Modernizing Government Technology Act: A Source of Opportunity

Published: September 20, 2019

Information TechnologyInformation TechnologyInnovationOpportunitiesPolicy and Legislation

Nearly two years after becoming law, the new tools provided by the Modernizing Government Technology Act remain a work in progress as Federal agencies continue to identify high-priority IT Modernization projects and bring their legacy systems into the 21st Century.

What is the Modernizing Government Technology (MGT) Act? 

The MGT Act was signed into law by President Trump as a part of the 2018 National Defense Authorization Act on December 12, 2017.  It is the result of bipartisan efforts in Congress to give Federal agencies new tools to assist in their IT modernization projects.  The MGT Act has a two-pronged approach to funding.  First, it authorizes agencies to set up IT-specific working capital funds, which allows them to specifically fund IT modernization and reinvest savings for additional modernization projects in the future.  Second, it establishes a centralized Technology Modernization Fund (TMF) to fund projects for multiple agencies at a time. 

Most Working Capital Funds are in the Planning Stage

As of July 2019, only three federal agencies have taken the necessary steps to set up their working capital funds, including the US Small Business Administration (SBA), General Services Administration (GSA), and Department of Labor (DOL).  Five more agencies, including the US Department of Agriculture (USDA), Department of Commerce (DOC), Department of Education (ED), US Department of Homeland Security (DHS), and US Agency for International Development (USAID) have plans to set up their capital funds by the end of FY 2020.

There remains a legal question when it comes to creating the funds.  Some agencies believe they are hampered by previous legislation that counters its ability to create a fund without explicit authorization to do so and are waiting for further Congressional action before they proceed with implementation.

Compliance with the MGT Act is now a criteria in the scorecard that marks agencies’ progress in conforming to the Federal Information Technology Acquisition Reform Act (FITARA).

TMF: the Government’s Shark Tank

The TMF is overseen by the Technology Modernization Board, consisting of seven voting members chosen among government IT leaders.  The Board reviews and approves funding for proposed modernization projects.  Described by some as the Government’s own version of the reality television show Shark Tank, agencies may submit project proposals for the Board’s consideration through a two-phased process:

  • Phase One: Initial Project Proposal (IPP) – A short two-page proposal which acts as a pre-screening for the Board to review
    • Agencies must confirm that funding for the project has never been denied or restricted by Congress
    • The Board takes about a week to consider and vote on the IPP, at which point the agency will receive one of three responses: 
      • The proposal has been approved for the next stage of consideration
      • The Board needs additional questions answered before a decision is made
      • The proposal isn’t what the Board is looking for
  • Phase Two: Full Project Proposal (FPP) – A more comprehensive description of the project, proposed milestones, and funding schedule
    • A narrative template, financial template, and in-person presentation to the Board are required  
    • The FPP should take about 4-6 weeks to prepare

Projects that the Board recommends for funding will receive incremental funding contingent on the successful execution of milestones.  Funds must be repaid to the TMF.  The first repayment must be within one year of the first transfer and the last repayment has to be within five years of the last transfer.  Agencies have multiple options to make payments to the fund.  These include paying back the loan as incremental funding through regular appropriations, using saving incurred as a result of the newly modernized IT system, or fee collections from a shared service which the agency creates with TMF funding for other customer agencies to use.

 IT Modernization Projects with TMF Support

Since its creation, agencies have submitted over 40 projects to the TMF’s Board for consideration.  As of July 2019, the Board awarded funding for the following projects:

