FY 2013 NDAA Pushes the DoD for Greater Software License Efficiencies

Published: January 17, 2013

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In early January the President signed the FY 2013 National Defense Authorization Act (NDAA). The law impacts several areas of information technology and its acquisition. It also provides further evidence of Congress’ push for the Department of Defense (DoD) to increase its effectiveness in managing its IT spending – especially in the area of software licensing.

The FY 2013 NDAA requires the DoD to develop a department-wide plan to inventory and balance their software licenses so as to maximize the return on investment for their software spend. According to provisions in the law, by July 1, the DoD CIO must issue a plan for the inventory of selected software licenses of the entire Department of Defense, including a comparison of licenses purchased with licenses installed. The inventory plan is to include the following:
  • Identify and explain the software licenses that the DoD will consider to be selected software licenses and a summary outline of the software licenses determined not to be selected software licenses.
  • Identify the means by which the DoD will assess its needs for selected software licenses during the two fiscal years following the date of the issuance of the plan (FY 2014 and FY 2015).
  • Identify the means by which the Department can achieve the greatest possible economies of scale and cost savings in the procurement, use, and optimization of selected software licenses.
Once the inventory is completed if the CIO determines that the number of selected software licenses exceeds the needs of the DoD then the NDAA directs the Secretary of Defense to implement a plan to bring the number of such software licenses into balance with the needs of the Department.
While the latest NDAA puts additional specific requirements around DoD’s software management, DoD’s efforts to optimize their software spending is not new. According to the DoD’s Enterprise Software Initiative (ESI) they have achieved a cost avoidance of more than $3 billion compared with published prices on GSA’s Federal Supply Schedule. In Deltek’s report Federal Software Products Market, FY 2012-2017 we note the DoD’s ongoing efforts to inventory and assess the current software applications to reduce redundancy, increase consolidation, and promote an enterprise approach to software availability. We also provided snapshots of the four DoD components – Defense Agencies, Air Force, Army and Navy – and their reported contract obligations on ESI contracts over the last few years. A summary of those obligations shows that ESI spending has been nearly $700 million for the last few years for which we have complete data. (See chart below.)

The NDAA’s enactment comes on the heels of the DoD’s December announcement of their awarding a three-year, $617 million joint enterprise license agreement (JELA) for Microsoft desktop and server software products. Presumably, this JELA will be enacted in a way that continues to maximize the economies and efficiencies of these particular software licenses. The agreement also recognizes DoD’s ongoing shift to enterprise mobility with a mobile-first focus as well as the DoD’s push to standardize their IT into their Joint Information Environment. As those efforts continue be on the lookout for the potential of additional JELAs that address other functional areas – from back-office systems to geospatial applications – that push forward similar software standardization.