U.S. GOVERNMENT PRINTING OFFICE

61–232 CC WASHINGTON : 1999

STATE OF THE STATES: WILL Y2K DISRUPT

ESSENTIAL SERVICES?

JOINT HEARING

BEFORE THE

SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,

INFORMATION, AND TECHNOLOGY

OF THE

COMMITTEE ON GOVERNMENT REFORM

AND THE

SUBCOMMITTEE ON TECHNOLOGY

OF THE

COMMITTEE ON SCIENCE

HOUSE OF REPRESENTATIVES

ONE HUNDRED SIXTH CONGRESS

FIRST SESSION

OCTOBER 6, 1999

Committee on Government Reform

Serial No. 106–56

Committee on Science

Serial No. 106–56

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

Committee on Science

(

Available via the World Wide Web: http://www.house.gov/reform

(II)

COMMITTEE ON GOVERNMENT REFORM

DAN BURTON, Indiana, Chairman

BENJAMIN A. GILMAN, New York

CONSTANCE A. MORELLA, Maryland

CHRISTOPHER SHAYS, Connecticut

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

STEPHEN HORN, California

JOHN L. MICA, Florida

THOMAS M. DAVIS, Virginia

DAVID M. MCINTOSH, Indiana

MARK E. SOUDER, Indiana

JOE SCARBOROUGH, Florida

STEVEN C. LATOURETTE, Ohio

MARSHALL ‘‘MARK’’ SANFORD, South

Carolina

BOB BARR, Georgia

DAN MILLER, Florida

ASA HUTCHINSON, Arkansas

LEE TERRY, Nebraska

JUDY BIGGERT, Illinois

GREG WALDEN, Oregon

DOUG OSE, California

PAUL RYAN, Wisconsin

HELEN CHENOWETH-HAGE, Idaho

DAVID VITTER, Louisiana

HENRY A. WAXMAN, California

TOM LANTOS, California

ROBERT E. WISE, JR., West Virginia

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

PATSY T. MINK, Hawaii

CAROLYN B. MALONEY, New York

ELEANOR HOLMES NORTON, Washington,

DC

CHAKA FATTAH, Pennsylvania

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

ROD R. BLAGOJEVICH, Illinois

DANNY K. DAVIS, Illinois

JOHN F. TIERNEY, Massachusetts

JIM TURNER, Texas

THOMAS H. ALLEN, Maine

HAROLD E. FORD, JR., Tennessee

JANICE D. SCHAKOWSKY, Illinois

———

BERNARD SANDERS, Vermont

(Independent)

KEVIN BINGER, Staff Director

DANIEL R. MOLL, Deputy Staff Director

DAVID A. KASS, Deputy Counsel and Parliamentarian

CARLA J. MARTIN, Chief Clerk

PHIL SCHILIRO, Minority Staff Director

SUBCOMMITTEE ON GOVERNMENT MANAGEMENT, INFORMATION, AND TECHNOLOGY

STEPHEN HORN, California, Chairman

JUDY BIGGERT, Illinois

THOMAS M. DAVIS, Virginia

GREG WALDEN, Oregon

DOUG OSE, California

PAUL RYAN, Wisconsin

JIM TURNER, Texas

PAUL E. KANJORSKI, Pennsylvania

MAJOR R. OWENS, New York

PATSY T. MINK, Hawaii

CAROLYN B. MALONEY, New York

EX OFFICIO

DAN BURTON, Indiana HENRY A. WAXMAN, California

J. RUSSELL GEORGE, Staff Director and Chief Counsel

MATT RYAN, Senior Policy Director

BONNIE HEALD, Communications Director/Professional Staff Member

CHIP AHLSWEDE, Clerk

TREY HENDERSON, Minority Counsel

(III)

COMMITTEE ON SCIENCE

HON. F. JAMES SENSENBRENNER, JR., (R–Wisconsin), Chairman

SHERWOOD L. BOEHLERT, New York

LAMAR SMITH, Texas

CONSTANCE A. MORELLA, Maryland

CURT WELDON, Pennsylvania

DANA ROHRABACHER, California

JOE BARTON, Texas

KEN CALVERT, California

NICK SMITH, Michigan

ROSCOE G. BARTLETT, Maryland

VERNON J. EHLERS, Michigan*

DAVE WELDON, Florida

GIL GUTKNECHT, Minnesota

THOMAS W. EWING, Illinois

CHRIS CANNON, Utah

KEVIN BRADY, Texas

MERRILL COOK, Utah

GEORGE R. NETHERCUTT, JR., Washington

FRANK D. LUCAS, Oklahoma

MARK GREEN, Wisconsin

STEVEN T. KUYKENDALL, California

GARY G. MILLER, California

JUDY BIGGERT, Illinois

MARSHALL ‘‘MARK’’ SANFORD, South

Carolina

JACK METCALF, Washington

RALPH M. HALL, Texas, RMM**

BART GORDON, Tennessee

JERRY F. COSTELLO, Illinois

JAMES A. BARCIA, Michigan

EDDIE BERNICE JOHNSON, Texas

LYNN C. WOOLSEY, California

LYNN N. RIVERS, Michigan

ZOE LOFGREN, California

MICHAEL F. DOYLE, Pennsylvania

SHEILA JACKSON-LEE, Texas

DEBBIE STABENOW, Michigan

BOB ETHERIDGE, North Carolina

NICK LAMPSON, Texas

JOHN B. LARSON, Connecticut

MARK UDALL, Colorado

DAVID WU, Oregon

ANTHONY D. WEINER, New York

MICHAEL E. CAPUANO, Massachusetts

BRIAN BAIRD, Washington

JOSEPH M. HOEFFEL, Pennsylvania

DENNIS MOORE, Kansas

VACANCY

SUBCOMMITTEE ON TECHNOLOGY

CONSTANCE A. MORELLA, Maryland, Chairwoman

CURT WELDON, Pennsylvania

ROSCOE G. BARTLETT, Maryland

GIL GUTKNECHT, Minnesota*

THOMAS W. EWING, Illinois

CHRIS CANNON, Utah

KEVIN BRADY, Texas

MERRILL COOK, Utah

MARK GREEN, Wisconsin

STEVEN T. KUYKENDALL, California

GARY G. MILLER, California

JAMES A. BARCIA, Michigan**

LYNN N. RIVERS, Michigan

DEBBIE STABENOW, Michigan

MARK UDALL, Colorado

DAVID WU, Oregon

ANTHONY D. WEINER, New York

MICHAEL E. CAPUANO, Massachusetts

BART GORDON, Tennessee

BRIAN BAIRD, Washington

EX OFFICIO

F. JAMES SENSENBRENNER, JR.,

Wisconsin+

RALPH M. HALL, Texas+

(V)

C O N T E N T S

Page

Hearing held on October 6, 1999 ............................................................................ 1

Statement of:

Benzen, Mike, president, National Association of State Information Resource Executives .......................................................................................... 129

Callahan, John, Chief Information Officer, Department of Health and

Human Services ............................................................................................ 94

Hugler, Edward, Deputy Assistant Secretary for Information Technology

and Acting Deputy Assistant Secretary for Administration and Management, U.S. Department of Labor ................................................................. 118

Spotila, John, Administrator, Office of Information and Regulatory Affairs, Office of Management and Budget .................................................... 85

Watkins, Shirley R., Under Secretary for Food, Nutrition, and Consumer

Services, U.S. Department of Agriculture ................................................... 106

Willemssen, Joel, Director, Civil Agencies Information Systems, U.S. General Accounting Office .................................................................................. 10

Letters, statements, etc., submitted for the record by:

Benzen, Mike, president, National Association of State Information Resource Executives, prepared statement of .................................................. 130

Biggert, Hon. Judy, a Representative in Congress from the State of

Illinois, prepared statement of ..................................................................... 193

Callahan, John, Chief Information Officer, Department of Health and

Human Services:

Inserts for the record ................................................................................ 177, 183, 187

Prepared statement of ............................................................................... 97

Horn, Hon. Stephen, a Representative in Congress from the State of

California, prepared statement of ................................................................ 3

Hugler, Edward, Deputy Assistant Secretary for Information Technology

and Acting Deputy Assistant Secretary for Administration and Management, U.S. Department of Labor, prepared statement of .......................... 120

Morella, Hon. Constance A., a Representative in Congress from the State

of Maryland, prepared statement of ............................................................ 6

Spotila, John, Administrator, Office of Information and Regulatory Affairs, Office of Management and Budget, prepared statement of ............. 88

Watkins, Shirley R., Under Secretary for Food, Nutrition, and Consumer

Services, U.S. Department of Agriculture:

Nutrition program information systems chart ........................................ 108

Prepared statement of ............................................................................... 110

Willemssen, Joel, Director, Civil Agencies Information Systems, U.S. General Accounting Office, prepared statement of ........................................... 12

(1)

STATE OF THE STATES: WILL Y2K DISRUPT

ESSENTIAL SERVICES?

