US agencies’ ‘save to spend’ IT freedoms hit budget deadlock

By on 12/03/2018 | Updated on 24/09/2020
Trey Hodgkins, senior vice president of public sector for the Information Technology Industry Council.

The US White House has released guidance for agencies on how they can raise funds under the Modernizing Government Technology (MGT) Act, though parts of the timeline are uncertain due to Congress’s continuing budget impasse.

The memo, sent to agencies by Office of Management and Budget director Mick Mulvaney on 27 February, outlines the process by which agencies can set up IT Working Capital Funds and access the Technology Modernization Fund. But both mechanisms are still awaiting funds, with the federal government currently running on a ‘continuing resolution’ valid only until 23 March.

Working Capital Funds allow agencies to take any money saved due to more efficient IT procurement, and to place that money in a three-year fund for future IT improvements – an approach dubbed ‘save to spend’ in an informal scheme adopted by the UK Treasury. US agencies must declare their intention to establish these funds by 26 March.

IT incentives

“The idea is to incentivise [agencies] to be aggressive about finding the dollars that would otherwise go back to the Treasury,” Trey Hodgkins, senior vice president of public sector for the Information Technology Industry Council, told Global Government Forum.

“It has the potential to substantially change the way IT investments are made and make those dollars available as the agencies need them, not when Congress can get around to approving an appropriations bill.”

The memo also sets out guidance for the Technology Modernization Fund, a two-year central fund of about US$500m that would lend money to agencies for IT projects. Proposals are now being accepted, and will be evaluated by a Technology Modernization Board led by federal CIO Suzette Kent.

Political pause

Continuing resolutions continue government funding at previously appropriated levels. But to fund a new program such as the Technology Modernization Fund, or even to fund the IT purchases that would sustain Working Capital Funds, Congress will have to pass a proper budget, Hodgkins said.

However, Hodgkins told Global Government Forum that he’s hopeful Congress will reach a budget agreement. “They’re really limiting the ability of agencies to keep pace with innovation, to migrate to new capabilities like cloud computing or to protect their networks from cyber threats. And I think there’s a robust understanding of that [in Congress],” he said.

The federal government spent $86 billion on IT in fiscal year 2018, with about 70% going to operations and maintenance for legacy systems, according to the government’s data site

The MGT Act passed in December was scaled back from an earlier version of the legislation, which the Congressional Budget Office estimated would have cost $9 billion over five years.

About Tamar Wilner

Tamar Wilner is a Dallas-based journalist and researcher who writes about public policy and the media. She's written extensively on energy, the environment, urban planning and small business for trade publications in the US and UK, and contributes regularly to the Columbia Journalism Review. Find her at @tamarwilner.

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