United States General Accounting Office

GAO Testimony

Before the Subcommittee on Government Management,

Information and Technology, Committee on Government

Reform and Oversight, House of Representatives

For Release on Delivery

Expected at

1 p.m.

Monday,

June 22, 1998

YEAR 2000 COMPUTING

CRISIS

Testing and Other

Challenges Confronting

Federal Agencies

Statement of Dr. Rona B. Stillman

Chief Scientist for Computers and Telecommunications

Accounting and Information Management Division

GAO/T-AIMD-98-218

Mr. Chairman and Members of the Subcommittee:

Thank you for inviting me to participate in today’s hearing on the Year

2000 problem. As you know, the federal government is extremely

vulnerable to Year 2000 problems due to its widespread dependence on

computer systems to process financial transactions, deliver vital public

services, maintain national security, and carry out its operations. This

challenge is made more difficult by the age and poor documentation of

some of the government’s existing systems and its lackluster track record

in modernizing systems to deliver expected improvements and meet

promised deadlines. Today, I will briefly discuss the Year 2000 risks facing

the government; highlight our major concerns with the government’s

progress in fixing its systems; and introduce our guidance on Year 2000

testing, which is designed to assist agencies in the most extensive and

expensive part of remediation.

Risk of Year 2000

Disruption to

Government Services

Is High

Addressing the Year 2000 problem in time will be a tremendous challenge

for the federal government. Many of the federal government’s computer

systems were originally designed and developed 20 to 25 years ago, are

poorly documented, and use a wide variety of computer languages, many

of which are obsolete. Some applications include thousands, tens of

thousands, or even millions of lines of code, each of which must be

examined for date-format problems.

To complicate matters, agencies must also consider the computer systems

belonging to federal, state, and local governments; the private sector;

foreign countries; and international organizations that interface with their

systems. For example, agencies that administer key federal benefits

payment programs, such as the Department of Veterans Affairs, exchange

data with the Department of the Treasury, which, in turn, interfaces with

various financial institutions to ensure that benefits checks are issued.

Department of Defense (DOD) systems interface with thousands of systems

belonging to foreign military sales customers, private contractors, other

federal agencies, and international entities such as the North Atlantic

Treaty Organization. Taxpayers can pay their taxes through data

exchanges between the taxpayer, financial institutions, the Federal

Reserve System, and the Department of the Treasury’s Financial

Management Service and the Internal Revenue Service. Because of these

and thousands of other interdependencies, government systems are also

vulnerable to failure caused by incorrectly formatted data provided by

other systems that are noncompliant.

Page 1 GAO/T-AIMD-98-218
The federal government also depends on the telecommunications

infrastructure to deliver a wide range of services. For example, the route

of an electronic Medicare payment may traverse several networks—those

operated by the Department of Health and Human Services, the

Department of the Treasury’s computer systems and networks, and the

Federal Reserve’s Fedwire electronic funds transfer system. Seamless

connectivity among a wide range of networks and carriers is essential

nationally and internationally and a Year 2000-induced

telecommunications failure could cause major disruptions.

In addition, the year 2000 could cause problems for the many facilities

used by the federal government that were built or renovated within the

last 20 years and contain embedded computer systems to control, monitor,

or assist in operations. For example, building security systems, elevators,

and air conditioning and heating equipment could malfunction or cease to

operate.

Agencies cannot afford to neglect any of these issues. If they do, the

impact of Year 2000 failures could be widespread, costly, and potentially

disruptive to vital government operations worldwide. For example:

• flights could be grounded or delayed and airline safety could be degraded;

• the military services could find it extremely difficult to efficiently and

effectively equip and sustain their forces around the world;

• Internal Revenue Service tax systems could be unable to process returns,

thereby jeopardizing revenue collection and delaying refunds;

• the Social Security Administration process to provide benefits to disabled

persons could be disrupted; and

• payments to veterans with service-connected disabilities could be

erroneous or severely delayed.

