Your Agency Needs to Comply with the MEGABYTE Act — Here's How

More than a year after after the MEGABYTE Act became law, agencies are still struggling to manage their software license inventories.

The act, which former President Barack Obama signed into law in July 2016, is officially known as the Making Electronic Government Accountable By Yielding Tangible Efficiencies Act of 2016. It requires agency CIOs to develop a comprehensive software licensing policy. Further, starting fiscal year 2017 and continuing for the next five fiscal years, CIOs must submit a report to the director of the Office of Management and Budget on the financial savings or avoidance of spending that resulted from improved software license management.

However, 21 of 24 CFO Act agencies are failing to comply with the MEGABYTE Act, according to the latest Federal IT Acquisition Reform Act report card, issued in June. Only the Education Department, General Services Administration and the U.S. Agency for International Development received passing grades.

Agencies need to use software asset management (SAM) and license optimization tools and other IT tools to get a better grasp on their vast software licenses. As FedScoop reports, agencies have had decentralized networks for years and have not centralized control over software on those networks, making it difficult to perform software asset inventories and develop stronger licensing policies.

However, if they use SAM tools, agencies can avoid purchasing duplicate software and cut costs. They can also optimize the number of licenses they have so that they are not purchasing more software than they need based on usage.

“That’s a problem from an efficiency and effectiveness perspective,” Carol Harris, director of IT at the Government Accountability Office, tells FedScoop. “When you have a decentralized inventory, you are not able to effectively [assess] the needs of your mission or your agency if you don’t know what you have.”

How to Keep Track of Software Licenses

Each year, the government spends more than $6 billion on software through more than 42,000 transactions, OMB notes in a June 2016 memo. As far back as 2014, the GAO found that OMB and the “vast majority” of agencies did not have adequate policies for managing software licenses.

The 2014 GAO report advised OMB to create a policy and included 131 recommendations for the 24 CFO Act agencies, according to FedScoop. However, despite the MEGABYTE Act, progress has been slow, with only 24 recommendations implemented as of July, the publication notes.

Under the MEGABYTE Act, agency CIOs must “establish a comprehensive inventory, including 80 percent of software license spending and enterprise licenses” by “identifying and collecting information about software license agreements using automated discovery and inventory tools.”

CIOs also need to regularly track and maintain software licenses so that decisions about the software can be made throughout the license management lifecycle. They also need to analyze software usage and other data to make cost-effective decisions, provide training relevant to software license management, and establish goals and objectives of the agency’s software license management program.

Agencies can take several steps to meet these goals, and OMB has laid out specific guidance.

The June 2016 OMB memo required agencies to “compile a baseline inventory of their commercial and [commercial off-the-shelf] software licenses purchased, deployed, and in use,” to the extent practicable, no later than Sept. 30, 2016.

The memo states that agencies “should leverage commercially available IT to support processes for compiling and maintaining software license inventories.”

This technology includes SAM, software license optimization, continuous diagnostics and mitigation, Continuous Monitoring as a Service and network management tools, as well as finance and accounting systems, to report on software inventory, prices and usage.

OMB advises agencies deploy this technology to automate IT hardware and software asset discovery; IT asset inventory tracking; software inventory normalization; contract, purchase and product use rights reconciliation; software license optimization; and SAM data-sharing capabilities.

“In this current climate, if you are looking to save some dollars, this is a great area where you can certainly cut the fat,” Harris tells FedScoop.