United States General Accounting Office

GAO Report to Congressional Requesters

July 1998 YEAR 2000

COMPUTING CRISIS

Actions Needed on

Electronic Data

Exchanges

GAO/AIMD-98-124

GAO United States

General Accounting Office

Washington, D.C. 20548

Accounting and Information

Management Division

B-279011 

July 1, 1998

The Honorable James A. Barcia

Ranking Minority Member

Subcommittee on Technology

Committee on Science

House of Representatives

The Honorable Bart Gordon

Member

House of Representatives

This report contains information on actions taken to address Year 2000

issues for electronic data exchanges. Electronic data exchanges are used

extensively to transfer information between computer systems.

Consequently, as computer systems are converted to process Year 2000

dates, the associated data exchanges must also be made Year 2000

compliant.

As requested, our objectives were to identify (1) the key actions taken to

date to address electronic data exchanges among federal, state, and local

governments, (2) the actions the federal government has taken to

minimize the adverse economic impact of noncompliant Year 2000 data

from other countries’ information systems corrupting critical functions of

our nation, and (3) international forums where the worldwide economic

implications of this issue have been or could be addressed. To obtain this

information, we developed and sent a data collection instrument to survey

42 federal departments and agencies, all states, the District of Columbia,

and Puerto Rico. All the federal agencies and 39 of the state-level

organizations responded to our survey during the first quarter of 1998.

Many of the respondents were not able to provide consistent or complete

data because they had only recently begun inventorying and assessing data

exchanges and this data generally had not been centrally tracked and

managed. We contacted the respondents to resolve instances of

inconsistent or incomplete data; however, we did not independently audit

and validate any of the data reported by the federal agencies and states.

We also collected data from federal and state organizations that are

coordinating activities to resolve Year 2000 computer problems and from

organizations that were identified as potential forums for international

Year 2000 data exchange issues from October 1997 through March 1998.

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We performed our work between September 1997 and April 1998 in

accordance with generally accepted government auditing standards.

Details of our objectives, scope, and methodology are presented in

appendix I. We requested comments on a draft of this report from the

National Association of State Information Resource Executives (NASIRE),

the President’s Council on the Year 2000 Conversion, and the Office of

Management and Budget (OMB) for comment. NASIRE and OMB provided

written comments that are discussed in the “Agency Comments and Our

Evaluation” section. OMB’s comments are reprinted in appendix VIII.

Results in Brief Key actions to address Year 2000 data exchange issues are still in the early

stages; however, federal and state coordinating organizations have agreed

to use a 4-digit contiguous year format and establish joint federal and state

policy and working groups. To implement these agreements, OMB issued

instructions in January 1998 to federal agencies to inventory all data

exchanges with outside parties by February 1, 1998, and coordinate with

these exchange partners by March 1, 1998. At the time of our review, no

actions had been taken to establish target dates for additional key tasks,

such as testing new exchange formats or developing and implementing

contingency plans.

About half of the federal agencies reported during the first quarter of 1998

that they have not yet finished assessing their data exchanges to determine

if they will be able to process data with dates beyond 1999. Two of the 39

state-level organizations reported having finished assessing their data

exchanges. For the exchanges already identified as not Year 2000 ready,

respondents reported that little progress has yet been made in completing

key steps such as reaching agreements with partners on date formats,

developing and testing bridges and filters, and developing contingency

plans for cases in which Year 2000 readiness will not be achieved.

Most federal agency actions to address Year 2000 issues with international

data exchanges have been in the financial services area. Ten federal

agencies reported having a total of 702 data exchanges with foreign

governments or the foreign private sector. These foreign data exchanges

represented less than 1 percent of federal agencies’ total reported

exchanges. Federal agencies reported reaching agreement so far on

formats for 98 (14 percent) of the foreign data exchanges.

International organizations addressing year 2000 issues have been the

most active in the financial services area. During 1997, several

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international organizations initiated activities to increase awareness,

provide guidance, and monitor the status of Year 2000 efforts.

Background Exchanging data electronically is a common method of transferring

information among federal, state, and local governments; private sector

organizations; and nations around the world. As computers play an

ever-increasing role in our society, more information is being exchanged

regularly. Federal agencies now depend on electronic data exchanges to

execute programs and facilitate commerce. For example, federal agencies

routinely use data exchanges to transfer funds to contractors and

grantees; collect data necessary to make eligibility determinations for

veterans, social security, and medicare benefits; gather data on program

activities to determine if funds are being expended as intended and the

expected outcomes achieved; and share weather information that is

essential for air flight safety. To facilitate commerce, federal agencies

regulate or provide oversight to organizations that use data exchanges

extensively to process payments through the banking system; purchase or

sell securities through stock exchanges and futures markets; and facilitate

import and export shipments through ports of entry. We have reported on

potential data exchange issues that could affect many of these activities

(see the list of related products at the end of this report).

An electronic data exchange is the transfer (sending or receiving) of a data

set using electronic media. Electronic data exchanges can be made using

various methods, including direct computer-to-computer exchanges over a

dedicated network; direct exchanges over commercially available

networks or the Internet; or exchanges of magnetic media such as

computer tapes or disks. The information transferred in a data set often

includes at least one date.

Because many computer systems have been using a 2-digit year in the date

format, the data exchanges have also used 2-digit years. Now that many

formats are being changed to use 4 digits to correctly process dates

beyond 1999, data exchanges using 2-digit year formats must also be

changed to 4 digits or bridges must be used to convert incoming 2-digit

years to 4-digit years or convert outgoing 4-digit years to 2-digits. These

conversions generally involve the use of algorithms to distinguish the

century (for example, 2-digit years less than 50 may be considered 2000

dates and 2-digit years of 50 or more may be considered 1900 dates). In

addition to using bridges, filters may be needed to screen and identify

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incoming noncompliant data to prevent it from corrupting data in the

receiving system.

These conversions are not necessary if the data exchanges are designed to

employ certain electronic data interchange standards (see appendix II for

a glossary of data exchange standards used by some federal agencies). A

data exchange standard defines the format of a specific data set for

transmission. Some of these standards specify a 4-digit year format.

Federal agencies often use exchanges that do not involve a standard

format. Instead, the data exchanges consist of individual text files with a

structure that is established by agreement between the exchange partners.

Files using these formats are generally referred to as flat files.

As part of their Year 2000 correction efforts, organizations must identify

the date formats used in their data exchanges, develop a strategy for

dealing with exchanges that do not use 4-digit year formats, and

implement the strategy. These efforts generally involve the following

steps.1

• Assess information systems to identify data exchanges that are not Year

2000 compliant.

• Contact the exchange partner and reach agreement on the date format to

be used in the exchange.

• Determine if data bridges and filters are needed.

• Determine if validation processes are needed for incoming data.

• Set dates for testing and implementing new exchange formats.

• Develop and test bridges and filters to handle nonconforming data.

• Develop contingency plans and procedures for data exchanges and

incorporate into overall agency contingency plans.

• Implement the validation process for incoming data.

• Test and implement new exchange formats.

The testing and implementation of new data exchanges must be closely

coordinated with exchange partners to be completed effectively. In

addition to an agency testing its data exchange software, effective testing

involves end-to-end testing—initiation of the exchange by the sending

computer, transmission through intermediate communications software

and hardware, and receipt and acceptance by receiving computer(s), thus

completing the exchange process.

1

The steps listed are based on guidance and best practices in the information technology industry as

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

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Resolving data exchange issues will require significant efforts and costs

according to federal and state officials. At an October 1997 summit, federal

and state information technology officials estimated that about 20 percent

of Year 2000 efforts will be directed toward correcting data exchange

problems. This could be significant considering the magnitude of expected

Year 2000 costs. According to OMB’s February 15, 1998, Year 2000 status

reports of 24 federal agencies, the federal government’s Year 2000 costs

are estimated to be about $4.7 billion. Based on estimates provided by

states to NASIRE, the states’ Year 2000 costs are estimated to be about

$5.0 billion.

If Year 2000 data exchange problems are not corrected, the adverse impact

could be severe. Federal agencies exchange data with thousands of

external entities, including other federal agencies, state agencies, private

organizations, and foreign governments and private organizations. If data

exchanges do not function properly, data will not be exchanged between

systems or invalid data could cause receiving computer systems to

malfunction or produce inaccurate computations. For example, such

failures could result in the

• Social Security Administration not being able to determine the eligibility of

applicants or compute and pay benefits because it relies on data

exchanges for eligibility information and payment processing. This could

have a widespread impact on the public since the agency processes

payments to more than 50 million beneficiaries each month, which in

fiscal year 1997 totaled about $400 billion;

• National Highway Traffic Safety Administration not being able to provide

states with information needed for driver registrations, which could result

in licenses being issued to drivers with revoked or suspended licenses in

other states;

• Department of Veterans Affairs not being able to determine correct

benefits and make payments to eligible veterans;

• U.S. Coast Guard not receiving weather information necessary to plan

search and rescue operations; and

• Nuclear Regulatory Commission not receiving information from nuclear

reactors that is needed to trigger emergency response actions.