Key Year 2000 Issues

Are Not Being

Adequately Addressed

Because of the urgent nature of the Year 2000 problem and the potentially

devastating impact it can have on critical government operations, we

designated the problem as a high-risk area for the federal government in

February 1997.1

 Since that time, we have issued over 40 reports and

testimony statements detailing specific findings and recommendations

related to the Year 2000 readiness of a wide range of federal agencies.2

 We

1

High-Risk Series: Information Management and Technology (GAO/HR-97-9, February 1997).

2

A list of publications is included as an attachment to this statement.

Page 2 GAO/T-AIMD-98-218
have also issued guidance to help organizations successfully address the

issue.3

Overall, the government’s 24 major departments and agencies are making

slow progress in fixing their systems. In May 1997, the Office of

Management and Budget (OMB) reported that about 21 percent of the

mission-critical systems (1,598 of 7,649) for these departments and

agencies were Year 2000 compliant.4

 A year later, in May 1998, these

departments and agencies reported that 2,914 of the 7,336 mission-critical

systems in their current inventories, or about 40 percent, were compliant.

Unless progress improves dramatically, a substantial number of

mission-critical systems will not be compliant on time.

In addition to slow progress in fixing systems, many agencies were not

adequately acting on critical steps to establish priorities, solidify data

exchange agreements, and develop contingency plans. Likewise, more

attention needs to be devoted to (1) ensuring the government has a

complete and accurate picture of Year 2000 progress, (2) setting national

priorities, (3) ensuring that the government’s critical core business

processes are adequately tested, (4) recruiting and retaining information

technology personnel with the appropriate skills for Year 2000-related

work, and (5) assessing the nation’s Year 2000 risks, including those posed

by key economic sectors. I would like to highlight some of these

vulnerabilities and our recommendations made in April 1998 for

addressing them.5

• First, governmentwide priorities in fixing systems have yet to be

established. There has not been a concerted effort to set governmentwide

priorities based on such criteria as the potential for adverse health and

safety effects, adverse financial effects on American citizens, detrimental

effects on national security, and adverse economic consequences.

Furthermore, while individual agencies have been identifying

mission-critical systems, this has not always been done based on a

3

Year 2000 Computing Crisis: An Assessment Guide (GAO/AIMD-10.1.14, September 1997), which

includes the key tasks needed to complete each phase of a Year 2000 program (awareness, assessment,

renovation, validation, and implementation), and Year 2000 Computing Crisis: Business Continuity and

Contingency Planning (GAO/AIMD-10.1.19, Exposure Draft, March 1998), which describes the tasks

needed to ensure the continuity of agency operations.

4

The Social Security Administration’s (SSA) mission-critical systems were not included in these totals

because SSA did not report in May 1997 on a system basis. Rather, SSA reported at that time, and again

in August 1997, on portions of systems that were compliant. For example, SSA reported on the status

of 20,000-plus modules rather than 200-plus systems.

5

Year 2000 Computing Crisis: Potential for Widespread Disruption Calls for Strong Leadership and

Partnerships (GAO/AIMD-98-85, April 30, 1998).

Page 3 GAO/T-AIMD-98-218
determination of the agency’s most critical operations. For example, as

noted by the Defense Science Board, Defense has no means of

distinguishing between the priority of a video-conferencing system and a

logistics system, both of which were identified as mission-critical. If

priorities are not clearly set, the government may well end up wasting

limited time and resources in fixing systems that have little bearing on the

most vital government operations.

• Second, contingency planning across the government has been inadequate.

In their May 1998 quarterly reports to OMB, only four agencies reported that

they had drafted contingency plans for their core business processes.

Without such plans, when unpredicted failures occur, agencies will not

have well-defined responses and may not have enough time to develop and

test alternatives. Federal agencies depend on data provided by their

business partners as well as services provided by the public infrastructure

(e.g., power, water, transportation, and voice and data

telecommunications). One weak link anywhere in the chain of critical

dependencies can cause major disruptions to business operations. Given

these interdependencies, it is imperative that contingency plans be

developed for all critical core business processes and supporting systems,

regardless of whether these systems are owned by the agency.

