Making the Technology Modernization Fund work for your agency

It’s proven that IT modernization can increase revenue growth for private sector companies, with that growth a demonstrated return on modernization investments. But federal agencies, funded by the congressional appropriation of taxpayer funds, face a bit of a chicken and egg problem. To realize the benefits of IT modernization – such as increasingly efficient mission delivery and reduced O&M costs – they need to blunt the blow of upfront modernization costs. Finding adequate budget dollars can be extremely competitive in the lengthy federal budget process, though, and can get consumed by partisan squabbles.

The Technology Modernization Fund (TMF), first established in 2017, was designed to short circuit that cycle by providing upfront capital to agencies for IT modernization, with the funds paid back to the TMF from the out-year savings. But the TMF was never, until now, funded at a level that could put a significant dent in the federal government’s huge technical debt. The American Rescue Plan, or ARP, signed by President Biden in March 2021, pumps $1 billion into the TMF and introduces much needed flexibility into the repayment arrangements.

With these recent updates, federal agencies have an increasingly desirable option for securing funding to modernize their IT. Submitting a successful TMF proposal requires investment across agency leadership, though, and a strong business case with defined mission impact.

Crafting a successful TMF application

At a recent breakfast event organized by Accenture and hosted by the Shared Services Leadership Coalition, the National Academy of Public Administration and the Senior Executive Service Association, members of the TMF Board and federal CIOs with experience in getting funding proposals approved answered questions on the proposal process. Later in the event, prior applicants shared their tips for navigating the process.

Panelists emphasized how getting a TMF proposal approved is a multi-stage process, with increasingly more detailed planning required at each step. The most important takeaway was the importance of demonstrating business value. Panelists stressed the urgency of getting senior leadership on board right at the beginning to enable this. One CIO at our breakfast explained how he even brought his agency’s CFO with him to present the proposal to the TMF Board, to show the agency’s business side was fully on board.

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Cross-referencing the public statements of TMF Board members like federal CIO Clare Martorana; debriefing those who’ve presented TMF proposals; and analyzing TMF Project Management Office (PMO) information about proposals and awards that OMB has released, we can derive several shared characteristics of strong TMF proposals:

• Aligning business process modernization with IT investments — and centering it on solid mission delivery impact. The plan needs to be about more than just buying new IT or focusing on a single project. Instead, it needs to be part of a holistic modernization plan, with the customer at the heart.
• Utilizing the expertise and assistance of the TMF PMO in putting together constructive proposals for TMF Board review.
• Including the CFO and impacted program executives in proposal development, review, and ongoing governance executed by the TMF Board, as well as the agency’s internal budget and financial leadership.
• Presenting convincing evidence of agency and contractor experience in delivering successful project outcomes of similar size, scope, and complexity.

Strong proposals also tend to fall into several high-priority modernization categories:

• Modernizing moves of high-value assets (HVAs) to cloud environments with zero trust architecture, upgraded authentication, and fine-grained, context-sensitive permissions for access control.
• Leveraging a cross-government and well-designed solution/platform to secure multiple HVAs based on an analysis of integration points within and across agency enterprise portfolios, for both mission support and mission delivery processes.
• Utilizing solutions provided by and marketplaces developed by the General Services Administration’s designated Quality Service Management Offices, especially in back-office functions like finance, human capital, and grants management.
• Employing a DevSecOps approach to enable agile deployment of modernized applications while following secure practices for software development.

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Underscoring the competitiveness of the awards, Martorana reports that 43 agencies have submitted $2.1 billion in requests for the $1 billion allocated to the TMF under the ARP. Adding further scrutiny, lawmakers are discussing making the effective use of the TMF a FITARA scorecard element.

TMF is a challenge well-worth the effort

At our breakfast, federal leaders showed appreciation for the due diligence and oversight provided by the TMF Board and the competition. The transparency and tough line of questioning ultimately helps ensure that TMF-funded IT modernization efforts are more effective and impactful, they agreed.

Moreover, the integration of government-wide modernization at the infrastructure and shared service level with agency-specific digital investments provides a pathway for agencies to scale TMF funding in systems and applications with sustainable returns over time.

The TMF is a necessary channel for funding the federal government’s urgent IT modernization needs. Agencies that prioritize defining the business value and mission impact of their proposals are best poised to reap its benefits.