A better way to manage modernizing funds

Implementing modern procurement technology and best practices is an investment, not an expense, which will deliver returns over time.

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All around the world, commerce, industry, transportation and health care are being transformed by digital systems and processes enabled by cloud computing and software-as-a-service platforms. While much of the powerful technology that now runs our world -- and expands what we can accomplish as individuals -- would not be possible without government funding, support and infrastructure, the U.S. government is significantly behind the private sector in its ability to deliver digitized services.

Technology and infrastructure modernization has been a primary focus for the last several administrations. The current administration passed the Modernizing Government Technology (MGT) Act to allocate funds to federal agencies to update legacy IT systems. Agencies should use these funds, according to official guidance, to invest in improving service delivery to the public, securing sensitive data and systems and increasing efficiency.

Although the connection between the MGT Act and procurement technology may seem unclear, the White House memo on implementing the program spells it out. "Successful projects will demonstrate a strong execution strategy, technical approach, and have a strong team with a demonstrated history of successful modernization efforts. Agencies should, to the extent practicable, consider the adoption of commercial technology solutions in their proposals and provide a strong technical approach and acquisition strategy to implement those solutions."

Modern technology requires modern procurement

The last phrase of this core directive stands out. Not only must federal agencies work on moving legacy systems to the cloud, identify commercial SaaS solutions that enable 21st century service delivery and deploy more sophisticated cyber security defenses -- they must approach these complex projects armed with intelligent, integrated procurement technology.

Allocations from the Technology Modernization Fund (created by the MGT Act) are still in process. The TMF offers a limited pool of resources, and each agency awarded funds will be under pressure to show results.

The MGT Act also authorized CFO Act agencies to establish working capital funds to modernize their IT systems. Rep. Will Hurd (R-Texas), who introduced the MGT Act, considers these capital funds to be the heart of the legislation, and he has put significant emphasis on transparency about how the funds are being used and what impact they are having.

Comprehensive procurement technology platforms can help government agencies get started, identify reliable suppliers, make smart investments and enable transparency and compliance. In fact, the White House's "Cloud Smart" strategy is focused on enabling improvements in three main areas: security, workforce -- and procurement. The policy, outlined by Federal CIO Suzette Kent in September 2018, "stresses the government's bulk purchasing power as it pushes cost savings, faster procurement, and increased standardization" and urges focus on "category management, service level agreements, and security requirements for contractors." Implementing modern procurement technology and best practices is an investment, not an expense, which will deliver returns over time.

In other words, it will be difficult and costly for agencies to pull off modernizing the digital systems and services without the data-driven intelligence, tracking and reporting capabilities of modern procurement systems. The General Accountability Office has added IT acquisitions to its high-risk list because such a large portion (often cited at 80 percent) of agency IT budgets are spent on keeping legacy systems running that there is nothing left for strategic growth, planning or innovation. Put simply, the effectiveness of the federal government is being actively undermined by agencies' inability to efficiently contract or purchase reliable IT solutions and services.

Cloud-smart lets agencies adapt proven solutions from the private sector

Not surprisingly, the universal recommendation is for agencies to move their legacy systems and IT operations to proven commercial cloud offerings whenever possible. Digital transformation and cloud computing have helped all kinds of business and industrial enterprises deliver maximum value, manage risk and develop agility and resilience. Federal agencies face similar challenges, but often under more dynamic conditions. Public expectations for online and self-service interactions with government are rising while budgets are falling. Political constraints on allowed suppliers are tightening given heightened fears over foreign state-sponsored espionage and sabotage. Ongoing international trade disputes and geopolitical unrest as well as constant regulatory and policy shake-ups add to the uncertainty.

Fortunately, federal agencies can benefit from lessons already learned in the private sector. By adapting proven best practices in IT procurement, vendor assessment and supply chain management from successful companies, federal IT leaders can build smarter, more collaborative and more flexible organizations. Digitization of contracting and acquisitions processes eliminates manual and paper-based procedures, integrates agency and supplier workflows and ensures reliable, comprehensive data capture for better visibility, insight and transparent accountability.

Even though extensive government contracts are often won by large suppliers, they are still vulnerable to data breaches. It's critical to closely manage supplier risk through 360-degree visibility, monitoring and updated scorecards.

Digital transformation is critical to agency sustainability and resiliency

In spite of all the hard work and challenging obstacles involved in digital transformation, the benefits are too vast to dismiss:

  • More critical services delivered more expediently to more citizens at lower cost, with fewer bureaucratic hassles. 
  • Better collaboration across agencies and more innovative efforts to build user-friendly interfaces with the public.
  • Ability for agencies to leverage and respond to emerging technology like autonomous vehicles, smart cities, internet of things and artificial intelligence.
  • More resilient, scalable and update-able systems in place, enabling agencies to sustain progress through administration turnovers, policy changes and periods of crisis.

As federal agencies build up their working capital funds and await final allocation of MGT Act funds, they can still drive modernization efforts forward. The first step for most agencies is to get their digital procurement systems up and running, gather insight and ideas from the private sector and begin the crucial work of setting up and integrating supplier networks. The key is to identify systems leveraged successfully in the private sector that offer the flexibility to meet unique federal requirements and adjust as those evolve. When the time comes to implement, track, and report on technology investments, chief procurement officers will be cloud-smart and ready to show how they're building a government that better serves citizens now and into the future.

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