May 25 2021

TMF Will Prioritize Agencies’ Cybersecurity, Modernization of High-Priority Systems

The federal Technology Modernization Fund is being recalibrated and will focus on new funding priorities and have more flexibility in repayment.

One of the core elements of the 2017 Modernizing Government Technology Act was the creation of the Technology Modernization Fund, a central fund agencies could tap to fund IT modernization projects. Now, the TMF is transitioning into version 2.0.

Earlier this month, the Office of Management and Budget, alongside the General Services Administration, which oversees the fund, announced significant changes to its priorities and how it operates.

GSA said that the TMF, which received a $1 billion appropriation as part of the American Rescue Plan Act — by far its largest annual allocation since the fund’s creation — would focus on “urgent IT modernization needs, bolster cybersecurity defenses, foster cross-agency collaboration, improve the delivery of government services for all Americans, and support services that can be scaled for impact across government.”

Additionally, OMB and GSA said in a statement they would consider funding projects that do not expect to yield enough savings to fully repay the amount they draw from the fund. Previously, all approved projects needed to yield enough savings to fully reimburse the fund, but OMB said that the Technology Modernization Board, which selects projects, has been aware that fully repayment “has been a barrier to the submission of a diverse set of project proposals.”

“The repayment flexibility model was designed to make it easier for agencies to access the $1 billion appropriated to the TMF to meet the urgent cybersecurity and IT modernization demands that we need,” Federal CIO Clare Martorana tells Federal News Network. “Now, agencies can apply for projects that previously were out of their reach.”

Initial project proposals are going to be reviewed on a rolling basis, but projects that agencies submit by June 2 will receive expedited consideration, according to OMB.

TMF to Focus on Modernization, Cybersecurity, Shared Services

OMB says that it’s trying to balance both immediate response needs and congressional intent for the additional TMF funding in the American Rescue Plan Act. Accordingly, the TMF board is going to prioritize projects in the following areas:

  • Modernizing high-priority systems: This will include the modernization and support of “priority agency assets and services.” OMB says this may include “systems already designated as High Value Assets (HVAs) that have significant impact, or longstanding security issues.”
  • Cybersecurity: The TMF board will support projects that “move the government to a consistent baseline of maturity in cybersecurity and privacy protections, including addressing gaps uncovered in the recent SolarWinds incident.” Importantly, this may include identity, credential and access management solutions, OMB says, as well as projects that move an agency to a zero-trust architecture “while maintaining the capabilities and performance that agencies need to deliver modern services and succeed at their mission.”
  • Public-facing digital services: The TMF will support the “creation or modernization of digital services with dramatic benefits to increasing access and equity, reducing fraud, and improving service delivery, including core issues exposed by the COVID-19 pandemic,” OMB says.
  • Cross-government collaboration or scalable services: TMF will prioritize funding “public-facing or agency-facing shared services, including technical infrastructure that can offer agency technology teams a scalable, secure foundation for the rapid creation and modernization of digital services.”

In response to a question about whether it was up to an agency to make the case to the TMF board that it is modernizing a high-priority or public-facing system or service, Martorana says: “Agencies are encouraged to submit their proposal to the board because they are their own best advocate. No one knows their IT portfolio and mission better than them, therefore they are best positioned to make the case and explain their proposals to the board.”

Gordon Bitko, a former FBI CIO and now senior vice president for policy at the Information Technology Industry Council, tells Federal News Network that OMB and GSA clearly want to speed up the release of TMF funds. “I think we will see agencies that are well positioned because they have modernization plans that are already in flight and this is an opportunity to tweak or accelerate it,” he says. “We will also see others who haven’t really been as effective in thinking about modernization may be starting from scratch to get proposals to the TMF board.”

DIVE DEEPER: These are the federal IT trends to keep up with in 2021.

OMB, GSA Offer Greater Flexibility on Repayment

In addition to shifting the focus of what kinds of projects the TMF will prioritize, OMB and GSA also made it easier for agencies to repay the fund with a new tiered approach.

“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,” GSA Acting Administrator Katy Kale said in a statement. “It is more aggressive — to meet the urgent technology needs of the federal government today, as well as more ambitious — to anticipate the demands of tomorrow.”

The new approach breaks down as follows, according to OMB:

  • Full Repayment “The TMF has historically operated under a full repayment model, and will continue to do so for projects that yield financial savings realized by the proposing agency,” OMB says. “The Board expects this to apply to single-agency investments with direct cost savings, such as replacing a legacy system with one that can be operated and maintained more efficiently.”
  • Partial Repayment. Some projects will merit partial repayment, “depending on the positive impact to the public and agency operations, alignment with overall TMF priorities, and the likelihood that the proposing agency can realize financial savings,” OMB says. If choosing this option, agencies should note whether its proposal “can be made financially recoverable at a 25%, 50%, or 75% repayment level.”
  • Minimal Repayment. GSA and OMB will consider approving “the most flexible payment arrangements for proposals that tackle the most urgent IT cybersecurity and modernization problems facing our government, and where cost savings are not easily realized by the proposing agency,” OMB says. Importantly, this includes proposals that “help agencies respond to gaps exposed by the SolarWinds incident and meet the demands of the COVID-19 pandemic, and can include projects not included in the proposed Cyber Reserve funding in the FY2022 budget.”

OMB says that “shared services that promise to address high-urgency areas across multiple agencies will receive high priority, and may receive TMF funds that allow the deployment and growth of these services over multiple years.” Agencies are expected to use that funding flexibility “to budget for the sustained reimbursement of these shared services once these TMF funds are fully used,” OMB says.

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