House Passes the MGT Reform Act

Introduced in September 2023 by Representative Nancy Mace, H.R. 5527, referred to as the Modernizing Government Technology Reform Act, passed the House last week and heads to the Senate Committee on Homeland Security and Governmental Affairs. The bill makes several changes to the Technology Modernization Fund to align the program’s requirements with congressional intent.

As a reminder, the Technology Modernization Fund (TMF) was established by the Modernizing Government Technology Act in 2017. Managed by the GSA, the TMF acts a revolving fund to assist agencies with critical IT modernizations. The TMF provides up-front funding to agencies with agreed-upon reimbursement models.

H.R. 5527 reauthorizes the TMF through FY 2030 and amends several original provisions such as use of funds, repayment options, reporting, and evaluation criteria. Specifically, the proposed legislation directs TMF funds to be used in relation to the following priorities, with a new emphasis on public services:

• Modernize, retire, or replace legacy information technology systems used by the agency;
• Enhance cybersecurity and privacy at the agency;
• Improve long-term efficiency and effectiveness of agency information technology; or
• Improve the ability of the agency to perform the mission of the agency and deliver services to the public.

The MGT Reform Act also directs the Office of the Federal Chief Information Officer to submit an annual report to Congress on the top 10 legacy IT systems presenting the greatest security and operational risks and list of each federal agency’s high-risk legacy IT systems. Moreover, the proposed bill requires that funds used for services or work in direct support of a project must be fully reimbursed. Lastly, H.R. 5527 revises proposal evaluation criteria to be based on the extent in which the funds will address the greatest risks, the impact of modernizing legacy IT systems, and the ability of the agency to repay the funds.

In the years since its inception, the TMF often received a fraction in appropriations of requested budgets, save for the $1B provided to the TMF by the American Rescue Plan Act. The FY 2025 budget requests $75M for the TMF to, “accelerate Government-wide IT modernization efforts, meet a significant increase in demand for investment from agencies, support active projects, and the associated program management and project oversight,” according to the fund’s budget document.  

Currently, the TMF has awarded over $900M to 57 investments across 32 federal agencies. According to budget documents, the TMF awarded $750M from American Rescue Plan funds between FY2021 – 2024 and $87M from FY 2018 – 2024 from annual appropriations. Investments range from helping agencies such as HHS, OPM, NOAA and USAID implement zero trust solutions, to assisting Education with the StudentAid.gov website revamp and digitizing forms at the VA. Recently, the TMF awarded its first generative AI project to the State Department to help distill and streamline data processing for analysts.

Looking ahead, it is likely that the MGT Reform Act could fall into the folds of the next NDAA, following the footsteps of the original MGT Act. Contractors can expect much of the same investments awarded out of the fund – those centered on high-risk legacy IT, cybersecurity, and citizen services. Based on past trends, the TMF will not prove effective to agencies without supplemental funding. GSA and OMB have already committed to exploring alternative funding mechanisms for the TMF to increase available funding for continued investments outside the appropriations process. The agencies did not specify what those alternative funding mechanisms might be.