U.S. GOVERNMENT PRINTING OFFICE

58–811 CC WASHINGTON : 1999

Y2K TECHNOLOGY CHALLENGE: WILL THE

POSTAL SERVICE DELIVER?

JOINT HEARING

BEFORE THE

SUBCOMMITTEE ON THE POSTAL SERVICE

AND THE

SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,

INFORMATION, AND TECHNOLOGY

OF THE

COMMITTEE ON GOVERNMENT REFORM

AND THE

SUBCOMMITTEE ON TECHNOLOGY

OF THE

COMMITTEE ON SCIENCE

HOUSE OF REPRESENTATIVES

ONE HUNDRED SIXTH CONGRESS

FIRST SESSION

FEBRUARY 23, 1999

Committee on Government Reform

Serial No. 106–25

Committee on Science

Serial No. 106–35

Printed for the use of the Committee on Government Reform and the

Committee on Science

(

Available via the World Wide Web: http://www.house.gov/reform

(II)

COMMITTEE ON GOVERNMENT REFORM

DAN BURTON, Indiana, Chairman

BENJAMIN A. GILMAN, New York

CONSTANCE A. MORELLA, Maryland

CHRISTOPHER SHAYS, Connecticut

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

STEPHEN HORN, California

JOHN L. MICA, Florida

THOMAS M. DAVIS, Virginia

DAVID M. MCINTOSH, Indiana

MARK E. SOUDER, Indiana

JOE SCARBOROUGH, Florida

STEVEN C. LATOURETTE, Ohio

MARSHALL ‘‘MARK’’ SANFORD, South

Carolina

BOB BARR, Georgia

DAN MILLER, Florida

ASA HUTCHINSON, Arkansas

LEE TERRY, Nebraska

JUDY BIGGERT, Illinois

GREG WALDEN, Oregon

DOUG OSE, California

PAUL RYAN, Wisconsin

JOHN T. DOOLITTLE, California

HELEN CHENOWETH, Idaho

HENRY A. WAXMAN, California

TOM LANTOS, California

ROBERT E. WISE, JR., West Virginia

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

GARY A. CONDIT, California

PATSY T. MINK, Hawaii

CAROLYN B. MALONEY, New York

ELEANOR HOLMES NORTON, Washington,

DC

CHAKA FATTAH, Pennsylvania

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

ROD R. BLAGOJEVICH, Illinois

DANNY K. DAVIS, Illinois

JOHN F. TIERNEY, Massachusetts

JIM TURNER, Texas

THOMAS H. ALLEN, Maine

HAROLD E. FORD, JR., Tennessee

———

BERNARD SANDERS, Vermont

(Independent)

KEVIN BINGER, Staff Director

DANIEL R. MOLL, Deputy Staff Director

DAVID A. KASS, Deputy Counsel and Parliamentarian

CARLA J. MARTIN, Chief Clerk

PHIL SCHILIRO, Minority Staff Director

SUBCOMMITTEE ON THE POSTAL SERVICE

JOHN M. MCHUGH, New York, Chairman

MARSHALL ‘‘MARK’’ SANFORD, South

Carolina

BENJAMIN A. GILMAN, New York

STEVEN C. LATOURETTE, Ohio

DAN MILLER, Florida

CHAKA FATTAH, Pennsylvania

MAJOR R. OWENS, New York

DANNY K. DAVIS, Illinois

EX OFFICIO

DAN BURTON, Indiana HENRY A. WAXMAN, California

ROBERT TAUB, Staff Director

HEEA VAZIRANI-FALES, Counsel

ABIGAIL D. HUROWITZ, Clerk

DENISE WILSON, Minority Professional Staff Member

Page

III

SUBCOMMITTEE ON GOVERNMENT MANAGEMENT, INFORMATION, AND TECHNOLOGY

STEPHEN HORN, California, Chairman

JUDY BIGGERT, Illinois

THOMAS M. DAVIS, Virginia

GREG WALDEN, Oregon

DOUG OSE, California

PAUL RYAN, Wisconsin

JIM TURNER, Texas

PAUL E. KANJORSKI, Pennsylvania

MAJOR R. OWENS, New York

PATSY T. MINK, Hawaii

CAROLYN B. MALONEY, New York

EX OFFICIO

DAN BURTON, Indiana HENRY A. WAXMAN, California

J. RUSSELL GEORGE, Staff Director and Chief Counsel

MATT RYAN, Senior Policy Director

MASON ALINGER, Clerk

FAITH WEISS, Minority Counsel

COMMITTEE ON SCIENCE

HON. F. JAMES SENSENBRENNER, JR., (R–Wisconsin), Chairman

SHERWOOD L. BOEHLERT, New York

LAMAR SMITH, Texas

CONSTANCE A. MORELLA, Maryland

CURT WELDON, Pennsylvania

DANA ROHRABACHER, California

JOE BARTON, Texas

KEN CALVERT, California

NICK SMITH, Michigan

ROSCOE G. BARTLETT, Maryland

VERNON J. EHLERS, Michigan*

DAVE WELDON, Florida

GIL GUTKNECHT, Minnesota

THOMAS W. EWING, Illinois

CHRIS CANNON, Utah

KEVIN BRADY, Texas

MERRILL COOK, Utah

GEORGE R. NETHERCUTT, JR., Washington

FRANK D. LUCAS, Oklahoma

MARK GREEN, Wisconsin

STEVEN T. KUYKENDALL, California

GARY G. MILLER, California

JUDY BIGGERT, Illinois

MARSHALL ‘‘MARK’’ SANFORD, South

Carolina

JACK METCALF, Washington

GEORGE E. BROWN, JR., California, RMM**

RALPH M. HALL, Texas

BART GORDON, Tennessee

JERRY F. COSTELLO, Illinois

TIM ROEMER, Indiana

JAMES A. BARCIA, Michigan

EDDIE BERNICE JOHNSON, Texas

LYNN C. WOOLSEY, California

ALCEE L. HASTINGS, Florida

LYNN N. RIVERS, Michigan

ZOE LOFGREN, California

MICHAEL F. DOYLE, Pennsylvania

SHEILA JACKSON-LEE, Texas

DEBBIE STABENOW, Michigan

BOB ETHERIDGE, North Carolina

NICK LAMPSON, Texas

JOHN B. LARSON, Connecticut

MARK UDALL, Colorado

DAVID WU, Oregon

ANTHONY D. WEINER, New York

MICHAEL E. CAPUANO, Massachusetts

VACANCY

VACANCY

SUBCOMMITTEE ON TECHNOLOGY

CONSTANCE A. MORELLA, Maryland, Chairwoman

CURT WELDON, Pennsylvania

ROSCOE G. BARTLETT, Maryland

GIL GUTKNECHT, Minnesota*

THOMAS W. EWING, Illinois

CHRIS CANNON, Utah

KEVIN BRADY, Texas

MERRILL COOK, Utah

MARK GREEN, Wisconsin

STEVEN T. KUYKENDALL, California

GARY G. MILLER, California

JAMES A. BARCIA, Michigan**

LYNN N. RIVERS, Michigan

DEBBIE STABENOW, Michigan

MARK UDALL, Colorado

DAVID WU, Oregon

ANTHONY D. WEINER, New York

MICHAEL E. CAPUANO, Massachusetts

BART GORDON, Tennessee

TIM ROEMER, Indiana

EX OFFICIO

F. JAMES SENSENBRENNER, JR.,

Wisconsin+

GEORGE E. BROWN, JR., California+

(V)

C O N T E N T S

Page

Hearing held on February 23, 1999 ....................................................................... 1

Statement of:

Corcoran, Karla W., Inspector General, U.S. Postal Service, accompanied

by Richard F. Chambers, Deputy Assistant Inspector General for Audit,

Office of the Inspector General, U.S. Postal Service; Jack L. Brock,

Director, Governmentwide and Defense Information Systems, Accounting and Information Management Division, U.S. General Accounting

Office; Carl M. Urie, Assistant Director, Governmentwide and Defense

Information Systems, Accounting and Information Management Division, U.S. General Accounting Office; Norman E. Lorentz, senior vice

president, chief technology officer, U.S. Postal Service; Nicholas F.

Barranca, vice president, operations planning, U.S. Postal Service; and

Richard D. Weirich, vice president, information systems, U.S. Postal

Service ............................................................................................................ 20

Letters, statements, etc., submitted for the record by:

Barranca, Nicholas F., vice president, operations planning, U.S. Postal

Service, followup questions and responses ................................................. 158

Brock, Jack L., Director, Governmentwide and Defense Information Systems, Accounting and Information Management Division, U.S. General

Accounting Office, prepared statement of ................................................... 121

Corcoran, Karla W., Inspector General, U.S. Postal Service:

Management advisory report ................................................................... 162

Prepared statement of ............................................................................... 23

Fattah, Hon. Chaka, a Representative in Congress from the State of

Pennsylvania, prepared statement of .......................................................... 217

Horn, Hon. Stephen, a Representative in Congress from the State of

California, prepared statement of ................................................................ 8

Lorentz, Norman E., senior vice president, chief technology officer, U.S.

Postal Service:

Information concerning the master calendar .......................................... 213

Prepared statement of ............................................................................... 141

McHugh, Hon. John M., a Representative in Congress from the State

of New York, prepared statement of ........................................................... 4

Morella, Hon. Constance A., a Representative in Congress from the State

of Maryland, prepared statement of ............................................................ 11

Turner, Hon. Jim, a Representative in Congress from the State of Texas,

prepared statement of ................................................................................... 16

(1)

Y2K TECHNOLOGY CHALLENGE: WILL THE

POSTAL SERVICE DELIVER?

TUESDAY, FEBRUARY 23, 1999

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON THE

POSTAL SERVICE, JOINT WITH THE SUBCOMMITTEE ON

GOVERNMENT MANAGEMENT, INFORMATION, AND TECH- NOLOGY, COMMITTEE ON GOVERNMENT REFORM; AND

THE SUBCOMMITTEE ON TECHNOLOGY, COMMITTEE ON

SCIENCE, Washington, DC.

The subcommittees met, pursuant to notice, at 10 a.m., in room

2154, Rayburn House Office Building, Hon. John McHugh (chairman of the Subcommittee on the Postal Service), Hon. Stephen

Horn (chairman of the Subcommittee on Government Management,

Information, and Technology), Committee on Government Reform;

and Hon. Constance Morella (chairwoman of the Subcommittee on

Technology), Committee on Science presiding.

Present: Representatives McHugh, Horn, Morella, Miller, Bartlett, Gilman, Biggert, Gutknecht, Turner, Stabenow, Gordon, Wu,

and Rivers.

Staff present from the Subcommittee on the Postal Service: Robert Taub, staff director; Heea Vazirani-Fales, counsel; Jane

Hatcherson, office and systems administrator/legislative assistant;

Abigail D. Hurowitz, clerk; Denise Wilson, minority professional

staff member, Committee on Government Reform; and Jean Gosa,

minority administrative staff assistant, Committee on Government

Reform.

Staff present from the Subcommittee on Government Management, Information, and Technology: J. Russell George, staff director; Bonnie Heald, communications director and professional staff

member; Matt Ryan, policy director; Mason Aliger, clerk; and Faith

Weiss, minority professional staff member, Committee on Government Reform.

Staff present from the Subcommittee on Technology: Richard

Russell, staff director; Ben Wu, professional staff member; Joe Sullivan, staff assistant; Mike Quear, minority professional staff member; and Marty Ralston, minority staff assistant.

Mr. MCHUGH [presiding]. Let me call the meeting to order and

wish everyone, ‘‘Good morning’’ and my personal words of welcome.

This is somewhat of a unique meeting today, in that we are joining not just another but, in fact, two other subcommittees, for a

total of three. Two of which have been designated as the, ‘‘experts,’’

on the year 2000 problems. My good friend on my left—only figuratively speaking—from California, Mr. Horn, fresh from a starring

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engagement on the ‘‘Today’’ show, and his role as the chairman of

the Subcommittee on Government Management, Information, and

Technology. And my other good friend, Mrs. Morella—Connie, how

are you—and her chairmanship over the Subcommittee on Science

and Technology. Rather than a joint hearing, I suppose we could

consider this a ‘‘trifecta’’ of sorts—[laughter]—and I certainly welcome the opportunity to join my distinguished colleagues in this

hearing today. I know we all look forward to having the benefit of

the testimony and input of our very distinguished witnesses.

This is certainly a serious matter that must be addressed fully— and I want to emphasize the word ‘‘fully’’—and must be addressed

within the next 311 days for those of us who are counting.

The Postal Service has stated that it is assigning a high priority

to addressing the Y2K problem and is spending a significant

amount of money on that effort. The Service has estimated that the

total cost of fixing its Y2K problem could be one-half to three-quarters of a billion dollars. Given the importance of the Postal Service’s mission to all Americans, whether at home or at their place

of business, we must ensure that this problem is and, of course,

stays on track.

The Postal Service faces a major challenge in updating its computer system to correctly identify dates beginning in the year 2000

and, thus, avoid malfunctions that could significantly, even disastrously, disrupt mail delivery. The Postal Service has a special responsibility in this regard because it is likely that a number of private-sector and Government groups may need to utilize the agency

as a backup delivery system if their computers malfunction, raising

concerns about the prospect of a mail surge in January of next

year.

An early assessment by the Inspector General showed that the

Service was slow to recognize the scope of this problem and failed

to take the necessary actions early on to ensure that its computer

systems were indeed Y2K compliant.

More recently, the Postal system’s November 19, 1998, quarterly

report to the Office of Management and Budget, on its efforts in

this matter, indicated progress in its meeting the challenge. The

Service’s remaining tasks include completing the adjustment of its

computers so that they are all completely compliant, fully testing

computer systems, and, of course, preparing contingency plans to

help ensure continuity of core business operations.

Our witnesses today include the Postal Service’s Inspector General, the General Accounting Office, and the Postal Service, itself.

The Inspector General has been working closely to assess and monitor the Service’s progress, and we certainly look forward to her insights and recommendations.

The GAO has also been evaluating the postal situation, and that

office, I believe, can provide some context given its assessments of

the Y2K problems encountered in other Federal agencies of similar

size and scope such as the Department of Defense. And, of course,

we are anxious to hear firsthand from the Postal Service on the

progress it has made in overcoming its early difficulties as identified last year by the Inspector General.

As I stated at the outset, given the importance of the Postal

Service’s mission to the American public, close oversight will be

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needed to ensure that its year 2000 program stays on track, and

today’s hearing, we all hope, is one step in that very important

process.

