Digital Product Passports: Transforming America’s Linear Economy to Combat Waste, Counterfeits, and Supply Chain Vulnerabilities

The U.S. economy is being held back by outdated, linear supply chains that waste valuable materials, expose businesses to counterfeits, and limit consumer choice. American companies lose billions each year to fraudulent goods—everything from fake pharmaceuticals to faulty electronics—while consumers are left in the dark about what they’re buying. At the same time, global disruptions like the COVID-19 pandemic revealed just how fragile and opaque our supply chains really are, especially in critical industries. Without greater transparency and accountability, the U.S. economy will remain vulnerable to these risks, stifling growth and innovation while perpetuating inequities and environmental harm. 

A shift toward more circular, transparent systems would not only reduce waste and increase efficiency, but also unlock new business models, strengthen supply chain resilience, and give consumers better, more reliable information about the products they choose. Digital Product Passports (DPP) – standardized digital records that contain key information about a product’s origin, materials, lifecycle, and authenticity – are a key tool that will help the United States achieve these goals.

The administration should establish a comprehensive Digital Product Passport Initiative that creates the legal, technical, and organizational frameworks for businesses to implement decentralized digital passports for their products while ensuring consumer ownership rights, supply chain integrity, and international interoperability. This plan should consider which entities provide up-front investment until the benefits of a digital product passport (DPP) are manifested.

Challenge and Opportunity 

The United States faces an urgent sustainability challenge driven by its linear economic model, which prioritizes resource extraction, production, and disposal over reuse and recycling. This approach has led to severe environmental degradation, excessive waste generation, and unsustainable resource consumption, with marginalized communities—often communities of color and low-income areas—bearing the brunt of the damage. From toxic pollution to hazardous waste dumps, these populations are disproportionately affected, exacerbating environmental injustice. If this trajectory continues, the U.S. will not only fall short of its climate commitments but also deepen existing economic inequities. To achieve a sustainable future, the nation must transition to a more circular economy, where resources are responsibly managed, reused, and kept in circulation, rather than being discarded after a single use. 

At the same time, the U.S. is contending with widespread counterfeiting and fragile supply chains that threaten both economic security and public health. Counterfeit goods, from unsafe pharmaceuticals to faulty electronics, flood the market, endangering lives and undermining consumer confidence, while costing the economy billions in lost revenue. Furthermore, the COVID-19 pandemic exposed deep weaknesses in global supply chains, particularly in critical sectors like healthcare and technology, leading to shortages that disproportionately affected vulnerable populations. These opaque and fragmented supply chains allow counterfeit goods to flourish and make it difficult to track and verify the authenticity of products, leaving businesses and consumers at risk. 

Achieving true sustainability in the United States requires a shift to item circularity, where products and materials are kept in use for as long as possible through repair, reuse, and recycling. This model not only minimizes waste but also reduces the demand for virgin resources, alleviating the environmental pressures created by the current linear economy. Item circularity helps to close the loop, ensuring that products at the end of their life cycles re-enter the economy rather than ending up in landfills. It also promotes responsible production and consumption by making it easier to track and manage the flow of materials, extending the lifespan of products, and minimizing environmental harm. By embracing circularity, industries can cut down on resource extraction, reduce greenhouse gas emissions, and mitigate the disproportionate impact of pollution on marginalized communities.

One of the most powerful tools to facilitate this transition is the digital product passport (DPP). A DPP is a digital record that provides detailed information about a product’s entire life cycle, including its origin, materials, production process, and end-of-life options like recycling or refurbishment. With this information easily accessible, consumers, businesses, and regulators can make informed decisions about the use, maintenance, and eventual disposal of products. DPPs enable seamless tracking of products through supply chains, making it easier to repair, refurbish, or recycle items. This ensures that valuable materials are recovered and reused, contributing to a circular economy. Additionally, DPPs empower consumers by offering transparency into the sustainability and authenticity of products, encouraging responsible purchasing, and fostering trust in both the products and the companies behind them.

In addition to promoting circularity, digital product passports (DPPs) are a powerful solution for combating counterfeits and ensuring supply chain integrity. In 2016, counterfeits and pirated products represented $509B and 3.3% of world trade. By assigning each product a unique digital identifier, a DPP enables transparent and verifiable tracking of goods at every stage of the supply chain, from raw materials to final sale. This transparency makes it nearly impossible for counterfeit products to infiltrate the market, as every legitimate product can be traced back to its original manufacturer with a clear, tamper-proof digital record. In industries where counterfeiting poses serious safety and financial risks—such as pharmaceuticals, electronics, and luxury goods—DPPs provide a critical layer of protection, ensuring consumers receive authentic products and helping companies safeguard their brands from fraud.

