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114th Congress     }                                          {   Report
                         HOUSE OF REPRESENTATIVES
 2d Session        }                                          {   114-587

======================================================================



 
                          MEGABYTE ACT OF 2016

                                _______
                                

  May 23, 2016.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

 Mr. Chaffetz, from the Committee on Oversight and Government Reform, 
                        submitted the following

                              R E P O R T

                        [To accompany H.R. 4904]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Oversight and Government Reform, to whom 
was referred the bill (H.R. 4904) to require the Director of 
the Office of Management and Budget to issue a directive on the 
management of software licenses, and for other purposes, having 
considered the same, report favorably thereon without amendment 
and recommend that the bill do pass.

                                CONTENTS

                                                                   Page
Committee Statement and Views....................................     1
Section-by-Section...............................................     4
Explanation of Amendments........................................     5
Committee Consideration..........................................     5
Roll Call Votes..................................................     5
Application of Law to the Legislative Branch.....................     5
Statement of Oversight Findings and Recommendations of the 
  Committee......................................................     5
Statement of General Performance Goals and Objectives............     5
Duplication of Federal Programs..................................     5
Disclosure of Directed Rule Makings..............................     6
Federal Advisory Committee Act...................................     6
Unfunded Mandate Statement.......................................     6
Earmark Identification...........................................     6
Committee Estimate...............................................     6
Budget Authority and Congressional Budget Office Cost Estimate...     6

                     Committee Statement and Views


                          PURPOSE AND SUMMARY

    H.R. 4904, the Making Electronic Government Accountable by 
Yielding Tangible Efficiencies (MEGABYTE) Act of 2016, was 
introduced to improve federal agencies' management and 
acquisition of software licenses. H.R. 4904 would require the 
Director of the Office of Management and Budget (OMB) to issue 
a directive on software licenses that would require each 
executive agency Chief Information Officer (CIO) to develop a 
comprehensive software licensing policy.

