The Government Accountability Office (GAO) released a decision today stating that the Office of Management and Budget (OMB) and the General Services Administration (GSA) have the authority to reduce reimbursement requirements on agencies that receive Technology Modernization Fund (TMF) awards, but can’t waive the reimbursement requirement completely.

In its decision, GAO analyzed the legislative underpinnings of TMF and keyed in on the continuing obligations of OMB and GSA to maintain the fund’s solvency.

The decision released today appears to be good news for both TMF – which is administered by GSA – and for Federal agencies that have received hundreds of millions of dollars worth of TMF awards since last year when the fund got a $1 billion cash infusion from Congress.

The TMF was created in 2017 under the Modernizing Government Technology Act to provide money to Federal civilian agencies to undertake tech modernization projects. From its creation through last year’s big cash infusion, the fund saw relatively modest demand from agencies – in part because the fund required agencies to repay borrowings over time with savings generated by those projects.

But driven by renewed urgency to put TMF money to work more quickly to tackle high-priority modernization projects, the Biden administration last year loosened repayment terms for at least a portion of the $1 billion infusions. That step followed numerous pleas to do so from members of Congress who argued it was important to quickly deploy the new modernization funding to improve Federal agency IT systems stressed by demands of the coronavirus pandemic and increased cyber assaults.

OMB and GSA explained last year that the new reimbursement rules for projects using the $1 billion of funding would fall under one of three repayment models:

  • “Minimal repayment” will be required for projects “aimed at tackling the most urgent IT issues facing our government, including critical cybersecurity improvements and initiatives that help agencies meet the demands of the COVID-19 pandemic, but which are unlikely to create direct cost savings”;
  • “Partial repayment” will be required for projects “with strong positive impact and which will yield some financial savings, but where the proposing agency doesn’t expect to reach full cost recovery”; and
  • Full repayment will be required for “projects that yield direct financial savings that can be used to fully repay” the fund.

In its decision issued today, GAO pointed out that the Fiscal Year 2018 National Defense Authorization Act (NDAA) provides the legislative authority for GSA to provide TMF funding to Federal civilian agencies, and gives GSA and OMB leeway to set reimbursement rates.

“TMF authorizing legislation directs agencies to reimburse TMF at rates set by OMB and GSA at a level to ensure TMF’s solvency, which leaves OMB and GSA the discretion to set rates at less than full reimbursement,” GAO said.

“While minimum payments are not defined by law, the statute does not provide the discretion to totally waive reimbursement by an agency,” the government watchdog agency said.

In a lengthy report on its reasonings, GAO said, “OMB and GSA’s discretion to establish the amounts to be paid by an agency and the terms of the repayment are not unbounded, as they recognize. The statute does not permit them to entirely waive repayment by an agency, but there is a range of discretion they can determine and implement.”

GAO further discussed the reimbursement obligations, but primarily as those would relate to the continuing solvency of TMF and the fund’s ability to cover its operating expenses.

“The amounts to be reimbursed to TMF will affect the amounts that will be available for future projects unless Congress appropriates additional funding or agencies repay additional amounts,” GAO said.

“But, as additional appropriations cannot be assured, OMB and GSA have to manage the fund as though no future appropriations will be forthcoming,” it said. “Thus, the solvency requirement serves to limit the degree to which OMB and GSA may waive repayment in establishing the amounts to be paid. That is, whatever the amounts required, they must be sufficient to ensure the solvency and continued operation of the fund.”

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John Curran
John Curran
John Curran is MeriTalk's Managing Editor covering the intersection of government and technology.