Moreover, DPPs offer real-time insights into supply chain operations, identifying vulnerabilities or disruptions more quickly. This allows businesses to respond to issues such as production delays, supplier failures, or the introduction of fraudulent goods before they cause widespread damage. With greater visibility into where products are sourced, produced, and transported, companies can better manage their supply chains, ensuring that products meet regulatory standards and maintaining the integrity of goods as they move through the system. This level of traceability strengthens trust between businesses, consumers, and regulators, ultimately creating more resilient and secure supply chains.

Beyond sustainability and counterfeiting, digital product passports (DPPs) offer transformative potential in four additional key areas: 

Plan of Action

The administration should establish a comprehensive Digital Product Passport Initiative that creates the legal, technical, and organizational frameworks for businesses to implement decentralized digital passports for their products while ensuring consumer ownership rights, supply chain integrity, and international interoperability. This plan should consider which entities provide up-front investment until the benefits of DPP are realized.

Recommendation 1. Legal Framework Development (Lead: White House Office of Science and Technology Policy)

The foundation of any successful federal initiative must be a clear legal framework that establishes authority, defines roles, and ensures enforceability. The Office of Science and Technology Policy is uniquely positioned to lead this effort given its cross-cutting mandate to coordinate science and technology policy across federal agencies and its direct line to the Executive Office of the President. 

Recommendation 2. Product Category Definition & Standards Development (Lead: DOC/NIST)

The success of the DPP initiative depends on clear, technically sound standards that define which products require passports and what information they must contain. This effort must consider the industries and products that will benefit from DPPs, as goods of varying value will find different returns on the investment of DPPs. NIST, as the nation’s lead standards body with deep expertise in digital systems and measurement science, is the natural choice to lead this critical definitional work. 

    Recommendation 3. Consumer Rights & Privacy Framework (Lead: FTC Bureau of Consumer Protection)

    A decentralized DPP system must protect consumer privacy while ensuring consumers maintain control over the digital passports of products they own. The FTC’s Bureau of Consumer Protection, with its statutory authority to protect consumer interests and experience in digital privacy issues, is best equipped to develop and enforce these critical consumer protections.

    Recommendation 4. DPP Architecture & Verification Framework (Lead: GSA Technology Transformation Services)

    A decentralized DPP system requires robust technical architecture that enables secure data storage, seamless transfers, and reliable verification across multiple private databases. GSA’s Technology Transformation Services, with its proven capability in building and maintaining federal digital infrastructure and its experience in implementing emerging technologies across government, is well-equipped to design and oversee this complex technical ecosystem.

    Recommendation 5. Industry Engagement & Compliance Program (Lead: DOC Office of Business Liaison)

    Successful implementation of DPPs requires active participation and buy-in from the private sector, as businesses will be responsible for creating and maintaining their product clouds. The DOC Office of Business Liaison, with its established relationships across industries and experience in facilitating public-private partnerships, is ideally suited to lead this engagement and ensure that implementation guidelines meet both government requirements and business needs.

    Recommendation 6. Supply Chain Verification System (Lead: Customs and Border Protection)

    Digital Product Passports must integrate seamlessly with existing import/export processes to effectively combat counterfeiting and ensure supply chain integrity. Customs and Border Protection, with its existing authority over imports and expertise in supply chain security, is uniquely positioned to incorporate DPP verification into its existing systems and risk assessment frameworks.

    Recommendation 7. Sustainability Metrics Integration (Lead: EPA Office of Pollution Prevention)

    For DPPs to meaningfully advance sustainability goals, they must capture standardized, verifiable environmental impact data throughout product lifecycles. The EPA’s Office of Pollution Prevention brings decades of expertise in environmental assessment and verification protocols, making it the ideal leader for developing and overseeing these critical sustainability metrics.

      Recommendation 8. International Coordination (Lead: State Department Bureau of Economic Affairs)

      The global nature of supply chains requires that U.S. DPPs be compatible with similar initiatives worldwide, particularly the EU’s DPP system. The State Department’s Bureau of Economic Affairs, with its diplomatic expertise and experience in international trade negotiations, is best positioned to ensure U.S. DPP standards align with global frameworks while protecting U.S. interests.

