The Government Accountability Office (GAO) has said that the Technology Modernization Fund (TMF) costs more to run than it collects in fees.
The General Services Administration (GSA) and Office of Management and Budget (OMB) oversee the TMF, which awards federal agencies funds to replace aging IT systems. Congress provided an initial $175 million in funding, from which 11 projects received $89 million. The American Rescue Plan Act of 2021 added $1 billion to the fund. Agencies reimburse the fund and pay a fee within five years of award.
GAO found that of the initial $175 million that Congress appropriated for TMF, the Technology Modernization Board had approved 11 projects totaling about $89 million, as of August 2021. Agency proposals were to include estimates of any project-related savings; agencies could use these savings to satisfy the requirement that they reimburse the TMF for any transfers within five years. For the seven projects approved in 2018 and 2019, two have reported generating cost savings but those savings are not documented. For the remaining five projects, two no longer plan on savings, two plan on savings starting in one to three years, and one does not know when savings will begin.
One of the 11 projects is U.S. Customs and Border Protection’s Automated Commercial Environment Collections Module project, which is intended to modernize the outdated Automated Commercial System platform to improve customs enforcement, revenue collections, trade protections, and user experience through improved features and business capabilities, which in the long run reduces the operations and maintenance costs associated with the existing system. The agency expects to complete the project in fiscal year 2024.
In May 2021, OMB provided updated TMF guidance to agencies regarding the $1 billion American Rescue Plan funding. Among other things, the guidance prioritizes projects that cut across agencies and address immediate cybersecurity gaps, and allows agencies to apply for a partial or minimal reimbursement of the TMF funds provided.
On September 30, 2021, GSA announced the approval of seven new projects with awards totaling at least $311 million (one of the seven projects is classified and no award figure is publicly available). In deciding on these seven, the Technology Modernization Board received 113 project proposals requesting a total of more than $2.3 billion.
One of the seven new projects is the Department of Homeland Security’s Southwest Border Technology Integration Program. The project is intended to provide standardized and secure data sharing across the federal enterprise and throughout the immigration lifecycle to improve border flow and capacity management and increase the timeliness and fidelity of data used by decision makers.
Regarding TMF operating costs and fees collected to offset those costs, as of August 2021, GSA had received fee payments totaling about $810,000, or about 29 percent of its operating expenses of $2.8 million. GAO determined that a key reason for this shortfall is that six of the seven initially approved projects narrowed their scopes. This led to reduced award amounts transferred to agencies, which in turn resulted in about a $1.12 million reduction in anticipated fees. Relatedly, OMB and GSA have not yet implemented GAO’s prior recommendation to develop and implement a plan to fully recover operating expenses with fee collection.
OMB funding guidelines require projects to include a reliable estimate of any project-related savings. However, GAO found that most of the TMF projects’ reported savings estimates derived from cost estimates continue to be unreliable. Specifically, three of the four projects reviewed did not fully incorporate best practices for a reliable cost estimate.
GAO previously made two recommendations in 2019, which have not been met and which the watchdog maintains must be implemented to improve the sufficiency of fee collection and the quality of cost estimates.
These recommendations call for OMB and GSA to develop and implement a plan that outlines the actions needed to fully recover the TMF Program Management Office’s operating expenses with fee collection in a timely manner; and for GSA to develop detailed guidance to aid agencies in completing their TMF proposal cost estimates.