And with that, before we go to our witnesses, I would be happy

to yield to my good friend, Mr. Horn, who actually came to me with

the idea of this hearing. So I am really relying upon him to make

us all look smarter than I think I am. But with that, I would be

happy to yield to the gentleman from California.

[The prepared statement of Hon. John M. McHugh follows:]

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Mr. HORN. Well, I thank you. As chairman, you have done a wonderful job over the last few years we have been colleagues in reviewing the Post Office. Thank you for calling this hearing.

If I might, I am going to only read one or two sentences from my

opening statement. Mr. Chairman, I would like to have the statement put in the record as if read at this point.

Mr. MCHUGH. Without objection, so ordered.

[The prepared statement of Hon. Stephen Horn follows:]

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Mr. HORN. I think I can say this about the Post Office Department. Based on my experience, 30 years of living in Long Beach,

CA, I have never had one single complaint about the Post Office

Department. You have a marvelous group of people out there. Mr.

Good, I think a lot of you know, who headed the Long Beach operation and was moved around the country in a couple of cases to salvage those operations. They run a fine system. I have been in every

single branch post office in that district at least four times over the

last 6 years. And, again, both clerks, letter carriers have done

things with a smile.

So, I don’t come at this from being ‘‘dogged’’ after the Post Office

Department. But I come at it because, as the chairman said in his

opening remarks, everybody else’s contingency plan, if their electronics and computers don’t work, all of them are depending on the

post office. We have enough trouble with the ones that have computers, and we hope they will work, and not just in the Federal

Government, but in the society, in general. But, again, we are

going to be really ‘‘up a creek’’ or ‘‘down a creek,’’ whatever the

phrase is, in needing your help, because January 1, 2000, is right

in the midst of your major rush of the year. If everybody is mailing

43 million checks or 10,000 checks in a small business, whatever

it is, they are going to need your help.

So, one of the things I hope will come out of this hearing is some

understanding of how you can be the contingency person of the

American society.

If we can hold the rest for questions—I am going to have to step

out at 10:45 for about a half an hour, Mr. Chairman, but I will be

back.

Mr. MCHUGH. I thank the gentleman.

There really is no order of seniority. Well, there is, of course—

[laughter]—but we are not adhering to any kind of rank here. We

have, as I said, three subcommittees, and of course a lot of Members, I know, will be coming in and out and the fact that we are

going to our third Chair this morning, as the third spot has absolutely no relevance to anything other than that seems to be the

way it worked out.

But with that, I would be delighted to yield to Chairwoman

Connie Morella for any comments she might like to make.

Mrs. MORELLA. Thank you, Mr. Chairman.

I appreciate your holding this hearing, with the three subcommittees coming together, because we recognize what an important issue this is and how important the Postal system is to all

Americans and to all people who are in the United States and, as

a matter of fact, throughout the world.

So, I am pleased to be here. We talk about three Chairs; maybe

we need to look at the table here that we have before us.

Delivery of the mail, of course, is so fundamental to our Nation

that it would be unthinkable for us to not have it. And yet, just

as in virtually every large business, and the Postal Service is a

quasi independent agency, is arguably the largest business in the

Federal Government with over 700,000 employees handling over

185 million pieces of mail annually, the Postal Service is also being

bitten by this millennium bug. So, the Postal Service must take

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every available necessary action to correct the Y2K computer

glitch, especially in this age of highly automated mail delivery.

The problem is that, due to initial inadequate leadership and

lack of management priorities, the Postal Service only began to

dedicate sufficient resources, personnel, and funding to the issue

much too late. And as a result, there are justifiable concerns about

the Postal Service’s ability to be fully Y2K compliant before January 1, 2000. And that deadline is like 311 days away.

I have been assured that, despite these concerns, the Postal

Service is determined that in the new millennium anyone who

drops off mail at the post office should remain absolutely confident

that their letter or package will arrive at its intended destination,

even if it has to be manually sorted or even if it needs to be delivered by Pony Express.

I have no doubt that getting the mail there will not be a problem,

but the Y2K challenge may ultimately give a stark, grim truth to

the old excuse, ‘‘the check is in the mail.’’ The possibility of significant business interruptions exist if the Postal Service isn’t able to

operate in the same manner as it does now. And these business

interruptions could potentially affect our Nation’s economic stability. If there is no confidence that the Postal Service can deliver

the mail in a timely manner, then businesses and others will turn

elsewhere when a letter or a package absolutely, positively needs

to get there.

These concerns about the Postal Service are especially pronounced because, in many cases, the Postal Service is the contingency plan for organizations and individuals that conduct business

electronically.

Assuring the American public that the Postal Service will have,

at worst, minimal Y2K disruptions is vital. It is vital to maintaining the trust and confidence that the institutional has held for over

200 years.

To help us achieve that goal, we have a distinguished panel of

witnesses from the Postal Service, the Postal Service Inspector

General, and the General Accounting Office. Both the Inspector

General and the GAO have issued a series of specific recommendations to guide the Postal Service in its operations and we appreciate that.

I am looking forward to reviewing the recommendations with the

Postal Service, determining the current status. I expect this hearing will be very helpful in guiding the Postal Service toward making the necessary changes in the short time remaining so that we

can be confident that, ‘‘through rain, snow, sleet, hail, or Y2K,’’ our

Nation’s mail will be delivered in a timely manner.

And, Mr. Chairman, I just want to announce that young people

are interested in this hearing, too. There is a class here of information technology students from a high school in Maryland. It is not

in my district, but it is Springbrook High School, and I am pleased

they are here because they wanted to come and to listen and to

learn from this hearing.

I yield back.

[The prepared statement of Hon. Constance A. Morella follows:]

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Mr. MCHUGH. Well, thank you, Connie. We appreciate your kind

comments and your leadership on this issue.

And, we certainly welcome the high school students who have

joined us, as we welcome all of our guests.

One of the positive things about having three Chairs is you also

have three ranking members who are associated, and we have been

joined with one already, the ranking member on the Government

Management, Information, and Technology Subcommittee who

serves faithfully with Mr. Horn, and Mr. Horn tells me does a terrific job as well, Mr. Turner, the gentleman from Texas. I would

be happy to yield to him at this time.

Mr. TURNER. Thank you, Mr. Chairman.

I would like to thank Chairman McHugh, Chairman Horn and

Chairwoman Morella for holding this hearing today on the status

of the Postal Service Y2K conversion efforts.

It is hard to imagine that we have 640 million pieces of mail

flowing in this country every day and 38,000 postal facilities. You

certainly have a challenge ahead of you to be sure that you are

Y2K compliant. It is my understanding that a concentrated effort

is being made, and I commend you for doing that.

They tell me much work remains to be done. I am told that there

are 148 of the 156 most-critical systems that have been repaired

and in service and ready for Y2K, but only 40 of those systems

have actually had their respective repairs tested and verified. I am

also told that you have much work to be done in the area of contingency planning. If there is anything that I would think the American people would expect from the Federal Government is to be

sure that their mail is delivered on time on January 2, 2000.

So, I commend all of you for your efforts, and we look forward

to hearing your report to us today.

Thank you, Mr. Chairman.

[The prepared statement of Hon. Jim Turner follows:]

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Mr. MCHUGH. I thank the gentleman.

We have something of a logistics challenge here this morning for

the three subcommittees, because we will have Members coming

and going. We are joined already by Judy Biggert, the gentlelady

from Illinois who serves as the vice chair of the Government Management, Information, and Technology Subcommittee; Gary Miller,

the gentleman from California who serves on the Technology Subcommittee; Roscoe Bartlett, another fine Member of the House from

Maryland. I would be happy to yield to any or all of you if you

would care to make any opening comments.

Mr. MILLER. Thank you, Mr. Chair—— Mr. MCHUGH. Mr. Miller.

Mr. MILLER [continuing]. For conducting this hearing today on

the status of the year 2000 challenge at the U.S. Postal Service. I

think it is important that we draw attention to the vital role the

U.S. Postal Service will play at the start of the new millennium.

As we discussed in the January 11th joint hearing which addressed

the Y2K problem at the Federal, State, local, and foreign governments, failure to identify and prepare for both the probable and

worst-case scenarios could result in consequences ranging from

mere inconvenience to long-term impairment of the economy.

It was ironic; I met with my local bankers last week, and the

amount of concern generated at that level was rather alarming.

You have to hand it to the technology companies when they sold

stock and created the concern over this problem. They did a very,

very effective job. I think our job today is to create a more calm

environment that this issue is really going to be dealt with.

I am hopeful that the testimony and the questions brought forth

today will help us prepare for the year 2000.

Once again, Mr. Chairman, thank you for holding this hearing.

Mr. MCHUGH. I thank the gentleman for his comments.

Any other Members wish to—Mr. Bartlett.

Mr. BARTLETT. Mr. Chairman, when I talk to our constituents, I

find more variability, less consensus, about what the Y2K problem

will do to us and about any future event. So I am here today to

listen with great interest to the preparations of the Postal Service

and their prognostications of what will happen to this vital part of

our society in the year 2000.

Thank you very much for convening this hearing.

Mr. MCHUGH. I thank the gentleman.

The gentlelady from Illinois.

Mrs. BIGGERT. Thank you, Mr. Chairman.

I, too, look forward to hearing from the witnesses today on this

Y2K challenge, and I know that certainly the year 2000 will come

at the Postal Service’s busiest time. And so I know that the American public and the Congress will be assured that the mail will be

delivered on time and look forward to hearing those assurances.

Thank you very much.

Mr. MCHUGH. I thank the gentlelady.

With that, that brings us to the substantive part, we hope, of today’s hearing and that would be, of course, testimony.

As some of you who have appeared before the full committee and/

or some of its subcommittees in the past know, it is committee

rules that all witnesses must be sworn. If you would please rise.

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I would also note, for the record, that although not seated at the

head table, Mr. Carl Urie, who is Assistant Director of Governmentwide Defense Systems of GAO, will also be sworn from some

place in the audience. So, if all of the aforementioned would rise.

[Witnesses sworn.]

Mr. MCHUGH. The record will show that all of the participants

affirmed and acknowledged the oath in the affirmative.

And with that, we welcome you here this morning. Thank you for

your patience. As you have heard from all of the Members here

today, this is a—generically and specifically—to the Postal Service,

a very pressing problem, one that concerns us all deeply, as I know

it does you. We are looking forward to your testimony. We will

begin, as the hearing notice indicated, with Ms. Corcoran, the Inspector General of the U.S. Postal Service.

Karla, welcome. It is good to see you again. Thank you for being

here, and our attention and our time is yours.

STATEMENTS OF KARLA W. CORCORAN, INSPECTOR GENERAL,

U.S. POSTAL SERVICE, ACCOMPANIED BY RICHARD F. CHAMBERS, DEPUTY ASSISTANT INSPECTOR GENERAL FOR

AUDIT, OFFICE OF THE INSPECTOR GENERAL, U.S. POSTAL

SERVICE; JACK L. BROCK, DIRECTOR, GOVERNMENTWIDE

AND DEFENSE INFORMATION SYSTEMS, ACCOUNTING AND

INFORMATION MANAGEMENT DIVISION, U.S. GENERAL ACCOUNTING OFFICE; CARL M. URIE, ASSISTANT DIRECTOR,

GOVERNMENTWIDE AND DEFENSE INFORMATION SYSTEMS,

ACCOUNTING AND INFORMATION MANAGEMENT DIVISION,

U.S. GENERAL ACCOUNTING OFFICE; NORMAN E. LORENTZ,

SENIOR VICE PRESIDENT, CHIEF TECHNOLOGY OFFICER,

U.S. POSTAL SERVICE; NICHOLAS F. BARRANCA, VICE PRESIDENT, OPERATIONS PLANNING, U.S. POSTAL SERVICE, AND

RICHARD D. WEIRICH, VICE PRESIDENT, INFORMATION SYSTEMS, U.S. POSTAL SERVICE

Ms. CORCORAN. Thank you. Good morning, Chairman McHugh,

Chairman Horn, Chairwoman Morella, and members of the subcommittees.

I am pleased to be here today to discuss the Y2K challenge facing

the Postal Service. Joining me is Richard Chambers, Deputy Assistant Inspector General for Audit.

With your permission, I would like to submit my full statement

for the record.

Mr. MCHUGH. For the record, so ordered, without objection, as all

of the witnesses statements will be entered in their entirety.

And, please, all of you feel free to summarize your comments and

make those points you feel are most important for the moment.

Thank you.

Ms. CORCORAN. Since beginning my office in 1997, we have been

performing work in the Y2K area. In addition, the Postal Governors have been very concerned about the Y2K issue. They have

monitored the progress through periodic briefings by management

and my office.

The Postal Service Y2K issues can be examined by answering

four key questions.

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One, why is it critical for the Postal Service to address the Y2K

issue?

Two, will the Postal Service be able to deliver mail after January

1, 2000?

Three, what is the current status of the Postal Service’s Y2K effort?

And, four, what can Postal Service do to minimize the Y2K risk?

Turning to question No. 1, why is it critical for the Postal Service

to address the Y2K issue? The Postal Service is an important part

of the Nation’s communication and commercial infrastructure. The

Postal Service is heavily reliant on technology, automation, and

thousands of critical, external suppliers of goods and services who

also face Y2K challenges. The Postal Service uses Y2K-vulnerable

equipment systems and processes to deliver 650 million pieces of

mail per day, maintain 38,000 facilities, and pay over 800,000 employees. In addition, numerous private and Government agencies

have included the Postal Service in their contingency plans if their

electronic systems fail.

Question 2, will the Postal Service be able to deliver the mail

after January 1, 2000? There are too many variables that currently

exist to answer that question. The answer to this question depends,

in large part, on the Postal Service—how well the Postal Service

executes its Y2K plans over the coming months. The Postal Service

has made progress, but much remains to be done in the remaining

10 months.

We have provided the Postal Service with five reports that outline opportunities for improvement. Generally, the Postal Service

has taken action on these reports, but with so little time remaining, ‘‘beating the clock’’ will be challenging.

Question 3, what is the current status of Postal Service’s Y2K effort? To answer this question, I would like to look briefly at eight

comprehensive areas.

The first area is external suppliers. Postal Service estimates it

has about 8,000 critical suppliers of goods and services for areas

such as air, rail, and fuel that are needed to move the mail and

maintain its facilities. The Postal Service has 661 critical national

suppliers; it only knows the Y2K readiness status of 1 out of 7 of

these national suppliers. The Postal Service also knows very little

about the 7,000 field suppliers and their Y2K readiness. Postal operations may be disrupted if their suppliers’ services are not Y2K

compliant or if the Postal Service does not develop alternatives to

these suppliers.