  • UNISYS Mainframe Migration (HUD) -- $20 million
    • Modernizes the code base and accelerates the migration of five of HUD’s most critical business systems from an on premise mainframe database to a Java cloud-based application suite that enables functional and technical enhancements to be completed more rapidly
    • HUD estimates the project will save $8 million annually, enabling payback of the TMF loan and generate working capital to transform additional legacy systems
    • A task order to support this project was awarded to Salient CRGT via GSA Schedule 70 on a sole-source basis on August 30, 2019
  • Enterprise Cloud Email (DOE) -- $15.2 million
    • Accelerates the implementation of the DOE Enterprise Cloud Email by allowing the Department to complete the consolidation, migration, and upgrading efforts for the remaining on premise e-mail systems
    • DOE estimates the project will be completed within three years
    • Market research was released via GSA Schedule 70 on September 27, 2018
  • Portal (USDA) -- $10 million
    • Updates the conservation financial assistance and payment operations across the Farm Service Agency (FSA) and the National Resources Conservation Service (NRCS); Modernizes the payment operations and conservation financial assistance; Updates legacy systems, resolve financial audit findings; Properly connect the agency systems to the USDA common financial system
    • USDS estimates the project will be completed within two years
    • Procured via the STARS II GWAC as an 8(a) Set-Aside and awarded as a task order to MetroStar Systems on July 9, 2019
  • Visa Application Transformation (DOL) -- $3.5 million
    • Eliminates the need for DOL to mail the Labor Certification documents to employer applications for work visas – “E-Certification” documents will be sent securely and electronically; Creates a data hub at DOL to securely transmit the Labor Certification documents to the USCIS
  • Application Modernization Integrating Flexible Architectures (GSA) -- $14.9 million
    • Modernizes 88 applications which currently have outdated user interfaces which are difficult to connect to other systems by conducting a pilot for full stack application modernizations and transforms a number of GSA Systems which are on legacy proprietary software to open source technologies
    • GSA expects this project will modernize a large percentage of their applications, generate a playbook for future modernizations, and make it easier to access actionable business information
  • Infrastructure Optimization and Cloud Adoption (USDA) -- $5 million
    • Migrate 10 existing applications to the cloud and consolidating cloud expertise so it can be enterprise-wide
    • Procured via GSA Schedule 70 and awarded as a task order to Mitre Corporation on September 10, 2018.
  • NewPay Payroll and Work Schedule and Leave Management SaaS (GSA) -- $20.6 million
    • Complete the configuration of the Software-as-a-Service (Saas) solution and related interfaces for both payroll and WSLM and lay the foundation for an enterprise solution for Government-wide HR functions
    • Procured through Full and Open competition with BPAs awarded to Carahsoft Technology Corporation and Grant Thornton LLP – however, only a portion of the requirement was supported by the TMF loan – Please see GovWin IQ Opportunity Report # 142619, NEWPAY SOFTWARE AS A SERVICE SOLUTION (SAAS) for additional information

Because of the ongoing need for MGT Act compliance, it is likely that TMF will continue to grow in popularity and use.  However, it must continue to demonstrate its viability to lawmakers to secure the necessary funding for success.  TMF received $100 million in FY2018 after passage of the MGT Act but was awarded only $25 million in FY 2019.  While President Trump’s FY 2020 Budget Request asked for $150 million for TMF, the House voted to approve just $35 million.  Funding is included in the Financial Services and General Government Appropriations Act (HR 3351) which passed the House in June.  It is awaiting consideration by the Senate.

More funding for the TMF does not necessarily guarantee it will be a source for competitive procurement opportunities.  Acquisition strategies for the awarded projects to date have varied.  Vendors can expect this to continue as more projects receive funds through the TMF.  An awareness of these projects is one of many useful sources to gauge each agency’s IT modernization strategy and the specific targeted improvements.

Government Accountability Office Identifies Top 10 High Risk Legacy Systems and Key Attributes for Modernization Success

Forecasting the future of IT Modernization projects within the Federal Government and navigating the strategy of each agency remains a challenge.  However, there are some clues about what may lie ahead from the Government Accountability Office (GAO).  In a recent report concerning the need to develop IT modernization plans, the GAO reviewed 65 legacy systems and identified the top ten currently operating with well-known security vulnerabilities.  Due to security concerns, GAO only provided a general description of each of the legacy systems:

  • DoD – A maintenance system that supports wartime readiness
  • Ed – A system that contains student information
  • HHS – An information system that supports clinical and patient administrative activities
  • DHS – A network that consists of routers, switches, and other network appliances
  • DOI – A system that supports the operation of certain dams and power plants
  • USDT – A system that contains taxpayer information
  • DOT – A system that contains information on aircraft
  • OPM – Hardware, software, and service components that support IT applications and services
  • SBA – A system that controls access to applications
  • SSA – A group of systems that contain information on Social Security beneficiaries