The overall responsibility for tracking and overseeing actions by federal

agencies to address Year 2000 issues rests with OMB and the President’s

Council on Year 2000 Conversion that was established in February 1998.

OMB has been tracking major federal agencies’ Year 2000 activities by

requiring them to submit quarterly status reports.

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Key Actions to

Address Electronic

Data Exchanges

Among Federal, State,

and Local

Governments Are in

the Early Stages

Efforts to address data exchange issues are in early stages. Federal and

state coordinating organizations reached initial agreements in 1997 on the

steps to address data exchanges issues; however, many federal agencies

and states have not yet finished assessing their data exchanges to

determine if they are Year 2000 compliant. Further, little progress has been

made in completing key steps such as reaching agreements with partners

on exchange formats, developing and testing bridges and filters, and

developing contingency plans.

Federal and State Efforts

to Coordinate Resolution

Activities

Federal and state coordinating organizations began to address Year 2000

data exchange problems in 1997. Initial agreements on steps to address

data exchange issues were reached at a state/federal summit in

October 1997 that was hosted by the State of Pennsylvania and sponsored

by the federal Chief Information Officer Council (CIO Council) and NASIRE.

At the summit, federal agency and state representatives agreed to establish

a contiguous 4-digit year date as a default standard for exchanges. They

also agreed that federal agencies will take the lead in providing

information on exchanges with states, any planned date format changes,

and timeframes for any changes. In addition, joint federal and state policy

and working groups were established to continue the dialogue on

exchange issues.

To implement these agreements, OMB issued instructions in January 1998

for federal agencies to inventory all data exchanges with outside parties by

February 1, 1998, and coordinate plans for transitioning to Year 2000

compliant data exchanges with exchange partners by March 1, 1998. OMB

also set March 1999 as the target date to complete the data exchange

corrections. In addition, for the February 15, 1998, quarterly reports, OMB

required the federal agencies to describe the status of their efforts to

inventory all data exchanges with outside entities and the method for

assuring that those organizations will be or have been contacted,

particularly state governments. However, OMB did not require the agencies

to report their status in completing key steps for data exchanges, such as

those listed earlier in this report.

According to its Year 2000 Coordinator, NASIRE plans to continue

implementing the agreements reached at the October 1997 summit through

active participation in joint policy and working groups and by holding

additional state/federal meetings on data exchange issues. These activities

will supplement NASIRE’s continuing efforts to provide states with access to

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information on vendors, software, and methodologies for resolving Year

2000 problems.

The federal CIO Council’s State Interagency Subgroup also plans to

continue pursuing the agreements reached at the October 1997 summit

through joint state and federal meetings on data exchange issues and by

hosting a state/federal meeting in April 1998.

The federal CIO Council also designated an official in the State Department

to act as the focal point for international exchange issues. The designee

plans to work through federal agencies that have international operations

to increase our foreign data exchange partners’ awareness of Year 2000

issues. For example, we were told that the State Department will add Year

2000 issues to bilateral and multilateral discussion agendas, such as the

Summit of the Americas and the Asian-Pacific Economic Cooperation

meetings.

Federal Department and

Agency Year 2000 Data

Exchange Activities

Twenty of the 42 federal agencies we surveyed reported having finished

inventorying and assessing data exchanges for mission-critical systems as

of the first quarter of 1998. Eighteen agencies have not completed their

assessments and the status of one federal agency is not discernable

because it was not able to provide information on their total number of

exchanges and the number assessed. The remaining three federal agencies

said they do not have external data exchanges.

Federal agencies reported that they have a total of almost 500,000 data

exchanges with other federal agencies, states, local governments, and the

private sector for their mission-critical systems. Almost 90 percent of the

exchanges were reported by the Federal Reserve2

 and the Department of

Housing and Urban Development (HUD) which reported having 316,862 and

133,567, respectively. The Federal Reserve exchanges data with federal

agencies and the private sector using software it provides to these entities.

The Federal Reserve reported that it has assessed all of these exchanges.3

Similarly, HUD has exchanges with housing authorities, states agencies, and

private sector organizations. HUD has determined that 92 percent of these

2

Information concerning the Federal Reserve was provided by the Board of Governors of the Federal

Reserve System.

3

The Federal Reserve has 2-digit and 4-digit year formats in its data exchanges. It plans to use 4-digit

formats for all exchanges in the future, but will continue using the 2-digit year format for some

exchanges and have exchange partners bridge to these if necessary. Federal Reserve’s Year 2000

officials estimated that 20 percent of their data exchanges have 2-digit year formats. They also told us

that they have not set a target date for the conversion to 4-digit year formats.

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exchanges are not Year 2000 compliant. The other agencies reported their

mission-critical systems have about 49,000 data exchanges with other

federal agencies, states, local governments, and the private sector, as

shown in figure 1. These agencies reported that they have assessed about

39,000, or about 80 percent, of the exchanges. (See appendix III for the

status of assessments and other actions for each of the federal agencies.)

Figure 1: Reported Federal Data

Exchanges With Other Federal

Agencies, States, Local Governments,

and Private Sector Organizations

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

6,707

8,860

552

32,481

Type of exchange partners

Number of exchanges

Federal agency States Local government Private sector

Note: Includes data exchanges for mission-critical systems only. Does not include 450,429

exchanges reported by the Federal Reserve and Department of Housing and Urban

Development.

Source: Data reported by federal agencies on GAO’s data collection instrument. We did not

independently verify this information.

Significant federal actions will be needed to address Year 2000 problems

with data exchanges. Of the 39,0004

 exchanges that federal agencies said

they assessed, they reported about 27 percent as not being Year 2000

compliant. Only six federal agencies told us that all their data exchanges

4

These numbers do not include the Federal Reserve and HUD data exchanges that were previously

discussed.

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B-279011 

are Year 2000 compliant and these represent only 123 of the approximately

39,000 data exchanges that have been assessed.

As discussed previously, dealing with data exchanges involves a number of

steps. For each noncompliant exchange, the agency must reach agreement

with the exchange partners on whether they will (1) change the date

format to make it compliant or (2) agree to retain the existing 2-digit

format and use bridges as an interim measure. To resolve Year 2000 data

exchange problems, all federal agencies have chosen to adopt a

contiguous 4-digit year format; however, some agencies plan to continue

using a 2-digit year format for some of their exchanges in the near term. If

a 2-digit exchange format is retained but the agency’s system will be using

4-digit years, the agency must develop, test, and implement (1) bridges to

convert dates to a useable form and (2) filters to recognize 2-digit years

and prevent them from entering agency systems. In addition, the agencies

should identify the exchanges where there is a probability that, even

though agreements have been reached to exchange 4-digit years, one

partner may not be compliant. In these cases, agencies must develop

contingency plans to ensure that mission-critical operations continue.

The status of activities to contact and reach agreement on Year 2000

readiness with exchange partners varies significantly among federal

agencies. Only one federal agency reported having reached agreements

with all its exchange partners. While on average the other federal agencies

reported having reached agreements on about 24 percent of their

exchanges, almost half of federal agencies reported that they have reached

agreements on 10 percent or less of their exchanges, as shown in figure 2

below.

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Figure 2: Reported Percentage of

Agreements Reached With Exchange

Partners by 36 Federal Agencies

0

5

10

15

20

25

19

12

4

1

Percent of agreements reached

Number of agencies

0-10% 11-50% 51-99% 100%

Note: Figures do not include the status of agreements reported by the Federal Reserve because it

controls the data exchange software and does not need to reach agreement with exchange

partners on formats.

Source: Data reported by federal agencies on GAO’s data collection instrument. We did not

independently verify this information.

Few federal agencies reported having taken actions to install bridges or

filters. Seventeen federal agencies responding to our survey have

identified the need to install 988 bridges or filters. In total, the agencies

reported having developed and tested 203, or 21 percent, of the needed

bridges or filters. In addition, only 38 percent of the federal agencies

reported having developed contingency plans for data exchanges. The

need for bridges, filters, and contingency plans may increase as agencies

continue assessing data exchanges and contacting and reaching

agreements with exchange partners.

States’ Year 2000 Data

Exchange Activities

Only two states reported to us that they have finished inventorying and

assessing data exchanges for mission-critical systems. The status of 15 of

the 39 states that responded to our survey is not discernable because they

were not able to provide us with information on their total number of

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exchanges and the number assessed. In addition, all but two states were

able to provide only partial responses or estimates on the status of

exchanges. For the 24 states that provided actual or estimated data on the

status of their exchanges, an average of 47 percent of the exchanges had

not been assessed.5

 Similar to the federal agencies, states reported that the

largest number of exchanges were with the private sector, as shown in

figure 3 below. (See appendix IV for the status of assessments and other

actions for each state.)

