EXECUTIVE OFFICE OF THE PRESIDENT OFFICE OF MANAGEMENT AND BUDGET WASHINGTON D C 20503 THE DIRECTOR April 8 2016 The Honorable Joseph R Biden President of the Senate Washington DC 20510 Dear Mr President On behalf of the Administration I am pleased to present for the consideration of the Congress a legislative proposal to establish an Information Technology Modernization Fund to improve cybersecurity and achieve cost-savings by retiring replacing and modernizing antiquated information technology IT systems and transitioning to more secure efficient and modern IT systems Currently civilian agencies spend nearly three-quarters of their IT budgets maintaining legacy IT investments These systems may pose security risks such as the inability to utilize current security best practices including data encryption and multi-factor authentication These systems may also pose operational risks such as rising costs and inability to meet to mission requirements Absent immediate action the cost to operate and maintain legacy systems will continue to grow while security vulnerabilities and other risks will remain unresolved To address these challenges the proposed Information Technology Modernization Fund to be administered by the General Services Administration will fund the transition to more secure and efficient modern IT systems and infrastructure such as cloud platforms while also establishing a self-sustaining mechanism for Federal agencies to regularly refresh their IT systems based on up-to-date technologies and best practices More specifically the Information Technology Modernization Fund legislative proposal addresses the challenges associated with legacy IT in a number of unique ways First a board of experts will identify the highest-priority projects across the Government ensuring that the Federal Government's most pressing and highest-risk systems are targeted for replacement In addition the board will identify opportUnities to replace multiple legacy systems with a smaller number of common platforms facilitating a Government-wide transition to common platforms and re-engineered business practices Second a repayment requirement will ensure that the Information Technology Modernization Fund is self-sustaining and can continue to support modernization projects well beyond the initial infusion of capital As a result $3 1 billion in seed funding for fiscal year 2017 will address at least $12 billion in modernization projects over the first 10 years and will continue to remain available into the future Third experts in IT acquisition and development at the General Services Administration will provide integrated modernization expertise to agencies in implementing their modernization plans Every investment that receives funding will benefit from centralized oversight and expertise increasing the probability of success Fourth funding for all projects will be tied to real-world delivery of incrementally developed products This approach ensures that agencies employ agile development techniques and that funds support successful projects Finally by establishing a central fund that agencies must apply to and compete for the legislative proposal will provide strong incentives for agencies to develop comprehensive high- quality modernization plans Ultimately retiring or modernizing vulnerable and inefficient legacy IT systems will not only make us more secure it will also save money As a means of addressing these pressing challenges the Information Technology Modernization Fund is an important first step in changing the way the Federal Government manages its IT portfolio The innovative approaches in this legislative proposal will enhance agencies' ability to protect sensitive data reduce costs and deliver world-class services to the public The prompt and favorable consideration of this proposal would be appreciated Director Enclosure Identical Letter Sent to the Speaker of the House of Representatives 2 EXECUTIVE OFFICE OF THE PRESIDENT OFFICE OF MANAGEMENT AND BUDGET WASHINGTON D C 20503 THE DIRECTOR April 8 2016 The Honorable Paul D Ryan Speaker of the House of Representatives Washington DC 20515 Dear Mr Speaker On behalf of the Administration I am pleased to present for the consideration of the Congress a legislative proposal to establish an Information Technology Modernization Fund to improve cybersecurity and achieve cost-savings by retiring replacing and modernizing antiquated information technology IT systems and transitioning to more secure efficient and modem IT systems Currently civilian agencies spend nearly three-quarters of their IT budgets maintaining legacy IT investments These systems may pose security risks such as the inability to utilize current security best practices including data encryption and multi-factor authentication These systems may also pose operational risks such as rising costs and inability to meet to mission requirements Absent immediate action the cost to operate and maintain legacy systems will continue to grow while security vulnerabilities and other risks will remain unresolved To address these challenges the proposed Information Technology Modernization Fund to be administered by the General Services Administration will fund the transition to more secure and efficient modem IT systems and infrastructure such as cloud platforms while also establishing a self-sustaining mechanism for Federal agencies to regularly refresh their IT systems based on up-to-date technologies and best practices More specifically the Information