WEDNESDAY, OCTOBER 6, 1999

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON GOV- ERNMENT MANAGEMENT, INFORMATION, AND TECH- NOLOGY, COMMITTEE ON GOVERNMENT REFORM, JOINT

WITH THE SUBCOMMITTEE ON TECHNOLOGY, COM- MITTEE ON SCIENCE, Washington, DC.

The subcommittees met, pursuant to notice, at 10 a.m., in room

2154, Rayburn House Office Building, Hon. Stephen Horn (chairman of the Subcommittee on Government Management, Information, and Technology) presiding.

Present from the Subcommittee on Government Management, Information, and Technology: Representatives Horn, Biggert, Ose,

and Turner.

Present from the Subcommittee on Technology: Representatives

Morella, Bartlett, Baird, Gutknecht, Wu, Barcia, and

Staff present from the Subcommittee on Government Management, Information, and Technology: J. Russell George, staff director and chief counsel; Matt Ryan, senior policy director; Bonnie

Heald, communications director and professional staff member;

Chip Ahlswede, clerk; P.J. Caceres and Deborah Oppenheim, interns; Trey Henderson, minority counsel; and Jean Gosa, minority

staff assistant.

Staff present from the Subcommittee on Technology: Jeff Grove,

staff director; Ben Wu, counsel; Joe Sullivan, staff assistant; Michael Quear, professional staff member; and Marty Ralston, staff

assistant.

Mr. HORN. The joint hearing of the House Subcommittee on Government Management, Information, and Technology, and the

House Subcommittee on Technology will come to order.

These programs, which include Medicaid, temporary assistance

for needy families, food stamps, child support enforcement, serve

millions of Americans each day.

This spring, the President’s Office of Management and Budget

identified 43 ‘‘high impact,’’ or essential Federal programs. Of these

43 programs, 10 are administered by State and local governments.

In August, we found that only seven of these will be completely

ready for the new year until December. That is simply not acceptable. Millions of American lives will be harshly disrupted if these

vital programs fail. It is time to start naming names. We must

know now whether States such as Alabama, Oklahoma, and California, among others, are ready. Will they be able to provide essenVerDate 11-MAY-2000 08:35 Mar 29, 2001 Jkt 066430 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 E:\HEARINGS\61232 pfrm09 PsN: 61232
2

tial services without a severe degradation of services because of potential Y2K failures?

The Office of Management and Budget has charged three Federal

departments with ensuring that these State-run programs are

ready. Representatives from these departments are with us today.

The Department of Health and Human Services is responsible for

six State-run programs, including Medicaid, the health care safety

net for 33 million of the Nation’s most vulnerable citizens; its children, its elderly, and its poor. This department is also responsible

for the Nation’s welfare program, called temporary assistance for needy families. The $16.5 billion program shores up families who

have fallen on hard times through the loss of a job or an illness

and helps them return to the work force.

The Department of Health and Human Services supplements

these two major programs with its programs for child care, child

support enforcement, child welfare, and low-income home energy

assistance. Will States be able to deliver these services after the

clock ticks past midnight on January 1st? That is what we will be

asking our panel.

The Department of Agriculture is responsible for three State-run

food programs—child nutrition, food stamps, and special supplemental nutrition program for women, infants, and children [WIC].

In the year 2000, the child nutrition program will serve more than

27 million lunches a day.

Could a State’s year 2000 failures result in some of these lunches

not being served to the school children who need them? Could such

failures prevent families from obtaining the food stamps they dependent on? Or deprive nourishment from the women and their

very young or unborn children? We need to know the answers to

those questions.

The Department of Labor is responsible for only one State-run

program, unemployment insurance. In the year 2000, an estimated

8 million people for one reason or another will lose their jobs and

rely on this program to supplement their incomes. Could year 2000

failures degrade States’ abilities to pay this benefit?

Together, these State-run programs affect millions of people and

cost the Federal Government in excess of $125 billion a year.

Today, we want to provide an accurate portrayal of the States’ year

2000 readiness. In just 86 days we will witness the dawn of the

new millennium. The American public deserves to know which

States are ready and which, if any, are at risk of failure.

I welcome today the panel of expert witnesses, and look forward

to their testimony.

[The prepared statement of Hon. Stephen Horn follows:]

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Mr. HORN. I will now turn to my colleague, the co-chairman for

this hearing, Mrs. Morella, the gentlewoman from Maryland, the

Chair of the House Subcommittee on Technology.

Mrs. Morella.

Mrs. MORELLA. Thank you, Mr. Chairman. Mr. Chairman, in the

past 31⁄2 years that our two subcommittees have been engaged in

the review of the year 2000 computer problem, we have pushed for

a greater Federal Y2K focus in correcting the millennium bug.

Since we first began our oversight hearings, we have seen vast

progress from our Federal agencies, in most instances. Y2K was finally mandated as an agency-wide priority and management leadership was required where previously there was none.

While we have been comforted by the actions of the great majority of Federal agencies, unfortunately, just as you said, with 86

days remaining before the January 1, 2000 deadline, there is still

much to be concerned about. For example, as of this past August,

only 7 of the 43 essential Federal programs, or a mere 16 percent,

are Y2K ready in a timely manner. This is troublesome because

these 43 essential programs, referred to by the Office of Management and Budget as ‘‘high impact programs,’’ collectively affect the

lives of virtually every single American.

It appears as if the main reason for such a low level of Y2K readiness is that key supply chain partners, including State and local

governments and the private sector, are simply not yet ready. And

especially troubling is the fact that of the 43 ‘‘high impact’’ Federal

programs, not one of the 10 essential programs administered by the

States was Y2K completed. These include such important Federal

programs as food stamps, food safety inspections, child nutrition,

child support enforcement, temporary assistance for needy families,

child welfare, and Medicaid.

No agency can take pride in their Y2K efforts, however remarkable their progress over the past 31⁄2 years, if the delivery of one

of their essential Federal programs is impaired. Even for those

Federal agencies that have received a high Y2K grade by Congress,

it is a hollow victory if they do not have effective interoperability

with key program partners such as the 50 States.

Today we are going to hear from representatives of the three

Federal agencies that oversee the 10 State-administered programs.

I am looking forward to hearing their testimony, as well as the

General Accounting Office, and the National Association of State

Information Resources Executives. I look forward to hearing from

our distinguished panel, a number who have been here before, certainly GAO. I was on a program, Mr. Chairman, with Mr. Hugler

just the other evening on this Y2K, and Labor Department has an

excellent booklet that he will probably refer to.

We want to hear from our distinguished panelists so that we can

move expeditiously to confidently reassure the American people

that our Federal Government will not be subject to catastrophic

Y2K glitches and will be able to proceed with all essential programs, especially the 10 that are State-administered. Thank you,

Mr. Chairman.

[The prepared statement of Hon. Constance A. Morella follows:]

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Mr. HORN. Thank you.

I now yield for an opening statement to the gentleman from

Texas, Mr. Turner, a distinguished member of the Subcommittee

on Government Management, Information, and Technology.

Mr. Turner.

Mr. TURNER. Thank you, Mr. Chairman. I want to commend you

and Mrs. Morella for our continuing joint efforts of the Government

Management, Information, and Technology Subcommittee and the

Technology Subcommittee of the Science Committee in trying to

continue to beat the drum to encourage all of our Federal agencies

and their partners to be Y2K ready.

As was noted, many of our essential or so-called ‘‘high impact’’

Federal programs rely on partners, both in the public sector

through State and local governments and in the private sector. And

not having direct control over them, we can only continue to urge

them to join with our Federal agencies in continuing to be prepared

for January 1st.

It is interesting, as Mrs. Morella noted, that as of August 13th,

there were only 7 of the 43 programs deemed by OMB to be ‘‘high

impact’’ that were ready for January 1st. Of course, the chairman’s

latest Y2K report card which was issued earlier this month indicated that the status of the programs in question had not changed.

So the failure to become compliant is due in large part to the fact

that there are many public and private sector partners who must

also be prepared for Y2K.

Our hearing today is simply to focus upon the progress that the

States have made in becoming Y2K compliant, and to hear from

our Federal agencies regarding that partnership and that joint effort. It is good to see all of our witnesses here today, and we thank

you for your participation.

Mr. HORN. I now yield time for an opening statement to Dr. Roscoe Bartlett, distinguished member from Maryland, and a member

of the Science Subcommittee on Technology.

Dr. Bartlett.

Mr. BARTLETT. Thank you very much. The question that I get

asked most by constituents is what is going to happen in the Y2K.

This Sunday I am speaking at a church. They want to know what

they ought to be doing in preparation for Y2K. My usual response

to all these people is that I just do not have the foggiest idea what

is going to happen; I hear a lot of different things.

So I am here to be edified today. And I hope I will be able to

speak with more certainty when I am asked that question in the

future. Thank you very much.

