Agencies Can’t Dine and Dash on Technology Modernization Fund, Official Says

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Awards are an advance, not a grant, and the program office has ways to make sure the fund stays solvent.

The Technology Modernization Fund—created as a resource for federal agencies with high impact and cost-saving IT improvement projects—is not a free source of money, according to the executive director of the program management office.

“We’re not a grant program where you’re just getting the funding,” Executive Director Elizabeth Cain said during the General Services Administration's Future Services Now conference organized by the Emerging Citizen Technology program. “We’re more like a loan or an advance, where you’re getting the funding up front but then you definitely have to pay it back.”

The Modernizing Government Technology Act established the TMF as a source of money designed to support governmentwide modernization efforts well into the future. Agencies have five years to repay the funding according to a payment schedule agreed to by the recipients, TMF Board and the program management office.

Cain said the TMF Board—chaired by federal Chief Information Officer Suzette Kent and made up of technology leaders from across government—looks at several criteria when evaluating proposals, with the ability to repay the fund very high on the list.

A number of checks and balances are in place to ensure the fund remains self-sustaining, starting with the board’s deliberation process. Once an award is made, that oversight continues in the form of incremental payments.

“So, if we make a $10 million award, we’re not taking out one of those big checks for $10 million; you’re getting a little bit for your first sprint, a little bit for your second sprint. And, oh by the way, if your project doesn’t hit those milestones, you might not get that next distribution,” she said, adding that this system “drives accountability” and ensures there will be funding available for future projects.

Down the line, if the agency has issues meeting the repayment schedule, they can work with the program management office to restructure the plan and possibly even get a short extension. What they can’t do is forgive the debt and move on.

“Congress, in their wisdom, did not give the TMF PMO the ability to write off bad debt,” Cain explained. And the board has options if an agency stops making payments and won’t return phone calls.

“The other thing we can do is reach up and over into your account and take our money back,” Cain said. “That’s our very last resort and one we don’t plan on using. But that is what we would do if an agency really welshes and are not working with us … that’s when we get out the claw.”

To date, the fund has awarded a total of $45 million to three projects, each of which has received initial funding to begin their modernization work. An additional $55 million remains in the fund and the board is continuing to review proposals for future awards.

Congress is also debating whether to increase the fund’s baseline above $100 million. A bill appropriating funding for a host of government agencies—referred to as the Financial Services and General Government spending package—is currently in conference between the House and Senate. The House version requests an additional $150 million for the fund while the Senate bill included zero additional funding. The conference will be the last chance for lawmakers to add money to the fund without introducing new legislation.