accountable for managing his or her agency's 
software license and limiting the reporting period to five 
years. The legislation, as modified by the Peters substitute 
amendment, was adopted by voice vote en bloc. Members present 
for the vote were: Senators Johnson, McCain, Portman, Paul, 
Lankford, Ayotte, Ernst, Sasse, Carper, McCaskill, Tester, 
Baldwin, Heitkamp, Booker, and Peters.

        IV. SECTION-BY-SECTION ANALYSIS OF THE BILL, AS REPORTED

Section 1. Short title

    This section establishes the short title of the bill as the 
``Making Electronic Government Accountable By Yielding Tangible 
Efficiencies Act of 2015,'' or the ``MEGABYTE Act of 2015.''

Section 2. OMB directive on management of software licenses

    This section provides definitions for the terms 
``Director'' and ``executive agency''. It also provides 
specific direction to the Director of OMB to develop software 
licensing policy for Federal agencies. This policy must include 
identifying for agencies the roles, responsibility and 
oversight responsibilities for managing enterprise software 
licenses.
    It also requires Executive agency CIOs to establish an 
inventory of 80 percent of their software licenses identifying 
the software licenses through automated tools. The CIOs are 
required to manage the software licenses through their 
lifecycle and use software usage information to make cost-
effective decisions for the agency. They must also provide 
training on how to manage software licenses, establish goals 
for software license management, and consider the total life 
cycle costs in decision making. This section also requires the 
CIOs to provide a report to the OMB Director and the public for 
the next five fiscal years that lists savings resulting from 
improved software license management.

                   V. EVALUATION OF REGULATORY IMPACT

    Pursuant to the requirements of paragraph 11(b) of rule 
XXVI of the Standing Rules of the Senate, the Committee has 
considered the regulatory impact of this bill and determined 
that the bill will have no regulatory impact within the meaning 
of the rules. The Committee agrees with the Congressional 
Budget Office's statement that the bill contains no 
intergovernmental or private-sector mandates as defined in the 
Unfunded Mandates Reform Act (UMRA) and would impose no costs 
on state, local, or tribal governments.

             VI. CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

                                                    April 21, 2016.
Hon. Ron Johnson,
Chairman, Committee on Homeland Security and Governmental Affairs, U.S. 
        Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 2340, the MEGABYTE 
Act of 2015.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Matthew 
Pickford.
            Sincerely,
                                                        Keith Hall.
    Enclosure.

S. 2340--MEGABYTE Act of 2015

    S. 2340 would amend federal laws related to managing the 
federal government's licenses for information technology 
software. The bill would require the Office of Management and 
Budget (OMB) to issue a directive to each federal agency to 
develop a comprehensive policy for software licensing including 
a complete inventory of software licenses and to develop a 
mechanism to track, maintain, and analyze software use.
    Most of the provisions of the bill would codify and expand 
current policies and practices of the federal government. OMB 
has reported that agencies spent about $9 billion in 2015 on 
software licenses. The Federal Information Technology 
Acquisition Reform Act (FITARA) recently directed agencies to 
acquire and manage software in a more coordinated way. In 
addition, the Enterprise Software Category Team, managed by the 
General Services Administration, the Department of Defense, and 
OMB, is developing government-wide agreements for obtaining 
software licenses. Because such efforts to better manage 
software licenses are already underway, CBO estimates that the 
bill would not substantially change those efforts, and that 
implementing S. 2340 would have no significant net impact on 
the federal budget over the next five years. The bill could 
affect direct spending by agencies not funded through annual 
appropriations; therefore, pay-as-you-go procedures apply. CBO 
estimates, however, that any net change in spending by those 
agencies would not be significant. Enacting S. 2340 would not 
affect revenues.
    Some agencies have reported that they have spent less to 
acquire software by more effectively analyzing data on software 
licenses and the Government Accountability Office expects that 
there is the potential for even greater savings government-wide 
through more efficient spending to acquire software. CBO 
expects that by improving software purchasing decisions 
implementing S. 2340 could lead to lower federal costs. 
However, we expect most of the savings in this area will 
probably be achieved through current efforts to make cost 
effective decisions when acquiring software.
    CBO estimates that enacting S. 2340 would not significantly 
increase net direct spending or on-budget deficits in any of 
the four consecutive 10-year periods beginning in 2027.
    S. 2340 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would not affect the budgets of state, local, or tribal 
governments.
    The CBO staff contact for this estimate is Matthew 
Pickford. The estimate was approved by H. Samuel Papenfuss, 
Deputy Assistant Director for Budget Analysis.

       VII. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

    Because this legislation would not repeal or amend any 
provision of current law, it would make no changes in existing 
law within the meaning of clauses (a) and (b) of paragraph 12 
of rule XXVI of the Standing Rules of the Senate.

                                  [all]
```