Technology Modernization Fund (TMF) Definition

What Is the Technology Modernization Fund (TMF)?

The Technology Modernization Fund (TMF) is a program that provides financing for government agencies to pay for information technology (IT)–related modernization projects. It was a key component of the Modernizing Government Technology Act, which was passed during the Trump administration at the end of 2017. That act described the goal of the TMF as using “technology-related activities to improve information technology, and to enhance cybersecurity across the federal government.”

Understanding the TMF

The TMF is an example of the United States government’s IT modernization efforts, which fall under the broader category of the government’s information technology initiatives. Part of the government’s strategy to strengthen the IT systems of its agencies and adapt to the emerging digital infrastructure, the TMF is ultimately meant to deliver government services at a lower cost and greater efficiency, eliminate redundancies, and fix vulnerabilities to data breaches, among other cybersecurity issues, which have become an increasing concern in the 21st century.

In general, IT modernization can be a particularly hard expense to justify for government agencies, experts say. However, IT falls into the category of important updates that need to happen regularly, and proactively pursuing new technology affords governments more flexibility in how they operate and adapt.

How the TMF works

The TMF’s funds are disbursed in a two-phase process, according to the Technology Modernization Board, which manages the program. First, agencies send proposals to the board. During this phase the agencies have to prove that the funding for the project for which they are requesting money has never been restricted or denied by the U.S. Congress. Second, agencies whose proposals the board has approved send in detailed plans for how they plan to use the money, including milestones for the project.

The fund has received $175 million from the Congressional annual budget. It has also received significant funding, about $1 billion, as part of the Biden administration’s American Rescue Plan, the president’s emergency response to the coronavirus pandemic.

In general, IT modernization is supposed to prevent data breaches and delays in government services. Specific programs are tailored to improve the quality of services, lower costs, and increase security.

Several government regulations apply to these update efforts, including the Federal Information Technology Acquisition Reform Act, passed in 2014, which was one of the first overhauls of the federal information system. A requirement of that regulation was that federal agencies consolidate their data centers, which has begun to happen under programs such as the Data Center Optimization Initiative (DCOI). The 24 participating government agencies reported that they closed 230 redundant data centers, saving taxpayers $1.1 billion between 2019 and 2020, according to the Government Accountability Office. The 2019 Federal Cloud Computing Strategy, another IT initiative, exists to speed up the adoption of cloud technology among government agencies.

Real World Example

A 2019 Government Accountability Office report highlighted the U.S. Department of Education’s legacy system as one of the 10 most in need of modernization. The system posed a high security risk and used an outdated programming language, but the department did not have a documented plan to modernize it, the report said.

The Technology Modernization Fund announced that it would finance “zero trust architecture” for the Department of Education in September of 2021. Zero trust architecture is a security framework that is more adapted to the digital environment. It uses zero trust principles, meaning that user accounts are not trusted in the network based on network location or asset ownership.

The materials published by the U.S. General Services Administration claimed that the project would improve data security for students and borrowers whose data the Department of Education handles. The project was one of seven in a $311 million round of funding, which also included money for the General Services Administration, the Department of Homeland Security, and the Office of Management and Budget. Those were the first projects funded with the $1 billion from the American Rescue Plan.