Figure 3: Reported State Data

Exchanges With Federal Agencies,

Other States, Local Governments, and

Private Sector Organizations

0

5,000

10,000

15,000

20,000

4,385

862

8,249

17,958

Type of exchange partners

Number of exchanges

Federal agency States Local government Private sector

Note: Includes data exchanges for mission-critical systems of 23 states that provided data in

these categories.

Source: Data reported by federal agencies on GAO’s data collection instrument. We did not

independently verify this information.

Significant state actions will be needed to address Year 2000 data

exchange issues. Of the 12,262 total exchanges that states reported as

5

This includes data from 11 states that provided estimates on the status of their data exchanges and 11

states that provided partial data.

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having assessed, 5,066 exchanges (41 percent) are reported as not being

Year 2000 compliant. None of the states reported that all their data

exchanges are Year 2000 compliant. For each of the noncompliant

exchanges, the states must take the same types of actions, as described

earlier for federal agencies, to reach agreements with the exchange

partners, develop, test, and implement bridges and filters, and develop

data exchange contingency plans.

Similar to federal agencies, states reported having made limited progress

in reaching agreement with exchange partners on addressing changes

needed for Year 2000 readiness, installing bridges and filters, and

developing contingency plans. However, we can draw only limited

conclusions on the status of the states actions because data were provided

on only a small portion of states’ data exchanges. Officials from several

states told us that they were unable to provide actual, statewide data on

their exchanges because the states do not collect and maintain such

information centrally and the state agencies did not provide the data

requested in our survey. According to NASIRE’s Year 2000 committee

chairman, individual state agencies are aware of data exchange issues and

have started taking action to address them, but few state chief information

officers have begun monitoring these actions on a statewide basis.

Regulatory/Oversight

Activities to Promote

Resolution of Year 2000

Issues

In addition to working with their exchange partners to resolve Year 2000

issues, some federal agencies are providing Year 2000 guidance to the

organizations that they regulate or oversee and monitoring their Year 2000

activities. Sixteen federal agencies reported that they have regulatory or

oversight responsibilities. Seven of the agencies focus on the financial

services area, including banks, thrifts, and security exchanges. The others

regulate or provide oversight to organizations performing government

services, such as housing authorities and grantees, and private

organizations in a variety of industry sectors such as the import and export

industry, the maritime industry, manufacturers of medical devices and

pharmaceuticals, and the oil, gas, and mineral industries.

All but 3 of the 16 agencies reported providing guidance or establishing

working groups addressing Year 2000 issues for the organizations for

which they have regulatory or oversight responsibility. In total, 11 of the

16 federal agencies provided guidance on Year 2000 issues and the

guidance from all but two addressed data exchange issues, 10 agencies

have sponsored Year 2000 working groups, 12 agencies have monitored

progress in resolving Year 2000 problems, and 5 have established

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inspection or validation programs. Of the 12 agencies that have been

monitoring progress on the resolution of Year 2000 problems, 10 reported

that they have data on the corrective action status of the organization they

regulate or oversee. See appendix V for Year 2000 activities undertaken by

each federal regulatory or oversight agency.

Most Actions Taken

by Federal Agencies

to Prevent

International Data

Exchange Problems

Have Been in the

Financial Services

Area

Federal agencies in the financial services area reported having initiated

efforts domestically and internationally to address Year 2000 problems

with international data exchanges, but other federal agencies reported that

they are still in the initial stages of addressing these issues.

Ten federal agencies reported having 702 data exchanges with foreign

governments or the foreign private sector. These 702 foreign data

exchanges reported by federal agencies represent less than 1 percent of all

federal data exchanges. The federal agencies reported reaching agreement

on formats for 98, or 14 percent, of the foreign exchanges.

Three federal agencies—the Departments of the Interior, Treasury, and

Defense—have the bulk of the reported foreign data exchanges. For its 416

reported foreign exchanges, Interior plans to notify its foreign data

exchange partners that it will continue to use a 2-digit year in data

exchanges and use bridges with algorithms to compute the century.

Treasury has reached agreement on year formats for 71 of its 107 reported

foreign exchanges and advised us that it is using bank examiners to

monitor the activities to make all the exchanges Year 2000 compliant. The

Department of Defense reported reaching agreement on 18 of its 103 data

exchanges with foreign entities. The remaining seven federal agencies

reported having reached agreement on 9 of their 76 foreign data

exchanges.

Interior was the only agency that reported having developed and tested

bridges and filters to convert dates and prevent the corruption of its

systems. None of the agencies reported having developed contingency

plans to process transactions if the exchange partners’ systems were not

Year 2000 compliant.

Nine federal agencies—six in the financial services area—said they have

regulatory or oversight responsibility for organizations with international

data exchanges. Three agencies in the financial services area said they are

relying on bank examiners to monitor progress and one is providing

guidance to exchange partners for addressing Year 2000 problems. Four of

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the nine agencies stated that they are also addressing Year 2000 problems

by working with international organizations, such as the Bank for

International Settlements, the International Organization of Securities

Commissions, and the Securities Industry Association. Two of the nine

agencies reported having no ongoing international Year 2000 activities.

Several International

Organizations Are

Serving as Forums for

Addressing Year 2000

Issues

International organizations identified by federal agencies as forums for

Year 2000 activities were primarily in the financial services area including

the Bank for International Settlements, International Organization of

Securities Commissions, Securities Industry Association, and Futures

Industry Association. The Department of Transportation also identified the

International Civil Aviation Organization as a potential international forum

for the resolution of Year 2000 problems. In addition, from our search of

the Internet for Year 2000 activities by international organizations, we

identified eight other potential international forums. The activities of these

organizations are highlighted in table 1 and the reported current and

planned activities of each organization are summarized in appendix VI.

Table 1: Reported Year 2000 Activities of International Organizations

Organization

Promoting

awareness

Issuing

guidance

Work groups or

conferences

Monitor or

survey Other

Bank for International Settlements X X X X X

International Organization of Securities Commissions X X X

Securities Industry Association X X X X X

Futures Industry Association X X X

International Association of Insurance Supervisors X

International Civil Aviation Organization X X

International Air Transport Association X X X X

European Commission X X X X

World Bank X X

United Nations X X

Year 2000 Global Steering Committee X

International Council for Information Technology in

Government Administration

X X

Interpol X

Source: Information was collected from the entities listed and from their Internet web sites. We did

not independently verify this information.

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The primary efforts cited by the international organizations are increasing

awareness and providing information and guidance on resolving Year 2000

problems, including posting the information on their Internet web sites.

Six organizations also reported that they are sponsoring conferences or

workshops to discuss Year 2000 issues and six reported that they are

monitoring or surveying the status of their members’ Year 2000 activities.

Organizations in the financial services area are the most active in Year

2000 efforts. According to the Bank for International Settlements, payment

and settlement systems are essential elements of financial market

infrastructures through which clearing organizations, settlement agents,

securities depositories, and the various direct and indirect participants in

these systems are intricately connected. It is therefore imperative that the

systems be adapted and certified early enough to ensure that they are Year

2000 compliant and to allow for testing among institutions. To address

these issues, officials at the Bank for International Settlements told us that

it is coordinating with the International Organization of Securities

Commissions and the International Association of Insurance Supervisors

to draw attention to Year 2000 issues. In September 1997, the Bank for

International Settlements issued a technical paper for banks which sets

out a strategic approach for the development, testing, and implementation

of system solutions as well as defining the role that central banks and

bank supervisors need to play in promoting awareness of the issue and

enforcing action.

Other organizations have also used the Bank for International Settlements’

technical framework to stimulate activities of their members. For

example, the Securities Industry Association used the framework to

develop a project plan with target dates for completing various tasks and

posted the plan on its Internet web site for members to use in planning

their Year 2000 activities. The Securities Industry Association also used

the framework as the basis for a survey instrument for assessing the status

of its members’ Year 2000 activities.

The European Commission has been publishing issue papers and

conducting workshops to increase awareness of Year 2000 computer

problems among its member countries. These issue papers and workshops

also addressed the implication of European countries’ efforts to convert to

the new Euro currency. Because this conversion is taking place at about

the same time as the Year 2000 date conversion activities, the two are in

competition for financial, technical, and management resources. To

identify how businesses are approaching the Euro conversion and the

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inter-relationship with activities to resolve Year 2000 problems, the

European Commission sponsored a survey of more than 1,000 senior

information technology managers in 10 countries. The result of this survey,

as well as the issue papers and workshop results, are posted on the

European Commission’s web site (www.ispo.cec.be/y2keuro).

In addition to assisting their members, several of the international

organizations reported having programs to ensure that their own systems

will be able to process international data exchanges for their members in

the Year 2000. For example, the Bank for International Settlements, the

International Air Transport Association, and Interpol told us that they have

information systems that process transactions and information exchanges

for their member organizations. Each of these organizations said that their

Year 2000 programs are on schedule and that they will be able to support

international data exchanges with Year 2000 dates.

