Implementation Of The Modernizing Government Technology Act

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EXECUTIVE OFFICE OF THE PRESIDENTOFFICE OF MANAGEMENT AND BUDGETWASHINGTON, D .C .20503February 27, 2018THE DIRECTORM-18-12MEMORANDUM FOR THE HEADS OF EXECUTIVE DEPARTMENTS AND AGENCIESJ.J/FROM:Mick Mulvaney .Director l'OSUBJECT:Implementation of the Modernizing Government Technology ActThe Modernizing Government Technology (MGT) Act is a key component of thisAdministration's continued efforts to improve Federal technology by providing financialresources and technical expertise to agencies. The MGT Act will allow agencies to invest inmodem technology solutions to improve service delivery to the public, secure sensitive systemsand data, and save taxpayer dollars. This memorandum sets forth Administration objectives andnecessary actions agencies should take in order to implement the MGT Act.BackgroundThe 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 agencyinformation technology (IT) modernization needs:1. The establishment of a centralized Technology Modernization Fund (TMF) andTechnology Modernization Board (Board); 2 and2. The authorization for all CFO Act agencies 3 to establish IT Working Capital Funds4(WCFs).This memorandum provides guidance to all agencies regarding the necessary planning forupcoming TMF activities, including the initial process for submitting project proposals to theBoard, additional guidance to ·CFO Act agencies 5 regarding the administration and funding of ITWCFs, and where to find additional information on topics such as disbursement and repaymentprocess 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 TechnologyModernization BoardSection A of this guidance is applicable to all agencies (as defined in 5 U.S.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 TechnologyModernization Board (Board), described in greater detail below in Section 2. The Board willconsider project proposals based on financial, technical, and operational criteria. Approvedprojects will receive funds in an incremental manner, tied to specific project milestones andobjectives, 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 of fiscalyears 2018 and 2019. Appropriations for fiscal year 2018 are currently pending. The Board willevaluate and recommend for funding the proposals that show the strongest case for delivering onagency mission objectives and a strong likelihood of success. Agencies must reimburse TMF forany transfer of TMF funds in accordance with the terms of a written agreement. 6 The writtenagreement will document the purpose for which the funds will be used and the terms ofrepayment, which may not exceed 5 years unless approved by OMB.Successful projects will demonstrate a strong execution strategy, technical approach, and have astrong team with a demonstrated history of successful modernization efforts. Agencies should, tothe extent practicable, consider the adoption of commercial technology solutions in theirproposals and provide a strong technical approach and acquisition strategy to implement thosesolutions. Furthermore, agencies are encouraged to submit proposals for common platforms andshared solutions or other modernization projects that will serve multiple components within asingle agency or multiple agencies. OMB anticipates that the TMF will be a testbed for projectsand procedures that agencies can operationalize through their IT planning processes and in theirexecution of their existing appropriations.Where legally permissible, TMF funding may be used to accelerate modernization efforts thatare ongoing. The TMF is not intended to duplicate funding provided through existingappropriations, including any agency funding of IT modernization projects through establishedIT WCFs. Consistent with the MGT Act, agencies may not submit any requests to the TMF, orutilize funding transferred into an agency WCF, to fund any project that has been expresslydenied or restricted by Congress.6For more information on the funds disbursement and repayment process, please visit policy.cio.gov.2

