Why it Matters

The systems that manage everything from veterans' benefits to Social Security run on infrastructure so ancient that maintaining them costs billions annually, even as those systems grow more vulnerable to security breaches and operational failures. In 2018, Congress created the Technology Modernization Fund to fix this. By 2025, the government had invested roughly $1.03 billion across 68 modernization projects, betting that updating these systems would eventually save money and improve services. The Government Accountability Office examined the fund's performance and found that projects are generating only modest financial returns so far, raising questions about whether this experiment in federal technology overhaul is delivering on its core premise.

The Scale of Federal IT Decay

Aging IT systems are costly for federal agencies to manage and maintain. Every year, government IT budgets are consumed by the unglamorous work of keeping decades-old code running, patching vulnerabilities, and paying contractors to maintain systems that should have been replaced years ago.

The Technology Modernization Fund was designed as a solution. Established by the Modernizing Government Technology Act, which was enacted as part of the National Defense Authorization Act for Fiscal Year 2018, the fund operates on a straightforward theory: invest upfront capital in agency projects to modernize IT systems with the expectation of generating long-run cost savings. Rather than forcing agencies to fund modernization from their existing budgets, the fund provides capital that agencies can repay through the savings they achieve.

The General Services Administration administers the Technology Modernization Fund through a Program Management Office, with an interagency board that approves project investments.

A Billion-Dollar Bet

Congress doubled down on the fund's potential. In 2021, lawmakers provided a $1 billion supplemental appropriation to the Technology Modernization Fund through the American Rescue Plan Act, treating federal IT modernization as part of the post-pandemic economic recovery strategy. That fresh capital brought total investments to approximately $1.03 billion across 68 projects by June 2025.

What the GAO Found

The Government Accountability Office reviewed expected savings for projects that received Technology Modernization Fund awards. Small savings have been achieved so far from Technology Modernization Fund projects. After billions invested and years of work, agencies are not yet seeing the dramatic cost reductions that justified the fund's creation.

The Technology Modernization Fund was predicated on a specific financial logic: agencies would sacrifice immediate budget relief for longer-term savings.

But the gap between what Congress expected and what agencies have delivered so far suggests that federal IT modernization is harder, slower, and more expensive than policymakers anticipated.

The Broader Challenge

Either way, the Technology Modernization Fund's mixed results offer a lesson in the gap between policy intent and execution in government.

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