Conclusions Unless federal agencies take action to reach date format agreements with

their data exchange partners and deal with data exchanges that will not be

Year 2000 compliant, some of the agencies’ mission-critical systems may

not be able to function properly. The data reported to us by federal

agencies and state governments suggest that the full extent of the

managerial and operational challenges posed by the heavy reliance on

others for data needed to sustain government activity is not yet known.

For the vast majority of data exchanges, including those with international

entities, federal agencies have not reached agreement with their exchange

partners and, therefore, do not know if the partners will be able to

effectively exchange data in the Year 2000.

Without knowing the status of activities or reaching agreements with

exchange partners, federal agencies can not identify all the exchanges

requiring (1) filters to prevent incoming invalid data from corrupting

mission-critical systems or (2) provisions in the agencies’ business

continuity and contingency plans to ensure the continuation of

mission-critical operations. In addition, without extensive coordination

with exchange partners, federal agencies will not be able to develop and

test new data exchange formats, bridges, and filters to ensure that they

will function properly.

Because federal agencies and states are still in the early stages of resolving

Year 2000 problems for data exchanges and the status of exchange partner

activities is generally unknown, federal agencies need to take the lead in

Page 16 GAO/AIMD-98-124 Electronic Data Exchanges
B-279011 

setting target dates for critical activities to prevent disruptions to their

operations. These include setting target dates for testing and implementing

new exchange formats and decision points for initiating the development

and implementation of contingency plans.

International forums for Year 2000 issues are available for a few economic

sectors and primarily in North America and Western Europe. Only recently

have any federal activities been directed at international issues and these

have been limited to increasing awareness.

Recommendations We recommend that the Director, OMB, in consultation with the Chair of

the President’s Council on Year 2000 Conversion, issue the necessary

guidance to require federal agencies to take the following actions.

• Establish schedules for testing and implementing new exchange formats

prior to the March 1999 deadline for completing all data exchange

corrections; such schedules may include national test days that could be

used for end-to-end testing of critical business processes and associated

data exchanges affecting federal, state, and/or local governments.

• Notify exchange partners of the implications to the agency and the

exchange partners if they do not make date conversion corrections in time

to meet the federal schedule for implementing and testing Year 2000

compliant data exchange processes.

• Give priority to installing the filters necessary to prevent the corruption of

mission-critical systems from data exchanges with noncompliant systems.

• Develop and implement, as part of their overall business continuity and

contingency planning efforts, specific provisions for the data exchanges

that may fail, including the approaches to be used to mitigate operational

problems if their partners do not make date conversion corrections when

needed.

• Report, as part of their regular Year 2000 status reports, their status in

completing key steps for data exchanges, such as the percent of exchanges

that have been inventoried, the percent of exchanges that have been

assessed, the percent of exchanges that have agreements with exchange

partners, the percent of exchanges that have been scheduled for testing

and implementation, and the percent of exchanges that have completed

testing and implementation.

We also recommend that the Director, OMB, ensure that the federal CIO

Council (1) identifiy the areas in which adequate forums on Year 2000

issues are not available for our international trade partners and

Page 17 GAO/AIMD-98-124 Electronic Data Exchanges
B-279011 

(2) develop an approach to promote Year 2000 compliance activities by

these trading partners.

Agency Comments

and Our Evaluation

We provided a draft of this report to NASIRE, the President’s Council on the

Year 2000 Conversion, and OMB for comment. NASIRE stated that its Year

2000 Committee had reviewed the draft and had no suggested changes.

The NASIRE President also commented that the information and

recommendations seemed reasonable and should assist federal agencies

and states in their Year 2000 efforts. The President’s Council on Year 2000

Conversion did not provide comments on the report. OMB provided

comments that are reproduced in appendix VIII and summarized and

evaluated below.

OMB provided updated information on the initial steps taken by federal

agencies to address data exchange issues, described actions taken to

partially implement three of our recommendations, cited plans to

implement one recommendation, and gave reasons for disagreeing with

the remaining two recommendations. OMB commented that our survey

results would have been markedly different if the data had been collected

1 month later. OMB stated that, after our survey, 24 of the largest federal

agencies reported that they had completed their assessments of data

exchanges, and that virtually all of these agencies had now reached

agreements with their exchange partners on exchange formats. We agree

with OMB that these steps would represent a good start; however, many

essential actions are yet to be completed. Our recommendations focus on

the actions needed to ensure that federal agencies appropriately build on

these fundamental steps to comprehensively address data exchange

issues.

In commenting on our recommendation concerning the establishment of

schedules for testing and implementation of new exchange formats, OMB

listed the actions that the CIO Council had taken in cooperation with NASIRE

to (1) establish lists of exchanges and a contact point for each exchange

and (2) develop a reporting format for federal agencies to report monthly

on the status of each data exchange with states starting in July 1998. OMB

stated that this information will be posted on an Internet web site and be

available for federal and state officials to review and determine whether

testing is being conducted successfully. While these are positive steps

toward implementation of our recommendation, they do not address the

need to establish schedules for testing and implementing new exchange

formats. Schedules with target dates for testing and implementation of

Page 18 GAO/AIMD-98-124 Electronic Data Exchanges
B-279011 

new exchanges are needed for coordinating efforts and measuring

progress toward specific milestones. In addition, the actions described by

OMB apply only to states and thus do not address exchanges with other

federal agencies, local governments, and the private sector that constitute

over 80 percent of the total reported exchanges.

As to our recommendation concerning the development and

implementation of contingency plans for data exchanges that may fail, OMB

stated that on April 28, 1998, it directed federal agencies to ensure that

their continuity of business plans address all risks to information flows,

including those with external organizations. OMB plans to evaluate this

guidance and amplify it as necessary based on its review of agencies’

May 15, 1998, Year 2000 status reports. OMB has taken an important step by

issuing this directive. However, the May progress reports showed that

federal agencies are making slow progress in their Year 2000 activities and

this reinforces the need for OMB to provide clear directions on this critical

issue. Because of the risk that exchange partners may not be able to make

their systems and exchanges Year 2000 compliant and the importance of

developing effective contingency plans, OMB should provide explicit

directions to ensure that agencies devote sufficient management attention

and resources to this critical activity. Such directions should clearly

require agencies to perform the key tasks associated with initiating the

project, preparing business impact analysis, developing contingency plans,

and testing the plans.

Regarding our recommendation that OMB require agencies to report their

status in completing key steps for data exchanges as part of the regular

Year 2000 status reports, OMB stated that the posting of data exchange

status information on a web site, as discussed above, will be used rather

than imposing an additional reporting requirement on agencies. OMB

explained that it and NASIRE have agreed to this approach because it

(1) provides sufficient information at a policy level to ensure that the work

is getting done, (2) promotes the greatest exchange of information at the

working level, and (3) minimizes duplication of reporting. As we

previously stated, establishing this status reporting process is a positive

step; however, the website will contain information on thousands of data

exchanges with states and must be summarized and analyzed for it to be

useful in managing and monitoring the time-critical activities to resolve

data exchange issues. Also, as previously noted, this reporting requirement

only covers the status of exchanges with states and thus excludes the

other data exchanges that constitute over 80 percent of the total

exchanges.

Page 19 GAO/AIMD-98-124 Electronic Data Exchanges
B-279011 

OMB agreed with our recommendation that agencies should give priority to

installing the filters necessary to prevent the corruption of mission-critical

systems and said that it plans to update its guidance to agencies to make

sure they recognize this priority as well.

OMB did not agree that agencies need to notify their exchange partners of

the implications to the agency and the exchange partners if they do not

make date conversions in time to meet the schedule for testing and

implementing Year 2000 compliant data exchange processes. OMB stated

that exchange partners are well aware of the implications of failing to

make date conversions. Although exchange partners are aware of the

general implications of date exchange failures, the partners will not know

the implications if they do not meet testing and implementation schedules

for specific exchanges, unless the agencies notify their exchange partners.

Knowledge of these implications is important because the exchange

partners have many competing demands for Year 2000 resources and may

have to decide which activities will be completed on time and which will

be deferred. Therefore, exchange partners need to know the implications

of data exchange failures, including the actions that will be needed under

contingency plans if the partners do not meet key milestones for testing

and implementing data exchanges.

OMB also disagreed with our recommendation that the federal CIO Council

(1) identify the areas in which adequate forums on Year 2000 issues are

not available for our international trade partners and (2) develop an

approach to promote Year 2000 compliance activities by these trading

partners. OMB said that the Chair of the President’s Council on Year 2000

Conversion agreed that international implications of the Year 2000

problems are of the gravest concern, but disagreed that the CIO Council

would be the right place to begin addressing these problems. According to

OMB, the Chair has met with representatives from two international

organizations to encourage them to be more involved in Year 2000

activities and with the Secretary of State who agreed to have ambassadors

conduct outreach efforts in each country. OMB also said that the Chair has

asked agency heads to encourage international organizations to cooperate

in addressing Year 2000 problems. The steps taken by the Chair to

promote international actions on Year 2000 problems represent progress

but much more organized, concerted, and continuous effort are needed to

adequately address this far-reaching and complex issue—one that the

Chair has acknowledged as being of gravest concern. Because the CIO

Council includes representatives of agencies that regulate or influence

private sector organizations that operate internationally in every economic

Page 20 GAO/AIMD-98-124 Electronic Data Exchanges
B-279011 

sector, it could, and should, play an important role in providing the

President’s Council with the support needed to deal effectively with Year

2000 issues worldwide.

