Information Technology Investment in Agriculture’s Working Capital Fund

The U.S. Department of Agriculture has been in the news for the last couple of years thanks to its information technology modernization efforts in coordination with the Office of Management and Budget and General Services Administration’s Centers of Excellence initiative. USDA’s participation in the CoE program as a “lighthouse” agency quickly resulted in contracts for cloud services awarded using funds from the GSA’s Technology Modernization Act budget. That handful of awards received a lot of attention for the shift in direction they represented and work under them is ongoing. Yet at the same time a more subtle shift in IT management and investment has also been taking place and this one has flown under the radar of most market watchers. Specifically, I am referring to the direction of a growing percentage of the department’s IT budget into its Working Capital Fund.

The signing into law of the Modernizing Government Technology Act in December 2017 as part of the fiscal 2018 National Defense Authorization Act authorized agencies to establish IT Working Capital Funds for the purpose of modernizing their IT assets and services. Congress set parameters around the use of WCF’s for IT, stipulating that funds may only be used to:

• Improve, retire, or replace existing IT systems to enhance cybersecurity and improve efficiency and effectiveness.
• Transition legacy IT systems to commercial cloud computing and other innovative commercial platforms and technologies, including those serving more than one agency with common requirements.
• Reimburse funds transferred to the agency from the Technology Modernization Fund.
• Fund a program, project, or activity that has not been denied or restricted by Congress.

To be fair, the USDA pioneered the use of its WCF for IT modernization even before passage of the MGT Act. Still, it is worth noting how IT leaders at the USDA took the new WCF authorization to heart and are now expanding on it. To that end, Agriculture’s FY 2020 budget request provides $1.03B under the WCF for enterprise IT services, including:

• $575.8M for the USDA Client Experience Center (+16% vs. FY 2018), which provides end-user, business application, and IT security services.
• $326.3M for Digital Infrastructure Center Services (+29% vs. FY 2018), including cloud and data center services.
• $136.2M for Enterprise Network Services (+182% vs. FY 2018), including USDA-wide telecommunications.

Readers will notice that the planned increases under each category are in at least the double-digits compared to the USDA’s request only two fiscal years ago, and for network services planned growth is in the triple digits.

Summing up, the USDA’s IT budget request for FY 2020 totals $2.2B. Slightly more than half of this total ($1.2B) is slated for the traditional budget buckets of Operations and Maintenance (O&M) and Development, Modernization, and Enhancement (DME). The other half has been channeled into the department’s WCF, where it can be spent more flexibly on modern services like cloud computing. Other agencies are likely to replicate the USDA’s approach in the years to come.

Next week’s post will dive into the Digital Infrastructure Services portion of the USDA’s WCF request specifically, with the other two areas to follow in the weeks afterward.