White House Proposes $3B IT Update Fund

The Obama administration is seeking US$3.1 billion for a modernization fund to update federal information technology resources that need to be replaced with more efficient and productive systems.

Initially, the fund would bolster the government’s annual spending on IT, which is set for a modest increase to $89.8 billion in the administration’s proposed budget for fiscal 2017.

While upgrading older systems has been a concern for some time, the administration chose to present the IT fund idea as part of a separate $19 billion cybersecurity initiative within the proposed 2017 budget — possibly to generate more support from lawmakers.

The cybersecurity plan includes “retiring outdated federal information technology systems that were designed in a different age and increasingly are vulnerable to attack,” President Obama said when presenting the 2017 budget last month.

Legacy IT systems are “suffering from a multitude of things,” including expensive operation and maintenance, declining functionality, weak security, and fewer people with the background to operate older facilities, federal CIO Tony Scott noted two days later at a forum hosted by the New America Foundation.

Plan Could Generate $12 Billion

The investment fund would constitute $3.1 billion in seed money, and federal agencies would submit projects to a review board for selection, according to the proposal. The administration is seeking $100 million for initial allocations. Agencies would return accrued savings from the investments to the revolving fund.

“The payback will have to come out of the funds that [the agencies] have,” Scott said at the forum.

Efficiencies from modernization eventually would create reimbursements to the fund sufficient to drive — or leverage — an additional $12 billion for upgrade investments over 10 years, theOffice of Management and Budget said.

“The continued and pervasive use of legacy IT systems by federal agencies results in increased cybersecurity risks to federal IT systems, downgraded service for the American people and businesses, increased personnel costs, and missed opportunities,” Denise Turner Roth, administrator of theGeneral Services Administration, said last month at a hearing before a subcommittee of the House Appropriations Committee.

GSA will be charged with operating the fund.

Projects Must Meet Performance Checks

Agencies devote so much of their annual budgets to legacy systems that they find it hard to get together a critical mass of funds for modernization projects, Turner said. More than 70 percent of civilian agency IT spending projected for 2017 will be for operations and maintenance.

The multiyear aspect of the modernization fund program will help underpin long-term investments, although Scott noted that projects likely will be funded incrementally with required periodic performance checks. A team of systems architects and developers at GSA will provide additional oversight and development capabilities to ensure that modernization activities are successful.

“Overall, I believe OMB is headed in the right direction through this initiative, though it is tough from a timing perspective with a new administration transitioning in January 2017,” said Tim Young, principal atDeloitte Consulting and a former deputy administrator at OMB.

“For the policy to be successful, the first few modernization efforts have to hit their quantitative goals in order to garner long-term support from a new administration and Congress, and be able to demonstrate that the new technology is delivering value and mission objectives,” he told the E-Commerce Times.

“The proposed $3.1 billion multiyear IT modernization fund would put some weight behind the cross-agency authority that CIOs received in the Federal Information Technology Acquisition Reform Act and provide the flexibility necessary to make some initial investments in modernization,” said Chris Wiedemann, senior analyst atimmixGroup.

“While we’re obviously waiting on the results of the ongoing committee discussions around this, we think it has a reasonable chance of being stood up, and we’re certainly interested in who leverages this money should it be appropriated,” he told the E-Commerce Times.

Funding Plan Is ‘Hogwash’

One key member of Congress gave the proposal a cold shoulder during a hearing last month conducted by the House Oversight and Government Reform Committee.

The hearing topic was security clearance reform, but the discussion veered briefly into the issue of legacy IT resources. Federal CIO Scott mentioned the difficulty agencies encounter in obtaining funds to replace legacy facilities.

“I think that’s hogwash,” committee Chairman Rep. Jason Chaffetz, R-Utah, said bluntly.

“You’re getting more than $80 billion a year and that’s not enough? You ask for about $3 billion and yet you’ve had $525 billion over the last seven years, ” he said.

“To suggest that we’re just 3 billion away from actually solving this problem is ridiculous. You’re spending 70 percent on legacy expenses and only 30 percent on new systems — but I don’t think it’s due to a lack of funding. This is not a funding issue. One good trip to Best Buy you can do better than we’re doing now,” Chaffetz continued.

The Federal Buzz: Cloud Contract Protest; Cyber Survey

HP Prevails in Cloud Contract: TheGovernment Accountability Office has upheld the award of a $225 million IT contact toHewlett Packard Enterprise Services by theU.S. Department of Education. GAO denied a protest of the award byDell Services Federal Government, which also bid on the contract.

The project called for transitioning student loan data, including Pell grant information, from a noncloud virtual data center environment, in which Dell was the incumbent provider, to a next-generation hybrid cloud configuration. Dell failed to adequately respond to requirements dealing with a number of components in the project related to the use of cloud technology, the Education Department said.

Dell contended that the department’s descriptions for those components were not sufficiently clear, and as a result the lower grades the company received on portions of its proposal were unsupportable.

In a decision earlier this year, however, GAO ruled that agencies don’t need to identify every aspect of a project award as long as the entire project is assessed in a reasonable fashion. The fact that Dell may have overlooked the cloud aspect of some project components in its bid was not the department’s fault, GAO essentially said. The goal of achieving cloud capability for all aspects of the system was sufficiently clear in the context of the project description.

Federal Cyber Survey: Federal cybersecurity executives will have an opportunity to register their views on the state of government cyberprotection in a survey to be conducted jointly byISC2 andKPMG. Results will be released in May.

Topics will include how federal executives plan to target resources for the Obama administration’s proposed Cybersecurity National Action Plan, or CNAP, and what agencies have done in response to the Office of Personnel Management breach of more than 20 million records. Executives also will be asked about their cybersecurity priorities and factors affecting their government service.

As part of CNAP, the administration is creating a federal chief information security officer position.

“As evidenced by the announcement of the new federal CISO position, the federal cyber executive perspective has an increasing role in helping government leaders make complex business decisions,” said Dan Waddell, director of U.S. government affairs for ISC2. “Together with KPMG, ISC2 is in the unique position to provide this platform for the voice of federal cyber executives to be heard at this very critical time.”

John K. Higgins is a career business writer, with broad experience for a major publisher in a wide range of topics including energy, finance, environment and government policy. In his current freelance role, he reports mainly on government information technology issues for ECT News Network.

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