59

Mr. WILLEMSSEN. As a possibility. But to the extent that we wait
on development of those contingency plans, the-prospect of addi-
tional manual intervention is higher.

If we start thinking about contingency plans now, we may be
able to, in the event something happens, rely more on efficient, less
costly automated means.

Ms. STABENOW. I would agree, given the enormous task that con-
fronts all of you, all of us, when we look at some of the dates for
completion as being November or December of 1999, without well-
thought-out contingency plans, it seems to me that we're placing
ourselves in a very risky situation.

you.

Mrs. MORELLA. I would agree.

Mr. Sessions, I’d be delighted to recognize you, sir.

Mr. SESSIONS. Thank you so much.

I appreciate the opportunity to be here today.

And Ms. Katzen, I perhaps missed some of your testimony up
front, so if I’m covering some things that you've already done, feel
free to tell me go read my notes a little bit more carefully of the
transcript.

Td like to, if I could, spend just a minute. We’ve talked about
this grading system of the effort that is going on in Agencies.

Are you aware of those grades?

Ms. KaTZEN. Yes.

Mr. SEssIons. Can you please comment to me on the applicabil-
ity of that? What did it mean to those Agencies. And then give me
the higher, meaning maybe the As, whose making good progress,
and then the Fs, if you’re aware of this, how you would grade those
Agencies today.

Ms. KATZEN. My original reaction to the grades that Chairman
Horn assigned last spring or summer was probably the result of my
being a type A personality. And a relatively compulsive and a
grade getter in school.

But there’s nothing like a quiz coming back in early September
to focus your attention and make sure you begin good study habits
to do better.

Mr. SESSIONS. Good. You took it the way he meant it then?

Ms. Katzen. Yes, yes. And what I thought, and what I told
Chairman Horn at the time was congratulations, you got their at-
tention. And have made a lot of them much more conscious, not
only of the problem, but of their need to perform.

id we use those grades in all of my meetings with the Deputy
Secretaries or Under Secretaries to focus their efforts in this re-
gard.

Mr. SESSIONS. So I gather that was concurrence that you were
giving to Chairman Horn’s report?

Ms. KaTzEN. Well, there were some interesting aspects of indi-
vidual grades. There was one department that got an F because it
had not sent in a form. They actually have done a lot of work. It’s
energy, and they are one of the ones that’s higher up in the list
in terms of their dates and the amount of work that they've done
and other such things, but they had not sent in a response. And
that’s not commendable under any circumstances, it’s not excus-
able. But it didn’t mean—


25

The current estimated costs for achieving Year 2000 compliance
for those 6 is almost $2 billion, or almost 70 percent of the total
price tag as it stands now.

When assessments of mission criticality haven’t been completed,
it’s logical to assume that the schedules for those systems haven't
been finalized, and that the estimated costs will likely increase.

Our recent evaluation of Year 2000 readiness at selected Agen-
cies show that assessment activities have not been completed. For
example, at the Veterans Benefits Administration, I testified 2
weeks ago that key readiness assessment processes, including de-
termining the potential severity of the impact of a Year 2000 fail-
ure and conducting inventories on information systems and their
components, had not been completed.

I also testified in May that the Health Care Financing Adminis-
tration had not completed numerous critical assessment activities
for the systems run by its contractors to process approximately
$200 billion annually in Medicare claims.

Our third reason for pushing for more urgency from OMB and
the Agencies is that OMB’s perspective is based on Agency self-re-
porting. Indications exist that Agency reports may not be entirely
accurate.

Fourth, Agencies may have interpreted mission-critical systems
in various ways, even within Departments. For example, the De-
partment of the Army reports that 7 percent of its total systems
are mission-critical, yet the Defense Information Systems Agency
reports that 100 percent of its systems are mission-critical.

Finally, beyond the major areas covered in the OMB Summary
Report, other issues surrounding the Year 2000 readiness are
emerging as critical ones.

These include the data interface and exchange issue that Rank-
ing Member Gordon mentioned, the establishment of systems prior-
ities, and contingency planning.

In closing, I’d like to reiterate that we believe that it’s important
that the Executive Branch place more urgency on this issue. Con-
tinuing Congressional oversight such as this hearing will be an im-
portant catalyst to make sure that occurs.

That concludes the summary of my remarks, and I’d be pleased
to address any questions.

1 {The prepared statement and attachments of Mr. Willemssen fol-
OW:


COMMITTEE ON SCIENCE

F. JAMES SENSENBRENNER, JR., Wisconsin, Chairman

SHERWOOD L. BOEHLERT, New York GEORGE E. BROWN, Jr., California RMM*
HARRIS W. FAWELL, Illinois RALPH M. HALL, Texas
CONSTANCE A. MORELLA, Maryland BART GORDON, Tennessee
CURT WELDON, Pennsylvania JAMES A. TRAFICANT, Jr, Ohio
DANA ROHRABACHER, California TIM ROEMER, Indiana
STEVEN SCHIFF, New Mexico ROBERT E. “BUD” CRAMER, Jr., Alabama
JOE BARTON, Texas JAMES A. BARCIA, Michigan
KEN CALVERT, California PAUL McHALE, Pennsylvania
ROSCOE G. BARTLETT, Maryland EDDIE BERNICE JOHNSON, Texas
VERNON J. EHLERS, Michigan** ALCEE L. HASTINGS, Florida
DAVE WELDON, Florida LYNN N. RIVERS, Michigan
MATT SALMON, Arizona ZOE LOFGREN, California
‘THOMAS M. DAVIS, Virginia LLOYD DOGGETT, Texas
GIL GUTKNECHT, Minnesota MICHAEL F. DOYLE, Pennsylvania
MARK FOLEY, Florida SHEILA JACKSON LEE, Texas
THOMAS W. EWING, Ilinois BILL LUTHER, Minnesota
CHARLES W. “CHIP” PICKERING, WALTER H. CAPPS, California

Mississippi DEBBIE STABENOW, Michigan
CHRIS CANNON, Utah BOB ETHERIDGE, North Carolina
KEVIN BRADY, Texas NICK LAMPSON, Texas
MERRILL COOK, Utah DARLENE HOOLEY, Oregon
PHIL ENGLISH, Pennsylvania
GEORGE R. NETHERCUTT, Jr., Washington
TOM A. COBURN, Oklahoma
PETE SESSIONS, Texas

Topp R. ScHULT2, Chief of Staff
Barry C. BERINGER, Chief Counsel
Patricia S. ScHwartz, Chief Clerk /Administrator
Vivian A. TesstErt, Legislative Clerk
RoserT E. PALMER, Democratic Staff Director

SUBCOMMITTEE ON TECHNOLOGY
CONSTANCE A. MORELLA, Maryland, Chairwoman

CURT WELDON, Pennsylvania
ROSCOE G. BARTLETT, Maryland
VERNON J. EHLERS, Michigan
THOMAS M. DAVIS, Virginia

GIL GUTKNECHT, Minnesota
THOMAS W. EWING, Mlinois
CHRIS CANNON, Utah

KEVIN BRADY, Texas.

MERRILL COOK, Utah

*Ranking Minority Member
**Vice Chairman

BART GORDON, Tennessee
EDDIE BERNICE JOHNSON, Texas
LYNN N. RIVERS, Michigan
DEBBIE STABENOW, Michigan
JAMES A. BARCIA, Michigan
PAUL McHALE, Pennsylvania
MICHAEL F. DOYLE, Pennsylvania
ELLEN 0. TAUSCHER, California

aD


68

TESTIMONY OF
ALVIN M. PESACHOWITZ
(CHIEF INFORMATION OFFICER FOR
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
AND
VICE-CHAIRMAN OF THE
FEDERAL CHIEF INFORMATION OFFICERS COUNCIL
BEFORE THE

SUBCOMMITTEE ON TECHNOLOGY
COMMITTEE ON SCIENCE

AND
SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,
INFORMATION, AND TECHNOLOGY
COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT
U.S. HOUSE OF REPRESENTATIVES
JULY 10, 1997

1. Introduction

Good morning, Chairpersons Morella and Horn, and Members of the respective
Subcommittees. I am Alvin M. Pesachowitz, Chief Information Officer (CIO) for the U.S.
Environmental Protection Agency. I am also the current Vice-Chair for the Federal Chief

Information Officers (CIO) Coun

lam pleased to be here today on behalf of the Federal
Chief Information Officers Council — or Federal CIO Council — to testify on the critical issue

of the federal government's Year 2000 computer problem.

Before I discuss the role of the Federal CIO Council on the Year 2000 problem, let me first

assure the members of both Subcommittees here today, the CIO Council believes that there is no


79

2
subtracting December 31, 1995, from December 31, 2005, to determine someone's age would

produce the incorrect answer of minus 90 instead of the correct result of 10.

‘The interaction of dates among different programs, systems, agencies, and levels of
government is one of the factors which make the Year 2000 issue so complex. Private

industry faces these same issues.

Interagency Activities and the CIO Council

In the fall of 1995, the Offic: of Management and Budget (OMB), recognizing the
critical nature of the problem and that the Social Security Administration (SSA) had taken
positive steps to address it, asked SSA to be the champion for Year 2000 and increase
awareness of the Year 2000 issue. In this role, we organized an informal committee which
we called the Year 2000 Interagency Committee. The purpose of the Committee was to raise
awareness of the Year 2000 and address cross-cutting issues which affected many oz all
Federal departments and agencies. The Committee began meeting in November 1995 with
only a few representatives attending. The number of participants grew steadily with each

~ regular meeting as more and more departments and agencies became aware of the Committee's
purpose. I might mention that the hearings which your Subcommittees held in the Spring of
1996 did much to increase awareness of the Year 2000 issue, and participation in the Year

2000 Interagency Committee grew rapidly as a result.


15

Getting Federal Computers Ready for 2000

Progress Report

U.S. Office of Management and Budget

May 15, 1997


14

Curriculum Vitae

Alvin M. Pesachowitz
Acting Chief Information Officer
U.S. Environmental Protection Agency

Vice-Chair
Federal Chief Information Officers Council

Alvin M. Pesachowite began his career in public service in 1968 as a chemical engineer
with the Department of Defense. After spending three years with the Department, he joined EPA
in 1971 to work on the implementation of the 1970 Clean Air Act.

In mid-1973, Mr. Pesachowitz joined the Agency's efforts to develop and implement a
management by objectives accountability system. In 1979, he transferred to the Budget Division
and was promoted to Budget Director in 1987. In his tenure as Budget Director, he managed
the Agency's $5.0 billion budget and maintained liaison with the Office of Management and
Budget as well as the Congressional Appropriations Committee,

Mr. Pesachowitz was promoted to Deputy Director of the Office of Information
Resources Management in Jamuary of 1989 and was appointed Director in October 1989. In
this capacity, he developed EPA policy and programs regarding information resources and
technology. The Office directs a major effort in information access including public access,
State/EPA data sharing, international data sharing, library services and data integration.

In December 1992, in order to help during the transition, Mr. Pesachowitz was appointed
Acting Comptroller, and in May 1993, he became the Acting Deputy Assistant Administrator for
Finance and Acquisition. In this capacity, he provided leadership and management oversight of
centralized finance, budget, contract and grant functions of the Agency. He returned to his
permanent position as Director of Information Resources Management in November of 1993.

In July 1995, Mr. Pesachowite was appointed the (Acting) Deputy Assistant
Administrator. In his capacity of Deputy Assistant Administrator, Mr. Pesachowitz was
responsible for the systems and policies that provide the people, resources, and information
needed by the Agency. In March 1996, he became the (Acting) Assistant Admintstrator for the
Office of Administration and Resources Management. He oversees a direct budget of $450
million and a staff of over 1400 diverse employees and manages the Agency's $6.0 billion
budget. Mr. Pesachowitz was appointed Chief Information Office (CIO) in August 1996 and
serves as the Vice-Chair for the Federal CIO Council

Mr, Pesachowitz graduated from Rutgers, the State University in 1968 with a B.A. in
Liberal Arts and a B.S. in Chemical Engineering. In 1972, he received his Masters Degree in
‘Management from George Washington University. He resides in Falls Church, Virginia with his
wife, Connie, and their three boys, Adam, Daniel and Eric.


32

Our evaluations of year 2000 readiness at component agencies of both the Department of
Veterans Affairs~one of the six reporting to OMB that its assessment was still underway
~and of Health and Human Services--which reported that this phase would be
completed in June 1997--show that assessment activities have not yet been completed.’
For example, we recently testified that key readiness assessment processes at the
Veterans Benefits Administration—including determining the potential severity of impact
of the year 2000 on agency operations, inventorying information systems and their
components, and developing contingency plans—had not been completed. The

Department has indicated that it will complete its assessment next January.!

We also reported and testified this past May that the Health Care Financing
Administration (HCEA)--a major component agency within the Department of Health
and Human Services (HHS)--had not completed numerous critical assessment activities
for the systems run by its contractors to process approximately $200 billion annually in

Medicare claims.* Specifically, HCFA had not required systems contractors to submit

5We currently have ongoing year 2000 evaluations at the Department of Defense,
Department of State, Social Security Administration, Federal Aviation Administration,
and Internal Revenue Service; in addition, we will shortly begin work at the Veterans
Health Administration.

4

Timely. Correction of Year 2000 Problems ( (GAO/T- =AIMDS7. 114, June 26, 1997) and
Veterans Benefits Computer Systems: Risks of VBA's Year 2000 Efforts (GAO/AIMD-97-
79, May 30, 1997).

4 fanagerial

"Medicare Transaction System: Success Depends Upon Correcting Critical Managerial
and Technical Weaknesses (GAO/AIMD: “ fee May 16, oe and Medicare Transaction

em: Se echni
ae IMD: 97 31, May 16, 1997).
6


103

Mrs. MoRELLA. Thank you. I thank all three of you for your testi-
mony. You really were very cognizant of the time situation, and
you presented the situation quite well.

Id like to start off, I guess, with GSA, and then anyone else who
wants to add comments to it.

GSA has incorporated a range of Year 2000 services into the
multiple award schedules. Also, you’re exploring the use of the
schedules to identify 2000-compliant products.

Now, what I wonder is, will GSA be compiling a list of the Year
2000-compliant information technology products?

Mr. THOMPSON. The answer is yes. Today we have some 30,000
that have been already identified, that are in the inventory, can be
reached through the Internet, and can be purchase:

Those items have been put in place under a contract clause
which reads as follows, as an excerpt, “The contractor warrants
that each hardware, software, and firmware product delivered
under this contract and listed below shall be able to accurately

rocess date data, including but not limited to calculating, compar-
ing, and sequencing from and into and between the 20th and the
21st Centuries.”

We also have identified a logo so that when you buy that equip-
ment through our services, it has a logo on it that says “Year 2000-
Compliant.”

And it covers with it, the warranty provisions that are provided
internationally and within the private sector, which reads as fol-
lows:

“The remedies available to the Government under this warranty
shall include repair and replacement of any listed products whose
non-compliance is discovered or made known.”

So the answer is yes, it is a continually improving inventory. One
of your members asked how are the industries moving forward in
terms of the quarter. I believe that was Congressman Davis in
terms of how many per quarter are now producing new products
that are Year 2000-compliant.

Over the last 6 months, sir, all industries are moving to provide
only products that are Year 2000-compliant from the private sector.
And those are the contract stars that we are using as a part of our
inventory data.

Mrs. MorELLA. I heard that sometimes information technology
products, the vendors may believe they’re Year 2000-compliant,
and they are actually not compliant.

It takes testing, actually, to determine this. Even testing of indi-
vidual products of the same model or product series can yield dif-
ferent results because microchips from different sources can be
used within the same model or product series.

So I wonder what has your involvement been in terms of the em-
bedded chip issue?

Mr. THOMPSON. You are absolutely correct. That is the concern
that we have to know whether or not you have an embedded chip
issue must come from the manufacturer.

For example, in long distance telephone calls, they are switched
Properly by computers. So if they have information within AT&T,

CI, any of the long distance telephone companies has the embed-
ded information in there will affect that date.


39

Joel C. Willemssen

Mr. Willemssen is Director of Information Resources Management within GAO's
Accounting and Information Management Division. In this position, he is responsible for
GAO's reviews of information technology management at many of the federal
government's major departments and agencies, including the Departments of Agriculture,
Education, Energy, Health and Human Services, HUD, Interior, Labor, Transportation,
Veterans Affairs; and EPA and SSA.

‘Mr. Willemssen joined GAO in 1979 and since that time has participated in and led
numerous computer systems reviews in a wide array of federal agencies. His evaluation
experience is predominantly in assessing major modernization efforts,
telecommunications, software management, performance evaluation, requirements
Management, acquisition approaches, systems maintenance, and business ‘Process
reengineering.

Mr. Willemssen has received many awards throughout his career, including GAO's
Meritorious Service Award. He received a bachelors and a masters degree in business
administration from the University of lowa, and completed the executive level program in
information systems at UCLA.


64
ly not my responsibility. It’s OMB. And OMB says well, it’s these

guys.

That’s what I’m concerned about, that we wind up in that prob-
lem and the result is we wind up where we are, in some respects,
with the FAA, where everybody keeps saying, well, yes, we’re work-
ing on it, it’s going to get done.

Tl leave that. That’s an unresolved issue.

But I think within the Administration, they should consider
making certain that one person, perhaps it’s you, is ultimately re-
sponsible and accountable to make certain that this gets done.

And I like the fact that you’re grading, and I like what you're
doing. I feel better about the direction that you're going than I do
perhaps with some of the other Agencies that we've dealt with.

I want to change subjects real quickly, though.

This came up at our March hearing, and I understand, Ms.
Katzen, that you are an attorney. One of the witnesses discussed
the Year 2000 problem and the likelihood that it may trigger a li-
ability lawsuit binge.

In fact, I think they used the term, it may create a cottage indus-

try.

‘Would you care to comment on the likelihood of that and what
you see as the potential legal liability as it relates to the Federal
Government?

Ms. KATZEN. I have a degree, I am a lawyer. I graduated from
law school. I am in a policy position now where I have the luxury
of having extraordinarily good legal counsel for myself, and have
for the last 4 years served in that capacity.

So I have not spent the time that I would ordinarily spend before
I opined on a subject such as that. I have read in the trade press
the concern. I know that this is sometimes viewed as a very highly
litigious country and that virtually every issue ends up at least
someone trying to go to court, whether or not our judicial system
is the best place to resolve that.

And I have no doubt that there will be a substantial number of
people racing to the courthouse steps to file suits of various sorts.
Beyond that, how valid their cases will be, the basis of the claims,
and the likelihood of success, I could not now comment on.

Mr. GUTKNECHT. Thank you, Madam Chairwoman. I’ve more
than exhausted my 5 minutes.

Mrs. Maloney, do you have any comments?

Mrs. MALONEY. In the interest of time, I know that this panel
has been speaking or addressing us for more than 2 hours. I'd like
to have my opening comments placed in the record.

I would just like to really congratulate OMB on the progress you
have made since our last hearing. This, I’m sure, will be one of
many oversight hearings, and we'll continue looking over your
shoulder and making sure that we are ready to address this prob-
lem.

Thank you.

Mrs. MORELLA. Hearing no objection, of course, your opening re-
marks will, in their totality, be included in the record.

[The prepared statement of Hon. Carolyn B. Maloney follows:]


35

Fourth, OMB, in its governmentwide schedule, has established only 1 month—from
December 1998 to January 1999--to complete validation. The validation phase is critical
for thorough testing of all converted or replaced system components to

(1) uncover any errors introduced during conversion or renovation, (2) validate year 2000
compliance, and (3) verify operational readiness. Without adequate testing, agencies can
have no assurance that their solutions will actually work. According to the Gartner
Group, a private research firm acknowledged for its expertise in year 2000 issues,
activities such as unit and system testing could consume up to 40 percent of the time
and resources dedicated to an entire year 2000 program. OMB's timeline does not
convey this message. Accordingly, agencies may perceive that OMB does not view
testing and validation activities as especially critical, and that OMB may approve overly

optimistic schedules.

1 ATTI

Beyond the major areas covered in agency reports to OMB and, in turn, in OMB's report
to Committees of the Congress, other issues surrounding year 2000 readiness are quickly
emerging that will be of major importance as agencies move farther along in their year

2000 programs. These include data interfaces and exchanges, systems prioritization, and

contingency planning. Our recent reports on year 2000 programs at the Veterans


67

I believe the joint efforts of OMB and the Council to establish an
effective Year 2000 reporting system has had a positive impact on
the pace of the Federal Government’s response to this problem, and
its ability to manage the problem effectively.

That concludes my remarks on the CIO Council’s role on support
for resolving the Federal Government Year 2000 problem, and I
look forward to answering your questions.

t ee prepared statement and attachments of Mr. Pesachowitz
follow:


104

They are the only ones who can tell you that.

And so the real answer is, they can certify back and say yes, it
is compliant, but one of our international carriers could say the
same thing. And you're absolutely correct. It may or may not work
with the instrument that’s on our desk and still meet the qualifica-
tions.

The only way to tell is to test it through a total system, which
is what we're talking about, at the end. It must be interconnected
and tested.

Mrs. MORELLA. So you are doing that?

Mr. THOMPSON. We are doing that.

Mrs. MORELLA. That list that you have of the 30,000, has that
gone through any testing?

Mr. THOMPSON. Those items have been tested and verified by the
corporations themselves whose records of testing can be obtained
from them. We have not ourselves entertained the staff to go in
and do that.

Mrs. MORELLA. But you have seen how they ascertain that they
have tested it or whatever?

Mr. THOMPSON. They are required to do that as a part of a con-
tracting validation process.

Mrs. MorELLA. The Good Housekeeping Seal of Approval. All
right.

‘ou have a good list.

Do you have a bad list?

Mr. THOMPSON. We do have a bad list. In fact, the same items,
just as with any other items.

For example, we are familiar with an incident in which a cus-
tomer ordered 20 and when they were actually tested in their par-
ticular facility, 12 of them did not operate.

In order to get the proper kinds of results during the testing, the
problem was not with the validation but it was again testing be-
tween the whole system involvement.

And so it did not meet that qualification and the manufacturer
replaced them.

of these kinds of interfaces are the kinds of things that we
can only accomplish if we have a cooperative effort from the private
sector, the public sector, and other entities.

Mrs. MORELLA. Let me just mention something I mentioned to
the previous panel and that is that we are working on language to
go into the Postal Treasury Appropriations bill that would require
that the Federal Government only purchase information technology
that is 2000 compliant, with a few little latitude in there is abso-
jutely necessary and you would agree with that because this would

e——

Mr. THOMPSON. We have put that language into our own GSA
contracts and our Office of Government-wide Policy has issued rec-
ommended Year 2000 compliance lan; age, both internally to GSA
government wide, and through the federal acquisition rules.

That information is available on our web _ site.
WWW6Epolicy.gsa.gov, and it is a part of my testimony.

We are currently averaging more than 10,000 inquiries monthly
coming in and looking at that data, so that we know that the gov-
ernment wide that information is being attributed to this problem.


45

What kinds of questions should you be asking your people to
make sure that you're getting the right answers? So that’s one area
that we’re working on.