• Third, OMB’s assessment of the current status of federal Year 2000 progress

is predominantly based on agency reports that have not been consistently

reviewed or verified. Without independent reviews, OMB and the

President’s Council on Year 2000 Conversion have little assurance that

they are receiving accurate information. In fact, we have found cases in

which agencies’ systems compliance status reported to OMB has been

inaccurate. For example, the DOD Inspector General estimated that almost

three quarters of DOD’s mission-critical systems reported as compliant in

November 1997 had not been certified as compliant by DOD components.6

In May 1998, the Department of Agriculture reported 15 systems as

compliant, even though these were replacement systems that were still

under development or were planned to be developed.7

 (The department

plans to remove these systems from compliant status in its next quarterly

report.)

• Fourth, end-to-end testing responsibilities have not yet been defined. To

ensure that their mission-critical systems can reliably exchange data with

other systems and that they are protected from errors that can be

introduced by external systems, agencies must perform end-to-end testing

6

Year 2000 Certification of Mission-Critical DOD Information Technology Systems (DOD Office of the

Inspector General, Report No. 98-147, June 5, 1998).

7

Year 2000 Computing Crisis: USDA Faces Tremendous Challenges in Ensuring That Vital Public

Services Are Not Disrupted (GAO/T-AIMD-98-167, May 14, 1998).

Page 4 GAO/T-AIMD-98-218
for their critical core business processes. The purpose of end-to-end

testing is to verify that a defined set of interrelated systems, which

collectively support an organizational core business area or function, work

as intended in an operational environment. In the case of the year 2000,

many systems in the end-to-end chain will have been modified or replaced.

As a result, the scope and complexity of testing—and its importance—is

dramatically increased, as is the difficulty of isolating, identifying, and

correcting problems. Consequently, agencies must work early and

continually with their data exchange partners to plan and execute

effective end-to-end tests. So far, lead agencies have not been designated

to take responsibility for ensuring that end-to-end testing of processes and

supporting systems is performed across boundaries, and that independent

verification and validation of such testing is ensured.

In our April 1998 report on governmentwide Year 2000 progress, we made

a number of recommendations to the Chairman of the President’s Council

on Year 2000 Conversion aimed at addressing these problems. These

included

• establishing governmentwide priorities and ensuring that agencies set

their own agencywide priorities,

• developing a comprehensive picture of the nation’s Year 2000 readiness,

• requiring agencies to develop contingency plans for all critical core

business processes,

• requiring agencies to develop an independent verification strategy to

involve inspector general or other independent organizations in reviewing

Year 2000 progress, and

• designating lead agencies responsible for ensuring end-to-end operational

testing of processes and supporting systems is performed.

We are encouraged by actions the Council is taking in response to some of

our recommendations. For example, OMB and the Chief Information

Officers Council adopted our draft guide providing information on

business continuity and contingency planning issues common to most

large enterprises as a model for federal agencies.8

 However, as we recently

testified before this Subcommittee, some actions have not been

initiated—principally with respect to setting national priorities,

independent verification, and end-to-end testing.

8

GAO/AIMD-10.1.19, Exposure Draft, March 1998.