The second area is data exchanges. This is the way that the Postal Service transfers data with other Government agencies, businesses, industries, and customers. Only 6 percent of the 2,000

known critical exchanges are Y2K ready.

The third area is technology-dependent facilities. These are the

controls for heating, cooling, fire suppression, and the numerous

other systems that support the 38,000 facilities. Postal Service is

still assessing these controls to determine what needs to be done

to assure the facilities do not shut down or cause problems on January 1, 2000.

The fourth area is mail-processing equipment. These are the

major automated systems for moving the mail. They consist of

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thousands of pieces of equipment. This area is on its way to being

Y2K compliant. Our main concern is whether the Postal Service

will adequately deploy and test its solutions.

The fifth and sixth areas are information systems and the information technology infrastructure. These are mainframes, PC’s, and

information systems that process data. A majority of these have

had solutions developed; however, independent verification to assure systems’ compliance and deployment of solutions to the actual

infrastructure could be a challenge.

The seventh area is readiness testing. Readiness testing gives

Postal Service assurance that their systems will be reliable on January 1, 2000. The Postal Service has not made a final determination as to what extent readiness testing will be performed.

The final area I would like to discuss within this third question

about Postal Service’s current Y2K status is their continuity plans.

You can consider continuity plans to be the Postal Service’s insurance plan. If failures occur in any of their equipment, systems, or

processes, alternatives or ways to assure their operations are not

affected must be developed, implemented, and tested for all core

business processes to ensure movement of the mail, payment of its

bills, protection of its revenue, and protection of the life and safety

of its employees and customers.

The Postal Service plans to complete the continuity plan by July

and test it by August. This is a tremendous challenge within the

given timeframes. But not meeting these timeframes is not really

an option for the Postal Service if they are going to be ready for

January 1, 2000.

In summary, for these eight areas, the Postal Service has done

much, but much remains to be done.

Question 4, what can the Postal Service do to minimize Y2K

risk? There are three things that we believe the Postal Service

needs to do to minimize their risk. First, the Postal Service should

reevaluate its initial assessments to identify only those most critical business operation systems. Second, the Postal Service should

focus its work on correcting, first, those systems, equipment, and

processes that are absolutely necessary to ensure core business

processes work. Third, the Postal Service must develop, implement,

and test business continuity plans for core business processes.

In summary, it is critical for the Postal Service to address the

Y2K issue. There are too many variables to determine what impact

Y2K will have on the Postal Service’s ability to deliver mail after

January 1, 2000.

The Postal Service recognizes its Y2K challenge, is taking action,

and has made progress. However, with 10 months remaining before

year 2000, much remains to be done. The Postal Service should

focus resources on the most critical core business processes and develop, implement, and test their continuity plan to minimize Y2K

risk.

My office will continue to work with the Postal Service to identify

challenges and to help the Postal Service minimize the Y2K risk.

The concludes my statement. Thank you for interest, and I will

be pleased to answer any questions.

[The prepared statement of Ms. Corcoran follows:]

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Mr. MCHUGH. Thank you very much, Ms. Corcoran. We appreciate your comments and observations.

As we had decided earlier, and as your presence all at the same

table at the same time suggests, our plan is to go forward and to

have all three presentations and then return for the questions and

answers.

So, in keeping with that, hearing no outcry of outrage—[laughter]—I would now be pleased to recognize Mr. Jack Brock, who

serves as Director of the General Accounting Office’s Governmentwide and Defense Information System, under the Accounting and

Information Management Division.

Mr. Brock, good morning, sir. Thank you for being with us.

Mr. BROCK. Thank you very much, Mr. McHugh, and I appreciate being here.

I was here on Friday before another one of your subcommittees

on the District of Columbia. I will be here next Tuesday on the Department of Defense before Mr. Horn.

So, the problems and the issues that the Postal Service is facing

are not unique. I mean every agency, every private-sector company,

all face Y2K concerns. So, they are not unique.

Mr. MCHUGH. Are you renting a room in the back? [Laughter.]

Or, are you just commuting? [Laughter.]

Mr. BROCK. Well, we are being kept busy, but it is nice to be employed.

Every morning when I get up, I turn on the lights, and I expect

the light to turn on. I usually call into my office and check my voice

mail, and I expect the phone to work. In a very similar fashion,

every afternoon when I come in from work, I go to my mailbox, and

the mail is always there. I cannot recall ever having a misplaced

letter. I have never had a call from a creditor saying, ‘‘Your check,

I guess, is in the mail, but we haven’t received it.’’ I mean I have

come to expect really—as Mr. Horn has discussed in his opening

remarks—first-class service from the post office.

Over 100 million Americans every day have this level of expected

service. The logistical operations that the post office has to go

through to deliver this 650 million pieces of mail and to provide the

ubiquitous service they provide across the Nation is incredibly complex.

Of all the agencies that I have responsibility for reviewing, I

think that only the Department of Defense has a more complex set

of operations that have to be ready on January 1st.

In many respects, the post office, the Postal Service, is a public

utility. It provides a public service that is absolutely necessary, and

it has to perform at a high level. There are too many people, too

many businesses, that depend on the Postal Service for their livelihood. For example, people getting prescription drugs through the

mail are dependent on the Postal Service; others are dependent for

delivery of checks. There are other benefit payments, for businesses

that depend upon timely receipt and transmission of packages and

bulk mail; everything has to work, and it has to work at a high

level.

So, just as on January 1st, if you can’t turn on your light switch,

if you can’t pick up the phone and get a dial tone, I think the Postal Service is in a similar situation. If it doesn’t deliver mail reasonVerDate 11-MAY-2000 09:19 Mar 23, 2001 Jkt 066343 PO 00000 Frm 00123 Fmt 6633 Sfmt 6601 E:\HEARINGS\58811 pfrm06 PsN: 58811
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ably effectively, then we are going to have the same kinds of problems. So it is very important the Postal Service work.

I think for that reason, regardless of their status, that it is important to have these hearings and this oversight to provide a

great assurance that things will work next year. So, I commend

you on having these hearings and providing that level of oversight.

As the Inspector General indicated in her remarks—and I will

try not to duplicate it—it is a complex environment that they have.

A third of the Federal work force works for the Postal Service. As

I mentioned, the 650 million pieces of mail a day that are delivered, thousands of local facilities, over 30,000 individual post offices, a couple of hundred mail facilities that sort mail, deliver, do

the set-up that is necessary for mail delivery—all of this is supported by a very rich, complex environment that relies on automation, that relies on computers to make it work.

So, the Postal Service has identified 152 critical systems that

have to work in order for the mail to be delivered. They have identified 349 important systems that need to work in order to make

life bearable for them. They have identified a number of facilities

that must work in order for the mail to be stored, to be delivered.

They have identified hundreds and thousands of interfaces that

must be in place. They have identified 43 types of mail-processing

equipment that are installed in several hundred locations that have

to work, and they have identified a number of interfaces, not only

within the Postal Service, but with their customers and their suppliers, that also have to work. So, it is not just a question of 152

mission-critical systems working; it is a question of an entire operating environment working. If that does not work, the Postal Service will have problems.

In terms of their status, I think the IG covered that very well.

But they are running somewhat behind the OMB guidance for implementation, and, as a result, they are going to be facing some

time compressions.

One of the things that I would like to comment briefly on,

though, is on what I believe is the strength of the Postal Service

and that is their new management structure. Until recently, the

burden of ensuring the year 2000 readiness largely resided in the

Program Management Office under the general director of the vice

president of information systems. The program focus here was

more directed at systems and processes that supported business operations, rather than on the readiness of business processes, which

typically involve a lot of activities that are more complex than just

individual systems.

In December 1998, the Service reorganized its program management to better reflect year 2000 efforts in terms of these business

operations. The new organizational structure represents a matrix

approach to managing ongoing efforts. Senior vice presidents that

have responsibility within functional areas like mail operations or

finance or marketing, are now required to ensure that individual

business processes will, in fact, be decomposed, and that each process will work.

Those processes are responsible for developing individual contingency plans and for conducting the simulation of what we would

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call ‘‘end-to-end’’ testing that is required to make sure that processes work, not just systems.

The vice president for Information Systems still has the responsibility for system remediation across these business areas. And then

across all of the areas, the Service’s chief operating officer has the

responsibility for developing a comprehensive business continuity

plan to allow for a certain level of business to be conducted in the

event of failures.

We are very supportive of this management approach. The problem with it is—we would have been even more pleased if it had

been put in place a couple of years ago. So, it is new; it hasn’t been

tested; it is just getting off the ground. But, nevertheless, if implemented appropriately, we think it will go a long ways toward serving the Postal Service.

However, even with this process in place, we believe the Postal

Service has two big, big challenges, and the first one is time. They

are running out of it; they have until the end of the year. However,

that deadline is further compressed by their business cycle which

picks up considerably in September with holiday mailing and further compresses the availability and the attention of top management to devote themselves to Y2K.

Second, they still have a large number of unknowns that they

are working toward. They have no complete inventory on the IT infrastructure, on the internal and external interfaces, and on field

equipment and systems. They don’t know yet whether the majority

of the critical vendors they have will, in fact, be ready, themselves,

to supply them with goods and services that are necessary for the

mail to be delivered. They don’t have assurances yet on the public

infrastructure—telecommunications, electrical power, things like

that, that all businesses, that all Government operations have to

depend on. Until they complete their simulation testing, they have

no real assurance yet that the internal business processes will

work.

So they have a large number of challenges that they must successfully address over the next few months in order to maximize

assurance and to minimize risk that, in fact, they will be ready on

January 1st.

For that reason, our recommendations are pretty straightforward—is that they, in fact, have sustained attention by the

management stakeholders that the plan is followed. They need to

develop a comprehensive plan; that is in the stage of being developed, but not yet developed. They need to make sure the plan is

followed. They need to make sure that all key decisions are really

bought into and made by the key stakeholders, not by the technology guys, but the business guys need to make the decisions

about any tradeoffs that will occur on the priorities that the Inspector General said had to be made. They need to ensure that adequate support is being provided throughout the process, and they

need to make sure that all the components in the individual business areas really support the whole—that is the mail delivery—

that you don’t suboptimize individual process in lieu of making the

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overall process as good as it can be.

Mr. Chairman, that completes my statement, and when the other

gentlemen are through, I would be pleased to address any questions that you might have.

[The prepared statement of Mr. Brock follows:]

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Mr. MCHUGH. Thank you very much, Mr. Brock. We appreciate

your comments.

Our last presenter this morning is Mr. Norman Lorentz, who is

senior vice president and Chief Technology Officer for the U.S.

Postal Service.

Good morning, Mr. Lorentz. Thank you for being here. As you

may have gathered, you and your department are the focus of our

attention here this morning. So, we are very anxiously awaiting

your comments.

And with that, our attention is yours.

Mr. LORENTZ. Good morning, Chairman McHugh, Chairman

Horn, Chairwoman Morella, and subcommittee members.

On behalf of the U.S. Postal Service, I welcome the opportunity

to speak to you today about the Postal Service’s efforts to address

the year 2000 computer problem.

With me today are Nicholas Barranca, the vice president of operations planning, and Richard Weirich, vice president of information

systems.

It is gratifying, not only to myself but to the Postal Service employees in thousands of communities across the Nation, to be reminded of the trust and confidence the American people have in

the mail system.

While years of predictions suggest that there is no place for

paper-based communications in this digital world, the fact that we

are sitting here today demonstrates that is not the case.

As Postmaster General William Henderson said in this very

room less than 2 weeks ago, ‘‘The health of the Postal Service is

important to the American people. It is a measure of how much

American companies and consumers depend on reliable, reasonably

priced postal services to communicate and conduct business.’’ We have taken this obligation seriously for the last two centuries, and we take it just as seriously as we move into the next.

The coming of the year 2000 presents a host of challenges. The

coming year is both anticipated and never before experienced, by

either the Postal Service or any other business or Government

agency.

The Postmaster General and senior Postal Service management

are giving this subject significant attention, with weekly meetings

of the Management Committee serving as a forum for reports and

discussion about the status of our year 2000 program. This is one

of the most important public policy issues we are facing this year.

It is a challenge of vast magnitude with a deadline—as was mentioned—311 days away, that cannot be changed. And it is a challenge that has engaged the men and women of the Postal Service

for a number of years.

Like any forward-thinking organization, the Postal Service is

doing everything possible to minimize and eliminate the potential

for disruption that could arise from the year 2000 computer problem. But, unlike many of those organizations, only the Postal Service is in the position of saying, ‘‘The buck stops here!’’

The fact is, the Postal Service is part of the year 2000 contingency plans for many organizations that rely on electronic communications, whether benefit payments by Federal agencies, electronic

payments in the private sector, or simple data transmission from

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person to person. This means that our readiness efforts must focus

on maintaining the ability to process and deliver normal mail volumes as we enter the new year, and to absorb additional volumes

that could be diverted from the electronic message stream.

I want to state clearly and unequivocally that we are ready in

the U.S. Postal Service to take on this challenge.

Our mail system is no stranger to operating successfully through

national and regional disruptions. We delivered 2 years ago when

a strike all but shut down the United Parcel Service, just as we delivered through two recent airline strikes. Since the first days of

the national postal system, we have found ways to deliver through

war, floods, earthquakes, and other natural disasters.

Even with this experience, we want to be sure that we are doing

the right things to prepare for the potential year 2000 disruptions.

This is why our planning for the year 2000 problem has been extremely thorough, establishing a step-by-step program that takes

us in to a new century with a reasonable level of assurance that

the Postal Service will continue to deliver.

We began our efforts with an inventory of all components and all

systems that can be affected. The next step was the assessment of

the criticality of each of these systems. One question was, ‘‘Is this

system necessary to our core mission of delivering the mail?’’ Then

we began remediation efforts on our mission-critical systems. If we

found a problem, we fixed it. It is not sufficient that our own people

tell us that something is fixed. We also require independent

verification that our key components and systems have been fully

remediated.

With remediation efforts on schedule, we are expanding our focus

this year to the next logical steps—business continuity planning

and recovery management.

Simulation testing, in an actual operating environment, helps

add further confirmation to the status of remediation. Knowing

what individual elements of our systems and processes will be

available provides us with a firm foundation for business continuity

planning.

We began testing our critical mail-processing systems last August at a mail-processing plant in Tampa and a bulk mail center

in Atlanta. The results of these tests and others that are being conducted are very, very encouraging. They demonstrate that, following remediation of our basic mail-processing equipment, mail is

being sorted correctly as it moves through our system.