      Recommendation 9. Small Business Support Program (Lead: Small Business Administration)

      The technical and financial demands of implementing DPPs could disproportionately burden small businesses, potentially creating market barriers. The Small Business Administration, with its mandate to support small business success and experience in providing technical assistance and grants, is the natural choice to lead efforts ensuring small businesses can effectively participate in the DPP system.

      Conclusion

      Digital Product Passports represent a transformative opportunity to address two critical challenges facing the United States: the unsustainable waste of our linear economy and the vulnerability of our supply chains to counterfeiting and disruption. Through a comprehensive nine-step implementation plan led by key federal agencies, the administration can establish the frameworks necessary for businesses to create and maintain digital passports for their products while ensuring consumer rights and international compatibility. This initiative will not only advance environmental justice and sustainability goals by enabling product circularity, but will also strengthen supply chain integrity and security, positioning the United States as a leader in the digital transformation of global commerce.

      Using Home Energy Rebates to Support Market Transformation

      Without market-shaping interventions, federal and state subsidies for energy-efficient products like heat pumps often lead to higher prices, leaving the overall market worse off when rebates end. This is a key challenge that must be addressed as the Department of Energy (DOE) and states implement the Inflation Reduction Act’s Home Electrification and Appliance Rebates (HEAR) program. 

      DOE should prioritize the development of evidence-based market-transformation strategies that states can implement with their HEAR funding. The DOE should use its existing allocation of administrative funds to create a central capability to (1) develop market-shaping toolkits and an evidence base on how state programs can improve value for money and achieve market transformation and (2) provide market-shaping program implementation assistance to states.

      There are proven market-transformation strategies that can reduce costs and save consumers billions of dollars. DOE can look to the global public health sector for an example of what market-shaping interventions could do for heat pumps and other energy-efficient technologies. In that arena, the Clinton Health Access Initiative (CHAI) has shown how public funding can support market-based transformation, leading to sustainably lower drug and vaccine prices, new types of “all-inclusive” contracts, and improved product quality. Agreements negotiated by CHAI and the Bill and Melinda Gates Foundation have generated over $4 billion in savings for publicly financed health systems and improved healthcare for hundreds of millions of people. 

      Similar impact can be achieved in the market for heat pumps if DOE and states can supply information to empower consumers to purchase the most cost-effective products, offer higher rebates for those cost-effective products, and seek supplier discounts for heat pumps eligible for rebates. 

      Challenge and Opportunity 

      HEAR received $4.5 billion in appropriations from the Inflation Reduction Act and provides consumers with rebates to purchase and install high-efficiency electric appliances. Heat pumps, the primary eligible appliance, present a huge opportunity for lowering overall greenhouse gas emissions from heating and cooling, which makes up over 10% of global emissions. In the continental United States, studies have shown that heat pumps can reduce carbon emissions up to 93% compared to gas furnaces across their lifetime. 

      However, direct-to-consumer rebate programs have been shown to enable suppliers to increase prices unless these subsidies are used to reward innovation and reduce cost. If subsidies are dispersed and the program design is not aligned with a market-transformation strategy, the result will be a short-term boost in demand followed by a fall-off in consumer interest as prices increase and the rebates are no longer available. This is a problem because program funding for heat pump rebates will support only ~500,000 projects over the life of the program—but more than 50 million households will need to convert to heat pumps in order to decarbonize the sector.

      HEAR aims to address this through Market Transformation Plans, which states are required to submit to DOE within a year after receiving the award. States will then need to obtain DOE approval before implementing them. We see several challenges with the current implementation of HEAR: 

      Despite these challenges, DOE has a clear opportunity to increase the impact of HEAR rebates by providing program design support to states for market-transformation goals. To ensure a competitive market and better value for money, state programs need guidance on how to overcome barriers created by information asymmetry – meaning that HVAC contractors have a much better understanding of the technical and cost/benefit aspects of heat pumps than consumers do. Consumers cannot work with contractors to select a heat pump solution that represents the best value for money if they do not understand the technical performance of products and how operating costs are affected by Seasonal Energy Efficiency Rating, coefficient of performance, and utility rates. If consumers are not well-informed, market outcomes will not be efficient. Currently, consumers do not have easy access to critical information such as the tradeoff in costs between increased Seasonal Energy Efficiency Rating and savings on monthly utility bills. 