Page 5 GAO/T-AIMD-98-218
GAO Guidance on

Year 2000 Testing

One of the more alarming problems we have come across in our Year 2000

reviews is that some agencies are not adequately prepared for testing their

systems for Year 2000 compliance. For example, in April 1998, we reported

that DOD did not have a testing strategy that specifies uniform criteria and

processes that its components should use in testing their systems. The

Army, Navy, and Air Force had not assessed their test needs or test facility

requirements.9

 In May 1998, we reported that the Department of

Agriculture’s Chief Information Officer had not provided test guidance to

the department’s component agencies, and 8 of 10 component agencies

included in our review lacked testing strategies.10

The fact that these agencies are not prepared now for effective testing

raises serious concern. Complete and thorough Year 2000 testing is

essential to provide reasonable assurance that new or modified systems

process dates correctly and will not jeopardize an organization’s ability to

perform core business operations after the millennium. Moreover, since

the Year 2000 computing problem is so pervasive, potentially affecting an

organization’s systems software, applications software, databases,

hardware, firmware and embedded processors, telecommunications, and

external interfaces, the requisite testing is extensive and expensive.

Leading organizations estimate that testing will require at least 50 percent

of an entity’s total Year 2000 program time.

To address this problem, we are issuing today a new installment of our

Year 2000 guidance which addresses the need to plan and conduct Year

2000 tests in a structured and disciplined fashion.11 The guide describes a

step-by-step framework for managing, and a checklist for assessing, all

Year 2000 testing activities, including those activities associated with

computer systems or system components (such as embedded processors)

that are vendor supported. This disciplined approach and the prescribed

levels of testing activities are hallmarks of mature software and system

development/acquisition and maintenance processes.

The guide describes the five levels of Year 2000 testing activities. The first

level establishes the organization infrastructure key processes needed to

guide, support, and manage the next four levels of testing activities. For

example, it addresses defining and assigning Year 2000 test management

9

Defense Computers: Year 2000 Computer Problems Threaten DOD Operations (GAO/AIMD-98-72,

April 30, 1998).

10GAO/T-AIMD-98-167, May 14, 1998.

11Year 2000 Computing Crisis: A Testing Guide (GAO/AIMD-10.1.21, Exposure Draft, June 1998).

Page 6 GAO/T-AIMD-98-218
authority and responsibility, defining criteria for certifying a system as

compliant, identifying and allocating resources, establishing schedules,

and securing test facilities. The next four levels provide key processes for

effectively designing, conducting, and reporting on tests of incrementally

larger system components: software unit/module tests, software

integration tests, system acceptance tests, and end-to-end tests. The

processes focus on testing of software and system components that the

organization is directly responsible for developing, acquiring, or

maintaining. Key processes, however, are also defined to address

organizational responsibilities relative to testing of vendor-supported and

commercial, off-the-shelf (COTS) products and components (including

hardware, systems software, embedded processors, telecommunications,

and COTS applications).

The test model builds upon and complements the five-phase conversion

model described in our Year 2000 readiness guide. The five levels of test

activities span all phases of our Year 2000 conversion model, with the

preponderance of test activities occurring in the conversion model’s

renovation and validation phases.

Finally, the guide incorporates guidance and recommendations of

standards bodies, such as the National Institute of Standards and

Technology and the Institute of Electrical and Electronic Engineers on

Year 2000 testing practices and draws on the work of leading information

technology organizations including the Software Engineering Institute,

Software Quality Engineering, Software Productivity Consortium, and the

United Kingdom’s Central Computer and Telecommunications Agency.

In conclusion, if effectively implemented, our guide should help federal

agencies successfully negotiate the complexities involved with the Year

2000 testing process. However, the success of the government’s Year 2000

remediation efforts ultimately hinges on setting governmentwide

priorities; ensuring that agencies set priorities and develop contingency

plans consistent with these priorities; developing an accurate picture of

remediation progress; designating lead agencies for end-to-end testing

efforts; and addressing other critical issues, such as recruiting and

retaining qualified information technology personnel.

Mr. Chairman, this concludes my statement. Mr. Joel Willemssen, GAO’s

Issue Area Director for Civil Agencies Information Systems and our focal

Page 7 GAO/T-AIMD-98-218
point for Year 2000 work, has accompanied me today. We will be happy to

answer any questions you or Members of the Subcommittee may have.