Mr. HORN. Thank you.

I now will yield time for an opening statement to Mr. Baird of

the State of Washington. Welcome.

Mr. BAIRD. Thank you, Dr. Horn. I hope at some point you will

address the question of whether our voting machines in the House

are Y2K compatible on the off chance that we stay here that long

this session. But I hope that will not be necessary.

Mr. HORN. Thank you. That is under the jurisdiction of Mr.

Thomas and the Committee on House Administration. [Laughter.]

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We all know that we have got little red cards, little green cards,

and little orange cards. So, if we can write, we can vote. But it is

a good thought.

As most of you know who have testified here, we have a routine

we go through, which is, No. 1, when we introduce you, and we do

in the order in which you are on the agenda, your full testimony

is immediately put in the hearing record, and then we would sort

of like you to summarize it, hopefully in about 5 minutes, and that

will leave us more time for a dialog of you among the panel as well

as those here on the rostrum and the panel. And then since we are

an investigating subcommittee of the House Committee on Government Reform, we do swear in all witnesses.

So if you will stand and raise your right hands, and your subordinates that you brought with you that might give you something,

please have them stand. So we have eight backing up the witnesses

of six. That is almost like the Pentagon.

Do you swear the testimony you are about to give this subcommittee is the truth, the whole truth, nothing but the truth?

[Witnesses respond in the affirmative.]

Mr. HORN. I see those lips moving. The clerk will note they have

all taken the oath.

We will start with the person we usually start with on our hearings of the Government Management, Information, and Technology

Subcommittee and that is Joel Willemssen, the Director, Civil

Agencies Information Systems, U.S. General Accounting Office,

part of the legislative branch and people we depend on in terms of

the marvelous job they do not simply in financial audits, but in

programmatic audits. Thank you, Mr. Willemssen, for coming.

STATEMENT OF JOEL WILLEMSSEN, DIRECTOR, CIVIL AGENCIES INFORMATION SYSTEMS, U.S. GENERAL ACCOUNTING

OFFICE

Mr. WILLEMSSEN. Thank you, Mr. Chairman, Chairwoman

Morella, members of the subcommittees. Thank you for inviting

GAO to testify today. As requested, I will briefly summarize our

statement.

Of the 43 ‘‘high impact’’ governmentwide Y2K priorities identified by OMB, 10 are State-administered Federal programs. OMB

reported data on the systems supporting these programs show that

numerous States are not planning to be ready until the last quarter of 1999. However, because the information in the OMB report

was not verified, even some of that information may not be accurate or up to date. For example, in five cases programs listed as

compliant by OMB in its June report now have estimated compliance dates of October 1999, or later, in the report issued in September.

In addition, the reported compliance dates for some States are

problematic because schedule delays or unexpected issues could

still arise. Reported schedule delays have now occurred in 8 of the

10 programs since OMB’s report in June. For example, OMB’s June

report showed that three States had estimated compliance in the

last quarter of 1999 for food stamps, while the most recent OMB

report indicates that 7 States now have estimated last quarter compliance dates.

11

The three Federal departments responsible for oversight of these

10 State-administered programs have taken different approaches in

assessing Y2K readiness of the States. For example, Agriculture’s

approach includes actions such as having its regional offices obtain

State certifications of compliance. At HHS, contractors have performed onsite reviews at all States. In another approach, the Department of Labor is requiring States to submit independent

verification and validation reports after declaring their systems

compliant.

These Federal approaches yielded very beneficial information to

helping to target the needed actions by States, while also pointing

out some of the remaining risks. For example, USDA is collecting

information from States on Y2K readiness and business continuity

and contingency plans. However, much work remains. For example,

last month USDA officials told us that only two States had submitted suitable contingency plans.

At HCFA, a contractor has now completed a second round of

State visits. Despite this effort, several States are still considered

to be at high risk within the Medicaid area. Specifically, four State

eligibility systems were still considered high risk, while five State

systems responsible for Medicaid payments were high risk. These

risk ratings also indicate that the information in OMB’s report may

have overstated the compliance status of some of the States. For

examples, systems cited as compliant by two States were considered to be at high risk by HCFA.

For the other five HHS State-administered programs, HHS’ Administration for Children and Families [ACF] has modelled its assessment approach after that of HCFA’s. However, because ACF

started later than HCFA, it is not as far along. Specifically, while

an ACF contractor has completed onsite reviews of all States, only

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At the Department of Labor, its contractor has reviewed States’ independent verification and validation reports of unemployment

insurance systems and rated them from low to high probability of

Y2K compliance. The contractor’s review found 20 States’ benefit

systems to have a low probability of compliance. Given the results

of those reviews, the information in last month’s OMB report appears to overstate the readiness of States because, of the 39 State

unemployment insurance programs cited in OMB’s report as compliant, Labor’s contractor had rated 15 States as having low probability of compliance.

That completes a summary of my statement. After the panel is

finished, I would be pleased to address any questions. Thank you.

[The prepared statement of Mr. Willemssen follows:]

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Mr. HORN. Thank you very much for that most helpful statement. I am sure we will have a lot of questions, because we know

your team has been working hard at this.

Our next witness is Mr. John Spotila, the Administrator of the

Office of Information and Regulatory Affairs, at the President’s Office of Management and Budget. Pleased to have you here.

STATEMENT OF JOHN SPOTILA, ADMINISTRATOR, OFFICE OF

INFORMATION AND REGULATORY AFFAIRS, OFFICE OF MANAGEMENT AND BUDGET

Mr. SPOTILA. Good morning, Chairman Horn, Chairwoman

Morella, and members of the subcommittees. I am pleased to appear before you to discuss the Federal Government’s progress on

the year 2000 problem. I want to begin by thanking you and all of

the members of the subcommittees for your continuing interest in

the Y2K problem and its potential impact on our country. It is

doubtful that we would be as well prepared for the year 2000 problem as we are if it were not for your efforts.

Today I will address briefly our progress in the Federal arena

and our plans for the remaining 86 days as we transition into the

year 2000.

As you know, we have been working on this problem on a Government-wide basis for almost 4 years. Based on the monthly reports that OMB received from the agencies in September, 98 percent of the mission critical systems are now compliant. This

progress is a tribute to the skillful, dedicated, and hard work of

thousands of Federal employees and contractors. While much remains to be done, we expect all of the Government’s mission critical systems will be Y2K compliant before January 1, 2000.

This is an important part of our work on the Y2K challenge. But

we also need to ensure that the programs supported by these systems will be ready for the new year. Accordingly, OMB has asked

the agencies to take the lead in working with State, tribal, and

local governments, and with contractors, banks, and others to confirm that Federal programs will work. They are helping to develop

business continuity and contingency plans, and share key information on readiness with partner organizations and with the public.

We have also identified 43 ‘‘high impact’’ federally supported programs that are critical to the health, safety, and well-being of individual Americans. We took a look at the Federal Government from

the individual’s point of view to determine what programs have the

most direct and immediate impact. Our goal is simple: to ensure

the delivery of uninterrupted services to the people who depend

upon those services and to reassure them that they can depend on

those services. Overall, progress has been good. Of the 43 programs, 12 have completed all end-to-end testing. We expect 19 others to complete testing this month, 4 to complete it in November,

and the remaining 8 in December.

Like you, we are concerned about the programs that will not be

ready until December. This does not leave much of a margin for

error. The task is not easy. One of the eight programs, the Indian

Health Service, involves work with a large number of sovereign

tribes. The other seven programs are State-run. In these cases, the

Departments of Health and Human Services, Agriculture, and

86

Labor must work with all 50 States and, depending on the program, with several territories. We care about the people affected

and will not consider the task complete until all of the States, territories, and tribal areas are ready.

We have been measuring progress in these programs as we move

toward their completion dates. In this regard, OMB asked Federal

agencies to tell us on a State-by-State basis when each of these

programs will be compliant. We then gave that information to the

National Association of State Information Resource Executives for

comment, and asked the three Federal agencies to work with it to

resolve any discrepancies.

We have reported the anticipated completion dates by State and

territory in our June and September reports to the Congress. This

information provides a better view of the status of these programs

and the progress being made. It also helps identify States or territories that may be encountering problems so that Federal agencies

can focus resources where they are most needed.

The Departments of Health and Human Services, Agriculture,

and Labor will be testifying later this morning and will discuss

their specific efforts with regard to these programs. I would acknowledge again, though, that you and other Members of Congress

have played an important role in ensuring that both the States and

the Federal agencies devote appropriate attention and work to

these programs. We appreciate all that you have done.

Before closing, I would add an update on our progress in business continuity and contingency planning.

Although we expect all Federal mission critical systems to be

ready by January 1, 2000, it is still important that every agency,

no matter how well prepared, have a business continuity and contingency plan [BCCP] in place. Sound BCCPs are an important

component of agency progress. To ensure quality and consistency,

OMB has directed the agencies to use the General Accounting Office’s guidance on this subject in preparing their plans. Many agencies also are working closely with their Inspectors General and expert contractors in the development and testing of these plans.

