EXECUTIVE OFFICE OF THE PRESIDENT 


OFFICE OF MANAGEMENT AND BUDGET 


WASHINGTON, D .C . 20503 


February 27, 2018 THE DIRECTOR 

M-18-12 

MEMORANDUM FOR THE HEADS OF EXECUTIVE DEPARTMENTS AND AGENCIES 

FROM: 	 Mick Mulvaney ..J.J/ 

Director ~l'O 

SUBJECT: 	 Implementation of the Modernizing Government Technology Act 

The Modernizing Government Technology (MGT) Act is a key component of this 

Administration's continued efforts to improve Federal technology by providing financial 

resources and technical expertise to agencies. The MGT Act will allow agencies to invest in 

modem technology solutions to improve service delivery to the public, secure sensitive systems 

and data, and save taxpayer dollars. This memorandum sets forth Administration objectives and 

necessary actions agencies should take in order to implement the MGT Act. 

Background 

The MGT Act was enacted as part of the Fiscal Year 2018 National Defense Authorization Act 

(NDAA) on December 12, 2017. 1 The MGT Act has two primary provisions that address agency 

information technology (IT) modernization needs: 

1. 	 The establishment of a centralized Technology Modernization Fund (TMF) and 


Technology Modernization Board (Board); 2 and 


2. 	 The authorization for all CFO Act agencies3 to establish IT Working Capital Funds4 

(WCFs). 

This memorandum provides guidance to all agencies regarding the necessary planning for 

upcoming TMF activities, including the initial process for submitting project proposals to the 

Board, additional guidance to ·CFO Act agencies5 regarding the administration and funding of IT 

WCFs, and where to find additional information on topics such as disbursement and repayment 

process for the TMF funds. 

1 Pub. L. No. 115-91 , National Defense Authorization Act for Fiscal Year 2018, Title X, Subtitle G (§§ 1076 through 1078). 


2 Ibid. § l 078(b )(I). 


3 31 U.S.C. §90l(b). 


4 Pub. L. No. 115-91 , Title X, Subtitle G, §l077{b)(I). 


5 31 U.S.C. § 901(b). 

A. 	Guidance to Agencies on the Technology Modernization Fund and Technology 


Modernization Board 


Section A ofthis guidance is applicable to all agencies (as defined in 5 US. C. §551(1)). 

Section 1 - The Technology Modernization Fund (TMF) 

The TMF provides a new funding model for Federal technology modernization projects. 

Agencies may submit project proposals for technology modernization projects to the Technology 

Modernization Board (Board), described in greater detail below in Section 2. The Board will 

consider project proposals based on financial, technical, and operational criteria. Approved 

projects will receive funds in an incremental manner, tied to specific project milestones and 

objectives, and will be regularly monitored by the Board for success. 

The MGT Act authorizes up to $250,000,000 in appropriations for the TMF for each offiscal 

years 2018 and 2019. Appropriations for fiscal year 2018 are currently pending. The Board will 

evaluate and recommend for funding the proposals that show the strongest case for delivering on 

agency mission objectives and a strong likelihood of success. Agencies must reimburse TMF for 

any transfer of TMF funds in accordance with the terms of a written agreement. 6 The written 

agreement will document the purpose for which the funds will be used and the terms of 

repayment, which may not exceed 5 years unless approved by OMB. 

Successful projects will demonstrate a strong execution strategy, technical approach, and have a 

strong team with a demonstrated history of successful modernization efforts. Agencies should, to 

the extent practicable, consider the adoption of commercial technology solutions in their 

proposals and provide a strong technical approach and acquisition strategy to implement those 

solutions. Furthermore, agencies are encouraged to submit proposals for common platforms and 

shared solutions or other modernization projects that will serve multiple components within a 

single agency or multiple agencies. OMB anticipates that the TMF will be a testbed for projects 

and procedures that agencies can operationalize through their IT planning processes and in their 

execution oftheir exi-sting appropriations. 

Where legally permissible, TMF funding may be used to accelerate modernization efforts that 

are ongoing. The TMF is not intended to duplicate funding provided through existing 

appropriations, including any agency funding ofIT modernization projects through established 

IT WCFs. Consistent with the MGT Act, agencies may not submit any requests to the TMF, or 

utilize funding transferred into an agency WCF, to fund any project that has been expressly 

denied or restricted by Congress. 

6 For more information on the funds disbursement and repayment process, please visit www.policy.cio.gov/. 

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Section 2- The Technology Modernization Board 

The Board will evaluate proposals and make recommendations for project funding to the GSA 

Administrator. The Board's responsibilities will include, but are not limited to, the following: 

• 	 evaluating proposals submitted for TMF funding; 

• 	 establishing evaluation criteria; 

• 	 identifying opportunities to improve or replace legacy information technology systems; 

• 	 providing funding recommendations to the GSA Administrator; and, 

• 	 monitoring the progress and performance of approved modernization projects. 