The other area is the CIO Council, and you'll hear from the co-
Chair of the CIO Council. We have had monthly meetings for al-
most a year now.

T have attended virtually all of those. I cannot think of a meeting
where we did not spend some time talking about the Year 2000
problem with the CIOs, who, under the Clinger-Cohen Act that you
mentioned in your opening statement, ultimately are the persons
responsible within the Department or Agency for assuring that this
will be done.

In terms of the public awareness—and I take it as a fact that
some small businesses have yet to realize the importance of this—
but I must say, having seen some articles in the newspaper and in
the general media, including magazines where there are worst-case
scenarios, that are quite explicit, if not based in fact, on the very
worst case that could possibly happen, on newsstands around the
country, I’m not sure what would exactly get their attention.

The objective here, I believe, is to have the work proceed. And
we are always open and always considering other ways of heighten-
ing the attention that is being given.

Mrs. MoreEta. Will you ask the President to do something? We
will.

(Laughter.]

Mrs. MoRELLA. You’ve evaded the question, but actually, I do
know that you do bring it up every week at the meetings. I’ve
heard that from others.

So I can validate the fact that it is always a topic of discussion,
and how are you doing? Are you achieving the milestones, etc.

Ms. KaTZEN. I will carry the message.

Mrs. MoRELLA. That will be great. We'll also try to follow
through, too.

Mr. Willemssen, do you want to comment on this?

Mr. WILLEMSSEN. Yes.

There’s no doubt that information technology professionals, Chief
Information Officers, and other professionals in the computer and
telecom field recognize the priority of this issue and that it must

e .

I have a lot of doubts as to whether officials at the Secretary,
Deputy Secretary level and Program Managers still believe this is
a really high priority. I think that’s the message that has to be car-
ried out.

There’s no doubt that the CIO Council has made this a major pri-
ority. No one would dispute that.

But at the program level, we’ve got to do more.

Ms. Katzen. I would have to say, in response to that, if I may,
that I know of several Cabinet Secretaries who have spoken to this
issue. It is on their agenda for their senior staff meetings.

I know almost every Deputy Secretary is fully aware of the im-
portance of this issue and the status. One of the things that we

ave in the quarterly report is a requirement that it be signed by
the CIO of the Agency, and/or the Deputy Secretary, so that this
has their attention.


87

10
cooperation by being the focal point for contact with the information technology industry

groups on the Year 2000 issue.

While we continue to work on the activities we have in progress, the Subcommittee is
currently focusing on several areas of the Year 2000 issue that we think will facilitate
agencies’ ability to address the challenges of Year 2000. The Subcommittee is developing a
database, to be made available throughout govern...ent, which will contain information
regarding whether commercial-off--he-shelf (COTS) software presently in use in Federal
agencies functions or will function properly when handling dates beyond 1999. The database
will indicate whether the product is compliant and, if it is not, when the Year 2000 compliant

version will be available.

Building one comprehensive database all agencies can use will save each agency the
expense and time to construct its own database of all of its vendor products. This database is
being built now and will be turned over to GSA to be maintained and made available on the
‘Year 2000 web site, At the June 1997 CIO Council Meeting, the Council approved the funds
to maintain this database, which we call the Y2K COTS System. It presently contains
information on almost 3000 products from over 600 vendors. It will be available on the web

site in September 1997.


8

The reporting requirements were specifically designed to provide
information that would be useful for oversight while imposing the
least burden practicable on the Agencies.

To be very blunt about it, it was important to spend time fixing
the problem, not filing reports on what we were going to do to fix
the problem, and we did not want to detract too much attention
from that effort.

We are using those reports to monitor agency progress and to
take action where we perceive the Agencies are not moving quickly
enough.

Those reports describe how Agencies are organized to address the
Year 2000 problem or to use the terms that were used in the open-
ing statement, the management capability and responsibility of the
Agencies.

The reports provide a status of their efforts to address the prob-
lem, where they are with respect to the milestones that have been
established to update, if appropriate, the cost estimates that they
have for addressing the problem, and to identify any mission criti-
cal systems that are falling behind schedule, so that we can focus
our attention on them.

As you mentioned, the first report was sent to the Congress, a
summary of it, on June 23, 1997, and I have attached a copy in
my full written statement.

We also made a copy of that report available through OMB’s
Home Page and on the CIO Home Page so that it would be readily
available to any and all with an interest in the subject.

That summary shows that most Agencies are in the assessment.
phase, as you have noted, that they estimate that they will now
spend roughly $2.8 billion fixing this problem.

Of the 7,649 mission-critical systems identified—and this did not
include SSA because they report in modules, rather than systems—
59 percent are being repaired, 9 percent are being replaced, 8 per-
cent are being retired, and 21 percent are already Year 2000-com-
pliant.

With respect to SSA, the figures of the modules is 71 percent as
of May 15 of this year.

As you mentioned, the cost estimates that we provided, $2.8 bil-
lion, is an increase from the figures that were provided in the Feb-
ruary 1997 report, which, as I indicated at that time, were initial
estimates that we expected to increase as the Agencies proceeded
through the assessment stage and had a better handle.

While the number has increased to 2.8, I indicated in this report
that we expected that number to continue to increase slightly as,
again, the Agencies complete the assessment phase and handle the
different responsibilities that they have.

Placing this in context, when we met here approximately a year
ago, I was asked, did I think it would cost $60 billion, which was
the figure that was floating at the time? And I said, no, I thought
it was closer to $1-5 billion.

And the numbers that we see here are more in line with that
range than with the other numbers that are being used. And that’s
just to provide some context. But the numbers are going to be
changing as the Agencies do more of their work.


WILL FEDERAL GOVERNMENT COMPUTERS
BE READY FOR THE YEAR 2000?

THURSDAY, JULY 10, 1997

HOUSE OF REPRESENTATIVES, COMMITTEE ON SCIENCE,
SUBCOMMITTEE ON TECHNOLOGY, JOINT WITH THE
COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT,
SUBCOMMITTEE ON GOVERNMENT MANAGEMENT, IN-
FORMATION, AND TECHNOLOGY

Washington, DC.

The Subcommittees met jointly at 10:10 a.m., in room 2318 of the
Rayburn House Office Building, Hon. Constance A. Morella and
Hon. Stephen Horn, Chairpersons of the Subcommittees, presiding.

Mrs, MORELLA. Ladies and gentlemen, I’m going to call to order
our joint hearing of the Science Committee and the Government
Reform and Oversight Committee, the two Subcommittees that are
very much involved with the Year 2000, and welcome all of you.

Over a year ago, the Government Reform and Oversight Commit-
tee and the Science Committee began our joint review of the Year
2000 computer problem. Together with my good friend from Cali-
fornia, Congressman Steve Horn, we have pushed for immediate
corrective action to solve this problem, especially in the Federal
Government.

We felt that this was necessary because experts who testified be-
fore us last year said the Federal Government was dropping the
ball. Last year’s hearings left us startled and not very confident
about the Federal Government’s ability to successfully meet the
challenges of the date conversion problem. We came to the inescap-
able conclusion that many Federal Government departments and
Agencies were simply not moving with the necessary dispatch to
become Year 2000 compliant in a timely manner.

Without greater urgency, and unless senior agency management
took immediate aggressive action, Federal Government Agencies
were placing themselves at risk of being unable to provide services
or perform functions that are critical to their mission and vital to
the American public. At that time, few federal Agencies were re-
sponding to the problem at all, let alone in the aggressive manner
necessary to address the issue. That’s why we inserted the legisla-
tive language in last year’s Treasury, Postal and General Govern-
ment Appropriations bill, directing the Office of Management and
Budget to create a national federal strategy and submit it to Con-
gress in February with the President's Fiscal Year 1997 budget.

We asked OMB to provide an accurate estimate of what it would
cost to convert all federal computers from two-digit to four-digit
fields and to map out a detailed plan for each agency and a time-

16)


42

I’ve worked fairly frequently on projects that involve extensive
planning efforts, specification efforts, validation efforts, and imple-
mentation.

The fact of the matter is, it is always a challenge, no matter how
jarge or small the project, to meet original timetables that have

een set.

My question is, what contingency plans do we have for those
Agencies that show their completion date as the month, if not the
day or the week before we reach a point of crisis? What are our
contingency plans?

How do we ensure that those that have scheduled completion for
December 1999, actually meet that very tight time schedule?

Ms. KaATzEN. Well, I think that’s a very important question.

I agree with you that there is little time available, which is why,
according to the schedule, which is why as we meet with the Agen-
cies, we urge them to accelerate their timing.

In the report that we filed, the May 15 report that was filed in
June, there were three or four Departments which had a footnote
call after their name to show that they had accelerated the time
periods from what had previously been reported.

This is on Table 1, Energy, Interior, Justice, VA, that have taken
what was earlier timeframes and accelerated them. That is the re-
sult of our focusing on the fact that there is not a great deal of time

ere.

If we had more time, I would be happy, but we don’t, and so the
issue of how one plans for the contingency that you raised is, I
think, the right question.

The only other caveat that I would mention is that the closed cir-
cle, or the completed circle or the final date given is the final date
for all mission-critical systems within an entire Department.

So, I would hope that there would be some understanding that
within some of the particularly large holding company Depart-
ments, as I sometimes refer to them, they may have several bu-
reaus, several departments, some of which may be well ahead of
the others.

It is the last possible date that is reflected on there, so it may
bea single system that is in trouble. Now, when we see that—and
we see that date—we inquire as to what is driving the final num-
ber, and the need for a contingency plan is first and foremost.

In some instances, that may come about as a result of a previous
intention to replace a system which is beginning to slip, and, there-
fore, we need a contingency plan to fix the ones that previously we
thought had been replaced.

In some instances, it’s shifting some of the resources from a par-
ticular system to another. GAO testified about the VA program.

In fact, they’re looking to do some data consolidation, and the
particular data center that they’re looking at is very much farther
along than any of the others.

That’s a type of contingency plan where they could then shift to
a different data center that was by then, Year 2000-compliant.

It will differ for the different Departments and Agencies. The
issue for us is, are they at a point where they must have a contin-
gency plan developed, and are they going about and doing that
planning?


73

monitoring federal efforts to correct problematic information systems, and, will support agency

CIOs and OMB efforts to take early and decisive action to address high-risk systems.

That concludes my remarks on the CIO Council role and support for resolving the federal
government’s Year 2000 problem. I recognize that the actions and efforts that I have described
here today are but a few modest first steps in addressing the overall Year 2000 problem.
However, I believe they exemplify the active role the CIO Council has played, and will continue
to play, in solving the Year 2000 problem. Further, I am confident that the progress that these

actions reflect will continue as the Council proceeds into its second year of operation.

I'll be glad to answer any questions from the Subcommittee, and I welcome any comments the
Committee would offer on how the Federal CIO Couneil can better serve all sectors {both private

and public] of the federal IT community in addressing the Year 2000 calendar date problem.


82

5
© A definition of Year 2000 Compliancy. which was published in the Federal Acquisition

Regulation on an interim basis in January 1997:

© Standard contract language for procurement of vendor products and services to ensure

they are Year 2000 compliant;

© _A framework for evaluating and dealing with Year 2000 issues~a Best Practices guide

for all levels of government; and

© Contacts and information exchanges with information technology industry groups to
increase their awareness of how government agencies are dealing with the Year 2000

problem and address issues of mutual concern.

In addition, the Committee sponsored two conferences to bring together the
stakeholders, both from inside and outside government, on the Year 2000 issue. The
Subcommittee, SSA, and the Armed Forces Communications and Electronics Association
(commonly known as AFCEA) sponsored the Millennium Time Bomb Conference on May 2,
1996, in Washington, D.C. Almost 500 people from Government agencies and private sector
firms attended the conference to raise awareness of the Year 2000 problem and discuss
experiences and approaches for addressing the problem. A follow-up conference called " Year
2000 Solutions: What Works” was held on March 5, 1997. Over 450 participants heard

panelists representing Federal and State government and the private sector discuss the


WILL FEDERAL GOVERNMENT COMPUTERS BE
READY FOR THE YEAR 2000?

JOINT HEARING

BEFORE THE

SUBCOMMITTEE ON TECHNOLOGY

OF THE

COMMITTEE ON SCIENCE

AND THE

SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,
INFORMATION, AND TECHNOLOGY

OF THE

COMMITTEE ON GOVERNMENT REFORM
AND OVERSIGHT

U.S. HOUSE OF REPRESENTATIVES

ONE HUNDRED FIFTH CONGRESS
FIRST SESSION

JULY 10, 1997

Committee on Science
INo. 35]

Committee on Government Reform and Oversight
Serial No. 105-52

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

Ee

U.S. GOVERNMENT PRINTING OFFICE
44-185C0 WASHINGTON : 1997

For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
ISBN 0-16-056232-5


CONTENTS

July 10, 1997:

Hon, Sally Katzen, Administrator, Office of Information and Regulatory
Affairs, Office of ‘Management and Bud; sudget, Washington, D

Joel Willemssen, Director, Accounting and Information Management Divi-

sion, General Accountiny ig Office, Washington, DC

Alvin Pesachowitz, Viee Chair, Chief Information Officers Council, Chief

Information Officer, Environmental Protection Agency Washington,

Kathles agency

Chief Information Officers Council, Assistant Deputy ‘Commissioner
for Systems, Social Security Administration, Baltimore, MD .

Joe Thompson, Chief Information Officer, General Services A\
tion, Washington, Di

66

1
90


30

STATUS OF AGENCIES’ YEAR 2000 PROGRAMS

On June 23, 1997, OMB transmitted its first quarterly report, dated May 15, 1997, to
selected congressional committees on the progress of federal agencies in correcting the
year 2000 problem. This report is based on the quarterly reports submitted by the
individual departments and agencies, which address questions of organizational
responsibility, program status, cost, and mission-critical systems that are behind

schedule.

In its report, based on May 1997 agency estimates, OMB noted that agencies expect to
spend about $2.75 billion correcting systems to be what is called year 2000 compliant.
This is an increase of nearly $500 million, or about 20 percent, over the February 1997
estimate. OMB noted in its summary report that its next quarterly report will likely

provide a higher cost estimate as more agencies complete the assessment phase.

While acknowledging that much work remains, OMB~on the basis of the agency reports
~expressed its belief that agencies had made a good start in addressing the problem.
OMB further summarized that most agencies had completed or would shortly complete
their assessments of the problem, many had begun systems renovation, and no mission-

critical systems were reported to be behind schedule.

Progress Report, U. S. Office of
Management and Budget, May 15, 1997.

4


89

Kathleen M. Adams

Kathleen Adams is the Assistant Deputy Commissioner for Systems at the Social Security
Administration (SSA). She is responsible for overseeing and managing all systems development
and integration, telecommunications and systems operations to support Social Security's
programs. These systems account for more than one quarter of the United States budget and
touch the lives of all Americans. They pay benefits to almost 50 million Americans each month,
maintain records of earnings for all workers and issue 17 million social security cards per year.

Prior to assuming her current position in February 1997, Ms. Adams was the Associate
Commissioner for Systems Design and Development, SSA. Throughout her career, she has held
a variety of technical and managerial positions in information systems, operations, policy and
budget components in SSA and the Health Care Finance Administration.

Ms. Adams is the chairperson of the Year 2000 Subcommittee of the CIO Council. This
subcommittee is addressing the need for all government agencies to ensure their computer
systems continue running when the calendar changes to 2000. She is the chairperson of the
Advisory Committee on Data Processing of the International Social Security Association. She
serves on the Information Technology Resource Board and is an Associate Director of AFCEA.

Ms, Adams has received numerous awards, including the Commissioner's Citation and awards
from Government Computer News, the Federal Executive Board, the Secretary of Health and
Human Services and the Senior Executives Association Achievement Award. She was selected
by Federal Computer Week to the Federal 100 in 1996,

Ms. Adams received her B. A. from the University of Maryland. She has done graduate work at
the George Washington University and has completed executive training at the Kennedy School
of Government, Harvard University.


° The Validation phase, in which the organization tests converted or replaced software;

and

° ‘The Implementation phase, in which the organization implements converted or replaced

software and implements data exchange contingencies, where necessary.

Each agency will have to complete all the steps (0 be able to meet the challenges posed

by the Year 2000 issue.

The best practices guide is available on the Year 2000 website, and is regularly updated

to reflect current best practices.

In addition, the Subcommittee worked with OMB to develop the format for the
quarterly status report each agency must submit to OMB regarding the progress of its Year
2000 program. OMB asked the Subcommittee to provide input on the report format. OMB
wanted to obtain adequate information from each agency to track and monitor Year 2000
progress across Government and report to Congress, but did not want reporting to be so
‘onerous that it would overburden the agencies with recordkeeping. Hopefully, the format for

the agency status reports accomplishes these goals.

I think all Federal agencies recognize the importance of dealing with the Year 2000

issue, and they have been extremely cooperative in dealings with the Subcommittee on Year


12

their progress, including a discussion of their ability to
acquire and retain skilled personnel to fix systems. This
information will help to identify areas where government-
wide action can assist agencies in addressing this problem.
So, for example, we have established an interagency working
group, chaired by the Department of Health and Human
Services, to look into the potential impact of this problem
on bio-medical devices and laboratory equipment.

Costs, The third section of the report provides agency
estimates of the cost of addressing the problem in fiscal
years 1996 through 2000. We expect these estimates to
increase as agencies complete their assessment of the
problem, and, based on the first report, they have. We
included this requirement to identify needed funding and
assure that funding constraints do not preclude agencies
from fixing this problem.

Exception Reporting on Systems. In the fourth section of
the report, agencies are required to report any mission-
critical system being repaired or replaced that falls behind
schedule by more than two months. This section will provide
an early warning and focus agency senior management
attention on such systems. The information to be provided
includes an explanation of why the system has fallen behind
schedule, what the new schedule is, and a description of
funding and other resources being devoted to ameliorate the
problem.

The report will also identify any mission-critical system
that falls behind schedule and remains behind schedule for
more that one quarterly report. For such systems, an agency
is to provide a description of actions being taken to
mitigate the situation and a summary of the contingency plan
for performing the function supported by the system.

Eirst Agency Reports,

The first agency reports were sent to OMB on May 15, 1997. These
reports provide the first government-wide measures of progress in
the Executive Branch. They have provided OMB with information
necessary to assess the progress of the agencies and to determine
which warrant special attention.

Summary Report.

On June 23, 1997 we sent a summary of the first quarterly reports
to the Subcommittees. Because it is important to inform the
public of agency progress, we have also made that summary
available through OMB's home page and on the CIO home page. The
summary shows that most agencies are in the assessment phase,
that agencies now estimate they will spend $2.8 billion fixing

3


54

Ms. KATZEN. Yes.

Mr. Davis of Virginia. All the different priorities from the high-
est to the lowest.

T also note that a few weeks ago, the Deputy Secretary of Treas-
ury requested an additional $258 million for the Year 2000 for the
IRS at a Senate Appropriations Subcommittee hearing.

That was in addition to the $84 million Treasury had already re-
quested for the Year 2000.

Was the latest request reflected in the latest OMB estimate? Was
that additional amount reflected, do you remember?

Ms. KaTzEN. Part of it was and part of it was not since that
number has changed as we were going through.

It was reflected in a footnote of the report that IRS had specifi-
cally changed its estimate since the May 15 as of date for the re-
port. 4 And I believe there’s a footnote that singles out IRS in that
regard.

Mr. Davis of Virginia. My last question.

In reading your comments today, I just found this. We are con-
fident that we will finish the work so that the Year 2000 computer
problem will be a non-event and we will all be able, obviously that’s
the goal. Realistically, do you think it’s going to be a non-event?

Ms. KATZEN. Yes.

Mr. Davis of Virginia. You have to approach this more cautiously
than that, don’t you?

Ms. KaTZzEN. I am cautious, I am concerned. I am prepared to do
what is necessary to fulfill, but that is my expectation that the req
uisite resources and attention will be devoted and we will al
breathe a very happy sigh of relief on December 31, 1999.

Mr. Davis of Virginia. That is all of our hope and expectation,
but using the word confident, in light of everything else we're hear-
ing, that’s an amazing optimism, and I certainly hope you're right.

Thank you.

Mrs. MORELLA. Twenty-nine months.

Mr. Davis, I’m delighted to recognize you, sir.

Mr. Danny Davis. Thank you very much. I’m always pleased to
follow my cousin from Virginia.

({Laughter.]

Mr. Davis of Illinois. I’m sure that we share many of the same
concerns.

Ms. Katzen, let me go to you first. From Mr. Willemssen’s testi-
mony, as well as what we’ve heard from many of my colleagues,
there seems to be a tremendous amount of concern that we may
very well not be ready by the Year 2000.

From the progress reports that you’ve received so far, what is the
rate of computers being made 2000 compliant on a per-quarter

aSis /

Ms. KATZEN. We only have one-quarter’s data so I can’t give you
a rate of increased change, but my sense is that it will be accelerat-
ing as we move along, because we're learning a lot of the lessons.
It’s one reason I was somewhat reactive to Mr. Horn’s comment
that SSA started in 1989 and they’ve only gone 50 percent of the
way. That’s 8 years.

How is the rest of the government going to catch up?


96

GSA's Federal Supply Service (FSS) serves as the Federal procurement arm of
the government. FSS's Intemet-based electronic commerce system for Federal
customers, GSA Advantage, is Year 2000 compliant. In addition, FSS completed

an overhaul, consolidation and outsourcing of its data centers into one, Year

~ 2000 compliant facility in Eagan, MN. Also, FSS has already spent about $1
million to fix 40 percent of the code in its legacy systems, and plans to spend
another $1.5 million to complete the task by the third quarter of 1998.
GSA's Office of Human Resources and Office of Finance are both working on
replacement systems which will be Year 2000 compliant and up and running in

1998.

GSA is also working governmentwide to raise awareness, share best practices

and leverage the resources needed to fix the problem. For example:

GSA's Federal Supply Service has notified manufacturers, service and
equipment providers that products sold to the government must be Year 2000
compliant. To help government purchasers, a Year 2000 compliant logo is being
displayed on compliant information technology items sold through the FSS

multiple awards schedules program.


1

Mrs. MorELLA. Thank you, thank you for being so succinct and
precise.
Ms. Adams, I’m delighted to recognize you.

TESTIMONY OF KATHLEEN ADAMS, CHAIR, INTERAGENCY
YEAR 2000 SUBCOMMITTEE OF THE CHIEF INFORMATION
OFFICERS COUNCIL, ASSISTANT DEPUTY COMMISSIONER
ror SYSTEMS, SOCIAL SECURITY ADMINISTRATION, BALTI-
MORE, MD

Ms. ADAMS. Madam Chairwoman and members of the Sub-
committees, I’m Kathleen Adams, Assistant Deputy Commissioner
for Systems at the Social Security Administration, and I’m testify-
ing here today in my capacity as the Chair of the Chief Information
Officers Council Subcommittee on Year 2000.

