U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

1

27–317 CC 1996

Union Calendar No. 464

104th Congress, 2nd Session – – – – – – – – – – House Report 104–857

YEAR 2000 COMPUTER SOFTWARE CONVERSION: SUMMARY OF OVERSIGHT FINDINGS

AND RECOMMENDATIONS

SIXTEENTH REPORT

BY THE

COMMITTEE ON GOVERNMENT

REFORM AND OVERSIGHT

SEPTEMBER 27, 1996.—Committed to the Committee of the Whole House

on the State of the Union and ordered to be printed
ii

COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT

WILLIAM F. CLINGER, JR., Pennsylvania, Chairman

BENJAMIN A. GILMAN, New York

DAN BURTON, Indiana

J. DENNIS HASTERT, Illinois

CONSTANCE A. MORELLA, Maryland

CHRISTOPHER SHAYS, Connecticut

STEVEN SCHIFF, New Mexico

ILEANA ROS-LEHTINEN, Florida

WILLIAM H. ZELIFF, JR., New Hampshire

JOHN M. MCHUGH, New York

STEPHEN HORN, California

JOHN L. MICA, Florida

PETER BLUTE, Massachusetts

THOMAS M. DAVIS, Virginia

DAVID M. MCINTOSH, Indiana

RANDY TATE, Washington

DICK CHRYSLER, Michigan

GIL GUTKNECHT, Minnesota

MARK E. SOUDER, Indiana

WILLIAM J. MARTINI, New Jersey

JOE SCARBOROUGH, Florida

JOHN B. SHADEGG, Arizona

MICHAEL PATRICK FLANAGAN, Illinois

CHARLES F. BASS, New Hampshire

STEVEN C. LATOURETTE, Ohio

MARSHALL ‘‘MARK’’ SANFORD, South

Carolina

ROBERT L. EHRLICH, JR., Maryland

SCOTT L. KLUG, Wisconsin

CARDISS COLLINS, Illinois

HENRY A. WAXMAN, California

TOM LANTOS, California

ROBERT E. WISE, JR., West Virginia

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

JOHN M. SPRATT, JR., South Carolina

LOUISE MCINTOSH SLAUGHTER, New

York

PAUL E. KANJORSKI, Pennsylvania

GARY A. CONDIT, California

COLLIN C. PETERSON, Minnesota

KAREN L. THURMAN, Florida

CAROLYN B. MALONEY, New York

THOMAS M. BARRETT, Wisconsin

BARBARA-ROSE COLLINS, Michigan

ELEANOR HOLMES NORTON, District of

Columbia

JAMES P. MORAN, Virginia

GENE GREEN, Texas

CARRIE P. MEEK, Florida

CHAKA FATTAH, Pennsylvania

BILL BREWSTER, Oklahoma

TIM HOLDEN, Pennsylvania

ELIJAH CUMMINGS, Maryland

———

BERNARD SANDERS, Vermont

(Independent)

JAMES L. CLARKE, Staff Director

KEVIN M. SABO, General Counsel

JUDITH MCCOY, Chief Clerk

BUD MYERS, Minority Staff Director

SUBCOMMITTEE ON GOVERNMENT MANAGEMENT, INFORMATION, AND TECHNOLOGY

STEPHEN HORN, California, Chairman

MICHAEL PATRICK FLANAGAN, Illinois

PETER BLUTE, Massachusetts

THOMAS M. DAVIS, Virginia

RANDY TATE, Washington

JOE SCARBOROUGH, Florida

CHARLES F. BASS, New Hampshire

SCOTT KLUG, Wisconsin

CAROLYN B. MALONEY, New York

MAJOR R. OWENS, New York

JOHN M. SPRATT, JR., South Carolina

PAUL E. KANJORSKI, Pennsylvania

COLLIN PETERSON, Minnesota

TIM HOLDEN, Pennsylvania

EX OFFICIO

WILLIAM F. CLINGER, JR., Pennsylvania CARDISS COLLINS, Illinois

J. RUSSELL GEORGE, Staff Director/Counsel

MARK UNCAPHER, Counsel

SUSAN MARSHALL, Procurement Specialist

DAVID MCMILLEN, Minority Professional Staff
(iii)

LETTER OF TRANSMITTAL

HOUSE OF REPRESENTATIVES,

Washington, DC, September 27, 1996.

