December marks the fifth anniversary of President Donald Trump’s signing of the Modernizing Government Technology Act.
While many in government and industry still like to focus on the Technology Modernization Fund as a big win from this bill, the ability to create IT working capital funds will long-term benefit former Rep. Will Hurd (R-Texas) and Rep. Gerry Connollys ( D-Va.) true coronation.
It is now clear that Hurd and Connolly overestimated the enthusiasm and acceptance of IT-WCFs among appropriators. Only a handful of agencies have been able to convince House and Senate money managers to approve these bank accounts, and most agency CFOs have been reluctant to simply set up these rainy funds without prior approval.
And like most things on Capitol Hill, change is coming, but it’s coming.
The most recent example is President Joe Biden’s fiscal year 2023 budget proposal to Congress.
The number of IT WCFs is growing, albeit much more slowly than needed to handle $7 billion or more in tech debt across government.
The Treasury Department is the latest agency to be given the ability by lawmakers to set up an IT working capital fund. The agency can keep up to 5% of its funds in this new bank account and it can remain available until September 30, 2026.
Treasury has cautiously moved into the cloud, at least at the headquarters level, and many expect its modernization efforts to be matched with the upcoming award of the T-Cloud program, which aims to establish a suite of cloud services for Treasury. several providers will gain momentum.
5 MGT Law working capital fund
By my count, that’s now five agencies with specific IT working capital funds that government agencies use under the MGT Act. The Treasury joins the Small Business Administration, which was first the Department of Labor, the Office of Personnel Management, and the US Agency for International Development, all of which received the blessing of the appropriators.
The budget request states how much money, or at least what percentage, they would like to have in their accounts.
Labor, for example, expects to spend its $3 million on the IT WCF this year.
USAID expects to have up to 5% or $30 million available that will be drawn from six different accounts. The money will also be available for three financial years.
Similar to USAID and Treasury, OPM can save up to 5% of its additional funds in the IT-WCF account and it will be available until September 30, 2026.
SBA said it will hold up to 3% of its funds from two different accounts and will be available until September 30, 2026.
Other agencies such as the Department of Education and the Department of Commerce have also applied for IT-WCF authority over the years but have not received approval.
HUD, EPA also fund IT modernization
In addition to these specific IT WCFs, several other agencies are also investing money in existing working capital funds to address IT modernization.
The department for housing and urban development has an IT fund “for the development, modernization and expansion, adaptation and infrastructure of department-wide and course-specific information technology systems, for the continued operation and maintenance of department-wide and course-specific information systems and for program-related maintenance activities …”
HUD said in the budget that it expects $382 million, of which $339 million will be available by September 30, 2024, and $43 million by September 30, 2026, linking to the MGT seem to make law.
The Environment Protection Agency takes a similar approach to HUD.
It uses a working capital fund established in 1997 and the agencies under the MGT Act to modernize IT services, including “agency postage, Cincinnati language services, background investigations, and Office of Mission Support-managed personal IT services for businesses; financial and administrative systems, employee relocations and a budget formulation system managed by the Office of the Chief Financial Officer; the Business Continuity Agency (COOP) website managed by the Office of Land and Emergency Management; legal services managed by the legal department; regional information technology service and support administered by EPA Region 8; and multimedia and agency maintenance contracts managed by the administrator’s office.”
The EPA projects that by 2023 the WCF will have $414 million.
The Department of Homeland Security is dissolving its working capital fund and will instead “transfer funds to the service management divisions for toll and state-mandated services.” DHS still anticipates $139 million in the working capital fund in 2023 as it liquidates pre-existing commitments to the fund and winds down activities.
Aside from working capital funds, the White House offered mixed support for IT modernization.
Total IT spending for civil government would increase to $65.8 billion in 2023 from $58.4 billion this year. OPM, SBA and DHS are among the biggest winners with significant increases in funding requests.
Meanwhile, the Office of Management and Budget was requesting “only” $300 million for the TMF. This is less than $500 million requested in the 2022 budget. But the lower demand comes after Congress zeroed the TMF in the 2022 omnibus bill, arguing that the remaining $700 million currently in the TMF must be spent, most of which came from the American Rescue Plan Act.
“With the ever-evolving IT and cyber landscape, these investments are an important down payment in delivering modern and secure services to the American public, and further investment in IT will be required to ensure the United States accelerates this.” Achieve pace of modernization,” OMB wrote in the budget request.
OMB, GSA’s other IT funds, are seeing growth
But two other related IT modernization funds would see increases in 2023.
OMB’s IT Oversight and Reform Fund (ITOR) called for $14 million in 2023, up from $12 million. The US Digital Service, which like the TMF benefited from a $200 million windfall in the American Rescue Plan Act, did not ask for new funds.
Congress approved $8 million for the ITOR Fund in 2022.
USDS is using the ARPA money to increase its full-time employees to 271 in 2022 from 161 the year before. It said the increased headcount will “enable USDS to address technology emergencies quickly, ensure access and equity are built into products and processes, and help agencies modernize their systems for long-term stability.”
At the General Services Administration, the administration is targeting a huge increase in the Federal Citizen Services Fund to $115.8 million. The GSA requested $59.2 million in 2022 and $55 million in 2021.
Congress approved $55 million in 2022.
Additionally, the GSA’s Office of Governmentwide Policy is seeking a modest increase to $70 million, from $68.7 million that Congress allocated in 2022.
GSA says that as part of this $70 million request, they would spend $12 million on the acquisition staff training fund and $10.9 million on a working capital fund to continue the E-scheme modernization project.
Beyond the funding requests, OMB also set some policy goals in the budget.
After being fairly quiet for the past two years, OMB has reinvented the concept of shared services.
Along with the efforts of the Quality Service Management Office at the Cybersecurity and Infrastructure Security Agency (CISA), which have been most active in recent years, the Grants Management QSMO, led by the Department of Health and Human Services, has released its first marketplace, according to the OMB in fiscal year 2021, identification of a dozen systems.
“The Grants QSMO is now working to verify that the functionality of these systems conforms to the agreed Grants standards,” the budget states. “The remaining QSMOs are working to release their marketplaces as soon as possible, potentially as early as FY2023.”
Of course, all of those numbers are just that, and lawmakers will honor that request and do with it what they please. For this reason, even more authorities that get approval for the IT-WCF have a better chance to get out of technical debt and provide modern services for citizens and businesses.