      Overcoming information asymmetry will also help lower soft costs, which is critical to lowering the cost of heat pumps. Based on studies conducted by New York State, Solar Energy Industries Association and DOE, soft costs run over 60% of project costs in some cases and have increased over the past 10 years.

      There is still time to act, as thus far only a few states have received approval to begin issuing rebates and state market-transformation plans are still in the early stages of development.

      Plan of Action 

      Recommendation 1. Establish a central market transformation team to provide resources and technical assistance to states.

      To limit cost and complexity at the state level for designing and staffing market-transformation initiatives, the DOE should set up central resources and capabilities. This could either be done by a dedicated team within the Office of State and Community Energy Programs or through a national lab. Funding would come from the 3% of program funds that DOE is allowed to use for administration and technical assistance. 

      This team would:

      Data collection, analysis, and consistent reporting are at the heart of what this central team could provide states. The DOE data and tools requirements guide already asks states to provide information on the invoice, equipment and materials, and installation costs for each rebate transaction. It is critical that the DOE and state programs coordinate on how to collect and structure this data in order to benefit consumers across all state programs.

      A central team could provide resources and technical assistance to State Energy Offices (SEOs) on how to implement market-shaping strategies in a phased approach.

      Phase 1. Create greater price transparency and set benchmarks for pricing on the most common products supported by rebates.

      The central market-transformation team should provide technical support to states on how to develop benchmarking data on prices available to consumers for the most common product offerings. Consumers should be able to evaluate pricing for heat pumps like they do for major purchases such as cars, travel, or higher education. State programs could facilitate these comparisons by having rebate-eligible contractors and suppliers provide illustrative bids for a set of 5–10 common heat pump installation scenarios, for example, installing a ductless mini-split in a three-bedroom home.

      States should also require contractors to provide hourly rates for different types of labor, since installation costs are often ~70% of total project costs. Contractors should only be designated as recommended or preferred service providers (with access to HEAR rebates) if they are willing to share cost data.

      In addition, the central market-transformation team could facilitate information-sharing and data aggregation across states to limit confusion and duplication of data. This will increase price transparency and limit the work required at the state level to find price information and integrate with product technical performance data.

      Phase 2. Encourage price and service-level competition among suppliers by providing consumers with information on how to judge value for money.

      A second area to improve market outcomes is by promoting competition. Price transparency supports this goal, but to achieve market transformation programs need to go further to help consumers understand what products, specific to their circumstances, offer best value for money. 

      In the case of a heat pump installation, this means taking account of fuel source, energy prices, house condition, and other factors that drive the overall value-for-money equation when achieving improved energy efficiency. Again, information asymmetry is at play. Many energy-efficiency consultants and HVAC contractors offer to advise on these topics but have an inherent bias to promoting their products and services. There are no easily available public sources of reliable benchmark price/performance data for ducted and ductless heat pumps for homes ranging from 1500 to 2700 square feet, which would cover 75% of the single-family homes in the United States. 

      In contrast, the commercial building sector benefits from very detailed cost information published on virtually every type of building material and specialty trade procedure. Data from sources such as RSMeans provides pricing and unit cost information for ductwork, electrical wiring, and mean hourly wage rates for HVAC technicians by region. Builders of newly constructed single-family homes use similar systems to estimate and manage the costs of every aspect of the new construction process. But a homeowner seeking to retrofit a heat pump into an existing structure has none of this information. Since virtually all rebates are likely to be retrofit installations, states and the DOE have a unique interest in making this market more competitive by developing and publishing cost/performance benchmarking data. 

      State programs have considerable leverage that can be used to obtain the information needed from suppliers and installers. The central market-transformation team should use that information to create a tool that provides states and consumers with estimates of potential bill savings from installation of heat pumps in different regions and under different utility rates. This information would be very valuable to low- and middle-income (LMI) households, who are to receive most of the funding under HEAR.

      Phase 3. Use the rebate program to lower costs and promote best-value products by negotiating product and service-level agreements with suppliers and contractors and awarding a higher level of rebate to installations that represent best value for money.

      By subsidizing and consolidating demand, SEOs will have significant bargaining power to achieve fair prices for consumers.

