Professional Services Council

Steve Harris

Federal Technology Advocate

For several tense weeks earlier this fiscal year, one of the federal government’s most important IT modernization tools sat frozen. The Technology Modernization Fund (TMF) — the revolving fund that helps agencies harden cybersecurity, stand up better digital services and retire outdated systems — lapsed while it awaited congressional reauthorization. At precisely the moment agencies could least afford a modernization pause on systems tied to national security and critical federal functions, nearly $200 million in available funding was locked in place.

In March 2026, Congress succeeded in addressing the lapse in authorization and provided for a short-term TMF extension through September 30, 2026. That was good news.

But a temporary extension is only a short-lived reprieve. The Fund’s leadership has said as much: to truly effect needed changes in technology modernization, this critical mission cannot survive on last-minute extensions.

On August 8, 2026, the Senate passed a continuing resolution that would extend TMF authorization through December 11, 2026 — another short-term extension that merely pushes the TMF cliff by a few months. If Congress wants agencies to keep modernizing the systems Americans depend on, TMF needs an unencumbered multi-year reauthorization.

Why does this matter? Because TMF has quietly become an effective tool to close the gap between the technology used by citizens every day and the technology running their government. Since its creation in 2017 and its $1 billion infusion under the American Rescue Plan Act of 2021, TMF has funded more than 50 projects, ranging from cybersecurity upgrades to the retirement of decadesold legacy platforms. Of particular note, TMF operates as a revolving fund: agencies that receive a Fund-related investment repay it over time and those repayments fund the next round of modernization.

“The TMF model only functions well if the Fund has the runway to operate as intended.”

None of that happens without industry. To execute modernization projects at this scale and speed, government and industry work hand-in-hand to bring the engineering talent, cybersecurity expertise and delivery discipline that turn a funded proposal into a system that delivers.

The TMF model only functions well if the Fund has the runway to operate as intended. Six months of authorization followed by another potential lapse undermines the very premise of a revolving fund. Agencies cannot plan multiyear modernization efforts and the industry partners who design, build and secure these systems cannot staff up with confidence around a fund that might not exist next fiscal year. Long-term — or even permanent — reauthorization is essential.

TMF’s board has made a clear case, designating artificial intelligence (AI) as a top priority for the fund. Recent awards reflect it: a generative AI project at the State Department to streamline data processing, modernization tied to the nuclear security mission at the National Nuclear Security Administration and AI safety initiatives at the Departments of Commerce and Energy. Earlier this summer, TMF launched a targeted call prioritizing AI adoption and permitting technology as the fund sought to deploy roughly $200 million in available capital.

This is the right instinct. Agencies are under pressure to adopt AI responsibly, but most are trying to work with legacy systems that were built long before their architects planned to integrate AI. TMF is one of the few funding mechanisms flexible enough to help agencies modernize the foundational systems AI adoption depends on: data quality, interoperability and security. Without that groundwork and without industry partners who can efficiently build it correctly the first time, AI initiatives risk becoming impressive pilots that never scale or tools bolted onto systems that can’t securely support them.

Industry’s role is essential to TMF’s success. A July 2026 Government Accountability Office review found that of the TMF contract actions it examined, 87 percent were competitively awarded, representing 96 percent of the total funding awarded. The private sector brings technical depth, from cloud migration to AI implementation to cybersecurity architecture and translates that expertise into secure systems. But this system works best when agencies and their industry partners are aligned around outcomes from day one, with the certainty to plan multi-year builds.

Congress has limited time to prevent another lapse in authorization. They must put in place a plan for a longerterm solution. We need to let TMF do what it was built to do: support technological innovation and modernization to ensure that America’s technological leadership is secure for the next generation.