                  BACKGROUND AND NEED FOR LEGISLATION

    In Fiscal Year (FY) 2015, the federal government spent over 
$80 billion on Information Technology (IT) products and 
services, including software licenses.\1\ However, the federal 
government has not effectively managed this spending, prompting 
the Government Accountability Office (GAO) to identify IT 
acquisition as a high risk area in February 2015.\2\ GAO 
designates areas as high risk due to significant 
vulnerabilities to fraud, waste, abuse, and mismanagement.
---------------------------------------------------------------------------
    \1\Data provided to the Committee by the Gov't Accountability 
Office (GAO) (April 2016) (on file with the Committee).
    \2\U.S. Government Accountability Office, ``High Risk Series: An 
Update'', GAO-15-290 (Feb. 2015).
---------------------------------------------------------------------------
    Over the last five years, there have been several IT 
management initiatives to focus agency efforts on creating 
inventories of IT assets, eliminating duplication, and 
effectively managing such assets. However, these initiatives 
have not made effective management of software licenses a 
priority. The MEGABYTE Act is intended to fill this policy gap 
and focus agencies on the management of software licensing.
    In March 2012, OMB launched an initiative called 
PortfolioStat to identify duplication and more effectively 
manage agency IT portfolios.\3\ Under this initiative, OMB 
directed agencies to review their IT investment portfolios in 
order ``to identify opportunities to consolidate the 
acquisition and management of commodity IT services and 
increase the use of shared-service delivery models.''\4\
---------------------------------------------------------------------------
    \3\OMB Memorandum for Executive Agencies from Acting Director 
Jeffrey Zients and Federal Chief Information Officer Steven VanRockel 
(March 30, 2012) available at: https://www.whitehouse.gov/sites/
default/files/omb/memoranda/2012/m-12-10.pdf .
    \4\Ibid. at 2.
---------------------------------------------------------------------------
    In December 2014, the Federal Information Technology Reform 
Act (FITARA)\5\ codified the PortfolioStat initiative by 
requiring agency CIOs to review annually the IT investments of 
their agencies to, among other things: (1) identify ways to 
increase efficiencies and effectiveness of IT investments; (2) 
identify opportunities to consolidate and move to increase the 
use of shared services models; (3) identify potential 
duplication and waste; (4) optimize the IT portfolio; and (5) 
identify cost savings.\6\ FITARA also requires the General 
Service Administration (GSA) to develop a new strategic 
sourcing initiative to enhance government-wide acquisition, 
shared use, and dissemination of software, including the 
purchase of government-wide license agreements. While FITARA 
provides tools to more effectively manage IT assets, the 
MEGABYTE Act will complement FITARA and prioritize more 
effective management of software licenses to promote cost 
savings in this area.
---------------------------------------------------------------------------
    \5\National Defense Authorization Act Fiscal Year 2015 Pub. L. No. 
113-291, Title VIII, Subtitle D (Dec. 19, 2014).
    \6\National Defense Authorization Act FY 2015, Pub. L. No. 113-291, 
Title VIII, Subtitle D (Dec. 19, 2014).
---------------------------------------------------------------------------
    In 2014, GAO focused on potential areas of cost savings in 
software management.\7\ GAO stated that the federal government 
enters into thousands of software license agreements annually 
and that more effective management of software licenses could 
result in fewer duplicate licenses and licenses that go unused. 
However, GAO found only two of 24 major agencies had 
comprehensive software licensing policies in place and only two 
agencies had comprehensive license inventories. Further, GAO 
said federal agencies were not generally following leading best 
practices identified by GAO for managing software licenses. GAO 
stated that, ``until the agencies have sufficient direction 
from OMB, opportunities to systematically identify software 
license related cost savings across the federal government will 
likely continue to be missed.''\8\
---------------------------------------------------------------------------
    \7\Gov't Accountability Office, Better Management Needed to Achieve 
Significant Savings Government-wide (May 2014) (GAO-14-413).
    \8\GAO Report (May 2014) (GAO-14-413) at 7.
---------------------------------------------------------------------------
    In 2015, GAO listed IT software license management as a 
potential cost savings area in its annual report to Congress 
concerning fragmentation, overlap, and duplication.\9\ GAO 
stated that the federal government has already achieved at 
least $250 million in savings as a result of effective software 
license management. For example, GAO reported one major agency 
saved approximately $181 million by consolidating its 
enterprise license agreements. In addition, another major 
agency report savings of approximately $33 million as a result 
of consolidating major IT contracts, including licenses. GAO 
stated that additional savings could result if agencies 
implemented GAO's recommendations. In 2016, GAO again listed 
the IT software license management area as a potential cost 
savings area in its annual Duplication Report.\10\
---------------------------------------------------------------------------
    \9\Gov't Accountability Office, Additional Opportunities to Reduce 
Fragmentation, Overlap, and Duplication and Achieve Other Financial 
Benefits (April 2015) (GAO-15-404SP) at 181. GAO also listed this area 
in the same report in 2016. Gov't Accountability Office, Additional 
Opportunities to Reduce Fragmentation, Overlap, and Duplication and 
Achieve Other Financial Benefits (April 2016) (GAO-16-375SP) at 285.
    \10\Gov't Accountability Office, Additional Opportunities to Reduce 
Fragmentation, Overlap, and Duplication and Achieve Other Financial 
Benefits (April 2016) (GAO-16-375SP) at 285.
---------------------------------------------------------------------------
    In December 2015, OMB released draft guidance on strategies 
for improving federal government spending of more than $9 
billion on software.\11\ The draft guidance would establish an 
Enterprise Software Category Team co-managed by OMB, GSA, and 
the Department of Defense (DOD) to develop government-wide 
software license agreements and encourage the use of best-in-
class existing software licensing agreements. At the agency 
level, the draft guidance would require agencies to: (1) 
appoint a software manager and team to manage agency contracts 
and licenses for commercial software; (2) maintain 
comprehensive annual inventories of software license and 
spending; and (3) aggregate agency software license 
requirements and funding. The draft guidance is a positive 
step, but the MEGABYTE Act will ensure a comprehensive and 
sustained approach to implement leading practices in software 
management, as identified by GAO.
---------------------------------------------------------------------------
    \11\OMB Draft Memorandum for Executive Agencies from Chief 
Acquisition Officer Anne Rung and Chief Information Officer Tony Scott 
on Category Management Policy 16-1: Improving the Acquisition and 
Management of Common Information Technology: Software Licensing 
(December 2015) available at: https://whitehouse.github.io/software-
policy//CategoryManagementSoftware.pdf.
---------------------------------------------------------------------------
    On April 13, 2016, the Council for Citizens Against 
Government Waste wrote a letter in support of H.R. 4904.\12\ In 
addition, On April 14, 2016, Senator Cassidy, the author of the 
Senate companion bill (S. 2340) to H.R. 4904 wrote the 
Committee supporting H.R. 4904.\13\
---------------------------------------------------------------------------
    \12\Council for Citizens Against Government Waste Letter to Members 
of the House Committee on Oversight and Gov't Affairs, April 13, 2016 
available at: http://ccagw.org/legislative-affairs/letters-officials/
support-megabyte-act-0
    \13\Senator Cassidy Letter is on file with the Committee.
---------------------------------------------------------------------------

