How Much Bite will the MEGABYTE Bite into Federal Software Spending?

Published: August 31, 2016

Acquisition ReformIT ReformPolicy and Legislation

Late in the legislative session and amidst an election year Congress and the White House passed a law aimed at saving billions of dollars in federal software spending through stronger software management.

On July 29, President Obama signed the Making Electronic Government Accountable By Yielding Tangible Efficiencies Act of 2016, a.k.a. the MEGABYTE Act of 2016, which requires federal agencies to establish comprehensive software licensing policies to improve efficiency and reduce spending through the use of automated tools and database inventories of software licenses.

Comprehensive Software Licensing Policy

Under the MEGABYTE Act each agency Chief Information Officer (CIO) is to develop a policy that identifies clear roles, responsibilities, and central oversight authority within their agency for managing enterprise software license agreements and commercial software licenses.

MEGABYTE also requires agency CIOs to:

  • Establish comprehensive software inventories comprising 80% of software license spending and enterprise licenses.
  • Identify and collect information about software license agreements using automated discovery and inventory tools.
  • Track and maintain software licenses to assist with implementing decisions throughout the software license management life cycle.
  • Analyze software usage and other data to make cost-effective decisions.
  • Provide training on software license management.
  • Establish goals and objectives for software license management.
  • Consider the software license management life cycle phases, including requisitioning, reception, deployment and maintenance, retirement, and disposal, in order to implement effective decision-making and to incorporate existing standards, processes, and metrics.


Proponents hope that MEGABYTE will help agencies save $2 billion in software spending, about half-way to addressing the $4 billion that GAO assessed that agencies waste each year in improperly-managed software licenses. It will take time for agencies to adjust and some could need help in making progress. Agencies vary on their readiness for the heightened focus on software asset management and the use of automated tools and could require assistance to implement these provisions.

One possible effect could be to further encourage the use of enterprise software licensing agreements across whole agencies or across multiple departments, something that has been discussed at length and that has obtained the largest foothold in the Department of Defense through their Enterprise Software Initiative.

One thing seems certain, the MEGABYTE Act (and others) will continue to keep pressure on agencies to reduce overall spending on software and other information technology while improving cost-effectiveness and overall IT asset management.