Can the Technology Modernization Fund get traction?

While lawmakers debate support for the Technology Modernization Fund in fiscal year 2019, more than half of the 2018 funding is yet to be awarded.

As it stands, three agencies are set to receive $45 million between them for various modernization projects. But looking forward, Senate appropriators zeroed out the funding for next year despite their House colleagues’ inclusion of $150 million in their bill.

Working capital funds tend to be a sticking point for appropriators, who like to control agency purse strings, and just five months after including $100 million for the centralized fund, lawmakers and staffers have pointed to a lack of transparency on the side of the Office of Management and Budget in the awards process.

Speaking on the Senate floor July 31, Sen. Jerry Moran (R-Kan.), one of the Modernizing Government Technology Act’s cosponsors, pitched fellow senators on providing a second year of appropriations.

Moran called the first round of awards “early-stage successes,” but added, “it is clear that [the General Services Administration] and OMB need to provide more information on individual agency proposals submitted to and awarded by the Technology Modernization Fund” both to agencies and Congress.

Sen. James Lankford (R-Okla.), chairman of the Appropriations Committee's Financial Services and General Government Subcommittee, which has jurisdiction over TMF appropriations, said Congress needs more information about how and whether the fund is working.

“We have not seen results from that program yet, and we don’t have any data on it,” he said. “And I wasn’t going to allocate $210 million to something that we don’t if it’s working.”

An administration official told FCW that “federal CIO [Suzette Kent] and GSA have been working closely with Congress to provide the information requested and address their concerns,” emphasizing the importance of TMF in government’s modernization efforts.

Mike Hettinger, a former Hill staffer and currently a lobbyist specializing in procurement and IT issues, made the point that clearer and more-frequent communication will have the dual benefit of placating appropriators and getting agencies more interested and invested in the program.

“The more they know, the more agencies are going to be interested,” he said.

On the agency side, however, one of the challenges may be the TMF process itself.

The requirements put in place to make sure the centralized fund has governance and works may be causing trepidation among agencies, especially considering the dollar amounts they’re on the hook to pay back aren’t that high relative to government’s needs to modernize.

Those requirements include paying back the fund, even if the agency’s modernization project fails, regular progress reporting and an agreement to allow the TMF board to halt or revoke funding.

Rep. Gerry Connolly (D-Va.), one of the Modernizing Government Technology Act’s cosponsors, said the repayment condition is central to the purpose of the GSA-managed fund.

The purpose of the fund is “to help agencies jumpstart their IT modernization efforts and was intended to be a revolving fund that could continuously seed modernization efforts,” he said. “It is not a slush fund.”

Former federal CIO Tony Scott noted the process is “still new for agencies to fully grasp, and there has been some unhelpful activity on the appropriations front where agencies that are considering to apply for TMF funds are told they might get cuts in their appropriations to offset whatever they get from TMF.”

“This was not the intent of TMF,” he added.

Scott, an early proponent of the MGT Act, also raised concerns that “agencies don’t necessarily have the skill sets needed to go figure out the business case” — the repayment plan — “so this is also a gap at the moment.”

As far as what money can be used to pay back the fund in the event a project fails, “that’s an issue that has to be dealt with,” said Scott, adding that either appropriators or “probably OMB has to lead this.”

Despite these challenges, the number of projects has increased since the first round of TMF applications. Hettinger, who was on a panel at a TMF event hosted by GSA and ATARC last in late July, said what stood out to him most was that 20 projects have been submitted for the remaining $55 million.

Pete Tseronis, the former Energy Department CTO who now runs the consulting firm Dots and Bridges, suggested that agencies not exploring TMF awards are foregoing a rare opportunity.

"The TMF affords agencies an unplanned and progressive opportunity to not only embrace the transformative spirit of the MGT Act" and the President's Management Agenda, he said, "but also to accelerate [and] incubate mission-focused innovation with … state-of-the-art technology capabilities" and funding fronted by the central fund.

Even for agencies that don’t plan on using the centralized fund — instead opting to use an agency-level working capital fund, which Rep. Will Hurd (R-Texas) has long insisted should be the “meat” of the MGT Act — Congress may need to step in to make that possible.

The Small Business Administration, whose CIO Maria Roat serves on the TMF Board that steers modernization dollars, “intends to establish our own working capital fund, but it will take congressional action to allow us to do so,” said Deputy CIO Guy Cavallo. “Without that action, we are prohibited from establishing such a fund.”

Yet even with the early growing pains, Scott said he still believes the TMF fund “will pay off,” and appreciates the support from the administration on this front.

“No one ever said it was going to be easy, but I like the momentum that is building,” he said.

FCW's Troy K. Schneider contributed reporting to this article.