SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Modernizing Govern-
ment Technology Act of 2016’’ or the ‘‘MGT Act’’. 
SEC. 2. FINDINGS; PURPOSES. 
(a) FINDINGS.—The Congress finds the following: 
(1) The Federal Government spends nearly 75 
percent of its annual information technology funding 
on operating and maintaining existing, legacy infor-
mation technology systems. These systems can pose 
operational risks, including rising costs and inability 
to meet mission requirements. These systems also 
pose security risks, including the inability to use cur-
rent security best practices, such as data encryption 
and multi-factor authentication, making these sys-
tems particularly vulnerable to malicious cyber activ-
ity. 
(2) In 2015, the Government Accountability Of-
fice (GAO) designated Improving the Management 
of IT Acquisitions and Operations to its biannual 
High Risk List and identified as a particular con-
cern the increasing level of information technology 
spending on Operations and Maintenance making 
less funding available for development or moderniza-
tion. The GAO also found the Government has spent 
billions on failed and poorly performing IT invest-
ments due to a lack of effective oversight.
(3) The Federal Government must modernize 
Federal IT systems to mitigate existing operational 
and security risks. 
(4) The efficiencies, cost savings, and greater 
computing power, offered by modernized solutions, 
such as cloud computing, have the potential to— 
(A) eliminate inappropriate duplication and 
reduce costs; 
(B) address the critical need for cyber se-
curity by design; and 
(C) move the Federal Government into a 
broad, digital-services delivery model that will 
transform the Federal Government’s ability to 
meet mission requirements and deliver services 
to the American people. 
(b) PURPOSES.—The purposes of this Act are the fol-
lowing: 
(1) Assist the Federal Government in modern-
ized Federal information technology to mitigate cur-
rent operational and security risks. 
(2) Incentivize cost savings in Federal informa-
tion technology through modernization. 
(3) Accelerate the acquisition and deployment 
of modernized information technology solutions, such 
as cloud computing, by addressing impediments in
the areas of funding, development, and acquisition 
practices. 
SEC. 3. ESTABLISHMENT OF AGENCY INFORMATION TECH-
NOLOGY 
SYSTEMS 
MODERNIZATION 
AND 
WORKING CAPITAL FUNDS. 
(a) INFORMATION
TECHNOLOGY
SYSTEM
MOD-
ERNIZATION AND WORKING CAPITAL FUNDS.— 
(1) ESTABLISHMENT.—There is established in 
each covered agency an information technology sys-
tem modernization and working capital fund (in this 
section referred to as the ‘‘IT working capital fund’’) 
for necessary expenses for the agency described in 
paragraph (3). 
(2) SOURCE OF FUNDS.—Amounts may be de-
posited into an IT working capital fund as follows: 
(A) Reprogramming of funds, including re-
programming of any funds available on the date 
of the enactment of this Act for the operation 
and maintenance of legacy information tech-
nology systems, in compliance with any applica-
ble reprogramming law or guidelines of the 
Committees on Appropriations of the House of 
Representatives and the Senate. 
(B) Transfer of funds, including transfer 
of any funds available on the date of the enact-
ment of this Act for the operation and mainte-
nance of legacy information technology systems, 
but only if transfer authority is specifically pro-
vided for by law. 
(C) Amounts made available through dis-
cretionary appropriations. 
(3) USE OF FUNDS.—An IT working capital 
fund established under paragraph (1) may be used, 
subject to the availability of appropriations, only for 
the following: 
(A) To improve, retire, or replace existing 
information technology systems to improve effi-
ciency and effectiveness. 
(B) To transition to cloud computing and 
innovative platforms and technologies. 
(C) To assist and support covered agency 
efforts to provide adequate, risk-based, and 
cost-effective information technology capabilities 
that address evolving threats to information se-
curity. 
(D) Reimbursement of funds transferred 
from the Information Technology Modernization 
Fund established under section 4, with the ap-
proval of the agency Chief Information Officer.
(4) EXISTING FUNDS.—An IT working capital 
fund may not be used to supplant funds provided for 
the operation and maintenance of any system al-
ready within an appropriation for the covered agency 
at the time of establishment of the IT working cap-
ital fund. 
(5) 
REPROGRAMMING
AND
TRANSFER
OF 
FUNDS.—The head of each covered agency shall 
prioritize funds within the IT working capital fund 
to be used initially for cost savings activities ap-
proved by the covered agency Chief Information Of-
ficer, in consultation with the Administrator of the 
Office of Electronic Government. The head of each 
covered agency may— 
(A) reprogram any amounts saved as a di-
rect result of such activities for deposit into the 
applicable IT working capital fund, consistent 
with paragraph (2)(A); and 
(B) transfer any amounts saved as a direct 
result of such activities for deposit into the ap-
plicable IT working capital fund, consistent 
with paragraph (2)(B). 
(6) RETURN OF FUNDS.—Any funds deposited 
into an IT working capital fund shall be available