Hon. NEWT GINGRICH,

Speaker of the House of Representatives,

Washington, DC.

DEAR MR. SPEAKER: By direction of the Committee on Government Reform and Oversight, I submit herewith the committee’s sixteenth report to the 104th Congress.

WILLIAM F. CLINGER, Jr., Chairman.

v

C O N T E N T S

Page

I. Summary ........................................................................................................... 1

A. Background ........................................................................................... 1

B. Jurisdiction ........................................................................................... 2

II. Findings ............................................................................................................. 2

A. Proceedings of the subcommittee ........................................................ 2

B. Oversight activities of the subcommittee ........................................... 5

C. Committee findings .............................................................................. 9

III. Recommendations ............................................................................................. 13

IV. Appendix ........................................................................................................... 14
Union Calendar No. 464

104TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 2nd Session 104–857

YEAR 2000 COMPUTER SOFTWARE CONVERSION: SUMMARY

OF OVERSIGHT FINDINGS AND RECOMMENDATIONS

SEPTEMBER 27, 1996.—Committed to the Committee of the Whole House on the

State of the Union and ordered to be printed

Mr. CLINGER, from the Committee on Government Reform and

Oversight, submitted the following

SIXTEENTH REPORT

On September 24, 1996, the Committee on Government Reform

and Oversight approved and adopted a report entitled ‘‘Year 2000

Computer Software Conversion: Summary of Oversight Findings

and Recommendations.’’ The chairman was directed to transmit a

copy to the Speaker of the House.

I. SUMMARY

A. BACKGROUND

After midnight, December 31, 1999, computer systems throughout the world are at risk of failing. Computers may confuse the

year 2000 with the year 1900 on January 1, 2000, and go backward

in time instead of forward when the new century begins. The severity of the problem was raised when Congress was told that if businesses and governments continue to ignore this issue, disruption of

routine business operations and the inability of the Federal Government to deliver services to the American public could result.

According to a Congressional Research Service memorandum

dated April 12, 1996, ‘‘Many people initially doubted the seriousness of this problem, assuming that a technical fix will be developed. Others suspect that the software services industry may be attempting to overstate the problem to sell their products and services. Most agencies and businesses, however, have come to believe

that the problem is real, that it will cost billions of dollars to fix,

and that it must be fixed by January 1, 2000, to avoid a flood of

erroneous automatic transactions.’’ The memorandum further sug-
2

1 Richard Nunno, Analyst in Information Technology, Science Policy Research Division, Year

2000 Computer Problem, Congressional Research Service, April 12, 1996, p. CRS–2. 2 Rules of the House of Representatives, 104th Congress, X, 1(g)(6) and (12) and X, 2(b)(2).

3 Rules of the House of Representatives, 104th Congress, X, 4(c)(2).

4The decision to record two-digit date fields as ‘‘66’’ rather than ‘‘1966’’ was a way to save

very limited storage space on computers. Many believed at the time that there would be difficulty in the year 2000, but they assumed that any systems already in operation would be replaced by the year 2000. At this point no magic bullet has appeared to solve this problem.

gests that it may already be too late to correct the problem in all

of the Nation’s computers, and that large corporations and Government agencies should focus on only their highest priority systems.1

The Committee on Government Reform and Oversight is deeply

concerned that many Federal Government departments and agencies are not moving with necessary dispatch to address the year

2000 computer problem. Without greater urgency, those agencies

risk being unable to provide services or perform functions that they

are charged by law with performing. Senior agency management

must take aggressive action if these problems are to be avoided.