I appreciate the opportunity to discuss what the Subcommittee
is doing to help federal Agencies address the Year 2000 computer
problem so that the transition to the new century can be a smooth

one,

In the fall of 1995, the Office of Management and Budget, rec-
ognizing the critical nature of the problem and that the Social Se-
curity Administration had taken positive steps to address it, asked.
SSA to be the champion for Year 2000, and increase awareness of
the issue across the Government.

In this role, we organized an informal committee in November of
1995, which we called the Year 2000 Interagency Committee. I
might mention that the hearings which your Subcommittees held
in the spring of 1996 did much to increase the awareness of the
Year 2000 issue, and participation in this informal committee, and,
as a result, it grew very rapidly.

I am pleased to say that today every Department and every
major Agency is represented on the Committee. In August of 1996,
as Mr. Pesachowitz mentioned, the CIO Council, which had been
established to review and provide guidance on information tech-
nology issues across the Federal Government, decided that the—
well, actually that’s when the CIO Council came together, in Octo-

er.

They decided that the Year 2000 issue was one of the most press-
ing information technology issues facing government, and that
Council made the Year 2000 Interagency Committee, which at that

joint was an informal committee, an official Subcommittee of the

10 Council and our name became the CIO Council Subcommittee
on Year 2000.

It’s important to keep in mind that each Agency must find solu-
tions to the Year 2000 problem that meet its unique needs, since
there is no single approach that all Agencies can employ.

While each agency head and CIO is responsible for ensuring that
his or her systems function properly on January 1, 2000, the focus
of the Subcommittee on Year 2000 is to facilitate this major under-
taking by addressing cross-cutting aspects of the problem such as
interagency data exchanges, availability of various vendor prod-
ucts, and sources of mutual help that the Agencies can use.

I believe we are meeting our goals to raise awareness and facili-
tate timely action. We can point to solid accomplishments, includ-
ing development of a Year 2000 Website on the GSA Home Page,


36

Benefits Administration and the Health Care Financing Administration include several

recommendations to address these issues.

Data exchange. Many agencies exchange data with hundreds if not thousands of
external entities. Unless both parties to any exchange are year 2000 compliant,
information systems and databases may easily be contaminated by coding embedded in
noncompliant systems. To combat this, agencies must inventory and assess all internal
and external data exchanges, make appropriate notifications and, if necessary, develop
appropriate bridges or filters to maintain the integrity of replaced or converted systems

and the data within them.

Systems prioritization. It is becoming increasingly clear that agencies will likely be
unable to correct all noncompliant systems before 2000. Accordingly, it is imperative
that agencies set priorities, on the basis of mission needs and the timing and expected
impact of year 2000-induced failures. Identification of mission-critical systems is not
enough; each department's and agency's most important business activities must be

given top priority to ensure their continued, uninterrupted operation.

Contingency planning. Because the cost of systems failure~in terms beyond just the
monetary--can be very high, contingency plans must be prepared so that core business
functions will continue to be performed even if systems have not been made year 2000

compliant.

10


48

We also believe that there is a role for these, in effect, coordinat-
ing committees. What Kathy Adams has done with the Subcommit-
tee of the Year 2000 in setting up the various subcommittees, saves
a lot of the Agencies time and effort from having to reinvent the
wheel themselves.

If we have one group looking at elevators and sharing the results
of what happens with the embedded chips in the elevators, we’re
all head of the game in that regard.

So, I think there are different functions that can be served by dif-
ferent levels and different groups. Now, does it need one Czar?

As if there were sufficient power available——

Mrs. MorELLA. I’m thinking of accountability.

Ms. KaTzEN. OMB has served that role. It does it both in terms
of its ordinary statutory responsibilities in the area of information
technology, generally, and through the budget process.

Each year, we review the Agency’s performance and the Agency’s
plans in the context of the appropriation of the President’s budget.

We also have management reviews and other components that fit
into that process. And that’s where this is currently.

Mrs. MORELLA. Let me ask you just one more question, so I can
ive my colleagues an opportunity. Then I hope to ultimately get
ack to asking questions later, too.

We want to send a strong message to the information technolo;
community that their products also have to be Year 2000-compli-
ant. And to achieve it, we are now working on statutory language
for this year’s appropriations bill—Treasury and Postal would be
the ones—that would prohibit the Federal Government from pur-
chasing any information technology which is not Year 2000-compli-
ant pursuant to Part 39[106] of the Federal Acquisitions Regula-
ti

ions.
We fee] that by forcing the government vendors to sell only Year
2000-compliant information technology by law, that it would in-
crease the probability that those manufacturers, as well as others,
might speed up the commercialization of Year 2000-compliant prod-
ucts for all Americans.

I wonder what your reaction is, both of you, to this, and would
you support such statutory language?

Ms.: Katzen. I would agree, in principle, with that concept. We
have been working towards that objective within the CIO Council.

Again, I think either Kathy Adams or Mr. Pesachowitz on the
next panel will be able to give you more information.

But we have worked on contract language that would require
vendors to certify that their products are Year 2000-compliant.
We've worked on putting together a database so that Agencies will
know what information technology is, in fact, Year 2000-compliant.

And exchange of information among the Agencies, as they dis-
cover subtleties or not-so-subtleties—so I think we join you com-
pletely in that objective.

We have been doing it as a matter of policy, and I have full
agreement in principle to do it as a matter of law.

Mrs. MoRELLA. Very good.

Mr. Willemssen?

Mr. WILLEMSSEN. I concur with the gist of Sally's comments. I
think, in general, the concept is very sound and makes sense.


53

therefore increased resources to get that system on line, that would
a cost.
So this is designed to get the incremental, if you will, additional

costs.

Mr. Davis of Virginia. That’s fine.

When you look at the OMB cost estimates, does it include all the
extensive Year 2000 work that’s being performed under previously
existing maintenance and support contracts which were previously
budgeted for, or is this just the increase over and above what had
been previously budgeted for over the last couple of years?

Ms. KATZEN. This would include that which is attributable solely

to—
Mr. Davis of Virginia. Whether previous or whatever, not just
new stuff coming in?

Ms. KATZEN. That’s correct.

Mr. Davis of Virginia. One of the concerns we have out in the
IT community, I represent northern Virginia, is if these cost esti-
mates are not accurate, that as the pressure to get the job comes,
and there’s no additional money because nobody’s requested it, and
we haven’t had time to weigh it the authorization and appropria-
tion process here that existing IT procurements in other areas are
going to be cut back and the money will be shifted into Year 2000,
and of course that has an impact on a lot of contractors and a lot
of employees out there.

Ms. KATZEN. That is a very realistic appraisal of the situation,
because it is our view that rather than upgrading a system, one
has to make sure it is fundamentally working, and so we want the
funds, as Chairman Horn was speaking earlier during his series of
questions, we’d want the money to be spent fixing the problem.

And if it means taking it from other IT projects or even going be-
yond the IT budget from the other programs, we need to make sure
the work is done. So that is, I believe, a very realistic appraisal of
the situation.

Mr. Davis of Virginia. Let me ask this.

Is OMB’s cost estimate include the potential costs associated
with the embedded chip problem that exists in some non-informa-
tion technology programs, such as weapons and equipment?

Ms. KaTzEN. The figures we have given are for the information
technology systems, and would not include the embedded chips in
the weapons systems or in elevators.

Mr. Davis of Virginia. Does anybody have those numbers or is
anybody looking at that?

Ms. Katzen. I believe the Agencies are actually beginning to look
at that, because part of the reporting form that we had generated
was designed to talk about issues that go beyond information tech-
nology and we were beginning to hear back, as I mentioned to Mrs.
Morella, we are looking at biomedical and laboratory equipment,
which is a very real issue for some of the health-based Agencies.

Mr, Davis of Virginia. I just think the Committee would be inter-
ested in what the order of magnitude is on those kind of things as
well and the schedules and how that’s being looked at too.

I take it the OMB cost estimate that we're seeing includes the
full cost of working being performed on the non-mission critical sys-
tems as well? .


49

I think the CIO Subcommittee has done some good work in this
area. And now it’s a matter of implementing it and getting it done.

Mrs. MoRELLA. Thank you. We've also been joined here at the
Subcommittee’s meeting by Mr. McHale from Pennsylvania, and
Mr. Bartlett from Maryland.

I'm now going to recognize Mr. Gordon for questioning.

Mr. GORDON. Thank you, Madam Chairwoman.

I also want to concur that many of us are looking at this legisla-
tion to require that the Federal Government purchase products
that are Year 2000-compliant, not only for the benefit of the tax-
payers, but also as a model for trying to push the private sector
into making these available to the public.

So I hope that we will be successful, legislatively, but I hope that
you will also move forward administratively on this. I think it’s im-
portant.

Let me also say that I suspect that if we were to stick our heads
in half of the offices or hearing rooms in this building today, there
would probably be a discussion about an urgent issue with a criti-
cal deadline.

I say that not to minimize. This is very serious and it’s very im-
portant.

It shouldn’t be a game of gotcha. Ms. Katzen, I appreciate your
commitment that you’ve demonstrated here today. A lot of it is,
yes, I did; no, I didn’t.

But as the quarterly reports come forward, that is your oppor-
tunity to really show that something is getting done. Again, it’s not
an effort to try to play gotcha.

I would suggest that you move forward as you are. I hope that
you will ask us for help where we can be of help. This needs to be
a partnership. This is a serious matter.

e’re all going to be impacted if it’s not.

Let me also maybe move, not to make the problem any bigger,
but I want to try. We've talked a little bit about the problems with
interfacing.

So, if in the Federal Government we get all of our information
together, so what happens when we interface with the state and
local and the private sector?

Let’s assume that we finally get as a Nation, our act together,
whatever criticisms we might have of ourselves, I think if we were
to look internationally, we would find that we’re way ahead. I think
the British Government has at least tried to make an effort to put
their private sector on notice, but what’s going to be the impact?

T’d ask from both of panelists, what, in your opinion, is going to
be the impact of international electronic commerce, as well as just
our activities here, if we do get our act together, and we’re interfac-
ing with other Agencies and other countries around the world who
have not?

What's going to be the impact of that?

Ms. KaTzEN. I agree with your assessment that whatever the
state of the domestic readiness, we’re well ahead of our colleagues
overseas, and that there will be very real implications.

Part of the solution may well be that as we are able to develop
better management techniques and better technical solutions to
this issue, we'll be able to share them.


78

Madame Chairman, Mr. Chairman, and Members of the Subcommittees:

Jam Kathleen Adams, Assistant Deputy Commissioner for Systems for the Social
Security Administration, but I am appeating today in my capacity as Chair of the Chief
Information Officers (CIO) Council Subcommittee on Year 2000. I appreciate the opportunity
to discuss the efforts of the CIO Council Subcommittee on Year 2000, formerly known as the
Year 2000 Interagency Committee. I will begin by outlining the reasons why systems
changes are needed to deal with the year 2000 and then describe what the Subcommittee is
doing to help Federal agencies address the problem. so that the transition to the new century is

a smooth one,

‘Reason Change Is Needed

‘As you are well aware, a unique event will take place on January 1, 2000. On that
day, we will experience the first century change since the start of the computer era. This
event poses enormous challenges for the data processing community, as public and private
sector organizations around the world prepare for the single largest integration feat since

computers entered our daily lives.

‘The reason that the century change poses a problem is that many computer programs
store and use only the last two digits of a year and assume that the first two digits are 19.
Under this practice, computer logic operations work as long as dates are in the same century,

but problems arise when it is necessary to use dates in two different centuries. For example,


il
Another important issue that we are addressing is how to minimize the burden on State
and local governments resulting from the Federal transition to Year 2000 compliant systems.
The data exchanges, mandated or voluntary, between the different levels of government will
all be affected by the changes made to deal with the Year 2000 issue. We are focusing on data

exchanges where multiple agencies are involved to minimize the impacts on the States.

I should again point fut thatthe responsibility for ensuring that the Government's
systems will function properly in the Year 2000 issue lie with the head and Chief Information
Officer of each department and agency. The Subcommittee on Year 2000. like the Interagency
Committee before it, does not keep track of where ayencies are in dealing with the Year 2000

issue or measure the effectiveness of each organization's pian to deal with the issue. OMB has

had and continues to have that role.

In conclusion, it would be impossible to overstate the importance of the need for a
smooth and timely transition of the Government's systems to accommodate the Year 2000 as
we enter that year. All of the departments and agencies participating in the Subcommittee on
‘Year 2000 recognize that there is no question of what needs to be accomplished over the next
several years, and no besitancy to work together to address common issues. [can assure you

that the Subcommittee on Year 2000 will continue its work in this critical undertaking.


43

And that’s the question that we are pursuing with them.

Mr. SUNUNU. When you're talking about a contingency plan for
ensuring that implementation is completed by December 31, 1999,
or a contingency plan for the continuing of their Agency operations
if or when they fail to update all the mission-critical systems?

Ms. KaTzENn. A contingency plan would be if they do not meet the
deadline of December 31, 1999.

Our efforts are to accelerate. I wouldn’t call that a contingency;
I would call that additional pressure and attention on the issue to
do everything we can to make sure they don’t back up against
those dates.

Mr. SUNUNU. Have all Agencies been requested to prepare con-
tingency plans for the event that a mission-critical system isn’t in
compliance by the Year 2000?

Ms. KATZEN. I would not say that all have. Where we are identi-
fying mission-critical systems that are looking as they are close to
the line, the issue becomes real.

In those instances where they have already fixed the system and
have tested it and verified it, as 21 percent government wide are
already Year 2000-compliant, there’s no reason to have a contin-
gency plan for those systems.

So it has to be on a system-by-system basis on these that we're
pursuing.

Mr. SUNUNU. Thank you.

I would only emphasize that I think that should be an important
part of this entire planning process, is identifying as early as pos-
sible, those mission-critical systems that are at risk, and ensure
that the planning not just consider, well, how do we accelerate the
timetable, but how do we plan for the contingency that the mission-
critical systems aren’t prepared.

Ms. KATZEN. I agree completely with that.

Mr. SUNUNU. I know it’s not in your jurisdiction, but I would
wonder if you or Mr. Willemssen could comment on the inter-
national implications a bit?

We've talked somewhat about the mission-critical systems that
we have here in the United States, and that’s obviously a principal
focus.

And we have numbers that give us a feeling, the 7,000 or so mis-
sion-critical systems that are affected in our own Agency structure.

Would you talk about the number of systems and the nature of
the systems, globally, that will be affected in a similar manner,
specifically those that might have an impact on US. citizens, avia-
tion systems, air traffic control, financial systems, that may also be
at risk outside our borders?

Mr. WILLEMSSEN. Despite our pessimism about where the Fed-
eral Government is at, and OMB’s actions to date, the general per-
ception is that the international community is far behind the Unit-
ed States in addressing the Year 2000 issue.

We have not done any specific work on that. I give you that view,
based on literature that we’ve looked at. The general perception is
that this country is further ahead than the rest of the international
community.


COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT
DAN BURTON, Indiana, Chairman

BENJAMIN A. GILMAN, New York HENRY A. WAXMAN, California

J. DENNIS HASTERT, Illinois TOM LANTOS, California

CONSTANCE A. MORELLA, Maryland ROBERT E. WISE, Jx., West Virginia

CHRISTOPHER SHAYS, Connecticut MAJOR R. OWENS, New York

STEVEN SCHIFF, New Mexico EDOLPHUS TOWNS, New York

CHRISTOPHER COX, California PAUL E. KANJORSKI, Pennsylvania

ILEANA ROS-LEHTINEN, Florida GARY A. CONDIT, California

JOHN M. McHUGH, New York CAROLYN B. MALONEY, New York

STEPHEN HORN, California THOMAS M. BARRETT, Wisconsin

JOHN L. MICA, Florida ELEANOR HOLMES NORTON, Washington,

THOMAS M. DAVIS, Virginia DC

DAVID M. McINTOSH, Indiana CHAKA FATTAH, Pennsylvania

MARK E. SOUDER, Indiana ELIJAH E. CUMMINGS, Maryland

JOE SCARBOROUGH, Florida DENNIS J. KUCINICH, Ohio

JOHN B. SHADEGG, Arizona ROD R. BLAGOJEVICH, Ilinois

STEVEN C. LaTOURETTE, Ohio DANNY K. DAVIS, Illinois

MARSHALL “MARK” SANFORD, South JOHN F. TIERNEY, Massachusetts
Carolina JIM TURNER, Texas

JOHN E. SUNUNU, New Hampshire THOMAS H. ALLEN, Maine

PETE SESSIONS, Texas HAROLD E. FORD, JR., Tennessee

MICHAEL PAPPAS, New Jersey —

VINCE SNOWBARGER, Kansas BERNARD SANDERS, Vermont

BOB BARR, Georgia (Independent)

ROB PORTMAN, Ohio
Kevin BINGER, Staff Director
Danren R. Mout, Deputy Staff Director
WILLIAM MoscHELLA, Deputy Counsel and Parliamentarian
JupitH McCoy, Chief Clerk
Punt. ScHILIRO, Minority Staff Director

SUBCOMMITTEE ON GOVERNMENT MANAGEMENT, INFORMATION, AND TECHNOLOGY
STEPHEN HORN, California, Chairman

PETE SESSIONS, Texas CAROLYN B. MALONEY, New York

THOMAS DAVIS, Virginia PAUL E. KANJORSKI, Pennsylvania

JOE SCARBOROUGH, Florida MAJOR R. OWENS, New York

MARSHALL “MARK” SANFORD, South ROD R. BLAGOJEVICH, Mlinois
Carolina DANNY K. DAVIS, Ilinois

JOHN E, SUNUNU, New Hampshire
ROB PORTMAN, Ohio

Ex OFFICIO

DAN BURTON, Indiana HENRY A. WAXMAN, California
J. RUSSELL GEORGE, Staff Director and Chief Counsel
MARK UNCAPHER, Counsel
JOHN Hynes, Professional Staff Member
ANDREA MILLER, Clerk
MARK STEPHENSON, Minority Professional Staff Member

ap


106

plementation date as 11/99 because we will actually have all of our
software ready and it will all be integration tested by December
1998.

We, too, are using that last year to run our software in produc-
tion and test it with other software coming in, but we still consid-
ered that part of testing, so we showed the implementation date as

And I was talking with Mr. Willemssen before the meeting, and
I think that what might be occurring in some of those implementa-
tion dates is that we might have a little bit of a different definition.

I think that needs to be clarified when all of the, I think that’s
something we’re going to take up at the Subcommittee the next
meeting, and that we all have a clarification of what we mean
when we say implementation.

Because to me, by definition,.you can’t implement until the ready
date because you're not really manipulating real Year 2000 dates
until they start to occur.

So I think there could be some, as is in the case I know with the
Social Security Administration, the definition that you’re using
here for implementation, our date would be 12/98, not 11/99.

Mr. BARTLETT. So we need to ascertain that that’s the same situ-
ation for the other Agencies.

Ms. ADAMS. Yes, and I’m going to put that on the agenda for the
next Subcommittee meeting because I think there might be a little
confusion about how we all defined implementation.

Mr. BARTLETT. Thank you very much.

Mrs. MORELLA. And I want to congratulate you, Ms. Adams, for
starting back in 1989, but it is also interesting that it’s not totally
completed, which says something about the time that’s necessary.

Tm sorry to cut this so short.

Ms. ADAMS. Can I say one thing, Madam Chairwoman? Can I
just say one comment to that?

Mrs. MORELLA. Yes.

Ms. ADAMS. We discovered it because a system broke and it was
a very back burner project. We didn’t really get cranking until
around 1993.

Mrs. MORELLA. Okay, great. Well thank you for your candor.

I want to thank all of you so very much. And let you know that
we have questions all ready to get to you.

Thank you for waiting and for being part of this very important
project.

And the Subcommittee’s meeting is adjourned.

{Whereupon, at 12:35 p.m., Thursday, July 10, 1997, the hearing
was adjourned.]

°


66

TESTIMONY OF ALVIN PESACHOWITZ, VICE CHAIR, CHIEF IN-
FORMATION OFFICERS COUNCIL, CHIEF INFORMATION OF-
FICER, ENVIRONMENTAL PROTECTION AGENCY, WASHING-
TON, DC

Mr. PESACHOWITZ. Thank you very much, and good afternoon,
Chairpersons Morella, and Horn, and members of the respective
Subcommittees. I’ve already been introduced.

I am the CIO of the Environmental Protection Agency, but I’m
primarily here as the Vice Chair of the CIO Council.

The Council was created by Executive Order on July 16, 1996,
to serve as the principal forum for improving information manage-
ment practices of federal Agencies. e Council membership is
composed of the CIOs and Deputy CIOs of 28 of the largest federal
Agencies, as well as two representatives of other smaller and inde-
pendent Agencies.

The CIO Council provides a valuable forum for CIOs to share in-
formation on critical information technology issues and challenges
facing all federal Agencies today.

In addition, because the Council represents a broad cross section
of the federal IT community, it is uniquely positioned to provide
leadership and policy advice on cross-cutting IT issues.

This leadership takes various forms, including a collegial ap-
proach to assisting OMB in formulating government wide IT policy,
and a Council strategy of establishing permanent committees to do
in-depth policy work on IT issues.

At the very first meeting of the CIO Council, which was held
only last October, the Council identified the Year 2000 as one of
the five top priority federal CIO issues. And in November, it asked
Ms. Kathy Adams to chair the CIO Council Subcommittee on the
Year 2000.

To support the work of the Year 2000 Committee, the full CIO
Council receives a monthly status report from the Chairperson, and
has acted on several occasions to endorse Committee recommenda-
tions for action and assistance.

As I indicated earlier, the Council seeks to support cross-cutting
policy issues by taking various specific management actions.

Specifically, in June, the CIO Council agreed to fund the oper-
ation and maintenance of a new database designed and developed
by the Year 2000 Committee. This database will provide the federal
IT community with access to high quality data on commercial prod-
ucts that claim to be Year 2000-compliant.

The CIO Council is strongly endorsing the use of this database
as the single most authoritative source for Year 2000 product infor-
mation in the Federal Government.

The CIO Council believes strongly that an effective reporting sys-
tem is critical to OMB’s ability to monitor government wide
progress in addressing the Year 2000 problem, and to inform Con-
gress of that progress.

The CIO Council has worked with OMB over the last 6 months
in developing such a reporting system that was talked about earlier
today. The Year 2000 problem is a shared problem, and the CIO
Council is becoming and effective vehicle for addressing this shared
problem.


52

Ms. KaTzEN. Some of them have already risen as they've gone
from 50 percent assessment to 75 percent assessment. That may
have yielded additional information so that some of the increase
has already been reflected in the increase that you mentioned has
taken place.

I suspect that there’ll be some increases even after everyone has
finished their assessment as potentially unanticipated problems
may arise. 2

Our objective is to get a fair and accurate count as we go, and
I don’t want to have a counter-incentive. Don’t raise your figures
because questions will be raised. I’d rather have the real_—

Mr. Davis of Virginia. So would we. That’s critical.

Ms. Katzen. I think that they may continue to change. Some
may go up, some may go down. I suspect most of them will go up
even after the assessment phase is finished.

