The $6 Billion Software Glitch: Why the Government Owns More Licenses Than Users

March 18, 2025

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The federal government spends an estimated $6 billion annually on software, yet a significant portion of that investment is wasted on unused licenses. In some cases, agencies own more software subscriptions than they have employees to use them. Former Defense Intelligence Agency (DIA) Chief Technology Officer, Bob Gourley, is raising awareness about this issue and offering solutions that could save billions.

Gourley shares some eye-opening statistics, including one agency with 13,000 employees holding 37,000 WinZip licenses and another with thousands of project management software subscriptions for a division that has far fewer workers. These numbers highlight a broader inefficiency in government software procurement—one that stems from outdated licensing models and a lack of centralized coordination.

Why Does This Happen?

Gourley explains that agencies often buy software in bulk, sometimes acquiring extra licenses at reduced rates. While this might seem cost-effective, it often leads to massive over-purchasing. Vendors sometimes encourage agencies to bump up to higher-tier plans, offering deals that appear beneficial but ultimately contribute to unnecessary spending.

Another challenge is the fragmented nature of software buying across government agencies. Many departments purchase the same tools independently rather than negotiating enterprise-wide agreements. As a result, the government ends up paying more than it should for software that could have been bundled into a single, cost-efficient contract.

The Path to Smarter Software Spending

To fix this issue, Gourley suggests several approaches. One of the most promising is usage-based licensing, where agencies only pay for the software they actively use. This model, already common in the private sector, would allow departments to scale up or down as needed, preventing wasteful spending on idle licenses.

Another solution is government-wide licensing agreements—contracts that cover all federal agencies under a single deal. Large vendors like Microsoft, Google, and Oracle already have enterprise agreements at the agency level, but expanding these to cover the entire government could unlock major savings. However, Gourley notes that a balance must be struck between efficiency and flexibility. While centralized purchasing reduces costs, agencies still need the ability to acquire specialized tools that fit their unique missions.

For software vendors, adapting to these changes is crucial. Gourley advises them to align their pricing models with government cost-saving goals. Vendors that offer transparent, flexible, and mission-driven pricing structures—such as tiered or performance-based pricing—can position themselves as valuable partners rather than targets for budget cuts.

What’s Next?

The push for smarter software spending is already underway. Agencies are scrutinizing their software inventories and looking for ways to consolidate contracts. The General Services Administration (GSA) plays a key role in these efforts, exploring ways to streamline procurement across the federal government.

Ultimately, Gourley believes a mix of centralized efficiency and decentralized agility is the key to success. By leveraging enterprise-wide agreements where appropriate and allowing individual agencies to make strategic purchasing decisions when necessary, the government can modernize its software strategy while reducing waste.

You can read more Bob’s full piece here