TMF Creates Opportunity to Jumpstart Shared Service Offerings

Piggy bank launching similar to a rocket.

The Technology Modernization Fund (TMF) was established to provide agencies with the means to transform their IT systems and ultimately better serve the American public. The fund provides approved projects with incremental funding (up to a fixed amount) that is meant to be repaid. Therefore, agencies need to have a strategic plan for repayment when considering what type of project to submit to the Technology Modernization Board for approval. Shared services are designed to work well with TMF’s fixed funding structure and requirement to pay back some or all of the modernization funds. Given this, agencies interested in TMF funding might strongly consider a shared service-focused submission, as such a project can repay the TMF by collecting funds from agencies that are interested in participating in the shared service. As explained in the TMF funding guidelines,

“Multiple agencies may partner with a managing partner, with its own appropriate reimbursable authorities, who invests in a common platform that is shared across the agencies. The managing partner receives TMF funding to develop the common solution, then charges a fee-for-service to partner agencies. Funds collected by the managing partner from multiple agencies are then used to centrally repay the TMF.”

Partner agencies may pay the managing partner using multi-year money (as opposed to one-year appropriations) or working capital funds. Working capital funds are sustained through the collection of fees, and while working capital fund expenses must be approved by Congress, they do not expire. These funds are easier to move between agencies than traditional agency funds and are typically transferred using Interagency Agreements and Memoranda Of Understanding.

Shared services are designed to work well with TMF’s fixed funding structure and requirement to pay back some or all of the modernization funds.

Because TMF funding only goes up to a fixed amount, it behooves agencies to submit projects that have the potential to be self-sustaining. Starting up a shared service has a high fixed cost, and once they are up and running the ongoing costs to maintain them are not significant compared to the upfront cost. Ongoing activities (such as security audits, patching, portfolio management, and transitions between COTS products) can be funded through the annual charge to participating agencies; this positions them to benefit from TMF’s initial injection of funds without relying on the TMF long-term.

When pursuing TMF funding, preparation for success post-funding is critical. By leveraging the ability of shared service projects to pay back funds and be self-sustaining, agencies can benefit from TMF funding in the short-term while setting themselves up to reap the long-term rewards that shared services can offer, for themselves and the agencies that use their new services.