Mr. Davis of Virginia. One of the problems we're encountering
out in our area is just the shortage of qualified workers bringing
back the old Cobol program which we've kind of laid out to pasture.
Now these guys are commanding top dollar and that is jumping the
anticipated costs just in terms of the labor intensity of this.

I’m not sure how that’s factored into the report. Maybe you could
tell me, but the labor costs seem to have jumped on this. This in
some cases can be very labor intensive.

Ms. KaTZEN. It is labor intensive. Expertise is one of the critical
restraints.

Mr. Davis of Virginia. Let me just put it in perspective. You
could give us one cost in February about the amount of time and
hours and work that were done. Then you take a look at it today,
and as you get toward that phase to hire the workers, you find that
gee, these people cost more today or tomorrow than they did 6
months ago, a year ago, when we were figuring this.

I just wondered if that’s factored into it?

Ms. KATZEN. I think part of that is factored in, although some
of the departments and Agencies already have contractors and con-
tract provisions that will govern the provision of this work.

In addition, a lot of this is able to be done in-house by the staffs
that would otherwise be charged with the regular operating and
maintenance of the systems. And those are government employees
who will be able to do that as part of their ordinary work.

Mr. Davis of Virginia. Now let me just take that. When you talk
about federal employees doing this work in-house, does your cost
include the in-house costs? Because if the employees are doing that,
then they're not doing something else that they might have done.

Would that be added to the—how is that factored in?

Ms. KATZEN. We asked the Agencies to give us the cost informa-
tion where there was, in addition to the ordinary work that was
being done.

For example, if you have a system which you expect to come on
line and replace your existing system, and therefore you’re not
going to repair your existing system, and your new system is going
to be completed well in advance, there'd be no additional cost.

If, however, you found out that new replacement system was
slipping and you wanted to accelerate its coming on line, and you


101

Joe M. Thompson

Chief Information Officer
General Services Administration

Joe M. Thompson heads the new Office of the Chief Information Officer, appointed on January
2, 1996 by the Administrator of the General Services Administration (GSA). GSA, often called
the Federal Government's business manager, is an executive branch agency with about 14, 500
employees and an oversight responsibility for $61 billion. Mr. Thompson will share
responsibility for managing government-wide investment and expenditures of over $200 billion
annually.

As the Chief Information Officer for GSA, Mr. Thompson reports directly to the Administrator
and is responsible for directing all of GSA’s Information Technology (IT) investments, including
annual IT capital planning for the agency, benchmark and performance plans, procurement plans,
an on-line data collection and management systems. ‘The Office also produces quarterly and
annual reports on the cost-cutting results of agency-wide IT management.

Prior to his appointment as GSA’s Chief Information Officer, Mr. Thompson served as the
‘Commissioner of GSA’s Information Technology Service. He had primary responsibility for
carrying out the recommendations of Congress and the National Performance Review to improve
the use of information technology to better serve citizens; for the implementation of electronic
procurement; for the replacement of obsolete computer applications and systems; nationwide
local telecommunications service for the federal government and the re-engineering of
government processes supporting Government-wide Electronic Mail and the Information
Superhighway. Mr. ‘Thompson also served as a primary consultant during the enactment of the
Federat Acquisition Streamlining Act of 1994, the most significant procurement reform
legislation since World War Il. ‘Through 1995-96 he chaired a CIO Council Working Group
leading the implementation of the Information Technology Management Reform Act of 1996,
which is now known as the Clinger-Cohen Act. Mr. Thompson started his career with GSA as a
chemist in GSA’s regional office in Fort Worth, Texas, his home state, He has served in a
number of significant positions within GSA including eight years as Assistant Regional
Administrator for the Information Resources Management Service in Phifadelphia.

Mr. Thompson now serves as the Chairman, of the CIO Capital Planning and Investment
Committee, Key Advisor to the Chairman of the GSA Business Technology Council, member of
the Information Management Forum, member of the International Institute of Business
Technologies Board of Directors and Advisors, and a fellow of InfoTEST International the
world’s leading Internet Altiance.

He received two Presidential Rank Awards for Meritorious Service, from President George Bush
in 1990 and from President William Clinton in 1996. He also received the GSA Administrator's


26

United States General Accounting Office

G ‘AO Testimony

Before the Subcommittee on Government Management,
Information and Technology, House Committee on
Government Reform and Oversight, and the Subcommittee on
Technology, House Committee on Science

See YEAR 2000

Sn COMPUTING CRISIS
Time Is Running Out for
Federal Agencies to Prepare
for the Millennium

Statement of Joel C. Willemsen
Director, Information Resources Management
‘Accounting and Information Management Division

GAO/T-AIMD-97-129,


22

TABLE 4

AGENCY YEAR 2000 COST ESTIMATES AS OF MAY 15, 1997
(Dollars in Millions, by Fiscal Year)

Agency 1996! 1997) 1998! 1999) 2000) TOTAL
7

Agriculture * H 3a] 21 33 278| 63) 972|
‘Commerce * 2.6| 13273 25.1 661 729
Defense * To4| 381.6) 6209] 263.0] cin 1317.0
Education * OL 061 34) 44 02) 87
Energy * i 18 305] 344 33.1 Bay 760.91
HHS i 0.0) 2742.9) 145 5.6) 90.7
HUD ! 07/1101 35.0) 15.01 621 679)
Tnterior = ; 021 341 15.0) 43] TSI 247
Justice i TST 8.01 9381 2.91 031 225
Labor 17 331 461 2.21 TSI 152
State OS! 476! S64 29.11 161 135.2
‘Transportation * 138] Bar 25.61 44.1) 6.6) 91.9]
Treasury * 1311060" 102.0] 119.01___41.0) 369.3
VA f 40i__-49.0) 49.0) 42.01 0.01 1440
‘AID : 0.0) 021 O51 031 0 19
EPA 08) 331 681 561 231 iss
FEMA : 3.8 441 3.0 3.21 12) 153)
‘GSA 7 02) 061 06 0.21 0.0) 16
NASA* = O41 38.198 371 2.21 W456
NSF 0.0) 02, 03 Om 0.0) 0.6)
NRC WA_ | 2.6 239) 2.91 039) 933)
‘OPM* i i 21 03 031 03 47:
SBA r 271 231 19] 00) Oo} 69)
‘SSA 22| 154 951 601 On 33.2
TOTAL yang) 757.8) 1129.1 | onal veal 2754.4)
Notes:

More accurate estimates will become available as agencies complete the assessment phase.
‘These estimates do not include the Federal share of the costs for State information systems that
support Federal programs. For example, the Agriculture total does not include the potential 50
percent in Federal matching funds provided to States by Food and Consumer Services to correct

their Year 2000 problems. Similarly, the HHS total does not include the Me

id baseline costs

for the Federal share of state systems. And, while Labor's FY 1998 appropriation request includes
'$200 million for States to correct Year 2000 problems in State unemployment insurance systems,
that amount is not included in this estimate.

N/A means “not available.”

* Agencies for which total estimate changed by more than $1 million from the February report; as noted
above, Treasury (IRS) has already indicated that there will be an increase reflected in the next report.


105

Mrs. MoRELLA. Are you aware of any purchases of non-2000 com-
pliant technology software?

Mr. THOMPSON. Only the kinds of things that interface with sys-
tems that are not Year 2000 compliant.

For example, if you’re operating an old FAA aviation system,
which has language that has not been changed, and you need to
modify it or upgrade it, you must use the old language that’s com-
patible with it.

But if you have moved to a new system, there is a new kind of
information and products available that will address it.

Mrs. MorELLa. I have some other questions, but may I direct
them to you, because we are going to be going to vote and I think
I’m going to adjourn this panel, only because it’s going to be too
difficult to get people back with this schedule.

But I do want to ask those questions.

But I want to give Mr. Davis an opportunity to ask his questions
before we break.

Mr. Davis of Illinois. Thank you very much, Madam Chair-
woman.

I have just one question.

Ms. Adams, as the Chairperson of the Subcommittee of the Coun-
cil, what is the biggest problem that the Council sees in terms of
Agencies being able to comply with the time frames?

Ms. ADAMS. I think the basic challenge to the whole problem is
just getting a handle on everything that needs to be addressed.

I think, as we get through the various phases of fixing the prob-
lem, a very time-consuming and a very difficult part is going to be
testing, not only testing your own systems, but making sure that,
where you exchange data between other entities and other systems,
that is all done on time and tested, and that all this is done before

e date.

We cannot slip the date, so I would say data exchanges and test-

ing.

Mr. Davis of Illinois. And jokingly, Mr. Thompson, when did
GSA start getting ready on this?

Mr. THOMPSON. GSA began moving aggressively moving on this
problem in 1995.

Mr. Davis of Illinois. Thank you.

Thank you, Madam Chairwoman.

Mrs. MoRELLA. I wanted to give Mr. Bartlett an opportunity to
make a comment or ask a question too.

Mr. BARTLETT. Thank you very much.

Mr. Thompson, I notice you indicated that your agency was going
to be up and running a full year ahead of schedule so that you
would have a year to look at interface problems.

I noted from the previous panel that a number of the Agencies
are anticipating being ready just in time.

Do you think that the lack of a time period for looking at inter-
face problems and so forth is going to create some problems if a
number of the Agencies are up and ready just in time?

Mr. THOMPSON. Yes.

Mr. BARTLETT. Do the other panel members agree?

Ms. ADAMS. Yes. I would like to add one thing to that, though.
In the case of the Social Security Administration, we show our im-


34

either November or December of 1999. This leaves only a matter of weeks, at most, if
something should require more work before January 1, 2000. According to their own
reports, six agencies, including four large departments, have already missed OMB's June
1997 deadline for completion of assessment. Where assessments of mission criticality
have not been completed, it is logical to assume that schedules for correcting those
systems have not been made final. Given these factors, it is essential that OMB continue
to monitor agency schedules to identify delays so that necessary action can be taken to

enable programs to finish in time.

Second, OMB's perspective is based on agency self-reporting, which has not been
independently validated. Indications are that agency reports may not be accurate; those
saying that assessment has been completed include HHS which, as I have highlighted

today, still has much to do.

Third, entities may have interpreted mission-critical in various ways~even within
departments. For example, the Department of the Army reports that 7 percent of its
systems are mission-critical, yet the Defense Information Systems Agency, a Defense
Department support agency, considers all of its systems~100 percent~to be mission-
critical. A further look within Defense shows that almost two-thirds of over 2,750
“mission-critical” systems slated for repair are still in the assessment phase. And this

excludes over 11,000 lower priority systems that are in varying stages of assessment.


58

We live in a world of interconnected computer networks. I have
two questions relative to that.

The first question is, to what extent do the fixes in the various
systems have to be coherent so that they can still network?

And the second question is, I think that it’s realistic to assume
that some systems are not going to be fixed by the Year 2000.

What will that do to networking, and if you are on a system that
has been fixed and you’re trying to network with a system that is
not, will that to some degree incapacitate what your system can
do?

Mr. WILLEMSSEN. To the extent that data exchanges occur be-
yond the particular network, the LAN or the WAN that an agency
has responsibility for, there is a high degree of concern that agency
address those data interfaces and data exchanges so that the infor-
mation coming from other networks or other systems does not infil-
trate the agency’s own system and corrupt their data.

So that is a major issue and one that needs continuing attention.

Mr. BaRTLETT. Thank you very much. I have no further ques-
tions at this time, Madam Chairwoman.

Mrs. MoreELLA. Did you make your reservations for the around-
the-world trip on January 1, 2000? I have a good discount for you.

[Laughter.]

Mr. BARTLETT. You have a good discount? Thank you.

[Laughter.]

Mrs. MoRELLA. I’d like to recognize Ms. Stabenow.

Ms. STABENOW. Thank you, Madam Chairwoman.

Obviously, we're all extremely concerned as you are about what
happens when the clock turns on January 1, 2000.

‘ould you talk a little bit more about any other contingency pos-
sibilities?

You've talked about prioritizing in terms of systems. A thought
flashed through my mind as you were talking that maybe we do
1999 again.

But short of that, what other options in terms of contingency
plans are possible?

Mr. WILLEMSSEN. You have to look at it from an individual agen-
cy basis.

And the work we've done, for example, at the Veteran’s Benefits
and Health Care Financing, we made specific recommendations to
develop contingency plans now, rather than waiting for 1999. It
may indeed be too late at that point.

Such plans, again highly dependent on the particular mission,
but could be a combination of manual and automated processes. It’s
particularly important to protect existing data that we already
have retained in database management systems, regardless of the
applications that are being used.

So that I think has got to be a major aspect of any contingency
plans. But we are pushing for those plans to begin development of
those now for especially high urgency, high critical missions.

Ms. STABENOW. So at this point you're looking at Piptecting in-
formation, making sure we don’t lose information and then looking
at backup systems that might involve using more personnel as op-
posed to electronic or computer systems?


76

a best-practices guide for all levels of government, which describes
successful approaches by public and private sector organizations for
addressing the various phases of fixing the Year 2000 problem.

I might add that GAO used this as the basis for its assessment
guide on Year 2000, which is currently in an exposure draft, and
will be put in final shortly.

We recommended a four-digit year standard for interagency data

- exchanges. We’ve developed a standard definition of Year 2000
compliance.

That was one of the issues. There was no real definition of what
compliance meant. And we have developed standard contract lan-
guage that all government Agencies could use in their procurement
documents to ensure that vendor products and services that they’re
buying are Year 2000-compliant.

We also conducted two conferences, each attended by over 450
people in Washington, DC. from government and industry. I think
all federal Agencies recognize the importance of dealing with this
issue, and they have been extremely cooperative in dealing with
the Subcommittee on Year 2000.

Our accomplishments would not have been possible without such
complete support and cooperation. In addition, we’ve been working
effectively, I believe, with the information technology industry
groups on many issues of mutual concerns.

We have worked very closely with the Information Technology
Association of America and the Industry Advisory Council on issues
such as standard contract language, contractor support services,
and commercial off-the-shelf packages of software.

The Subcommittee on Year 2000 is currently focusing on several
new initiatives that we think will facilitate each agency’s ability to
address this challenge. The most important of these is development
of a database to be made available throughout the government on
the Web, which will contain information regarding whether com-
mercial off-the-shelf software from vendors that federal Agencies
presently use will function properly when handling dates beyond
1999.

I should again point out that responsibility for ensuring that the
government systems function properly in the next century lies with
the heads and the CIOs of the Agencies. The Subcommittee on
Year 2000 does not track where Agencies are in dealing with the
Year 2000 problem, or the effectiveness of an individual organiza-
tion’s plan. That is the role of OMB, as you have heard from Ms.
Katzen.

In conclusion, it would be impossible to overstate the importance
of a smooth and timely transition of the government systems to ac-
commodate Year 2000 and ensure no interruption of the critical
government services that we provide in this government.

All of the departments and Agencies participating in the Sub-
committee on Year 2000 recognize what needs to be accomplished
over the next 2 years, and there is no hesitancy to work together
to address common issues.

I can assure you that the Subcommittee will continue to work in
this critical undertaking.

Thank you.

[The prepared statement of Ms. Adams follows:]


The federal strategy for resolving the year 2000 computing crisis is detailed in a
document OMB submitted on February 6 of this year to three House Committees:
Government Reform and Oversight, Science, and Appropriations. The strategy is
predicated on three assumptions: (1) senior agency managers will take whatever action
is necessary to address the problem once they are aware of its potential consequences;

(2) a single solution to the problem does not exist, and solving it requires modification or
replacement of agency information systems; and (3) given the limited amount of time

available, emphasis will be placed on mission-critical systems.

At the department and agency level, this strategy relies on the recently established chief
information officers, or CIOs, to direct year 2000 actions. To complement individual
agency efforts, OMB is (1) requesting that departments and agencies submit quarterly
reports on their progress, and (2) sharing management and technical expertise through

its CIO Council and the Council's Subcommittee on the Year 2000.

In addition, OMB has set as the standard that agency year 2000 activities should adhere
to industry best practices for the five delineated phases of an effective year 2000
program: awareness, assessment, renovation, validation, and implementation. In consonance

with these phases, we have developed and disseminated an assessment guide to help


94

Madame Chairman, Mr. Chairman and distinguished members of the
Subcommittees, thank you for the opportunity to discuss the challenges raised

by the Year 2000 issue.

1am Joe M. Thompson, Chief Information Officer (CIO) of the General Services
Administration (GSA). The Office of the CIO was created in February 1996 to
serve as GSA's information technology leader. The CIO is responsible for
applying state-of-the-art information technology to achieve GSA’s business goals

and citizen satisfaction.

| would like to share with you the progress GSA has made in resolving the Year

2000 issue within the agency and as a leader governmentwide.

The Administrator of General Services, Dave Barram, has identified the Year
2000 issue as a top priority for the agency, raising it to the highest level of
awareness and action. As a result, through the collaboration of GSA’s Business
Technology Council, chaired by our Administrator and comprised of the ClO, the
Chief Financial Officer and the agency's top leadership, and our Information
Technology Council, chaired by our Deputy ClO, we have put into action a multi-
level approach to solve the problem in GSA. Our approach has been to
upgrade our systems to Year 2000 compliance as part of our overall strategy to

improve our systems. The progress of Year 2000 implementation plans


9

With respect to overall characterization of the report and what
it shows, I would say that Agencies have made a good start.

Whether it was your report cards from a year ago that got their
attention and woke them up, whether it was the-series of meetings
that we had with the senior management, whether it was headlines
in newspapers that spelled out dire predictions, or all of the above,
we have their attention.

No one is even talking awareness now in the Federal Govern-
ment. That is assumed to have been completed.

We are in the assessment phase for many of them, and some are
through the assessment phase. Even while those who are in the as-
sessment phase are still in the assessment phase, they have begun,
in many instances, the renovation stage.

You don’t have to complete totally one whole phase before you go
on to the next. The work occurs ad seriatim.

I also was pleased to see that no mission-critical systems have
been reported behind schedule as of yet. That’s something which I
think is important and that we will be focusing on.

But I do not want in any way to minimize the enormous amount
of hard work that remains to be done, the absolute need for us to
stay on top of this, to apply the resources that are necessary to as-
sure that the American people continue to be able to receive the
benefits, services, and other aspects of the Federal Government
that they should.

We continue to meet and work with senior officials in the Agen-
cies, and when we see that their timeframe has slowed or is not
accelerating as much as we would like, we have been meeting with
them and working with them to solve their problems.

We continue to bring these issues to the attention of the CIO
Council, and the very good work, the excellent work that is being
done by the Subcommittee on Year 2000—you'll be hearing in the
next panel from the Chair of the CIO Council and the Chair of that
Subcommittee to talk about what they’ve been doing.

On a government wide basis, among other things, they do have
underway, efforts to look at the facilities-based issues such as ele-
vators and heating and air conditioning and security systems with-
in the buildings.

They have a Subcommittee that is looking at the telecommuni-
cations systems. They have a Subcommittee that is looking at bio-
medical devices and laboratory equipment so that each Agency does
not have to reinvent the wheel.

This is where collegial efforts can actually be very productive.
And you will hear more about this from the witnesses who follow

me.

I think that we have made a good start. I think we have a long
way to go, and that there is a lot of work to do.

We are confident that we will finish that work, and that the Year
2000 will be a time for celebration, and that the concern with this
will be largely a non-event.

I thank you again for holding these hearings. I would be happy
to respond to any questions, and to continue what I think has been
a very important and constructive dialogue.

[The prepared statement and attachments of Ms. Katzen follow:]


7

HEARING BEFORE THE
COMMITTEE ON SCIENCE
SUBCOMMITTEE ON TECHNOLOGY

FOR RELEASE UPON DELIVERY

AND THE

COMMITTEE ON GOVERNMENT REFORM
AND OVERSIGHT
SUBCOMMITTEE ON GOVERNMENT
MANAGEMENT, INFORMATION AND
TECHNOLOGY

ON

YEAR 2000 QUARTERLY REPORT TO OMB
JULY 10, 1997

vig

STATEMENT BY
KATHLEEN ADAMS
CHAIRPERSON, CHIEF INFORMATION
OFFICERS COUNCIL SUBCOMMITTEE
ON YEAR 2000


challenges and lessons learned in implementing their Year 2000 programs. The emphasis of
this conference was on identifying solutions that are being used and are working. Tweaty-
seven vendors that have Year 2000 products or services were also present to answer questions

and distribute product literature.

A significant accomplishment of the Year 2000 Interagency Committee is the
formulation of our Best Practices guide to provide a framework for agencies to deal with the
Year 2000 challenge. The guide is designed to assist Federal agencies in planning, managing,
and evaluating their systems affected by the Year 2000 issue. The guide draws on the best
practices of Federal agencies, as well as the private sector. for each phase of the process.

‘These phases have been defined as:

© The Awareness phase, in which the organization defines the Year 2000 problem and

ensures that everyone in the organization is aware of the problem;

° ‘The Assessment phase, in which the organization identifies core business areas,

analyzes systems supporting these areas, and identifies resources;

© The Renovation phase, in which the organization converts databases and software and

modifies interfaces;


5

This hearing today is important for two reasons. First, to stress
the importance of fixing the federal computer systems and the
problems that the Agencies are encountering as they work towards
solutions.

Second, and perhaps more important, these hearings serve to in-
crease attention to this problem by the general public.

L intend to focus on a few issues.

What will be the real cost to fix the federal computer systems.
Already OMB has revised upwards by 20 percent its estimates of
5 months ago.

Is there adequate management structure in place to fix the prob-
lem by 2000?

And finally the issue of computer system interfaces. I am par-
ticularly concerned about this last topic.

Federal computer systems not only transfer data between Agen-
cies, they do thousands of transactions with external computer sys-

ms.

Unless there is a coordinated plan for conversion or appropriate
controls are in place, what will happen when systems are converted
in haphazard fashion?

Tm also concerned about the level of communication that has oc-
curred between the federal Agencies and the contractors and the
state and local government concerning this interface issue.

Unless there is a comprehensive plan of action to address the
data exchange issue, it won’t matter how many resources we dedi-
cate to fixing the federal computer systems.

I want to thank our witnesses for appearing today, and look for-
ward to hearing your testimony.

Mrs. MoRELLA. Thank you, Mr. Gordon.

T’d now like to recognize Mr. Davis from Illinois for any opening
comments he may have.

Mr. Davis. Thank you very much, Madam Chairwoman. I'd like
to commend you and Chairman Horn for convening this joint hear-
ing regarding will the Federal Government computers be ready for
the Year 2000.

Td also like to acknowledge and thank our distinguished panel
of witnesses for taking the time to come and share with us the sta-
tus of current Federal Government efforts to correct the Year 2000
problem.

The Year 2000 issue is a very serious one. Computers that use
two-digit date fields that I hear people talking about all over Amer-
ica will fail to recognize the century change on January 1, 2000.

I look forward to earing the status of the current Federal Gov-
ernment efforts to correct the problem.

In addition, I look forward to hearing the timetables for having
the Federal Government computers converted by the Year 2000.

Finally, I look forward to hearing what management processes
and structures are in place to monitor the Federal Government
Year 2000 efforts.