                          LEGISLATIVE HISTORY

    On April 12, 2016, Congressman Matt Cartwright (D-PA) 
introduced H.R. 4904, the Making Electronic Government 
Accountable by Yielding Tangible Efficiencies (MEGABYTE) Act.
    A companion bill, S.2340 was introduced by Senator Bill 
Cassidy (R-LA) on December 2, 2015. The Senate Committee on 
Homeland Security and Governmental Affairs ordered S.2340 
favorably reported on February 10, 2016.

                           Section-by-Section

    Section 1. Short title
    Designates the short title of the bill as the ``Making 
Electronic Government Accountable by Yielding Tangible 
Efficiencies Act of 2016.''
    Section 2. OMB directive on management of software licenses
    Section 2(a) defines ``Director'' and ``executive agency''.
    Section 2(b) requires OMB to issue a directive to the CIO 
of each executive agency to develop a comprehensive software 
licensing policy.
    Under this OMB directive, the agency CIO must establish an 
agency software licensing policy that identifies clear roles, 
responsibilities, and central oversight authority within the 
executive agency for managing enterprise software license 
agreements and commercial software licenses.
    Under this OMB directive, the agency CIO also shall 
establish a software licensing policy that will:
          (1) establish a comprehensive inventory (including 80 
        percent of software license spending and enterprise 
        licenses in the agency) by identifying and collecting 
        information about software license agreements using 
        automated discovery and inventory tools;
          (2) regularly track and maintain software licenses to 
        assist the agency with implementing decisions 
        throughout the software license management life cycle;
          (3) analyze software usage and other data to make 
        cost-effective decisions;
          (4) provide training relevant to software license 
        management;
          (5) establish goals and objectives for the agency 
        software license management program; and,
          (6) consider the software license management life 
        cycle phases (including requisition, reception, 
        deployment and maintenance, retirement, and disposal 
        phases) to implement effective decision making and 
        incorporate existing standards, processes, and metrics.
    Section 2(c) requires agency CIOs to submit a report to OMB 
on the financial savings or avoidance of spending that resulted 
from improved software license management. This reporting 
requirement begins the first fiscal year after enactment and 
continues in each of the following five fiscal years. OMB is 
also required to make these reports publically available.

                       Explanation of Amendments

    No amendments to H.R. 4904 were offered during Full 
Committee consideration of the bill.

                        Committee Consideration

    On April 14, 2016, the Committee met in open session and 
ordered reported favorably the bill, H.R. 4904, by voice vote, 
a quorum being present.

                            Roll Call Votes

    No roll call votes were requested or conducted during Full 
Committee consideration of H.R. 4904.

              Application of Law to the Legislative Branch

    Section 102(b)(3) of Public Law 104-1 requires a 
description of the application of this bill to the legislative 
branch where the bill relates to the terms and conditions of 
employment or access to public services and accommodations. 
This bill requires the Director of the Office of Management and 
Budget to issue a directive on the management of software 
licenses. As such this bill does not relate to employment or 
access to public services and accommodations.

  Statement of Oversight Findings and Recommendations of the Committee

    In compliance with clause 3(c)(1) of rule XIII and clause 
(2)(b)(1) of rule X of the Rules of the House of 
Representatives, the Committee's oversight findings and 
recommendations are reflected in the descriptive portions of 
this report.

         Statement of General Performance Goals and Objectives

    In accordance with clause 3(c)(4) of rule XIII of the Rules 
of the House of Representatives, the Committee's performance 
goal or objective of the bill is to require the Director of the 
Office of Management and Budget to issue a directive on the 
management of software licenses.

                    Duplication of Federal Programs

    No provision of this bill establishes or reauthorizes a 
program of the Federal Government known to be duplicative of 
another Federal program, a program that was included in any 
report from the Government Accountability Office to Congress 
pursuant to section 21 of Public Law 111-139, or a program 
related to a program identified in the most recent Catalog of 
Federal Domestic Assistance.

