Federal CIO Tony Scott: $3.1 Billion IT Modernization Fund Will Reorient Tech Spending

Federal CIO Tony Scott maintained his push for the Obama administration’s $3.1 billion revolving fund to modernize federal IT systems, arguing that it will kick-start a change in how the government purchases technology.

Scott, delivering the opening keynote at the 2016 Brocade Federal Forum in Washington, D.C., pointed out that the federal government spends roughly 80 percent of its $80 billion annual IT budget on maintaining legacy systems, many of which were designed to automate processes, and some of which are decades old. The rest of the IT budget often gets gobbled up by new requirements from Congress and is used to maintain existing systems, leaving “precious little” for upgrades and replacement.

“That’s the world that we live in, by and large,” he said. “Now that’s kind of crazy isn’t it? When you see this at scale, the scale of the federal government, you go, ‘Holy cow, this is insanity! We shouldn’t be doing this.’”

Scott said that not every agency is locked into that model, which tends to be the general pattern, and added that it’s “taken a tremendous amount of creativity for those that want to make change to figure out ways to change that pattern.”

“The time for action is now,” Scott said. “This is one of those situations where it’s not going to get better if we wait, or if we sit on our hands or if we don’t take action.”

Pushing for the Modernization Fund

Scott pointed out that over the decades, the federal government adopted technology to automate processes and kept giving agencies money annually to maintain those automated systems. More than 7,000 different line items get funded in the federal budget, Scott said, and each of those has some IT component. However, the government has not devoted resources to help agencies modernize their technology or work with peer agencies to see if there are more advantageous methods of achieving their objectives.

By spending more and more money each year on simply maintaining legacy systems, Scott said, agencies “have missed multiple generations of advancements in technology,” especially because roughly every five years technology enhancements can deliver “double the capacity or the capability for the same dollar.”

That is why Scott is pushing for the fund, officially dubbed the “Information Technology Modernization Fund,” or ITMF. In early April, the White House proposed legislation to create the ITMF, which would be administered by the General Services Administration.

Scott explained that under the fund, agencies can individually or in groups present business cases to an independent board made up of IT experts, business process change specialists and procurement officials. The board will review the business cases and approve funding for the upgrades to applications and IT infrastructure.

The ITMF will require agencies to submit incremental project plans that will get funded as the upgrades are achieved. The panel will judge funding requests based on how significantly they decrease cybersecurity risks, improve efficiencies and effectiveness, and whether they use cloud services and modern IT architectures.

Scott also noted that the agencies will need to repay the fund. “How are you going to do that?” he said. “I guarantee you there is enough money in that inefficient, ineffective infrastructure and application space that paying back isn’t going to be the problem, from a financial perspective.”

Paying back the fund will also help ensure that modernization projects receive management attention over a sustained period of time, to make sure the investment goes well. And repaying the ITMF will also provide a continuous pool of money for projects. Scott said that the initial $3 billion investment requested by the Obama administration can fund about $15 billion of new applications and new infrastructure over the next several years.

Getting Congress on Board

Scott said the fund has broad bipartisan support and 20 co-sponsors in the House. Late last month lawmakers from both parties expressed support for the bill. As FedScoop reports: “Both Sen. Mark Warner and Rep. Darrell Issa told an event held by the Data Coalition, an open data advocacy group, that the bill was sorely needed to help agencies improve their cybersecurity and rein in the billions spent on maintaining legacy IT systems.”

Rep. Jason Chaffetz (R-Utah), chairman of the House Oversight and Government Reform Committee, said in late May about the fund that he is “warming up to the idea, but I’m not there yet,” according to Federal News Radio. Chaffetz said he wants to “make sure it ultimately leads to savings” and that he will work with Democrats “to try to find a good, plausible solution that will actually work.”

Scott noted that some critics of the fund often ask why the federal government can’t reap the savings from existing programs, like the Data Center Optimization Initiative. The issue, he said, is that the government can’t shut off critical IT systems that send out Social Security checks or keep the federal air traffic control system running while it creates new systems. “You can’t just decide we’re going to turn it all off and wait until we figure out how to replace it,” he said.

Scott said that in the next three years more than $3 billion of equipment and services —ones that the government uses and can still fix and update — will go to “end of life” status, meaning those fixes will no longer be possible. That is another justification for the fund, he argued.

“I have become known as the guy who is all about landing the plane,” Scott said. “We’ve got a plane, folks, it’s flying around, it’s running out of fuel and we have got to figure out where we’re going to land. And in my judgment, this is the way best way for us to make progress.

“It’s not perfect, I will say,” he added. “There’s a whole bunch of things we are going to have work out as we go. But it’s important that we switch course, figure out where we’re going to land, and move expeditiously to get there.”