News at Smith

Welcome to the 'People's Code' of the United States

Aug 18, 2016
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SMITH BRAIN TRUST — A recent White House memorandum to heads of federal departments and agencies outlining a policy toward “ensuring Government-wide reuse rights for custom code that is developed using Federal funds" could be problematic for vendors that customize software for individual federal agencies, says entrepreneurship lecturer Jonathan Aberman at the University of Maryland’s Robert H. Smith School of Business and founder of TandemNSI, a firm whose mission is to “connect agile innovators to government agencies.

The new Federal Source Code, also dubbed the “People’s Code,” also calls for at least 20 percent of these software projects to be accessible to the public without any additional payment to the developer through the “open sourcing” of their work. Aberman expresses caution in reviewing these changes. “Taken together, these policy steps could be a problem for software entrepreneurs," he says. "As is often the case with announcements like these, the devil is in the details.”

A key issue is the juxtaposition of “government rights” and open sourcing of software products. “A government agency often acquires the right to use a software product specially written for it — and unless the developer specially limits this in their contract with the government, the government will have the right to share it throughout the government without further payment. That is not a new thing," Aberman says. "You see this most often in research and development or prototyping. And, the government quite literally has rights to thousands of software projects that are completed and not used, or are only used by the agency to which they are delivered. Trying to figure out how to cause them to have more utility is a great idea for taxpayers.”

But the challenge, Aberman says, is whether the new government policy would uniformly take software developed for a single government customer and allow other agencies to use it without additional payment to the developer. "The policy does not really describe where this crosses the line from a research and development or prototype project that has no commercial value, and becomes the right to share a commercially viable product.” Moreover, “by adding on the ability for the government to freely share such products by ‘open sourcing’ the resulting code, the issue is raised that a developer writes some code and loses forever not only the right to obtain further sales within the government, but also potential to generate sales in the commercial world.”  

“I would be worried about this as an entrepreneur,” he says. “It’s really a question of ownership: 'Who has the right to commercial gain from the code that is developed with federal dollars?' This is always a hot button for software innovators when they work with the government — even more so for software innovators that do not generally work with the government.”

In the commercial world, the concept of getting royalty payments by licensing proprietary software to a customer is very entrenched, and is based upon the idea that the owner of the software is giving a right to someone else to use it. They are in effect renting the software. An alternative software model — “open source” — instead creates non-proprietary licenses to technology without payment, to encourage collaboration and community development of technology.

Aberman says the coexistence of two distinct licensing regimes allows entrepreneurs to develop software in a broad range of business models. “In fact, many of the reasons why new software can be written so quickly is because of the ubiquity of open source licensing.”

In the commercial world, “different flavors of open sourcing” have emerged, Aberman says. “In some communities software improvements are monetized, provided the underlying technology remains free. And some communities have an established company providing an enterprise-secure or grown up version of the technology that’s proprietary with an open source version that’s free. But, most of the software products currently used on computers and phones would not exist without the effective co-existence of proprietary and open source software in the commercial world.”

The issue is one of predictability and consistency. “In the commercial world, the rules for how to use proprietary and open source licensing are well understood. At this time, projecting the ‘rules of the road’ from reading the 'People’s Code' memorandum is difficult," he says. “Depending on how it becomes structured, including how much proprietary licensing and vendor control of that licensing continues, applying open-sourcing by the government could end up undermining innovation, which is a Federal Government priority alongside efficiency.”

Aberman nonetheless says he credits the government’s intent to better serve taxpayers by aiming to reduce the roughly $6 billion it spends on about 42,000 software acquisitions annually. “The challenge,” he says “is that in serving all of us, the government must ensure that it is an attractive partner for our agile software innovators."



About the University of Maryland's Robert H. Smith School of Business 

The Robert H. Smith School of Business is an internationally recognized leader in management education and research. One of 12 colleges and schools at the University of Maryland, College Park, the Smith School offers undergraduate, full-time and part-time MBA, executive MBA, online MBA, specialty masters, PhD and executive education programs, as well as outreach services to the corporate community. The school offers its degree, custom and certification programs in learning locations in North America and Asia.