Key Takeaways

Full Report


October 17, 2022


Policy recommendations include

  • Locate impediments to effective modernization
  • Consider and analyze funding options
  • Communicate and promote available funding opportunities


Government understands the importance of modernizing and digitizing. In an era of rapid digitization, the U.S. government has made little progress in updating its IT systems and processes to improve efficiency and access to the American people. Many government IT systems lag far behind the private sector. A more data-driven digital infrastructure will enable government systems to be more resilient, inclusive, and informed. It also will enable the U.S. to respond quickly and effectively to future crises as well as better serve Americans’ daily needs.

Numerous government functions are still conducted through outdated and inefficient processes. In our increasingly digital and mobile world, Americans expect government to keep up with the amenities and benefits of the on-demand economy and digitized information collection systems that provide a much more accessible, cost-efficient, and user-friendly experience.

The Paperwork Reduction Act (PRA) was signed into law in 1995 and governs how federal agencies collect information from the public. One of its primary goals is to calculate “burden hours” and costs of government processes in order to reduce its toll on the public. These numbers are publicly displayed on federal forms. Nevertheless, despite laying the groundwork for more government awareness and accountability, the PRA neither takes into account current technologies nor provides guidance on modern data collection.

To hasten the adoption of digitized information collection, Congress passed the 21st Century Integrated Digital Experience Act (IDEA) in 2018, which aimed to improve the digital experience for government customers and reinforces existing requirements for federal public websites. Yet progress has been stalled. Because no statutorily required guidance has been issued to help implement the law, agency implementation has been inconsistent. According to a survey of a random sample of government forms, fewer than 2% were fully compliant with the act.

Only about 20% of the more than $90 billion of the U.S. government’s annual IT spending is devoted to modernization. The 2018 Modernizing Government Technology (MGT) Act sought to improve on this by establishing a fund within the Department of the Treasury for federal agencies to apply for loans to update their outdated systems. Congress appropriated $1 billion to the fund through the American Rescue Plan. However, the allocations so far have mostly focused on cybersecurity and not on updating federal legacy systems, and there is still a long way to go.

According to McKinsey, government digitization, using current technology, could generate $1 trillion in additional growth worldwide. Not only would digitizing government services better serve Americans, it would also cut costs, increase efficiency, and build resilience.

America leads the world in technology and innovation. Government should capitalize on these resources and collaborate with the private sector to bring its services into the 21st century. 

Serving Americans

Digitizing government forms to meet the needs of the public should be paramount for policymakers. An easier, more efficient, and less burdensome citizen experience would help increase trust in the government, especially when that trust is near historic lows.

Today, citizens expect to be able to engage with government through modern means, including smartphones and computers. Reports have found that 85% of Americans own a smartphone, with 27% of adults in low-income households being smartphone-only internet users. Moreover, the pandemic-propelled shift to remote work is greatly accelerating the digitization trend throughout the country.

An example of the change in how citizens interact with government is in the shift from paper filing to e-filing tax returns. In 2001, only 30% of Americans e-filed their taxes. By 2021, as technology quickly developed, that number rose to over 95%.

It is government’s responsibility to meet its constituents in how they want to and expect to engage. Nearly 85% of Americans indicate that they hold government to the same, or higher, standard as their commercial providers. While citizens’ satisfaction with digital services has improved as government has embraced more digital solutions, 4 in 10 citizens are still not satisfied.

Reducing Costs

Beyond poor service, using outdated and manual processes cost Americans an estimated $117 billion and government agencies an estimated $38.7 billion every year. Using hard copies requires substantial worker hours to capture and process the information and often creates bottlenecks. Digitizing these forms would reduce costs in materials and required staff hours.

  • 9,858 Forms
    The calculated number of unique forms across all federal agencies in the 12 months prior to August 30, 2022.

At the federal level alone, government agencies combined spend nearly $143 billion on information collections every year. In the 12 months prior to August 30, 2022, across all federal agencies, there were 9,858 unique forms and over 106 billion forms processed.

Modernizing these systems would not only improve service, security, and efficiency, but it would save money for government agencies and, by extension, taxpayers.

Increasing Efficacy

Over the previous year, about 10.5 billion hours were spent by the public on government paperwork. Adopting digitized processes would greatly reduce turnaround times for government services, the amount of “burden hours” on citizens, and the amount of tedious manual labor by government employees. The turnaround times for filing taxes, for example, varies widely depending on the method of submission. For taxpayers who file their returns with a paper check, the wait time is between four and six weeks. In contrast, taxpayers who file their returns electronically and request a direct deposit, the wait time is 21 days or less.

