TMF’s planned cost savings have been ‘minimal’ in reality, GAO finds

Since the Technology Modernization Fund made its first tranche of investments in 2018, “agencies’ planned cost savings are substantial, but actual savings thus far are minimal,” the Government Accountability Office writes in a new report. So far, “awards have not yet been offset by savings.”

The TMF, established by the Modernizing Government Technology Act, was meant to help agencies modernize aging, legacy systems with a revolving fund structure replenished by the cost savings generated by such efforts. 

Since its creation, lawmakers have appropriated about $1.23 billion into the fund, the bulk coming from the 2021 American Rescue Plan Act. 

GAO says that as of February, the board had awarded $636 million to 37 projects. Of those, eight had yielded $14.8 million in cost savings, with five of those eight anticipating another $2.6 million in savings.

Sixteen more projects are estimating about $738 million in savings from their investments. But 13 of the funded projects aren’t predicting any savings and haven’t seen any so far. The new report also includes details on the extent to which agencies’ estimates for cost savings compare to the realized dollar amounts.

This isn’t the first time GAO has taken a critical eye to TMF operations. It reported in 2021 that operating expenses were exceeding fee collection and that the savings estimates for projects weren’t reliable.

TMF has also faced skeptics on Capitol Hill concerned about management of the fund, particularly in terms of how agencies are or aren’t paying back the money they were awarded, as lawmakers say was the original intent of the program. 

A bipartisan reform proposal introduced in the House in September would reauthorize the TMF legislation through fiscal year 2030 and tweak the program’s management and oversight in response to recent critiques. 

GSA requested $200 million in new TMF funding for fiscal 2024, but the Senate and House Appropriations Committees both declined to add new money to the fund in appropriations bills they passed. 

After the $1 billion plus-up from the pandemic relief package, TMF updated its reimbursement guidelines in 2021, including new options for partial or minimal repayment. 

At the time, the TMF Board announced that it was prioritizing cross-cutting projects and those aimed at cybersecurity, customer experience and systems deemed high-priority, noting that it was “aware that requiring full repayment to the TMF has been a barrier to the submission of a diverse set of project proposals.”

Colleen Allen, assistant administrator at the Bureau for Management at the U.S. Agency for International Development, noted in a response included in the GAO report that the over $5 million in TMF funding for the agency’s zero trust architecture project will yield real benefits. 

“Although direct cost savings from implementation… may pale in comparison to the funding provided by the TMF, these funds will enable the agency to accelerate its ZTA initiative across an ‘anytime-anywhere’ organization of over 15,000 users worldwide, improve customer experience and reduce mission risks,” she wrote.