Section 2 – The Technology Modernization BoardThe Board will evaluate proposals and make recommendations for project funding to the GSAAdministrator. 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 ofseven members: The Administrator of the Office of E-Government (Federal CIO), who shall serve as theChair;A senior official from GSA with technical expertise in information technologydevelopment;A member of the Department of Homeland Security’s (DHS) National Protection andPrograms Directorate (NPPD); andFour employees of the Federal Government primarily having technical expertise ininformation technology development, financial management, cybersecurity and privacy,and acquisition, appointed by the Director of OMB.The Board will distribute information and communications regarding the TMF, includingupdates to the submission and evaluation process, a charter governing Board operations,evaluation criteria for project proposals, and any other relevant information to policy.cio.gov.Section 3 –Initial Project Proposal Submissions ProcessAll agencies are encouraged to begin submitting Initial Project Proposals to ofcio@omb.eop.govusing the template provided in Appendix A starting February 27, 2018. Appendix B providessome areas of consideration that are intended to aid agencies in an initial submission. Agenciesmay submit as many Initial Project Proposals as they wish. However, the submission of InitialProject Proposals does not guarantee funding from the TMF, and selection of projects forfunding by the GSA Administrator does not require agencies to accept funds for projects. InitialProject Proposals will continue to be collected at the address above until the Board issues furtherinstructions for project submission. For updates, downloadable Initial Project Proposal templates,and additional information, please visit policy.cio.gov.Section 4 –Additional MGT Act Implementation InformationAdditional information on agency considerations for project proposals, the process andmechanics of TMF funds disbursement and repayment, and other matters relevant to theimplementation of the MGT Act is available at policy.cio.gov. If necessary, OMB may provideadditional supplemental guidance on the areas described above or other relevant matters that may3

arise out of initial MGT Act implementation. Questions regarding this memorandum should bedirected to ofcio@omb.eop.gov.B. Guidance to CFO Act Agencies on IT Working Capital FundsSection B of this guidance is applicable to all CFO Act agencies (as defined in 31 U.S.C. §901 (b)).Under the MGT Act, all CFO Act agencies are authorized to establish an IT Working CapitalFund (WCF). 7 IT WCFs may only be used: (A) to improve, retire, or replace existinginformation technology systems to enhance cybersecurity of existing systems and to improveefficiency and effectiveness of the life of a given workload; (B) to transition legacy informationtechnology systems to commercial cloud computing and other innovative commercial platformsand technologies, including those serving more than one covered agency with commonrequirements; (C) to assist and support covered agency efforts to provide adequate, risk-based,and cost-effective information technology capabilities that address evolving threats toinformation security; (D) to reimburse funds transferred to the agency from the TechnologyModernization Fund; and, (E) for a program, project, or activity or to increase funds for anyprogram, project, or activity that has not been denied or restricted by Congress.By March 26, 2018, all CFO Act agencies should notify their OMB Resource ManagementOffice (RMO) and the OFCIO Desk Officer if the agency intends to establish an IT WCF in FY2018 and initiate the process of creating a new Treasury account for the WCF. If an agencydetermines it will establish an IT WCF after February 27, 2018, the agency should notify theirOMB 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 ITinvestments it supports consistent with OMB’s management and budget development role. In thefiscal quarter after an agency establishes an IT WCF, and every quarter thereafter, the agencywill 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 abrief narrative justification;b) Updates to the IT Dashboard, reflecting changes to all investments or projects fundedfrom 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); andc) 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 OFCIOintegrated data collection (IDC) process, Agency Strategic reviews, PortfolioStats, andTechStats). Agencies that establish WCFs should consider, to the extent applicable, the criteriaand guidance the TMF Board formally approves for TMF projects.7 Pub. L. No. 115-91, Title X, Subtitle G, §1077(b)(1).4

Agencies are reminded that, pursuant to the MGT Act, all transfers and reprogramming of fundsto the WCFs are subject to any applicable appropriations law restrictions. The MGT Act does notconfer transfer authority. Therefore, agencies may transfer funds to WCFs only if they have otherauthority that authorizes the transfer of such funds. Agencies are encouraged to review theirexisting agency-specific authorities to identify accounts with applicable transfer authority. Inconcert with the decision to establish a WCF, agencies should identify accounts with applicabletransfer authority and submit the account names to their OMB RMO and OFCIO desk officer.Enclosures5