I am confident, and although I know that there are always pre-
dictions and fears of gloom and doom, but I am confident that the
people of America have always been able to rise to the occasion.

And I am confident that we will be able to avert any major crisis
by having the proper management and monitoring systems in place


81

properly on January 1. 2000. the focus of tie Subousumittee is 9 facilitate this major
undertaking by addressing cross-cutting aspects of the problem, such as interagency data
exchanges, availability of various vendor products. ai.d sources of mutual help across

agencies.

‘ear 2

believe the Subcommittee is meeting its goal to raise awareness of the Year 2000
issue and facilitate timely action. The Subcommittee can point to solid accomplishments,

inchiding development of:

o A Year 2000 website on the General Services Administration (GSA) homepage, which

can be reached at www. itpolicy.gsa.gov;

° Briefings on the Year 2000 issue and its ramifications for numerous government

agencies, including State agenci

© A recommended four digit year standard for interagency data exchanges, which was
done in conjunction with the National Institute of Standards and Technology and

approved by the CIO Council;


92

It will be important to have all of those components, and we are
working through groups and through the Interagency Committee to
accomplish that. But the year-end testing is important.

Finally, I should note that the Year 2000 work has been accom-
plished under the leadership and guidance of the Office of Manage-
ment and Budget, with assistance from the private sector, includ-
ing the Industry Advisory Council, the Information Technology As-
sociation of America, and the Coalition of Government Procure-
ment.

Td like to thank the members again for this opportunity to
speak, and for the continued cooperation between the Congress and
the Executive Branch in meeting the Year 2000 challenge.

1 oe prepared statement and attachments of Mr. Thompson fol-
low:


60

Mr. SESSIONS. It wasn’t indicative necessarily of what——

Ms. KATZEN. Exactly, exactly.

Mr. SEssIONS. So you would say that Energy, upon your evalua-
tion and your testimony today, is Energy probably would have been
and now should be higher up the list in terms of a grade?

Ms. KATZEN. Yes.

We have attached to our report four tables. The fourth is the
cost, the first three tables provide the milestones, the number of
mission critical systems and their state of renovation and repair.

And you'll see that not surprisingly, the experience of the various
Agencies is quite varied. And in some instances, they may be doing
very well, and that same agency may have a less than sterling
record.

It’s sort of hard to capture it all in a single grade, so we've tried
to provide more information td enable you to decide how you would
like to evaluate them.

What we use this information for is to spot areas where we need
to focus attention.

And Mrs. Morella focused us, identified a couple of different de-
partments, GAO has identified a couple of different departments
and Agencies, and this information gives us the tools to go back to
them and say, not only what’s happening to you, but also a little
peer pressure always helps.

Look at how some of your sister Agencies are faring, and why
aren’t you doing better.

Again, you’re hearing from someone who is basically competitive
and compulsive in this area

Mr. SEssIons. You're the straight A student of the bunch?

Ms. Katzen. Well, I was in my youth.

Mr. SESSIONS. Would that be how you would apply that?

Ms. KATZEN. When I was in school.

Mr. Sessions. I like that.

Ms. KATZEN. I’m not sure what grades I’m getting now.

Mr. Sessions. I like that.

Mr. Horn. Before she appeared before a Congressional commit-
tee, right?

Ms. KATZEN. I was doing great.

Mr. Sessions. I think you’re doing wonderfully.

Let’s talk about then those areas, and I am looking at what I
take is table 3 and table 4 and I’ve already admitted I did not
apply myself, as you do, to everything ahead of time.

But where are those areas, since this is a management problem,
are there Agencies that you believe, being very polite, that are not
as far along as you might have wished they might be?

Ms. KaTzEN. Yes.

Mr. SESSIONS. Since these are your charts and I haven't studied
them, I’m going to let you draw some conclusions.

Ms. KaTZEN. If you start with table 1.

Mr. Sessions. Table 1, okay.

Ms. KATZEN. Footnote 2 shows those departments that are re-
porting earlier dates than they had previously reported. I would
consider that good and progress. Whether it’s sufficient for some of
them remains to be seen.


56

Mr. Davis of Illinois. Ms. Katzen, you responded to concerns that
have been expressed about a number of the Agencies having time-
tables that press the moment. That is, November and December.
And therefore, there’s very little, practically no room for error.

And you indicated that you’ve met with those Agencies and there
have been discussions and there is indeed need to have contingency
plans in place.

Would it also make sense to lay out for them some definitive ta-
bles that were a little different than what they've been able to
come up with, and then give some firm and definitive projections
of what they really need to do?

Ms. KaTZzEN. We originally set out to set forth government wide
milestones and timetables and thought about imposing it by fiat or
edict and say, this will happen.

Our experience is that we're, usually a little bit more successful
in achieving our underlying objective if we actually find out wheth-
er it’s realistic or is acceptable, or whether it will be laughed at or
disregarded when it is presented to them.

So we took our proposal to the CIO Council to talk about wheth-
er this makes sense, and we got some feedback. Those have been
helpfal in giving us a sense of what the Agencies are really dealing
with.

It has not dissuaded us from the importance of continuing to
press hard and firm to ensure that Agencies and departments are
moving as quickly as possible.

And as we see these kinds of dates, we do step up the pressure
to ensure that they’re doing absolutely eve: ing that they can.

Mr. Davis of Illinois. Do you agree with the GAO that this is
more of a management problem than a technical problem?

Ms. Katzen. Yes. Apart from the headlines, I think what GAO
is saying and what I’m saying is remarkably similar. We’re both ac-
knowledging that there’s a lot of work to be done and a lot of con-
cern out there.

The question is really more the tone, but I believe it is a manage-
ment issue that must be focused on.

Mr. Davis of Illinois. My final question, Mr. Willemssen.

You indicate that it is becoming just crystal clear that the Agen-
cies are not going to be able to correct non-compliant systems be-
fore 2000. That is all.

Have you heard anything or are you hearing anything that might
cause you to take a different position relative to that?

Mr. WILLEMSSEN. No, I have not. I still remain concerned that
it’s highly likely that some systems will fail. That’s why we’re
pushing hard on establishing priorities so that whatever failures do
occur when we hit the millennium; that they occur on low priority
systems that will not have a major mission impact.

Mr. Davis of Illinois. Thank you both very much, and thank you,
Madam Chairwoman.

Mrs. MoRELLA. Thank you, Mr. Davis.

I’m now going to recognize Mr. Bartlett, but I wanted to com-
ment on the fact that being with us for some times have been Mr.
Sessions, as well as Mr. Gutknecht.

Mr. Bartlett?

Mr. BARTLETT. Thank you very much.


18

However, as the summary tables show, much work remains to be done. As of today, 21
percent of the agency mission-critical systems are reported as already compliant. An additional 8
percent are being retired and need not be fixed. That leaves 71 percent of the 7,649 mission
critical systems reported that must be repaired or replaced.

As expected, our estimate of the government-wide cost ($2.8 billion) is higher than the
$2.3 billion estimate that we reported in February, because agencies have progressed through
their assessments of the problem. Indeed, even since the May 15 date of this report, some
departments and agencies have revised their estimates, such as the Intemal Revenue Service. We
expect that the next quarterly report will provide a better, and likely higher, cost estimate as most
agencies complete their assessments in June.

Action

Agencies continue to place a high priority on fixing this problem. However, we are
continuing to interact with senior officials in those agencies that are not scheduled to complete
their assessment or renovation phases as early as most other agencies. In addition, where plans

are not complete or progress is slower than previously promised, we are bringing the issue to the
attention of senior agency management to ensure their continued involvement.


AT

It’s how far along you are in the process. Again, as I mentioned
to Mr. Sununu, what these figures are for when the assessment is
finished or when the renovation is, is when the very last thing is

lone.

But along the way you have a lot of information that is useful.

Mrs. MORELLA. It just shows that we’re not tied to that figure;
that it is going to escalate, and we know it will, bit-by-bit.

Ms. KATZEN. I said I thought it would increase as it has been in-
creasing as we get better information through the process.

Mrs. MorELLA. I'd like to also point out that as I looked at the
chart, with assessment, renovation, validation, and implementa-
tion, as I mentioned in my opening comments, I just found some
very unusual dates here.

For instance, DOT has a validation date of 12/99, and an imple-
mentation date of 12/99. I find that pretty remarkable.

Ms. KaTZzEN. I found it a cause of concern and actually met with
them last week. That is a problem, and we are going to address

at.

That’s why we get this information, so we see where we can focus
attention. And we did meet on this subject, specifically, last week.

Mrs. MoRELLA. You have a number of others that are very, very
similar areas, for instance, OPM, 11/99 for validation and 12/99 for
implementation, and even some others that have given themselves
like 3 months or 4 months.

From what I understand from experts, you need—we used to say
you needed a year and now maybe 9 months. Maybe you could do
it in that period.

I find it difficult to understand that you could do it much later.
So what I’m saying is, if that is reflective of the self-reporting or
self-accounting, as Mr. Willemssen says, then maybe we need to
have more reality in it.

Then I have another question: Do we need to have a so-called
Year 2000 Czar? Do we need somebody who is going to be like in
charge of this?

You’ve got CIOs in each of the Agencies, and then you meet with
them. Do we need to have one?

Ms. KaTZEN. The concept of the Clinger-Cohen Act is that infor-
mation technology is best managed most effectively, most effi-
ciently, on a decentralized basis with the Agencies themselves and
the Departments themselves being held accountable for their ac-
tivities.

This is not an area, in particular with the Year 2000 issue,
where a silver bullet or a dose of medicine administered at a cen-
tralized point is going to solve the problem.

There is real work to be done. It’s work that has to be done at
the Department, at the Agencies, at the technical level where the
expertise is to be applied, and where the support must come from
within the Program Offices, from within the Office of the Secretary
of the Department.

We believe that by ensuring the importance of this, stressing the
importance of this issue, then making it very clear that we are
holding the Agencies accountable for their progress, that we will
have a more efficient and effective way.


51

Mr. Gorpon. Is GAO doing anything on this?

Mr. WILLEMSSEN. GAO has not done anything on the inter-
national side, no.

Mr. Gorpon. Is that appropriate?

Mr. WILLEMSSEN. To the extent that we receive a request to do
so, we could do that, yes.

Mr. Gorpon. There’s still room on the plate, then?

[Laughter.]

Mr. WILLEMSSEN. We do our best.

(Laughter.]

Mr. Gorpon. You'll be hearing from me.

Thank you.

Mrs. MORELLA. Thank you, Mr. Gordon.

I’m now going to recognize Mr. Davis from Virginia, and then
Mr. Davis from Illinois.

Mr. Davis of Virginia. Ms. Katzen, are you aware of the FASB
rules and regulations allowing companies, this is private commer-
cial companies, on the Year 2000, having to take all of their allow-
ances in one year and not being able to conduct it over a series of
years?

Ms. KATZEN. I have heard the term FASB, and I’m aware of the
procedures. I am not an expert in any way, shape, or form on the
actual provisions of how.

Mr. Davis of Virginia. Since you're the federal rep, I'll call it to
your attention.

What is happening is that private companies who are having to
make these changes in 1 year, 1 or 2 years, are not allowed to am-
ortize these over a series of years, so they take the deductions in
one year.

That of course is a tax liability to companies and to local and fed-
eral governments in terms of how it’s going to impact the budget.

It’s come to our attention and there is some concern about that.

I don’t know what the best way to deal with it, but the private
companies are putting a huge investment, as you know, in becom-
ing 2000 compliant.

And it looks to me like the Federal Accounting Standards Board,
at least in this case, is probably not helping with the situation at
least in terms of the bottom line on how it’s going to affect tax rev-
enues and allow the companies to do this in a way that you would
other capital projects.

Ms. Katzen. I'd be happy to look into that.

Mr. Davis of Virginia. I note that the OMB’s Federal Govern-
ment Year 2000 cost estimate jumped in the June report by over
20 percent from the one that was sent last February.

lany large Agencies are still in the assessment phase, so we still
don’t know the size of the problem being faced.

Id like just to go through some questions, if I can, about the cost
estimates and how they were arrived at.

Is it true that the estimates for specific Agencies that have not
yet completed their assessment phase, are they likely to rise in the

ture?

Ms. KATZEN. I think that, yes.

Mr. Davis of Virginia. To the extent that they haven’t been com-
pleted, they may indeed rise?


In August 1996. the Information Technology Management Retorm Act. which was
enacted as part of Public Law 104-106, became effective and mandated a C1O Council to
review and provide guidance on information technology issues across the Federal Government,
At the CIO Council's first meeting in August 1996, it decided that the Year 2000 issue was
one of the most pressing information technology issues facing the government. In November
1996, the Council made the Year 2000 Interagency Committee an official subcommittee of the

Council, and our name became the CIO Council Subcommittee on Year 2000.

While our name changed, and we ndw have ufficial status, our purpose has not
changed. The Subcommittee's role is to raise awareness of the Year 2000 issue, address facets
of the issue that cut across government, seek mutual solutions where possible, and share best

practices.

Our official role has, however, given us some distin advantages. As Chair ofthe
Subcommittee, I attend meetings of the CIO Council to provide monthly status reports on
Subcommittee activities and bring to the Council issues requiring its attention or a decision. In
addition, the Council's focus on information technology issues gives the Subcommittee’s

activities more visibility within the Federal agencics.

It is important to keep in mind that each agency must find solutions to the Year 2000
issue that meet its unique needs, since there is no single approach that all agencies can employ.

While each agency head and CIO is responsible for ensuring that his or her systems function


13

this problem, and that of the 7,649 mission critical systems
identified (excluding the Social Security Administration, which
reported modules) :

© 4,493 (59%) are being repaired,

© 673 (9%) are being replaced,

© 621 (8%) are being retired,

© 1,598 (21%) are already year 2000 compliant, and

© 264 (3%) are still to be evaluated.
There were no mission-critical systems reported behind schedule.
I have attached a copy of the summary report to my statement.

While the agencies have made a good start, much work remains to
be done. Only 21 percent of the government's mission-critical
systems are reported as already compliant. an additional 8
percent are being retired and need not be fixed. That leaves 71
percent of the 7,649 mission-critical systems reported that must
be repaired or replaced.

Government-wide Cost.

Our $2.8 billion estimate of the government-wide cost is higher
than the $2.3 billion estimate that we reported in February. We
had anticipated that the estimates would change and likely
increase as agencies progress through their assessments of the
problem, Indeed, even since the May 15 date of the reports, some
departments and agencies have revised their estimates. We expect
that the August quarterly reports will provide better, and likely
higher, cost estimates as most agencies complete their
assessments.

‘The estimates cover the costs of identifying necessary changes,
evaluating the cost effectiveness of making those changes (fix or
scrap decisions), making changes, testing systems, and preparing
contingencies for failure recovery. They do not include the
costs of upgrades or replacements that would otherwise occur as
part of the normal systems life cycle. They also do not include
the Federal share of the costs for state information systems that
support Federal programs.

Assessment and Actions.

Agencies continue to place a high priority on fixing the year
2000 problem. I would characterize the first reports as showing
that agencies have made a good start in addressing the problem.
Most agencies are on schedule. They have completed or will

4


55

Aside from the fact that it’s actually 71 percent, we’ve learned
a lot from past lessons. And I believe the rate of repairs and ren-
ovations will increase. It’s a belief that I cannot yet document be-
cause we only have one quarter’s data so far.

Mr. Davis of Illinois. But you believe that based upon what
you've been able to do initially, working out whatever bugs might
exist, getting the system started, getting things on line, you are
then confident that by the Year 2000, we'll be in good shape.

I mean, is that what I’m hearing?

Ms. KATZEN. Yes, sir.

Mr. Davis of Illinois. All right.

We know that GAO has found, for example, that HCFA had not
made some critical assessments.

Do you know if those have now been made or if HCFA is moving
along satisfactorily towards making those assessments so that
they'll be in a better position to be on line?

Ms. KaTZEN. I can answer that better in 2 weeks’ time because
we're meeting with them next week on this specific issue which
was called to our attention, and which we have sought to verify.

Mr. Davis of Illinois. Okay.

Mr. Willemssen, we've had a lot of spotlight on HHS and on the
VA. We've talked about those being two Agencies that we had some
grave concerns about.

Are there other Agencies that you are aware of that fall in the
same category?

Mr. WILLEMSSEN. We are conducting work at several other Agen-
cies. Our work right now is on-going. It would be a bit premature
for me to comment on that at this point. We do have other work
at the Department of Defense, FAA, SSA, IRS, and the Department
of State. But that work is on-going, so I’m really not in a position
to comment yet at this time.

Mr. Davis of Illinois. There has also been a great deal of con-
versation about the President taking the leadership. You know, I
heard earlier that of course he was the most effective presidential
communicator since Franklin Delano Roosevelt. I always thought
that Ronald Reagan did all right too.

But aside from the President taking the lead in terms of using
his position to push the urgency of the matter, are there other
things that perhaps could be done that will help give the American
public assurance that we’re really moving to be ready by 2000?

Mr. WILLEMSSEN. Among the things that we would look for are
the resulting actions coming from some of the discussions that
Sally has had with top agency officials. Clearly, those discussions
are occurring.

We'll be looking to see what changes are made in their programs
as a result of those discussions.

Are they going to speed up assessment and renovation to allow
themselves additional time for testing?

Those are important items that we’d like to see come to fruition
as the discussions occur.

Similarly, as the upcoming budget cycle comes up, we would hope
to see that OMB imposes itself and clearly lays out some priorities
linked to the Year 2000 issue.


2

table to ensure that all government computers will continue to op-
erate in the Year 2000. On February 6 of this year, OMB submitted
this federal strategy in its report “Getting Federal Computers
Ready for 2000.” The February 1997 strategy relies heavily on the
involvement of Senior Program Managers and Chief Information
Officers in each agency.

Under this strategy, the CIOs and Senior Program Managers will
interact with the newly-formed CIO Council and the Year 2000
Interagency Working Group under the supervision of OMB to craft
a solution for each agency. The CIO Council was established in the
104th Congress through the Information Technology Management
Reform Act of 1996, which we’ve come to know as the Clinger-
Cohen Act. And was enacted largely with the assistance of Con-
gressman Horn.

Since the submission of the February 1997 OMB strategy, we've
been working closely with the Executive Branch to make sure that
the Federal Government remains on track with its Year 2000 ef-
forts. As part of this oversight, we have helped institute a quar-
terly reporting requirement to OMB for each agency and identified
management information that was necessary to monitor each agen-
cy’s progress. On June 23, 1997, we received the first quarterly re-
port based on information OMB received from the federal Agencies
by May 15.

The next agency reports are due to OMB on August 15, and sub-
sequently every 3 months thereafter. Today’s hearing will review
the June 1997 progress report, and provide us with a snapshot of
how far we've come in the implementation of the February 1997
OMB federal strategy. As the Federal Government moves forward
in correcting the Year 2000 problem, I continue to have significant
concerns regarding the government’s ability to have its computer
systems ready for the millennium date conversion.

Specifically, I'l mention some of my concerns. That the govern-
ment wide estimate of $2.8 billion, which was incidentally in-
creased from the January 1997 estimate of $2.3 billion, to correct
the Year 2000 problem is a significant understatement. Another
concern: that the Federal Government agency timetables and mile-
stones submitted in the report are neither viable nor realistic.
Third, that various Agencies are not allowing adequate time for the
validation of converted systems.

For instance, there were several that had validation and imple-
mentation months the same, that there may not be enough ac-
countability in the current system to effectively advance and mon-
itor Federal Government Year 2000 efforts.

And that adequate attention government wide is being paid to
other date-sensitive systems, such as the embedded computer chip
problem, a concern that not enough attention is being given to the
embedded computer chip problem.

Those are some of the concerns which I hope that we're going to
be able to address today. As everyone in this room knows, we're all
competing in a race against time to avert the impending computer
catastrophe in the Year 2000. And the deadline we face is unforgiv-
ing. Time is running out. We have under 2.5 years left, less than
about 1,000 days. What’s that, about 29 months.


72

workable and effective, and we believe close interaction with all stakeholders in the Year 2000

problem will serve us well in achieving this outcome.

Now, I'd like to talk briefly about the Council’s efforts to assist OMB in developing Year 2000
quarterly reporting requirements. First, the CIO Council believes strongly that an effective
reporting systems is critical to OMB's ability to monitor government-wide progress in
addressing the Year 2000 problem and to inform Congress of that progress. The CIO Council
has worked closely with OMB over the last six months to develop reporting requirements that
will provide accurate information on the size of the Year 2000 problem and the pace of agency

efforts to correct non-Year 2000 compliant systems.

In general, the forum of the CIO Council has given CIOs of both large and small federal agencies
an opportunity to work directly, as a team, with OMB in formulating Year 2000 policies, such as
the quarterly reporting requirements. The CIO Council also provides an effective forum for

agencies to raise policy issues to OMB early in the process and to resolve them productively.

The Year 2000 problem is a “shared” problem (.e., one shared by all federal agencies), and the
CIO Couneil is becoming an effective vehicle for addressing “shared” problems. I believe the
joint efforts of OMB and the Council to establish an effective Year 2000 reporting system has
had a positive impact on the pace of the federal government’s response to the Year 2000
problem, and on its ability to manage the problem effectively. Specifically, these quarterly
reporting data will support individual agency CIOs — and the CIO Couneil at large — in

5


27

Mr. Chairman, Ms. Chairwoman, and Members of the Subcommittees:

During the past 12 months, the year 2000 computing problem has received increased
attention~and deservedly so~in large part thanks to the efforts of your Subcommittees.
Much has happened since the initial congressional hearings on this matter were held just
over a year ago on whether computer systems that support federal programs will be
equipped to handle dates later than 1999. At that time, most federal agencies were just
beginning to be aware of the year 2000 issue and its importance, and few had prepared

plans for addressing it.

Now, agencies report to the Office of Management and Budget (OMB) that they are in a
much better position to resolve the year 2000 challenge before the actual change of
millennium. However, while agencies have certainly made progress over the last year,
we believe that the pace needs to be significantly accelerated if widespread systems

problems are to be avoided as the year 2000 approaches.

Our testimony today will describe the federal government's strategy for addressing the
year 2000 problem, and agencies’ reported status in resolving the issue. In addition, we
will provide observations on federal efforts to date based on work we have completed at
certain agencies and on our review of OMB's implementation of the federal strategy,

including year 2000 reports submitted by 24 federal agencies.


70

the IT issues of vital and strategic importance to the federal government.
The Year 2000 problem is an example of one of the vital and strategic issues the Council is
concerned with. Finally, the CIO Council also has the capacity to provide limited funding
assistance to projects where the benefits are clearly government-wide, or where no single agency
can, or should, have to fund a project’s entire cost. Later in my remarks, I will talk about a

specific Year 2000 project the Council is funding based on these criteria,

With this understanding of the Council’s mission and basic operating framework in mind, I
believe the Council has had a positive impact on the pace and direction of the federal effort to
address the Year 2000 problem. I also believe, that within this framework, the Council will
continue to do whatever it can to ensure the integrity of the information systems that so many
critical government programs and services rely upon. Now let me be more specific about the

Council’s role and efforts on the Year 2000 problem.

