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A Carousel for Cloud: Agencies Need Revolving IT Funds

Within the past two years the American public witnessed the worst nightmare a Federal CIO could imagine.

The Centers for Medicare and Medicaid (CMS), a component of the U.S. Department of Health and Human Services (HHS), tried to act as lead systems integrator on, a moderately complex e-commerce site. Burdened by intense political scrutiny and political second-guessing, the agency’s effort failed miserably.

Getting your name and organization into the headlines is probably not the first choice of any sane Federal CIO. When this happens, commentators and pundits usually scream for heads to roll. Even Robert Gibbs, President Obama’s then-spokesman, wanted blood.

“I hope they are working day and night to get this done,” Gibbs said. “When they get it fixed, I hope they fire some people that were in charge of making sure that this thing was supposed to work.”

A lot of ink has been spilled on But the lasting takeaway is this: Why can’t the government successfully complete complex IT projects?

One primary reason is cumbersome way the government funds IT development. With agencies subsisting from one Continuing Resolution (CR) to the next, intermittent funding wreaks havoc on IT planning.

But even if Congress did its job and properly drafted the 13 appropriations bills needed to fund government operations, funding would still be a problem, because it is usually allocated in one-year increments. This stop-and-start appropriations process is totally out of phase with the way that we develop and deploy technology.

Vivek Kundra, our first Federal Chief Information Officer, tried to fix that in 2010, preparing a plan for how government could move its technology systems into the 21st century.

“The rapid pace of technological change does not match well with the Federal government’s budget formulation and execution processes,” Kundra said then. “To deploy IT successfully, Federal agencies need the ability to make final decisions on technology solutions at the point of execution, not years in advance. Agencies need the flexibility to move funding between investments or projects within their portfolio to respond to changes in needs and available solutions.”

Kundra proposed a “Revolving Capital Fund” as the solution. This pot of resources could be rolled over and replenished in a much more flexible manner than relying on CRs or yearly appropriations to compensate for the misalignment between IT program management and the need for detailed budget planning.

Generally, Intra-governmental Revolving Funds (IRFs), including Revolving Capital Funds and Working Capital Funds “do not receive appropriations directly. Instead, they are accounts that may receive reimbursements and advances from other federal accounts...The use of IRFs to fund consolidated or shared services allows agencies to benefit from economies of scale or take advantage of specialized expertise that they may not have..”

Agencies have used Revolving Funds for years. They are widely recognized as a key resource to implement shared services, such as IT, that are common across agencies. The Justice Department, Census Bureau, and Commerce Department all use Revolving Capital Funds today.

The Federal IT Acquisition Reform Act (FITARA), which was signed into law last December, gives agency CIOs authority to manage their IT spending.

Unfortunately, one key provision of FITARA did not make it through the legislative process and into the final law. This provision would have established a Working Capital Fund program to fund agency transitions to the cloud. The language mirrored language establishing similar funds in other agencies, such as at the U.S. General Services Administration (GSA), and would have specified that such funds could preserve funding for cloud service transitions for up to five years per appropriation.

This type of budget flexibility is just what agencies need to successfully migrate to new and innovative platforms. It would allow agencies to renew the government’s commitment to the “cloud first” initiative. Failing to include this provision undermines FITARA.

Congress should move forward now to enact this reform, and help agencies move more quickly to the cloud.


Gibbs: “I Hope They Fire Some People,” by Tal Kopan, Politics. October 14, 2013.

25 Point Implementation Plan to Reform Federal Information Technology Management, by Vivek Kindra, U.S. Chief Information Officer.

U.S. Government Accountability Office, Intragovernmental Revolving Funds: Commerce Departmental and Census Working Capital Funds Should Better Reflect Key Operating Principles , GAO-12-56, November 2011, p. 3, at

GAO; Intergovernmental revolving Funds; Commerce Department and Census Working Capital Funds should better reflect key operating principals; GAO-12-56 (November 2011).

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