B. JURISDICTION

The Committee on Government Reform and Oversight (the ‘‘committee’’) has primary legislative and oversight jurisdiction with respect to the ‘‘overall economy, efficiency and management of Government operations and activities, including Federal procurement.’’

It also has primary oversight responsibility to ‘‘review and study,

on a continuing basis, the operation of Government activities at all

levels with a view to determining their economy and efficiency.’’ 2

In addition to its other oversight responsibilities:

[T]he Committee on Government Reform and Oversight may at

any time conduct investigations of any matter without regard

to the provisions . . . conferring jurisdiction over such matter

upon another standing committee. The committee’s findings

and recommendations in any such investigation shall be made

available to the other standing committee or committees having jurisdiction over the matter involved....3

Pursuant to this authority, the Subcommittee on Government

Management, Information, and Technology (the ‘‘subcommittee’’)

convened an oversight hearing on April 16, 1996 to examine whether January 1, 2000, is the date for a potential computer disaster 4.

Currently, computers which use two-digit date fields will fail to recognize the entry of the next millennium on January 1, 2000. If left

unchanged, a global computer virus could result. The subcommittee

reviewed Federal agency management of this potentially disastrous

computer problem.

The subcommittee’s jurisdiction centers on the Federal Government’s operations. Consequently, although the year 2000 problem

affects both public and private organizations, the subcommittee has

focused its attention on the preparedness of Federal Government

departments and agencies.

II. FINDINGS

A. PROCEEDINGS OF THE SUBCOMMITTEE

On April 16, 1996, Subcommittee Chairman Stephen Horn convened a hearing of the Subcommittee on Government Management,
3

5Opening statement of Representative Tom Davis before a hearing of the Subcommittee on

Government Management, Information, and Technology, House Committee on Government Reform and Oversight, Is January 1, 2000 the Date for a Potential Computer Disaster? April 16,

1996. 6Statement of Representative Peter Blute before a hearing of the Subcommittee on Government Management, Information, and Technology, House Committee on Government Reform and

Oversight, Is January 1, 2000 the Date for a Potential Computer Disaster? April 16, 1996. 7Oral testimony of Kevin Schick, research director, The Gartner Group, before a hearing of

the Subcommittee on Government Management, Information, and Technology, Committee on

Government Reform and Oversight, Is January 1, 2000 the Date for a Potential Computer Disaster? April 16, 1996.

Information, and Technology to collect the facts on the steps Federal agencies are taking to prevent a possible computer disaster.

Among the questions he raised were whether agencies are taking

the necessary actions to identify where the problem lies and whether they are providing the necessary human and capital resources

to correct the problem.

In her opening statement, the subcommittee’s ranking minority

member, Representative Maloney noted: ‘‘The cost of failure is

high—systems that deliver services to individuals will not work,

and those services will not be delivered. Checks will not arrive on

time. Planes will be grounded, and ports will be closed.’’

As noted by subcommittee member Representative Tom Davis

(R–VA), ‘‘think for a moment how dates play a part in each one of

our lives and how the failure of a computer system or computer

scanner to recognize and understand a date can affect us. Our driver’s license may prematurely expire and the Social Security Administration may recognize 25-year-olds as 75-year-olds, without conversion that is needed for the year 2000.’’ 5 And as pointed out by

Representative Peter Blute, ‘‘this is a very important issue—an economic issue for the entire country.’’ 6

A number of examples were received by the subcommittee of

incidences that could occur if industry and government continue to

ignore this issue. In fact everything from unexpected expiration of

drivers’ licenses to the erroneous dates for final mortgage payments

could occur if two-digit date fields remain unable to recognize the

year 2000. Knowing this information technology project has a fixed

date for completion, January 1, 2000, Subcommittee Chairman

Horn asked hearing witness, Kevin Schick of the Gartner Group,

the estimated cost of fixing this problem. Mr. Schick provided recent estimates as high as $600 billion worldwide, half of which

would be in the United States and $30 billion for the Federal Government. In accordance with Congress’ responsibility to better understand what steps Federal agencies are taking to ensure a