In the first meeting of the CIO Council, which was held in October of last year, the Council
identified the Year 2000 issue as one of the five top priorities of federal CIOs. In November, the
Council acted to elevate the existing Federal Interagency Year 2000 Committee to a CIO Council
Committee — and appointed Ms. Kathy Adams — the Chair of the existing Interagency
Committee — to serve as the Chair for the CIO Council’s Year 2000 Committee. As Ms.
‘Adams has testified in previous hearings, the Year 2000 Committee is implementing a
comprehensive and detailed work plan to address critical cross-cutting, or government-wide,
Year 2000 issues. To support the work of the Year 2000 Committee, the full CIO Council

3


63

the word, words like accountability and responsibility I think are
important.

And I say that, and I don’t want to be overly critical of this whole
effort, but earlier this week, this Subcommittee took a tour of the
new terminal at Washington National Airport.

And I think we all came away from that tour feeling as if they're
building a whole new nice package out there but when we saw the
radar screens, which I think were built in 1956, that have been
just taken out of the old control tower and put into this control
tower, I think we all came away thinking, gee whiz, we've been
told, this Subcommittee has been told, since I’ve been on it that,
yes, the FAA is making progress and everything is moving ahead,
it’s not going the way we’d like.

And those displays that they were using over there were built
when I was in Kindergarten, and so I guess the first question I
have for you is, at the end of the day, who ultimately is responsible
and accountable for making certain that these problems are, (a) re-
solved, or (b) mitigated?

Is it you?

Ms. KaTzEN. I would say that the Secretary of Transportation
bears that responsibility for Department activity.

I am responsible, if you will, for impressing upon him that this
is real, that this is a problem, and that he will be responsible for
it.

But most of the activities of the Federal Government, the sec-
retaries of the department are ultimately the ones who are to be
held accountable if we are going to have an effective and efficient
government.

Mr. GUTKNECHT. Don’t you feel that there ought to be one person
who is responsible for this?

If you say secretaries, all of a sudden, I can’t name all the sec-
retaries and neither can anybody else. Well, I shouldn’t say nobody.

Ms. Katzen. My reaction to it is that having the accountability
and the responsibility at a level that is close enough to where the
work is being done is generally more effective than several levels
removed.

I am from OMB and that gives me a certain amount of authority
within the government and people do return my telephone calls on
this and other issues.

But if what we’re focusing on is fixing the mission critical sys-
tems for a department, it is ultimately the secretary of that depart-
ment who is to be held accountable for what the department does
here as in other areas, whether it’s the budgeting, the carrying out
of the missions themselves, and that is the person to whom the
President looks to be responsible for that department.

In some instances, you would want to devolve responsibility
below that level, again, to get it closer to where the work is being
done. But you need it at a high enough level within the Depart-
ment to assure that those doing the work have the necessary sup-

port.

So I think it’s a balancing effort.

Mr. GUTKNECHT. A balancing effort though is sometimes con-
fused with bureaucratic shuffles. People start saying, well, it’s real-


oo TABLE 2
(May 15, 1997)

Number Number Number
Total Number %of Being Being Being Number

Agency m

Agriculture 684 80 12% 43 46987 5
Commerce 484 Ls 23%=— 0162 3 98
Defense 3,962 582 «15% = 473" 2,752, 487,141
Education 24 10 42% 6 7 1

Energy 261 TR 28% 119 6 8

HHS 566-251 44% 13200177 6

HUD 206 32 16% 3600S 2B

Interior 85 35 41% 10 38 2

Justice 190 61 32% 10118 1

Labor 58 6 10% 28 24 0

State 58 12 21% 29 14 0 3
DoT? 166 18 11% 16132 0

Treasury 86 13 15% 7 66 0

VA u 1 9% 0 10 0

AID 64 20 31% 30 2 0 12
EPA 61 28 46% 12 16 0 5
FEMA 38 17 45% 3 17 1

GSA 42 16 38% 2 23 1

NASA 453-205 45% 37 0

NSF 16 o - 4 12 0

NRC wa wa a wa sas

OPM 94 17 18% 9 67 1

SBA 40 10 25% 30 ) 0)

SSA‘ 29,139 20,426 71% 975 7,730 8

Total® 7,649 1,598 21% 673 4493621 264

' Not included in the total systems -- entries in this figure may have been reported twice.
? Does not include FAA -- will be provided after assessment is completed.
2 Information will be provided after assessment is completed.

* Reported and tracking modules (units of computer code that when compiled/assembled
and executed perform a specific business function) rather than systems.

5 Excludes SSA which reported modules.


37

We consider it essential that OMB emphasize in its ongoing oversight and monitoring

these issues that we expect to grow in significance in the next 2% years.

In closing, as we have reiterated previously, preparing for the year 2000 is much more of
a management challenge than a technical one. Managers~in the agencies and in OMB-~
must ensure that the technical solutions are implemented on time. It can be done, and
the public is depending on us to do it. Continuing congressional oversight, such as this
hearing, will be an important catalyst to effective, timely actions to ensure that

information systems are prepared for the year 2000.

Mr. Chairman, Ms. Chairwoman, and Members of the Subcommittees, this concludes my

statement. I would be pleased to respond to any questions you may have at this time.

(511225)

11


57

A year ago, when Congress reviewed the Federal Government
Year 2000 computer readiness, my understanding is that Rep-
resentative Horn gave a letter grade of F to the Department of
Transportation.

The Acting Chief Information Officer told us in February that
the first he’d heard of the Year 2000 problem was last August.
That was 4 months after our Subcommittee’s, after this Sub-
committee’s first hearing on the issue and 4 months after the Sub-
committee’s Ranking Member, Representative Maloney and Chair-
man Horn sent a very detailed letter to Secretary Pena asking
questions on the status of the Department’s Year 2000 effort.

Interestingly, within the Department of Transportation, the Fed-
eral Highway Administration began its Year 2000 activity in April
of 1989.

Why did not someone at the Department of Transportation report
up the chain of command, hey, we might have a problem here that
the Federal Aviation Administration should take a look at?

After all, report after report has criticized the Federal Aviation
Administration’s air traffic control modernization.

Why did it take the Federal Aviation Administration so long to
get started?

Ms. KaTZEN. I can’t give you—I assume you're asking me. I can’t

ive you an answer of what happens within the Department of

‘ansportation.

What I can tell you is that Michael Herta, who is the CIO who
testified, did not personally know of this before August of last year.
He has spent an enormous amount of time on the subject since.

Mr. BARTLETT. The Chief Information Officer at the Department
of Transportation told the Subcommittee in February that the as-
sessment at FAA would be finished this May.

According to the Department’s report to OMB, the Department’s
assessment will not be complete until the end of the year.

In fact, we still do not know the extent of the problem the Air
Traffic Control system faces.

Given the difficulties that the FAA has faced in the past, very
significant challenges could exist.

What specific actions is OMB taking to address the lagging re-
sponse by the Department of Transportation?

Ms. KaTZEN. I'd like to note that in Table 1, we identify DOT as
the only department whose dates had slipped rather than acceler-
ated since the last report.

And, having seen that, I met with them just last week. And the
Deputy Secretary, Mr. Downey, among others, was with us at the
time.

And we have talked about a variety of different things that can
be done to not only focus attention but to get the work done at

Mr. BARTLETT. Is it not true that at this time, we really do not
know, we can only hope that the Air Traffic Control system will op-
erate safely on Saturday, January 1, 2000?

Ms. KaTZEN. Following my meeting last week with Mr. Downey
and others, it is my expectation that it will work on January 1,
Year 2000.

Mr. BARTLETT. It’s our hope that it will work, then.


23

Biography
of
Sally Katzen

Sally Katzen is the Administrator, Office of Information and Regulatory Affairs in the Office of
Management and Budget, She had previously served in Government in the Carter Administration
as Gencral Counsel (1979-80) and then Deputy Director for Program Policy (1980-81) of the
‘Council on Wage and Price Stability in the Executive Office of the President.

Prior to becoming Administrator, she was a Partner in the Washington, D.C. law firm of Wilmer,
Cutler & Pickering, spocializing in regulatory/legislative matters. She has worked extensively in
the field of administrative law, both in her law practice and in professional activities. In 1988, she
‘was elected Chair of the Section on Administrative Law and Regulatory Practice of the American
Bar Association; she has held various other offices in the ABA, including serving two terms as a
D.C. Delegate to the House of Delegates. She served as a Public Member and Vice-Chairman of
the Administrative Conference of the United States, and she has taught Administrative Law as an
Adjunct Professor at Georgetown Law Center. In 1990 she was elected President of the Federal
Communications Bar Association. She also sorved as President of the Women's Legal Defense
Fund (1976-77), and is 2 member of its Advisory Board,

‘She was born and raised in Pittsburgh, Pennsylvania, and gradusted from Smith College and the
University of Michigan Law School, where she was Editor-in-Chief of the Michigan Law Review.
Following graduating from law school, she clerked for Judge J. Skelly Wright of the U.S. Court
of Appeals for the District of Columbia Circuit.

She is married to Timothy B, Dyk and they have one child.


90

Mrs. MorRELLA. Thank you, thank you, Ms. Adams.
Mr. Thompson, we look forward to hearing from you, sir.

TESTIMONY OF JOE THOMPSON, CHIEF INFORMATION OFFI-
CER, GENERAL SERVICES ADMINISTRATION, WASHINGTON,
DC

Mr. THOMPSON. Madam Chairwoman Morella, Ranking Mem-
bers, and distinguished members of the Subcommittees, thank you
for the opportunity to discuss the challenging issues of the Year

GSA is pleased to provide a copy of my written testimony. How-
ever, to paraphrase an old saying, I’ve given you a thousand words
in my testimony. What’s being held up Eeyore you—and I'll take my
5 minutes to highlight the major points from my written testimony
from that single picture.

That single picture represents the thousand words, and you
should have a copy being distributed to you in smaller print. This
picture, indeed, summarizes the progress that GSA has made in re-
solving within the Agency and within the business community, the
Year 2000 issue.

For example, one of our major businesses which affects most of
the buildings and operations in government, we have made—I have
been on a proprietary outmod mainframe system for the last 25
years.

We have now replaced that system with a Year 2000-compliant
system. That was accomplished on January of this year.

In order to take that system off, we saved $5 million. If we had
been required to upgrade that system through code revision, it
would have cost us $20 million.

By getting rid of the old system, we saved $5 million in savings
which we now are using to buy a new system. So our costs went
down in terms of that modernization project.

So what did we get and where are we in terms of Year 2000 com-
pliance? Up at the upper left-hand side, you see IRIS. That’s an
automated system that gives a comprehensive view of all new con-
struction, major modernization, repairs and alterations for all of
the GSA buildings nationwide, and it is now Year 2000-compliant,
today.

Below that you see EAS, which is an Electronic Acquisition Sys-
tem already in place as I sit here before you today, which virtually
automates every procurement process from creating requisitions to
the final closeout. For the first time PBS is able to track contracts
using milestones during any point in its contracting process, and
it is Year 2000-compliant.

Looking further down, you see we have gone to the Internet for
our business enterprises because all of the businesses within GSA
must be Year 2000-compliant in order for us to do business, both
national, international, state, and local.

And we are working with all of those bodies in terms of accom-
plishing that. The same is true of our human resources. If you look
over to Fiscal Year 1998, the first one at the top, which is CHRIS,
that is a human relations interface system for our personnel.

That system will be Year 2000-compliant, and is in the process
of being installed even as we speak.


44

The impact could be felt, though, obviously, within this country,
to the extent that we have data interchanges and exchanges with
other countries’ systems.

If their data is not Year 2000-compliant, our systems here have
to make sure that we have the appropriate bridges or filters so that
non-compliant does not infiltrate our systems.

Mr. SuNUNU. Where are those kinds of interchanges most com-
mon?

Mr. WILLEMSSEN. Again, we have not done work on this. I would
guess that there might be something in the financial area. That
would be the banking area which is probably an area to explore

er,

Ms. KaTZEN. Financial institutions, U.S. multinational corpora-
tions will have a variety of these types.

I would concur with my colleague from GAO on the assessment
that the United States is far ahead of the rest of the world on this
issue, and that is not a basis for pride or complacency, but for con-
tinued attention to this issue.

One of the subcommittees of the Year 2000 Committee for the
CIO Council, which is looking at data standards will at some point
be able to use those efforts internationally, as well, where they are
accepted.

Mrs. MORELLA. I'll pick up the questioning then, too.

I wanted to get back to something that I’ve always felt was need-
ed, and Chairman Horn mentioned it, too.

Tm not sure about whether there was an adequate answer with
regard to the position of the President as the leader, to make a
definite statement, whether at a press conference, a particular
broadcast, calling the Cabinet in, and then announcing that he’s
called the Cabinet in.

He calls the press in after that. In terms of leadership, what do
you think that we should do, you should do, with regard to having
a strong statement made by the head of state?

Ms. Katzen, I'll ask you, and, Mr. Willemssen, if you want to add
something in terms of how you look at that, too, what can be done.
I think a definite statement has to be made.
anlavbe if you want an Executive Order, that might not be a bad
idea.

Ms. KaTzEN. I think that it is obviously very beneficial to have
a statement made, to use the bully pulpit. I think it is also, as I
tried to indicate in my opening comments, important to get the
work done.

We have attempted to get the attention of, and focus that atten-
tion of those within the Departments and Agencies who are doing
the work and need the support to get the work done.

Within almost all of the Departments and Agencies, there is
what is known as sort of the Chief Operating Officer, usually the
Deputy Secretary or the Undersecretary, that is responsible for the
management of that Department or Agency.

They meet together once a month. I have appeared before that
group on several occasions to talk about this issue. And we have
actually arranged to have some people from the private sector come
and talk to them, not on the technical side, but on the management
side.


8

2000. Our accomplishments would not have been possible without such complete support and

cooperation.

The Subcommittee is continually evaluating the need to deal with emerging facets of
the Year 2000 issue. Since these issues are numerous and far-reaching, we have formed

subgroups to focus on specific areas of the Year 2000 issue, We have subgroups to deal with:

° Best Practices~-works on identifying best practices for Year 2000 solutions and updates
the Best Practices guide;

° ‘State Issues--works with the National Association of State Information Resources
Executives (NASIRE) and other State groups to address State/Federal interface
problems resulting from the Year 2000 issue, as well as items of mutual interest;

° Contract Language and GSA Schedules--works to standardize the definition of Year
2000 Compliance, provide contract language for Year 2000 compliant products, and
make Year 2000 products and services available through GSA schedules;

° Data Exchange—-works on problems relating to exchanges of data among Government
agencies or the Government and third parties, particularly where multiple agencies are

involved;


62

meeting with these does not mean that they have a sordid record
and that they have clearly flunked the course.

Mr. SEsSIONS. I don’t take it that way.

Ms. Katzen. And the fact that I didn’t mention somebody doesn’t
mean that they’re sterling and I have no cause of concern.

Mr. SESSIONS. Right.

Ms. KAaTZEN. This is where my attention is currently being fo-
cused.

Mr. SESSIONS. Good.

Ms. Katzen. Based on this information.

Mr. SESSIONS. Good, good.

Inspector generals, IGs in these Agencies, I think perform a very
important role.

e these one of the avenues that you would utilize in your man-
agement structure to try and make sure that performance and in-
formation and work is being performed?

Ms. KaTZEN. Yes. There is the PCIE, the President’s Committee
on Integrity and Efficiency, which is the IG group. And we have
met with them.

They have reported back and provided information about the ex-
tent to which IGs within different departments and Agencies will
not only be focused on this issue but help validate some of the in-
formation that is being supplied.

I think that’s very important.

In many instances, some of the mission critical systems are fi-
nancial systems for the departments themselves. The IG obviously
have a very important role to play there.

But across the board, they can be very useful and have indicated
their willingness to work with us in this regard.

Mr. SEssIons. Good.

Lastly, if I have just 1 more minute, please?

Okay, thank you.

I am hoping and assume that as part of your managerial struggle
with these Agencies and departments that they have gone through
and listed things that would be critical elements where they could
have failure, not just general code, but things that could really go

ad.
And I would be interested, as we go forward, to find out what
those are on an agency by agency basis. Not that we have to get
into it, but that they have developed those lists and in fact are
managing themselves, and I hope that that’s something that has
been developed.

And that’s just a statement.

Ms. KaTZEN, That’s very important information, yes.

Mr. Sessions. Thank you. I appreciate this opportunity.

Mrs. MoRELLA. Thank you, Mr. Sessions.

We've been joined by Ms. Maloney who is the Ranking Member
of the Subcommittee on Government Management, Information and
Technology, but she’s going to defer to Mr. Gutknecht who’s been
here for awhile.

Mr. GUTKNECHT. Thank you, Madam Chairwoman.

Actually, Mr. Sessions raised a number of the points that I want-
ed to discuss, and I was very pleased with the answers. In fact, ’m
extremely happy to hear that you are grading people and I do like


86

oO Commercial Off-the-Shelf (COTS) Software--works to obtain and provide information
regarding whether commercial-off-the shelf software presently in use in Federal
agencies functions or wil function properly when handling dates beyond 1999;

© —_Telecommunications-works on issues affecting telecommunications:

© —_Biomedical-works on issues affecting biomedical equipment; and

© Industry--works with industry information technology groups to increase awareness of
the Government's need for Year 2000 services and products and addresses issues of

mutual concern.

The subgroup structure has enabled us (o focus resources on the individual facets of the Year
2000 issue by using the expertise of the Subcommittee members where it can do the most

good.

We have been working effectively with the information technology industry on many issues of
mutual concern. We have worked closely with the Information Technology Association of
America (ITAA) and the Industry Advisory Council (IAC) on numerous issues, such as
standard contract language, the need for contractor support services, and COTS software.

We are encouraging the industry to advise government buyers as soon as possible when Year
2000 compliant versions of software packages will be released so that government agencies
can better plan their implementation and testing programs. Many Year 2000 solutions will
require close cooperation between Government and industry. The Subcommittee on Year

2000, since it represents all departments and agencies, has and will continue to facilitate that


31

The OMB report includes agency-specific schedules for completing the assessment,
renovation, validation, and implementation phases of the year 2000 effort. Our
accompanying chart, which appears at the end of this statement, summarizes those

schedules.

As shown on our chart, 18 of 24 departments and agencies reported that they would
complete the assessment phase as of last month, the deadline in OMB's governmentwide
schedule. Six reported that they would not meet the assessment phase deadline:
Defense, Transportation, Treasury, Veterans Affairs, the Agency for International
Development (AID), and the Nuclear Regulatory Commission (NRC). The cusrent
estimated cost for achieving year 2000 compliance for these 6 entities is about $1.9

billion, or about 70 percent of the total for the 24 agencies.

To complete the assessment phase, an agency needs to undertake a variety of activities.
In our view these should include, at a minimum, (1) assessing the severity and timing of
the impact of year 2000-induced failures; (2) developing a thorough inventory of all of its
systems; (3) establishing priorities and schedules as to whether--and which~systems
should be converted, replaced, or eliminated; (4) developing validation strategies and
test plans; (5) addressing interface and data exchange issues; and (6) developing

contingency plans for critical systems in the event of failure.


7

And Mr. Willemssen, Joel Willemssen, the Director of Accounting

and Information Management Division in the General Accounting
ice.

We've looked at your testimony and look forward to hearing from

ou.

And in both instances, the entirety of your testimony will be in
the record. And if you’d like to synopsize with highlights, we’d ap-
preciate it.

Thank you very much.

Ms. Katzen.

TESTIMONY OF HON. SALLY KATZEN, ADMINISTRATOR, OF-
FICE OF INFORMATION AND REGULATORY AFFAIRS, OFFICE
OF MANAGEMENT AND BUDGET, WASHINGTON, DC

Ms. KATZEN. Thank you very much.

Good morning, Madam Chairwoman, and Mr. Chairman, mem-
bers of the Committee.

I am pleased to be back to continue our discussions on how the
Federal Government is moving to solve the Year 2000 computer
problem for our information technology systems.

And I would like, as I have in the past, to begin by again ac-
knowledging our appreciation for the leadership that both of you
and your Committees have shown in focusing attention on this
problem and helping to raise awareness of the issue.

We are very appreciative of the efforts that you have undertaken
in this regard.

As you mentioned, today’s hearing is going to focus on the Year
2000 quarterly reports from the federal Agencies to OMB which we
hope will help reassure the public that the Executive Branch is
aware of and working on the Year 2000 problem, so that what we
all agree would be totally unacceptable consequences of system fail-
ure as a result of that problem will not occur.

As you indicated in your opening statement, Madam Chair-
woman, a lot has happened since I testified last September.

In the appropriations language that you referred to, OMB was
directed to assess the risk to federal systems and submit a report
on the costs and strategy for addressing that risk, which we did on
February 6, 1997, in the report that you identified.

That report identified the Federal Government’s strategy to ad-
dress the problem, established a schedule against which to meas-
ure agency progress, and provided initial cost estimates.

As reflected in that report, a key component of our strategy is as-
suring agency progress and accountability by the Agencies that are
charged with this responsibility.

As you also mentioned, we spent a lot of time this spring working
with your staffs and with the CIO Council and its subcommittee on
the Year 2000 to design a reporting requirement for the Agencies
to use to measure progress that would be helpful not only to OMB
but also to the Congress in its oversight capacity.

In May, we informed the Agencies that it would be a quarterly
reporting requirement that would be in place on the 15th of May
and then August and November.


46

I just feel that while I’m perfectly prepared to say that more has
to be done, and I’m perfectly prepared to say we have to focus
more, I do not think it is accurate to say that Secretaries, Deputy
Secretaries and Agency heads are not aware of this issue.

T really feel compelled to say that.

Mr. WILLEMSSEN. I wouldn’t say that on the awareness. I’m talk-
ing in terms of the priority and the priority demonstrated through
various actions, budget resources and otherwise.

Ms. KaTZEN. Again, I disagree.

Mrs. MORELLA. Because you’ve worked so hard on it.

Ms. KATZEN. Not only I, the Director of OMB, as well, and others
have devoted time and effort.

But more importantly, we’re seeing the results. We are seeing
that some Departments and Agencies are accelerating their time-

ames.

Some Departments and Agencies are clearly reporting increase in
mission-critical systems being repaired. When I speak on this issue,
eyes don’t glaze over and they go into some sort of sense of denial,
which did happen 18 months ago.

It can’t be that difficult. Computers are smart, we won’t have
that problem. I don’t hear any of that.

I hear, okay, I'll triple my efforts within the Department if that’s
what it takes. I hear a commitment to address this issue.

Mrs. MoRELLA. I’d like to also ask if you would ask Frank Raines
to speak to the President. I think that would help.

Again——

Ms. KATZzEN. Absolutely.

Mrs. MoRELLA. Thank you.

I just had a lot of questions that came up also because of Mr.
Willemssen’s kind of confirmation of some of the ideas.

For instance, the $2.8 billion dollar figure, in his testimony he
mentions that six Agencies have not completed their assessment.
it will ultimately cost them 70 percent of $2.8 billion; that’s 6 out
of 24,

So it indicates that there will not be just a small amount that
will have to be added to the budget figure, but a significant amount
will have to be added if that is 70 percent.

