What’s the Deal with Government IT Modernization Funding?

by | Apr 19, 2021

The stress the pandemic has put on government IT infrastructure is generating a great deal of public awareness around these core systems. But while there may be more widespread knowledge around the outdated technology that many local, state and federal agencies use, the problems they face are not new. In fact, Congress tried to tackle government IT modernization before COVID, but there are disagreements on the real value modernization funds bring to the table.

Here’s a look at how recent IT modernization funding has unfolded.

FURTHER READING: How Government CIOs Position Legacy Modernization

Modernizing Government Technology Act of 2017

In 2017, the Modernizing Government Technology Act (MGT Act) was enacted as part of the 2018 National Defense Authorization Act. It established the Technology Modernization Fund (TMF) and Board and authorized agencies to develop IT working capital funds to modernize and update systems over many years. However, that’s not exactly how things worked out.

According to Federal News Network, lawmakers didn’t anticipate how difficult it would be for government agencies to establish working capital funds. In fact, only the Small Business Administration (SBA) was able to set up a working capital fund and successfully transfer unexpired funds to it. Besides the SBA, no other agency was able to persuade lawmakers, leaving other interested parties to either request the authority to expand existing funds or create new ones. To date, it appears only five other agencies have continued to pursue funds under the MGT Act.

Post-pandemic Technology Modernization Fund

In January 2021, part of the COVID relief proposal to Congress included a $9 billion request for the TMF and changes to the reimbursement structure in order to improve impact and access to funds. While the $1.9 trillion American Rescue Plan Act was passed on March 11, 2021, the final amount allocated to the TMF was slashed from $9B to $1B.

While some are excited about any boost to the TMF, many industry leaders are speaking out and urging the federal government to change how it manages the revolving fund. They believe significant changes are required in order for this additional money to make a real impact.

Unemployment Insurance Technology Modernization Act of 2021

Meanwhile, a bill to revamp state unemployment insurance systems would appropriate $500M for the Department of Labor to reform and overhaul state unemployment systems. The bill would allow the agency to create a modular set of technology capabilities from which states could choose based on their individual modernization needs.

Lawmakers see the bill as a blueprint for IT modernization, which requires an assessment of current tech needs before funds can be obtained. If passed, the Labor Department will manage the program through a newly created Digital Services team, which is specifically funded by the bill. This team will help institute a cohesive, federal approach to modernization versus continuing with separate state systems.

How to Fund Continuous Modernization

As IT experts know, modernization is a marathon and not a race. Funds appropriated with a time limit can prevent modernization projects from the thoughtful, long-term planning and execution needed to succeed.

In fact, Gartner recommends thinking about modernization as a continuous process. The question for lawmakers becomes what is the best way to fund efficient and effective modernization.