APPENDIX AInitial Project Proposal TemplateInstructions: Please fill out all of the information requested below. Initial Project Proposalsselected by the Technology Modernization Board (Board) for further consideration may receiveassistance in developing an in-depth proposal and business case to present to the Board. Pleaseavoid the use of acronyms or terminology likely to be unfamiliar to someone outside of youragency and/or program area.Please complete the form using plain language and submit to OMB, as a .docx file, atofcio@omb.eop.gov. Please limit Initial Project Proposals to 2 pages, using 10 point font(“General Information” excepted).General InformationProject Name:Sponsoring Agency:Project Sponsor Name:Project Sponsor Title andOffice:Project Sponsor Email:CIO Sponsor Name, Titleand Email:CFO Sponsor Name, Title,and Email:1. Describe how the project fulfills your Agency’s mission, identify the problem this projectsolves and how successful execution of this project solves the problem. (1-3 sentences)2. Provide an estimation of the TMF funding request and the method used for cost estimation. Ifless than the estimated total project cost, also state the estimated total project cost and how youintend 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 youwill demonstrate that your intended milestones were met.6

4. Describe why the project will succeed, citing examples such as: (1) executive level support for thiseffort, (2) the strength or experience of the team, including any agency digital service experts, otheragency development resources, the availability of contractor support (3) the preparedness to beginexecuting this project, and (4) other relevant factors that will demonstrate the likelihood of projectsuccess.5. Describe why the Technology Modernization Fund makes sense for this project and how theapproach you are taking for this effort is different than what you have previously attempted.7

APPENDIX BRelevant Considerations in Preparing an Initial Project ProposalA thoughtful IT modernization strategy prioritizes projects based on impact and probability ofsuccess. Impact can be measured by effect on users, risk reduction, opportunity enablement, andcommon solutions. Probability of success can be measured by team and project strategy strength.The following topics are neither exhaustive nor may be applicable to all agency projects, butserve to provide a framework to identify projects ripe for IT modernization.Agencies submitting Initial Project Proposals are encouraged (though not required) to addressthese considerations, including citing or attaching evidence that their project meets anyapplicable considerations. Agency project sponsors should also be able to address these issues aspart of the 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 ademonstrable 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 expectedoutcomes will enhance the delivery of services that reduces burden, improvesperformance, 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 amaterial impact on project execution) that would otherwise not be solved. The projectleverages commercial capabilities and industry best practices where applicable in order tomanage risk during execution and throughout the life and maintenance of the project.Feasibility Agency Sponsorship and Strength of Team: The project has strong executive visibilityand support, so that any issues that arise during execution can be addressed quickly andeffectively. Agency leadership understands and champions the project success asessential to achieving agency priority goals. Project Execution Strategy and Measures of Success: The project identifies keymilestones for success and demonstrates how the use of funds will enable milestoneachievement. A successful project also envisions an appropriate governance structure andoperational model that will last beyond initial execution. The project will enhance andimprove the existing agency IT modernization strategy, and the project will ultimately beexecuted according to a strong project management approach that aligns to industry bestpractices and incorporates, to the greatest extent practicable, commercial technologysolutions8

Opportunity Enablement Expected Cost Savings, Lasting Financial Impact, and Ability to Repay the TMF: Asuccessful project will provide detailed information on how the agency will save costs ordramatically improve service quality through modernization. The project will describethe importance of the investment to the agency (i.e., how impactful this project is toagency mission) and the expected long-term savings and operational efficienciesexpected through successful project execution. Projects will highlight how businessprocess or change management advances (including the repurposing of workforce asnecessary) will be achieved as a result of successful project execution.Common Solutions Reduction of Outdated, Insecure Systems to Modern, Scalable Platforms: A successfulproject will ensure that security is designed into execution from the outset andcomplements service delivery and mission objectives. Projects will leverage commercialproducts and services to the greatest extent practicable to boost security, decreasetechnical debt, and improve the ability of the project and the associated technology toadapt to a changing threat and operational environment. Where applicable, projects willdemonstrate the ability of the agency to reduce outdated or duplicative systems (or toretired multiple systems) through modernization and deliver common solutions and reuseopportunities within an agency, or between the agency and external partners.9

Guidance to Agencies on the Technology Modernization Fund and Technology Modernization Board Section A of this guidance is applicable to all agencies (as defined in 5 U.S.C. §551(1)).

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