                  Disclosure of Directed Rule Makings

    The Committee estimates that enacting this bill does not 
direct the completion of any specific rule makings within the 
meaning of 5 U.S.C. 551.

                     Federal Advisory Committee Act

    The Committee finds that the legislation does not establish 
or authorize the establishment of an advisory committee within 
the definition of 5 U.S.C. App., Section 5(b).

                       Unfunded Mandate Statement

    Section 423 of the Congressional Budget and Impoundment 
Control Act (as amended by Section 101(a)(2) of the Unfunded 
Mandate Reform Act, P.L. 104-4) requires a statement as to 
whether the provisions of the reported include unfunded 
mandates. In compliance with this requirement the Committee has 
received a letter from the Congressional Budget Office included 
herein.

                         Earmark Identification

    This bill does not include any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9 of rule XXI.

                           Committee Estimate

    Clause 3(d)(1) of rule XIII of the Rules of the House of 
Representatives requires an estimate and a comparison by the 
Committee of the costs that would be incurred in carrying out 
this bill. However, clause 3(d)(2)(B) of that rule provides 
that this requirement does not apply when the Committee has 
included in its report a timely submitted cost estimate of the 
bill prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act of 
1974.

     Budget Authority and Congressional Budget Office Cost Estimate

    With respect to the requirements of clause 3(c)(2) of rule 
XIII of the Rules of the House of Representatives and section 
308(a) of the Congressional Budget Act of 1974 and with respect 
to requirements of clause (3)(c)(3) of rule XIII of the Rules 
of the House of Representatives and section 402 of the 
Congressional Budget Act of 1974, the Committee has received 
the following cost estimate for this bill from the Director of 
the Congressional Budget Office:

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, April 28, 2016.
Hon. Jason Chaffetz,
Chairman, Committee on Oversight and Government Reform,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 4904, the MEGABYTE 
Act of 2016.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Matthew 
Pickford.
            Sincerely,
                                                        Keith Hall.
    Enclosure.

H.R. 4904--MEGABYTE Act of 2016

    H.R. 4904 would amend federal laws related to managing the 
federal government's licenses for information technology 
software. The bill would require the Office of Management and 
Budget (OMB) to issue a directive to each federal agency to 
develop a comprehensive policy for software licensing including 
a complete inventory of software licenses and to develop a 
mechanism to track, maintain, and analyze software use.
    Most of the provisions of the bill would codify and expand 
current policies and practices of the federal government. OMB 
has reported that agencies spent about $9 billion in 2015 on 
software licenses. The Federal Information Technology 
Acquisition Reform Act (FITARA) recently directed agencies to 
acquire and manage software in a more coordinated way. In 
addition, the Enterprise Software Category Team, managed by the 
General Services Administration, the Department of Defense, and 
OMB, is developing government-wide agreements for obtaining 
software licenses. Because such efforts to better manage 
software licenses are already underway, CBO estimates that the 
bill would not substantially change those efforts, and that 
implementing H.R. 4904 would have no significant net impact on 
the federal budget over the next five years. The bill could 
affect direct spending by agencies not funded through annual 
appropriations; therefore, pay-as-you-go procedures apply. CBO 
estimates, however, that any net change in spending by those 
agencies would not be significant. Enacting HR. 4904 would not 
affect revenues.
    Some agencies have reported that they have spent less to 
acquire software by more effectively analyzing data on software 
licenses and the Government Accountability Office expects that 
there is the potential for even greater savings government-wide 
through more efficient spending to acquire software. CBO 
expects that by improving software purchasing decisions 
implementing H.R. 4904 could lead to lower federal costs. 
However, we expect most of the savings in this area will 
probably be achieved through current efforts to make cost 
effective decisions when acquiring software.
    CBO estimates that enacting H.R. 4904 would not 
significantly increase net direct spending or on-budget 
deficits in any of the four consecutive 10-year periods 
beginning in 2027.
    On April 21, 2016, CBO transmitted a cost estimate for S. 
2340, the MEGABYTE Act of 2015, as ordered reported by the 
Senate Committee on Homeland Security and Governmental Affairs 
on February 10, 2016. The two pieces of legislation are 
similar, and the CBO's estimates of the budgetary effects are 
the same.
    H.R. 4904 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would not affect the budgets of state, local, or tribal 
governments.
    The CBO staff contact for this estimate is Matthew 
Pickford. The estimate was approved by Theresa Gullo, Assistant 
Director for Budget Analysis.