      First, by leveraging relationships with public and private sector stakeholders, SEOs can negotiate agreements with best-value contractors, offering guaranteed minimum volumes in return for discounted pricing and/or longer warranty periods for participating consumers. This is especially important for LMI households, who have limited home improvement budgets and experience disproportionately higher energy burdens, which is why there has been limited uptake of heat pumps by LMI households. In return, contractors gain access to a guaranteed number of additional projects that can offset the seasonal nature of the business.

      Second, as states design the formulas used to distribute rebates, they should be encouraged to create systems that allocate a higher proportion of rebates to projects quoted at or below the benchmark costs and a smaller proportion or completely eliminate the rebates to projects higher than the benchmark. This will incentivize contractors to offer better value for money, as most projects will not proceed unless they receive a substantial rebate. States should also adopt a similar process as New York and Wisconsin in creating a list of approved contractors that adhere to “reasonable price” thresholds.

      Recommendation 2. For future energy rebate programs, Congress and DOE can make market transformation more central to program design. 

      In future clean energy legislation, Congress should direct DOE to include the principles recommended above into the design of energy rebate programs, whether implemented by DOE or states. Ideally, that would come with either greater funding for administration and technical assistance or dedicated funding for market-transformation activities in addition to the rebate program funding. 

      For future rebate programs, DOE could take market transformation a step further by establishing benchmarking data for “fair and reasonable” prices from the beginning and requiring that, as part of their applications, states must have service-level agreements in place to ensure that only contractors that are at or below ceiling prices are awarded rebates. Establishing this at the federal level will ensure consistency and adoption at the state level.

      Conclusion

      The DOE should prioritize funding evidence-based market transformation strategies to increase the return on investment for rebate programs. Learning from U.S.-funded programs for global public health, a similar approach can be applied to the markets for energy-efficient appliances that are supported under the HEAR program. Market shaping can tip the balance towards more cost-effective and better-value products and prevent rebates from driving up prices. Successful market shaping will lead to sustained uptake of energy-efficient appliances by households across the country.

      This action-ready policy memo is part of Day One 2025 — our effort to bring forward bold policy ideas, grounded in science and evidence, that can tackle the country’s biggest challenges and bring us closer to the prosperous, equitable and safe future that we all hope for whoever takes office in 2025 and beyond.

      PLEASE NOTE (February 2025): Since publication several government websites have been taken offline. We apologize for any broken links to once accessible public data.

      Frequently Asked Questions
      Why are prices driven up by subsidies?

      There is compelling evidence that federal and state subsidies for energy-efficient products can lead to price inflation, particularly in the clean energy space. The federal government has offered tax credits in the residential solar space for many years. While there has been a 64% reduction in the ex-factory photovoltaic module price for residential panels, the total residential installed cost per kWh has increased. The soft costs, including installation, have increased over the same period and are now ~65% or more of total project costs.


      In 2021, the National Bureau of Economic Research linked consumer subsidies with firms charging higher prices, in the case of Chinese cell phones. The researchers found that by introducing competition for eligibility, through techniques such as commitment to price ceilings, price increases were mitigated and, in some cases, even reduced, creating more consumer surplus. This type of research along with the observed price increases after tax credits for solar show the risks of government subsidies without market-shaping interventions and the likely detrimental long-term impacts.

      In which contexts has market-shaping/transformation work succeeded in the global health sector?

      CHAI has negotiated over 140 agreements for health commodities supplied to low-and-middle-income countries (LMICs) with over 50 different companies. These market-shaping agreements have generated $4 billion in savings for health systems and touched millions of lives.


      For example, CHAI collaborated with Duke University and Bristol Myers Squibb to combat hepatitis-C, which impacts 71 million people, 80% of whom are in LMICs, mostly in Southeast Asia and Africa [see footnote]. The approval in 2013 of two new antiviral drugs transformed treatment for high-income countries, but the drugs were not marketed or affordable in LMICs. Through its partnerships and programming, CHAI was able to achieve initial pricing of $500 per treatment course for LMICs. Prices fell over the next six years to under $60 per treatment course while the cost in the West remained at over $50,000 per treatment course. This was accomplished through ceiling price agreements and access programs with guaranteed volume considerations.


      CHAI has also worked closely with the Bill and Melinda Gates Foundation to develop the novel market-shaping intervention called a volume guarantee (VG), where a drug or diagnostic test supplier agrees to a price discount in exchange for guaranteed volume (which will be backstopped by the guarantor if not achieved). Together, they negotiated a six-year fixed price VG with Bayer and Merck for contraceptive implants that reduced the price by 53% for 40 million units, making family planning more accessible for millions and generating $500 million in procurement savings.


