Biden administration officials announced on Tuesday that payback requirements will be relaxed for some projects funded by the recent $1 billion addition to the Technology Modernization Fund. Administrators want urgently needed upgrades that help respond to the pandemic or improve the cybersecurity of federal agencies.
The federal government will relax payback requirements for projects addressing urgent cybersecurity, pandemic response and IT modernization needs that draw on the $1 billion addition to the Technology Modernization Fund (TMF) included in the American Rescue Plan Act.
In a joint statement, the Office of Management and Budget and General Services Administration announced on Tuesday that the updated model will foster cross-agency collaboration and allow the TMF Board to focus on four proposal categories, including modernizing high-priority systems, cybersecurity, public-facing digital services and cross-government services and infrastructure.
The TMF, a revolving fund of no-year money, was established in 2017 but its capitalization spiked from $150 million to more than $1 billion with the passage of the Rescue Act this March. The fund was created with strict reimbursement requirements to allow for continual funding of new projects. At a recent Senate hearing, current and former technology officials noted that the payback requirements could be an impediment to funding modernization projects.
GSA Acting Administrator Katy Kale said the updated TMF model "provides the clarity and flexibility necessary" for agencies to address technology modernization efforts "while transforming the relationship between the federal government and the public we serve."
"It is more aggressive," she added about the updated TMF model, "as well as more ambitious – to anticipate the demands of tomorrow."
The new repayment model was announced after House Democrats urged OMB, GSA and the TMF Board to create a plan for how it will go about selecting investments following a $1 billion injection in funds provided in the American Rescue Plan. Lawmakers on the House Oversight Committee had expressed concerns the repayment model may "atrophy" since reimbursement requirements were removed from the text of the law during the budget reconciliation process.
"We strongly urge the administration not to let the reimbursement model atrophy during the expenditure of the investment made by the American Rescue Plan," lawmakers including Reps. Gerry Connolly (D-Va.) and Carolyn Maloney (D-N.Y.) stated in an April letter to GSA and OMB leaders.
"Smart IT investments are integral to the federal government's mission and were the driving reason behind our effort to secure $1 billion for the TMF in the American Rescue Plan," Connolly, the chairman of the Government Operations subcommittee of the House Oversight Committee, told FCW in an emailed statement. "The administration was quick to take the opportunity to brief and engage my subcommittee on their plans, and I look forward to continuing my work with them to ensure the TMF is adequately reimbursed and agile IT modernization becomes the norm across government."
Under the updated model, agencies will no longer be required to provide a full repayment for certain projects, with partial repayment provisions provided for those with a "strong positive impact" that will "yield some financial savings," the statement read.
The statement also said minimal repayment guidelines would be offered to projects addressing "the most urgent IT issues facing our government," including when those investments were "unlikely to create direct cost savings."
Among the critical issues the agencies hope to address with the $1 billion injection in funds include a federal response to the SolarWinds hack, as well as addressing the public's needs throughout the COVID-19 pandemic, according to Federal CIO Clare Martorana.
David Wennergren, CEO of the American Council for Technology and Industry Advisory Council (ACT-IAC), said one of the key intents of the model update was to "accelerate modernization by getting more projects funded and more agencies around the right priority topics that help make the biggest difference in IT modernization."
"The modernization fund has been around for a while, it's had a little bit of money and has done a few good projects," he added, "but if you're going to effectively move the needle, you're going to have to spend more money on more projects which deliver meaningful results."
TMF currently provides funding to 12 projects across seven agencies. The board is accepting project proposals for priority consideration by June 2, 2021.