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Category Management Policy 16-1


Category Management Policy 16-1: Improving the Acquisition and Management of Common Information Technology: Software Licensing

Each year, the Federal Government spends more than $9 billion on software1 through more than 50,000 transactions, which results in a fragmented and inefficient marketplace. A recent report by the Government Accountability Office (GAO)2 indicates that agencies buy and manage software licenses in a decentralized manner, struggle to create accurate inventories, often purchase unneeded capabilities, and generally do not share pricing, terms, and conditions across Government to facilitate better purchasing. Furthermore, most agencies do not have a designated central oversight authority to manage software agreements, and agency personnel often lack sufficient experience and expertise to effectively negotiate and manage large software agreements. This memorandum addresses these and other challenges in information technology (IT) commodity management, specifically software licensing, in order to help agencies improve the acquisition and management of common IT goods and services. This memorandum follows recent Office of Management and Budget (OMB) guidance regarding new requirements for purchasing desktops and laptops3.

The Federal Information Technology Acquisition Reform Act (FITARA)4 and the Office of Management and Budget's category management initiative5 address a number of IT management challenges by directing agencies to buy and manage common commodities – like commercial software – in a more coordinated way. To fully leverage the Government's vast buying power, improvements must be made at both the agency and the governmentwide level. Agencies need to move to a more centralized management structure so they can reduce underutilization and maximize the use of best-in-class solutions6. In parallel, governmentwide strategies, such as increasing the number and use of enterprise software agreements and developing better inventory tools, are needed to reduce duplication of efforts. The success of these governmentwide steps depends on the improvements that agencies make in their own license management programs.

As explained below, the Enterprise Software Category Team (ESCT)7, co-managed by the General Services Administration (GSA), the Department of Defense (DOD), and OMB, will develop governmentwide software license agreements for mandatory agency use, and OMB will encourage or direct use of best-in-class existing software licensing agreements. The memorandum further requires agencies to develop transition plans in accordance with ESCT guidance to address how agencies will transition their existing agreements to those that are mandated by the ESCT. Agencies must also justify and obtain high-level agency approval for pursuit of new agreements that overlap with the ESCT mandated agreements.


  • 1 For the purposes of this Memorandum, IT software includes the costs of commercial software licenses, subscriptions (including Software-as-a-Service, as defined in NIST Special Publication 800-145) and maintenance (upgrades, patches, limited helpdesk support). This memo only applies to commercial software, not custom services or the development/coding of new software. However, Agencies shall develop agency processes and guidelines to manage software consistent with OMB policies and guidance, to include OMB circular A-130 and the Federal Acquisition Regulation. These processes and guidelines must embrace a total lifecycle approach in accounting for IT software, which would include methods of acquisition, professional services, consulting services, integration services and other administrative tasks necessary for effective software implementation. The processes and guidelines must also include alternatives analyses in a technology neutral manner that is merit-based, and considers such factors as performance, total cost of ownership, security, interoperability, ability to share or re-use, and availability of quality support. In the context of developing requirements for software, this means alternatives should include proprietary, open source, and mixed source technologies that allow the agency to pursue the best strategy to meeting mission needs.
  • 2 GAO-14-413 Federal Software Licenses, Better Management Needed to Achieve Significant Savings Governmentwide
  • 3 M-16-02; https://www.whitehouse.gov/sites/default/files/omb/memoranda/2016/m-16-02.pdf
  • 4 Section 837 of the National Defense Authorization Act (NDAA) for Fiscal Year 2015; https://www.congress.gov/113/plaws/publ291/PLAW-113publ291.pdf#page=148
  • 5 https://www.whitehouse.gov/sites/default/files/omb/procurement/memo/simplifying-federal-procurement-to-improve-performance-drive-innovation-increase-savings.pdf
  • 6 https://hallways.cap.gsa.gov/Gov-wideCMGuidance_V1.pdf
  • 7 The ESCT is a subgroup of the Category Management Leadership Council, formerly known as the Strategic Sourcing Leadership Council (SSLC). The SSLC was established under M-13-02, Improving Acquisition through Strategic Sourcing: https://www.whitehouse.gov/sites/default/files/omb/memoranda/2013/m-13-02_0.pdf.