The heavy cost and security weaknesses inherent in aging IT systems is a bigger problem for government than Y2K, Federal CIO Tony Scott told the House Committee on Oversight and Government Reform while lobbying for a new revolving fund to help agencies modernize.

The proposed $3.1 billion IT Modernization Fund would act as a funding source for specific agency projects to upgrade legacy systems, with an eye on projects that would both improve agency cybersecurity and lower maintenance costs. As agencies realize savings from the upgraded infrastructure, they would be required to pay back the ITMF, creating funding opportunities for more modernization programs.

Watch: Federal Agencies' Reliance on Outdated and Unsupported IT — A Ticking Time Bomb

"Three-quarters of IT budget go to maintaining legacy systems," Scott told the Committee during the May 25 hearing, noting that in addition to security vulnerabilities, these legacy systems are "very inefficient and subject to rising costs over time."

In Scott's assessment, funding modernization efforts now will lead to significant savings. As the fund is repaid and reused over time, he projects the initial $3.1 billion outlay will be able to address some $12 billion in improvements over 10 years without adding more funds.

However, "You can't capture the savings until after you have something to replace it," he argued, stressing the need for an initial funding mechanism to get the ball rolling.

But while lawmakers on the Oversight Committee agreed legacy systems are a problem, they weren't immediately convinced a multi-billion fund is the answer.

"It is counterintuitive that we would need to add more money," Rep. Gerry Connolly, D-Va., said, noting the government spends upwards of $80 billion annually on IT. "I think you can sell that argument if you can demonstrate: Here will be the payoff."

"That is the seminal question," Oversight Chairman Jason Chaffetz, R-Utah, agreed.

Chaffetz suggested finding other funding sources, particularly those that would incentivize agencies to move forward with other initiatives. Specifically, he offered looking at savings from the data center consolidation efforts. The Government Accountability Office estimates agencies have saved more than $2 billion in three years closing duplicative data centers — a number GAO says could and should be much higher.

"I'm much more inclined to allow CIOs who have those savings and foresight to use those savings" to modernize legacy systems, Chaffetz said, rather than creating what could be seen as a slush fund.

Scott also noted the modernization plan would spur other initiatives like data center consolidation, which in turn would lead to more savings.

Chaffetz said he is "warming up to this idea," he would like to see some alternatives, such as finding funding elsewhere in the larger IT budget.

Scott said he and the team at the Office of Management and Budget considered a number of other options and are open to hearing more.

"ITMF is my best guess at the fastest way to accelerate progress toward this goal," Scott said. "What won't work is going around tin-cupping 7,000 investments across the federal government — that's the slow way to nowhere."

"We are making progress, just not fast enough and comprehensive enough," he added. "It takes too long to put together the money or harvest the savings" needed to get these projects done.

Aaron Boyd is an awarding-winning journalist currently serving as editor of Federal Times — a Washington, D.C. institution covering federal workforce and contracting for more than 50 years — and Fifth Domain — a news and information hub focused on cybersecurity and cyberwar from a civilian, military and international perspective.

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