The report cites recent modernization initiatives that were successful and cites the key attributes for their success.  GAO suggests the following solutions (as applicable) to high-risk legacy systems:

  • Utilize automated technologies to examine programming code and to perform testing
  • Thoroughly testing the system
  • Actively engaging the stakeholders and the end users throughout the modernization process
  • Promoting a strong partnership between the government and industry
  • Following management practices on both life cycle management and change
  • Implement an enterprise-wide cost collection and data analysis process for commodity IT to measure progress against optimization and cost-savings
  • Create an interface that is consistent across all systems
  • Strong support from executive leadership
  • Utilizing agile principles to facilitate ownership of the project

Vendors should consider reaching out to the Program Offices of their agencies of interest regarding IT Modernization strategies.  With the list of vulnerable systems identified by the GAO, vendors may have the opportunity to proactively engage agencies in order to offer constructive solutions to the challenges they face with their legacy systems.  By identifying specific areas in need of development, vendors can leverage their skills and specializations to assist agencies with developing projects for unrealized requirements.

Ongoing IT Modernization Procurements Currently Tracked by GovWin IQ

The GovWin IQ Opportunities Database remains a valuable resource in identifying competitive procurements and building a pipeline for IT Modernization projects as agencies identify their priorities and continue to take steps moving forward.  The following are active procurements that Deltek is currently tracking:


The scope of this requirement is to provide engineering, continual architecture design and sustainment, application onboarding, operations support, and program/project management services to continue HEDC Lifecycle support.  This requirement also calls for the evolution of the HEDC’s current application hosting Platform-as-a-Service (PaaS), Software-as-a-Service (SaaS), traditional and cloud native application on-boarding, architecture design, engineering modernization, and quality/configuration management in both the classified and unclassified enclaves.


The Indian Health Services’ (HIS) objective is an effort to modernize, augment, or replace RPMS legacy health IT systems, including, but not limited to, its clinical, administrative, financial and HIT infrastructure.  This project will address the current state of IHS health IT, where multiple legacy systems and disparate data stores, developed over four+ decades, are in need of modernization to ensure and enable sustainability, flexibility, intra/interoperability, patient data federation, population health, and clinical quality measures, toward improved continuity of care.


The AIT-3 requirement has ongoing and upcoming technology modernization, including wideband systems that will improve detection and false alarm rates; Open architecture software that supports modularity of functions (i.e. interchangeable algorithms, GUI); Deep learning algorithms with material discrimination to identify threats prior to alarm resolution; Integration of the 8 algorithms selected from the KaggleGrand Challenge.


The Government’s efforts to modernize its Information Technology Infrastructure are continuous.  The speed with which advancements are made in the IT industry guarantees that modernization efforts will provide a continuous stream of opportunities for contractors in the coming years if not in perpetuity. The tools provided by the MGT Act are perfect examples of the Government experimenting with acquisition policy in order to promote and accelerate cost effect projects to bring agencies IT infrastructures up to date.  Additionally, GAO identifies a number of larger legacy systems that Deltek expects will see modernization efforts in the future.

So far, the projects funded by the TMF are promising. The TMF is an excellent platform to watch for potential opportunities as well as to get a sense of where agencies are currently focusing their modernization efforts.  However, the current projects are incomplete and have not yet proven to be effective investments.  Additionally, the small size of the approved budget limits the total number of projects the TMF Board is able to approve – making the success of the approved projects critical to the program’s future. 

Congress needs to take action and revise or supplement the MGT Act in a way that allows agencies a broader ability to ensure the necessary compliance with what the law requires.  Additional modernization projects involving competitive acquisition processes are possible, especially after more working capital funds are in place.  Agencies that have already engaged in a comprehensive modernization strategy will likely continue to utilize the TMF for additional projects.  If the fund yields positive results with additional success stories, additional agencies will be encouraged to utilize TMF for their own efforts.  Ultimately, the future of TMF lies with each Federal agency.