Government watchdog calls out TMF for low rate of cost recovery

The Government Accountability Office said its previous recommendations for the Technology Modernization Fund have not been followed, leading to unrecovered operating costs and unreliable proposal cost estimates for new projects.

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The General Services Administration has failed to implement recommendations that would help offset operating costs for the Technology Modernization Fund , according to a new government watchdog report.

The Government Accountability Office (GAO) report released Dec. 10 said that GSA and the Office of Management and Budget have not yet implemented a plan to fully recover operating expenses for the TMF program management office, as the independent oversight agency had previously recommended, and that cost estimates for TMF proposals remained unreliable due to a lack of proper guidance.

When TMF was established as part of the Modernizing Government Technology Act in 2017 the program included robust cost recovery from participating agencies. The payback provisions were designed to keep the program solvent even in the absence of new funding. However, a $1 billion infusion to the fund made under the American Rescue Plan Act included guidance that relaxed payback requirements.

GAO previously released a report warning of the TMF's possible operational issues in 2019 which raised the issue of a shortfall in program management fees and called for an improved fee collection plan.

GSA received fee payments of nearly $810,000 as of August 2021, covering about 29% of the program management office's total operating expenses of $2.8 million since 2018, according to the new report. While fee collections have steadily risen since the TMF program management office was first launched, GAO suggested that it was not clear whether those fees can fully offset the program management office’s operating expenses.

“OMB and GSA have not yet implemented GAO’s prior recommendation to develop and implement a plan to fully recover operating expenses with fee collection,” the report said. “Doing so would provide greater assurance that fees collected would be sufficient to offset operating costs.”

The report also noted that, “given the significant expansion in available TMF funds,” it was “increasingly important” for GSA to provide improved instructions for the TMF cost estimate template.

The report also stated that of 11 projects examined by GAO, only two have shown any cost savings.

The agency had previously indicated that the only guidance for TMF proposal cost estimates was a template the program management office provided on the TMF website in 2019, which lacked written instructions regarding data elements and what fields were required to be completed.

"Given the hundreds of millions of dollars remaining in the fund to address urgent IT modernization challenges, and the changes to the types and size of awards the fund is making, it is increasingly important that GSA implement our prior recommendation to improve the instructions for the TMF cost estimate template required of each proposal," the report stated.

The report did not include reply comments from GSA or OMB.