OMB has reviewed initial agency BCCPs and has been providing

feedback and guidance to these agencies on an individual basis.

One characteristic of the year 2000 problem is that we have a

specific day when any problems are likely to occur. Even after all

of our other preparation, we can focus on being ready to respond

on day one. In this regard, we have been working with the General

Accounting Office and the agencies to develop guidance that will

help agencies take advantage of this opportunity. We will ask agencies to provide us their updated business continuity and contingency plans by October 15th, including their day one plans, and we

will be reviewing those submissions.

Day one planning will allow agencies to take advantage of the

fact that the year will change 17 hours earlier in New Zealand

than in Washington. We can learn from problems encountered elsewhere in the world and take mitigating actions. Agencies can use

the roll-over weekend to check their buildings for security and

heating and to have technicians verify that all other systems are

working. They can check with their partners in program delivery,

including the States, to assess whether they are having problems

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and to begin providing appropriate assistance. All of these steps

will help minimize any adverse impact from the Y2K problem.

In conclusion, we are very focused on the tasks remaining. During the 86 days before the year 2000, we are concentrating on three

priorities: completing work on remaining mission critical systems

and on other Federal systems; completing end-to-end testing with

the States and other key partners, placing special emphasis on ensuring the readiness of programs that have a direct and immediate

impact on public health, safety, and well-being; and completing and

testing business continuity and contingency plans, particularly day

one plans, to mitigate the impact of any failures due to the year

2000 problem.

Thank you for the opportunity to share information with you on

our progress. We know that there is still a great deal to be done

and we are hard at work. I would be pleased to answer any questions you may have after the conclusion of the testimony.

[The prepared statement of Mr. Spotila follows:]

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Mr. HORN. Thank you very much for your presentation.

The next witness is the Honorable John Callahan, Chief Information Officer, Department of Health and Human Services. Welcome

again to this committee.

STATEMENT OF JOHN CALLAHAN, CHIEF INFORMATION

OFFICER, DEPARTMENT OF HEALTH AND HUMAN SERVICES

Mr. CALLAHAN. Thank you very much, Chairman Horn, CoChairman Morella, and other distinguished members of both subcommittees. We want to thank you for holding this oversight hearing on the Y2k status of ‘‘high impact’’ federally financed State-administered programs. Your oversight has been very, very beneficial,

not only to the departments but I think to the State governments

as well.

HHS is responsible for several of the ‘‘high impact’’ programs

under the direction of the Administration on Children and Families

and the Health Care Financing Administration. First, I would note

that all of HHS’ mission critical systems, including the ones that

service these programs, are Y2K compliant. There is one mission

critical system, the Indian Health Service Resource and Patient

Management System, which is Y2K compliant although we are in

final negotiations with 16 tribes to ensure that they become Y2K

compliant. But since they are sovereign nations, those negotiations

are complex, to say the least.

We have listed and tested all of our data exchanges with States

on the ‘‘high impact’’ programs that you are concerned about and

they are Y2K compliant as well. Consequently, we are confident

that from our end we will be able to make grant payments and

child support enforcement matches for all of the programs under

consideration. Additionally, we have fielded and are fielding contingency plans and day one operating plans for these programs which

will be coordinated with the ICC, which is under the direction of

John Koskinen, the President’s Special Counsel on Y2K matters.

Now let me give you a brief assessment of the Y2K readiness of

‘‘high impact’’ Health and Human Services programs under the Department’s jurisdiction.

We are now just finishing the first round of technical assistance

on human service programs—TANF, child support enforcement,

child welfare, child care, and low-income home energy assistance—

that are the responsibility of the Administration for Children and

Families. Our technical assistance reports in the HCFA case are

being shared, first, with State program officials who are on the line

providing these services, Governors, individual State chief information officers, NGA, and NASIRE.

At this time, we have adjudged that some of the ACF programs

in the following States are at considerable risk of Y2K failure because of both the remediation or testing of systems is not complete,

or behind schedule, or because the contingency planning process is

deficient. These are the States of Alabama, Delaware, District of

Columbia, Georgia, Mississippi, New Hampshire, and South Carolina.

Having said that, we believe that State Y2K preparedness

progress has been considerable. State officials in all States are

using these assessments provided by ACF and their contractors to

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their best advantage. ACF is continuing to stand ready to provide

further detailed technical assistance to States that need further

help in correcting their Y2K problems that they are encountering.

We are confident that Governors, State program officials, and State

CIOs will continue to get on top of the Y2K problem.

Turning to Medicaid and the State children’s health insurance

program. HHS has provided extensive technical assistance for

nearly a year and a-half now. Two rounds of State technical assistance visits have been completed, and a third round of State visits

is now being conducted. States that are adjudged to be at considerable risk with regard to their eligibility or financial systems on the

Y2K preparedness front at this point are Massachusetts, New

Hampshire, Alabama, North Carolina, New Mexico, and Alaska.

States that should be make substantial improvements in their contingency and business continuity planning include New Hampshire,

Rhode Island, Vermont, New York, Delaware, West Virginia, Ohio,

New Mexico, Oklahoma, and Colorado. However, as in the case

with ACF, States are making almost daily improvements on these

fronts as well, progress that we will report to the subcommittee as

soon as we are able to.

Let me provide you with two examples of how our Federal efforts

have assisted States. In Maine, in late January, HCFA made its

first State site visit to Maine. Maine was hoping that a new system

would be implemented before the end of the year and they were

trying to decide whether to fix their old system or put their resources into implementing the Y2K compliant systems. Maine, like

many States at the time, viewed the Y2K problem too narrowly as

a systems problem.

The HCFA review called the State’s attention to a number of

issues where better direction was needed. Immediately, the Maine

commissioner of human resources took the HCFA findings and developed a detailed strategy and put the department commissioner

for programs in charge of the Y2K effort. Contractor support was

obtained, and the State was able to remediate and test the old system and develop a new business continuity plan. When HCFA

came back 4 months later, Maine had gone from high risk to low

risk.

Similarly, in North Dakota, HCFA made a first State visit and

the State was judged to be at risk because of inadequate contingency planning. HCFA sent a team of experts to North Dakota to

work with State staff, and they are now adjudged to be low risk

on the contingency planning front.

I would like to conclude my testimony on a positive note. As we

all know, we only have a limited time left, but HHS has provided,

on a very cooperative basis, Y2K technical assistance to make sure

that State-administered federally financed programs will be millennium compliant. The technical assistance has been offered and received in a spirit of identifying and seeking to fix Y2K problems in

these areas. State governments run these programs, they recognize

that they have primary responsibility for fixing the Y2K problem

in these areas. The Federal Government cannot assume any direct

administrative responsibility for these programs, but we can offer

the best and most cooperative technical assistance possible to the

States in this area. We have mounted a strong technical assistance

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effort with regard to all these ‘‘high impact’’ programs, and we will

continue to provide that right down to last hour. So we believe that

we are making progress, but, as this committee knows, we need to

make more progress, and we will.

That concludes my testimony. I would be happy to answer any

questions.

[The prepared statement of Mr. Callahan follows:]

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Mr. HORN. Thank you very much. That is helpful and we will get

back to that.

The Honorable Shirley Watkins, who is the Under Secretary for

Food, Nutrition, and Consumer Services in the Department of Agriculture. Welcome.

STATEMENT OF SHIRLEY R. WATKINS, UNDER SECRETARY

FOR FOOD, NUTRITION, AND CONSUMER SERVICES, U.S. DEPARTMENT OF AGRICULTURE

Ms. WATKINS. Thank you, Mr. Chairman, Chairwoman Morella,

and the distinguished members of the committees. I am delighted

to be able to join you this morning and share with you the progress

that we have made in the nutrition assistance programs at USDA

that are State-administered. Those programs are going to be Y2K

ready, and we will be working aggressively with the States and will

increase our efforts as we need to do so.

Food and Nutrition Service’s primary goal has been to work with

our State partners to assure that there are no interruptions in the

Nation’s nutrition assistance programs that provide food to children and to working, needy families. This is consistent with our

goal to ensure that no people in this country go hungry. These nutrition assistance programs consist of the food stamp program, the

supplementary nutrition program for women, infants, and children,

and the child nutrition program, which includes school breakfast,

school lunch, and after school snacks.

FNS works with the partners in the States and the territories in

monitoring and providing oversight of these critical programs.

State agencies and territories are responsible for providing the delivery of services for the nutrition programs to the various customers across the Nation.

The Food and Nutrition Service started preparing for the millennium by communicating to the 50 States, Guam, the Virgin Islands, Puerto Rico, and the District of Columbia the importance of

Y2K preparedness for the food stamp, WIC, and for the school nutrition programs. FNS, in January 1998 requested Y2K progress in

three critical areas: software, hardware, and telecommunications

compliance.