Ms. KATZEN. The issue here, though, is whether everybody is
holding back, and I don’t think that’s the case.

In other words, the fact that a Department has not completed its
assessment, does not mean that it does not have a better handle
on the number. And it may be, in not having yet completed it, it
may be 80 percent of the way there; it may be 90 percent of the
way there.

And in the process of getting and revising its figures as it goes,
so that, for example, as reflected in the report, we know that since
May 15th, the Internal Revenue Service has revised its numbers,
has increased its numbers.

Treasury is shown as not having completed the full assessment,
but they have done enough to know that they need additional
funds. So it’s not an on/off switch until you are completely finished
with the assessment. You don’t have any idea of what the real
costs are.


6

te ensure, that all government computers are converted before the
‘ear .

I thank you again, Madam Chairwoman, and look forward to
hearing the testimony of our expert witnesses.

Mrs. MorELLA. Thank you, Mr. Davis, and thank you for your
confidence.

Ms. Lofgren from California, who has been a leader in the area.

Ms. LorereEn. I'll just wait to hear the testimony, Madam Chair-
woman.

Mrs. MORELLA. Thank you.

Ms. Stabenow, I’m delighted to recognize you.

Ms. STABENOW. Thank you, Madam Chairwoman.

I wish to welcome our panelists as well and share the concerns
about this issue.

I also, in my district in Michigan, I’m concerned as I talk with
business people, particularly small business people, about the lack
of awareness of the impact of this issue on them.

And while we are discussing today the Federal Government’s role
and the critical issues surrounding the challenges faced by the Fed-
eral Government, I’m also extremely concerned that we do not see
a level of awareness in general with local units and government
and businesses that will be affected.

That is certainly something I would certainly welcome anyone

Mr. Barcia.

Mr. Barct. Thank you very much, Madam Chairwoman.

Td like to thank you and the Ranking Member for convening this
session, and also the distinguished panel guests who will share
their insight on this very critical problem as all my colleagues have
mentioned.

And so that as the millennium is fast approaching, I’d don’t
think we can devote too much time and attention to this issue to
be prepared for the challenges that we'll face with regard to our na-
tional computer network.

Thank you, Madam Chairwoman. In the interests of time, I won’t
have any further opening comment.

Mrs. MoRELLA. Thank you, Mr. Barcia.

Mr. Doyle.

Talk about perfect timing, if you have any opening comments?

Mr. DoyLE. No opening comments, Madam Chairwoman. Thank
you very much.

Mrs. MoRELLA. Thank you, Mr. Doyle.

It is the procedure in this Committee that we swear in witnesses
so might I ask if you would kindly stand.

(Witnesses sworn.]

Mrs. MorRELLA. The record will show an affirmative response.
Thank you.

I want to welcome our witnesses.

Sally Katzen who is the Administrator of the Office of Informa-
tion and Regulatory Affairs of the Office of Management and Budg-
et, not new to this Committee, the two Subcommittees. We than!
you for the work that you’ve done.


40

Mrs. Morea. Thank you very much for your statement. I’m
now going to allow Chairman Horn to have the first opportunity for
questioning.

Mr. Horn. Thank you very much, Madam Chairwoman.

Ms. Katzen, in my opening remarks, I noted the need for the
President to use the bully pulpit to awaken not only the Executive
Branch for which he’s responsible, but generally across the land,
for which The Gartner Group, in testimony before our Committee
in April of 1996, that it’s a $300 billion problem.

That’s certainly worthy of Presidential attention. Have you or the
Director of OMB recommended to the President that he speak out
in this area in a radio address or by other means of communica-
tion?

He’s the most skilled person since Franklin Roosevelt in the
Presidency, and it would be very helpful.

Ms. KATZEN. We have from time to time thought through and
made recommendations about the best way of focusing attention on
this issue.

Our approach to date has been to speak to the managers of the
Departments and the Agencies, as you know.

Mr. Horn. I take it that the answer to the question is no; you
have not recommended to the President that he speak out?

Ms. KATZEN. That is correct.

Mr. Horn. Let’s move to reprogramming policy. My understand-
ing with the Director was that, generally, they would urge Depart-
ments to reprogram existing money in their budget in order to get
right on top of this problem now and not sit around in a 1-year
budget process or more than 1 year.

As we all know, there’s three cycles going on. What is OMB’s pol-
icy on the sense of urgency here of using reprogram money rather
than having people come up and say, gee, I need $258 million for
the Year 2000 solution, as TRS did recently?

What’s our policy on this?

Ms. KATZEN. In most instances, the annual appropriations for in-
formation technology are sufficient to be available to use these
monies without reprogramming technically done.

And we have encouraged that. We have explained that with a
roughly $26-27 billion a year annual appropriations for informa-
tion technology, the money for this particular problem is there, and
it is the most important.

When we have had the budget reviews with the Agencies last
fall, there were a number where the issue specifically was focused
on because of our concern, and it was made clear that this was the
number one priority in the information technology area.

A few Agencies did, in fact, request additional money, and those
were part of the President’s Balanced Budget Proposal. They in-
cluded that request for funding where we thought additional funds
taken from the Departments would be appropriate.

Mr. Horn. How much money at this point do we know has been
reprogrammed to deal with this problem in the current fiscal year?

Ms. KATZEN. I don’t have the figures in that order because a lot
of it doesn’t have to be reprogrammed. A lot of it is there to be used
for information technology and would be used in the ordinary
course.


Agency

Agriculture
Commerce
Defense
Education
Energy”
HHS
HUD
Interior”
Justice?
Labor
State
DoT?
Treasury
va?

AID>
EPA
FEMA
GSA
NASA
NSF

NRC
OPM
SBA

SSA

19

(May 15, 1997)

TABLE 1

6/97'
3/97
12/97
6/97
W/97
6/97
6/97
397
6/97
6/97
6/97
12/97
WT
198
8/97
6/97
6/97
6197
3/97
6/97
9/97
6/97
9/96
5/96

9/98
12/98
12/98
9198
9/98
12/98
12/98
12/98
H98
12/98
9/98
12/98
12/98
11/98
TBD
1298
12/98
12/98
6/99
6/98
3/99
12/98
12/98
11/98

9/99
1/99
6/99
9198
2/99
1/99
1199
1/99
10/98
99
10/98
12/99
12/98
1/99
TBD
1/99
1/99
199
7199
12/98
499
11/99
12/98
12/98

10/99
10/99
199

3/99

1199
11/99
11/99
11/99

99
11/99

8/99
12/99
11/99
12/99

TBD
11/99
11/99
10/99,
12/99
12/99
11/99
12/99
12/98
11/99

' Two digits are used for the year since all dates occur before the year 2000

? Dates are earlier than those reported in February 1997.
> Dates are later than those reported in February 1997.


4

shortly complete their assessment of the problem, and many have
begun renovating systems. No mission-critical systems were
reported behind schedule. However, the bulk of the hard work
still lies ahead.

We are continuing to work with senior officials in those agencies
that are not scheduled to complete their assessment or renovation
phases as early as most other agencies through meetings focussed
on this issue or as part of more general discussions about agency
information management. In particular, where plans are not
complete or progress is slower than previously promised, we
continue to bring the issue to the attention of senior agency
management to ensure their continued involvement. In addition,
we will use the information in the reports to assist in our Fall
review of agency budget requests.

We are also continuing our work on ways to help address this
problem from a government-wide perspective. Specifically, we
have undertaken targeted efforts to address the year 2000’ problem
in Federal buildings, telecommunications and bio-medical devices
and laboratory equipment. We work closely with the CIO Council
and its Subcommittee on Year 2000. I understand that Al
Pesachowitz, the Vice-chairman of the CIO Council, and Kathy
Adams, the chairwoman of the Subcommittee oh Year 2000, are
testifying today about the excellent work they are doing. We
also work closely with GSA, which provides support for
government-wide activities such as maintaining the year 2000 home
page for exchanging information about how to best address this
problem. I understand that Joe Thompson of GSA is also
testifying today. All three of them and their organizations have
been extremely helpful to us in addressing this problem.

Conclusion

We have made a good start. While we, like the Subcommittees, are
concerned about the limited time we have left, and the large
amount of work that remains to be done, we are confident that we
will finish that work so that the year 2000 computer problem will
be a non-event -- and we will all be able to celebrate the new
millennium,

I thank the Subcommittees for holding its series of hearings on
this important subject. They are contributing materially to the
solution of the year 2000 problem.

I would be happy to answer any questions that you may have.


3

So much more work, however, clearly remains to be done, so I
look forward to working with my colleagues and the distinguished
panel before us this morning in using this hearing to review and
reform our federal Year 2000 efforts so that we can provide ade-
quate assurances to the American public that our Federal Govern-
ment will not be bitten by the millennium bug.

I want to thank you all and turn over to the Chairman of the
Subcommittee on Government Management Information and Tech-
nology, Congressman Horn, for his opening remarks.

Mr. Horn. Thank you very much. It’s always a pleasure to work
with the Subcommittee on Technology that also has a very broad
interest in this.

The purpose of this joint hearing is to determine whether federal
Agencies are taking the necess: steps to avoid a breakdown in
government services at the turn of the century.

The people need to know, are federal Agencies moving fast
enough on solving the Year 2000 problems? Are the agency time-
tables realistic and adequate to solve the problem before the
unmovable deadline of midnight, December 31, 1999? Do the Agen-
cies have sufficient management processes in place to monitor their
ear 2000 efforts? Is there sufficient leadership in the Executive

ranch?

Has the President of the United States made this an issue? He
is one of the great communicators of this century. We need him to
awaken the Nation to this very serious situation.

In brief, the President needs to use the bully pulpit, not only on
the Executive Branch, where it has not been used; not only to in-
volve the Cabinet, where they have to be involved, or it isn’t going
to happen, but also to the Nation generally. He needs to say,
“We're serious about it and we need to get to work on it.” That this
is a problem.

We all know, as you get closer and closer to the Year 2000, you
have a scarcity of resources that will increase the cost of doing
business to solve these problems. We will be answering a lot of
these questions today with the help of a new report provided by the
Office of Management and Budget, though, but we need to begin
with a brief review of the basics.

After midnight on the last day of 1999, computer systems in the
United States and abroad using two digits to signify the year will
automatically flash from 99 to 00. Many of these systems will inter-
pret the digit 00 to mean the year 1900 instead of the Year 2000.
Some systems understand the digits to mean no date at all.

In either case, the result could be malfunction, corruption of
data, or simply shutdown. In effect, we’re talking about a global
computer virus.

During the last Congress, an investigation by the Subcommittee
on Government Management Information and Technology first
brought to ight a near total lack of preparation by the Federal
Government for the Year 2000 problem. Despite recent efforts by
federal departments and Agencies, government officials are still
unable to say whether the Federal Government’s computers will be
ready for the Year 2000.

Appearing before the House Appropriations Subcommittee on
Treasury, Postal Service, and General Government on March 11,


69

higher priority for federal CIOs than to ensure the proper operation of the information systems

the government relies on to serve the American public, as we enter the next century.

The Federal CIO Council was created by Executive Order on July 16, 1997 to serve as the
principal forum for improving the information management practices of federal agencies. The
Council membership is composed of the CIOs and Deputy CIOs of the twenty-eight largest
federal agencies, as well as, two CIOs representing other smaller and independent federal
agencies. The Council is Chaired by the Deputy Director for Management of OMB. The Vice-
Chair is elected by the CIO Council on a rotating basis and must be an agency CIO. (My term as

Vice-Chair began in October, 1996 and will continue through November of this year.)

The CIO Council provides a valuable forum for federal CIOs to share information on the critical
information technology (IT) issues and challenges facing all federal agencies today. The vision
of the Administration in establishing the CIO Council was to create an executive-level body that
could advise OMB on the strategic direction of information technology (IT) management in the
federal government. As such, the CIO Council has an important role in assessing the
government's progress in addressing critical IT management issues, such as the Year 2000. In
addition, because the Council represents a broad cross-section of the federal IT community, it is
uniquely positioned to provide leadership and policy advice on cross-cutting IT issues. This
leadership takes various forms, including
= acollegial approach to assisting OMB in formulating government-wide IT policies, and
=  aCouncil strategy of establishing permanent committees to do in-depth policy work on
2


24

Mrs, MorELLA. Thank you, Ms. Katzen. We'll have some ques-
tions following Mr. Willemssen’s comments.

Td like to just note that we have been joined on this panel by
Mr. Davis from Virginia, Mr. Sununu from New Hampshire, and
Ms. Johnson from Texas.

And now it’s a pleasure to turn to you, Mr. Willemssen, from the

TESTIMONY OF JOEL WILLEMSSEN, DIRECTOR, ACCOUNTING
AND INFORMATION MANAGEMENT DIVISION, GENERAL AC-
COUNTING OFFICE, WASHINGTON, DC

Mr. WILLEMSSEN. Thank you, Madam Chairwoman, Chairman
Horn, and Representative Gordon, members of the Subcommittees.
Thank you for inviting GAO to testify today on the Year 2000
issue.

As requested, I'll briefly summarize our statement.

As noted, OMB recently submitted its first quarterly report on
the progress of federal Agencies in correcting the Year 2000 prob-
lem. The report is based on the quarterly reports submitted by in-
dividual Departments and Agencies.

In its report, OMB acknowledged that much work remains. How-
ever, OMB also stated that it believed Agencies had made a good
start in addressing the problem.

OMB went on to say that most Agencies had completed or would
shortly complete the assessment phase work, but that many had
begun to make fixes, and that no mission-critical systems were re-
ported to be behind schedule.

OMB’s perspective would seem to imply that there is no cause for
alarm. We don’t share that view.

On the contrary, we believe that OMB and federal Agencies need
to increase their level of concern, and move with more urgency to
clearly demonstrate that a business-as-usual approach on the Year
2000 issue won’t work.

As we've pointed out in earlier testimony, if systems fail, the re-
sulting delays and problems could be devastating. Let me highlight
a few of the reasons why we believe more urgency is needed:

First, the Agencies’ reported schedules show that most are leav-
ing essentially little or no time for unanticipated schedule delays.
As the chart over here shows—and I might also note that the chart
is reprinted at the back of our statement for those of you who can-
not see it—this shows the schedules for each of the Agencies for
completion of critical phases of the Year 2000 program.

So that reading across, for any given Department or Agency, the
circle that’s one-quarter filled indicates estimated completion of as-
sessment; half-filled indicates renovation; three-quarters filled esti-
mated completion of validation, and fully-filled, implementation.
The red stripe going down the middle is where we're at today.

In looking at the chart, you can see the predominance of symbols
on the right side, dangerously close to the Year 2000. This leaves
little time if something would require more work before January of
the Year 2000.

Second, as shown on the chart, 6 of the 24 Departments and
Agencies reported that they would not complete assessments of
mission-critical systems by the June 1997 OMB deadline.


10

EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET

ADMINISTRATOR

STATEMENT OF SALLY KATZEN
ADMINISTRATOR
OFFICE OF INFORMATION AND REGULATORY AFFAIRS
OFFICE OF MANAGEMENT AND BUDGET
BEFORE THE
SUBCOMMITTEE ON TECHNOLOGY
OF THE COMMITTEE ON SCIENCE
AND THE
SUBCOMMITTEE ON GOVERNMENT MANAGEMENT, INFORMATION, AND TECHNOLOGY
OF THE COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT
U.S. HOUSE OF REPRESENTATIVES

duly 10, 1997

Good Morning. I am pleased to again appear before the
Subcommittees to discuss solving the year 2000 computer problem
for Federal information technology systems.

Today's hearing, which focusses on the year 2000 quarterly
reports from Federal agencies to OMB, will be helpful to maintain
public confidence that the Executive Branch is aware of, and
working on, the year 2000 problem so that the unacceptable
consequences of systems failures as a result of that problem will
be avoided. :

When I testified last September, we were in the midst of an
active effort to raise senior managers’ awareness of the year
2000 problem and convince them that it poses a real threat to the
business of their agencies. Much has happened since then as the
agencies have made a good start toward making their systems year
2000 compliant.

In 1997 appropriations language, the Congress directed OMB to
assess the risk to Federal systems and submit a report on the
cost and strategy for addressing that risk. On February 6, 1997,
OMB sent a report to the Congress entitled “Getting Federal
Computers Ready for 2000". That report outlined the Federal
government's strategy to address the year 2000 computer problem
in its systems, established the schedule against which to measure
agency progress, and provided initial cost estimates. As
reflected in that report, a key component of our strategy is
assuring agency progress and accountability.

This Spring, we worked with your staff, the CIO Council, and its
Subcommittee on Year 2000 to design a reporting requirement for
measuring agency progress that could be used not only by OMB, but
by the Congress as well. In May, OMB informed the agencies that
they would be required to report quarterly on their year 2000


29

agencies plan, manage, and evaluate their year 2000 programs. The guide provides

information on the scope of the challenge and offers a structured approach for agencies

to use. We are following the approach outlined in the guide for our reviews at selected

agencies, and are encouraging others to use it as well. To date, we have received over

16,000 requests for copies.

For each of the five phases, OMB has set the following governmentwide milestones for

agencies to complete the majority of the work.

Phase Completion measure Completion date
AWARENESS Agency strategy approved by CIO 12/96
ASSESSMENT Inventory and scope completed 3/97

System plans/schedules approved
by CIO 6/97
RENOVATION Coding completed 12/98
VALIDATION Management sign-off 1/99
IMPLEMENTATION Integrated testing completed 11/99
Source: OMB.

"Year i

ri
AIMD- 10.1.14, February 1997).

t Guide [exposure draft] (GAO/



- 98

correcting their computer systems. Examples of other information available on
this web site are links to conferences, Federal, state, and international sites,
documents from the Office of Management and Budget, General Accounting

Office, and Congressional hearings.

My Deputy CIO, Don Venneberg, was instrumental in helping to establish what is
now referred to as the CIO Council Subcommittee on the Year 2000, chaired by
fellow panelist Kathy Adams. GSA provides direct support for the group and from

this effort; a governmentwide “Best Practices” guide has been produced.

GSA chairs the Real Estate Building Subgroup of the CIO Council's
Subcommittee on the Year 2000. Specifically, this group, through GSA's Public

Buildings Service, is requesting that manufacturers, trade associations, building

and facilities groups, such as the Building Owners and Managers Association
and the International Facility Management Association, identify products with the
potential for causing building systems malfunctions. The goal is to obtain Year
2000 product testing and Year 2000 compliance certification from vendors on
products, including building automation and energy management systems,
elevators, alarms, clocks, security and power supplies, and all systems or

devices with embedded microchips or software.

GSA also chairs the Telecommunications Subgroup of the ClO Council's

Subcommittee on the Year 2000, which has launched a major initiative to help


91

Looking below that, you see what is known as PBS-Star. That is
a system for administering and tracking real property which will
also be Year 2000-compliant.

It will be available in 1998, via Internet, to more than 240 prop-
erty management centers and regional offices nationwide, including
Chicago, as well as government Agencies and private sector compa-
nies. So that practice will be in place, completed, Year 2000-compli-
ant, 1998.

If you look at this whole layout of the entire picture, what we've
given to you is the same as in my testimony. It shows you that by
January 1, 1999, we will be, within the General Services Adminis-
tration, Year 2000-compliant, implemented and completed, oper-
ational, working.

Our Federal Supply Service, which is another major part of our
business enterprise, we have spent $1 million to fix 40 percent of
the code. In that one, we needed, indeed, to go back and upgrade,
and we plan to spend another $1.5 million to complete that in Fis-
cal Year 1998. ‘

Let me move over to the planning and the management aspects.
We have a plan in the GSA and a process of review, led by our Ad-
ministrator of General Services, David Barram, and a Business
Technology Council which looks at this investment.

We are also working, government wide, to raise awareness and
to share best practices. And we are working with the industry to
leverage the resources to fix this problem.

We will be successful. But let me agree with you about one of the
concerns that you've raised.

Since GSA is the business arm of government, success in the
Year 2000 means that our industry partners in the state, local, fed-
eral, international, and business community, must also be compli-
ant and ready to provide seamless communication among all par-
ties.

If our telephone communications networks from here to across
the world don’t interface in Year 2000 compliance, being compliant
in GSA will still not mean that we can conduct business in Chicago
or Tennessee or Missouri or in Europe because those switches and
those interfaces must take place.

Many of our partners have not moved rapidly or aggressively
enough to assure that they, too, will be ready on time. We are
working with 24 nations in the international community in looking
at this problem.

We believe that continuing attention and the interest of Congress
and the Administration in this matter will assist both in raising
awareness to the problem, and in stimulating solutions on all

‘onts.

Simply put, products and services must be tested, end-to-end
among all business partners to prove that they function in the 21st
Century. That’s why we are going to be compliant in January of
1999, so that we have the whole year in order to look at those
interfaces.

Just having a box that is Year 2000-compliant won't do it. Just
having identified embedded chips won’t do it.


i

progress on the fifteenth of February, May, August, and November.
(See OMB Memorandum M-97-13, "Computer Difficulties Due to the
Year 2000 -- Progress Reports" - May 7, 1997).

The reporting requirements were designed to impose the least
burden practicable on the agencies while satisfying OMB's
oversight requirements. We will use the reports to monitor
agency activities and take action where we perceive an agency's
progress is too slow.

Reporting Requirements,

The agency reports include four sections:
Organizational Responsibilities, The first section
describes how an agency is organized to track progress in

addressing the Year 2000 problem. It includes identifying

who is responsible, a description of the processes for

assuring internal accountability of those responsible, a

description of management actions taken when an organization

falls behind schedule, and a description of how internal
performance is verified. These responsibilities are to be
included in the first report, and subsequently updated if
any changes are made. We asked for this information because
it is essential to assure that responsibility has been
assigned appropriately if we are to succeed in addressing
the problem.

Status. The second section provides a status of agency
efforts to address the problem. It requires a count of the
number of mission-critical systems and a count of how many
of those systems will be repaired, replaced, or retired.

For those being repaired, it also requires a statement of
the agency's milestones for completing each phase of the
best practices and a report of the percentage of the systems
that have completed each phase. This section will allow us
to measure the progress of an agency's overall Year 2000
program. We expect, for example, the counts of mission-
critical systems completing each phase to increase from
report to report.

This section also requires a brief narrative description of
agency progress in addressing the problem in other than
mission-critical systems and in problems beyond information
technology systems, such as security systems or elevators.
While our emphasis is on mission-critical systems and we ask
for an accounting of them, we are also concerned about the
status of other systems and any problem due to embedded
technology.

Finally, this section provides an opportunity for agencies
to describe any significant problems that may be hindering

2


97

GSA’s Federal Telecommunications Service (FTS) has incorporated Year 2000
compliance language in all current and follow-on procurements and contracts,
including the FTS2001 solicitation and its contracts for wireless service,

international service, and all other procurement actions.

