GAO blames FAR gaps for $10B cloud procurement sprawl
Agencies are buying modern cloud services through a rulebook that still cannot define the thing being bought.
TL;DR
GAO found that outdated Federal Acquisition Regulation language, conflicting Office of Management and Budget and National Institute of Standards and Technology guidance, and weak procurement data are slowing cloud acquisition across 24 agencies. Primes and agency counsel are still bidding and drafting around undefined cloud terms as annual federal cloud contract spending tops $10 billion. GAO names the awkward part: the procurement rulebook has aged more slowly than the market it governs.
GAO’s new cloud procurement report is not subtle about the defect. Federal agencies now spend more than $10 billion a year on cloud contracts, up from $2.3 billion over the past decade, while the Federal Acquisition Regulation still lacks a definition of cloud computing. That is not a vocabulary problem. It is the condition under which contracting officers, primes and counsel have to decide what is being bought, what clauses apply, and how risk gets priced.
The report identifies three frictions that matter for contractors: outdated FAR language, conflicting Office of Management and Budget and National Institute of Standards and Technology guidance, and procurement data too imprecise to support confident buying decisions. According to GAO, 22 of 24 selected agencies primarily relied on historical procurement data for cloud decisions, even though cloud obligations in the retired Federal Procurement Data System were imprecise because of how IT product and service codes were assigned. Moving FPDS functionality into SAM.gov does not, by itself, make old coding practices reliable.
For bidders, the practical consequence is delay and ambiguity rather than a clean new compliance obligation. Cloud solicitations can still carry uneven definitions, inconsistent software expectations, and agency-specific approaches to cost control. That is where legal and capture teams earn their keep, but it is also where government pays twice: once in procurement friction and again in missed savings if agencies cannot measure cloud use accurately enough to manage it.
GAO’s FinOps recommendation is the best measure of how fast this will move. GAO said the General Services Administration should require agencies to use FinOps practices and report their benefits. GSA disagreed, with Administrator Edward Forst saying the agency lacks authority to mandate FinOps use and can instead promote practices and provide contracts that support adoption. That answer may be legally sound. It also means standardization will probably arrive by encouragement, templates and buyer pressure, not by a governmentwide switch being flipped.
The open item is the FAR rewrite now out for public comment. If the overhaul closes the definitional gaps, cloud contracting gets less improvisational. If it does not, agencies will keep buying a $10 billion-plus category through patched guidance, inconsistent data, and voluntary cost discipline. Spending is already moving faster than the rulebook.
Published ·Deep Fathom