We also have sent several memoranda to the States, both individually from FNS and jointly with the Department of Health and

Human Services regarding the significance of Y2K. Both FNS and

HHS also provided expedited approval of funding for Y2K activities. We began obtaining status reports and updates from each of

the States, and we requested such information on a quarterly basis

at that point. That was to be submitted to the seven regional offices around the country. Secretary Dan Glickman, early in 1998,

sent letters to every Governor requesting their leadership to assure

Y2K compliance by June 1999.

We have participated in several national meetings involving all

of the Federal and State partners and some of local partners to discuss Y2K and its impact on State and local systems. Each of our

regional offices has performed site visits to the various State offices

in order to perform Y2K compliance checks. In addition, FNS requested that the States report Y2K compliance and submit to us

a certifying letter that their systems were Y2K complaint. The

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agency also requested that those States that were not able to report that they would be Y2K compliant by March 1999 submit a

contingency plan which would assure the continued delivery of nutrition assistance to all of our recipients.

In April of this year, FNS acquired the services of Science Applications International Corp. [SAIC] to assist in the oversight and

evaluation of State program compliance. We reviewed and analyzed

the information that was gathered from the State agencies regarding the software, hardware, and telecommunications compliance to

determine which States SAIC should review.

Thus far, SAIC has visited over 20 agencies in the States to review their compliance activities, such as planning, test procedures,

test results, regression analysis, and implementation and contingency plans. SAIC has worked very closely with our headquarters

office as well as the regional staff in monitoring the State Y2K program activities.

Well, what is our current status at FNS? As of September 30, the

vast majority of the State agencies have notified us that they are

Y2K compliant. FNS was designated by OMB as a ‘‘high impact’’ program because of the services that we provide to the large numbers of customers around this country. I would like to insert for the

record a table outlining the progress by program as of September

25th, showing the month in which the State agencies report they

will achieve Y2K compliance.

Mrs. MORELLA [presiding]. Without objection, so ordered. It will

be included in the record.

[The information referred to follows:]

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Ms. WATKINS. Thank you. We are concerned with a couple of

States, and we have noted that.

But to ensure the continued successful operations of the Nation’s

nutrition assistance programs into the year 2000, FNS has requested a certification letter from each State agency that operates

the food stamp program and the WIC program. State agencies that

cannot certify Y2K readiness have been asked to submit a business

continuity/contingency plan. Through September 1999, FNS has received certification letters or contingency plans for these programs.

For the food stamp program we have received 23 letters of certification from States, 19 States have submitted contingency plans,

and 8 States have submitted both. For the WIC program, 37 States

have submitted certification letters, 21 States have submitted contingency plans, and 9 States have submitted both.

With electronic benefit transfer, the District of Columbia and 40

States now deliver food stamp benefits through EBT. These systems are delivering benefits to nearly two-thirds of all food stamp

recipients, with 31 States and the District of Columbia operating

State-wide EBT systems. We are working aggressively with the

States. We have met with the EBT processors, the retailers, the

third party processors, and financial networks to assure that the

food stamp benefits through EBT will be accessible to our clients

on January 1, 2000. We have received assurances from the major

food retailers that food will be available. Our third party processors

have indicated to us in early July that all of those programs are

Y2K ready.

Mrs. MORELLA. I am going to ask you if you can wind up.

Ms. WATKINS. Sure. What are our next steps? We are making

preparations to ensure that all of these programs will be compliant.

We do have some State agencies that have indicated that they will

not be ready until December. Those include Georgia and Maryland

for either WIC and child nutrition. We will be working with those

agencies aggressively to assure that they are ready. Today, Secretary of Agriculture Dan Glickman is sending a letter to every

Governor reemphasizing the importance of Y2K compliance to ensure that no families go hungry, and that letter will also let them

know where they are currently in the process.

In conclusion, Congresswoman Morella, USDA’s vision for its

Food and Nutrition Service is to lead America in ending hunger

and improving nutrition and health. To not provide food to needy

families and children as a result of Y2K would undercut that vision. We want to make certain that all of our families are going to

be served and all children will be served.

That concludes my prepared remarks. At the conclusion of the

panel, I will be glad to answer any questions that you may have

about these programs.

[The prepared statement of Ms. Watkins follows:]

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Mrs. MORELLA. Thank you very much, Secretary Watkins. I am

particularly interested, as Mr. Bartlett is, in getting more compliance from Maryland.

We are going to recess this panel because we do have a vote. Mr.

Horn will be back probably very quickly and then we will reconvene in about 10 minutes. Thank you.

[Recess.]

Mr. HORN. The subcommittee will come to order.

Our next presenter is Edward Hugler, the Deputy Assistant Secretary for Information Technology, and Acting Deputy Assistant

Secretary for Administration and Management, U.S. Department of

Labor. Welcome.

STATEMENT OF EDWARD HUGLER, DEPUTY ASSISTANT SECRETARY FOR INFORMATION TECHNOLOGY AND ACTING

DEPUTY ASSISTANT SECRETARY FOR ADMINISTRATION AND

MANAGEMENT, U.S. DEPARTMENT OF LABOR

Mr. HUGLER. Thank you, Chairman Horn, and members of the

subcommittee. I appreciate the opportunity, like the rest of the

panel, to discuss the readiness of the Department of Labor’s programs, specifically, the Federal and State-run unemployment insurance program.

As you know, the unemployment insurance program operates

through 53 State employment security agencies [SESAs]. The Department of Labor oversees this nationwide program which is administered by the 50 States, Puerto Rico, the Virgin Islands, and

the District of Columbia. It is a $20 billion program, serving some

8 million workers annually. As such, the UI program is, indeed,

and ‘‘high impact’’ program with very direct and immediate impact

on the lives of individuals in need.

To carry out the Secretary of Labor’s commitment to ensure the

uninterrupted delivery of these and other core Department of

Labor services, we have taken a very strong leadership role in assisting our 53 SESA partners. Since 1996, the Department has provided ongoing guidance and hands-on technical assistance. Specifically, our Employment and Training Administration unemployment

insurance staff have worked extensively with the SESAs to carry

out the very same year 2000 readiness regiment used across the

Department of Labor for our own systems as well as other Federal

agencies. That began with the system of remediation or replacement, followed by independent verification and validation, which is,

in effect, a double-check audit of that work, followed then by endto-end testing to see that we accomplished what we set out to do,

and then, finally, business continuity and contingency planning so

that if any automated system is in fact disrupted by something unforeseen, program services can still be delivered.

In support of these rigorous preparations, the SESAs have received more than $250 million to date, and we appreciate the support of Congress in making those funds available to our SESA partners.

I believe we have solid results to show for these efforts. At the

beginning of this year, the unemployment insurance program was

one of the very first to have to adapt to the century date change.

This is because the eligibility computations for workers filing

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claims at the start of 1999 began to include, for the first time, projections into the year 2000. The unemployment insurance program’s 53 SESAs were prepared and they cleared this hurdle without incident.

Since then a tremendous amount of work has been done to ensure that all aspects of the unemployment insurance program are

equally ready at the end of this year, and that we can repeat our

earlier success. I should explain that the unemployment insurance

programs are composed of three principal systems: the benefit payment system, which is really where the rubber meets the road; the

tax system, which provides the revenue for the benefit payments;

and the wage record systems. Right now, the benefit payment systems in 50 of the 53 SESAs are year 2000 compliant and have been

successfully implemented; 46 SESAs also have all three of their

primary systems compliant and on line.

In the time remaining, we are stepping up our monitoring and

assistance to the SESAs focusing on those with work still to do.

Yesterday, the Secretary of Labor sent letters to the Governors of

three States, Iowa, Maine, and New Jersey, alerting them to the

issues that require their attention.

In the District of Columbia, which is behind all other SESAs at

this time, the Department is providing extensive and direct assistance, utilizing nearly $2 million in recently released emergency

funds. As part of this effort, the Department is working with the

District to install a first of its kind, stand alone, personal computer-based system that can actually substitute for any State’s benefit payment system. It is called, appropriately, the Automated

Contingency System. It was developed by the Department in cooperation with the State of Maryland specifically for the unemployment insurance program to protect against any unforeseen year

2000 disruptions. The system can be customized to the unique laws

of any SESA, and thereafter it will process claims, calculate benefits, and issue payments to eligible claimants, while the main system is brought on line.

Right now we are installing this ingenious solution in the District of Columbia to back up our efforts to complete the installation

and testing of compliant systems before the end of the year. We expect to have the Automated Contingency System operational in the

District of Columbia next month. We have also demonstrated the

ACS, Automated Contingency System, to other SESAs interested in

utilizing it as part of their contingency planning.

These are some of the highlights of what we have been able to

accomplish in our UI program and that staff working with our 53

SESA partners. I would be very pleased to expand on any of these

topics and answer any questions you may have. One other thing I

would like to do is revisit what I think is a misunderstanding of

some of our management information that was referred to in Mr.