minimalization of risk and cost to the American taxpayer, Subcommittee Chairman Horn then queried Schick of his knowledge

regarding the administration’s and, in particular, the Office of

Management and Budget’s current efforts to convey the urgency of

this problem. Mr. Schick responded ‘‘there is no sense of urgency

. . . We [the Gartner Group] are not interested in creating a sensational story here about the year 2000. We don’t want to panic. That

does nobody any good . . . Yet, if [Federal agencies] are not already well into this project by October of 1997, [the Federal Government] will be doing a disservice to the very constituents that depend on [it] to prevent something like this from happening to

them. . . .’’ 7
4

8Statement of Larry Olson, Deputy Secretary for Information Technology, Commonwealth of

Pennsylvania, before the Subcommittee on Government Management, Information, and Technology, Committee on Government Reform and Oversight, Subcommittee on Technology, Committee on Science, September 10, 1996. 9The BIO’s chip instructs the basic input/output system of a computer.

10Oral statement of Harris Miller, president, Information Technology Association of America,

before Subcommittee on Government Management, Information, and Technology, Committee on

Government Reform and Oversight, Subcommittee on Technology, Committee on Science, Solving the Year 2000 Computer Problem, September 10, 1996. 11Statement of Sally Katzen, Administrator, Office of Information and Regulatory Affairs, Office of Management and Budget, before the Subcommittee on Government Management, Information, and Technology, Committee on Government Reform and Oversight, Subcommittee on

Technology, Committee on Science, Solving the Year 2000 Computer Problem, September 10,

1996, p. 3.

To further understand the impact of this issue on the Nation’s

businesses and State and local governments, Representative Constance Morella, chairwoman of the Subcommittee on Technology of

the Committee on Science, called for a joint hearing with the Subcommittee on Government Management, Information, and Technology, to review the impact on personal computers, State governments and Federal agencies. During the hearing held on September

10, 1996, Larry Olson, Deputy Secretary for Information Technology for the Commonwealth of Pennsylvania, presented Pennsylvania’s plan of action. As noted by Olson, the key to success of

the plan is senior level support. Mr. Olson pointed out that during

his first year as Governor of Pennsylvania, Tom Ridge quickly recognized the dramatic implications of the year 2000 date field problem. Subsequently the Governor took quick action to ensure that

Pennsylvania businesses and governments will be prepared before

January 1, 2000.8

At the September session Harris Miller, president, Information

Technology Association of America, presented an outline of how the

year 2000 situation presents three problems for personal computer

users in homes and businesses across the country: (1) the BIO’s

chip of individual machines; 9 (2) the operating system that generally comes bundled with new computers; and (3) the commercial

software purchased for those machines. Most equipment manufacturers in the past 18 months have modified their products. Operating system software is also an issue. Operating systems in personal

computers in most cases can have their operating systems ‘‘fixed’’

through a simple procedure using the computer’s mouse. Commercial software products may or may not be year 2000 compliant. An

issue of great concern for personal computer users is the increasing

interconnectedness with other systems. In order to ensure that

computer systems are operational in the year 2000, most systems

will need modification.

Mr. Miller testified further that personal computer users as well

as mainframe information technology managers need to be aware

of this issue and take appropriate corrective steps.10

In her testimony Sally Katzen, Administrator, Office of Information and Regulatory Affairs, Office of Management and Budget,

provided an outline of the Clinton administration’s current strategy

for solving the problem: (1) raise the awareness of the most senior

managers in Federal agencies to the dimensions of the problem; (2)

promote the sharing of both management and technical expertise;

and (3) remove barriers that may slow down or impede technicians

fixing systems.11
5

12Letter from Representative Stephen Horn and Representative Carolyn Maloney to 24 departments and agencies, April 29, 1996 (letters on file with the subcommittee). It is attached

as an appendix to the report. 13 National Defense Authorization Act for fiscal year 1997; Division E; Public Law 104–106. 14 Refer to appendix (on file with the subcommittee). 15 Each of the four also has some comparability to the private sector financial services industry which also moved faster than other private industries in addressing the problem.

