Treasury joins growing ranks of agencies with IT working capital
December will mark the fifth anniversary of President Donald Trump signing the Government Technology Modernization Act.
While many in government and industry still like to focus on the Technology Modernization Fund as a big win of this bill, the ability to create IT working capital will, in the long run, be the old Rep. Will Hurd (R-Texas) and The Real Coronation of Rep. Gerry Connolly (D-Va.).
It is clear today that Hurd and Connolly overestimated user enthusiasm and acceptance for computer WCFs. Only a handful of agencies have been successful in convincing House and Senate fund managers to approve these bank accounts, and most agency CFOs have been reluctant to simply set up these rainy funds without prior approval.
And as with most things on Capitol Hill, change comes slowly, but it does.
The latest example comes from President Joe Biden’s fiscal year 2023 budget request to Congress.
The number of IT WCFs is growing, albeit much more slowly than needed to process $7 billion or more in technical debt across government.
The Treasury Department is the latest agency lawmakers have granted the ability to create an IT working fund. The agency can keep up to 5% of its credit in this new bank account and it can remain available until September 30, 2026.
The Treasury, at least at the head office level, has been a cautious move towards the cloud, and many expect its modernization efforts to accelerate with the impending award of the T-Cloud program, which aims to establish a set of Treasury-wide cloud services through multiple vendors.
5 Working capital of the MGT law
By my calculations, that’s now five agencies with specific IT working capital using authorizations under the MGT Act. The Treasury joins the Small Business Administration, which was the first, the Department of Labor, the Office of Personnel Management and the United States Agency for International Development, all of which received the owners’ blessing.
The budget request details the amount of money, or at least the percentage, they hope to have in their accounts.
Labor, for example, plans to spend its $3 million on IT WCF this year.
USAID expects to have up to 5% or $30 million available from six different accounts. The money will also be available for three fiscal years.
Similar to USAID and Treasury, OPM can save up to 5% of its incremental funding to the WCF IT Account, and it will be available through September 30, 2026.
The SBA said it will keep up to 3% of its funds in two different accounts and will be available until September 30, 2026.
Other agencies such as the Departments of Education and Commerce have also sought IT WCF clearance over the years but have not received approval.
HUD and EPA also fund IT modernization
Along with these specific IT WCFs, several other agencies are also investing money in existing working capital to address IT modernization.
The Department of Housing and Urban Development has an IT fund for “the development, modernization and improvement, modifications and infrastructure of department-wide and program-specific information technology systems , for the ongoing operation and maintenance of department-wide and program-specific information. systems, and for program-related maintenance activities…”
HUD said in the budget that it expects to have $382 million, of which $339 million will be available through September 30, 2024 and $43 million will be available through September 30, 2026, which seems be linked to the MGT law.
The Environment Protection Agency takes a similar approach for the HUD.
It uses a revolving fund established in 1997 and authorities under the MGT Act to modernize IT services, including “agency postage, Cincinnati voice services, background investigations and corporate human resources IT services managed by the Mission Support Office; financial and administrative systems, employee relocations and a budgeting system managed by the Office of the Chief Financial Officer; the Agency’s COOP (Continuity of Operations) site managed by the Bureau of Lands and Emergency Management; legal services managed by the Office of the General Counsel; regional IT service and support managed by EPA Region 8; and multimedia and agency services contracts managed by the Office of the Administrator.
The EPA expects to have $414 million in WCF in 2023.
The Department of Homeland Security is dissolving its working capital and “will instead transfer funds to service management business lines for fee-based, government-wide mandated services.” DHS says it still expects to have $139 million in working capital in 2023 as it liquidates pre-existing obligations that have arisen against the fund and liquidation activities.
In addition to working capital, the White House has offered blended support for IT modernization.
Overall civilian agency IT spending would rise from $58.4 billion this year to $65.8 billion in 2023. OPM, SBA, and DHS are among the biggest winners with significant increases in funding requests.
Meanwhile, the Office of Management and Budget has requested “only” $300 million for the TMF. That’s down from the $500 million requested in the 2022 budget. But the lowest request comes after Congress zeroed the TMF in the 2022 omnibus bill, citing the need to spend the $700 million. million dollars currently remaining in the TMF, most of which came from the American Rescue Plan Act.
“With the ever-changing computing and cyber landscape, these investments are an important down payment on the delivery of modern and secure services to the American public, and continued investments in IT will be required to ensure that the United States keeps pace. accelerated modernization,” OMB wrote in the budget request.
OMB and other GSA IT funds to be boosted
But two other related IT modernization funds would see increases in 2023.
OMB’s IT Oversight and Reform Fund (ITOR) requested $14 million in 2023, up from $12 million previously. The American Digital Service, which benefited like the TMF from a godsend in the American Rescue Plan Act of 200 million dollars, did not ask for any new financing.
Congress approved $8 million for the ITOR fund in 2022.
The USDS is using the ARPA money to increase the number of its full-time employees to 271 in 2022 from 161 the previous year. It says the increased number of employees will enable “USDS to respond quickly to technology emergencies, ensure access and equity are embedded into products and processes, and support agencies to modernize their systems for long-term stability”.
At the General Services Administration, the administration is seeking to significantly increase the Federal Citizen Services Fund to $115.8 million. The GSA requested $59.2 million in 2022 and $55 million in 2021.
Congress approved $55 million in 2022.
Additionally, the GSA’s Office of Public Policy is asking for a modest increase to $70 million from the $68.7 million Congress appropriated in 2022.
The GSA says that as part of this $70 million request, it would spend $12 million on the acquisition workforce training fund and $10.9 million would go into a revolving fund. to pursue the e-regulation modernization project.
Beyond funding requests, the OMB has also set out some policy objectives in the budget.
After being rather quiet for the past two years, OMB has rebooted the concept of shared services.
Along with the efforts of the Cybersecurity and Infrastructure Security Agency (CISA) Quality Service Management Office, which have been the most active in recent years, the OMB reports that the Quality Service Management QSMO grants, led by the Department of Health and Human Services, released its initial market in fiscal year 2021, identifying a dozen systems.
“Grants QSMO is currently working to verify that the functionality of these systems meets agreed grant standards,” the budget says. “The remaining QSMOs are working to publish their marketplaces as soon as possible, potentially as early as FY2023.”
Of course, all those numbers are just that and lawmakers will accept that request and do whatever they want with them. This is why the more agencies that receive authorization for IT-WCF will have a better chance of getting out of technical debt and providing modern services to citizens and businesses.