Willemssen’s testimony which I think could inadvertently cast

some doubt on the readiness of our SESA systems. We are confident that the unemployment insurance program will be there for

workers who may need it on and after the century date change.

Thank you, Mr. Chairman.

[The prepared statement of Mr. Hugler follows:]

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Mr. HORN. Thank you very much. That was a very thorough

statement.

Mike Benzen is president of the National Association of State Information Resource Executives. Tell me a little bit about the group

and who all is in there.

STATEMENT OF MIKE BENZEN, PRESIDENT, NATIONAL ASSOCIATION OF STATE INFORMATION RESOURCE EXECUTIVES

Mr. BENZEN. Mr. Chairman, members of the committee, I would

be happy to. NASIRE represents the State government CIOs. In

that capacity, we do need to understand, first, NASIRE does not

control what individual States do, it is a coalition of States, if you

will, and of State CIOs.

We began working on Y2K in terms of workshops, awareness

programs 4 years ago. We think we have been very successful with

it. But it is very difficult to characterize progress of 50 individual

States. I would note that while certainly there are problems, and

they have been well-documented at this table—I have five colleagues sitting here commenting about the States; I think I am the

one now defending the States and it is hard to circle the wagons

when you have only one wagon—but, nonetheless, we think that

the progress of the States has been exceptional. If you look at the

overall progress in terms of 40 States or 47 States, we are now

dealing with a few. We certainly recognize that this is a serious

issue. Those States need to do whatever has to be done to be ready

on time. But we think, overall, the progress has been exceptional.

I think I would also mention this, and it is hard for the States

to acknowledge this I think, we have partnered with the Federal

Government, they have acted in partnership, the people at this

table, and in a cooperative effort we have gotten out of an adversarial relationship and have gotten into cooperative agreements. I

would hope that this would be something that we would see go on

after the turn of the century and after Y2K, because I think this

has been very beneficial and I believe both NGA and NASIRE feel

the same way about that.

And with that, I will close and take questions.

[The prepared statement of Mr. Benzen follows:]

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Mr. HORN. Thank you very much. I think we are inclined to take

your advice on that series of hearings in the future. So, thank you

for raising it.

Let me start with Mr. Callahan, because HHS is a tremendous

impact on the States and the people, Health and Human Services.

I appreciate you publicizing in your written statement and your

oral comments that several programs have a high risk of Y2K failures. Those States included, as I remember and wrote some of

them down, Alabama, Colorado, Delaware, the District of Columbia, Georgia, Mississippi, New Hampshire, Rhode Island, South

Carolina, Vermont, West Virginia. I might have missed a few. But

which of those State-run programs are of the greatest concern to

HHS?

Mr. CALLAHAN. Well, I think, Mr. Chairman, the fact that we

have enumerated those States as having problems in two areas.

One is the continued remediation schedules for Y2K, and then the

development of sound business continuity plans. I do not know

whether we would discriminate among those States as to saying

one has a more serious problem than another. But I think the point

here is that we will provide, and are providing, direct technical assistance from both HCFA and ACF to help them remediate these

problems as quickly as possible.

I would echo Mr. Benzen’s comments here. We entered into this

technical assistance problem not ‘‘to fix the blame,’’ but to fix the

problem. We do feel that in many, many cases, you may get a listing today and it may change 3 days from now, a week from now,

whatever. And that is our effort here, is to do the two things that

you are concerned about, which is the remediation and the certification of Y2K compliance, and second, have a sound business continuity plan so that even if there is some system failure, services

can be provided.

Mr. HORN. Have any of those States that we named, and I might

have missed a few, have any of them undertaken—well, the remediation, has that been done at all with all of them or just a few?

Mr. CALLAHAN. Oftentimes they are in the process of doing the

remediation, we just do not feel that their remediation based on

the contractor assistance has progressed far enough at the time we

take the snapshot. Again, all these reports, as you know, are snapshots and the snapshot can change today, tomorrow, et cetera. So

the effort is to identify the problem and fix it as soon as possible.

We will continue to provide the subcommittee as much as we can

with direct reports on that. But I might add that when we do these

reports, when the contractor goes in and does these reports, whether it is for ACF or HCFA, they provide immediate interaction with

the program officials so that everyone comes to as much of an

agreement as possible about the things that are problems and that

need to be corrected. We are hopeful that they will continue down

the path of making these corrections.

I will say, if I could, that a number of the States that have good

business continuity plans, I think we are sharing those with other

States so that they can benefit from the work of their neighbors or

other States that they are compatible with. It is pretty clear that

in many States they are moving to things like presumptive eligibility after year 2000 should a system fail. They are also in many

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cases moving to preprint checks for January and February so that

they are looking at their eligibility rolls and would have checks

available. So I do think a number of States are making positive efforts in this regard. Our job is to work with the States that are not

quite as far along and help them down the road.

Mr. HORN. Did any of them try testing for the January 1, 2000

date to see the extent of the problem they might have?

[The information referred to follows:]

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Mr. CALLAHAN. Some of them have and have been successful. A

number of them have not really gone as far as we would like in

that regard. But we will provide as much as we can of that detailed

information to the subcommittee.

Mr. HORN. OK. In your written statement, there were 19 States

and territories that have been high or medium risks associated

with Medicaid mission critical systems. I guess the question would

be, what can be done to mitigate potential Medicaid Y2K failures

in those States? Do you just feel they are the same as any other

program, or some programs are much more difficult and with a

much greater impact on people than some of the others?

Mr. CALLAHAN. The one thing that occurs in Medicaid that is

somewhat similar to the problem that we have alluded to in the

area of Medicare that we are directly responsible for, and this is

the issue of making sure that the providers that provide these services, whether it is Medicaid or Medicare, are Y2K compliant. I

think it is fair to say that in testimony before this subcommittee

and elsewhere there has been a little bit of disappointment that a

lot of the medical providers may not have taken this problem seriously enough. So the States will face very much similar problems

that we face in the Federal Government about urging the providers

to get on with it and be able to transmit their claims, for example,

on a Y2K basis. HCFA, as you know, recently HCFA has provided

a Y2K ‘‘jump start kit’’ which is available to any provider that

would seek it. But, again, some providers, either because of the

press of business, or hoping against hope I guess, are not coming

to the fore. That will be a bit of a problem.

Mr. HORN. How about the Department of Agriculture, Secretary

Watkins, where are we there with the particular States? I have got

this chart that you have shown on nutrition programs. As I read

it, the big problems would be the October compliance, the November compliance, and the December compliance. It looks like the December compliance is Georgia and Maryland primarily with the red

markings. Can you give us any enlightenment on where your worries are, with what States?

Ms. WATKINS. The worries primarily, Mr. Chairman, are with

those two States that you identified that have stated they will be

compliant in December. The concern in Georgia is with the WIC

program. We do have the contractor in there this week working

with Georgia so that they can work on a backup system so they

will be ready to deliver services for our WIC clients. And the Maryland program is with our school nutrition programs. They had a

system that they were working on and had a failure in that system.

So they do have a manual system in place. That will not disrupt

any of the school nutrition meal services, and it will not disrupt the

payment, because payments would be made mid-February for January. So that is not as critical for us, but we will continue to work

with them to get their systems complaint.

Mr. HORN. How about the Department of Labor, Mr. Hugler,

where are they with some of the States, and which are the ones

that you think you might the most trouble with?

Mr. HUGLER. Mr. Chairman, right now, if we add up all the systems that we want to see be fully ready for the year 2000, there

would be 159 component parts of all the respective SESAs. There

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are 11 systems that have not yet been made year 2000 compliant.

Breaking that down a little bit further. Three of those are benefit

payment systems, and they really, again, are where the rubber

meets the road, where the benefit payments will be made, and they

are at the top of our list.

Mr. HORN. What are the States that are in that category?

Mr. HUGLER. Yes, sir. The States of concern right now would

have to begin with the District of Columbia. They are, as I mentioned earlier, further behind than any other SESA. I think the

good news there is that we are going to install, as I mentioned earlier, the automated system that will actually take over and independently run their benefit systems. We are going to do that and

have that done by November.

Mr. HORN. Are you designing the software for that?

Mr. HUGLER. The Department of Labor, in conjunction with the

State of Maryland, came up with a software system that can be

adapted to any SESA. So the work being done in the District right

now is to configure that program to the unique laws of the District

of Columbia so that it can do that work in accordance with the

local laws. That is the work being done right now in the District

of Columbia.

Mr. HORN. Has the Department of Labor done software for any

of the States on any of its programs?

Mr. HUGLER. We have not done this type of thing before, if that

is your question. We have offered the Automated Contingency System and demonstrated it for all of the SESAs and will make it

available to anyone who would want to make it part of their contingency plan.

