Federal agencies are plagued by outdated and inefficient legacy technologies. The federal government spends over $100 billion per year on information technology (IT) and other cyber-related investments, but 80 percent of these expenditures are used just to maintain outdated systems. Government systems require modernization to mitigate cybersecurity risks and provide productive services for taxpayers.
The Technology Modernization Fund (TMF) was created in 2017 to reform how federal agencies invest in technology. Congress sought to reimagine the way the government delivers services to Americans by assisting agencies, both financially and in their development process. TMF was established with $100 million in funding, intended to support every stage of modernization. The Fund is overseen by a Board made up of leaders in government IT who have expertise in technology and transformation.
Agencies propose projects to the Technology Modernization Board, which can approve these plans for incremental funding based on the completion of developmental milestones. The organizations are expected to pay back this funding, along with a fee, on an approved timeline within five years of the award. Award reimbursement can be full, partial, or minimal, depending on factors such as the ability of the agency to realize financial savings. The additional fee is partly based on the percent of award amount used, and is intended for the General Services Administration (GSA) to cover TMF operating expenses.
Since its initiation, TMF has funded 29 projects across 17 federal agencies. However, the success of such investments are still not entirely clear. Sen. James Lankford (R-OK), lead Republican on the Senate Homeland Security and Government Affairs Subcommittee on Government Operations and Border Management raised concerns about the Fund in 2018. He opposed requests for additional TMF funding stating, “We have not seen results from that program yet and we don't have any data on it.”
Despite Lankford’s concerns, TMF received $1 billion in funding through the American Rescue Plan Act of 2021. The Build Back Better Act passed by the House in 2021 would have provided another $250 million to the Fund, and President Biden’s 2023 budget proposal requested $300 million more. Considering the scope of the funding available, it is crucial to understand the efficiency of the program and how these tax dollars are being used.
Rep. Gerry Connolly (D-VA), Chair of the House Oversight Subcommittee on Government Operations, has emphasized the need to better confirm the effectiveness of TMF, stating earlier this May, “[w]e must guarantee that TMF enables quicker, more secure, and more efficient service delivery to individuals, families, and businesses.”
Many federal IT modernization projects are ineffective due to lack of oversight and cost overruns. The Government Accountability Office (GAO) has analyzed the timeline of projects funded by TMF. Their report published in 2021 found that “[t]he fund continues to cost more to run than it collects in fees” and “[m]ost of the projects' reported savings estimates continue to be unreliable.” Their update in early 2022 states “TMF continues to lack sufficient fee collection and reliable cost estimates.”
Most recently, GAO released a report for testimony in front of the House Committee of Oversight and Reform that highlights a lack of accountability throughout the implementation and repayment of TMF projects. GAO highlighted several recommendations to address these problems. They advise the Office of Management and Budget and GSA to develop steps to recover operating expenses through fee collection. Their report also directs GSA to implement clear guidance to help agencies complete proposal cost estimates. However, GAO has pointed out that these recommendations have not yet been acted on.
In the 2022 omnibus appropriations bill, Congress did not provide additional funding for TMF due to the amount still unobligated. Yet, 60 agencies have sent 130 proposals to the TMF board, more than allocated resources can meet. Federal agencies want to engage in modernization opportunities and take advantage of TMF. The Fund still has hundreds of millions of dollars to award, so it is essential to create a streamlined process that addresses this demand while ensuring that taxpayer money is being used wisely
TMF has helped improve some agencies’ IT. For example, its recent investment in the National Archives and Record Administration will help digitialize a paper-based records request system, allowing veterans and other citizens to electronically receive records. The scope and outcome of this funding highlight the benefits and opportunities of technology modernization.
Yet, GAO’s concerns about the shortcoming of the program need to be addressed. The intentions behind the Fund was to improve government operations on behalf of taxpayers and to generate savings. If many of the funded programs are not meeting these targets, Congress must ensure that TMF does not become a slush fund for inefficient, low-priority projects, especially at a time when annual deficits exceed $1 trillion.