As agreed with your offices, unless you publicly announce its contents

earlier, we plan no further distribution of this report until 30 days from the

date of this letter. At that time, we will send copies to the Chairman of the

Committee on Science; the Ranking Minority Member of the Committee on

Science; the Chairman of the Subcommittee on Technology; other

interested congressional committees; the Director, Office of Management

and Budget; and other interested parties. Copies will also be made

available to others upon request.

I can be reached at (202) 512-6408 or by e-mail at

willemssenj.aimd@gao.gov, if you or your staff have any questions. Major

contributors to this report are listed in appendix IX.

Joel C. Willemssen

Director, Civil Agencies Information Systems

Page 21 GAO/AIMD-98-124 Electronic Data Exchanges
Contents

Letter 1

Appendix I 

Objectives, Scope,

and Methodology

26

Appendix II 

Data Exchange

Standards Glossary

28

Appendix III 

Reported Status of

Assessments and

Other Actions by

Federal Agencies

30

Appendix IV 

Reported Status of

Assessments and

Other Actions by

States

34

Appendix V 

Guidance and

Monitoring

Information Provided

by Federal Agencies

That Have

Oversight/Regulatory

Responsibilities

35

Page 22 GAO/AIMD-98-124 Electronic Data Exchanges
Contents

Appendix VI 

Activities of

International

Organizations to

Resolve Year 2000

Problems

36

Appendix VII 

Data Collection

Instrument

45

Appendix VIII 

Comments From the

Office of Management

and Budget

54

Appendix IX 

Major Contributors to

This Report

59

Related GAO Products 63

Table Table 1: Reported Year 2000 Activities of International

Organizations

14

Figures Figure 1: Reported Federal Data Exchanges With Other Federal

Agencies, States, Local Governments, and Private Sector

Organizations

8

Figure 2: Reported Percentage of Agreements Reached With

Exchange Partners by 36 Federal Agencies

10

Figure 3: Reported State Data Exchanges With Federal Agencies,

Other States, Local Governments, and Private Sector

Organizations

11

Page 23 GAO/AIMD-98-124 Electronic Data Exchanges
Contents

Abbreviations

BIS Bank for International Settlements

CIO Chief Information Officer

DCI data collection instrument

FIA Futures Industry Association

HUD Department of Housing and Urban Development

IATA International Air Transport Association

IOSCO International Organization of Securities Commissions

NASIRE National Association of State Information Resource

Executives

OMB Office of Management and Budget

SIA Securities Industry Association

Page 24 GAO/AIMD-98-124 Electronic Data Exchanges
Page 25 GAO/AIMD-98-124 Electronic Data Exchanges
Appendix I 

Objectives, Scope, and Methodology

As requested by the Ranking Minority Member of the Subcommittee on

Technology, House Committee on Science, our overall objectives for the

review were to identify (1) the key actions taken to date to address

electronic data exchanges among federal, state, and local governments,

(2) actions the federal government has taken to minimize the adverse

economic impact of noncompliant Year 2000 data from other countries’

information systems corrupting critical functions of our nation, and

(3) international forums where the worldwide economic implications of

this issue have been or could be addressed.

To identify the key actions taken to date to address electronic data

exchanges among federal, state, and local governments, we contacted

federal and state organizations responsible for coordinating Year 2000

activities to identify their approaches for addressing data exchange issues.

We obtained information on the status of actions of federal agencies and

states using a data collection instrument (DCI). The DCI contains questions

based on our Year 2000 Computing Crisis: An Assessment Guide (a copy of

the DCI is reproduced in appendix VII). The DCI was pretested by having it

reviewed for clarity and reasonableness by three agencies’ representatives

who are knowledgeable about data exchanges. We revised the DCI based

on their comments and further tested it by sending it to six federal

agencies and three states. Five of the six federal agencies responded with

a completed DCI in November and December 1997 and the other agency did

not respond until February 1998. The three states provided oral comments,

but did not respond with a completed DCI. Based on the five agencies’

responses and our subsequent follow-up questions concerning

inconsistent or incomplete data, we revised the DCI by adding additional

definitions and cross references.

The DCI was sent to an additional 36 federal departments1

 and major

agencies (referred to collectively as federal agencies) and the remaining 47

states, the District of Columbia, and Puerto Rico. All 36 federal agencies

and 39 of the 52 state-level organizations responded to our survey between

January and March 1998. Three of the federal agencies reported that they

did not have external data exchanges. In cases involving incomplete

responses or inconsistent data on responses, we contacted the

respondents to request additional data or clarification, as appropriate.

Responses to follow-up questions were received in February, March, and

April 1998.

1

One combined Department of Defense response included information for the departments of the

Army, Navy, and Air Force.

Page 26 GAO/AIMD-98-124 Electronic Data Exchanges
Appendix I 

Objectives, Scope, and Methodology

The DCI was also used to identify the federal government’s actions taken to

minimize the adverse economic impact of noncompliant Year 2000 data

from other countries’ information systems corrupting critical functions of

our nation. In this regard, we collected information from federal and state

organizations that have, or oversee entities that have, international data

exchanges using the DCI.

To identify international forums where the worldwide economic

implications of this issue have been or could be addressed, we collected

information from federal agencies using the DCI and researched

international organization and Year 2000 Internet sites. We contacted the

organizations identified as potential forums for international Year 2000

data exchange issues from October 1997 through March 1998 and

ascertained their current and planned Year 2000 activities. Five of the

international organizations that we contacted did not have Year 2000

activities or did not respond to our request for information. These

organizations were the International Monetary Fund, Organization for

Economic Cooperation and Development, European Monetary Institute,

Asia-Pacific Economic Cooperation, and Association of Southeast Asian

Nations.

We did not independently verify the data provided in the DCI. We

performed our work between September 1997 and April 1998 in

accordance with generally accepted government audit standards.

Page 27 GAO/AIMD-98-124 Electronic Data Exchanges
Appendix II 

Data Exchange Standards Glossary

ANSI ASC X12 American National Standards Institute Accredited Standards Committee

X12: An ANSI committee that formulates electronic data interchange

standards governing transaction sets, segments, data elements, code sets,

and interchange control structure. Standards define the format for specific

electronic data interchange messages. In June 1997, the committee

approved the use of a 8-digit date in X12 that includes the first 2 digits of

the year.

CHIPS The Clearing House Interbank Payments System: a computerized network

for the transfer of international dollar payments. CHIPS links 115

depository institutions which have offices in New York City.

EDI Medicare ANSI ASC X12 standards for the formatting and transmission of Medicare

electronic transmissions involving enrollments, claims, reimbursements,

and other payments.

Fedwire Federal Reserve’s electronic funds and securities transfer service. Fedwire

is used by Federal Reserve Banks and branches, the Department of the

Treasury, other government agencies, and depository institutions.

FIPS 4-1 Federal Information Processing Standards Publication 4-1, Representation

for Calendar Date and Ordinal Date for Information Interchange. FIPS 4-1

strongly encourages agencies to use a 4-digit year format for data

exchanges.

HL7 A standard for electronic data exchange in certain health care applications

involving patient, clinical, epidemiological, and regulatory data. HL7

standards are not used in healthcare insurance administration

applications.

UN/EDIFACT United Nations-supported international electronic data exchange standard

for administration, commerce, and transport.

