Technology Modernization Fund: Small Savings Achieved So Far, but Substantial Future Savings Expected

TL;DR

GAO’s fourth biennial review of the Technology Modernization Fund (TMF) found that from fiscal years 2018 through 2025 the Technology Modernization Board invested about $1.03 billion in 68 unclassified projects, but realized cost savings so far have been small. As of June 2025, 24 projects expect total savings of about $1.06 billion; 11 projects have realized roughly $13.5 million in savings while 13 have not yet begun achieving savings. The bulk of anticipated savings—about $1.04 billion (98.3 percent)—is expected in fiscal year 2027 or later. Thirty-seven projects do not expect cost savings but provide other value (for example, security risk mitigation), and seven projects were cancelled prior to June 2025. GAO found most procurements used full and open competition (154 of 177 actions, 87 percent), accounting for about $713.1 million (96 percent) of awarded funding; 23 noncompetitive awards were documented with authorized exceptions. Immediate implication for contractors: near-term realized TMF procurement volume tied to savings is limited, but larger opportunities are likely as projects reach expected savings in FY2027+, and proposals must account for realistic cost‑savings, migration risk, and non-cost value such as security.

Key Points

• What happened: GAO analyzed TMF activity through June 2025 and reported about $1.03 billion invested across 68 unclassified projects; 24 projects expect ~$1.06 billion in savings (11 have realized ~$13.5M; 13 have not yet realized savings); most anticipated savings are expected in FY2027 or later; 37 projects expect no cost savings and 7 projects were cancelled.
• Who is affected: Federal agencies receiving TMF investments and contractors competing for TMF-related work; entities named in the report include GSA (General Services Administration) (invested funds), OMB (issued guidance), and GAO (reporting office).
• Timeline: TMF investments span fiscal years 2018–2025; GAO’s dataset is current as of June 2025; most project savings are expected in fiscal year 2027 or later; contract actions analyzed covered March 1, 2023–June 2, 2025.
• What contractors should do NOW: Reassess cost‑savings assumptions and migration‑cost estimates in capture plans, emphasize non‑cost benefits (security, risk reduction) where applicable, position for FY2027+ opportunity windows, ensure competitive bidding readiness, and document realistic baselines and contingency for migration overruns.

Who Is Affected

• Federal agencies receiving TMF investments and their program offices.
• Contractors and capture teams pursuing TMF-related procurements and follow‑on work.
• Named entities in the report: GSA, OMB, GAO.
• Specific NAICS codes, agencies, and contract vehicles pending source review.

Frequently Asked Questions

Q: How much has the TMF invested and how much savings have been realized so far?

A: From fiscal years 2018 through 2025 the Technology Modernization Board invested about $1.03 billion in 68 unclassified projects. As of June 2025, 24 projects expect total savings of about $1.06 billion; 11 projects have realized about $13.5 million in savings, and 13 projects had not yet begun to achieve savings.

Q: Did agencies use full and open competition for TMF procurements?

A: GAO found 154 of 177 TMF contract actions (87 percent) were awarded using competitive procedures, accounting for about $713.1 million (96 percent) of the funding awarded. In 23 instances agencies awarded without full and open competition and documented authorized exceptions, consistent with statutory exceptions.

Q: Why have some TMF projects not met expected savings?

A: For completed projects that missed targets, agencies cited causes such as removal of planned functionality and higher-than-planned system migration costs, which reduced realized savings—sometimes by tens of millions. GAO compared realized vs. expected savings against OMB’s variance threshold of 10 percent for applicable completed projects.

Definitions

• Technology Modernization Fund (TMF): A federal fund that invests in agency projects to modernize aging federal information technology systems.
• Modernizing Government Technology Act: The statute that established the TMF.
• Competition in Contracting Act of 1984 (CICA): Federal law that requires, with certain exceptions, full and open competition for procurements.
• OMB variance threshold (10 percent): The Office of Management and Budget’s variance threshold used by GAO to compare expected and realized savings for applicable completed projects.

Intelligence Response

• Cabrillo products to leverage: Cabrillo Signals War Room, Cabrillo Signals Match Engine, Cabrillo Signals Intelligence Hub, Proposal Studio (Proposal OS), and Proposal Studio Workflow Tracker.
• Who to notify: BD lead, Capture Manager, Proposal Manager, Contracts Officer, Security/Compliance Lead, and Program Delivery Lead.
• First 48-hour playbook:
• Hour 0–4: Ingest GAO brief into Cabrillo Signals War Room; distribute this flash brief to capture and BD teams; flag projects with FY2027+ savings expectations.
• Hour 4–12: Run a Match Engine rescore of open pipelines and active pursuits tied to TMF themes (modernization, migrations, security); create saved searches in Intelligence Hub for TMF follow‑ons and solicitations.
• Hour 12–24: Launch a Proposal Studio capture folder for prioritized pursuits; populate cost‑savings and migration‑risk narratives and generate an initial bid/no‑bid recommendation using Proposal Studio’s decision engine.
• Hour 24–48: Configure Workflow Tracker gates for compliance reviews (cost realism, security value, and procurement competitiveness); schedule meetings with contracts/compliance to confirm competitive capability and exception documentation approach if needed.
• Use the following Cabrillo references for operational guidance: Secure Operations Guide (/insights/secure-operations-guide), CMMC (Cybersecurity Maturity Model Certification) Compliance Guide (/insights/cmmc-compliance-guide), CUI (Controlled Unclassified Information)-Safe CRM Guide (/insights/cui-safe-crm-guide).
• How Cabrillo operationalizes this event:
• Cabrillo Signals War Room already detected this GAO report and delivered this briefing to subscribed teams. War Room ingests authoritative reports and flags high‑severity procurement and program updates for immediate review.
• Cabrillo Signals Match Engine automatically rescors opportunity pipelines when GAO findings shift the risk/reward profile (for example, when major savings are deferred to FY2027), so capture teams have updated win probabilities and resource priorities within hours.
• Cabrillo Signals Intelligence Hub creates saved searches and alerts for follow‑on solicitations and contract actions related to TMF investments so BD and capture can react as opportunities post to SAM.gov (System for Award Management).
• Proposal Studio and Workflow Tracker translate the brief into capture artifacts (cost‑savings narratives, migration‑risk mitigations, 9‑gate capture workflow and compliance routing) to accelerate proposal production and audit readiness.