Everything now is done with an eye on the future. However, this is nothing new as you always plan for your future in your present whether it is for your career or marriage, child’s education or retirement. Similarly, foresightedness is also an essential requirement in businesses as well, irrespective of its type.
Concern for the future is even more profound in funding, lending or banking as it deals with money which is at the source of everything. Since money loaned out have a high chance of not coming back to the lender if loaned to an unworthy borrower, it is paramount that the creditworthiness factor is looked into with more care and concern.
However, in most of the cases, the banks and lenders often meet the borrower for the first time and it is hard to know the intent of the person by simply looking at the face. It is for this reason banks and financial organizations ask for several documents along with the loan application. All these come to a hefty bunch which is humanly not possible to scrutinize accurately considering all the risk factors.
Though these documents will tell a lot about a person’s income and expense habits and the amount of money left in hand to repay the loan but other important areas will be left uncovered. This inevitably will raise the risk of funding which is the last thing any lender would want, whether it is an online source such as libertylending or any traditional bank.
Hence the need for technology modernization as it will help in assessing the fund proposal. It will help the lender to follow the set funding guidelines for agencies receiving disbursements from the technology modernization fund.
There are a few specific requirements to deal with these funds such as:
- All funds must be transferred within the allocated level
- All incremental transfers must be made contingent on achieving the project milestone and
- All fund transfers must be reimbursed according to the repayment terms in the written agreement.
The term of each transfer of funds may not be more than five years unless otherwise mentioned in the agreement and approved by The Office of Management and Budget. Usually, all funding is made on an incremental basis. These incremental transfers are tied to milestones that are documented in the written agreement.
The written agreement
The agreement must be made in the prescribed format by The General Services Administration and designed in consultation with OMB. This agreement must be signed between the GSA and the agency receiving the fund. In the agreement must contain the following elements:
- The purpose of funding
- The reimbursement terms
- The legal obligations of the receiving agency to GSA
- The amount of transfer
- The anticipated schedule of transfer
- A statement indicating funding will be made on an incremental basis tied to the milestone metrics
- An estimate of project related cost savings
- A note on avoidance relative to pre-modernization activities
- A planned acquisition strategy where applicable
- How the GSA Staff or the Board will oversee the project and
- Any other requirements by the GSA or the Board that may deem necessary for the success of the project and in order to execute the funding.
As for the reimbursement aspect, it is not contingent upon the project related savings. It can be derived from any supporting information technology activity of the agency account and in accordance with Section 1078 (b)(5)(A)(ii).
- Usually, the reimbursement schedule will mention that the first reimbursement must be made within 12 months after the first incremental transfer is made. It can also be made six months after the completion of the project whichever is earlier.
- The reimbursement amount will typically be spread proportionally across the entire reimbursement period. However, it must never be spread disproportionately and back-loaded to the later years.
- If there is any need by an agency to increase the repayment terms, it may submit a request to the Board for consideration to exceed it beyond five years. Such projects will receive a conditional Board recommendation. However, prior to any final funding recommendation made by the Board, the Administrator of General Services will have to submit the pertinent written agreement between the agency and the GSA to the Director of OMB for proper approval of such extension.
- All incremental transfers are covered by the same underlying written agreement though each transfer will be treated as separate funding especially when it comes to reimbursement schedule purposes.
- The reimbursement amount is typically based on actual amount transferred and not the total amount proposed by the Board for funding the entire project.
All TMF funding on a project is usually for two years from the initial incremental transfer and the incremental transfers must not be back-loaded at the end of this two year statute.
The Modernizing Government Technology Act authorizes all incremental transfers of TMF funding. According to the MGT Act, all agencies must comply with the set statutes and have bona fide needs for TMF funding for their projects.
The agencies will have to pay the administrative fee in addition to reimbursement of amounts funded from the TMF. This administrative fee is determined by the GSA once again after consulting the OMB. The administrative fee covers the costs under several heads such as:
- The cost of operating the TMF
- The cost of reviewing and recommending project proposals
- The cost of support to the TMF Board
- The cost of technical assistance provided to the agency
- The cost of preparation of project proposals
- The cost of monitoring and overseeing the projects and
- The cost of executing transfers.
Apart from the above, the agency will also have to pay for any optional project execution assistance requested or for and GSA labour imbedded. These costs may be paid using the project funds transferred and on a reimbursable basis. However, an agency may also pay from any other funding available.