B. OVERSIGHT ACTIVITIES OF THE SUBCOMMITTEE

Alarmed by what the subcommittee had learned at its April 16

hearing, Subcommittee Chairman Stephen Horn and Ranking Minority Member Carolyn Maloney sent a joint congressional oversight letter. The letter was addressed to the heads of each executive department and 10 additional agencies. The letter, dated April

29, 1996, asked 13 detailed questions intended to ascertain the status of each agency’s software conversion preparation for the year

2000.12

The agencies receiving the letter were selected by the subcommittee because each would be required under the Information Technology Management Reform Act to appoint chief information officers.13

The overall response the subcommittee received was discouraging. Only 9 of the 24 departments and agencies responded that

they had a plan for addressing the problem. Five of them had not

even designated an official within the organization to be responsible for the problem. Seventeen of the departments and agencies

lacked any cost estimates for addressing the problem. Even those

with partial cost estimates could only provide projections for a limited part of their agency.14

Four agencies surveyed did have superior records, compared with

the others. The Social Security Administration began its year 2000

initiatives in 1989. Although it should be observed that their efforts

are not yet near completion. The Agency for International Development wrote the subcommittee that a ‘‘system migration’’ to newer

technology had addressed the problem. Both the Office of Personnel

Management and the Small Business Administration also had

more advanced year 2000 efforts. However, none of these four agencies is a Cabinet department. Each organization has a more focused

information technology mission than other agencies.15

Several Cabinet departments, with diverse subagencies and bureaus, reported to the subcommittee that they only had limited

year 2000 projects underway. Efforts at the Departments of Energy

and Transportation were so underdeveloped that both could not answer any of the 13 questions posed by the April 29 oversight letter.

Many agencies with direct responsibilities for furnishing services to

the public, such as the Departments of Labor, Veterans Affairs and

the Federal Emergency Management Agency, had only minimal

year 2000 initiatives underway.

Subcommittee Chairman Horn, Ranking Member Maloney and

other members of the subcommittee released their conclusions

based on the agency responses at a July 30, 1996 press conference.

To underscore their conclusions, each of the 24 departments and

agencies received letter grades based on the subcommittee’s assessment of their relative performance. Four were given ‘‘A’s’’ and four

agencies were given ‘‘F’s.’’ Ten agencies were given ‘‘D’s,’’ none of
6

which had any plan in place for addressing the problem, or available cost estimates. The decision to give each agency a grade was

intended to emphasize the responsibility that individual departments and agencies have for their own performance.

[The information referred to follows:]
7
8
9

16Letter from Representative Stephen Horn and Representative Carolyn Maloney to the Honorable Donna Shalala, Department of Health and Human Resources, April 29, 1996 (on file with

the subcommittee). Letter from Representative Stephen Horn and Representative Carolyn

Maloney to the Honorable Dan Glickman, Secretary, Department of Agriculture, April 29, 1996

(on file with the subcommittee). Letter from Representative Stephen Horn and Representative

Carolyn Maloney to the Honorable Richard W. Riley, Secretary, Department of Education, April

29, 1996 (on file with the subcommittee). Letter from Representative Stephen Horn and Representative Carolyn Maloney to the Honorable James B. King, Director, Office of Personnel

Management, April 29, 1996 (on file with the subcommittee). Letter from Representative Stephen Horn and Representative Carolyn Maloney to the Honorable Philip Lader, Administrator,

Small Business Administration, April 29, 1996 (on file with the subcommittee). Letter from Representative Stephen Horn and Representative Carolyn Maloney to the Honorable Christopher

Warren, Secretary, Department of State, April 29, 1996, (on file with the subcommittee). 17Tom Backman, MITRE Corporation, MITRE Assessment on the Effects of Two-Digit Years

for the Year 2000, January 10, 1996.