Despite our best efforts to fix all of the vulnerable systems and

components, and testing them to make sure they work, being prepared means that we also have to anticipate that there may be

some year 2000 problems.

In our own systems, we are looking at 100 million lines of computer code. On top of that, we rely on commercial air and surface

transportation to move mail both locally and across the country.

We also power our facilities from the same utilities as other customers. As you can see, some of the key elements that are necessary to support a national postal system are not within our direct

control.

Through business continuity planning, we are exploring ‘‘what if’’

scenarios that anticipate specific disruptions, internal or external,

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that might arise. The ‘‘work arounds’’ we are developing will help

us to minimize the potential problems. All of our senior officers are

actively engaged in the process. But business continuity plans cannot be successful by themselves. They go hand-in-hand with recovery management.

Recovery management gives our people a structured way to report problems and implement the plans that have been designed to

address them. Some decisions will be based on specific plans that

have been developed to meet a particular contingency. Other decisions will be dynamic, based on the unique confluence of events

that may occur at any point in time. Either way, recovery management is one of the most important tools we will have to continue

moving the mail.

Throughout each of these key processes—remediation, business

continuity planning, and recovery management—our actions have

been consistent with the approach taken by other Government and

private-sector organizations. We have contracted with the help of

over 1,300 technical support people to implement and manage

many of the technical elements of this critical program. The entire

effort is being supported by a level of financial resources necessary

to address this once-in-a-lifetime issue. Unlike other Government

agencies, the U.S. Postal Service is receiving no appropriations for

the year 2000 readiness.

While we at the Postal Service are confident that we are doing

the right things to protect universal service, we also recognize that

we do not have all of the answers—and nobody does.

In this respect, we welcome the positive contribution of those

who have reviewed our activities and offered us constructive suggestions and proposals. Both the U.S. Postal Service’s Inspector

General and the General Accounting Office, who also reported to

you today, have been actively engaged in helping us to meet this

challenge.

In closing, I can’t promise that there will be no problems, but we

remain confident that with the continued hard work of everyone involved in this effort, we will achieve our goals of delivering the

mail, protecting our employees, and protecting our finances.

Thank you.

[The prepared statement of Mr. Lorentz follows:]

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Mr. MCHUGH. Thank you, Mr. Lorentz.

Before we proceed to questioning, I just want to acknowledge we

have been joined by three members of the Technology Subcommittee which, at the moment, is leading for the well-attended prize— Mrs. Morella, great job. In the order in which they came into the

room; the gentlelady from Michigan, Ms. Stabenow—Debbie, welcome—Bart Gordon, gentleman from Tennessee—Bart—and David

Wu, gentleman from Oregon. We thank you all for being here with

us. Oh, also, gee, a fellow-New Yorker and the dean of the New

York delegation—I will really get in trouble. [Laughter.]

We have been joined by my dear friend, Ben Gilman, chairman

of the International Relations Committee, as well. Mr. Chairman,

good morning.

Mr. GILMAN. Good morning. Thank you for conducting this hearing, and I was very much concerned with Y2K.

We have just met with a number of our European parliamentarians and they, too, are very much concerned around the world of

how this will affect all services, all governmental services, as well

as the industry. We are all very much concerned about this sensitive program, and certainly the Postal Service which affects so

many of our citizenry all over the country. It plays an important

part in what we are going to be doing.

So, I regret I wasn’t here at the start of this hearing, but I will

look over the testimony, and we are hopeful that our Postal Service

will be able to do whatever has to be done to be prepared for the

year 2000.

Thank you, Mr. Chairman.

Mr. MCHUGH. I thank the gentleman. Again, I thank him for

being here.

If the old adage, ‘‘a little knowledge is a dangerous thing,’’ is

true, I am a very dangerous man, because this is an incredibly

complex situation, as all of you know so very well.

I just want to start with a couple of general questions and, then,

move to those who have been working on those subcommittees that

are far more conversant with the specifics of the problems than I

am.

But one of the things—as I took time out over the weekend to

read your statements—I couldn’t help but being impressed by, was

the enormity of this situation facing the Postal Service. Mr. Lorentz spoke of just about 100 million lines of computer code; both

the IG and Mr. Brock spoke about the thousands upon thousands

of suppliers, both critical and less so, and the interfacing of the

Postal Service with corporations and companies that are so essential—be they airline or otherwise—and yet, by most measures, are

beyond their direct control. Fifty-three percent of the suppliers responded in all, to a survey the Postal Service very correctly tried

to conduct to try to assess their Y2K compliancing.

The thing that seems to strike me as I look at what we see the

numbers to be and what has to be achieved in the next 311 days,

and less an hour that we have been here this morning, is the enormity of the task. And I am not convinced that, even if everything

went perfectly and everything humanly possible was done, that we

could meet this challenge. I would be interested to see what your

assessment of that is.

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Are we in a process where we are attempting to minimize the

likelihood of disaster or, do we really—and ‘‘disaster’’ is an overstatement, the likelihood of significant interference and interruption—or are we truly in a position, still, to fix this problem to the

highest possible extent?

I will just begin with the order in which you testified and sit

back and listen.

Ms. CORCORAN. I believe that the Postal Service has a challenge,

as I mentioned earlier. What we recommended, as we were going

through our testimony, is that they need to refocus their resources

to make sure that they are dealing with those processes that are

most important to moving the mail, paying their bills, protecting

revenue, and protecting the life and safety of their employees and

customers.

Postal is now moving in that direction, and they are continuing

to decrease the number of systems and equipment that they have

to fix.

As long as they stay focused on really making sure they get to

those that are critical, hopefully, there is a chance. But, again, they

need to have contingency plans and all these other things done to

make sure that if something doesn’t work, that they have an alternative.

Mr. MCHUGH. Mr. Brock, you mentioned in your testimony that,

with the possible exception of the Defense Department, no Government agency faces a Y2K problem as complex as the Postal Service.

I guess if DOD is not prepared, we lose the war. If the Postal Service isn’t prepared, the Social Security checks don’t go out. As an

elected official, I am not sure which I would prefer. [Laughter.]

So, how do you assess their ability to get to the end successfully?

And just an added twist for you, how might you compare the Postal

Service’s progress to a DOD, for example?

Mr. BROCK. That is a difficult question because it is an ‘‘apples’’

and ‘‘oranges’’ kind of question. Nevertheless, I will answer it.

[Laughter.]

One of the reasons that I personally want to make sure that the

Department of Defense is ready, it is like an insurance policy. Even

if we are not engaged in a war, hostilities—as you want that insurance policy, you don’t want it to lapse; you want it in place.

The Postal Service, as I mentioned earlier, is a utility; it has to

work. So, I want it to work as well. So it is important that both

work.

One of the challenges at many agencies is that their primary objectives are carried out through transaction processing. You know,

you write checks; you distribute checks; you either mail them or

you send them electronically. But with both the Postal Service and

DOD, you have a whole series of logistical operations that you have

to carry out as well, as well as making sure that thousands and

thousands and thousands of facilities are going to be ready. So, it

is pretty complex.

The issue that we would have with the Postal Service—to get

back to your original question—in terms of increasing assurances,

that they will be able to provide an acceptable level of service, is

to not only focus on remediating the systems, but increase focus on

the contingency plans and to really scrub those down. A continVerDate 11-MAY-2000 10:52 Mar 23, 2001 Jkt 066343 PO 00000 Frm 00160 Fmt 6633 Sfmt 6601 E:\HEARINGS\58811 pfrm06 PsN: 58811
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gency plan, or a business continuity plan, should be more than a

piece of paper. It really needs to define what an acceptable level

of process is, and that may be delivering mail at the same level,

or it may be, in fact, changing your standards for a period of time

and saying, ‘‘This is the level of service we would be willing to accept.’’ It means taking a look at all of those processes—systems and

suppliers and things—that support that business operation and

doing a sort of a risk analysis, ‘‘And what are the risks that this

will fail?’’—and then, funding it. I will just give you sort of an extreme example.

If you, in fact, assume that first-class mail delivery had to meet

the current standards, and you had no certainty that some of your

key suppliers or some of the key infrastructures, such as telecommunications or electrical power, would be ready; you would, in

fact, have to develop a very expensive contingency plan to make

sure that was funded.

So, these are business decisions where a lot of pros and cons

need to be weighed. I think this is where the crunch is going to

come this summer with the Postal Service. And really scrubbing

these plans and having a level of assurance that is shared by their

stakeholders—and I would include the Oversight Committee as a

stakeholder, as representing the American public—that, in fact,

these are acceptable levels of service and that, in fact, the provisions are made to supply that level of service are acceptable.

Mr. MCHUGH. Thank you.

Mr. Lorentz, no pressure. [Laughter.]

Are you going to make it? [Laughter.]

Mr. LORENTZ. We are very confident with the amount of planning

and the process approach that we are taking, and the use of some

of the best resources money can buy, that we will be in position on

January 1, 2000, to move the mail.

We are focusing, specifically—getting back to the Inspector General’s point—we are focusing, specifically, on the processes that are

directly involved with moving the mail, with collecting revenue,

with paying bills, and most importantly, with protecting the safety

of our employees. So, when you compare the other processes relative to those, those are the ones we are focusing on, moving into

the year 2000.

Mr. MCHUGH. Thank you.

We have, as I said, other members here far more conversant in

these things than I am.

I have a number of other questions, but, at this time, I am happy

to yield to the gentlelady from Maryland, Mrs. Morella, for any

questions she might have.

Connie.

Mrs. MORELLA. Thank you, Mr. Chairman.

I think you have been asking great questions, and I appreciate

hearing from our parties here who are very much involved in the

postal system.

One of the questions I wanted to ask has to do with the international operation of the mails. I was recently in Indonesia, but I

don’t think they know what Y2K is. And then even in Tokyo, members of the Diet didn’t seem cognizant of the impact of it. Now we

are going to want to communicate, by virtue of the mails, also to

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our international partners and countries, and I just didn’t see anything really in your statements that gave me any lead in terms of

how you are going to be handling that. I wondered if you would address that.

All three of you, or anyone who wants to.

Mr. LORENTZ. OK. I guess I will start first, seeing as we are the

ones doing the interfacing, and I would like my friends here to participate as well.

There are really three classifications of international players

here. There are the large industrial nations like Canada, the UK,

France, and Germany, that are probably as prepared as we are.

There is a group of large nations like Brazil and China that are

less automated, less mechanized, and while they—it is a doubleedged sword—while they may have less mitigation or remediation

issues, they have another set of problems. Then there is the less

industrialized nations. And we do participate in forums in the Universal Postal Union. There are 200 postal administrations that actually participate in looking at, and trying to share information

from the common interest and the member readiness.

And, Nick, you might want to speak on any other issues.

Mr. BARRANCA. If you look at the international mail volume that

we originate and we process from the rest of the world, our systems

are being remediated and plans are being developed so that we will

deal with the originating international mail in this country in the

same way that we will deal with our originating domestic mail.

We will also be prepared to process incoming international mail

in the same way that we will process and deliver our own originating mail for this country.

As Norm indicated, there are two international organizations

that are dealing with the Y2K problem from an international

standpoint. It is the UPU, the 200 countries that participate in

that forum. It is an issue on their agenda. There is also the International Postal Corp., which is 21 industrial postal administrations

around the country that has the Y2K issue on their agenda. We are

participating in those discussions.

From a country standpoint, as Norm indicated, those countries

that rely on automated systems, which are those handful of large,

industrialized countries, are dealing with the issues in the same

way we are. Those countries that actually depend more on manual

systems to process and deliver their mail, the problem is not as significant—I don’t want to minimize it. It is not as significant as

those that rely on automated systems, because the world doesn’t

change to a great extent, in that their systems are basically manual now. So——

Mrs. MORELLA. Are we offering any assistance to any of these

countries through these two international organizations or individually?

Mr. BARRANCA. We are an active participant in these two organizations and their committees. Our international business unit is involved in those discussions. I can’t tell you exactly what the nature

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of their involvement or their details are. I would be happy to make

that available for the record in the future.

Mrs. MORELLA. That would be great.

And do you have contingency plans for the international mail?

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Mr. BARRANCA. Our contingency plans for collecting, processing,

and transporting mail that originates in this country are the same,

regardless of whether the destination of that mail is here in this

country or international destinations. We will be prepared to collect, process, transport, and move it to the international destination.

For international mail originating outside of this country to be

delivered here, we have contingency plans to deal with that volume

in the same way that we deal with our originating domestic mail.

Mrs. MORELLA. If I send a letter to Korea and then a letter is

sent to me from Korea, which will reach its destination?

Mr. BARRANCA. If you send a piece of mail to Korea, we will get

it to Korea.

Mrs. MORELLA. You will get it there.

Mr. BARRANCA. To the extent that the Korean postal administration will get it to the address in Korea is what the UPU and—not

in Korea’s case—the ICP is dealing with.

Mrs. MORELLA. And Kim wants to send something to us, and we

will get it?

Mr. BARRANCA. As long as it gets——

Mrs. MORELLA. Through the mail?

Mr. BARRANCA [continuing]. To this country, we will get it delivered; yes.

Mrs. MORELLA. Could I just ask you—I know that the end-to-end

stuff is very difficult, and I won’t spend much time on it, but I hope

you will look to addressing that because of your many connections,

your many contractors that are all involved. On March 9th, we are

going to have a hearing on liability. I am curious about whether

the postal system could be subject to any liability suits or issues.

Mr. LORENTZ. I am not aware of that issue. I do know there were

some contractual issues that we had relative to supplier liability.

Rick, you may want to address that.

Mr. WEIRICH. We have continued to look at this emerging issue

of everyone managing their potential liability in year 2000. We are

having difficulty getting some of our supplier data, although some

of the changes that you all have made certainly have helped in that

regard.

I am not an expert on whether we might be liable under the statutes. I would have to bring our General Counsel to answer those

questions though.

Mrs. MORELLA. But I think you are also saying, though, that

with suppliers you find that there is sort of a chilling effect for fear

that there could be liability suits. And, of course, there are those

who speculate that that cottage industry of lawyers could end up

costing more than remediation of the Y2K problem. It is something

we need to look at, not to give any waivers, but to look at, in terms

of what we can do, to make it be a more encouraging information

and data exchange and working together.

I like the idea that we have got the Inspector General and GAO

working with the Postal Service. I think that is the kind of union

that there should be.

And I think you wanted to make a comment, Ms. Corcoran.

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Ms. CORCORAN. Madam Chairman, we have done an audit report,

or an advisory report, where we did look at some contractual

issues. We would be happy to share these with you.

