The Department of Homeland Security is moving forward with a congressionally approved working capital fund to help finance both technology improvements and facilities modernization.

The “nonrecurring expenses fund” or “NEF” allows DHS to use unobligated, expiring discretionary funds on both IT and facilities improvements. In an interview, DHS Chief Information Officer Eric Hysen confirmed the fund would be split 50-50 between technology and facilities modernization.

“We are about to solicit applications for the first tranche of projects on the IT side, but it’s something that I am hopeful will be a very significant tool for us in our IT modernization journey for years to come,” Hysen said in an interview. 

The types of projects eligible to receive NEF funding should meet at least one of three parameters, Hysen explained:

• Projects that “tangibly address cybersecurity deficiencies in legacy systems.”
• Projects that “improve the experience our employees have doing their jobs; that make them more effective and improve the quality of their work life.”
• And projects that “improve the experience of our customers,” which has become a major focus for DHS and its new customer experience directorate.

Proposals for NEF funding can come from anywhere in DHS’s IT community and will be reviewed by the department’s CIO council, Hysen said.

“It’s a small start,” he said regarding NEF funding. “Still working with our [chief financial officer] team to understand exactly what this is going to look like for us over time.”

But DHS aims to fund the initial round of NEF projects by the end of the year, he added.

“So I certainly would expect to be talking more about what those would look like probably in the fall timeframe,” Hysen said.

Lawmakers have been looking to agencies to take advantage of authority in the Modernizing Government Technology Act of 2017 that allows them to set up an IT working capital fund.

During a Senate Homeland Security and Governmental Affairs Committee hearing earlier this month, emerging threats and spending oversight subcommittee chairwoman Maggie Hassan (D-N.H.) asked Hysen about the NEF and the 50-50 split between IT and facilities modernization.

“You still don’t have an IT modernization working capital fund that is devoted over the years just to improving IT and modernizing IT?” Hassan asked.

“Technically, no, but we believe that the NEF will grow considerably as funds expire year over year,” Hysen responded. “And with the intended 50-50 split with IT funding there, that will be a long-term source of much needed it modernization funding for us.”

Congress in the fiscal 2022 appropriations bill granted DHS the explicit authority to establish the NEF for both IT modernization and facilities improvements.

In the same bill, Congress also put more requirements around how DHS could tap into the government-wide Technology Modernization Fund. It requires DHS to report to Congressional appropriators when the department submits a project proposal to the Technology Modernization Board or prepares to launch a project using TMF funding.

“I think we have learned through our ongoing partnership with our colleagues on the Hill that we need to clearly justify and document for our appropriators how we are using the TMF versus how we are using their appropriated funds,” Hysen said in the interview with FNN. “And when we’ve struggled to do that, they have justifiably asked us questions,  we’re going to continue to aggressively use the TMF.”

He pointed out DHS has recently received funding through the TMF for the Southwest Border Technology Integration Program, as well as to help modernize a network DHS uses to share information with state and local law enforcement.

“I think the NEF will give us an additional avenue as well, and I think we will find over time, what’s a good fit for [the NEF] and what’s a good fit for the TMF,” Hysen said. “In every case, though, our goal is clarity and true, complete transparency with the Hill and with other oversight partners on how we are using different sources of funds and why each of them are necessary to add up to delivering on modernization projects.”

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