      Footnote: Hanafiah et al., Global epidemiology of hepatitis C virus infection: New estimates of age-specific antibody to HCV seroprevalence, J Hepatol. (2013), Volume 57, Issue 4, Pages 1333–1342; Gower E, Estes C, Blach S, et al. Global epidemiology and genotype distribution of the hepatitis C virus infection. J Hepatol. (2014),61(1 Suppl):S45-57; World Health Organization. Work conducted by the London School of Hygiene and Tropical Medicine. Global Hepatitis Report 2017.

      How are states implementing HEAR?

      Many states are in the early stages of setting up the program, so they have not yet released their implementation plans. However, New York and Wisconsin indicate which contractors are eligible to receive rebates through approved contractor networks on their websites. Once a household applies for the program, they are put in touch with a contractor from the approved state network, which they are required to use if they want access to the rebate. Those contractors are approved based on completion of training and other basic requirements such as affirming that pricing will be “fair and reasonable.” Currently, there is no detail about specific price thresholds that suppliers need to meet (as an indication of value for money) to qualify.

      How can states get benchmark data given the variation between homes for heat pump installation?

      DOE’s Data and Tools Requirements document lays out the guidelines for states to receive federal funding for rebates. This includes transaction-level data that must be reported to the DOE monthly, including the specs of the home, the installation costs, and the equipment costs. Given that states already have to collect this data from contractors for reporting, this proposal recommends that SEOs streamline data collection and standardize it across all participating states, and then publish summary data so consumers can get an accurate sense of the range of prices.


      There will be natural variation between homes, but by collecting a sufficient sample size and overlaying efficiency metrics like Seasonal Energy Efficiency Rating, Heating Seasonal Performance Factor, and coefficient of performance, states will be able to gauge value for money. Rewiring America and other nonprofits have software that can quickly make these calculations to help consumers understand the return on investment for higher-efficiency (and higher-cost) heat pumps given their location and current heating/cooling costs.

      What impact would price transparency and benchmark data have?

      In the global public health markets, CHAI has promoted price transparency for drugs and diagnostic tests by publishing market surveys that include product technical specifications, and links to product performance studies. We show the actual prices paid for similar products in different countries and by different procurement agencies. All this information has helped public health programs migrate to the best-in-class products and improve value for money. Stats could do the same to empower consumers to choose best-in-class and best-value products and contractors.

      Driving Product Model Development with the Technology Modernization Fund

      The Technology Modernization Fund (TMF) currently funds multiyear technology projects to help agencies improve their service delivery. However, many agencies abdicate responsibility for project outcomes to vendors, lacking the internal leadership and project development teams necessary to apply a product model approach focused on user needs, starting small, learning what works, and making adjustments as needed. 

      To promote better outcomes, TMF could make three key changes to help agencies shift from simply purchasing static software to acquiring ongoing capabilities that can meet their long-term mission needs: (1) provide education and training to help agencies adopt the product model; (2) evaluate investments based on their use of effective product management and development practices; and (3) fund the staff necessary to deliver true modernization capacity. 

      Challenge and Opportunity

      Technology modernization is a continual process of addressing unmet needs, not a one-time effort with a defined start and end. Too often, when agencies attempt to modernize, they purchase “static” software, treating it like any other commodity, such as computers or cars. But software is fundamentally different. It must continuously evolve to keep up with changing policies, security demands, and customer needs. 

      Presently, agencies tend to rely on available procurement, contracting, and project management staff to lead technology projects. However, it is not enough to focus on the art of getting things done (project management); it is also critically important to understand the art of deciding what to do (product management). A product manager is empowered to make real-time decisions on priorities and features, including deciding what not to do, to ensure the final product effectively meets user needs. Without this role, development teams typically march through a vast, undifferentiated, unprioritized list of requirements, which is how information technology (IT) projects result in unwieldy failures. 

      By contrast, the product model fosters a continuous cycle of improvement, essential for effective technology modernization. It empowers a small initial team with the right skills to conduct discovery sprints, engage users from the outset and throughout the process, and continuously develop, improve, and deliver value. This approach is ultimately more cost effective, results in continuously updated and effective software, and better meets user needs.

