Potential Changes Coming to Federal Agency Software Investment

Back in December 2024, the Senate read H.R. 1695 twice on the chamber floor after the bill passed the House of Representatives. Titled the “Strengthening Agency Management and Oversight of Software Assets Act,” H.R. 1695 is intended to increase visibility into and oversight of the software assets used and managed by federal agencies. While bills taken up by the previous Congress might not survive into the next Congress, I believe this bill will resurface because it was introduced in 2023 and taken up again in 2024. The bill therefore has some history behind it.

In addition, the Executive Order (EO) that President Trump signed on January 20, 2025, to establish the so-called “Department” of Government Efficiency (DOGE), included a section that reorganized and renamed the United States Digital Service (USDS). The EO states “The USDS Administrator shall commence a Software Modernization Initiative to improve the quality and efficiency of government-wide software, network infrastructure, and information technology (IT) systems. Among other things, the USDS Administrator shall work with Agency Heads to promote inter-operability between agency networks and systems, ensure data integrity, and facilitate responsible data collection and synchronization.”

These objectives match language in H.R. 1695, and since Republicans in Congress are trying to harmonize or at least support executive branch initiatives with legislation it would make sense for the Senate to send this simple 18-page bill to the president for signature. If it does pass and is signed into law, H.R. 1695 could reshape software and Software-as-a-Service investment by federal agencies.

Bill Sections

According to the bill, capabilities offered by cloud service providers are to be included in agency assessments and inventories of software being used. The bill directs the CIO, CFO, Chief Acquisition Officer, Chief Data Officer, and General Counsel of each agency to complete a comprehensive assessment of the software paid for by, in use at, or deployed throughout the agency. The resulting inventory shall list:

• The software being used, including software entitlements, contracts and other agreements or arrangements, and the largest software entitlements separated by provider and category of software.
• Any software used by the agency, including software developed or built by the agency, or by another agency for use by the agency.
• The contracts and other agreements used to acquire, build, deploy, or use the identified software.
• Additional fees or costs, including for cloud services, that are not included in the initial costs of the contract, agreement, or arrangement for which the agency pays; that are not deployed or in use by the agency; and that are billed to the agency under any contract or business arrangement that creates duplication, or are otherwise determined to be unnecessary by the CIO.
• The extent to which software in use is interoperable and the ways in which the agency is trying to improve interoperability.

Potential Market Implications

The identification of duplicative investments could lead to license consolidation and an overall reduction in spending on software, including on cloud-based capabilities, depending on the extent to which agency organizations might have unwittingly purchased new licenses instead of leveraging existing licenses.

Additionally, the bill authorizes each agency to award a contract for assessment support, if the agency cannot conduct the assessment itself. This section could go away, however, based on the involvement of DOGE in the issue of consolidating/streamlining software licenses.