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Our review was limited to evaluating strengths and weaknesses in the management of the

Year 2000 conversion project. Specifically, we determined if processes existed and were

designed to mitigate the Year 2000 risk to an acceptable level for ensuring all mission

critical IT systems remain operable. Therefore, this memorandum is not intended to

represent or convey statements that any given system is Year 2000 compliant or that a

system will or will not work into the next millennium.

From June through September 1998, using a risk based audit approach, we reviewed and

evaluated applicable Year 2000 documentation, including: Treasury’s Year 2000

Vulnerability Assessment Report, dated October 1997; FLETC’s monthly status reports;

FLETC’s Year 2000 Project Management Plan; and other related documents.

AUDIT RESULTS

Overall, we concluded that FLETC established an infrastructure for managing its

conversion effort and minimizing the risk that a Year 2000 induced failure would have on

its mission critical operations. FLETC’s project management and strategies for

conversion, testing, and contingency planning were adequate to address their needs. No

significant reportable issues came to our attention. However, we made three suggestions

which may assist FLETC, as well as other bureaus, in sustaining their Year 2000 efforts.

Details on the results of our assessment and suggestions are provided below.

Project Management

We concluded that FLETC established an effective project management foundation to

address Year 2000 issues. To address Year 2000 issues, the Director was designated as

FLETC’s Year 2000 Senior Executive. Under the Year 2000 Senior Executive, FLETC

developed a Year 2000 Program Office to manage the progress and organize the Year

2000 compliance activities and resources. FLETC’s Year 2000 team was made up of

representatives from every work group within their organization, and their goal was to

establish a partnership among Treasury headquarters, the FLETC offices, and other

Federal agencies and commercial partners. They also provided guidance, communication,

and coordination to apply these methods and processes to their IT and non-IT effort.

FLETC had also been submitting its monthly status reports to the Department and had

identified its mission critical systems.

System Conversion and Certification Process

FLETC’s Year 2000 conversion and testing strategy was adequate to minimize the

occurrence of potential Year 2000 related failures. As of September 30, 1998, FLETC

reported two mission critical information systems - Student Testing System (STS) and

Student Information System (SIS). STS was certified as Year 2000 compliant, and SIS
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was in the process of being migrated to a new platform. FLETC’s largest efforts to

become Year 2000 compliant were making the necessary upgrades of hardware, operating

systems, and commercial off the shelf software and assessing the impact of external

systems. Final certification was anticipated to be completed by March 1999. Prior to

certification, independent verification and validation was to be performed by FLETC’s

staff who did not participate in testing.

Ensuring Year 2000 Conversion Integrity

It is important for FLETC to ensure that subsequent modifications and environmental

changes do not nullify certified test results. Generally, the risk that a system may fail due

to system changes increases as January 1, 2000 approaches and the time available for

additional testing decreases. The risk associated with modifying a system will vary

depending on the timing and complexity of the changes. The closer system changes occur

to the end of testing and certification, the higher the risk. Additionally, the more

applications, programs, and interfaces affected by a specific change, the higher the risk to

conversion and testing integrity. As organizations complete system, integration, and end

to end testing, the likelihood increases that even small changes subsequent to these tests

could jeopardize the integrity of certification. Business users and management both have

critical roles for managing the risk of system changes. They both need to evaluate

potential changes in the context of Year 2000 compliance, and balance the risk to

operations of not implementing a change with the risk of rendering a system non-Year

2000 compliant.

One suggested practice to mitigate conversion risk is to adopt "freeze policies," or as

done by the Federal Reserve, put in place a "limitation window and moratorium policy1."

Whether an organization opts for a complete restriction or limited restriction, it is critical

that the timing of such a policy is driven by test schedules and progress. The more

systems that are tested and certified as Year 2000 compliant, or the more aggressive the

existing test schedule is, the lower the tolerance should be for approving changes.

Suggestion

1. We suggest that the FLETC Director ensures a disciplined change management

process is in place to maintain Year 2000 conversion integrity. Once a system has

been certified, steps need to be taken to ensure test integrity is maintained.

Subsequent changes, including platform upgrades, software enhancements, or any

system modification should be evaluated and approved with the understanding of

the implications. This could be accomplished by establishing specific criteria for

approving system changes. Criteria should address such factors as: nature, timing,

 

1

 Terms adopted from the Federal Reserve’s century date change management policy. The limitation

window is the period where there is a higher standard for requesting and approving system changes. A

moratorium would occur towards the end of the limitation window, closer to January 1, 2000, and would

further restrict changes.
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and extent of requested change; documented assessment of requested change;

extent of retesting required; and number of organizations and partners affected.