Mr. HORN. The reason I am asking the question is I think it is

an outstanding idea. I remember proposing it about twenty years

ago on a couple of departments, saying, look, why are we reinventing the wheel everywhere. If you have got a compatible software for the States to administer it in relation to yours, that ought

to be the way it was done. So I congratulate you. I am glad somebody in this town is doing that.

Mr. HUGLER. And the commendation goes to the unemployment

insurance staff and working with the State of Maryland and the

SESAs.

Very quickly, other States. California has a benefit program that

has one piece, an imaging program, that needs to be fixed. That

will get done we believe, and they have a very good contingency

plan for it if it does not. That is due in at the end of this month.

Puerto Rico will implement all three of their primary systems over

this upcoming weekend. So that should take care of the remainder.

So I think we are in good shape on that score.

Mr. HORN. I see my time is about up. So let me ask the whole

panel here, in your opinion, which States run the risk of experiencing the most year 2000 related failures, and in what program

areas?

Mr. Willemssen, do you want to answer that one?

Mr. WILLEMSSEN. I will answer it in two ways, Mr. Chairman.

First of all, it is very difficult to generalize on States for all these

10 programs. When we look at any specific State, there are within

those States differences among the programs. I think some of the

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States and some of the programs have been highlighted where the

most significant risks are. For example, in Medicaid, we would

think that the two States right now with the highest risk would be

New Mexico and New Hampshire since each of those has been assessed as high risk for one of its systems and also high risk for its

business continuity and contingency plan. This is a double whammy that has to be avoided.

I would generally concur with the comments that have been

made about the specific programs and the evidence we have seen

in terms of where the risks are for those specific States.

Mr. HORN. If we can get the question in, we have got time to answer it. I made the mark.

Mr. SPOTILA. Mr. Chairman, I would agree with the comments

that Joel has just made and the other panel members. We, obviously, reported based on information supplied by the agencies having the more current, up-to-date specific knowledge. But I think

what we have heard today is pretty accurate.

Mr. HORN. Does anybody want to add to that?

Mr. Callahan.

Mr. CALLAHAN. Again, I would concur, especially to the extent

where a State is behind on its basic remediation and its business

continuity planning, that is a State where additional technical assistance from our side and State effort from their side has to occur.

Mr. HORN. Ms. Watkins.

Ms. WATKINS. I would agree with Mr. Callahan. We will have to

work with those States that look like they may fall behind. And we

will continue to work with Maryland with Georgia and those two

program areas, as we work with Oklahoma, Arkansas, Illinois, and

Alabama where we have some program areas of concern. We will

work with everyone right up to the last minute where there may

be some problems. We would be particularly concerned about those

people who have November and December dates.

Mr. HORN. Do you want to add anything for the Department of

Labor?

Mr. HUGLER. Mr. Chairman, the only jurisdiction with which we

have concern about being at high risk is the District of Columbia.

We are taking extraordinary efforts to work with them right now

to solve that problem.

Mr. HORN. Anything you can—— Mr. BENZEN. Well, only this. Obviously, anyone that is planning

on finishing in November, December, there is great cause for concern. I think I would have to agree with that.

Mr. HORN. Yes. Thank you.

I am going to yield to the gentleman from Washington on behalf

of the minority. Mr. Baird, you have got 7 minutes.

Mr. BAIRD. Thank you, Mr. Chairman. I very much appreciate

the work you folks are doing on this. I get asked about it almost

every town meeting, and, like the speaker earlier said, this is a difficult problem.

I was intrigued by Mr. Hugler’s comments. Is that pronunciation

correct?

Mr. HUGLER. Yes, sir.

Mr. BAIRD. About the contingency plan with a PC-based backup

system. I am interested, are other agencies using a similar model

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as a contingency plan either at the State or at the Federal level?

I will sort of open that up to whoever. If anybody is, it makes sense

to me.

Mr. CALLAHAN. I do not believe we are. But certainly based on

the comments today, we would immediately converse with the Department of Labor to see what benefits it would have. We are, as

I mentioned earlier, providing assistance to providers both in Medicare and Medicaid, if they request it.

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Mr. HUGLER. We would be happy to share anything we have

learned.

Mr. BAIRD. It makes a lot of sense to me. I would hope that

somewhere someone has a hard copy so that if Mrs. Jones comes

in and her checks are late and she needs to feed the kids, somebody can look on a hard copy and see if somebody owes her a check

or not. I hope we have got some kind of backup.

Let us suppose a system crashes in a State agency that administers one of these programs. Do we have a sense from previous

test experience what sort of timeframe does the State have in how

long it will take to bring the system back up and get it up and running again?

Mr. BENZEN. That depends entirely on what crashed. I can speak

to my own State easier than I can the other 49. Medicaid—finished, done, back in production, year 2000 compliant. Stuck it into

the test partition past year 2000 and it did crash. It took almost

twenty minutes to get it back up and running again. The piece of

this that you do need to understand, if these systems have been remediated, and some of these systems are 200,000 hours worth of

labor to fix, once they are done, if you do find something that is

going to crash on January 1st, it is very unlikely you are going to

have to come back and spend another 200,000 hours to fix it again.

It is typically going to be something much more minor. So, in terms

of a surprise crash, what you are going to see—now, if people do

not meet these December dates, it is not going to crash, they are

not going to be able to turn it on because they know it is not going

to work—but if you see a crash, chances are real good that you are

going to get it up and running real fast.

Mr. BAIRD. If there were multiple crashes at the same time, it

would follow that the skilled folks who can correct such a crash

would be in high demand. It would seem almost analogous to a

power outage where we have got people putting up lines in different places. Do we have a national readiness force, or do the

States have in place readiness forces of people on call who can

work on these issues?

Mr. BENZEN. I am not seeing that kind of preparation. Again, we

know what needs to be done. What is being talked about at this

table I believe is we have an estimate that it is going to take X

thousands of hours and they have not completed that number of

hours. But in terms of, gee, we thought we had it fixed and then

all of a sudden it just crashed, I am not looking to see that kind

of problem. I would be amazed if that happens.

Mr. SPOTILA. One thing I would add to that, though, is that when

I testified about the importance of business continuity and contingency plans and day one plans, that is precisely the potential problem that those plans are directed at and that is why we are giving

such emphasis to it.

Mr. BAIRD. Excellent. That is good to hear.

One final question. I have been reading about the concern people

have about trap doors being written into the software from private

business, particularly banking and other financial concerns. Do we

have concerns about that at the Federal level, someone writes a

trap door and suddenly gets 40,000 social security checks?

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Mr. SPOTILA. I think the truth is we do have a concern about

this. It is difficult to assess the extent of the risk. We work closely

with the National Security Council, with Richard Clarke, the President’s advisor in this area, and we have had discussions with them.

It is something that we are watching closely. We do not have specific threats identified that we can go after and start working on

now, but we are certainly watching it.

Mr. BAIRD. Is there a discussion underway of how to monitor

that, how we would look for it?

Mr. SPOTILA. We are certainly trying to monitor it internally in

terms of the Federal Government and there is a lot of discussion

about how to do that. With respect to the private sector, we have

ongoing discussions, particularly with key industry groups, about

how to do that monitoring and how to get information from them

so that we can respond. We can try to supply you with more information on that, if you like. But, in general, it is something we are

sensitive to. We are going to need an awful lot of cooperation from

the private sector if we are going to be able to work together on

this.

Mr. CALLAHAN. I might add, if I could. I am sure that both for

our agency and for other agencies, we are also standing up all our

computer security people in this year 2000 process so that they can

do what they normally do, which is look for intrusion, detection, et

cetera, and we are working with the Department of Commerce, the

Carnegie Mellon operation and other relevant agencies. We will

fully stand up our security people along with Y2K people.

Mr. BAIRD. Thank you very much. Thank you, Mr. Chairman.

Mr. HORN. Thank you. Appreciate that line of questioning.

I now yield to the gentleman from Maryland, Dr. Roscoe Bartlett.

Mr. BARTLETT. Thank you very much.

Mr. Callahan, can you please update us on the Y2K readiness of

HHS’ big, $165 billion payment management system and where

that is?

Mr. CALLAHAN. Yes. The payment management system is Y2K

compliant. It has been certified as Y2K compliant by IV&V, and we

have done some end-to-end testing as well in that regard. So, in essence, the payment management system that makes these grants,

particularly in the ACF areas, will be available and ready to pay

States their allotments.

I might add, what happens is the States generally draw down

their money on a day-to-day basis. They might get a quarterly apportionment for any number of grant payments, but they draw it

down from us on a day-to-day basis to make sure there is no interest payments that they would owe us. But we are ready to go on

that.

Mr. BARTLETT. Assessment presumes I gather the readiness of

the infrastructure? There are lots of electronic fund transfers, not

much operates without electricity today. What sort of assessments

do you make of the availability of the infrastructure, and what contingency plans do you have if it is not there?

Mr. CALLAHAN. This is power primarily?

