The Technology Modernization Fund Needs a Federal IT Strategy (and More Money)

The Technology Modernization Fund (TMF)—a working capital fund created by Congress to help bring federal government information technology (IT) systems into the modern age—is essential to leveraging technology investments to improve specific mission outcomes across the whole government. However, until the Office of Management and Budget (OMB) specifies a mission-oriented federal IT strategy that offers clear direction for federal agencies—and encourages Congress to contribute more money for IT projects—the TMF won’t be as effective as it could be.

The TMF is very popular. It is open to all federal agencies, it has a governance structure focused on shared services and replicating best practices, and it continues to garner support from agency staff. The TMF also offers agencies a funding mechanism outside of the traditional budget cycle, which is too slow, often operating across multiple years. As Ann Dunkin, CIO of the Department of Energy, said during a recent event, it’s “massively oversubscribed” and, as a result, is not viewed as a fully reliable funding source for most federal agencies. In fairness, the $1 billion cash injection from the American Rescue Plan (ARP) in 2021 was much more than the fund had received in prior years, but that’s more a testament to how woefully underfunded federal IT has been over the decades. Rep. Gerry Connolly (D-VA) said as much recently, claiming that the ARP funding in the TMF is “40 years’ worth of annual appropriations in one bill,” but he also expressed disappointment that the latest $1.5 trillion omnibus spending bill didn’t include additional funding for the TMF. The reality is that federal IT modernization requires many more billions of dollars. Raylene Yung, Executive Director of the TMF, agrees, stating that the money the TMF has received thus far isn’t nearly enough to manage “the flood of requests” from federal agencies. The TMF has received over 130 proposals worth about $2.5 billion from more than 40 federal agencies.

And yet even more than the money problem, the TMF needs direction from an overarching federal IT strategy that focuses on mission outcomes rather than technology outcomes as it currently does. Modernizing high-priority systems, investing in cybersecurity, and improving public-facing digital services are important activities, but these are not the ultimate end goals that federal agencies hope to accomplish through broad IT modernization. Congress seems to understand the need for strategy in IT funding, though it makes the wrong kind of demands from OMB by stating in the latest spending bill that “the federal government must maximize the impact of [TMF and other] funds by developing a strategic plan for use of the funds that will prevent duplication of efforts, direct the funds to their highest use and guarantee coordination among agencies.”

But IT strategy is more than efficient money management. Federal agencies need clear guidance from OMB to collaborate, share services and information, and move collectively toward the same set of goals that align with their agency’s mission directives outside of just modernizing IT. Mission outcomes could include cost (and personnel reduction), ease of use by citizens (including metrics for equity and accessibility), security, or service delivery speed—examples that are already aligned with the Biden-Harris Management Agenda Vision and support federal agencies moving together in the same direction.

The lack of an overarching federal IT strategy is also reflected in the Federal Citizens Services Fund (FCSF). The General Services Administration (GSA) established the FCSF to drive “innovation in government through interagency programs to enhance the federal government’s ability to do business electronically and to disseminate Federal government information to the public,” and receives yearly appropriations, including the same $55 million as last year from the latest spending bill. But why is the FCSF a distinct fund from the TMF, particularly as the GSA also used TMF funding for login.gov, and both funds have directives to invest in public-facing technology? Congress also tasked GSA with coming up with a strategy for this fund, but why should there be separate strategies for two different funds from two different agencies—GSA for FCSF and OMB for TMF—that are investing in the same initiative? Given the limited funds available to agencies for modernizing IT, consolidating the FCSF into the TMF could simplify the application process and encourage alignment with a future federal IT strategy, should OMB establish one.

OMB should identify specific priorities for IT modernization that focus on measurable outcomes that can be applied broadly across the federal government, particularly cost savings and delay-reduction for all users (not just within the federal government, but by users of federal services, including other governments, businesses, and residents). IT modernization initiatives should get investments from funds like TMF by demonstrating how their projects align with this outcome. TMF project delivery should include greater coordination and governance from OMB and GSA, and OMB should continue to monitor outcomes from these projects even after the technology is in place. Then hopefully, with a clear federal IT strategy that includes critical priorities year-over-year, Congress will also loosen its purse strings and ramp up funding for TMF and federal IT modernization overall.