Page 8 GAO/T-AIMD-98-218
List of GAO Products That Address the Year

2000 Problem

Year 2000 Computing Crisis: Telecommunications Readiness Critical, Yet

Overall Status Largely Unknown (GAO/T-AIMD-98-212, June 16, 1998).

GAO Views on Year 2000 Testing Metrics (GAO/AIMD-98-217R, June 16, 1998).

IRS’ Year 2000 Efforts: Business Continuity Planning Needed for Potential

Year 2000 System Failures (GAO/GGD-98-138, June 15, 1998).

Year 2000 Computing Crisis: Actions Must Be Taken Now To Address Slow

Pace of Federal Progress (GAO/T-AIMD-98-205, June 10, 1998).

Defense Computers: Army Needs to Greatly Strengthen Its Year 2000

Program (GAO/AIMD-98-53, May 29, 1998).

Year 2000 Computing Crisis: USDA Faces Tremendous Challenges in

Ensuring That Vital Public Services Are Not Disrupted (GAO/T-AIMD-98-167,

May 14, 1998).

Securities Pricing: Actions Needed for Conversion to Decimals

(GAO/T-GGD-98-121, May 8, 1998).

Year 2000 Computing Crisis: Continuing Risks of Disruption to Social

Security, Medicare, and Treasury Programs (GAO/T-AIMD-98-161, May 7, 1998).

IRS’ Year 2000 Efforts: Status and Risks (GAO/T-GGD-98-123, May 7, 1998).

Air Traffic Control: FAA Plans to Replace Its Host Computer System

Because Future Availability Cannot Be Assured (GAO/AIMD-98-138R, May 1,

1998).

Year 2000 Computing Crisis: Potential For Widespread Disruption Calls

For Strong Leadership and Partnerships (GAO/AIMD-98-85, April 30, 1998).

Defense Computers: Year 2000 Computer Problems Threaten DOD

Operations (GAO/AIMD-98-72, April 30, 1998).

Department of the Interior: Year 2000 Computing Crisis Presents Risk of

Disruption to Key Operations (GAO/T-AIMD-98-149, April 22, 1998).

Year 2000 Computing Crisis: Business Continuity and Contingency

Planning (GAO/AIMD-10.1.19, Exposure Draft, March 1998).

Page 9 GAO/T-AIMD-98-218
List of GAO Products That Address the Year

2000 Problem

Tax Administration: IRS’ Fiscal Year 1999 Budget Request and Fiscal Year

1998 Filing Season (GAO/T-GGD/AIMD-98-114, March 31, 1998).

Year 2000 Computing Crisis: Strong Leadership Needed to Avoid

Disruption of Essential Services (GAO/T-AIMD-98-117, March 24, 1998).

Year 2000 Computing Crisis: Federal Regulatory Efforts to Ensure

Financial Institution Systems Are Year 2000 Compliant (GAO/T-AIMD-98-116,

March 24, 1998).

Year 2000 Computing Crisis: Office of Thrift Supervision’s Efforts to

Ensure Thrift Systems Are Year 2000 Compliant (GAO/T-AIMD-98-102,

March 18, 1998).

Year 2000 Computing Crisis: Strong Leadership and Effective

Public/Private Cooperation Needed to Avoid Major Disruptions

(GAO/T-AIMD-98-101, March 18, 1998).

Post-Hearing Questions on the Federal Deposit Insurance Corporation’s

Year 2000 (Y2K) Preparedness (AIMD-98-108R, March 18, 1998).

SEC Year 2000 Report: Future Reports Could Provide More Detailed

Information (GAO/GGD/AIMD-98-51, March 6, 1998).

Year 2000 Readiness: NRC’s Proposed Approach Regarding Nuclear

Powerplants (GAO/AIMD-98-90R, March 6, 1998).

Year 2000 Computing Crisis: Federal Deposit Insurance Corporation’s

Efforts to Ensure Bank Systems Are Year 2000 Compliant (GAO/T-AIMD-98-73,

February 10, 1998).