  • 10.5 Billion hours
    The amount of time spent by the public on government paperwork

In 2021, paper returns took at least eight months to process, and that backlog cost the IRS $3 billion in interest. According to IRS Commissioner Chuck Rettig, “We are a paper-based organization operating in a digital world economy.” The agency’s paperwork burden poses a significant negative impact on the annual processing of tax returns.

For employees, according to a survey of local government leaders, one of the top obstacles is too much manual work. Reducing manual processes would free workers to invest their time in higher-value work that directly supports the mission of their team and agency. According to the General Services Administration (GSA), if the government achieved only 20 hours of workload elimination per employee, the net capacity gained would be worth $3 billion.

Building Resilience

When the COVID-19 pandemic hit, many government agencies struggled to provide services. They faced a frantic push for digitization so that they could accommodate telework for their staff and perform their basic functions virtually. The difficulty of this transition created massive delays and backlogs in service requests that are still being processed today. However, COVID-19 only exposed and exacerbated a fundamental weakness—the federal government has fallen so far behind the private sector in IT modernization that it is still employing decades-old technology that makes it less able to effectively adapt. Digitizing commonly used forms will enable government to be more agile and resilient to future crises and unforeseen conditions.

The agencies that were more modernized weathered the challenges of the pandemic much more effectively than those that were not. For example, the Small Business Administration, whose IT system controls access to applications was 17 years old and ranked among the top 10 critical federal legacy systems most in need of modernization before the pandemic, had its E Tran website crash as it tried to roll out the Paycheck Protection Program.

On the contrary, the Department of Transportation was able to get its workforce 100% telework ready in just five days, building on the network consolidation and modernization work that the agency started two years before the pandemic. Although the number of travelers plummeted, this work readiness enabled the agency to maintain critical support for delivering essential food, supplies, and medical equipment.

During the pandemic, millions of Americans faced illness, unemployment, food insecurity, and financial instability. An improved ability for government to accelerate research on, gather data from, and quickly respond to disasters and pandemics could aid Americans in receiving the assistance they need in a timely manner.

Policy Recommendations

  1. Congress should use its oversight authority to determine current impediments to agencies’ effective modernization. Where current constraints lie, Congress should direct necessary funding for modernization.
  2. Congress should review and analyze all potential ways to fund needed IT modernization, such as developing capital working funds at agencies for the specific use of IT modernization.
  3. Congress should continue to appropriate necessary funding to the Technology Modernization Fund (TMF) to assist in updating outdated and inefficient IT systems
  4. Federal agencies that administer funding for IT modernization to state and local governments should develop communication campaigns to educate localities about available funding opportunities like those in the American Rescue Plan.


When the pandemic hit, government had to move quickly to adapt to the new environment. Agencies had to move their staff to telework, meet increased demands, and continue normal services and operations. This required an acceleration in implementing new systems. According to Government Executive, 97% of federal executives say it was an unprecedented stress test for their agencies.

The stories of success and failure regarding how government dealt with COVID-19 are lessons in why it’s important to finally bring our public sector into the 21st century. During the pandemic, outdated government systems wrought havoc on relief efforts across federal, state, and local governments. Many systems faltered in meeting the needs of Americans. For example, the IRS struggled to disperse millions of economic relief payments, and the Small Business Administration’s E-Tran website crashed as it tried to roll out the Paycheck Protection Program. As Rep. Gerald Connolly, chairman of the Subcommittee on Government Operations, said at the July 2020 congressional hearing on federal IT modernization, “The public policy was there, but our IT systems often couldn’t deliver. In other words, the fate of the world’s largest economy rises and falls often with the ability of government IT systems to deliver in an emergency, and that should galvanize us all.”

Yet successes were apparent. When the New York Department of Labor’s aged systems, which only allowed them to do an average of 10 emails an hour, failed to meet the 1,300% increase in unemployment claims, the department partnered with DocuSign to build a digital process. This enabled the department to send out 570,000 unemployment certifications in under 72 hours.

The pandemic transformed how government executives thought about work, not only accelerating the pace of modernization but also validating its critical need. As we consider the post-pandemic era, we can’t lose the momentum of this change. Digitization will enable government agencies to cut costs and increase efficiency every day. As we continue to deal with future crises and disruptions, digitization will build resilience into the federal system. Ultimately, if government can’t perform its basic functions efficiently and effectively, it fails and loses the trust of the people who depend on its services. We must prioritize digital modernization so that government can continue to accomplish and improve on its ultimate goal—serving the American people.

Key Takeaways

Full Report