OMB Guidance Sets the Stage for MGT Act Modernization Projects

Published: February 07, 2018

Acquisition ReformBudgetInformation TechnologyOMB

After a couple of derailments, the Modernizing Government Technology (MGT) Act was passed as part of the FY 2018 National Defense Authorization Act in December 2017. Now that it has become reality, OMB is arming agencies with the framework and process for claiming MGT dollars.

According to a recent FCW article, OMB has provided agencies with a “user’s guide” framing the process and requirements for obtaining funds.The goal of MGT is to provide seed money via a centralized Technology Modernization Fund (TMF) and budgetary flexibility through agency IT Working Capital Funds (WCFs) to facilitate investment in high priority IT modernization projects.

Here’s the breakdown:

  • MGT allows for a total of $500M in appropriations ($250M in FY 2018 and $250M in FY 2019).  The funds would reside in a new Technology Modernization Fund, which still awaits FY 2018 appropriations.
  • A TMF Board will be assembled to review, evaluate and grade project proposals. The Board will be established on March 12, 2018 with 7 members:
    • The Federal CIO
    • Senior GSA official with IT development expertise
    • An official from DHS’ National Protection and Programs Directorate (NPPD)
    • Four additional members appointed by the OMB Director
  • Agencies’ project proposals submitted to the TMF Board should “show a strong preference for” modernizing mission support and citizen-facing services, maximizing adoption of commercial technologies, establishing common platforms, or solutions that serve multiple organizations.
  • The TMF Board will assess proposals based on a standardized set of criteria focused on 6 areas:
    • User Impact: project impact on mission effectiveness, and user and public benefit
    • Risk Reduction: mission impact of current system failures; previous incidents or technology audits that support the case for modernization; modernization of hardware or software that relies on outdated skillsets; and impact of technological dependencies on other systems.  
    • Opportunity Enablement: potential or known savings, long-term financial impact, criticality of modernization timing, reduction of vendor lock-in, government-wide added value.
    • Common Solutions: reuse potential, cross-agency collaboration potential, and potential for shared tools.
    • Team Strength: previous successes, leadership, technical and subject matter expertise of agency modernization teams.
    • Project Strategy Strength: strength of project and acquisition plans, team members’ readiness to execute, and alignment with ongoing modernization strategies.
  • Dollars committed to TMF-approved projects will be disbursed incrementally, doled out as agencies’ meet established milestones and objectives.
  • Agencies must fully reimburse the TMF within five years. Reimbursements will also be incremental, taking place either 12 months after the first disbursement from the TMF or 6 months after project completion.
  • The guidance requires agencies to submit at least one proposal by February 16, 2018 but, as noted in the FCW article, the draft is from January and it is not clear whether this is the final guidance or whether that deadline will be extended given the current budget uncertainty.
  • Agencies subject to the CFO Act are authorized to establish IT Working Capital Funds to use for legacy system replacement, cloud computing migration, shared services solutions, and other efficiency projects. It can also be used to reimburse the TMF. Agencies must alert OMB of the creation of new Treasury accounts for their IT WCFs within 21 days of the guidance. Agencies can also transfer money from other areas to their WCFs (with some restrictions). 

    WCFs provide more flexibility than regular appropriations because they are self-sustaining revolving funds that, like typical business operations, charge for products or services, and use the proceeds to fund themselves.  
  • OMB encourages agencies to submit concept papers to spur innovative ideas to drive modernization projects that drive government-wide benefits.
  • The use of rapid and iterative development processes (agile!) is recommended. 
  • The guidance also provides templates for project proposals and concept papers.

OMB appears to have been preparing for this process for some time.  During Deltek’s annual Marketview event last September, former Acting Federal CIO Margie Graves noted OMB’s preparations, including a mock board of professionals from the acquisition and IT disciplines working to iron out the project review and approval process.

Agencies have been identifying key systems requiring modernization for awhile, and hopefully MGT can provide the much-needed budget flexibility required.