When evaluating the overall budget picture, many analysts understandably and appropriately focus on the big ticket spending items, especially the largest and fastest growing portions of the federal budget, entitlements. Sometimes, it pays to think smaller scale and evaluate low hanging fruit when looking for areas to reduce costs.

As previously reported in CAGW’s March 2012 WasteWatcher, the Government Accountability Office (GAO) has issued two reports over the past two years which identify a number of duplicative services and systems that are ripe for picking from the federal budget tree. The first report, “Opportunities to Reduce Potential Duplication in Government Programs, Save Tax Dollars, and Enhance Revenue,” published on March 1, 2011, identified 34 agencies, offices, and initiatives that provide similar or identical services to the same populations, along with 47 programs that are either wasteful or inefficient. On February 28, 2012, the GAO issued its second report, highlighting significant cases of duplication, overlap, and lack of coordination between agencies and programs. Together, these reports detailed $400 billion in spending each year on 1,500 duplicative, fragmented, and inefficient programs.

One major source of duplication identified by the two GAO reports is information technology (IT) purchases. In fiscal year (FY) 2011, there were approximately 7,200 IT investments totaling at least $79 billion. As stated in the most recent GAO report, even though the Office of Management and Budget has issued guidance on how to report IT investments to agencies, this guidance does not ensure that duplicative investments are identified or reported. Agencies must first have the ability to identify potential duplicative investments prior to making additional purchases using inventory controls and internal auditing tools.

Currently, there is scant coordination within the acquisition process. Often, several divisions within a department or agency have the ability to perform their own contracting without consulting with other divisions in their planning. Last year, the Department of Homeland Security Office of Inspector General reported that the agency could have better managed the purchase of $3.2 billion worth of metal detectors, explosive detection systems, and radiation detectors in its inventory since 2010 through the use of a practice known as strategic sourcing.

Another area of potential savings in IT purchases is in unnecessary or excessive software licenses, bought in part because the government is unable to keep track of what they currently own or actually use. A March 10, 2010 article in CIO Magazine highlighted how these purchases are made using “seat licensing” or enterprise license agreements, and points out the need for improved tracking of actual software usage before procuring additional software licenses. On July 19, 2011, the GAO also criticized government agencies’ inventory management of data centers, noting that 15 federal agencies did not list all of their software assets in their reports.

As highlighted in a June 27, 2011 article in Training Magazine, managing software licenses and usage is currently routinely and systematically performed by the private sector in order to ensure proper license usage and to improve software purchasing decisions through the use of software asset management (SAM) tools. By having a complete understanding of how the business is utilizing software licenses, an organization can better focus on cost savings when renegotiating license agreements.

On November 7, 2011, information technology research and consulting firm Gartner released a report entitled “Predicts 2012: Government CIOs on a Tightrope,” which discussed the future of government IT in a tightening economy. Among the report’s recommendations was that governments at all levels should “consider using technology-intensive approaches to manage data and processes” to aid in the delivery of services. In response to the Gartner report, the U.K.-based Federation Against Software Theft confirmed that cost containment will continue to dominate government IT, and one of the primary ways to control costs is through the use of software asset management and license optimization.

One of the key precepts of procurement best practices that CAGW has espoused in its issue brief, Cloud Computing 201: Guidelines for Success Cloud Investments can also be applied to other IT procurements; that an agency should know what is in its inventory of equipment and applications before entering into purchasing agreements. This includes not only hardware and network equipment, but also software and the number of licenses that are in actual use or lying stagnant. There are several SAM auditing systems available in the private sector which offer software licensing auditing tools. These same tools could be applied to government systems to ensure that CIOs and purchasing agents are aware of existing software licenses and can document actual usage in order to make smarter purchasing decisions.

Often, these incremental changes seem unimportant when facing a looming $15.7 trillion debt. But any impending budget cutting campaign must begin with the elimination of systemic wasteful management practices, such as excess software licenses, before addressing the thornier issues of program cuts and entitlement reforms.