Page 28 GAO/AIMD-98-124 Electronic Data Exchanges
Page 29 GAO/AIMD-98-124 Electronic Data Exchanges
Appendix III 

Reported Status of Assessments and Other

Actions by Federal Agencies

Mission-critical systems

Department/agencya (response date)b Total

With

exchanges

Agency for International Development (1/22/98) 65 6

Commodity Futures Trading Commission (1/23/98) 2 2

Department of Agriculture (3/12/98) 1,320 121

Department of Commerce (4/2/98) 500 73

Department of Defense (4/7/98) 2,378 548

Department of Education (4/1/98) 14 10

Department of Energy (1/29/98) 368 n/ac

Department of Health and Human Services (3/26/98) 490 177

Department of Housing and Urban Development (4/8/98) 63 21

Department of the Interior (3/18/98) 95 40

Department of Justice (4/9/98) 192 59

Department of Labor (1/26/98) 61 18

Department of State (3/4/98) 69 9

Department of the Treasury (3/25/98) 311 138

Department of Transportation (3/5/98) 516 56

Department of Veterans Affairs (1/21/98) 11 10

Environmental Protection Agency (2/11/98) 61 25

Federal Communications Commission (4/7/98) 24 21

Federal Deposit Insurance Corporation (3/13/98) 40 14

Federal Emergency Management Agency (1/23/98) 48 3

Federal Maritime Commission (3/31/98) 1 1

Federal Reserve (3/26/98) 8 8

Federal Trade Commission (1/23/98) 18 6

General Services Administration (3/27/98) 42 19

National Aeronautics and Space Administration (1/23/98) 158 17

National Archives and Records Administration (3/6/98) 22 3

National Credit Union Administration (1/23/98) 11 1

National Science Foundation (1/26/98) 16 4

National Transportation Safety Board (3/9/98) 2 1

Nuclear Regulatory Commission (3/31/98) 7 1

Office of Personnel Management (1/27/98) 124 44

Overseas Private Investment Corporation (1/22/98) 4 2

Pension Benefit Guaranty Corporation (1/27/98) 15 3

Railroad Retirement Board (3/4/98) 83 17

Securities and Exchange Commission (3/18/98) 53 18

Page 30 GAO/AIMD-98-124 Electronic Data Exchanges
Appendix III 

Reported Status of Assessments and Other

Actions by Federal Agencies

Exchanges

Bridges and filters

Total

number

Percent

assessed

Percent

noncompliant

Agreements

reached

Identified

as needed

Percent

developed

& tested

Contingency

plans developed

39 95 89 2 0 • 0

27 100 0 27 0 • 0

8,091 94 42 2,075 30 27 521

265 92 63 61 105 37 140

1,911 51 51 476 55 49 143

13,536 68 0 4,600 0 • 44

n/a n/a n/a n/a n/a n/a n/a

6,170 70 57 655 306 19 1,211

133,567 100 92 9,514 30,533 0 61,066

2,921 98 47 12 31 81 12

280 69 49 150 71 18 173

3,130 100 8 236 14 0 66

25 52 31 6 0 • 0

6,898 100 12 2,725 76 32 77

344 51 83 66 78 1 53

580 100 23 230 0 • 0

1,000 0 n/a n/a n/a n/a n/a

55 100 55 1 15 0 0

79 100 87 0 0 • 0

214 100 2 0 0 • 0

86 100 0 0 0 • 0

316,862 100 0 n/nd 0 • •

6 100 0 4 0 • 0

1,796 56 6 236 1 0 55

110 37 46 15 5 0 4

40 0 n/a n/a n/a n/a n/a

1 100 0 0 0 • 0

18 100 44 10 0 • 0

2 100 0 0 0 • 0

107 100 100 0 107 0 0

166 100 38 92 35 0 96

8 100 88 0 0 • 0

8 75 0 6 0 • 0

110 64 56 7 2 100 0

28 0 n/a 0 18 0 0

(continued)

Page 31 GAO/AIMD-98-124 Electronic Data Exchanges
Appendix III 

Reported Status of Assessments and Other

Actions by Federal Agencies

Mission-critical systems

Department/agencya (response date)b Total

With

exchanges

Small Business Administration (1/30/98) 40 9

Social Security Administration (3/9/98) 308 n/a

U.S. International Trade Commission (2/2/98) 4 1

U.S. Postal Service (1/26/98) 408 56

Page 32 GAO/AIMD-98-124 Electronic Data Exchanges
Appendix III 

Reported Status of Assessments and Other

Actions by Federal Agencies

Exchanges

Bridges and filters

Total

number

Percent

assessed

Percent

noncompliant

Agreements

reached

Identified

as needed

Percent

developed

& tested

Contingency

plans developed

40 100 95 2 2 100 16

302 100 100 0 37 14 0

1 100 0 0 0 • 0

903 90 90 0 0 • 0

aThree agencies are not listed in this table because they reported having no data exchanges.

These agencies are the Export-Import Bank of the U.S., Federal Retirement Thrift Investment

Board, and U.S. Trade and Development Agency.

bThe date that the agency supplied the most recent information, including new data supplied as

the result of follow-up questions.

cn/a means that the agency was not able to provide this data.

dn/n means that reaching agreement with exchange partners is not necessary because the

Federal Reserve provides the data exchange software to the exchange partners.

Source: Federal agencies’ responses on a data collection instrument developed by GAO. We did

not independently verify this information.

Page 33 GAO/AIMD-98-124 Electronic Data Exchanges
Appendix IV 

Reported Status of Assessments and Other

Actions by States

Mission-critical

systems

Exchanges Bridges and filters

State Total

With

exchanges

Total

number

Percent

assessed

Percent

noncompliantAgreements

reached

Identified

as needed

Percent

developed

& tested

Contingency

Plans

Developed

Alabamaa 417 333 2,099 21 44 334 0 0 51

Californiaa 631 114 769 88 94 104 8 13 202

Connecticuta 1,549 136 196 69 59 46 70 0 40

Delaware 195 72 849 89 17 487 23 17 0

Georgiab 378 100 600 50 87 n/ac n/a n/a n/a

Illinoisa 333 123 3,970 69 18 2,021 298 5 1

Indianaa 200 10 10 10 0 0 0 0 0

Iowab 104 66 87 46 65 87 3 0 16

Kansasb 262 113 949 53 32 173 28 36 54

Kentuckya 290 76 118 66 49 66 0 0 24

Marylandb 30 20 60 67 63 0 0 0 0

Michigana 718 43 86 50 65 0 0 0 0

Minnesotaa 1,628 n/a 1,330 64 50 n/a 320 0 0

Mississippib 40 40 105 100 98 100 103 0 n/a

New Hampshireb 200 100 100 50 60 n/a 15 0 0

North Dakotab 171 67 90 100 78 0 0 0 0

Ohiob 2,000 800 800 88 29 145 200 50 0

Oklahomab 14 4 65 100 38 n/a 5 0 15

Puerto Ricob 148 61 464 59 27 41 71 0 52

South Carolinaa 611 189 1,145 59 34 380 19 79 37

Tennessee 231 83 2,218 87 72 1,493 1,370 0 9

Utaha 548 112 178 62 47 27 22 0 57

Vermont 80 58 4,051 40 24 24 0 0 0

West Virginiab 18 11 17 82 43 7 1 0 0

Note: This table does not include state organizations that did not respond to our survey, including

Alaska, Arizona, Arkansas, Hawaii, Idaho, Louisiana, Maine, Nebraska, New Jersey, New Mexico,

Pennsylvania, Rhode Island, and Wisconsin. This table also does not include state organizations

that responded to our survey but were not able to provide the requested data, including

Colorado, District of Columbia, Florida, Massachusetts, Missouri, Montana, Nevada, New York,

North Carolina, Oregon, South Dakota, Texas, Virginia, Washington, and Wyoming.

aThese states were not able to provide information for all state organizations and a significant

amount of data were not available.

bThese states provided estimates.

cn/a means that the state was not able to provide these data.

Source: States’ responses on a data collection instrument developed by GAO. We did not

independently verify this information.

Page 34 GAO/AIMD-98-124 Electronic Data Exchanges
Appendix V 

Guidance and Monitoring Information

Provided by Federal Agencies That Have

Oversight/Regulatory Responsibilities

Issued guidance

Established

Department/agency

Year 2000

problems

Data exchange

issues

Work groups

or forums

Inspection or

validation

program

Other

approaches

Commodity Futures Trading Commission X X

Department of Agriculture X X X

Department of Education X X X X

Department of Housing and Urban

Development

(no activities

reported)

Department of Health and Human

Services

X X X X

Department of the Interior X X

Department of Justice X X

Department of Labor X X X X X

Department of the Treasury X X X X X

Department of Transportation X

Environmental Protection Agency X X X

Federal Deposit Insurance Corporation X

Federal Reserve X X X

Federal Retirement Thrift Investment Board X

National Credit Union Administration X X X X

Securities and Exchange Commission X X X

Source: Federal agencies’ responses on a data collection instrument developed by GAO. We did

not independently verify this information.

Page 35 GAO/AIMD-98-124 Electronic Data Exchanges
Appendix VI 

Activities of International Organizations to

Resolve Year 2000 Problems

Information on the Year 2000 activities of international organizations was

obtained by interviews with their officials and research of information

posted on Internet web sites. There may be other organizations addressing

international Year 2000 issues that we did not identify.

Bank for International

Settlements

The Bank for International Settlements (BIS) has undertaken a worldwide

campaign to increase awareness, provide guidance, and identify the status

of Year 2000 efforts by central banks and major international banking

organizations. BIS hosts the Basle Committee on Banking Supervision and

the Committee on Payment and Settlement Systems that are sponsored by

the Group of Ten Governors.1

According to BIS, payment and settlement systems are an essential element

of financial market infrastructures through which clearing organizations,

settlement agents, securities depositories, and the various direct and

indirect participants in these systems are intricately connected. It is

therefore imperative that such systems be adapted and certified early

enough to ensure that they are Year 2000 compliant and, very importantly,

to allow inter-institution testing. This information is available on the BIS

web site (www.bis.org).

To increase awareness, in September 1997, the Basle Committee on

Banking Supervision issued a technical paper for banks that sets out a

strategic approach for the development, testing, and implementation of

system solutions as well as defining the role that central banks and bank

supervisors need to play in promoting awareness of the issue and

enforcing action.

