The Biden administration has loosened repayment terms for at least a portion of the $1 billion of Technology Modernization Fund (TMF) money approved by Congress in March and is asking Federal agencies to submit proposals by June 2 as it looks to quickly parcel the funding out to projects that will improve cybersecurity and modernize high-priority systems, among other aims.

The move to relax repayment rules for TMF awards follows recent pleas to do so from members of Congress, who said 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.

The fund’s normally stringent repayment terms – from savings generated by the projects that receive TMF money – have tamped down agency demand for borrowings. Since its creation in 2017, the fund has received approximately $175 million in total funding from Congress but has only overseen 11 projects agency totaling about $125 million.

Today’s announcement from the Office of Management and Budget (OMB) and the General Services Administration (GSA) – which oversees TMF with help from the TMF Board – should change the calculus for many agencies looking for modernization funding.

The TMF Board said it wants agencies to “submit project proposals by June 2, 2021, for prioritized consideration,” and said it will accept applications on a “rolling basis.”

Project Priorities

In deciding how to distribute the $1 billion of recently approved funding, the TMF Board will give top priority to projects that fall into four categories:

  • Modernize “high-priority” systems;
  • Cybersecurity;
  • Public-facing digital systems; and
  • Cross-government services and infrastructure.

Looser Repayment Rules

OMB and GSA said that projects using the new $1 billion of funding may 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.

The project and repayment model adopted for the $1 billion of TMF funding “prioritizes investments to address urgent IT modernization needs, bolster cybersecurity defenses, foster cross-agency collaboration, improve the delivery of government services for all Americans, and support services that can be scaled for impact across government,” OMB and GSA said.

“The disbursement plan creates new opportunities for investing in a diverse range of projects by allowing agencies significant flexibility in repaying awarded funds, especially for projects that tackle some of the most pressing challenges facing our nation,” the agencies said.

“The TMF enables multi-year transformational projects by ensuring federal agencies have resources that exist throughout the lifecycle of modernization,” said Federal CIO Clare Martorana. “We plan to use these resources to enable the federal government to better respond to SolarWinds, the COVID-19 crisis, and support the economic recovery.”

“The updated TMF model provides the clarity and flexibility necessary to encourage federal agencies to prioritize technology modernization while transforming the relationship between the federal government and the public we serve,” commented Acting GSA Administrator Katy Kale. “It is more aggressive – to meet the urgent technology needs of the federal government today, as well as more ambitious – to anticipate the demands of tomorrow.”

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