Pursuant to the MGT Act, the Board will be established on March 12, 2018, and will consist of 

seven members: 

• 	 The Administrator ofthe Office ofE-Government (Federal CIO), who shall serve as the 

Chair; 

• 	 A senior official from GSA with technical expertise in information technology 


development; 


• 	 A member ofthe Department ofHomeland Security's (DHS) National Protection and 

Programs Directorate (NPPD); and 

• 	 Four employees ofthe Federal Government primarily having technical expertise in 

information technology development, financial management, cybersecurity and privacy, 

and acquisition, appointed by the Director ofOMB. 

The Board will distribute information and communications regarding the TMF, including 

updates to the submission and evaluation process, a charter governing Board operations, 

evaluation criteria for project proposals, and any other relevant information to 

www.policy.cio.gov. 

Section 3 -Initial Project Proposal Submissions Process 

All agencies are encouraged to begin submitting Initial Project Proposals to ofcio@omb.eop.gov 

using the template provided in Appendix A starting February 27, 2018. Appendix B provides 

some areas of consideration that are intended to aid agencies in an initial submission. Agencies 

may submit as many Initial Project Proposals as they wish. However, the submission oflnitial 

Project Proposals does not guarantee funding from the TMF, and selection ofprojects for 

funding by the GSA Administrator does not require agencies to accept funds for projects. Initial 

Project Proposals will continue to be collected at the address above until the Board issues further 

instructions for project submission. For updates, downloadable Initial Project Proposal templates, 

and additional information, please visit www.policy.cio.gov. 

Section 4 - Additional MGT Act Implementation Information 

Additional information on agency considerations for project proposals, the process and 

mechanics ofTMF funds disbursement and repayment, and other matters relevant to the 

implementation ofthe MGT Act is available at www.policy.cio.gov. Ifnecessary, OMB may 

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provide additional supplemental guidance on the areas described above or other relevant matters 

that may arise out of initial MGT Act implementation. Questions regarding this memorandum 

should be directed to ofcio@omb.eop.gov. 

B. Guidance to CFO Act Agencies on IT Working Capital Funds 

Section B ofthis guidance is applicable to all CFO Act agencies (as defined in 31 USC §901 (b)). 

Under the MGT Act, all CFO Act agencies are authorized to establish an IT Working Capital 

Fund (WCF). 7 IT WCFs may only be used: (A) to improve, retire, or replace existing information 

technology systems to enhance cybersecurity of existing systems and to improve efficiency and 

effectiveness of the life of a given workload; (B) to transition legacy information technology 

systems to commercial cloud computing and other innovative commercial platforms and 

technologies, including those serving more than one covered agency with common requirements; 

(C) to assist and support covered agency efforts to provide adequate, risk-based, and costeffective information technology capabilities that address evolving threats to information 

security; (D) to reimburse funds transferred to the agency from the Technology Modernization 

Fund; and, (E) for a program, project, or activity or to increase funds for any program, project, or 

activity that has not been denied or restricted by Congress. 

By March 27, 2018, all CFO Act agencies should notify their OMB Resource Management 

Office (RMO) and the OFCIO Desk Officer ifthe agency intends to establish an IT WCF in FY 

2018 and initiate the process of creating a new Treasury account for the WCF. Ifan agency 

determines it will establish an IT WCF after February 27, 2018, the agency should notify their 

OMB RMO and the OFCIO Desk Officer at least 30 days prior to establishment. 

If an agency establishes an IT WCF under the MGT Act, OMB will oversee the fund and the IT 

investments it supports consistent with OMB's management and budget development role. In the 

fiscal quarter after an agency establishes an IT WCF, and every quarter thereafter, the agency 

will report to OMB on all IT investments funded out of the IT WCF. Pursuant to the MGT Act, 

each agency shall submit to OMB: 

a) All planned transfers and reprogramming actions for the upcoming quarter, including a 

brief narrative justification; 

b) Updates to the IT Dashboard, reflecting changes to all investments or projects funded 

from the IT WCF in the prior quarter and planned for funding in the upcoming quarters 

(including all necessary updates to IT Portfolio/Business Cases/Standard Reports); and 

c) A summary by fiscal year of actual obligations, expenditures, and unused balances. 

OMB will align IT WCF reporting to pre-existing reporting processes (such as the OFCIO 

integrated data collection (IDC) process, Agency Strategic reviews, PortfolioStats, and 

TechStats). Agencies that establish WCFs should consider, to the extent applicable, the criteria 

and guidance the TMF Board formally approves for TMF projects. 

7 Pub. L. No. 115-91 , Title X, Subtitle G, §1077(b)(l). 

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Agencies are reminded that, pursuant to the MGT Act, all transfers and reprogramming offunds 

to the WCFs are subject to any applicable appropriations law restrictions. The MGT Act does not 

confer transfer authority. Therefore, agencies may transfer funds to WCFs only ifthey have other 

authority that authorizes the transfer of such funds. Agencies are encouraged to review their 

existing agency-specific authorities to identify accounts with applicable transfer authority. In 

concert with the decision to establish a WCF, agencies should identify accounts with applicable 

transfer authority and submit the account names to their OMB RMO and OFCIO desk officer. 

