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The Biden administration’s top technology officials announced plans to use the Technology Modernization Fund (TMF) to strengthen the federal government’s cyber defenses and respond to the Covid-19 pandemic.
The move could mean hundreds of millions of dollars in new spending on IT modernization, much of which would create new opportunities by federal contractors.
Officials from the White House Office of Management and Budget (OMB) and the General Services Administration (GSA) issued a press release May 4 outlining funding goals for the TMF, which received a $1 billion boost from the American Rescue Plan Act (PL 117-2). As a revolving capital fund, the TMF makes small loans — typically $1 million to $20 million — to promising IT projects with the understanding recipients will use the resulting savings to repay the fund within five years. The fund will continue to focus investments on projects that offer cross-government services and infrastructure, public-facing digital services, cybersecurity, and upgraded high-impact IT systems.
But in a departure from precedent, officials announced they will relax the TMF reimbursement requirement in an effort to speed funding to crucial, high-risk programs. Agencies may submit funding proposals that promise only partial or minimal repayment if projects address “critical cybersecurity improvements” or “help agencies meet the demands of the Covid-19 pandemic,” the announcement details. The TMF board, chaired by federal Chief Information Officer Clare Martorana, will accept new funding proposals between now and June 2.
“The updated TMF model provides the clarity and flexibility necessary to encourage federal agencies to prioritize technology modernization while transforming the relationship between the federal government and the public we serve,” said acting GSA Administrator Katy Kale.
This change to the TMF’s repayment structure could lead to a wave of new funding requests throughout the government. In the face of budget uncertainty in past years, the TMF board was reticent to issue large awards or fund high-risk projects. Since its inception in December 2017, the TMF board has disbursed only $89 million in funding to 11 projects. But with a billion-dollar injection in March, the TMF board can afford to take more risks and offer funding to a broader pool of applicants.
The prospect of federal agencies green-lighting hundreds of millions of dollars in new development, modernization, and enhancement (DME) projects represents a tantalizing opportunity for federal contractors, especially those operating in markets like agile software engineering, cloud computing, and cybersecurity.
Potential TMF Remedies
Following closely behind the SolarWinds data breach, the Government Accountability Office (GAO) issued 10 recommendations to strengthen the federal government’s cyber defense posture — many of which could be addressable with TMF funding. For example, the TMF board could support efforts to establish a cross-agency process for managing IT supply chains or fund implementation of basic security upgrades at cash-strapped agencies. Incoming federal Chief Information Security Officer Chris DeRusha also recently stated his intent to implement zero-trust architecture, which aims to stymie attackers that succeed in accessing government networks, as a top priority.
Responding to the global pandemic and ensuing recession will also remain a top policy priority for the Biden administration’s IT leadership. The federal government already obligated close to $5 billion on pandemic response-related IT contracts, with likely billions more necessary in fiscal 2021 and 2022.
The Small Business Administration, a top spender on Covid-19-related IT, saw its emergency loans program added to GAO’s High Risk List. TMF funding could support upgrades to SBA payment systems to monitor for fraud or improper payments. The Department of Veterans Affairs, another agency strained by the global pandemic, could apply for TMF funding to expand veterans’ access to telemedicine services.
Though Martorana and the TMF board still face the challenge of how to allocate funds in smart and sustainable ways, Congress’s billion-dollar investment gives them greater flexibility to make transformational investments in federal IT.
Note: This Is IT is a weekly column by Bloomberg Government focused on information technology matters affecting government contractors.
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