Year 2000 Computing Crisis: FAA Must Act Quickly to Prevent Systems

Failures (GAO/T-AIMD-98-63, February 4, 1998).

FAA Computer Systems: Limited Progress on Year 2000 Issue Increases

Risk Dramatically (GAO/AIMD-98-45, January 30, 1998).

Defense Computers: Air Force Needs to Strengthen Year 2000 Oversight

(GAO/AIMD-98-35, January 16, 1998).

Year 2000 Computing Crisis: Actions Needed to Address Credit Union

Systems’ Year 2000 Problem (GAO/AIMD-98-48, January 7, 1998).

Page 10 GAO/T-AIMD-98-218
List of GAO Products That Address the Year

2000 Problem

Veterans Health Administration Facility Systems: Some Progress Made In

Ensuring Year 2000 Compliance, But Challenges Remain (GAO/AIMD-98-31R,

November 7, 1997).

Year 2000 Computing Crisis: National Credit Union Administration’s

Efforts to Ensure Credit Union Systems Are Year 2000 Compliant

(GAO/T-AIMD-98-20, October 22, 1997).

Social Security Administration: Significant Progress Made in Year 2000

Effort, But Key Risks Remain (GAO/AIMD-98-6, October 22, 1997).

Defense Computers: Technical Support Is Key to Naval Supply Year 2000

Success (GAO/AIMD-98-7R, October 21, 1997).

Defense Computers: LSSC Needs to Confront Significant Year 2000 Issues

(GAO/AIMD-97-149, September 26, 1997).

Veterans Affairs Computer Systems: Action Underway Yet Much Work

Remains To Resolve Year 2000 Crisis (GAO/T-AIMD-97-174, September 25,

1997).

Year 2000 Computing Crisis: Success Depends Upon Strong Management

and Structured Approach (GAO/T-AIMD-97-173, September 25, 1997).

Year 2000 Computing Crisis: An Assessment Guide (GAO/AIMD-10.1.14,

September 1997).

Defense Computers: SSG Needs to Sustain Year 2000 Progress

(GAO/AIMD-97-120R, August 19, 1997).

Defense Computers: Improvements to DOD Systems Inventory Needed for

Year 2000 Effort (GAO/AIMD-97-112, August 13, 1997).

Defense Computers: Issues Confronting DLA in Addressing Year 2000

Problems (GAO/AIMD-97-106, August 12, 1997).

Defense Computers: DFAS Faces Challenges in Solving the Year 2000

Problem (GAO/AIMD-97-117, August 11, 1997).

Year 2000 Computing Crisis: Time Is Running Out for Federal Agencies to

Prepare for the New Millennium (GAO/T-AIMD-97-129, July 10, 1997).

Page 11 GAO/T-AIMD-98-218
List of GAO Products That Address the Year

2000 Problem

Veterans Benefits Computer Systems: Uninterrupted Delivery of Benefits

Depends on Timely Correction of Year-2000 Problems (GAO/T-AIMD-97-114,

June 26, 1997).

Veterans Benefits Computer Systems: Risks of VBA’s Year-2000 Efforts

(GAO/AIMD-97-79, May 30, 1997).

Medicare Transaction System: Success Depends Upon Correcting Critical

Managerial and Technical Weaknesses (GAO/AIMD-97-78, May 16, 1997).

Medicare Transaction System: Serious Managerial and Technical

Weaknesses Threaten Modernization (GAO/T-AIMD-97-91, May 16, 1997).

Year 2000 Computing Crisis: Risk of Serious Disruption to Essential

Government Functions Calls for Agency Action Now (GAO/T-AIMD-97-52,

February 27, 1997).

Year 2000 Computing Crisis: Strong Leadership Today Needed To Prevent

Future Disruption of Government Services (GAO/T-AIMD-97-51, February 24,

1997).

High-Risk Series: Information Management and Technology (GAO/HR-97-9,

February 1997).

(511463) Page 12 GAO/T-AIMD-98-218
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