H.R. 2985, Modernizing Government Technology Reform Act

Bill Summary

H.R. 2985 would amend and reauthorize the Technology Modernization Fund (TMF) through calendar year 2032 and create new reporting requirements for federal agencies regarding their information technology (IT) systems. The bill also would direct the Office of the Federal Chief Information Officer (within the Office of Management and Budget) to provide the Congress with a list of federal agencies’ high-risk, outdated IT systems.

Estimated Federal Cost

The estimated budgetary effects of H.R. 2985 are shown in Table 1. The costs of the legislation fall within budget function 800 (general government).

Basis of Estimate

CBO assumes that H.R. 2985 will be enacted near the beginning of fiscal year 2027. CBO’s estimated outlays are based on the assumption that awards to agencies would be spread evenly over the period covered by the extension in the bill.

Direct Spending

CBO estimates that enacting H.R. 2985 would increase direct spending by $300 million over the 2026-2036 period. Those estimated costs arise because the General Services Administration (GSA), which administers the Technology Modernization Fund, would not be able to spend most of the amounts in that fund after the end of fiscal year 2026.

The TMF is used for projects to modernize or replace federal IT systems. Funds for each project are transferred to agencies over three to five years and recipient agencies repay those amounts with their annual appropriation, typically within five years after the first transfer. The projects are governed by agreements that specify timelines, benchmarks that must be met before additional funding is provided, and the terms of repayment.

Under current law, the authority to transfer amounts in the fund for new IT modernization projects will expire at the end of fiscal year 2026. After that date, unawarded amounts can be used to cover operating expenses or for projects already in process; no new awards can be made. As a result, CBO expects that most of the amounts remaining in the fund at the end of 2026, as well as any repayments from agencies for current agreements, will remain unspent and will not be committed to specific projects.

H.R. 2985 would reauthorize the TMF through the end of calendar year 2032 and thus would allow any unawarded amounts, either already in the fund or reimbursed to the fund after 2026, to be transferred to agencies for new projects. Because the amounts in the TMF can be spent without further appropriation, those outlays would be classified as direct spending.

According to GSA, the TMF currently holds around $240 million in unawarded funds. CBO expects that about $40 million of that amount will be awarded to new projects by the end of the current fiscal year. In addition, information from GSA suggests that $190 million in outstanding reimbursements could be returned to the TMF after 2026. Because GSA has not been able to fully recover all of the awards made under the TMF, CBO estimates that $100 million of the $190 million in outstanding reimbursements would be returned to the fund after 2026. On that basis, CBO estimates that enacting H.R. 2985 would increase direct spending by $300 million over the 2026-2036 period—$200 million for the amounts in the fund at the end of 2026 and $100 million for funds we expect would be returned to the fund after 2026.

Spending Subject to Appropriation

CBO estimates that implementing the reporting requirements in H.R. 2985 would cost less than $500,000 over the 2026-2031 period. Any related spending would be subject to the availability of appropriated funds. The bill would not authorize the appropriation of additional funds into the TMF.

Uncertainty

CBO’s assessment of the amount remaining in the TMF at the end of fiscal year 2026 is uncertain. If GSA were to award less or more than the $40 million CBO expects the agency to award by the end of fiscal year 2026, the cost of enacting the bill would be higher or lower than CBO’s estimate.

In addition, the amount of reimbursements that will be returned to the TMF after 2026 from agencies repaying awards made before the end of fiscal year 2026 is uncertain. If the amount returned is larger or smaller than the $100 million that CBO estimates will be returned, the actual cost would be higher or lower than CBO’s estimate.

Pay-As-You-Go Considerations

The Statutory Pay-As-You-Go Act of 2010 establishes budget-reporting and enforcement procedures for legislation affecting direct spending or revenues. The net changes in outlays that are subject to those pay-as-you-go procedures are shown in Table 2.

Increase in Long-Term Net Direct Spending and Deficits

CBO estimates that enacting H.R. 2985 would not increase net direct spending or on-budget deficits in any of the four consecutive 10-year periods beginning in 2037.

Mandates

The bill contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act.

Estimate Prepared By

Federal Costs: Emilia Oliva

Mandates: Andrew Laughlin

Estimate Reviewed By

Ann E. Futrell
Chief, Natural and Physical Resources Cost Estimates Unit

Kathleen FitzGerald
Chief, Public and Private Mandates Unit

H. Samuel Papenfuss 
Deputy Director of Budget Analysis

Estimate Approved By