Industry research shows that major IT government software contractors such as Microsoft and Oracle are using proprietary methods that cost taxpayers hundreds of millions of dollars more without meaningful competition to overpower federal agencies. are routinely locked to a single source contract.
Microsoft and Oracle, the two largest software companies in the world, received at least 25% to 30% of government sales over the past decade through completely uncompetitive procurement processes, commissioned by tech trade body NetChoice. According to the report.
The survey was compiled from thousands of government contract documents and drafted by independent procurement expert Michael Garland. This is called “vendor lock and lack of competition in government software assets.”
Given that governments spend $10-15 billion annually on commercial off-the-shelf software and cloud, just a 5% reduction from competition could save taxpayers up to $750 million annually. There is a nature. said the study.
“Vendor lock has also enabled software vendors to use their power to impose many harmful practices on the government,” the study said. Sometimes we reverse engineer processes to avoid true competition.”
One example of vendor lock cited in the study is that in 2021, the USDA will spend $112 million more to buy Microsoft Office than Google Workspace to avoid switching costs, which it perceives to be even higher. Purchased procurement process.
According to the study, some of the proprietary behaviors involving major IT government vendors include: A fixed, non-flexible annual support fee that cannot be reduced. Predatory software audit.
This research highlights specific examples of unreasonable software licensing restrictions currently in use by Microsoft. This restriction essentially allows government clients to migrate all Microsoft software to Azure at no extra charge, but the client must buy back with new Microsoft licenses or start over. Migrate to AWS or Google Cloud.
“VA bowed to Microsoft’s dominance and allowed it to charge whatever Microsoft wanted,” the study said. “$1.6 billion is a lot of taxpayer money to spend without meaningful competition.”
Oracle also warned against using software on alternative cloud platforms, citing a recent lawsuit accusing Oracle of using predatory audits to drive 90% of cloud revenue between 2017 and 2018. are becoming more expensive.
The study makes some suggestions on how the federal government can limit vendor lock and save taxpayer dollars. Chief among these proposals is the bipartisan Enhanced Control and Supervision of Software Assets Act (SAMOSA), which FedScoop reported exclusively last year.
If passed, the law will mandate the consolidation of software licenses for federal agencies and enhance transparency and accountability of software purchases through independent review.
“The SAMOSA Act will provide valuable data to help the U.S. government identify and break out of vendor lock,” said the study. “Governments have an obligation to remove opaque licensing terms, restrict movement and impose unjustified penalties.”
NetChoice is a technology trade association whose members include big tech companies such as Amazon and Google.