Money Flows Slowly From Tech Modernization Fund: This Is IT

By Laura Criste

The Technology Modernization Fund Board has awarded money for seven projects worth a total of $89.4 million since its establishment in March 2018. But only $13 million of the awarded money has been transferred so far from the fund to agencies. And of the $125 million appropriated for the fund in fiscal years 2018 and 2019, $35.6 million remains to be awarded.

The TMF is a government-wide information technology fund for modernizing agency IT systems. Agencies must submit project proposals which are then considered by the board. The fund was created by the Modernizing Government Technology Act, which became law as an amendment in the Fiscal 2018 National Defense Authorization Act (Public Law 115-91). The law authorized as much as $250 million in appropriations in each of fiscal years 2018 and 2019.

For fiscal years 2018 and 2019, lawmakers appropriated just a quarter of the $500 million that the MGT Act had authorized for the two years. Fiscal 2018 appropriations were $100 million, and the fiscal 2019 appropriations bill that became law on Feb. 15 included $25 million. Because just $125 million of the $500 million was appropriated for fiscal 2018 and 2019, the MGT Act’s spending authority for the remaining $375 million will expire.

Slow to Start Spending

The board has chosen seven projects across five agencies and set aside $89.4 million to pay for them. Although much of the fund’s appropriated money is spoken for, not much of it has been disbursed and even less has been awarded on contracts.

The board doesn’t provide all the money for a project in one payment, and has transferred just $13 million to agencies. The board wants periodic updates in exchange for incremental funds to ensure that if a project fails or the agency is unable to pay back the TMF, the full award amount isn’t lost.

Agencies have five years to pay back the fund using the savings that the investments are supposed to make possible. Once those funds are repaid, the board can award more IT modernization projects, continuing the cycle.

Agencies have awarded contracts for just three of the seven projects so far, and of those, only two have spent money to date:

  • The Department of Housing and Urban Development obligated $4.6 million to Salient Federal Solutions Inc. to migrate five critical business systems from an on-premises Unisys Corp. mainframe database to the cloud. HUD expects the program to save $8 million annually, and the total TMF award is $20 million.
  • The Department of Agriculture has spent $1.4 million of the $10 million TMF total award amount to establish the Farmers.gov Citizen Experience Portal.

The awarded contract with no spending so far is the Energy Department’s initiative to move its 45 separate on-premises email systems to the cloud. The TMF Board has allotted $15.2 million to the project and has transferred $4 million so far.

What’s Ahead

Four projects haven’t yet received transfers from the TMF.

  • The Labor Department’s paper-to-electronic visa application transformation could be worth as much $3.5 million.
  • The General Services Administration, with a $15 million investment from the TMF, plans to modernize 88 applications and transition legacy software to open-source technologies.
  • USDA is using a $5 million TMF investment to work toward a shared services cloud platform model and migrate 10 applications to the cloud.
  • GSA on Feb. 11 was awarded $20.7 million to upgrade its payroll, work schedule, and leave management software, NewPay.

Although these projects haven’t awarded TMF funding to contractors, agencies are likely to add the funding to existing contracts or task orders that have already been awarded, rather than competing the work separately, to get the projects started more quickly.

The TMF will add funding to GSA’s previously awarded $2.5 billion NewPay contract to accelerate the establishment of a cloud-enabled software-as-a-service solution. GSA is likely to award the extra funding to at least one of the six vendors that won spots on the NewPay contract: Carahsoft Technology Corp., Immix Technology Inc., Deloitte Consulting LLP, Grant Thornton, the Arcanum Group Inc., or CGI Federal Inc.

For the other three projects, clients can use BGOV’s Opportunity Search to set an alert in case there are any competitions for the work. This saved search uses keywords from the project descriptions and narrows the results by GSA, USDA, and Labor. Clients can save the search and set an alert to be notified about any new solicitations that meet the criteria.

Future projects will probably be similar to the seven funded so far. The TMF Board specified last year that it was looking for projects that emphasize shared services and services to citizens. At least four of the projects have a citizen-facing digital services focus and the remaining projects are focused on cloud migration. The $35.6 million remaining in the TMF will probably fund projects with cloud and digital services angles.

To contact the analyst: Laura Criste in Washington, D.C. at lcriste@bgov.com

To contact the editors responsible for this story: Daniel Snyder at dsnyder@bgov.com; Jodie Morris at jmorris@bgov.com

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