      However, transitioning to the product model is challenging. Agencies need more than just infrastructure and tools to support seamless deployment and continuous software updates – they also need the right people and training. A lean team of product managers, user researchers, and service designers who will shape the effort from the outset can have an enormous impact on reducing costs and improving the effectiveness of eventual vendor contracts. Program and agency leaders, who truly understand the policy and operational context, may also require training to serve effectively as “product owners.” In this role, they work closely with experienced product managers to craft and bring to life a compelling product vision. 

      These internal capacity investments are not expensive relative to the cost of traditional IT projects in government, but they are currently hard to make. Placing greater emphasis on building internal product management capacity will enable the government to more effectively tackle the root causes that lead to legacy systems becoming problematic in the first place. By developing this capacity, agencies can avoid future costly and ineffective “modernization” efforts.

      Plan of Action

      The General Services Administration’s Technology Modernization Fund plays a crucial role in helping government agencies transition from outdated legacy systems to modern, secure, and efficient technologies, strengthening the government’s ability to serve the public. However, changes to TMF’s strategy, policy, and practice could incentivize the broader adoption of product model approaches and make its investments more impactful.

      The TMF should shift from investments in high-cost, static technologies that will not evolve to meet future needs towards supporting the development of product model capabilities within agencies. This requires a combination of skilled personnel, technology, and user-centered approaches. Success should be measured not just by direct savings in technology but by broader efficiencies, such as improvements in operational effectiveness, reductions in administrative burdens, and enhanced service delivery to users.

      While successful investments may result in lower costs, the primary goal should be to deliver greater value by helping agencies better fulfill their missions. Ultimately, these changes will strengthen agency resilience, enabling them to adapt, scale, and respond more effectively to new challenges and conditions.

      Recommendation 1. The Technology Modernization Board, responsible for evaluating proposals, should: 

      1. Assess future investments based on the applicant’s demonstrated competencies and capacities in product ownership and management, as well as their commitment to developing these capabilities. This includes assessing proposed staffing models to ensure the right teams are in place.
      2. Expand assessment criteria for active and completed projects beyond cost savings, to include measurements of improved mission delivery, operational efficiencies, resilience, and adaptability. 

      Recommendation 2. The TMF Program Management Office, responsible for stewarding investments from start to finish, should: 

      1. Educate and train agencies applying for funds on how to adopt and sustain the product model. 
      2. Work with the General Services Administration’s 18F to incorporate TMF project successes and lessons learned into a continuously updated product model playbook for government agencies that includes guidance on the key roles and responsibilities needed to successfully own and manage products in government.
      3. Collaborate with the Office of Personnel Management (OPM) to ensure that agencies have efficient and expedited pathways for acquiring the necessary talent, utilizing appropriate assessments to identify and onboard skilled individuals. 

      Recommendation 3. Congress should: 

      1. Encourage agencies to set up their own working capital funds under the authorities outlined in the TMF legislation. 
      2. Explore the barriers to product model funding in the current budgeting and appropriations processes for the federal government as a whole and develop proposals for fitting them to purpose. 
      3. Direct OPM to reduce procedural barriers that hinder swift and effective hiring. 

      Conclusion 

      The TMF should leverage its mandate to shift agencies towards a capabilities-first mindset. Changing how the program educates, funds, and assesses agencies will build internal capacity and deliver continuous improvement. This approach will lead to better outcomes, both in the near and long terms, by empowering agencies to adapt and evolve their capabilities to meet future challenges effectively.

      This action-ready policy memo is part of Day One 2025 — our effort to bring forward bold policy ideas, grounded in science and evidence, that can tackle the country’s biggest challenges and bring us closer to the prosperous, equitable and safe future that we all hope for whoever takes office in 2025 and beyond.

      PLEASE NOTE (February 2025): Since publication several government websites have been taken offline. We apologize for any broken links to once accessible public data.

      Frequently Asked Questions
      What is the Technology Modernization Fund and what does it do?

      Congress established TMF in 2018 “to improve information technology, and to enhance cybersecurity across the federal government” through multiyear technology projects. Since then, more than $1 billion has been invested through the fund across dozens of federal agencies in four priority areas.

      Why is the TMF uniquely positioned to lead product management adoption across the federal government?
      The TMF represents an innovative funding model that offers agencies resource flexibility outside the traditional budget cycle for priority IT projects. The TMF team can leverage agency demand for its support to shape not only what projects agencies pursue but how they do them. Through the ongoing demonstration of successful product-driven projects, the TMF can drive momentum toward making the product model approach standard practice within agencies.