Technology Modernization Fund legislative proposal addresses the challenges associated with legacy IT in a number of unique ways First a board of experts will identify the highest-priority projects across the Government ensuring that the Federal Government's most pressing and highest-risk systems are targeted for replacement In addition the board will identify opportunities to replace multiple legacy systems with a smaller number of common platforms facilitating a Government-wide transition to common platforms and re-engineered business practices Second a repayment requirement will ensure that the Information Technology Modernization Fund is self-sustaining and can continue to support modernization projects well beyond the initial infusion of capital As a result $3 1 billion in seed funding for fiscal year 2017 will address at least $12 billion in modernization projects over the first 10 years and will continue to remain available into the future Third experts in IT acquisition and development at the General Services Administration will provide integrated modernization expertise to agencies in implementing their modernization plans Every investment that receives funding will benefit from centralized oversight and expertise increasing the probability of success Fourth funding for all projects will be tied to real-world delivery of incrementally developed products This approach ensures that agencies employ agile development techniques and that funds support successful projects Finally by establishing a central fund that agencies must apply to and compete for the legislative proposal will provide strong incentives for agencies to develop comprehensive high- quality modernization plans Ultimately retiring or modernizing vulnerable and inefficient legacy IT systems will not only make us more secure it will also save money As a means of addressing these pressing challenges the Information Technology Modernization Fund is an important first step in changing the way the Federal Government manages its IT portfolio The innovative approaches in this legislative proposal will enhance agencies' ability to protect sensitive data reduce costs and deliver world-class services to the public The prompt and favorable consideration of this proposal would be appreciated Director Enclosure Identical Letter Sent to the President of the Senate 2 Information Technology Modernization Fund Legislation a Information Technology Modernization Fund -- 1 ESTABLISHMENT --There is established in the Treasury of the United States an Information Technology Modernization Fund for technology related activities to improve information technology and enhance cybersecurity across the Federal government in this section referred to as the Fund 2 ADMINISTRATION OF FUNDS --The Administrator of General Services shall administer the Fund in accordance with this subsection 3 USE OF FUNDS -- A IN GENERAL --The Administrator of General Services may as consistent with the recommendations of the Information Technology Modernization Board established in subsection b make use of amounts in the Fund for the following purposes i transfer to the head of any Federal Department or Agency notwithstanding any other provision of law to remain available until expended to improve retire or replace existing information technology systems to enhance cybersecurity and improve efficiency and effectiveness ii development operation and procurement of information technology products services and acquisition vehicles for use by federal agencies to improve government-wide efficiency and cybersecurity in the proper discharge of their responsibilities and iii services or work performed in support of the activities described in clause i or ii 4 DEPOSIT OF FUNDS -- A IN GENERAL --There is appropriated to the Fund out of any money in the Treasury not otherwise appropriated $3 billion for the fiscal year ending September 30 2017 B OTHER CREDITS --The Fund shall be credited with all reimbursements advances and refunds or recoveries relating to information technology or services provided through the Fund C AVAILABILITY -- i IN GENERAL --Funds deposited credited or otherwise made available to the Fund shall be available without regard to fiscal year limitation 5 REIMBURSEMENT -- A IN GENERAL --For products and services developed under subsection a 3 A the agencies requesting or using those products or services shall pay prices fixed by the Administrator of General Services in accordance with this subsection and for transfers made under subsection a 3 A agencies are required to reimburse the Fund according to terms established in the written agreement described in subsection a 6 Notwithstanding any other provision of law an agency may make a reimbursement required by this paragraph from any appropriation available for information technology activities An obligation to make a payment under an agreement under this section in a future fiscal year shall be recorded pursuant to 31 U S C 1501 in the fiscal year in which the payment is due B PRICES FIXED BY ADMINISTRATOR OF GENERAL SERVICES --In coordination with the Director of the Office of Management and Budget the Administrator of General Services shall fix prices and establish repayment terms at levels sufficient to ensure the solvency of the Fund including operating expenses Any change to such prices and terms shall undergo a review by the Administrator of General Services in coordination with the Director of the Office of Management and Budget C FAILURE TO MAKE TIMELY REIMBURSEMENT --The Administrator of General Services may obtain reimbursement by the issuance of transfer and counterwarrants or other lawful transfer documents supported by itemized bills if payment is not made by a requisitioning agency within 90 days following an agreed upon repayment period documented in written agreements referenced in subsection a 6 A or within 45 days following payment schedules for products and services developed under subsection a 3 A ii 6 WRITTEN AGREEMENT -- A IN GENERAL --Prior to transferring funds to an agency under subsection a 3 A i the Administrator of General Services and the head of the requisitioning agency must enter into a written agreement documenting the purpose for which the funds will be used and the terms of repayment An agreement pursuant to this subparagraph shall be recorded as an obligation as provided in subsection 5 A B REQUIREMENT FOR USE OF INCREMENTAL DEVELOPMENT PRACTICES--For all funds transferred to agencies under subsection a 3 A i in the absence of compelling circumstances documented by the Administrator of General Services at the time of transfer such funds shall be transferred only on an incremental basis tied to metric-based development milestones achieved by the agency to be described in the written agreement required under clause A b Information Technology Modernization Board -- 1 ESTABLISHMENT --There is established an Information Technology Modernization Board in this section referred to as the Board which shall evaluate all proposals for modernization 2 MEMBERSHIP --The Board shall consist of seven voting members 3 CHAIR --The Administrator of the Office of Electronic Government shall serve as Chair 4 PERMANENT MEMBERS --The Administrator of the Office of Electronic Government and a senior General Services Administration official appointed by the Administrator of General Services shall serve as permanent members 5 PERMANENT SEATS --One additional member appointed by the Secretary of Commerce shall be an employee of the Department of Commerce National Institute of Standards and Technology and another additional member appointed by the Secretary of Homeland Security shall be an employee of the Department of Homeland Security National Protection and Programs Directorate and each shall have a term of one year renewable up to three times at the discretion of the relevant Secretary 6 OTHER APPOINTED MEMBERS -- A REQUIRED EXPERTISE -- In addition to the members described in paragraphs 4 and 5 the Board shall be comprised of three other Federal employees primarily having technical expertise in information technology development financial management cybersecurity and privacy and acquisition and who shall each be appointed by the Director of the Office of Management and Budget B TERM --Each member described in this paragraph shall have a term of one year renewable up to three times at the discretion of the Director of the Office of Management and Budget 7 RESPONSIBILITIES --The responsibilities of the Board are to-- i provide input to the Office of Management and Budget for the development of processes for agencies to submit modernization proposals to the Board and the criteria by which they will be evaluated ii request that the Administrator of General Services assist agencies in the further development and refinement of select submitted modernization proposals based on an initial evaluation performed with the assistance of the Administrator of General Services iii review and prioritize with the assistance of the Administrator of General Services and the Office of Management and Budget modernization proposals based on established criteria including addressing the greatest security and operational risks having the greatest government-wide impact and having a high probability of success based on factors such as a strong business justification technical design procurement strategy including adequate use of incremental development practices and program management iv identify with the assistance of the Administrator of General Services opportunities to improve or replace multiple information technology systems with a smaller number of information technology systems common to multiple agencies v recommend the funding of modernization proposals in accordance with the uses in subsection a 3 A to the Administrator of General Services vi monitor in coordination with the Administrator of General Services progress and performance in executing approved projects and if necessary recommend the suspension or termination of funding for projects that fail to meet the terms of the written agreement described in subsection a 6 c Responsibilities of the Administrator of General Services -- 1 IN GENERAL --In addition to the responsibilities outlined in section a the Administrator of General Services shall support the activities of the Board and provide technical support to and oversight of agencies which receive transfers from the Fund 2 RESPONSIBILITIES --The responsibilities of the Administrator of General Services are to-- i provide direct technical support in the form of personnel services or otherwise to agencies transferred amounts under subsection 3 A i and for projects funded under subsection 3 A ii ii assist the Board with the evaluation prioritization and development of modernization proposals iii perform regular project oversight and monitoring of approved modernization projects in coordination with the Board and the Office of Management and Budget to increase the likelihood of successful implementations and