Other major findings resulting from the April 29 oversight letter

which were presented at the July 30, 1996 press conference with

Representatives Horn, Maloney and other members of the subcommittee include:

• Major departments are in the initial planning stages of this effort, even though, agencies need to have their systems inventoried

and fixed by 1998, in order to provide sufficient time to test and

ensure complete accuracy. This means, in the next year and a half

departments and agencies must complete their plans, inventory

and fix millions of lines of code, while simultaneously meeting

agency needs.

• Even those agencies considered leaders in this effort, such as

the Social Security Administration and the Department of Defense

are not close to completing the inventory and solution stages of the

conversion process.

According to the information received, only six agencies have cost

estimates on the monetary resources needed to address the problem. These agencies include, the Department of Agriculture, the

Department of Education, the Department of Health and Human

Services, the Office of Personnel Management, the Small Business

Administration, and the Department of State. In fact, the Department of Health and Human Resources, has cost estimates for only

two divisions, amounting to $125 million and the Department of

Agriculture has cost estimates for only one division, amounting to

$5.6 million. The total estimate for these six agencies and their departments is $298 million.16

• The Department of Defense has not yet completed its inventory

of the computer software code which needs to be converted.

• The cost estimate to fix the 358 million estimated lines of code

to be reviewed is between $1.02 and $8.52 per line. This means the

cost to review and fix Department of Defense’s systems could range

somewhere between $358 million and $3 billion.17

• NASA, one of the most innovative, advanced and computer dependent agencies in the Federal Government, has not prepared a

plan to solve the problem and does not anticipate having a plan

completed until March 1997. With this schedule, the agency will

have less than a year to inventory, and fix systems.

C. COMMITTEE FINDINGS

The committee finds the following:
10

18Oral testimony of Kevin Schick, research director, The Gartner Group, before a hearing of

the Subcommittee on Government Management, Information, and Technology, House Committee

on Government Reform and Oversight, ‘‘Is January 1, 2000 the Date for Computer Disaster?’’

April 16, 1996, p. 8. 19Michael B. Tiernan, chairman, Year 2000 Subcommittee, Data Management Division of

Wall Street, Securities Industry Association, testimony before the Subcommittee on Government

Management, Information, and Technology, April 16, 1996, p. 79. 20 Richard Nunno, Analyst in Information Technology, Science Policy Research Division, Year

2000 Computer Problem, Congressional Research Service, p. CRS–3.

1. The year 2000 problem results from the unanticipated consequences of data processing decisions made decades ago

The two-digit year date field in many computer systems perform

various functions, such as calculating the age of U.S. citizens, sorting information by date, or comparing multiple dates. When computer technology was developed 20 years ago disk storage was very

expensive.18 During this time, many computer programmers never

considered an alternative format, because of the cost and the idea

that these programs would not last 10 years let alone through the

year 2000. Systems which have been in place for nearly 30 years

have been enhanced through advanced technology development but

continue to be programmed for the 20th century. During the development of computer technology many experts within the Federal

Government and the private sector believed that the rapidity with

which technology advanced could always yield a ‘‘silver bullet’’ solution to any technical difficulty. Others believed that the software

services industry was overstating the problem in order to sell their

product solutions. It has been noted that while correcting the date

field is technically simple, the process of inventorying, correcting,

testing and integrating software and hardware among all interactive systems (both among and between industry and Government) is a very complex management task.

2. Senior management involvement is required to address the year

2000 problem

According to the various witnesses who appeared before the subcommittee, the key to success is support from senior level management to fix systems accordingly. Witnesses revealed the fact that

many information technology experts have been aware of this

issue, in some instances for a decade, but have been unable to take

corrective action because the issue has been perceived as irrelevant

to the success of agencies’ missions. According to private sector witness, Michael Tiernan, it was only after senior level management

realized the potential economic impact of this issue did they move

quickly to develop a plan to resolve the problem.19

Within the Federal sector an interagency committee has been established to raise awareness of the daunting task facing Federal information technology managers. The ‘‘Interagency Committee on

the Year 2000’’ has taken several actions including requiring vendor software listed in future procurement schedules to be year 2000

compliant.20

3. The year 2000 deadline cannot be extended; no schedule slips are

possible

According to Kevin Schick, research director, The Gartner Group,

the crisis revolves around three considerations: time, cost and risk.
11

21The State of Nebraska has imposed a new tax to pay for the cost of the year 2000 computer

conversion. 22Kevin Schick, research director, The Gartner Group, testimony before the Subcommittee on