The Committee on Payment and Settlement Systems is collecting and

publishing information on the state of preparedness of payment and

settlement systems around the world with respect to the Year 2000 issue.

For this purpose, a special reporting framework has been developed that

operators of payment and settlement systems can use to indicate the state

of internal testing as well as testing with external participants for key

components of their information technology infrastructure. The

framework distinguishes between the key components of such

infrastructures—the central system, the networks and network interfaces,

the participants’ front-end systems, and other main components. For each

1

The Group of Ten Governors are the governors for the central banks of Belgium, Canada, France,

Germany, Italy, Japan, Luxembourg, the Netherlands, Sweden, Switzerland, the United Kingdom, and

the United States. These and central bank representatives of 30 other countries have representation

and voting rights at the general meetings of the Bank for International Settlements.

Page 36 GAO/AIMD-98-124 Electronic Data Exchanges
Appendix VI 

Activities of International Organizations to

Resolve Year 2000 Problems

of these components, information is provided on the start and completion

dates for internal testing as well as testing with external participants. An

indication is also given as to the connections of the respective payment or

settlement systems with other external systems, on the coordinated effort

with other payment systems and/or major participants, and where more

information can be obtained from the respective operator. The Basle

Committee also plans to survey the efforts that banking supervisors have

underway in each country as well as the state of readiness of the local

banking system. They expect to complete these surveys during the first

half of 1998.

In April 1998, the Basle Committee, the Committee on Payment and

Settlement Systems, the International Organization of Securities

Commissions, and the International Association of Insurance Supervisors

held a round table on the Year 2000 in order to provide a global platform

for the sharing of relevant strategies and experiences across key industries

by international bodies representing both the public and the private sector.

International Organization

of Securities Commissions

As the principal international organization of securities regulators, the

International Organization of Securities Commissions (IOSCO) has taken a

leadership role in promoting awareness of the Year 2000 computer

problem and in encouraging its membership and all market participants to

take swift and aggressive action to address Year 2000 issues. IOSCO is the

largest international organization of securities regulators with 99

members—principally domestic government agencies entrusted with

securities regulation. Among other things, IOSCO has called for regular

monitoring of Year 2000 readiness and global, industrywide testing to take

place in sufficient time to address any weaknesses or deficiencies that are

revealed.

IOSCO currently exchanges information, periodically engages in joint work

with, and to some extent coordinates its ongoing work with, the Basle

Committee on Banking Supervision and the International Association of

Insurance Supervisors. IOSCO has a working relationship and/or exchanges

information on a regular basis with BIS, the International Accounting

Standards Committee, the International Federation of Accountants, the

Fédération Internationale des Bourses de Valeurs, the International

Monetary Fund, and members of the World Bank Group. IOSCO also

maintains a liaison relationship with the International Organization for

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Appendix VI 

Activities of International Organizations to

Resolve Year 2000 Problems

Standards. Information on IOSCO’s current work program is regularly

provided to the Group of Seven.2

IOSCO is surveying and obtaining information on a regular basis about

measures being taken by industry and regulators to address Year 2000

computer issues. IOSCO is also encouraging global, industrywide testing.

IOSCO’s current work builds on its public statement of June 1997, exhorting

all members and market participants in their jurisdictions to take all

necessary and appropriate action to address the critical challenges

presented by the Year 2000 issue.

IOSCO’s Technical Committee, which consists of regulators of the most

developed and internationalized markets, is currently surveying its

members to ascertain what actions are being taken within member

jurisdictions to avoid Year 2000 problems. Because of the critical nature of

this project, the Technical Committee decided to conduct similar surveys

on industry readiness every 6 months. Each Technical Committee member

was requested to supply the following information to the IOSCO Secretary

General by January 15, 1998.

1. Awareness: What actions has your organization taken to impress upon

relevant entities (self-regulatory organizations, industry groups, financial

firms) the importance of addressing the Year 2000 issues identified in the

Technical Committee Statement?

2. Guidance: What specific policies and/or procedures are being used by

your organization and other relevant organizations within your jurisdiction

to prepare markets and market participants for Year 2000?

3. Progress: What steps (including the use of specific interim goals) are

being taken by your organization and by the other relevant organizations

in your jurisdiction to monitor the progress of relevant entities in

addressing Year 2000 problems?

4. Testing: What plans have been made by your organization or other

relevant organizations in your jurisdiction for industrywide systems testing

for Year 2000 problems?

2

The Group of Seven is comprised of the leaders from these seven countries: Canada, France,

Germany, Great Britain, Italy, Japan, and the United States.

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Activities of International Organizations to

Resolve Year 2000 Problems

IOSCO added a specific section on the Year 2000 issue to its Internet web

site (www.iosco.org) that contains a substantive reference list on this

topic.

Securities Industry

Association

The Securities Industry Association’s (SIA) activities are primarily directed

at increasing awareness; however, it is taking a leadership role in its

efforts to establish a testing schedule. SIA staff have been making

presentations at conferences to increase international awareness of Year

2000 problems. For example, SIA staff gave Year 2000 awareness

presentations at IOSCO conferences in Kenya, Taipei, and European cities.

SIA is also conducting scenario planning sessions at international

conferences to stimulate planning. These sessions focus on priorities for

resolving Year 2000 problems.

To identify Year 2000 readiness in the securities industry, SIA is conducting

an industrywide survey. The survey form is posted on its Internet web site

(www.sia.com/year_2000). If sufficient response is received, SIA will post

a summary of the results on its web site. SIA has also developed and posted

on its web site a conversion and testing schedule for its members to use in

coordinating their Year 2000 activities. In addition, SIA is developing a

checklist to help chief executive officers focus on key Year 2000 activities.

SIA has coordinated extensively with other international organizations,

including the Investment Dealer Association, IOSCO, International

Insurance Association, Futures Industry Association, Institute

Internationale Finance, and Fédération Internationale des Bourses de

Valeurs. SIA is considering a coordinated effort with multilateral

development banks, such as the World Bank, Asian Development Bank,

and the European Development Bank, to promote awareness.

Futures Industry

Association

The focus of the Futures Industry Association’s (FIA) Year 2000 activities is

information sharing and test coordination among its 200 members. Its

members include futures commissions merchants, international

exchanges, and others interested in the futures market. FIA compiled a

“conditions catalog” of products and transactions to be tested on an

exchange-by-exchange basis in the United States. It is making this

available to international members and encouraging members to adopt the

same format for testing between exchanges and intermediaries. FIA has

posted this information on its Internet web site (www.fiafii.org). FIA has

also placed information about various exchanges on the web site and

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Appendix VI 

Activities of International Organizations to

Resolve Year 2000 Problems

plans to include additional information about international exchanges in

the future.

FIA met with brokerage firms, exchanges, the London Clearing House, and

key service providers in June and December 1997 to raise awareness of

Year 2000 issues and discuss possible test scenarios. FIA also hosted an

international meeting at its Futures & Options Expo in October 1997 to

discuss various Year 2000 activities around the world. At the FIA

International Futures Industry Conference in March 1998, FIA asked key

members to support an industrywide test.

FIA is surveying 20 of the member exchanges with the highest trade volume

to identify their Year 2000 activities. At a Global Technology Forum held in

London March 30-April 1, 1998, FIA will request that the 20 member

exchanges provide information about the scope of their Year 2000

activities, including their current status, interfaces with intermediaries,

plans for individual testing with intermediaries, and willingness to

participate in an industrywide test.

International Association

of Insurance Supervisors

The International Association of Insurance Supervisors’ Year 2000

activities are primarily directed at increasing awareness of Year 2000

issues among its insurance supervisor members from over 70 countries. It

is also working cooperatively with other international organizations to

increase awareness. In November 1997, it issued a joint statement with the

Basle Committee on Banking Supervision and the International

Organization of Securities Commissions that emphasized the importance

of the Year 2000 issue. The joint statement urged the development of

action plans to resolve Year 2000 problems, including data exchange

problems with financial institutions and clients.

International Civil Aviation

Organization

In December 1997, the International Civil Aviation Organization sent a

letter to its members to increase their awareness of Year 2000 computer

problems. The letter explained that air traffic service providers may need

to perform assessments on operational air traffic control systems and

nonoperational systems that provide business and commercial support.

Air traffic service operational systems may be date dependent and subject

to local implementation. Such systems include aeronautical fixed

telecommunication networks, radar data processing, and flight data

processing systems. In addition, operational systems often use date

information for logging performance information. The letter also

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Appendix VI 

Activities of International Organizations to

Resolve Year 2000 Problems

suggested a schedule for assessing, implementing solutions, and testing

systems. The International Civil Aviation Organization requested that

members advise it on remedial actions they have taken.

International Air Transport

Association

The International Air Transport Association (IATA) represents and serves

259 members in the airline industry. In addition to the airlines, IATA works

with airline industry suppliers, including airports, air traffic controls,

aircraft/avionics manufacturers, travel agencies, global distribution

systems, and information technology suppliers. IATA serves as a clearing

house between its airline members to process their debit/credit notes.