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Mrs. MORELLA. Very good, thank you; thank you.

I have taken up enough time. Thanks, Mr. Chairman.

Mr. MCHUGH. I thank the gentlelady. The gentleman from

Texas, Mr. Turner.

Mr. TURNER. Thank you, Mr. Chairman.

Mr. Lorentz, you said in your statement that the Postal Service

is the only organization that is in a position to say, ‘‘the buck stops

here.’’ As I look at this panel, it is pretty clear that in the totality

of those gathered here, you are the one that has to say, ‘‘the buck

stops here,’’ because if things don’t work out, I am sure that you

are the one that is really going to be looked to for the explanations.

Part of the purpose, I think, of our hearing here today is to try

to reassure the American public that their mail is going to be delivered on time. There is a lot of—as you know, and as all of us

know—a lot of hysteria surrounding the Y2K problem. It is somewhat amazing, as we have gone through many of these hearings

with other agencies, to realize that we are all gathered here because of a problem that some computer folks from the past did not

take care of.

Perhaps, there are some comments you could make that could be

reassuring, and let me direct the question to you this way.

One of the concerns I have was when I noticed that so far you

have spent $200 million addressing the Y2K problem. Yet, I also

read that, in the next 300 days, you are going to spend $400 million more, which suggest to me that there is a whole lot left to be

done, and maybe we are behind if we have to spend $400 million

at the Postal Service in 300 days.

Maybe it would help if you could specifically tell us of the efforts

you have made for that first $200 million. What problems did you

find that you fixed, and if you hadn’t fixed, would have resulted in

some disastrous consequence for the American postal customers?

Second, of the $400 million you are going to spend in the next

300 days, what do you think you are going to fix, that if you don’t,

will be problem?

Mr. LORENTZ. In answering the first question about the $200 million; we have over 500 important systems of which 152 have been

identified as either ‘‘severe’’ or ‘‘critical.’’ And ‘‘severe’’ means that

it affects moving the mail; it affects those four areas: moving the

mail, collecting revenues, making payments, and the safety of our

people. And of those severe systems—the difference between ‘‘severe’’ and ‘‘critical’’ is that there is no work around for a severe system; you have to fix it. And the criticals, there is an identifiable

work around.

Of those 152 systems, we have completed what we call ‘‘remediation.’’ In other words, that is a euphemism for ‘‘fixed.’’ We fixed

131 of the technical problems in those 152 systems, and we have

actually implemented 108. In addition, we have 55 that have been

actually externally verified.

We are also looking at the balance of the 359 that are less than

critical. The 152 has been a major investment. It is very expensive

to go into 100 million lines of code, to actually do an external

verification.

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We also have completed some simulation testing on the automation that we have in our plants, both P and DC’s and bulk mail

centers.

So what we have gotten up to this point is the ‘‘lion’s share’’ of

the, ‘‘technical fixes.’’

The balance of the $400 million that you addressed, I think we

are going to end up—we are currently for the year at about $99

million. I think we have spent about $197 million up to this point.

We plan on spending about $340 million for the year to look at the

balance of those 349 systems. And we have also got the continuity

planning and contingency planning, the ‘‘what ifs,’’ where we cannot remediate something, where we have to build a contingency,

that is what the investment resources are for.

Mr. TURNER. Well, give me just one concrete example of something you did fix that if you hadn’t, it would have resulted in some

specific consequence. Maybe in the area of delivery of the mail

would be the more interesting example, and if you hadn’t fixed it,

what would have happened——

Mr. LORENTZ. We have——

Mr. TURNER [continuing]. On January 1st?

Mr. LORENTZ. We have systems that delivery sequence letter

mail. And, basically it varies how much that we literally have

there, depending on the location—between 80 and 90 percent of the

mail is in delivery sequence mode. That is a tremendous amount

of the letter mail that is in delivery sequence. That would be something that would be very difficult to replace with manual sortation.

Another example is——

Mr. TURNER. You know that that would not have happened if you

hadn’t gone in and fixed this problem?

Mr. LORENTZ. Absolutely. We believe that to be true.

Mr. TURNER. It wouldn’t have been sorted?

Mr. LORENTZ. Well, it would have been much more difficult to

sort. I guess I can refer Nick to part of this question. But over the

last few years, we have invested a tremendous amount of money

in letter mail automation to remove manual intervention in that

mail stream. And so, basically, that is what those systems do.

Mr. TURNER. I know you have a lot of people looking over your

shoulder, and they are never going to tell you that you have done

enough. That is a risk they won’t want to accept. What is your

greatest fear of what might happen if you don’t move forward in

the things you are going to spend the next $400 million on? What

is your greatest fear that you now need to address?

Mr. LORENTZ. Well, I really appreciate—[laughter]—having the

ability to answer that question, because this is an area where I

think we need your help, and I think this hearing can be helpful.

We have a very significant issue with getting the attention of

suppliers.

And you have brought up the issue, Mrs. Morella, of the fact that

there are liability issues and so forth and so on, but we are making

an earnest effort to contact our suppliers and determine their situation relative to Y2K.

So, if there is an area of concern, it is being able to fully engage

with our suppliers and get the information about where they are.

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Mr. TURNER. As a percentage of your total annual Postal Service

budget, how much are we spending on remediating Y2K?

Mr. LORENTZ. The total projected cost, at this point, is $607 million.

Mr. TURNER. As a percentage of what your operating expenses at

the Postal Service, what would that be?

Mr. LORENTZ. It is—— Mr. TURNER. On an annual—— Mr. LORENTZ. It is less than 1 percent. In our terms, it is the

equivalent of about six ‘‘rounding errors.’’ Mr. TURNER. Of what?

Mr. LORENTZ. Six ‘‘rounding errors.’’ A ‘‘rounding error’’ is $100

million in a $63-billion company.

Mr. TURNER. About 1 percent?

Mr. LORENTZ. One percent.

Mr. TURNER. Additional operating costs?

Mr. LORENTZ. Yes.

Mr. TURNER. Thank you, Mr. Chairman.

Mr. MCHUGH. Thank you.

The gentleman from Maryland, Mr. Bartlett.

Mr. BARTLETT. Thank you very much.

In trying to understand the potential implications of the Y2K

problem, I have taken a very simplistic look at the exponential

function involved here.

If there are just seven process or services that are essential for

the delivery of mail; like power, and communications, and suppliers, and sorting equipment, and information systems, data exchanges, information technology infrastructure, and so forth—there

may be a whole lot more than that. But, if there were only seven,

and we look at the probability that we are going to be able to deliver the mail, if we have a 90 percent probability that each of

those seven is going to work. Then, you multiply 0.9 times 0.9

times 0.9, seven times, and you come out with a total system probability of success of less than 42 percent.

If you make the assumption that maybe the future is not quite

that rosy, that there is a 60 percent probability that each of these

seven systems—services, whatever—need to work before we can deliver the mail; then, 0.6 times 0.6 times 0.6, seven times. The exponential function is really quite fascinating, because now we come

to a 1.6 probability that we are going to be able to deliver the mail.

Mr. Brock indicated you have the second most complex system in

our country—the most complex being the Defense establishment—

have you looked at the probability of what will happen and what

contingency planning you need to put in effect from this exponential analysis viewpoint?

Mr. LORENTZ. I guess an understatement would be that it is, obviously, a very complex situation. I think where we gain confidence

that we are approaching it in an effective way is that we have used

common approaches in industry where we have done unit remediation; we have done string testing. I think the most significant area

that we are getting into now—we have started on it, our critical

operational processes—is something called, ‘‘simulation testing,’’ where we fit all of the processes together and make sure all of it

works. And to me, I think, that is a key for us.

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By the same token, being a systems person, you know that once

you put something live, what you have come in the front-end could

be a different circumstance than maybe you even tested for. And

I believe that is where we have to be very effective at looking at

what our contingencies need to be.

But our approach, we believe, puts us in the position to have an

effective outcome.

And, Nick, and, Rick.

Mr. BARRANCA. Yes, I understand, the premise that you laid out

for us, and it can result in that type of cumulative probability. And

as part of our continuity planning and our contingency planning,

what we are trying to do, and what we have done initially, was to

look at the appropriate levels of planning at the national, the area,

and the local level. Because I think as things do not work—and

some things won’t work; I mean we all realize as we get into this,

something is going to fail at some place in time. I think one of the

facts will be that it won’t fail every place at the same time.

So our continuity planning and contingency planning is looking

at what happens at the local level for local issues that need to be

addressed.

To a certain extent—and I don’t want to minimize the problem— but to a certain extent, I think it is like a weather issue, in that

there will be hurricanes on January 1st in some parts of the country that we will have to react to, like we have in the past. But I

don’t think there will be a hurricane for the entire country.

Our continuity planning and our ‘‘recovery management,’’ which

is another term for ‘‘command, control, and communications,’’ which we will have in place before and after January 1, will focus

on: what are the appropriate issues that need to be addressed at

the local level, and what are the issues that need to be addressed

at the area level? What are the issues that need to be addressed

at the headquarters level? And we will have the command, control,

and communications in place at all those levels. And the contingency plans are ready to be implemented, depending on if it is a

local situation, a broader geographic issue to be dealt with in the

area, or a national situation that we have to deal with here at the

national level.

So, while what you lay out likely could happen, I hope it doesn’t

happen in the entire country. It might be one area that we really

have to focus our attention on. But our plans are structured in a

way that they are layered based on the level of the organization

that has to respond to the situation that presents itself.

Mr. BARTLETT. Of necessity, of course, you address the problems

one-by-one. If you are looking at each of the problems separately,

one can have reasonable confidence that there is a reasonable level

of expectation that we are going to be successful in solving that

problem.

But my concern was, since this is a very complex system, relying

on a number of things happening, sequentially—successfully happening sequentially—that it is interesting to look at the probability

that the mail is really going to get through by this of simply multiplying one probability by another probability by another.

Of course, there are some of these things, that if they don’t work,

you are not going to deliver the mail at all. If we don’t have a

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power grid, for instance, the mail is not going to be delivered at

all. So that is a 100 percent shutdown if that one doesn’t work.

I wonder if the other two organizations that have looked to this

have looked at the exponential complication here?

Mr. BROCK. Not precisely in the way you have addressed it, but

we have recognized that when you are doing the overall end-to-end

testing, the simulation testing, that as you introduce more complexities into it, it certainly increases the risk that you will have

failures that will affect the ability of the overall process to function

properly.

And that, second, as you develop the contingency plans, since you

are developing them now for something more than just a single

system or a single element of that process, that it also increases

the complexity and, ultimately, the expense of those plans.

There is something to be gained from that, though, by going

through processes like this. Organizations that have not done it before can develop an inherently better understanding of their business processes and the key flow through those processes and what

may, in fact, be ‘‘fat’’ and what is of necessity, ‘‘muscle.’’ Ms. CORCORAN. We haven’t looked at that issue either, from an

exponential aspect. However, in our very first report, we talked to

the Postal Service about their need for continuity plans from the

standpoint that things are going to go wrong, and they need to understand exactly how these things all fit together. And it does paint

a very bleak picture when you look at it in the manner in which

you did.

Mr. BARTLETT. Mr. Chairman, I wonder if maybe our enormous

success might ultimately be the basis of our undoing. We have been

so successful in automation and in high tech. And we now become,

because we have been so successful there, we become more vulnerable to the Y2K bug.

Thank you very much.

Mr. MCHUGH. I thank the gentleman.

The gentleman has been very successful in his first question, reminding me why I majored in political science. [Laughter.]

The gentleman from New York, Mr. Gilman.

Mr. GILMAN. Thank you, Mr. Chairman.

I do have several questions.

I think it was Mr. Lorentz that said that 152 severe systems still

were part of the 500 systems. Of those remediated were 131, but

only 55 have been verified for Y2K compliance. How long will it

take to verify the balance of those severe systems?

Mr. LORENTZ. The balance of those systems will be externally

verified by the June timeframe. And we have just three of those

specific systems that will be verified after June. So, 149 will be

verified by June, and then three after that, but all before the end

of year.

Mr. GILMAN. Some agencies have discovered that some of their

system which they had considered to be Y2K compliant needed additional work to be fixed. Does this mean that the Postal Service

doesn’t really know today whether the systems it has worked on to

make them Y2K-ready will actually work on January 1, 2000?

Mr. WEIRICH. Well, like everyone else, we haven’t been there yet;

we have only tested. Certainly, there is some risk that there could

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be a deficiency in our testing that we will discover when the time

comes.

Mr. GILMAN. But when will you put a deadline on getting all of

that testing done?

Mr. WEIRICH. The deadline is the one Mr. Lorentz communicated. We have tested each of these systems as we have done the

work. We have been giving each system to an independent team;

basically, set up a ‘‘tiger team’’ structure where we have a complete

independent review of the testing that was done, whether all the

test cases were, indeed—— Mr. GILMAN. Is that an in-house testing group?

Mr. WEIRICH. This is done by an external supplier who is providing a check and balance against our own folks.

Mr. GILMAN. Will they be able to do all of that check and balance

by your deadline?

Mr. WEIRICH. Yes, they will.

Mr. GILMAN. The Service uses computer networks to conduct financial transactions with the Treasury Department and financial

institutions. How could the Service’s operations be disrupted if it

has Y2K-related problems in the electronic data exchanges? And,

what is the risk of that happening?

Mr. LORENTZ. That is one of our most significant portfolio systems, the financial systems, and that is being overseen by the chief

financial officer. We have very specific plans in place for all of

those interchanges, and there are specific test plans that have been

developed.

Mr. GILMAN. So what is the—— Mr. LORENTZ. So we have been—— Mr. GILMAN. So what is the progress of all of those?

Mr. LORENTZ. Rick, do you want to speak on the progress issue?

Mr. WEIRICH. Those are proceeding on plan. We are working

with Treasury, specifically, and doing joint testing. That is one of

the areas where we recognized the need to test together, so endto-end, we know that our processes both work.

Mr. GILMAN. Well, how many electronic data interchanges have

been identified as having Y2K problems? And of those, how many

have been renovated, tested, and validated?

Mr. LORENTZ. I have some statistics if I find the right sheet. The

statistics that we have relate to the electronic interfaces with some

of our suppliers of the equipment that generates postage. I can get

you that specific information. We don’t have it with us.

Mr. GILMAN. Would you supply that to the committee——

Mr. LORENTZ. Absolutely, I will.

Mr. GILMAN [continuing]. At your earliest convenience.

Mr. LORENTZ. Thank you.

Mr. GILMAN. I would like to make that part of our record today.

