Senate Appropriations Committee looks to claw back TMF funding

The Senate Appropriations Committee passed a bill out of committee on Thursday that would rescind $290 million from the Technology Modernization Fund as lawmakers work on crafting government funding bills that fit into the debt ceiling deal reached earlier this year, which capped non-defense discretionary spending.

It’s the opposite of what the Biden administration wanted for the technology-focused revolving fund — the White House asked for $200 million for the fund in its fiscal 2024 budget request. It received $50 million in fiscal 2023, but in 2021, lawmakers put $1 billion into the fund as part of the American Rescue Plan Act.

In June, the House Appropriations Committee’s financial services and general government appropriations bill zeroed out any additional monies for the fund but didn’t claw back any of its funding. 

TMF currently has an unobligated balance of over $769 million, according to USAspending.gov. 

However, the number that the board has left to hand out in new investments is likely much smaller. When TMF makes an award to an agency, the agency doesn’t get all the money at once. They get it in stages as work is successfully completed, so some of that unobligated balance is likely already committed for current awards, Suzette Kent, former federal CIO told Nextgov/FCW.

For example, only about $2 million of the over $11 million cloud modernization award for the Treasury Department’s Foreign Intelligence Network, awarded in February, has been obligated so far.

TMF awards do come with repayment requirements, although the board relaxed those requirements for certain projects in 2021. Still, waiting until agencies pay the TMF back for projects — as opposed to having funding from Congress ready to go — could create a "timing challenge" as the board waits for repayments to come in before it can issue new awards to address “urgent needs," said Kent.

"At a time when the government needs to invest more to combat cybersecurity threats and improve technology systems to better serve the public, this proposed rescission is a step in the wrong direction," GSA Administrator Robin Carnahan told Nextgov/FCW, in an email. "TMF investments are doing everything from helping millions of veterans get better access to their benefits and records, to helping expedite inspection for billions of pounds of food each year to feed our kids, military and families. Supporting the TMF is a smart investment – it saves money, enhances security, and improves delivery of services to taxpayers."

Hesitation to invest in the five-year-old fund isn’t new for lawmakers, although the current funding bill back-and-forth on Capitol Hill is colored by the restrictions agreed to in the debt ceiling deal.

During the Thursday markup, Sen. Chris Van Hollen, D-Md., chairman of the appropriations subcommittee on financial services and general government, said that he agreed that TMF “serves a useful purpose.”

But “one of the challenges we faced… was most of the agencies we fund are salaries and expenses, and therefore they would’ve seen very deep cuts in real terms if we weren’t able to take some of the funds from some of the capital budget parts,” he said. “This is always the problem — which is a lot of the things which we need to be doing on the capital budget side we don’t — when we are squeezed overall in terms of the budgets.”

Ranking member of the subcommittee, Sen. Bill Hagery, R-Tenn., said that the bill “claws back $10.5 billion from previously appropriated accounts and reprioritizes that spending.”

That includes a clawback of $10 billion from the money given to the Internal Revenue Service as part of the Inflation Reduction Act, something agreed to as part of the debt ceiling deal.

The accompanying report for the bill notes that although the committee “supports the goals of the TMF,” it also “believes the fund should require full reimbursement over time from funded agencies… so that the fund can be self-sustaining.”

That report also requests information on the reimbursement required for all funded investments to date within 60 days of passage.

Sen. Jerry Moran, R-Kan., a backer of the original law that created TMF, said during the markup that the clawback is a “mistake.”

The fund is meant “to strengthen the federal government’s cybersecurity and reduce wasteful government spending on alarmingly out-of-date systems,” he said, pointing to “many recent examples of successful cyber attacks against the federal government that have exposed sensitive data.

“These breaches are incredibly damaging to the work of the federal government, intrude upon the privacy of Americans, and we should be doing more, not less, to address these vulnerabilities — that’s why funding TMF was my priority,” he said. 

Van Hollen did tell Moran that there are “a number of capital-type accounts” under the financial services and general government purview, and said that “as the process proceeds we look forward to working with you and GSA to see if we can identify funds to put back at least some of these dollars into the TMF account.”

Moran said that he would continue efforts “to see that this is accomplished,” and that he had suggested a particular account for the money to come from.

The fund’s proponents say that its ability to award money more quickly than traditional appropriations and provide multi-year funding important for long-term projects is critical.

Kent told Nextgov/FCW via email that she is “deeply concerned by the short sightedness of this action at a time when our government is experiencing unprecedented cyber challenges (multiple disclosed this week), mounting legacy system modernization issues and the demands for improved digital/mobile services are at historic levels.

“New cyber challenges move much faster than a budget cycle,” she added. “I am hopeful that further floor conversations about the overall impact of the TMF and deeper clarity about the near-term challenges will yield a better outcome.”

Clare Martorana, federal chief information officer and TMF board chair, and Raylene Yung, TMF executive director, wrote in a recent blog post that the fund “has enabled agencies to respond in real-time to critical needs, show their customers that they can deliver modern products and services and through rigorous oversight by the TMF Board — remain accountable and transparent to taxpayers.”

So far, the fund has handed out over $750 million across 45 investments in 27 agencies, according to a GSA announcement last week.

“The TMF is helping agencies make investments that have been decades in the making, due — in part — to Congress continually using IT line items as a bill payer,” Ross Nodurft, executive director of software technology trade group the Alliance for Digital Innovation, told Nextgov/FCW via email. “To see this happen today, as more and more of our core government services and defenses move into digital environments, is disappointing and reckless.”

The funding bill still has to pass both chambers and be signed by the president to make it into law.