Enclosures 

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APPENDIX A 

Initial Project Proposal Template 

Instructions: Please fill out all ofthe information requested below. Initial Project Proposals 

selected by the Technology Modernization Board (Board) for further consideration may receive 

assistance in developing an in-depth proposal and business case to present to the Board. Please 

avoid the use of acronyms or terminology likely to be unfamiliar to someone outside of your 

agency and/or program area. 

Please complete the form using plain language and submit to OMB, as a .docx file, at 

ofcio@omb.eop.gov. Please limit Initial Project Proposals to 2 pages, using 10 point font 

("General Information" excepted). 

General Information 

Project Name: 

Sponsoring Agency: 

Project Sponsor Name: 

Project Sponsor Title and 

Office: 

Project Sponsor Email: 

CIO Sponsor Name, Title 

and Email: 

CFO Sponsor Name, Title, 

and Email: 

I. Describe how the project fulfills your Agency's mission, identify the problem this project 

solves and how successful execution ofthis project solves the problem. (1-3 sentences) 

2. Provide an estimation ofthe TMF funding request and the method used for cost estimation. If 

less than the estimated total project cost, also state the estimated total project cost and how you 

intend to repay the TMF. 

3. Describe the key metrics for success and your suggested initial milestones for implementation, 

including the deliverables, anticipated completion dates, and other criteria through which you 

will demonstrate that your intended milestones were met. 

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4. Describe why the project will succeed, citing examples such as: (I) executive level support for this 

effort, (2) the strength or experience ofthe team, including any agency digital service experts, other 

agency development resources, the availability ofcontractor support (3) the preparedness to begin 

executing this project, and (4) other relevant factors that will demonstrate the likelihood ofproject 

success. 

5. Describe why the Technology Modernization Fund makes sense for this project and how the 

approach you are takingfor this effort is different than what you have previously attempted. 

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APPENDIXB 

Relevant Considerations in Preparing an Initial Project Proposal 

A thoughtful IT modernization strategy prioritizes projects based on impact and probability of 

success. Impact can be measured by effect on users, risk reduction, opportunity enablement, and 

common solutions. Probability ofsuccess can be measured by team and project strategy strength. 

The following topics are neither exhaustive nor may be applicable to all agency projects, but 

serve to provide a framework to identify projects ripe for IT modernization. 

Agencies submitting Initial Project Proposals are encouraged (though not required) to address 

these considerations, including citing or attaching evidence that their project meets any 

applicable considerations. Agency project sponsors should also be able to address these issues as 

part ofthe evaluation process, should a project merit additional examination by the Board. 

Impact on Agency Mission 

• 	 User Impact and Expected Outcomes: Successfully executing this project will have a 

demonstrable and visible impact to the public, in alignment with the agency's mission. 

The project will articulate a desired end state that clearly showcases how expected 

outcomes will enhance the delivery of services that reduces burden, improves 

performance, or has the potential to produce positive long term benefits. 

• 	 Improving Security: The project will address an urgent problem (cybersecurity, financial, 

operational, or another significant risk the agency has identified that could have a 

material impact on project execution) that would otherwise not be solved. The project 

leverages commercial capabilities and industry best practices where applicable in order to 

manage risk during execution and throughout the life and maintenance ofthe project. 

Feasibility 

• 	 Agency Sponsorship and Strength ofTeam: The project has strong executive visibility 

and support, so that any issues that arise during execution can be addressed quickly and 

effectively. Agency leadership understands and champions the project success as 

essential to achieving agency priority goals. 

• 	 Project Execution Strategy and Measures of Success: The project identifies key 

milestones for success and demonstrates how the use offunds will enable milestone 

achievement. A successful project also envisions an appropriate governance structure and 

operational model that will last beyond initial execution. The project will enhance and 

improve the existing agency IT modernization strategy, and the project will ultimately be 

executed according to a strong project management approach that aligns to industry best 

practices and incorporates, to the greatest extent practicable, commercial technology 

solutions 

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Opportunity Enablement 

• 	 Expected Cost Savings, Lasting Financial Impact, and Ability to Repay the TMF: A 

successful project will provide detailed information on how the agency will save costs or 

dramatically improve service quality through modernization. The project will describe 

the importance of the investment to the agency (i.e., how impactful this project is to 

agency mission) and the expected long-term savings and operational efficiencies 

expected through successful project execution. Projects will highlight how business 

process or change management advances (including the repurposing of workforce as 

necessary) will be achieved as a result of successful project execution. 

Common Solutions 

• 	 Reduction of Outdated, Insecure Systems to Modem, Scalable Platforms: A successful 

project will ensure that security is designed into execution from the outset and 

complements service delivery and mission objectives. Projects will leverage commercial 

products and services to the greatest extent practicable to boost security, decrease 

technical debt, and improve the ability of the project and the associated technology to 

adapt to a changing threat and operational environment. Where applicable, projects will 

demonstrate the ability ofthe agency to reduce outdated or duplicative systems (or to 

retired multiple systems) through modernization and deliver common solutions and reuse 

opportunities within an agency, or between the agency and external partners. 

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