The General Accounting Office, while not issuing a formal report,

has been conducting ongoing audits of the Postal Service. And

among the GAO’s many concerns, the fact that the Postal Service

serves as a primary backup system for our Federal agencies in the

event of Y2K failures in their organizations, potentially creating a

multitude of problems in mail handling caused by the steep spike

in mail volume. GAO found that the USPS lacked a detailed project

plan for any system that would contain target dates for remaining

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tasks and necessary resources. It does not have a good picture of

system conversion status because the progress reports are inaccurate and that you were late in implementing your post-implementation validation plan and have not prepared the contingency

plans. Have those problems been resolved?

Is our GAO representative—Mr. Brock, can you respond to that?

Have they resolved those questions?

Mr. BROCK. They are working on resolving those questions.

There are still unknowns—as I mentioned in my statement, Mr.

Gilman—that they need to resolve to provide the certainty.

I would like to add something to my statement, though. When

you were talking about the Postal Service, in fact, acts as a contingency plan for many organizations who rely on electronic commerce. I think a couple of things could well happen here is, first

of all, that some organizations not wanting to risk triggering their

own contingency plan may, in fact, start to mail more later in the

year, therefore, increasing the burden on the Postal Service.

Second, if—— Mr. GILMAN. Are they prepared for that?

Mr. BROCK. This is something they should be examining in their

contingency plans.

Mr. GILMAN. Have they been examining them?

Mr. LORENTZ. Yes, we have.

Mr. BROCK. The second issue—and the one that is, frankly, a little more troublesome—that if, in fact, the trigger events that would

cause someone engaged in electronic commerce to have to rely on

the Postal Service, and some of those trigger events might be a

break down in electrical power, or things like that, would also be

trigger events that would have a negative impact on the Postal

Service and would, in fact, impact their ability to act as a contingency plan for another organization.

So, it is sort of a vicious circle there.

Mr. GILMAN. Well, how do we address that? How is that being

addressed?

Mr. BROCK. I think that, at this point, we are now talking about

contingency plans that need to be elevated to the national level.

These are things that the Y2K Conversion Council, under John

Koskinen, should be considering, I believe, starting in the April

through June timeframe, when they begin to look at national contingency plans.

Mr. GILMAN. Are they looking at that now?

Mr. BROCK. They are preparing for that now.

Mr. GILMAN. What does ‘‘preparing’’ mean? Are they going to address the problem——

Mr. BROCK. Yes.

Mr. GILMAN [continuing]. Or not address it?

Mr. BROCK. Yes; they have hired contractors to help develop

what they call ‘‘tabletop exercises,’’ that will allow them to examine

a number of contingencies, and contingencies such as this are some

of the ones that they would be examining.

Mr. GILMAN. Just one or two other questions, Mr. Chairman.

The Postal Service, I have been informed, is using outside contractors to help deal with Y2K, as you have indicated. These contractors employ many foreign workers. How has the Postal Service

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dealt with this from a security perspective? Has there been any security arrangements?

Mr. WEIRICH. Yes, we have rather strong requirements for security screening of personnel who work on our sensitive activities.

What we have done in the case of foreign nationals is target

them at work areas that were not sensitive. We have not been

using foreign nationals, for example, to modify our code, itself. But

we have been using foreign nationals to assist in some of our

project management and oversight activities.

Mr. GILMAN. How has the Postal Service ensured that the external suppliers, who have self-reported readiness, will not run into

unforeseen problems come January 1, 2000? How do you check up

on the readiness reports?

Do you do any checking up on readiness reports?

Mr. WEIRICH. Yes, we are. In addition to talking to our suppliers,

we are monitoring all the information that is publicly available. We

are looking to sources like industry groups and trade groups. We

do sit on several of the different Federal groups that monitor areas

like transportation, so that we get a perspective of what is going

on in an industry and what other information is available about

the likely performance of the suppliers we depend on in that area.

Mr. GILMAN. Well, do you have reliable way of checking on a specific contractor that says, ‘‘Yes, we are ready?’’ How do you know

they are ready?

Mr. LORENTZ. I guess I would say that is where we rely on the

three-tiered testing approach, where we have a supplier that is

helping us to remediate and, basically, fix the code, et cetera. We

have a different supplier that is doing an external verification. And

then, last, in the very critical processes, we are doing simulation

testing, which is an entirely different process for exercising all of

the systems at once.

So, in terms of process, that would be our approach to making

sure we are not kidding ourselves.

Mr. GILMAN. So all of your contractors, then, will be tested?

Mr. LORENTZ. In their—— Mr. GILMAN. Is that what you are telling me?

Mr. LORENTZ. In their various roles.

Mr. GILMAN. The Inspector General recited a number of recommendations for top management.

Can I ask the Inspector General, has this list been complied

with?

Ms. CORCORAN. The Postal Service has been very good about

working with us and accepting our recommendations and working

to implement them. These are not things that can be done overnight. It is the direction that they are moving. As I had mentioned

earlier, one of the first things we had recommended——

Mr. GILMAN. Could you put that mic a little closer to you?

Ms. CORCORAN. One of the first things we recommended, in

March 1998, was that they start working on their continuity plans.

They just have recently, since last fall, started working on it. We

would have liked to have seen them get on that one a little faster.

But, generally, they have been working with our recommendations.

Mr. GILMAN. Have there been any shortcomings so far?

Ms. CORCORAN. In terms of dealing with our recommendations?

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Mr. GILMAN. Of complying with your recommendations.

You made 17 recommendations, as I understand it. Have they all

been complied with?

Ms. CORCORAN. We follow up as we are doing additional work.

At this point in time, I believe they have all been dealt with. As

I said, the one that was really concerning us was the one on continuity plans.

Mr. GILMAN. So everything else has been complied with

except——

Ms. CORCORAN. The last report, we just issued last Friday.

Mr. GILMAN. And did you find any shortcomings in your report?

Ms. CORCORAN. Yes. This is the one that we believed that the

Postal Service needed to put together better data, use a more consistent format, and assure, when managers were making decisions,

that they really knew what they had, instead of shifting definitions

and numbers. The Postal Service has agreed to do that. But to my

knowledge, they have not complied with that report yet.

Mr. GILMAN. And how will you followup with regard to your recommendation?

Ms. CORCORAN. We are constantly in the Postal Service looking

at the Y2K area. At this point in time, we have about 25 percent

of our evaluator resources looking at the Y2K issue, and so it will

be something that we will be monitoring on an almost daily basis.

Mr. GILMAN. Have you submitted your latest report to this committee?

Ms. CORCORAN. Yes, sir. It was attached to the testimony.

Mr. GILMAN. Thank you.

Mr. MCHUGH. I thank the gentleman.

Mr. GILMAN. Thank you, Mr. Chairman.

Mr. MCHUGH. Thank you, Mr. Gilman.

Mr. Turner.

Mr. TURNER. Thank you, Mr. Chairman.

Mr. Lorentz, earlier, in response to my question, you gave me a

specific example of something that you had discovered to be nonY2K compliant that had been fixed, and you referred to the computer systems that sort the mail, that replace the manual sorting

of the mail.

Mr. LORENTZ. I would like to clarify what my response was on

that. The issue that my understanding of your question was,

‘‘Could you give me an example of a system that, if it was not

fixed,’’ and that was the context in which I answered that question.

So——

Mr. TURNER. So, that sorting system——

Mr. LORENTZ. That was just purely an example of a severe system that, if it was broke, we would have a difficult time replacing

it.

Mr. TURNER. And I take it that——

Mr. LORENTZ. That is, by the way, one of the systems that is

fixed so—[laughter.]

Mr. TURNER. So, if it hadn’t been fixed, we would have——

Mr. LORENTZ. Yes, that is correct.

Mr. TURNER [continuing]. Had a problem sorting the mail.

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As I understand it, over the last several years, you have installed

across the country a lot of these computerized mail-sorting systems?

Mr. LORENTZ. That is correct.

Mr. TURNER. Over what period of time has that been done by the

Postal Service?

Mr. LORENTZ. Do you want to address that?

Mr. BARRANCA. The letter automation and flat automation programs started in 1987.

Mr. TURNER. And have continued up to when?

Mr. BARRANCA. The bulk of the equipment is currently in place

and being used. We are making refinements to the system on an

ongoing basis, and we are still deploying some pieces of equipment

to sort the larger-size envelopes which we call ‘‘flats.’’

Mr. TURNER. Of the systems that you fixed, how old were they?

Mr. BARRANCA. How old were they?

Mr. TURNER. How old were they?

Mr. BARRANCA. The original systems went in 1987, but the computer and the software components of those systems are updated

on an ongoing basis. So, I mean we don’t have systems out there

that date back to 1987. We have some frames and some mechanical

aspects of the equipment that date back to 1987, but the software

is updated on a continuing basis, because one of our objectives is

to make it better so it reads more mail, so we can finalize more

mail in the automated system.

Mr. TURNER. So it was the software that had the problem that

you fixed?

Mr. BARRANCA. That is correct. Well, all of our systems were—

software was tested to make sure that it was Y2K compliant, so

that we had assurances that, internally, mail that we are processing today, on equipment we are using today, will still function

in the same manner it functions today, after the year 2000.

Mr. TURNER. Is there only one supplier of this software, or are

there several companies that supply this software?

Mr. BARRANCA. The equipment has been supplied by a number

of suppliers. The software changes to that equipment is developed

and provided to field sites from a centralized location that we manage at our Engineering Development Center. We have a Process

Control Unit that controls the software for all of our automated

sorting equipment.

Mr. TURNER. So it is fair to say that the problem you found and

corrected was a software problem, not a hardware problem?

Mr. BARRANCA. That is correct.

Mr. TURNER. And, private companies supply this software to the

Postal Service?

Mr. BARRANCA. They have supplied it as part of the original

equipment deployments. As I said, we have a unit out at our Engineering Development Center, which is a Postal Service unit—that

is our Process Control Unit—that provides all the new software

and updates to all of our existing software.

And so, when we stamp out a piece of equipment for an OCR,

it is developed in our Engineering Development Center. It is tested

in a number of sites, and then it is sent out to all of our sites so

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that we have some control over what processes we are using at all

our facilities.

We make sure that we are using the most efficient software in

all of our plants, so that we can keep as much of the mail processed

in automation to take advantage of the advancements we have

made in sorting software.

Mr. TURNER. It would be fair to say that, when you discovered

that your software had a problem that had to be fixed to be Y2K

compliant, that the problem you found was one created by the Postal Service because you engage in the function of producing the software for the Postal Service?

Mr. BARRANCA. Yes, whether or not we had a problem in the example that Norm used, I would have to go back and check. What

he basically said was that, ‘‘If we have a problem in this software

application, it would create a big problem.’’ I can’t sit here and tell

you that we had a problem in that software. I would have to check

on that.

Mr. TURNER. Well that——

Mr. BARRANCA. But we did check it all to make sure it worked

in the year 2000.

Mr. TURNER. All right.

In my original—and maybe I wasn’t clear with Mr. Lorentz—but

what I was looking for is an example of something you had discovered to be non-Y2K compliant, in the course of your testing and

your evaluation.

Mr. BARRANCA. Right.

Mr. TURNER. And you have fixed it.

Mr. BARRANCA. Yes, I can——

Mr. TURNER. If you hadn’t have fixed it——

Mr. BARRANCA [continuing]. Give you an example along those

lines.

Mr. TURNER [continuing]. There would have been a problem.

Mr. BARRANCA. I can give you an example of that.

Mr. TURNER. All right. That is what I was looking for.

Mr. BARRANCA. OK. One of the systems that we did test where

we found we had a problem was the system we use to bill or assign

mail to our commercial air carriers. When mail is assigned to carriers—when mail is billed to a carrier, we assign it to a particular

flight in order to make a planned arrival time so our service standards would be accomplished. And what we did find in that system

was that it would not function in a Y2K environment, thus we had

to go and make adjustments to that system so it still would assign

mail to commercial air carriers in the year 2000.

That is a problem we found as a part of the testing, and that is

a problem that we have fixed.

Now there were ‘‘work arounds’’ if the system failed, which is we

could go back to the way we did it prior to ‘‘CAB sunset,’’ which

was manual assignment to air carriers and pulling out the ledgers

and the pencils and doing bulk assignments.

Mr. TURNER. That was a software problem that you fixed?

Mr. BARRANCA. That was a software problem.

Mr. TURNER. And were you the supplier of the software, or was

that a private supplier?

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Mr. BARRANCA. I think we probably supplied that software. That

system goes back probably 10 or 15 years. But our testing led us

to that problem which, in turn, led us to a ‘‘fix,’’ which is not a

problem now.

Mr. TURNER. But of all the testing and verification that you have

done thus far, do I take it that that is the only concrete example

that you can cite me of something you found that would have been

a problem had it not been fixed?

Mr. BARRANCA. Well, I am sure there are others. I was trying to

identify one that, from an operation standpoint, would have been

a significant problem if we hadn’t found it.

Mr. TURNER. I mean, I am asking this question, primarily because, as you know, the Postal Service is like any large corporation,

and I am trying to get a feel for the scope of the kind of Y2K problems that we are running into. I know we are spending millions,

billions of dollars in the public and private sector to test to be sure

we are compliant, and I was just curious as to what your experiences have been, what you have discovered that was really a problem. And that, obviously, is the primary example that comes to

your mind.

Mr. BARRANCA. That is one that I can state now. There are probably others that others might be aware of.

Mr. WEIRICH. As an example of what happens, yes, we just had

our first failure case that we were able to document.

At the first of the year, we had a problem in one of our payable

systems, and there was an edit in there that looked a year ahead.

And when we looked and projected failure dates, that had not been

noticed, and we did not realize the system was due to fail on the

first of 1999. We had thought it would fail later. In fact, we had

created a remediated version that was still in testing but had not

put it into production.

So, indeed, the old version did ‘‘rear up’’ and fail on us. We had

to call some programmers in, and we spent 3 hours in the middle

of the night taking the patch and putting it on the old thing so it

would work correctly. But, frankly, we would not have been able

to pay the bills until we patched that program so that it would

handle transaction.

In the case of the information systems, that is a lot of what we

find in the repairs. A particular transaction would not process if

the system were not fixed to correctly handle dates that have traveled the centuries.

In other cases, we have certainly—the system would incorrectly

calculate intervals and would not be able to determine, for example, whether I had adequate years of service to collect an annuity.

So people trying to retire would have problems proving their eligibility.

