Committee reviews bill aimed at preventing vendor lock in government software contracts

A business coalition told the Joint Committee on State Administration and Regulatory Oversight that state software purchasing contracts sometimes contain licensing terms that prevent an agency from running already purchased software on generally available servers or in the cloud of the agency’s choosing. Scott Traxton, representing the Coalition for Fair Software Licensing, urged the committee to approve S.2150, a narrowly tailored bill that would prevent future state contracts from containing provisions that artificially restrict the state's ability to deploy software designed to run on generally available hardware or hosting environments.

Witnesses described the problem as “vendor lock,” where restrictive license provisions lead purchasers to buy additional services from the same vendor rather than use the hosting or cloud environment that best suits the agency. Traxton cited federal activity — including a U.S. Federal Trade Commission inquiry into certain legacy vendors and a 2024 House direction for agency review of software license management — and said similar laws have passed in several states (Colorado, Missouri, Illinois, New Hampshire, Indiana and Ohio).

Proponents said the bill would not bind agencies to a particular cloud provider or require state agencies to use a particular software vendor; rather, it would preserve agency choice, competition and cybersecurity resilience. Committee members asked for practical examples of the cost impact; witnesses referred to federal and GAO analyses that have estimated large inefficiencies and cited at least one instance of very large additional federal spending tied to restrictive licensing terms. The committee took testimony and asked for written materials; no vote was taken at the hearing.