Technology Modernization Fund nears expiration, despite bipartisan backing

Authorization for the revolving fund set up to financially back government technology projects will expire in just over a week without congressional action.

The General Services Administration, which houses the Technology Modernization Fund, has been quiet about the fund since the second Trump administration started in January, opting not to publicly announce either of the two new projects the fund financed this year.

But as a Dec. 12 authorization cliff nears, political leadership at the Office of Management and Budget and GSA are making their support for the fund known to Congress, according to an industry source and another person familiar with the effort to reauthorize TMF, who weren’t allowed to speak on the record.

If the TMF isn’t reauthorized, GSA will be able to continue to oversee existing investments, but not make any new ones, the latter said — meaning that nearly $160 million in funding would effectively be frozen.

Lawmakers created the revolving fund in 2017 to help address a chronic government IT problem: modernization projects often take years, while Congress doles out money annually, when it passes a budget at all. The consequence of that structure is a government that still uses decades-old technology that can be clunky and insecure.

The fund works well and helps solve that problem, its proponents say. It has bipartisan backing from lawmakers like Rep. Nancy Mace, R-S.C., and Sen. Gary Peters, D-Mich., yet it still may have to stop awarding new projects if lawmakers don’t act.

“Reauthorizing the TMF is essential to ensuring stable, flexible funding that helps agencies deliver secure, modern services for the American people. We look forward to working with Congress on the reauthorization effort,” a GSA spokesperson said in a statement, calling the fund “one of the federal government’s most effective tools for rapidly strengthening cybersecurity and improving high-impact systems.”

Despite that support, lawmakers have at times been skeptical of the TMF’s funding structure since setting it up in 2017, often deciding not to put more money into the fund outside of the $1 billion plus-up for the fund in the American Rescue Plan Act. Congress later clawed back about $100 million of that funding.

The initial premise that the fund would be a self-sustaining mechanism fueled by repayments from agencies that have reaped savings from their modernizations hasn’t always panned out. Some projects simply don’t result in savings. The Biden administration temporarily lowered repayment requirements to account for this, although the Trump administration is now requiring 100% repayments in most cases.

The Trump administration also proposed a new funding model for TMF in its 2026 budget request, asking lawmakers for a new tool that would let GSA take money from other agencies and put it into the fund, instead of asking appropriators for more money.

Whatever challenges TMF has faced, its backers say it’s working. 

“By providing flexible capital through a merit-based process overseen by federal technology leaders, the Fund enables agencies to undertake complex modernization initiatives that would otherwise remain trapped in multi-year budget cycles,” the Alliance for Digital Innovation — a trade group of commercial technology companies — wrote in a November letter to the top leaders in the House and Senate, expressing support for the fund.

“This structure ensures accountability while giving agencies the agility to respond to rapidly evolving technology landscapes and emerging threats,” the letter continues.

The Professional Services Council, a trade group of companies in the government technology and professional services industry, has also asked lawmakers to reauthorize the fund.

TMF has funded projects like the Customs and Border Protection’s move from a mainframe to the cloud and the Labor Department's transition away from paper in the labor certification process. Other projects have focused on cybersecurity or digital services for Americans. Overall, the fund has made 70 investments totaling over $1.05 billion. 

As for how lawmakers could get the fund’s reauthorization over the finish line, a reauthorization bill introduced earlier this year by Reps. Nancy Mace, R-S.C., and Shontel Brown, D-Ohio — as well as the late Rep. Gerry Connolly, D-Va., who died in the spring — would renew the TMF and set up repayment requirements meant to keep it operational.

Last year, the House passed a previous version of the bill, but the Senate did not. This year, the proposal hasn’t yet passed out of the House Committee on Oversight and Government Reform, and there’s no Senate companion bill yet.

Some lawmakers are pushing for reauthorization to be included in this year’s must-pass National Defense Authorization Act. A majority spokesperson for the House Oversight and Reform Committee, chaired by Rep. James Comer, R-Ky., told Nextgov/FCW that the committee has asked “in a bipartisan manner” that an extension for the fund be included in the NDAA. 

“This is a shared policy priority with the Administration and the Office of Management and Budget,” they said, also noting that the committee has received letters of support from the Information Technology Industry Council and the Center for Procurement Advocacy, in addition to ADI and PSC.

“I’ll support any measure that moves reauthorization forward,” Brown told Nextgov/FCW. “If Congress lets it expire, nearly $200 million in funding for new projects will disappear overnight — and with it, our ability to tackle urgent technology upgrades across the federal government.”

There’s also a question about whether the fund could be “authorized by appropriations” if lawmakers were to put money into the TMF in a funding bill, the industry source said. 

The Senate included $5 million for the fund in its 2026 appropriations bill, while the House didn’t include any TMF money in their proposal. Congress could also include explicit authorization language in a funding bill. 

“I think the biggest question is, if not TMF, what’s the plan?” Larry Bafundo, former director of the TMF and current president of digital services company MO, told Nextgov/FCW. 

What success looks like for the fund remains a tension point, he said. Is it cost savings, or is it better program outcomes in government?

Either way, “you still have a lot of legacy systems across government — that hasn’t gone away,” he said. “And many of those systems still create risk to programs.”