On Dec. 12, 2025, Congress‘s authorization of the Technology Modernization Fund expired, limiting the government’s ability to deploy up to $200 million that could otherwise go toward improving federal information technology systems.
Created in 2017, the TMF helps agencies overcome the upfront costs that often block IT modernization — funding cloud migration, data transfers, and workforce retraining while requiring projects to repay the fund from long-term savings. It prioritizes cybersecurity, accelerates delivery of services, and enables agencies to move away from brittle legacy systems toward modern, modular platforms.
Today, the federal government spends over $100 billion annually on IT, with the majority going to maintaining legacy and obsolete systems. The status quo not only squanders taxpayer funds, but it also worsens essential government services, weakens cybersecurity, and harms citizens who waste their own time and money interacting with these aging and ineffective services.
Congress should move quickly to reauthorize and further fund the TMF, whether through a direct appropriation or other means — for example, by reallocating funds from canceled federal software projects.
TMF helps address the root causes of many problems with federal software. For decades, federal IT procurement has favored entrenched vendors such as Oracle and Microsoft, creating deep vendor lock-in. Dominant firms use complex licensing and audit practices that make it costly and risky for agencies to switch providers, even when cheaper and more secure alternatives exist. The result is a system that rewards inertia, discourages competition, and traps agencies in outdated technology.
Oracle and others have employed a tactic known as “surprise” audits against agencies that reduce their spending with the company — or agencies that seek to migrate services to competing cloud providers. Designed as a scare tactic, agencies are informed of possible “non-compliance,” e.g., having too few licenses for the number of federal employees on a system. Possible fines are steep and could eat up agencies’ limited software budgets. However, by bargaining with Oracle and renewing a contract, agencies can resolve the audit without costly and complicated disputes.
TMF can provide government leaders with the financial backing and political courage necessary to overcome surprise audits and other obstacles that vendors deliberately place in the way of federal IT modernization. While moving to open-source and cloud-based platforms will save agencies and taxpayers money in the long run, the upfront cost of such a transition — paying for new systems, data migration, retraining staff, etc. — can serve as a significant barrier.
Furthermore, the annual budget process in Congress creates uncertainty for agencies that may be loath to undertake yearslong modernization processes in the face of shifting political and fiscal winds. TMF can provide that certainty through IT modernization funding that isn’t as volatile as annual appropriations have historically been for such projects.
To protect taxpayers, the fund has strong measures in place to ensure that long-term cost savings are used to repay the TMF so that the program becomes self-sustaining.
And it prioritizes projects that address immediate cybersecurity gaps — a long-standing and under-resourced imperative.
The TMF also enjoys widespread bipartisan support in Congress, the tech industry, civil society groups, and the Trump administration, which created the TMF when President Donald Trump signed the Modernizing Government Technology Act in his first term. It’s one of those rare “no-brainers” in Washington, and the cost to taxpayers is a relative pittance for the possible savings and overall benefits to the country, including making government services better and easier to use.
TMF’s track record so far is overwhelmingly positive. The fund has invested in 70 projects across 34 agencies, including modernizing U.S. Customs and Border Protection’s IT and digitizing the Labor Department’s certification process, which sped up approvals for farmers and other businesses. The program boasts an 80% success rate compared to the dismal 13% for large government projects using traditional methods of modernization, according to the Office of Management and Budget. Moreover, the General Services Administration estimates the fund has saved 378 million work hours and delivered billions in cost savings.
Looking ahead, the TMF will also play a critical role in increasing artificial intelligence adoption across the federal government. For agencies to realize the benefits of AI, they will need the “seed” funding to move toward cloud-based and modular systems that enable them to use AI applications that are otherwise available to the private sector.
Trump summed it up well: “Americans deserve better digital services from their government.” Congress can help make that happen by reauthorizing the TMF.
Evan Swarztrauber is a senior fellow at the Foundation for American Innovation and former policy adviser at the Federal Communications Commission during the first Trump administration.