Coordinating Pivot Dates With Data Exchange Partners

We determined that FLETC developed a reasonable strategy to address their data

exchange issues. Although FLETC identified their data exchange partners and was in the

process of addressing related issues with their limited interfaces, we want to address the

importance of synchronizing pivots between data exchange partners that use the

windowing approach.

For exchange partners using a windowing logic technique in lieu of a four digit field

expansion, special care needs to be given to coordinate pivots.2 For example, all Treasury

bureaus exchange payroll, budget, and accounting data with the National Finance Center

and the Financial Management Service, both of which use the windowing logic technique.

If exchange partners choose different pivots, the century identifiers could be incorrectly

inferred if further processing, calculating, or sorting is performed on data transferred. For

example, if FLETC is using a pivot date of 50 and its exchange partner is using a pivot

date of 60, date values in between 1950 through 1960 and 2049 through 2059 could be

calculated in error. Without coordination with exchange partners, bureaus may not

adequately develop and test new data exchange formats, nor apply the necessary bridges

and filters to ensure the exchanges will function properly. The greater the number and

complexity of data exchanges, the greater the challenge in identifying, synchronizing, and

testing exchange formats.

Suggestion

2. We suggest that the FLETC Director ensures that data exchange procedures

include the identification and coordination of pivot dates with its exchange

partners. Where there are differences in pivot dates, FLETC should ensure

that filters are installed to synchronize and maintain the accuracy of century

identifiers. This is especially important between processing partners, i.e., those

partners whose data is transferred for further processing.

 

2 The windowing logic technique uses pivots to interpret a two digit year into a four digit year. All year

values above the pivot are understood to represent one century; while all values below the pivot are

understood to represent another century. Pivots refer to a number built into system logic to infer the 2

digit century identifier “19” or “20”. For example, a pivot of 50 infers 19 as the century identifier for

values 50-99 and infers 20 for values 0-49.
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Contingency Plans For Business Continuity

FLETC was in the process of preparing contingency plans to ensure continuous

operations into the next century. In the event of an unplanned outage, FLETC would

revert to manual record keeping. Since FLETC is such a small organization, we anticipate

that the bureau will have no problem continuing mission critical functions. Although

FLETC anticipated their formalized contingency plans to be completed by March 1999,

we want to reiterate the importance of contingency planning and issues that should be

considered when developing contingency plans.

It is management’s responsibility to reduce the risk of Year 2000 related failures and

maintain a minimum acceptable level of service. Contingency planning is required to

assure continuity of operations in the event of an unanticipated Year 2000 failure, and for

systems that will not be Year 2000 compliant. Contingency planning should address risks

not only with internal systems, but external risks with business partners and the public

infrastructure. Plans should identify resources, procedures, and appropriate training

required to carry out core business functions. Plans should clearly identify triggers for

implementation, be tested thoroughly, and continuously reevaluated. Steps should be

included that facilitate the restoration of normal services at the earliest possible time.

Suggestion

3. We suggest that the FLETC Director ensures that management prioritizes and

facilitates the preparation and testing of contingency plans for each core

business function, as well as mission critical systems. As part of managing the

development and potential implementation of these plans, management should

ensure that: these plans consider both the internal and external risks; resources

and implementation triggers are identified; training in executing the plan is

performed; and the plans are periodically evaluated for reasonableness.

We appreciate the courtesies and cooperation provided to our auditors during the review.

If you wish to discuss this report, you may contact me at (202) 622-1090 or a member of

your staff may contact Barry L. Savill, Director of Audit, at (202) 283-0151.

cc: Treasury Departmental Offices

Assistant Secretary for Management and Chief Financial Officer

Deputy Assistant Secretary for Information Systems

and Chief Information Officer

Assistant Director of Information Technology Policy and Management

Director, Office of Organizational Improvement

Director, Office of Strategic Planning

Director, Financial Management Division
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Office of Budget

Desk Officer, Office of Accounting and Internal Control

Desk Officer, Management and Controls Branch

Federal Law Enforcement Training Center

Joyce Toler, Branch Chief, Information Systems Division

Office of Management and Budget

Michael S. Crowley, Budget Examiner