reduce waste and iv publish and maintain list of projects funded by the Fund on a public dashboard to be updated not less than on a quarterly basis that will include a description of the project project status and financial expenditure data related to the project Section by Section Analysis Information Technology Modernization Fund a Information Technology Modernization Fund Section 1 Establishment This section establishes an Information Technology Modernization Fund to improve information technology and enhance cybersecurity across the Federal government Section 2 Administration of Funds This section designates the Administrator of General Services to administer the Fund among projects the modernization proposals recommended for funding by the Information Technology Modernization Board Section 3 Use of Funds This section allows the Administrator to make use of the funds as consistent with the recommendations of the Information Technology Modernization Board for the following purposes Transfer to an agency head to improve or retire existing IT systems or enhance cybersecurity development operation or procurement of IT products services or work in support of the above Section 4 Deposit of Funds This section appropriates $3 billion from the Treasury for the fiscal year ending September 30 2017 money available for the Fund will be available without regard to fiscal year limitation Section 5 Reimbursement This section stipulates that agencies will pay prices fixed by the Administrator and transfers are permitted to reimburse the Fund in installments established in writing by the Administrator the Administrator in coordination with OMB will establish repayment terms at levels that ensure solvency of the Fund the Administrator can obtain reimbursements if payment is not made by a requisitioning Agency following the relevant agreed upon repayment period outlined in previous sections Section 6 Written Agreement This section states that the Administrator and a participating Agency must have a written agreement documenting the purpose of the funds and the terms of repayment in the absence of compelling documented circumstances the allocated funds will be transferred on an incremental basis tied to metricbased milestones described in the required written agreement b Information Technology Modernization Board Section 1 Establishment This section establishes an Information Technology Modernization Board which will evaluate and recommend the funding of all modernization proposals to the Administrator of General Services Section 2 Membership This section states that the Board will consist of seven voting members Section 3 Chair This section states that the Administrator of the Office of Electronic Government will serve as Chair Section 4 Permanent Members This section states that the Administrator of the Office of Electronic Government and a senior General Services Administration official will serve as permanent members Section 5 Permanent Seats This section states that the Department of Commerce National Institute of Standards and Technology NIST and the Department of Homeland Security National Protection and Programs Directorate will each have one seat on the Board with each representative serving a one year term renewable up to three times at the discretion of the Director of OMB Section 6 Other Appointed Members This section states that three members shall be other Federal employees primarily having expertise in IT development financial management cybersecurity and privacy and acquisition who shall be appointed by the Director of OMB These members will serve one year terms renewable up to three times at the discretion of the Director of OMB Section 7 Responsibilities This section states that the responsibilities of the Board are to provide input to OMB for the development of processes for agencies to submit modernization proposals request the assistance of the Administrator of General Services with assisting agencies in the further development and refinement of select modernization proposals review and prioritize with the assistance of the Administrator of General Services and the Office of Management and Budget modernization proposals based on established criteria of business justification technical design procurement strategy etc identify with the assistance of the Administrator of General Services opportunities to improve or replace multiple information technology systems with a smaller number common to multiple agencies recommend modernization proposals for funding and monitor in coordination with the Administrator of General Services progress of projects and recommend suspension or termination of funding if a project fails to meet the terms of written agreements c Responsibilities of the Administrator of General Services Section 1 In General This section directs the Administrator to provide support to the Board and agencies that apply to the Fund Section 2 Responsibilities This section states the responsibilities of the Administrator in support of the Board are to provide technical support to agencies that are transferred funds assist the Board with evaluation of modernization proposals perform regular project oversight in coordination with the Board and OMB publish and maintain a dashboard updated quarterly of projects funded by the Fund                     National Security Archive    Suite 701  Gelman Library  The George Washington University    2130 H Street  NW  Washington  D C  20037    Phone  202 994‐7000  Fax  202 994‐7005  nsarchiv@gwu edu