Government Management, Information, and Technology, April 16, 1996, p. 16. 23Stephen Horn, chairman, Subcommittee on Government Management, Information, and

Technology, Ranking Member Carolyn Maloney, ‘‘letter’’, April 29, 1996. 24Letter from Representative Stephen Horn and Representative Carolyn Maloney to the Honorable Donna Shalala, Department of Health and Human Resources, April 29, 1996 (on file with

the subcommittee). Letter from Representative Stephen Horn and Representative Carolyn

Maloney to the Honorable Dan Glickman, Secretary, Department of Agriculture, April 29, 1996

(on file with the subcommittee). Letter from Representative Stephen Horn and Representative

Carolyn Maloney to the Honorable Richard W. Riley, Secretary, Department of Education, April

29, 1996 (on file with the subcommittee). Letter from Representative Stephen Horn and Representative Carolyn Maloney to the Honorable James B. King, Director, Office of Personnel

Management, April 29, 1996 (on file with the subcommittee). Letter from Representative Stephen Horn and Representative Carolyn Maloney to the Honorable Philip Lader, Administrator,

Small Business Administration, April 29, 1996 (on file with the subcommittee). Letter from Representative Stephen Horn and Representative Carolyn Maloney to the Honorable Christopher

Warren, Secretary, Department of State, April 29, 1996 (on file with the subcommittee).

Businesses, Federal agencies, and State and local governments

need to understand that this is the only information technology

project that will not allow for a schedule slip. Saturday, January

1, 2000 cannot be moved to another day or time. Federal, State and

local governments may need to shift resources from other projects

in order to work on year 2000 efforts.21 In most cases, Federal

agencies are running out of time.

4. The cost of addressing the year 2000 problem is expensive

Addressing the year 2000 computer problem will be very expensive. Estimates received by the subcommittee run as high as $600

billion for systems worldwide. The cost for the Federal Government

alone, could reach $30 billion. These estimates are based upon the

private and public sectors developing plans to inventory their current programs; analyze the percentage of code affected by dates;

implement a ‘‘fix’’ to the problem, and provide for testing to ensure

that the changes are correct.22 All of these solutions need to be applied while successfully operating current information technology

programs.

Only six agencies furnished any cost estimates on the monetary

resources needed to solve the problem to the April 29, 1996 oversight letter. These agencies include, the Department of Agriculture,

the Department of Education, the Department of Health and

Human Services, the Office of Personnel Management, the Small

Business Administration, and the Department of State. In fact the

Department of Health and Human Services, has cost estimates for

only two divisions, amounting to $125 million.23 The Department

of Agriculture has cost estimates for only one division, amounting

to $5.6 million. The total estimate for these six agencies and the

remaining 22 departments is $298 million.24

As of this date, there are no estimates for solving the problem

within and among the various departments and agencies.

5. There is a high risk of system failure if the year 2000 computer

problem is not corrected

As stated by the Congressional Research Service, it may be too

late to correct every system in the Nation before the clock strikes
12

25 Richard Nunno, Analyst in Information Technology, Science Policy Research Division, Year

2000 Computer Problem, April 12, 1996, p. CRS–2. 26 Richard Nunno, Analyst in Information Technology, Science Policy Research Division, Year

2000 Computer Problem, Congressional Research Service, June 7, 1996.

twelve on December 31, 1999.25 If this is the case, then, businesses

need to know what steps they must take in order to avoid disruptions in normal business operations. Federal, State and local governments, need to prioritize mission critical systems, immediately

correcting those systems which have the greatest human impact.