We have certainly identified a host of things in the systems

where the calculations would have been incorrect, had we not gone

through and changed them. And, indeed, in well over half of the

systems that we have worked on, we can point to specific errors

that would have occurred—they run the gamut—had we not made

the changes to the code.

Mr. TURNER. I might just followup with Inspector General.

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You have heard their responses. I get the impression that of all

the efforts that have been made in testing and verification, that the

number of discovered problems seems to be fairly minimal. It gives

me some assurance that, perhaps, what remains to be done may

not reveal any significant problems.

I know that is not a very scientific way to approach this, but it

does seem to me that the number of problems that they have found

and fixed is relatively small, compared to the scope of the testing

that they have done.

Is that an accurate assessment, or am I somewhat off target?

Ms. CORCORAN. I am going to let Mr. Chambers answer that

question.

Mr. CHAMBERS. Well, I think if I understood Mr. Weirich correctly, he just indicated that they had found problems in about 50

percent of their systems.

I think the important concern that we have about what remains

this year is not necessarily in the information systems, because

they appear to be on track to get the bulk of those fixed.

Our biggest concerns, as Ms. Corcoran indicated earlier, are in

a lot of the more traditional non-information systems areas, such

as facilities and these other non-suppliers and some of the other

non-traditional areas. But to the extent that they have been reviewing the systems, these severe and critical systems, if they have

been finding about 50 percent of them with some degree of problems, then I think it was probably an exercise well worth it.

Mr. TURNER. Thank you.

Thank you, Mr. Chairman.

Mr. MCHUGH. I thank the gentleman.

We have been joined off and on, as I indicated earlier—we knew

we would—by various Members, and I want to recognize and thank

them. The gentlelady from Michigan, Ms. Rivers, was here for a

time.

And from those of us who dabble in computers talk about ‘‘spam,’’ we think about one thing, but when those of us who were raised

in the 1950’s think about ‘‘spam,’’ we think of something else and—

[laughter]—we have been joined by a gentleman who represents

the great ‘‘spam’’ industry, a gentleman, Mr. Gutknecht, Gil Gutknecht. We welcome him, and I would be happy to yield to him at

this time.

Mr. GUTKNECHT. Thank you, Mr. Chairman.

Actually, part of the reason I was late for the meeting, we were

meeting with a delegation of members of parliament from Canada.

We were talking, among other things about hogs and ‘‘spam,’’ and

it did come up. [Laughter.]

I hope that this question hasn’t been answered, and I apologize,

but, you know, I understand the first real test that we are going

to face, according to some of the experts that have testified previously, is on September 9, 1999.

I am just curious, have you run any tests, or anybody want to

comment on what is going to happen on September 9, 1999? Do we

have some handle on what that is going to reflect?

Mr. WEIRICH. We would certainly agree with you. I think that is

our first critical date. We are treating it as such. We have included

this in the cases that we test for those systems that do operate on

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a month and fiscal year, for example. That will not affect a number

of our systems, because not all of our systems use that forum. But

for those where it does occur, yes; that will be the first we will be

alert to.

Mr. GUTKNECHT. I take it that you are comfortable that you will

meet that test on September 9th?

Mr. WEIRICH. As comfortable as we are about anything else in

this program.

Mr. GUTKNECHT. That is an honest answer.

Let me just—one of the other issues that has come up in some

of our other hearings is the issue of embedded chips. And how vulnerable are you to the problem of embedded chips? And do you

have an inventory of how many you have?

I raise that issue because, not only do we have a little company

that makes that wonderful pork product that was talked about earlier, but we also have in my district, a relatively small company

that is a chip broker. They buy and sell chips all over the world.

They have told me that there are a lot of companies who may not

even realize that there are chips built into their all kinds of equipment that may or may not be Y2K compliant. I am just curious,

in terms of the Postal Service or any other Federal agencies, have

they done the inventory?

For example, one of the utilities in our State, they found that

they had over 300,000 embedded chips in their system, most of

which were not a problem, but at least they had an inventory and

a better idea. Have you done the same?

Mr. WEIRICH. No, we have not done that per se. We have been

pouring over our mail processing equipment primarily in this area,

looking for whether we can identify any embedded chip weaknesses

in those systems. To date, we have not. We have tested the systems.

Mr. GUTKNECHT. Do you plan to do that inventory?

Mr. WEIRICH. No, we don’t plan an exhaustive inventory of all

the chips.

Mr. GUTKNECHT. Thank you, Mr. Chairman.

Mr. MCHUGH. I thank the gentleman.

Mrs. Morella.

Mrs. MORELLA. I guess to followup, why? Why are you not doing

any inventory on the embedded chips?

Mr. WEIRICH. We are looking for a case where they would have

a date function that potentially could cause a machine to fail. The

way we see them used in the machines, we have not identified

cases where we believe they will cause a problem. We are continuing to review that, however.

Mrs. MORELLA. Would the Inspector General and the GAO representative agree?

Ms. CORCORAN. We are certainly following and monitoring what

they are doing. One of the places I think you might find embedded

chips are in some of the facilities and some of the controls for the

various equipment and things. That is one of areas I spoke about

earlier, where Postal still has work to do to determine exactly

where this is leading.

We believe that Postal has done a fairly good inventory of known

systems at this time, in terms of knowing where things are. So, we

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will continue to monitor that, but, at this point in time, we

wouldn’t be doing any additional work on embedded chips either,

other than just monitoring it.

Mr. BROCK. The question of embedded chips is, I think, very difficult for many agencies to answer because it is difficult sometimes

to determine the inventory. I think that, with respect to the mail

process equipment that the Postal Service was discussing, that

there is probably not as great a concern. And they have looked at

that, and it is easier to look at.

One of the issues, though, sometimes with chips, is that even

with the same model of equipment, that the manufacturer can substitute a different chip. So when you test one piece of equipment,

in fact, you can have a problem in another piece because of a

change in the chip.

In terms of where most embedded chips would be, I would agree

with the Inspector General that they are probably located at the

facilities. One of the things that the Postal Service needs to do is

to, as they are going through some of the facilities, make a determination about where chips might occur, and what effect chip failure might have on postal operations at particular facilities. They

need to weigh that against the time and the cost that it would take

to do an exhaustive inventory, and whether or not doing such an

inventory might, in fact, divert them from some other mission critical activities. This is something they have to put in the balance

in the coming months.

Mrs. MORELLA. And the balance is probably necessary, but it is

a tremendous concern. And I think that we kind of have blinders

on. You have got to be able to try to identify where you can for remediation.

I would like to pick up on a report that GAO did rather recently,

and it dealt with the fact that the Postal Service had had some difficulty holding onto some qualified staff and had been using some

contractors. I am wondering if the use of contractors has exacerbated the cost of this remediation, and if it is a trend? And if we

are saying that we are now using more and more contractual staff,

is this making some kind of a statement with regard to the Postal

system?

Mr. BROCK. We did a survey of all Government agencies about

a year ago or so, and it was self-reported by the Postal Service that

personnel issues were a concern to them. They have largely supplemented their staff with a large number of contract employees, I believe 1,200—that sticks in my mind. We are finding that most

agencies, or at least the agencies I deal with, extensively rely on

contractors because, in many cases, the specific skills are simply

not in-house to run the business as usual, and then take on Y2K

as well.

I think this is true in the Postal Service, that it was forced to

rely on contractors in order to do the remediation that was required, that they simply did not have the staff on board, nor was

it feasible in the short time remaining to hire them and bring them

up to speed in order to do the vast amount of work that had to be

done.

Ms. CORCORAN. The OIG is currently looking at the issue of contractors and how well these moneys are being spent, what contracVerDate 11-MAY-2000 09:19 Mar 23, 2001 Jkt 066343 PO 00000 Frm 00209 Fmt 6633 Sfmt 6601 E:\HEARINGS\58811 pfrm06 PsN: 58811
204

tors are doing. We hope to have a report out probably within the

next month looking at this issue.

Mrs. MORELLA. That would be great if you would share the report with the three subcommittees who are here represented. I

think it says something about the Postal Service and cost and efficiency.

I just have one final question, really, and it deals with—again,

I think, Mr. Brock, I jotted down, I think you said it at some point

during your testimony, that the business guys must make the decisions and not the ‘‘techies.’’ Right?

Mr. BROCK. That is correct.

Mrs. MORELLA. Can you explain that?

Mr. BROCK. Sure. One of the reasons we are in this problem,

some technical decisions were made about how to conserve space,

and, you know, instead of using a four-digit date, a two-digit date

was made. I am not quite sure that business owners ever really understood the long-term ramifications of that decision, even though

I believe the technical people did understand that long-term ramification.

One of the major problems that I find across Government, when

we are looking at information management, is the failure of business process owners to actually own the information technology

and to make the hard decisions that have to be made in terms of

‘‘are we making the best investment?’’ ‘‘Are we making the right

decision; are we spending wisely?’’ As crunch time comes, and it will come, and decisions and tradeoffs are going to have to be made about, ‘‘Well, do we remediate

this first, this first, or this first?’’ That needs to be done within the

context of the business operations that those decisions support.

And they are most appropriately made by the business process

owners, not by the technology people that support the processes.

Mrs. MORELLA. It just seems to me that there has got to be sort

of a partnership when you talk about balance.

Mr. BROCK. Oh, yes.

Mrs. MORELLA. Are you blaming the late Admiral Grace Hopper,

who is the one who devised COBOL?

Mr. BROCK. I would never do that. [Laughter.]

Mrs. MORELLA. Is now looking—— Mr. BROCK. No. [Laughter.]

Mrs. MORELLA. I frankly think everybody knew. People have

asked me, ‘‘Why didn’t anybody know this early on?’’ And I said,

‘‘Of course they knew it.’’ They just felt, either they wouldn’t be

around, or there would be some way to remediate it. But, at the

moment, I think the business people were probably involved in

terms of saving the space and, therefore, saving the money. I don’t

know.

But very interesting response, and I appreciate it. Thank you.

Thank you, Mr. Chairman.

Mr. MCHUGH. I thank the gentlelady.

This hearing is going to continue; I will leave it to you if that

is the good news or the bad news.

The good news certainly is for you, I have a meeting with our

Governor, and I deeply apologize, but I am going to yield the Chair

to the gentleman from California, Mr. Horn.

205

But, before I do, I want to thank all of you for being here—Mr.

Lorentz, Mr. Brock, and, of course, Ms. Corcoran.

This is obviously a very serious problem, one that we are deeply

concerned about, and I know that the Postal Service understands

the ramifications—real and perhaps somewhat imagined, but potentially real, as well.

We are looking forward to working with you, in hopes that this

challenge can be met successfully and we appreciate GAO and the

IG’s office assistance in this matter.

Let me thank, last, all of my colleagues, but particularly my cochairs, Mr. Horn and Mrs. Morella, for their interest and their support and their leadership. So, thank you.

And with that, I turn the Chair over to Mr. Horn.

And Mr. Turner, too, as the ranking member, who has been here

faithfully, and Mr. Wu—everybody, thank you. [Laughter.]

Mr. HORN [presiding]. I thank the gentleman, and we appreciate

the patience of all of you when you are in one of these sessions.

I believe Mr. Wu has not had an opportunity to ask a few questions. The gentleman from Oregon, we are delighted to have you

here.

Mr. WU. Thank you very much, Mr. Chairman.

I have only one question, and that is assuming that all of your

efforts to become Y2K compliant are successful within the continental United States, and that we have a seamless transition.

Will we have significant problems develop in Europe or Asia or

Canada or Mexico? Besides the obvious problems with the international mail, what is the potential for foreign computer problems

in their mail systems, or elsewhere, becoming our problems in the

USPS?

Mr. WEIRICH. The biggest concern would be that it would, obviously, it would be a change in the flow of the mail. Every time that

we have met with different mailer groups and looked at the things

that could go wrong, our big fear for anybody—also includes people

mailing things in the United States—is if they have problems, will

those ripple down to us? Will we see a difference in their ability

to prepare mail correctly or get us the mail on time to deliver it?

It would be the same coming in from the foreign administrations.

It would also present some challenges for us outbound.

Nick could probably address; we have had problems before. If a

receiving administration is unable to handle what we give them,

we have various processes to shut off that flow of mail until they

are able to recover. I believe that is what we would get into.

Mr. BARRANCA. Yes. I understood your question to be more along

the lines that, could there be a problem in a computer system offshore that could create a problem in one of our resident systems?

Mr. WU. And, also, given the number of vendors that you have,

some of your vendors may be domestic, and some of your vendors

may be foreign entities.

Mr. BARRANCA. Yes. I guess, you know, we are focusing our efforts on making sure that the physical piece can move from where

it originates to where it ‘‘destinates,’’ for those pieces that originate

in this country. We feel we will be capable of continuing to deliver

mail like we do it today in the year 2000.

206

We are also confident that mail that arrives in this country, we

will be able to deliver to its destination the same as we do today.

So, when we are doing testing, doing remediation of our originating processing systems and our destinating processing systems,

we are doing that for domestic and international mail.

I really can’t address the concern of—if I understand your question, ‘‘What is the possibility of a computer problem in a foreign

country creating a computer problem in this country that we

haven’t really anticipated?’’ That is not something that I would be

able to address. I don’t know if—— Mr. WU. Coming out of this industry sector in the relative recent

past, I have a—let’s just say I have a higher level of confidence in

what we are doing in this country.

I am deeply concerned about what is happening in other countries, whether they are making the same type of efforts and having

the same kind of progress.

And we are having difficulties with our schedules; I imagine that

is a much greater problem in certain foreign countries, and that is

where, you know, my personal focus is on trouble in any Y2K trouble scenario.

Mr. BARRANCA. Yes, as we addressed earlier, there are two international organizations that are focusing on those issues. That is

the UPU, and, this is an item on their agenda. They represent 200

postal administrations around the world. And then there is the

International Postal Corp., which represents 21 industrialized nations, and this is also an item for discussion on their agenda.

So, we are talking together about the potential issues. And, as

Norm answered earlier, if you sort the countries into, say, three

categories—those that are highly automated like we are, they are

dealing with their Y2K problem in a similar manner as we are,

looking at their systems, making sure they can work. Then there

are other countries that don’t rely as heavily on automated processing, and they rely more on a mix of automated and manual

processing; to a lesser extent, the problems are as severe. And then

the other countries that rely mainly on manual processing, to a

great extent, the world won’t change a whole lot as a result of the

year 2000.

But there are two international organizations that are trying to

address the problems jointly to see if they can learn from what the

members are doing. We are an international unit as part of those

discussions. And, as I volunteered earlier, we can make available

more information for the record, as we have it.

Mr. WU. Thank you for an opportunity to get the issue on the

table.

