Federal Agencies Must Inventory Every Software License, With 75% of Savings Earmarked for Deficit Reduction

The Strengthening Agency Management and Oversight of Software Assets Act is essentially forcing the federal government to clean out its digital attic. This legislation mandates that every federal agency (excluding the intelligence community) must create a comprehensive, detailed inventory of every software license and subscription it owns—what’s often called a “software entitlement.” This isn’t just a quick list; agencies have to track the total cost, how many licenses are being used versus sitting idle, and when they expire (SEC. 1).

If you’ve ever managed software licenses for a mid-sized company or even just tried to cancel a dozen forgotten subscriptions, you know how quickly costs balloon. This bill aims to fix that problem across the entire federal bureaucracy, which spends billions annually on software. The goal is simple: find the unused, duplicate, or overly expensive licenses and cut them out. Within 18 months of enactment, every agency must complete a detailed assessment, led by the Chief Information Officer (CIO), that identifies waste, inefficiency, and opportunities to transition to more cost-effective options like cloud computing or enterprise licenses (SEC. 3).

The Great Digital Clean-Up and the Budget Payoff

Once the agencies submit their massive software inventories, the Office of Management and Budget (OMB) and the General Services Administration (GSA) will conduct a government-wide assessment to spot major opportunities for consolidation and savings. Think of it as a massive, coordinated group purchase intended to leverage the government’s buying power (SEC. 1). Based on these findings, each agency must develop a plan to achieve those savings.

Here’s the kicker that affects the bottom line: The agencies must use at least 25 percent of the savings they realize to modernize their own information technology systems. The remaining 75 percent of the savings must be directed toward deficit reduction (SEC. 1). For the average taxpayer, this means that every dollar saved by canceling an unused Adobe or Oracle license is mostly going back to the Treasury, with a quarter reinvested in making the government’s IT systems less ancient and more efficient.

Centralizing Control: The CIO Becomes the Gatekeeper

To prevent the problem from recurring, the bill fundamentally changes how software is bought within federal agencies. Section 4 requires the agency’s Chief Information Officer (CIO) and Chief Acquisition Officer (CAO) to approve virtually all new software purchases. No bureau or component within an agency can acquire or develop any new software entitlement without this sign-off. This is designed to stop individual departments from quietly racking up expensive, redundant licenses that the CIO only discovers years later. While this is smart fiscal policy, it could create administrative bottlenecks, especially in large agencies where dozens of small teams might need specialized software quickly.

The Catch: No Extra Funds to Do the Work

While the mandate to save money is clear, the bill has a significant catch: it prohibits the authorization of any additional funds to implement the Act (SEC. 6). This means the agencies must absorb the considerable administrative costs of creating these massive inventories, conducting the assessments, and developing the new modernization plans using their existing, often already strained, operational budgets. For agency IT staff, this is a huge lift. They are being asked to take on a complex, time-consuming audit—requiring detailed tracking of every license, contract, and usage metric—without any dedicated budget relief.

This lack of funding could force agencies to divert resources from existing projects or even essential maintenance just to comply with the inventory deadlines. In the short term, this could put a squeeze on agency operations, even if the long-term goal is significant savings and modernization. It’s a classic Washington move: mandate a massive, necessary cleanup, but make the staff pay for the cleaning supplies out of their own pocket.