Further, GSA’s Office of Governmentwide Policy has issued “Recommended
Contract Year 2000 Compliance Language” both internally to GSA, and
governmentwide as a Federal Acquisition Regulation rule. GSA’s Office of
Governmentwide Policy also maintains a Year 2000 Web site

(www itpolicy.gsa.gov) which is currently averaging 10,000 hits monthly.

The Office of Governmentwide Policy manages and maintains the
governmentwide Year 2000 information Directory for the Chief Information
Officers’ Council Subcommittee on Year 2000. This Directory is a one-stop
‘source for information on Year 2000 issues for Federal agencies. It contains a
database of commercial-off-the-shelf (COTS) products which can be utilized by
the entire information technology community, and anyone interested in Year
2000 information. A new interactive COTS database is being developed that will
contain information provided by agencies and vendors. The Directory also
contains the “Best Practices” documents prepared by the Subcommittee. There
are documents on each of the following phases: awareness, assessment,
renovation, validation and implementation. These phases have been adopted by

the Office of Management and Budget for agencies to use as milestones when


102

Quality Award in 1992; GSA’s Meritorious Service Award in 1981 the Blacks in Government
“Leadership Excellence 1997 Award” and several other awards for outstanding performance and
leadership.

Mr, Thompson received a B.S. in chemistry from Prairie View A&M University in Texas; a
M.S. in chemistry from Texas Southern University, Houston, TX; and a M.S. in public
administration from DePaul University, Chicago, IL.



65

PREPARED STATEMENT OF HON. CAROLYN B. MALONEY, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF New YORK

GOVERNMENT MANAGEMENT SUBCOMMITTEE HEARING ON SOLVING THE YEAR 2000
COMPUTER PROBLEM

Thank you, Mr. Chairman. The public has awakened to this issue since we first
raised it last April. I hope that through this hearing, we can continue the process
of bringing this problem to the attention of the American people.

When we surveyed the Agencies last spring, I was distressed to learn that over
half of the Agencies we surveyed are only beginning to address this problem. Since
that hearing there has been substantial progress, but there is a long way to go.

The General Accounting Office has put together a useful assessment guide, and
I look forward to hearing more about how it is being used by Agencies. We have
begun to receive quarterly reports from the Agencies. That, too, is helpful in mon-
itoring the progress, and is the approach called for in the legislation I introduced.

There is still an overriding concern about whether the appropriate level of man-
agement oversight and resources are being directed to this problem. We cannot af-
ford a failure in this conversion. That is why GAO placed the Year 2000 on the
high-risk list, and that is why we are having this hearing today.

Through hearings like this, both the public and those toiling in the bureaucracy
are made aware of the importance of solving this problem. This hearing will give
us an opportunity to once again examine the level of effort being made.

I am cautiously optimistic that come January 1, 2000, we will have solved the
problem in all critical areas. I have faith in the public servants charged with this
task, and in this administration to provide the resources necessary to get the job

lone.

Mrs. Morea. I also want to thank this panel. We have held
you much longer than we anticipated. It’s because you are so in-
volved in the visceral part of this whole 2000 computer conversion.

Thank you very much. We may have some more questions to
pose to you, if we may do that, from any member of either of the
Subcommittees.

Ms. KaTzEN. Thank you for your leadership in this area. It’s very
important.

Mrs. MoRELLA. I’m going to ask the next panel to come forward,
if they would. Mr. Pesachowitz, Ms. Adams, and Mr. Thompson.

Again, it’s the tradition of these Subcommittees to ask our panel-
ists if they would please stand to be sworn in.

[Witnesses sworn en banc.]

Mrs. MORELLA. The report will indicate affirmative responses.

Very good. Mr. Pesachowitz is Vice Chair, Chief Information Offi-
cers Council, Chief Information Officer, Environmental Protection
Agency. Ms. Adams is the Chair, Interagency Year 2000 Sub-
committee of the Chief Information Officers Council, Assistant Dep-
uty to Commissioner for Systems, Social Security Administration in
Baltimore, who started on this in 1989. Mr. Joe Thompson is the
Chief Information Officer for the General Services Administration.

Thank you all for being so patient, and for being here. As I men-
tioned to the other panelists, the totality of your testimony will be
included in the record, and you may want to synopsize. Thank you.

We'll start off with you, Mr. Pesachowitz.


7

receives a monthly status report from the Chairperson [Ms. Adams], and has acted on several

‘occasions to endorse Committee recommendations for action and assistance.

As I indicated earlier, the Council seeks to support cross-cutting policy initiatives by taking
various specific management actions, including

1. Reviewing the progress in resolving critical IT issues,

2. Recommending actions to remove barriers to progress where observed, and

3. Providing funding assistance to critical projects that have government-wide benefits.
The Council has followed this operating model closely with regard to the Year 2000 problem.
Specifically, in June, the CIO Council agreed to fund the operation and maintenance of a new
information system designed and developed by the Year 2000 Committee. This information
system will provide ALL federal agencies access to high quality data on commercial products
that claim to be Year 2000 compliant. The CIO Council is strongly endorsing the use of this
computer system as the single, most authoritative source for Year 2000 product information in
the federal government. By supporting and endorsing the use of this information system, the
federal government avoids the needless duplication of time, effort, and information that would
otherwise occur if each agency collected and maintained this same information independent of

each other.

The Council is also working closely with the private sector to ensure we approach the Year 2000
problem in as cooperative a manner possible with this important sector of the federal IT
community. Our goal must be to ensure that federal solutions and Year 2000 policies are both

4


16

Getting Federal Computers Ready for 2000
Progress Report of the U.S. Office of Management and Budget
May 15, 1997

‘The Administration and the Congress are both working to address the year 2000
computer problem. On February 6, 1997 OMB sent a report to the Congress entitled "Getting
Federal Computers Ready for 2000," which outlines the Federal government's strategy to address
the year 2000 computer problem in its systems. That strategy includes assuring agency
accountability. To assist in that effort, OMB required agencies to report quarterly on their
program on the fifteenth of February, May, August, and November. (See OMB Memorandum M-
97-13, “Computer Difficulties Due to the Year 2000 -- Progress Reports" - May 7, 1997).

This summary report is based on the first agency reports due to OMB on May 15, 1997.
Those reports:

1. describe the organizational responsibilities for addressing the problem,

2. include a status of agency efforts to address the problem,

3. estimate the cost of addressing the problem in fiscal years 1996 through 2000, and

4. report on any systems that fall behind schedule.
Analysis

‘The February report established the schedule against which to measure progress and
provided initial cost estimates. This report provides the first measures of progress and updated
cost estimates. It shows that most agencies are in the assessment phase, that agencies now
estimate they will spend $2.8 billion fixing this problem, and that of the 7,649 mission critical
systems identified (excluding the Social Security Administration, which reported modules):

© 4,493 (59%) are being repaired,

© 673 (9%) are being replaced,

© 621 (8%) are being retired,

© 1,398 (21%) are already year 2000 compliant, and

° 264 (3%) are still to be evaluated.


99

senior government managers identify vuinerable system components and

peripheral devices.

Since GSA is the business arm of government, success in the Year 2000 means
that our industry partners, and other state, local, Federal and international
agencies must also be compliant and ready to provide seamless communication
among all parties. Many of our partners have not moved rapidly or aggressively
enough to assure that they, too, will be ready on time. We believe that the
continuing attention and interest of Congress in this matter will assist in both

raising awareness of the problem and stimulating solutions on all fronts.

Simply put, products and services must be tested end-to-end among all business

partners to prove that they will function into the twenty-first century.

Finally, | should note that all of the Year 2000 work has been accomplished
under the leadership and guidance of the Office of Management and Budget with’
help from private sector partners, such as the Industry Advisory Council, the
Information Technology Association of America, and the Coalition for

Government Procurement.

I would like to thank the members again for this opportunity to speak and for the
continued cooperation between Congress and the Executive Branch in the

meeting the Year 2000 challenge.


Agency

Agriculture
‘Commerce
Defense
Education.
Energy
HHS
HUD
Interior
Justice
Labor
State
DOT
Treasury
VA

AID

EPA
FEMA
GSA
NASA
NSF
NRC
OPM
SBA
‘SSA'

Tota?

' Reported and tracking modules rather than systems.

‘Number
of Systems

469
162
2,752
7
61
177
115
38
118
24
14
132
66
10
2
16
7
23
21
12
na
67
0
7,730

4593

21

(May 15, 1997)

Assessment Renovation Validation
¥ y¥

41%
75%
64%
30%
100%
99%
50%
90%
52%
86%
1%
50%
80%
85%
80%
80%
92%
99%
75%
0%

100%
100%
100%

65%

0%
TM%
23%
0%
8%
15%
2%
41%
2%
19%

0%
10%
17%
32%

0%
20%
4AM
40%
2%
17%
0%
25%
65%

17%

0%
5%
5%
0%
8%
17%
0%
0%
1%
19%
0%
0%
15%
12%
0%
20%
26%
5%
1%
0%
0%
25%
55%

5%

TABLE 3

Implementation
5

0%
5%
8%
0%
8%
16%
2%
0%
0%
13%
0%
0%
8%
6%
0%
20%
26%
5%
1%
0%

0%
25%
50%

6%

2 Excludes SSA which reported modules; percentages are weighted averages.


50

One of the Committees that Kathy Adams has within her task
force deals with data standardizations that will enable us to ensure
that we are able to better communicate within this country.

A lot of that can be used by others overseas so as to minimize
those issues.

But there has been again, as occurred here over the last several
years, a growing awareness in Europe, Asia, and elsewhere, of the
need to focus on these issues.

It’s a problem to some extent with the old established computers
and sort of mainframe type systems.

We have our fair share of those.
ae it is not to minimize that work needs to be done internation-

ly.

Mr. GoRDON. Just because, I don’t mean to be discourteous, but
Tve bot a limitation of time and I want to explore this a little bit

ther.

I’m working with Ira Magaziner and Secretary Daley on a task
force with international electronic commerce. What spillover do you
see to this effort and is there, or should there be an international
agency or effort?

The Chair mentioned a czar. I’m not sure we want to have an
international czar but do we need to be working through some kind
of international agency and is there anything like this going on
now?

Ms. KaTZEN. I think the seeds of this are beginning to be sown,
and I think part of Mr. Magaziner’s work with Secretary Daley,
and they are traveling, even as we speak, carrying the message
abroad, these types of issues, because we do not need another non-
tariff barrier to international electronic commerce.

Mr. Gorpow. Is there a vehicle for this?

Ms. KATZEN. There are various forms in which it can be devel-
oped that we are currently exploring.

Mr. Gorpon. Let me ask you this, because this is somewhat
maybe off out on the side.

You do not necessarily have to have all the answers now.

Would you get. back to me, please, with some suggestion as to,
on an international basis, what we should be doing and the impact
that it can have on our country and on our government if we don’t.

And if you think that there are some existing Agencies, whether
it’s U.N., I don’t know what it might be, that would be a greater
vehicle to do this?

Ms. KATZEN. I’d be happy to do that.

Mr. Gorpon. If I stil ve a couple of minutes, I don’t know
whether I do or not.

But, Mr. Willemssen, on that particular question, would you add

anything?
. WILLEMSSEN. I would echo Sally’s comments, but would also
add to the extent that especially federal Agencies but also some of
the institutions that we've talked about within this country have
clear interface and data exchanges with the international commu-
nity.

t’s imperative that those be identified quickly so that to the ex-
tent that there is impact, at least it try to be minimized within this
country.


95

submitted to the CIO by the GSA business lines is being monitored monthly by
our Business Technology Council and Information Technology Council. | am glad

to report that GSA is on track and | am satisfied with our progress so far.

For example, the Public Buildings Service's (PBS's) legacy systems have been
operating on a proprietary and out-moded mainframe platform for over 25 years.
PBS's PLUS, implemented in January 1997, migrated the legacy data to a

modern, Year 2000 compliant platform saving GSA more than $5 million a year.

PBS's STAR, a system for administering and tracking real property, will also be
Year 2000 compliant. STAR will be available in 1998 via Internet to more than
240 property management centers and regional offices nationwide, as well other

government agencies and private sector companies.

PBS's EAS, a Year 2000 compliant electronic acquisition system already in
place, automates virtually every procurement process - from creating requisitions
to the final close-out. For the first time, PBS is able to track all contracts using

milestones during any point in the contracting process.

PBS's IRIS, an automated system that is Year 2000 compliant, gives a
comprehensive view of all new construction, major modernization, repairs, and

alteration projects.


33

year 2000 plans for approval, and lacked contracts or other legal agreements detailing
how or when the year 2000 problem would be corrected, or indeed whether contractors
would even certify that they would correct the problem. We made several
tecommendations to HCFA to address its shortcomings in this area, including regular
reporting to HHS on its progress. HHS reported in May that it expected to complete the

assessment phase last month.

URGENT NEED TO ACCELERATE
AGENCY YEAR 2000 PROGRAMS:

As we have pointed out in earlier testimony, if systems that millions of Americans have
come to rely on for regular benefits malfunction, the ensuing delays could be disastrous.°
OMB’s perspective that agencies have made a good start and that no mission-critical
systems were reported to be behind schedule would seem to imply that there is no cause
for alarm. On the contrary, we believe ample evidence exists that OMB and key federal
agencies need to heighten their levels of concern and move with more urgency. A closer

look reveals why.

First, the agencies’ reported schedules show that most are leaving essentially no margin

of error for unanticipated schedule delays; 15 of 24 expect to complete implementation in



17

This report includes four tables which array and summarize information provided by
agencies. No systems were reported behind schedule.

Table 1, "Agency Progress and Plans for Year 2000 Compliance of Mission Critical Systems,"
provides the schedules for agencies to complete the phases of the government-wide best
practices. It shows that 18 of the 24 agencies were still in the assessment phase as of May 15,
1997.

Table 2, "Agency Year 2000 Mission Critical Systems," provides a snapshot as of May 15, 1997
of the size of the year 2000 problem and the results of "repair, replace, or retire" decisions made
thus far. Agencies have identified 7,649 mission critical systems (excluding the Social Security
Administration which has identified 29,139 modules).

Table 2 also shows that agencies are planning to repair the majority (59 percent) of their systems,
replace 9 percent and retire 8 percent. Twenty one (21) percent of agency mission critical
systems are already Year 2000 compliant. Decisions are pending for 3 percent.

Table 3, "Status of Agency Year 2000 Mission Critical Systems Being Repaired," shows that, as
a weighted percentage, the government is 65 percent complete with its assessment, and 17
percent complete with renovation of the systems to be repaired.

Table 4, "Agency Year 2000 Cost Estimates as of May 15, 1997," shows the estimated costs for
fixing the problem by agency. Agencies estimated it will cost $2.8 billion to fix the year 2000
problem. That includes an estimated expenditure of $758 million in FY 1997 and $1.1 billion in
FY 1998.

‘The estimates cover the costs of identifying necessary changes, evaluating the cost
effectiveness of making those changes (fix or scrap decisions), making changes, testing systems,
and preparing contingencies for failure recovery. They do not include the costs of upgrades or
replacements that would otherwise occur as part of the normal systems life cycle. They also do
not include the Federal share of the costs for state information systems that support Federal
programs. The figures provided by agencies continue to be preliminary estimates.

Evaluation

As the first quarterly report, this report provides the first measure of progress in the
Executive Branch, Based on the reports, agencies have made a good start in addressing the year
2000 problem. Most agencies are on schedule and have completed or will shortly complete their

assessment of the problem. In the interim, many have begun renovating systems. No mission
critical systems are reported behind schedule.


61

Footnote 3 is attached to the Department of Transportation
which we've previously identified where their dates are further in
the future than originally.

And has been pointed out, with a validation date of 12/99 and an
implementation date of 12/99, there’s not a lot of margin for error.

There are several others that have either 11/99 or 12/99. VA is
one of those. NSF is another. NASA is another. Where they have
dates that are pressing the limits.

Mr. SESSIONS. So implementation might be a burn in date?

Ms. KaTZEN. That would be cause for concern and cause for me
to call the appropriate people, make sure I’m getting the attention.

And one of the things that I would just mention is when I first
made my series of telephone calls after Mr. Horn had provided this
incentive, through the grading system, some of the calls were re-
turned promptly, others were not.

When I said what I wanted to talk about and could we set meet-
ings, some of them said a couple weeks from now.

Now when I call and I say what I’m calling about, I get an imme-
diate response and an immediate meeting.

I mean, I think the attention is there.

Mr. SEssions. So in your opinion, in your opinion in the testi-
mony that you're giving is that at this point, there is no organiza-
tion or agency that does not or has not begun, gotten the word, got-
ten the message that we heard earlier.

In other words, across these Agencies, in your opinion, they get
the message and they've started the plan. And you feel confident
that since this is a managerial problem, that they're on board?

Ms. KATZEN. That’s correct.

But I would be the first to say, a lot of them have a long way
to go.

Mr. SESSIONS. Okay.

Now, when we say that, can you pick two or three of those with-
out picking on anybody that has the furthest to go that would aid
us the next time we speak with you to know whether that progress
has been made?

In other words, I’d like for you not to walk out of here with us
knowing what’s on your plate of people who you’re working with,
and then I'd like to find out in the coming months what progress
is being made.

Ms. KaTZEN. Well, I think I’ve already identified the Department
of Transportation is one that we met with last week. HHS which
actually has done a lot and in some respects is very far along, but
there are other problems that have been identified I'll be meeting
with next week.

OPM is one that we're arranging meetings with.

NRC is another one that we are arranging meetings with.

And VA, I’ve been exchanging telephone calls with the Secretary
Designate. He returned the call quickly, I just wasn’t there.

Mr. Sessions. Okay. So you might say that these five Agencies
are five at this point that you feel like you are going to work more
closely with and carefully with.

Ms. Katzen. Let me add AID to that list, as well, as one that’s
on our schedule for the next several weeks. And the fact that I'm


4

1997, the Director of the Office of Management and Budget com-
mitted to furnish Congress with a quarterly report on federal
progress toward correcting the Year 2000 computer problem.

The £ first quarterly report was transmitted to Congress on June
23, 1997.

It is based on data provided by all major departments and Agen-
cies to OMB on May 15, 1997.

The OMB report raised the disturbing fact that some Agencies
with the most critical responsibilities for providing public services
are stuck at the starting gate.

Consider that, as of May 15, fully 18 out of 24 Agencies have yet
to finish assessing the vulnerability of their computer systems to
the Year 2000 problem.

Ten of the 24 Agencies have not proceeded far enough to com-
plete any testing of software changes.

These are discouraging and worrisome statistics.

We're very concerned as well about whether the Agencies are
using an appropriate definition of mission critical systems.

Some Agencies define mission critical to exclude vital contractor
systems and systems that are used at individual field locations,
while others list virtually every system without prioritizing them
according to their role in the agency’s mission.

Social Security began the Year 2000 effort, as we all know, in
1989. As of May 1997, it had completed only 50 percent of the
changes necessary to avoid failure at the turn of the century.

That means an agency with foresight and resolve needed 8 years
to get halfway through the problem.

Most federal Agencies began their Year 2000 efforts within the
last 2 years. They do not have 8 years to implement a full solution.

These facts weigh heavily on us. We're responsible to the Amer-
ican people for the smooth functioning of the Federal Government.

Based on this report, we need to redouble our efforts. If the be-
ginning of a solution to the federal Year 2000 problem is marked
by a serious, effective government wide effort we have not yet I'm
afraid reached the end of the beginning. Time is running out.

Our-witnesses today will help us understand the meaning of this
new report and answer our questions about the strength and weak-
nesses of the Federal Government’s Year 2000 efforts.

We do thank you for appearing before us, and welcome you.

Mrs. MorELLA. Thank you, Congressman Horn, Chairman Horn.
Td like to now recognize the Ranking Member of this Subcommit-
tee on Technology, Mr. Bart Gordon from Tennessee.

Mr. Gorpon. Thank you.

I want to join my colleagues in welcoming everyone to this hear-
ing on the Year 2000 computer problem.

There’s been a great deal of press attention on this issue and fed-
eral Agencies are now actively engaged in solving the problem.

However, I remain concerned that this issue is still not taken se-
riously enough, considering the magnitude of the problem.

I believe this is the principal finding of the GAO Report.

Because of this, I still don’t believe that the necessary financial
and management resources have been dedicated to solving the
problem.


93

STATEMENT OF
MR. JOE M. THOMPSON
CHIEF INFORMATION OFFICER
GENERAL SERVICES ADMINISTRATION
BEFORE THE
SUBCOMMITTEE ON TECHNOLOGY
COMMITTEE ON SCIENCE
AND THE
SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,
INFORMATION, AND TECHNOLOGY
COMMITTEE ON GOVERNMENT REFORM
AND OVERSIGHT
U.S. HOUSE OF REPRESENTATIVES
JULY 10, 1997,



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41

Much of the repair work that has to be done here can be done
during ordinary operating and maintenance of the systems for
which there is a substantial amount of funds available.

And we don’t ask the Agencies, nor do they keep track of, penny-
by-penny, how they use their money within a particular line item.
And if there is no need to reprogram, then to give any figure of the
amount of money that would be transferred would, I think, be very
misleading in terms of the amount of attention devoted and re-
sources spent in fixing the problem.

Mr. Horn. Well, but money is a problem. And I realize it buys
resources, and I’m not asking that question.

I'm just making sure that there’s flexibility in the system where
money can be reprogrammed.

Ms. KaTZzEN. There is.

Mr. Horn. And if there isn’t—well, you’re taking it from IT
money, right?

Can you go beyond that?

Ms. KaTzEN. Yes.

Mr. Horn. Well, good. So you have the exiting authority from the
Appropriations Subcommittees?

Ms. KATZEN. It will depend, with respect to—there’s no single an-
swer with respect to the appropriations that apply to each of the
Departments and Agencies.

Our approach has been from the beginning, that there is suffi-
cient money there, and if there is not, we will either request addi-
tional money, which, I guess, technically, would be reprogramming,
because it would be coming from some other source within the Ap-
propriation Subcommittees’ general jurisdiction ——

Our hope is that we would not have to use program funds for
this, and to date have not had to. But that still enables sufficient
money to be used.

We see, rather than the dollars, that the challenge here is on
management.

Mr. Horn. I couldn’t agree with you more.

Ms. KaTzEN. And attention, and to focus that attention has been
our primary objective.

ir. Horn, I commend OMB, if that’s their policy. I think you’re
absolutely right. The problem is management, and you need to use
the resources you have if you possibly can.

So, I gather from the answer to the question that you feel you
have sufficient authority from the Congress in order to deal with
the use of resources at the right place at the right time.

And if you don’t, you’re going to ask us for it?

Ms. KaTzEn. Absolutely.

Mr. Horn. Okay, that’s fine with me. What is our timing on
questions on this fine Joint Subcommittee?

It’s what, 5 minutes?

Well, I’d like to yield the rest of my time to Mr. Sununu.

Mr. SUNUNU. Thank you, Mr. Chairman. If I can just take a cou-
ple of moments to talk a little bit more about the contingency plan-
ning, as was mentioned in Mr. Willemssen’s presentation.

ere are a number of Agencies that show their timetable for
completion of implementation as December of 1999. I’m struck by
that, coming out of an engineering background.