Mr. HORN. Thank you very much.

The gentleman from Maryland, Mr. Bartlett.

Mr. BARTLETT. Thank you.

I would like to return for a moment to the potential problem of

embedded chips. It is my understanding that many of these chips

are generic chips; that is, they are made with a variety of capabilities and the application to which you put them may use only one

or a few of those capabilities.

The question has been raised that if you have a generic chip that

has a date code, even though you are using it in a situation where

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the date is of no relevance like sorting mail—that sorting machine

couldn’t care what day of the week or year or millennium it was

sorting mail in. What kind of confidence do we have that if an embedded chip contains a date code, that when we go past the year

2000, that, in fact, that chip is going to continue to work for the

purposes for which you are using it?

It has been suggested that if there is a date code in the chip,

even though you have no interest in the date, that that chip may

possibly not work after the year 2000. Have you looked at that?

And how many of your chips are generic chips, and what is the potential extent of this problem?

Mr. LORENTZ. I guess a general answer to the question is, if we

are testing the specific equipment as one of our critical or severe,

or even the 500 systems, and we are testing it for the date issue,

that if it does have an embedded chip, we believe that that would

properly exercise that chip.

As far as the more technical aspect of that, we can certainly address that, but we believe that the remediation of the overall system should take that into account.

Mr. BARTLETT. I have trouble understanding how we check to see

if a generic chip with a date code capability, which we aren’t assessing and, therefore, can’t exercise how we are going to be sure

that that chip is going to continue to perform the functions that we

need of it in the year 2000 if we don’t know whether or not it is

going to continue to function if it has a built-in date code.

I don’t understand how we can test for that.

Mr. LORENTZ. I think we have two issues here: No. 1, we are

testing the equipment capability; we are doing that.

Mr. BARTLETT. But, you are testing it today, not in the year

2000.

Mr. LORENTZ. And then the other issue that we need to address,

as the previous conversation, is the issue of individual chips, managing the individual chip issue, and we accept that.

Yes, we are simulating; when we go through simulation testing,

we are taking all of the automation equipment in the systems into

year 2000. So, we are exercising those chips as part of simulation.

Mr. BARTLETT. But, ‘‘how do we advance the clock in the chip if

the date code in the chip is not something we are interested in and

not something we are accessing?’’ is the question that has been

raised to me.

Mr. LORENTZ. By advancing the clock in the rest of the system.

Mr. BARTLETT. I still am less than sanguine about our knowledge

of embedded chips and how much of a problem they are going to

be in the year 2000.

I thank you very much.

Mr. HORN. I thank the gentleman.

Let me just ask a few closing questions, do a little bit of administrative bit, and then do a short closing statement.

Just for the record at this point, how many systems have you defined as ‘‘mission critical’’ systems within the U.S. Postal Service?

What is the number of those?

Mr. LORENTZ. 152 systems.

Mr. HORN. OK.

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How about ones that are not ‘‘mission critical?’’ What other systems do you have?

Mr. LORENTZ. 349.

Mr. HORN. 349.

And does then when you add them up, that is essentially 501 or

so?

Mr. LORENTZ. That is correct. Yes, sir.

Mr. HORN. Yes.

Do you find as you go along that maybe some of those that

weren’t defined originally as ‘‘mission critical’’ are ‘‘mission critical,’’ when you put the whole context together?

Mr. LORENTZ. We actually, as we have worked through our threestep process, we have actually both included or excluded systems

as we have gone along, so the number, for instance, could increase

to 153 or could decrease to 151. So there has been that kind of a

situation that has occurred; yes.

Mr. HORN. Seems to me, as we go through this experience, which

is once in a millennium, hopefully, that we also learn that you

want to avoid ‘‘garbage in’’ and ‘‘garbage out’’ by saying, ‘‘Do we

really need this system? Could we merge it with something else?’’

Is that going on within the Postal Department, just as a matter

of organization?

Mr. LORENTZ. Absolutely, and we have actually retired—specifically, retired—some of the systems.

Mr. HORN. Let me ask a few questions. I hope you haven’t covered it when I had to be unavoidably detained.

Do we have a master schedule? Is fixing your computer systems

under that schedule?

Mr. LORENTZ. Yes.

Mr. HORN. Well, if so, does the schedule have certain provisions

for business continuity and contingencies?

Mr. LORENTZ. We specifically have constructed an approach

around three specific process areas—business continuity and recovery or contingency, the systems’ remediation, as well as doing communication.

We have—just to kind of give you an idea as to how that fits into

the management structure—in every management committee meeting that the Postmaster General holds, there is a standing agenda

item on Y2K mitigation.

There is a subgroup called the Executive Council Y2K that is

chaired by the Deputy Postmaster General, Mike Coughlin, on the

PMG’s behalf, where those specific process owners, as well as the

what we call ‘‘portfolio owners,’’ which are senior vice presidents,

the business process owners, come in and specifically review in a

very structured, consistent way exactly what the current situation

is with those systems. And that is consistent with the suggestions

and findings from the Inspector General’s office. So those are in

progress, as well as, we are explicitly creating for our own usage

a ‘‘war room,’’ if you will, where we have a very consistent graphic

representation for anybody at any time. They can walk in and see

what the current state of the Y2K approach is.

Mr. HORN. What is the view of the General Accounting Office on

this, Mr. Brock? Have you seen the master schedule?

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Mr. BROCK. It is my understanding, Mr. Horn, that the master

schedule had not been developed at the time of our final exit last

week, that they were working on that, that many of the individual

business processes had detailed schedules. Our concern by not having an overall master schedule is that it is easier to suboptimize

and that you can’t look at the relationship of one schedule versus

another to make sure that things are coming together.

Again, it was my understanding that the master schedule was

being worked on and that it was near completion, but we think

that something like that needs to be ready as soon possible so that

it can be managed against.

Mr. HORN. How about the Inspector General, Ms. Corcoran, have

you seen the master schedule?

Ms. CORCORAN. No, sir; we have not.

Mr. HORN. You have not. Is that because it has been done in the

last week, maybe in preparation for the hearing, or what?

Ms. CORCORAN. I can’t really say. I knew they were working on

it, but I have not seen a copy of it, nor have my people.

Mr. HORN. Did they send any drafts around to either GAO or the

Inspector General?

Ms. CORCORAN. No, sir.

Mr. HORN. OK.

Well, it seems to me when you go about, as I have said, from day

one of April 1996 when I got into this, this is a management problem. It is not a bunch of ‘‘techies’’ running loose. If it is a bunch

of ‘‘techies’’ running loose, that is part of the problem. That is why IRS failed years ago with $4 billion down the drain.

That is why FAA failed 5 years ago when I was a freshman in this

Congress and $4 billion went down the drain. And you could walk

into the room, and I knew at 10 seconds that there was no management to that operation. And everybody had a new idea every morning, ‘‘so let’s try the new idea’’—never closure, never getting one

thing related to the next.

It seems to me, before you even start in this thing, you have got

to have some schedule of what is most important. What is the limiting factor in relation to all other systems that you have got to

worry about? Is there a few real trunk systems that everything else

depends on, and if they go out, you can forget all the peripheral

business?

So, how long have we been working on that master schedule?

Mr. LORENTZ. I would say that, specifically, we have gone

through an evolution, and I certainly think it is as my colleagues

here portray it. Initially, we underestimated the complexity. We did

approach this from a systems perspective initially. We have evolved

that approach. We now, in a very—and I mean the Postmaster

General makes it clear every time he talks about this—this is a

business problem. So, Mr. Chairman, I absolutely—we absolutely

share your perspective on that.

Are the plans that we have in place perfect? No. Are they under

construction?

Are they going to be continuously improved as we deal with this

business problem? Absolutely, yes.

And I would say that we are comfortable we are headed in the

right direction, but we are not done.

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Mr. HORN. How many pages is there in the current draft of the

master schedule?

Mr. LORENTZ. I do not know the answer to that question.

Mr. HORN. Does anybody with you know it?

Mr. LORENTZ. No.

Mr. HORN. All right.

Mr. LORENTZ. We can provide that.

Mr. HORN. I am saving a big space in the records for, within a

week, getting that copy of the master schedule, without objection,

and insert it in the record at this point.

My next question is this—and maybe it has been covered, but

just give me a brief answer—who is the contingency for the Postal

Service?

You are the contingency for everybody else we review with our

staff, known as the executive branch of the Federal Government.

They have sort of got you as No. 1. And a lot of them don’t know

what to do anyhow. But those that say, ‘‘Yes; we can check it

off.’’—you get a plus; you at least have an idea that if everything

fails in the computers, you can mail the stuff.

What happens to you?

Mr. LORENTZ. We really——

Mr. HORN. Who is your contingency?

Mr. LORENTZ. We believe that the ‘‘buck stops here.’’

Mr. HORN. So that is it? There is no contingency? Or, is there

another alternative way around?

Mr. LORENTZ. Word of mouth. I mean we do not——

Mr. HORN. Smoke signals on hills, or what are we down to?

Mr. LORENTZ [continuing]. We believe we are the ultimate contingency; yes.

We certainly are accepting that responsibility. [Laughter.]

Mr. HORN. Well, yes. One of my colleagues mentioned the Pony

Express, and 30 years ago, I was living in this city and a good

friend of mine, Jim Boren, president of the International Association of Professional Bureaucrats, challenged the post office on mailing that he would put in Baltimore and Philadelphia to Washington, and he did it by horseback, and they did it the regular way.

He won. That did hit every paper in America. And Mr. Boren is

teaching students how to do those things, I am sure, wherever he

is posted in Oklahoma or Texas.

But that is one contingency, maybe, that might be possible, if everything else happens.

Now, what assurances do we have that the mail will be going

through? I mean you have got all this tremendous thing that I

mentioned earlier, known as the ‘‘backlog’’ at Christmas and all the

rest of the third class mail and second class mail and all that. Have

we got some assurance here that the mail will go through?

Mr. LORENTZ. We believe that the plans and the resources that

we have in place, we have a high degree of confidence that we can

deliver the mail. As well as our experience has been articulated by

Mr. Barranca, we are, some can say, an expert at contingency planning to weather elements and other disruptions. So we do have experience at dealing with those issues as well.

[The information referred to follows:]

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Mr. HORN. OK. Well, we wish you well on that.

Let me just say what I think I have learned in looking at the papers, as well as hearing the testimony.

We have learned that you are making progress in solving the

year 2000 technology challenges, yet you still have a long way to

go, and it is in a very short period. We are talking about 311 days

from now is the real test, and I am glad you are simulating.

In response to the gentleman from Maryland, that is the only

way you are going to know in advance if you have got a real serious problem on microchips that people don’t even know about,

whether it is the elevators in your building or your others buildings

around the country. They are often by microchips.

And some of the programming and some of the firms have gone

out of business in the older buildings when you phone up, but the

medical profession is doing a pretty good job in this area. They

have a website, and they started with the emergency rooms. And

when we had a field hearing in Cleveland with the Cleveland Clinic, one of the outstanding medical facilities and programs in the

country, that they are checking all the design numbers and everything else, calling the manufacturers so people don’t have to trip

over everybody in this. They do it once and if they have got data

tested against it and put it in if it is new and don’t worry about

it; just use the other fellows that we had in 2 months ago.

So I think that is certainly one thing that would be well to do,

to look at either a website with other industrial groups, that I

know Mr. Koskinen has. Are you involved with Mr. Koskinen’s operation?

Mr. LORENTZ. Yes, we are.

Mr. HORN. Is it in a separate team that you are there, or is the

post office just standing alone on here?

Mr. LORENTZ. We are involved at two levels. The Postmaster

General is involved in the CIO Council. Mr. Weirich represents us

on the President’s Council. So we are involved at both levels. And

there are other industry representatives involved.

Mr. HORN. Good.

Well, what leads me to that concern in the short period of time,

is the obvious. You have got many systems, more than almost any

place but the Department of Defense and perhaps HHS, Health

and Human Services. But you have got 8,000 suppliers that have

to relate to your computing, I would think, in terms of their inventory control and the Japanese method of inventory, so you don’t

have to build many storage sheds everywhere, but keep it moving.

Do you feel there is a problem there on trying to make sure that

they are converted, so when they interact with your system—if

they do interact with it—that they don’t pollute the system because

they haven’t done their job?

Mr. LORENTZ. We do have a very significant issue with the suppliers’ side that we are aggressively pursuing with plan, but it is

an area of concern.

Mr. HORN. Good.

Any last comments any member might want to make now that

you have heard everybody else’s comments?

Inspector General, do you have any thoughts on this?

Ms. CORCORAN. We are going to continue to monitor——

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Mr. HORN. OK.

Ms. CORCORAN [continuing]. And provide you information—— Mr. HORN. Good.

General Accounting Office have any other comments?

Mr. BROCK. We will continue as always, Mr. Chairman, to monitor, not only the Postal Service but the other agencies that we

have a responsibility for, and reporting back to you on the progress

of agencies all across the Government.

Mr. HORN. Very good.

Let me just thank the staff on both sides of the aisle that put

the hearing together: J. Russell George, the staff director and chief

counsel for the Subcommittee on Government Management, Information, and Technology. He has given up on us, I think, and headed to the next hearing. Mr. Ryan is to my left, the senior policy director on my subcommittee. He came to us from the General Accounting Office. Bonnie Heald, director of communication, professional staff member, sitting way in back, so she has a decent seat

and doesn’t have to have us tripping over her and vice versa.

Mason Alinger, our reliable clerk is here that arranges all these

hearings. And then we have got a lot of free labor and help with

college interns, Paul Wicker, Kacey Baker, and Richard Lukas; we

thank you, ladies and gentlemen.

And for the minority, we have Faith Weiss and Jean Gosa, and

we thank you all for your usual professional help.

And from the Postal Service Subcommittee, we have Robert

Taub, the Postal Subcommittee staff director; Heea Vazirani-Fales,

the Postal professional staff member; and Abby Hurowitz, the Postal clerk.

From the Technology Subcommittee of the Committee on Science,

we have Richard Russell, the staff director of the Technology Subcommittee; Ben Wu, the member of the professional staff there;

and then, Joe Sullivan is the clerk to the committee.

And I have here Denise Wilson for the minority staff, professional staff member.

And last but not least, our brave court reporter, Sarah Swanson.

And when you have all that many people on a panel, I don’t know

how you keep track of them. [Laughter.]

And thank you all.

And with that, this hearing is adjourned.

[Whereupon, at 12:22 p.m., the subcommittees adjourned.]

[The prepared statement of Hon. Chaka Fattah follows:]

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