Federal, State and local governments, must ensure that the

American public is not at risk of losing any currently available government service. Additionally, agencies, such as the Department of

Defense, the Federal Aviation Administration, and the National

Aeronautics and Space Administration, need to ensure that January 1, 2000 will not be a day when computers go haywire and life

as we know it is severely disrupted.

On June 7, 1996, the Congressional Research Service (CRS) provided both the House and Senate with a memorandum on the various issues complicating the year 2000 solution process. The CRS

also identified the potential consequences resulting from a failure

to address this problem at the Federal level. Some examples of the

impact of system failures could include:

• Miscalculation by the Social Security Administration of the

ages of citizens, causing payments to be sent to people who are not

eligible for benefits while ending or not beginning payments to

those who are eligible;

• Miscalculation by the Internal Revenue Service of the standard

deduction on income tax returns for persons over age 65, causing

incorrect records of revenues and payments due;

• Malfunctioning of certain Defense Department weapon systems;

• Erroneous flight schedules generated by the Federal Aviation

Administration’s air traffic controllers;

• State and local computer systems becoming corrupted with

false records, causing errors in income and property tax records,

payroll, retirement systems, motor vehicle registrations, utilities

regulations, and a breakdown of some public transportation systems;

• Erroneous records by securities firms and insurance companies;

• False billing by telephone companies resulting in errors in consumers’ bills or lapses in service.26

6. There are potential liability issues if the year 2000 computer date

conversion is not completed

In the future, industry may face potential liability for failing to

provide year 2000 compliant products or services. These same providers need to ensure that their databases are not corrupted by bad

data from other sources. This issue may cause banks, securities

firms and insurance companies to ascertain whether the companies

they finance or insure are year 2000 compliant before making investment decisions. Additionally, governments and businesses will

need to protect themselves from purchasing noncompliant software
13

products and services through the use of commercial market warranties.

7. Interconnected computer systems pose international risks

As the leading user of computer technology the United States

probably has more at risk, in terms of economic loss, if the year

2000 issue is not resolved properly. The economic impact on businesses both domestically and internationally could be dramatic, especially if our allies do not quickly take action to correct date dependent software. In fact, Federal agencies and the private sector

need to emphasize the urgency of this problem worldwide.

III. RECOMMENDATIONS

The year 2000 is less than 40 months away. The problem, although not technically complex, is managerially challenging and

will be very time consuming for private and public sector organizations. Additionally, the task may be more difficult for the public

sector, where systems which have been in use for decades, may

lack software documentation and therefore increase the time it

takes from the inventory phase to solution. Further increasing the

time to solve the problem could be a lack of qualified personnel

willing, or able, to correct the problem.

According to estimates received by the subcommittee during the

hearing process, the cost to fix Federal systems, is estimated to be

at least $30 billion. After requesting budget information from 24

departments and agencies, Congress still does not have a complete

picture of the cost of solving this problem. This lack of cost information may hinder Federal agency efforts to correct every system.

In fact, as stated by the Congress Research Service memorandum

dated April 12, 1996, ‘‘it may be too late to correct all of Nation’s

systems’’. The clock is ticking and most Federal agencies, have not

inventoried their major systems in order to detect where the problem lies within and among each Federal department, field office

and division. The date for completion of this project cannot slip.

The administration, particularly, the Office of Management and

Budget must ensure that agencies convert two-digit date fields to

recognize the year 2000 by ensuring the necessary and appropriate

resources—including both human and capital—are available to senior agency managers. The Government has a responsibility to its

constituents and we must not fail to ensure that Government services and public safety are available to all of our citizens.

Additional specific recommendations for the Federal Government

by the committee include:

• Agencies must prioritize mission critical systems, and determine the resources needed to make these systems year 2000 compliant.

• The Office of Management and Budget should direct Federal

agencies to begin implementation of agency year 2000 plans by

January 1, 1997.

• The Office of Management and Budget should work with Federal agencies to ensure appropriate funding levels are allocated to

solving this problem.
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