August 29, 2018 | Supplier Management Strategy Blogs
The Modernizing Government Technology (MGT) Act — which was passed as a law by the Trump Administration in December 2017 — is going to be a very big deal indeed in the world of public sector procurement. It brings significant change to the way federal government IT procurement is done. The Act empowers agencies to invest in a modern technology infrastructure enabled by digital technologies such as cloud, analytics, artificial intelligence and blockchain. This is a key development since there was a pressing need for public agencies to emulate the private sector while improving public service capabilities, securing sensitive systems and data, and reducing taxpayer burden. Moreover, the provisions under the MGT Act will assist agencies in fulfilling requirements vis-à-vis earlier mandates such as the Federal Information Technology Acquisition Reform Act (FITARA).
More About the Law
Enacted as part of the 2018 National Defense Authorization Act (NDAA), the MGT Act has two clearly laid out primary provisions, including the establishment of a centralized Technology Modernization Fund (TMF) and agency-level Working Capital Funds (WCF) for IT transformation and information security.
For the TMF, the Act authorizes the appropriation of funds up to $250 million for each of the fiscal years 2018 and 2019. The TMF will be managed by the General Services Administration (GSA), which will facilitate the transfer of funds to individual agencies for IT enhancement. Funds can be used for the development, operation and procurement of IT products, services and acquisition vehicles to improve efficiency and cybersecurity.
The MGT Act drives flexibility in IT spending. While being compliant with government procurement guidelines, agencies can now invest funds with a longer-term view to value and IT modernization in mind, instead of being compelled to utilize funds within the fiscal year.
Impact on Government Procurement and Spend
The U.S. federal government spent a sizable $94.1 billion on IT in 2017, most of which was directed toward maintaining legacy and dated applications — despite the larger and practical risks involved with using such systems, such as shortages of talent skilled in legacy codes and programming. With the MGT Act, the federal government can considerably minimize its maintenance efforts, using bulk of the funds for procuring cutting-edge technology solutions, and achieving innovation and capability expansion. The adoption of digital technologies can be a shot in the arm for federal agencies looking to drive higher value in terms of enhancing business processes and improving citizen services.
For inspiration, government agencies can look at their private sector counterparts who — unhampered by public sector regulations and restrictions — have successfully leveraged new digital technologies to elevate the end-to-end customer journey, create personalized customer experiences, increase revenues and improve efficiency.
Government Procurement Contracts
The MGT Act is a powerful incentive for companies seeking to earn prestigious public sector contracts on the strength of a strong repertoire of technology suites and solutions. Companies that are well-versed with the practical applications of new and emerging technologies are undoubtedly in high demand. The introduction of “Best-in-Class (BIC) Contracts” by the federal government also puts the obligation on contractors to provide competitive pricing along with proven solutions.
The MGT Act is an empowering change to the government procurement process, providing budget flexibility and most importantly, galvanizing agencies to lay their hands on the best available technology solutions. It will ensure that government agencies, often regarded as antiquarian in their outlook and service delivery, step up to rapidly move toward best-in-class practices and start meeting the demands of a digital-first world.