IATA has an internal Year 2000 project that includes four major steps:

software/hardware inventory, Year 2000 compliance analysis, software

modification, and contingency planning. IATA has set a target date of

December 25, 1998, for Year 2000 compliance for all of its products and

services.

As an association of international airlines, IATA has established a group to

coordinate and synchronize efforts within the industry to ensure timely

solutions to Year 2000 issues. Specifically, the date format of interline

messages (messages airlines exchange among themselves and other

parties as a part of business processes) has been frozen. The member

airlines’ applications will have to handle date conversion, if required. In

addition, IATA has conducted Year 2000 conferences and seminars to

exchange information among members.

To monitor the status of Year 2000 activities, IATA has conducted surveys

of airline members and industry suppliers. The survey of member airlines

showed that (1) very few organizations claim to be fully compliant, (2) the

majority of the organizations are well aware of the problem and have

already initiated Year 2000 compliance activities, and (3) the typical target

date for full compliance is the end of 1998. The results of the survey are

available on IATA’s web site (www.iata.org/y2k).

European Commission The European Commission has declared that it is concerned about the

vulnerability of enterprises, infrastructures, and public administrations to

the Year 2000 computer problem as well as the possible consequences of

this problem for consumers. The Commission had extensive consultations

with the public and private sectors during workshops in 1997 to identify

the main priorities for action and the roles for enterprises, associations,

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Activities of International Organizations to

Resolve Year 2000 Problems

administrations, and the Commission itself. As a result of these

consultations, the Commission adopted a course of action and published it

in an official communication on February 25, 1998. The purpose of the

communication was to raise awareness and set out the Commission’s

steps to address Year 2000 issues, including

• encouraging and facilitating the exchange of information and experience

on Year 2000 initiatives undertaken by the Commission’s member states

and European associations, with a view to identifying how synergies can

be established to reduce duplication of effort and increase the overall

impact;

• serving as a liaison with the European and international organizations that

are responsible for regulating or supervising infrastructural sectors with

significant cross-border effects (finance, telecommunications, energy,

transportation) in order to exchange information about respective

activities and identify where cooperation may be required. An area of

particular concern is the planning and implementation of coordinated

cross-border testing activities in those sectors that are likely to involve

organizations in different member states. The Commission will initiate

discussions between relevant organizations and member states;

• discussing the Year 2000 and its implications through all the relevant

contacts available to the Commission services in industry and member

states. In particular, attention will be paid to the impact on and

preparation of infrastructural sectors, the impact on consumers and small

and medium size enterprises, and the potential impact on the functioning

of the internal market; and

• maintaining a Internet web site on the Year 2000 computer problem

(www.ispo.cec.be/y2keuro). This site provides access to information about

activities in different economic sectors and member states, points to

sources of advice on specific aspects of the problem, and links to other

sites as well as to all documents and reports produced by the Commission

on the subject.

The Commission also plans to monitor progress, exchange information,

and benchmark best practices while reporting regularly on the progress

towards Year 2000 readiness and its related issues. In the context of its

policies such as those on industry, small and medium size enterprises,

consumers, and training, the Commission will examine whether a further

contribution could be made towards helping raise awareness and address

Year 2000-related problems.

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Activities of International Organizations to

Resolve Year 2000 Problems

In addition to its Year 2000 activities, the Commission is also addressing

the information technology implications of European countries’

conversion to the new Euro currency. Because this conversion is taking

place about the same time period as the Year 2000 date conversion

activities, the two activities are in competition for financial, technical, and

management resources. To identify how businesses are approaching the

Euro conversion and the interrelationship with activities to resolve Year

2000 problems, the Commission sponsored the survey of over 1000 senior

information technology managers in 10 countries. The results of this

survey, as well as the issue papers and workshop results, are posted on the

Commission’s web site.

World Bank The World Bank is conducting an awareness campaign directed toward its

client governments and implementing agencies that are responsible for

World Bank-financed projects in developing countries. The Bank wants to

ensure the continued success and viability of its clients and avoid

problems with development projects, many of which comprise information

technology systems and embedded logic components that may be

vulnerable to the Year 2000 problem. In this effort, however, the Bank

limits its role to raising awareness and pointing clients toward ways of

evaluating and remediating the problem.

To begin this effort, the Bank is (1) distributing an information packet on

the Year 2000 problem, (2) pointing recipients to further sources on the

Internet, and (3) providing some advice on ascertaining Year 2000

compliance in the procurement process. In the near future, the Bank plans

to provide Year 2000 information on the Bank’s Internet web site

(www.worldbank.org). The Bank also is hiring a contractor to develop a

guide for developing country governments on creating a national Year

2000 policy. When ready, this guide will be placed on the Bank’s Internet

web site and will be conveyed to governments via seminars to be held

around the world.

United Nations In November 1997, the United Nations’ Information Technology Services

Division posted information on its Internet web site

(www.un.org/members/yr2000) to increase awareness of the actions

needed to resolve Year 2000 computer problems. This included

information on the actions being taken concerning the computer systems

operated by United Nations’ organizations and references to issue papers

and guidance documents that member countries could use in developing

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Appendix VI 

Activities of International Organizations to

Resolve Year 2000 Problems

their own Year 2000 program. It also circulated a letter to member

countries that recommended dates for Year 2000 compliance and

contained references to reading materials and companies providing Year

2000 services. At that time, the United Nations was considering a program

to encourage member countries that have not already begun a Year 2000

assessment to take aggressive action in the development of strategic plans

to deal with Year 2000 problems. It also circulated a letter to member

countries that recommended dates for Year 2000 compliance and

contained references on reading materials and companies providing Year

2000 services.

Year 2000 Global Steering

Committee

The Steering Committee is sponsored by the Group of Seven and its

objective is to promote the international sharing of information on the

resolution of Year 2000 computer problems. To achieve this objective, the

Steering Committee has established an Internet web site

(www.itpolicy.gsa.gov) that includes (1) links to Year 2000 web sites of

various countries and (2) databases showing the Year 2000 compliance

status of commercial-off-the-shelf software, telecommunications, facilities,

and biomedical equipment. The Steering Committee is also planning to use

the web site to conduct a virtual Year 2000 international conference.

International Council for

Information Technology in

Government

Administration

The International Council sponsored a workshop in August 1997 with the

objectives of exchanging information among members on Year 2000 issues

related to each member country and identifying areas of common interest.

The workshop was attended by representatives from 14 countries (a report

on the workshop is located at www.ogit.gov.au/ica/icay2k). The

International Council has scheduled a second workshop for June 1998.

Interpol Interpol operates an international network that its 177 member countries

use to exchange law enforcement information. Member countries connect

to telecommunication hubs that are located around the world and their

information systems transmit data through the network. Interpol has a

project underway to ensure that its network will be ready well before the

Year 2000. According to project officials, Interpol has been working with

suppliers to ensure that the network’s hardware and software will be Year

2000 compliant. It has also sent its Year 2000 plans to each member

country. A key part of these plans is the testing of the network. This

testing is scheduled to be performed in October 1998 and January 1999.

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Data Collection Instrument

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Data Collection Instrument

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Data Collection Instrument

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Data Collection Instrument

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Data Collection Instrument

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Data Collection Instrument

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Data Collection Instrument

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Data Collection Instrument

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Data Collection Instrument

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Appendix VIII 

Comments From the Office of Management

and Budget

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Appendix VIII 

Comments From the Office of Management

and Budget

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Comments From the Office of Management

and Budget

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Comments From the Office of Management

and Budget

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Comments From the Office of Management

and Budget

Page 58 GAO/AIMD-98-124 Electronic Data Exchanges
Appendix IX 

Major Contributors to This Report

Accounting and

Information

Management Division,

Washington, D.C.

David G. Gill, Assistant Director

Mirko J. Dolak, Technical Assistant Director

James R. Hamilton, Evaluator-In-Charge

William G. Barrick, Senior Information Systems Analyst

William N. Isrin, Operations Research Analyst

Michael A. Tovares, Information Systems Analyst

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Major Contributors to This Report

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Major Contributors to This Report

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Major Contributors to This Report

Page 62 GAO/AIMD-98-124 Electronic Data Exchanges
Related GAO Products

Year 2000 Computing Crisis: Continuing Risks of Disruption to Social

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

Year 2000 Computing Crisis: Potential for Widespread Disruption Calls for

Strong Leadership and Partnerships (GAO/AIMD-98-85, 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: Federal Regulatory Efforts to Ensure

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

March 24, 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: Business Continuity and Contingency

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

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).

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: An Assessment Guide (GAO/AIMD-10.1.14,

September 1997).

Page 63 GAO/AIMD-98-124 Electronic Data Exchanges
Related GAO Products

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).

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).

(511434) Page 64 GAO/AIMD-98-124 Electronic Data Exchanges
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