Politics
House reduces pool of money available for IT modernization
Agencies looking for extra funding for IT modernization projects in fiscal 2026 may have a harder time finding it.
House lawmakers reduced funding in the traditional accounts used to bolster IT modernization efforts across the board in its version of the Financial Services and General Government appropriations bill.
House appropriators zeroed out the Technology Modernization Fund for the third straight year with the passage of the 2026 FSGG bill on Sept. 3. Legislators cut the Federal Citizen Services Fund and reduced the amount of money available in the IT Oversight Reform (ITOR) fund.
“The advancement of this bill is a sign that we are one step closer to fiscal discipline and common sense within our own federal government. It caps federal spending to ensure responsible use of taxpayer dollars, modernizes technology infrastructure to increase efficiency and effectiveness, and strengthens national security by preventing bad actors from taking advantage of our financial system,” said Financial Services and General Government Subcommittee Chairman Dave Joyce (R-OH) in a release.
The House appropriations approved the bill 35 to 28.
Here is a breakdown of the cyber and IT funding highlights from the bill.
Federal Citizen Services Fund
- 2025: $75 million
- 2026 request: $70 million
- House 2026 bill: $55 million, of which $5 million should be used for hiring employees to support the implementation of the Foundations for Evidence-Based Policymaking Act of 2018
“The committee welcomes efforts to increase federal agencies’ access to secure cloud computing products and services. To that end, the committee appreciates efforts to improve the Federal Risk and Authorization Management Program (FedRAMP), including the recently announced FedRAMP 20x effort. However, the Committee remains concerned about a lack of detail from GSA. Therefore, the committee directs the General Services Administration to provide a briefing to the House and Senate appropriations committees on the implementation plan for FedRAMP 20x within 90 days of enactment of this act.”
Technology Modernization Fund
- 2025: $0
- 2026 request: $0
- House 2026 bill: $0
The House bill didn’t include any explanation of why it zeroed out the TMF. The Senate has not yet moved on its version of the FSGG bill.
The additional rationale for not giving the TMF any new money, besides the appropriators disdain for these types of funding mechanisms, can be found in GSA’s 2026 budget justification.
GSA wants to make it a revolving or working capital fund of sorts.
The legislative proposal would let “GSA, with the approval of OMB, to collect funding from other agencies and bring that funding into the TMF,” GSA wrote in its budget justification document. “This would allow agencies to transfer resources to the TMF using funds that are otherwise no longer available to them for obligation. This provision is essential to providing the TMF with the necessary funds to help the federal government address critical technology challenges by modernizing high-priority systems, improving AI adoption and supporting cross-government collaboration and scalable services.”
GSA wants to be able to collect up to $100 million a year in otherwise expired funding. The TMF funding would be no-year money as well.
The TMF only has made one new award to agencies in 2025 and is estimated to have over $220 million in available funding.
IT Oversight Reform Fund
- 2025: $8 million
- 2026 request:$19.6 million
- House 2026 bill: $10 million
“The committee recommends $10 million for ITOR, of which $5 million is provided to the Office of the Chief Information Officer and $5 million to the United States DOGE Service (DOGE). The committee further directs the administrator of DOGE to submit quarterly reports to the House and Senate committees on appropriations on the number of hires for DOGE, including the use of detailees and transfers to and from an agency for personnel.”
The House is cutting the among of money the Federal CIO’s office has to support certain IT modernization and cybersecurity efforts like establishing the child tax credit website and strategy and modernizing the Department of Agriculture’s Special Supplemental Nutrition Program for Women, Infants and Children program.
ITOR also has the ability to carry over funding from previous years. According to USASpending.gov, OMB has more than $55 million left for 2025. It started out with over $85 million, $30.7 million of which carried over from previous years.
Source: USASpending website, August 2025.
In many cases over the years, the Office of Management and Budget uses money from all three funds to support governmentwide modernization programs.
In OMB’s 2022 IT operating plan, former Federal CIO Clare Martorana wrote, “The funds have different and complementary strengths that stem from their inherent purposes and variations in the operating models of the implementing organizations.”
Treasury’s Cybersecurity Enhancement Account
- 2025 appropriation: $36.5 million
- 2026 request: $59 million
- House 2026 bill: $99 million
“The committee recommends $99 million for the CEA. The recommendation includes an increase for zero trust architecture implementation, low code application development and cloud enterprise cybersecurity enhancements.”
The committee is asking Treasury for quarterly plans to the appropriations committees detailing how it plans to spending the money for each CEA investment. The first one would be due 60 days after the bill becomes law.
“The committee is concerned by the infiltration of Chinese hackers into the department’s information technology systems, which resulted from vulnerabilities associated with the department’s third-party service provider,” the House report stated. “The plan shall include prior year unobligated balances and identify planned obligations by source year of appropriation. The plan shall also include anticipated unobligated balances at the close of the fiscal year and the planned obligation of carryover in future years by quarter until all funds are obligated. The department is directed to submit quarterly updates on the status of implementing this plan. The plan shall also identify any agreement or areas of cooperation with members of the intelligence community to strengthen its cybersecurity platform.”
Office of the National Cyber Director
- 2025 appropriation: $21.7 million
- 2026 request: $20 million
- House 2026 bill: $18.1 million
The committee didn’t offer much insight into why it reduced ONCD’s budget for 2026. It did, however, tell ONCD that it should spend more time on securing federal data.
“A significant portion of today’s cybersecurity vulnerabilities occur outside of traditional legacy and enterprise investments made for localized agency network protections when data is in transit, due to various automated routing and switching protocols via systems and infrastructure potentially controlled or subject to manipulation by adversarial threats. The ONCD is encouraged to work with the Cybersecurity and Infrastructure Agency to ensure best practices are followed with lessons learned from the Department of Defense’s mapping methodology and data format.”
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