Mr. BARTLETT. Power and electronic, phone lines and so forth.

Mr. CALLAHAN. We have had continuing discussions with the

power suppliers and the telephone suppliers in the area and we

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feel that those discussions have been very positive. I will supply for

the record our detailed information on that, but I believe we have

also identified hot sites to move from our current area in Rockville

if, in fact, it is not serviceable.

[The information referred to follows:]

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Mr. BARTLETT. Several months ago I attended a hearing of our

Technology Subcommittee with the power representatives. In effect,

what they told us was that they would not be ready because they

have hundreds of thousands of embedded chips in components and

it was just impossible for them to figure out were all those going

to work. But their hope was that they could wire around it. Obviously, we had electricity a long time before we had computers. But

I do not know how much ability we have now to wire around computer problems. Are you sanguine with the position that if they

cannot fix these embedded chip problems, they will just wire

around it?

Mr. CALLAHAN. Well, not having been privy to your conversation

with the power executives, it is a little hard for me to get a context

here. But we will supply for the subcommittee and for you the nature of our discussions with our power and telephone suppliers as

it relates to our payment management system.

Mr. BARTLETT. So your assessment of readiness is then intraagency assessment? You are presuming the availability of services?

Mr. CALLAHAN. At this point, as I said in conversations with our

power and telephone suppliers vis a vis this particular system, we

are confident that that will be available. But we will provide the

subcommittee with that information.

Mr. BARTLETT. I appreciate that. Thank you very much.

Thank you, Mr. Chairman.

Mr. HORN. Thank you.

I now yield to the gentleman from Minnesota, Mr. Gutknecht,

who is a member of the Science Subcommittee on Technology.

Mr. GUTKNECHT. Thank you, Mr. Chairman, and thank you to

the people that are here today testifying.

When we first starting having these hearings 4 years ago, they

were very sparsely attended and most of us had no idea what Y2K

stood for. I think we have made real progress. But there was something that you said, Mr. Callahan, that sort of just caught my ear.

You said something about the problems that are still out there we

expect to solve down the road. Part of the reason we have been

having these hearings is to get periodic updates to make certain

that we are making progress. I guess the real point here is that

the road is getting shorter, and I know you are aware of that. We

are down to T-minus 80 days, something like that.

Mr. CALLAHAN. Yes. Let me, if I can, correct the record. As you

know, and every member of the subcommittee knows, when we

started off with this Y2K problem, one of the biggest problems was

the Federal Government itself. Congressman Horn, with his report

cards, sort of put the sticks to us to provide a lot of progress in a

lot of our systems, including Medicare, for example, which is a

very, very complex system. So I think by necessity the initial efforts here were on our own, on the Federal Government computer

systems, because if they did not work, it did not make any difference whether the State systems worked or not. I think, as Mr.

Spotila has mentioned on behalf of OMB, tremendous progress has

been made with regard to that. So first things have to come first,

which was to fix our own computer systems.

Now, obviously, we have to work with the States and make sure

that we have complimentary contingency plans, et cetera, to make

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sure that the federally financed but State-administered programs

will run. And so that came, to some degree, after the first effort

here. I do think a lot of progress has been made, and will continue

to be made, even though we have to focus for the subcommittee on

some of the States where there are particular problems.

Mr. BARTLETT. I certainly agree. I want to congratulate all of

you. Compared to where we were even a year ago, I think at least

the Federal Government is in a lot better shape than we would

have been. And, again, I congratulate Chairman Horn and Chairwoman Morella because I think it has been their reports cards and

the updates and forcing people to come to grips with this situation

that have really helped. And, of course, the real purpose is so that

we do not have hearings in January asking why did people not get

their checks, why did this happen. Unfortunately, this town is very

good at finger-pointing and, frankly, I think most of us on this subcommittee and the science subcommittee as well do not want to be

into that.

I do want to make one other point. Ms. Watkins, you sort of

made a reference to how the food and nutrition programs would

work. And by what you said, it sounded to me as if there would

be no problem getting the money out to the schools so they could

continue to buy food for the kids. Your concern was information

coming to the Federal Government.

I am not trying to pin you down on this, but I do hope, and this

is just one Member’s opinion, that if there is a problem, we will err

on the side of the people who need the benefit. OK? That if the bureaucracy, in other words, is not getting the information or the red

tape from whomever, I hope that temporary aid for needy families,

for example, will not be withheld because for some reason there is

a glitch in our getting the right information. In other words, if

there is a problem, I hope we will err on the side of making certain

that people get the health care, get the temporary assistance, or

get whatever that they would otherwise be entitled to. I just hope

that is the policy, and I hope that someone here will kind of reassure me that that is the policy.

Ms. WATKINS. That certainly is the policy. Maybe I need to correct the record, because I did not want to give the impression that

when talking about Maryland and the reports that would be flowing in from school districts to the State, that anything would delay

the feeding of children or any person who is eligible for nutrition

assistance in this country. We are going to work to make certain

that all of the benefits that are deserved so all of customers will

be delivered. We will be monitoring those contingency plans that

are coming in from the States.

I personally am working with our staff here in headquarters to

go through those State plans to ensure that no person goes hungry

in this country. That is what the Secretary of Agriculture wants us

to do, that is what this committee wants us to do, and we are going

to monitor it. Nobody wants to see any interruption in our programs. So it will not be a bureaucratic process and looking at some

report. We certainly are not going to get caught up in that. That

is not what you want us to do.

Mr. BARTLETT. I assumed that was the answer and I just wanted

to make sure that was clear and on the record. I thank you all.

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I yield back, Mr. Chairman.

Mr. HORN. Thank you.

Let me just clean up a few things and then I will yield to the

vice chairwoman, Mrs. Biggert.

Mr. Spotila, I am curious about the States that OMB is worried

about and the respective programs. What had made us both curious, both Mrs. Morella and I, was the waiting till December for a

lot of this review, last minute remediation testing, and so forth.

There seems to be a little disagreement here with the General Accounting Office in terms of the number of States, what their names

are, what are the programs that OMB is worried about. I just want

to straighten that out.

Mr. SPOTILA. I think that, as we said earlier, Mr. Chairman, we

have actually heard a pretty detailed discussion here by the agencies involved who are more directly connected.

Mr. HORN. But we have a lot of other agencies that also have

programs. We just brought them up because they are so gargantuan in terms of their impacts.

Mr. SPOTILA. Right. As to the particular impact, Mr. Chairman,

it would be best if we supplied you with that list. I do not have

the individual States by program right in front of me. The information we have most recently is the report that we submitted to you.

We do have some updated information that is coming in, but I do

not have that compiled to give you this morning. I would be happy

to try to supply you with more information.

Mr. HORN. Well, what are the States you are worried about?

Does your subordinate know that?

Mr. SPOTILA. As I mentioned in my testimony, we share your

concern for any State that is waiting until December to finish because the margin for error is so slim. We have heard references

here to some States and individual programs, and we concur in

that, Mr. Chairman.

Mr. HORN. Does OMB want that testing done in early, middle,

or late December? Or do you want to move it up to November?

Mr. SPOTILA. I think the problem here is that the testing has to

follow the work. The reason that the testing is late is that the work

is not necessarily completed. Again, we are relying on information

being supplied to us by individual agencies working with individual

States in many of these cases. We are presuming that this testing

is going to be done as soon as possible, as soon as there is something to test. So the problem here is that although people are hard

at work on it, in many cases they started too late and they are behind.

We have a concern and we are doing all that we can do to work

with the agencies to make certain that the resources are there and

to make certain that information is supplied. But we do not control

the effort ultimately when we are dealing with States or territories

or tribal areas. We cannot do it for them. All we can do is try to

be supportive, and they have that primary responsibility to do their

part.

Mr. HORN. Mr. Willemssen, what are your thoughts on this?

Mr. WILLEMSSEN. My thoughts are to, first, recognize that the

OMB reports that have been put together over the last couple of

quarters that have laid out the detail by State, all of that informaVerDate 11-MAY-2000 08:35 Mar 29, 2001 Jkt 066430 PO 00000 Frm 00197 Fmt 6633 Sfmt 6601 E:\HEARINGS\61232 pfrm09 PsN: 61232
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tion is unverified. What you have heard today from some of the

agencies who have overall responsibility for those 10 State-administered programs is that they have additional information, additional data, beyond that self-reported information. So I think OMB,

in the very near future, needs to take that kind of information into

account when it highlights those States that are most at risk for

those particular programs rather than simply going with the

unverified information that it receives. I think the agencies here

are now in a position to provide more of a qualitative assessment

given their risk evaluations that have been done, so that the agencies and OMB can go beyond that self-reported information and

make real assessments on where the risks are.

Mr. HORN. What I would like, you said you would like to file it

for the record, can you file that by Friday?

Mr. SPOTILA. We will respond by Friday.

Mr. HORN. OK. Because Columbus Day is Monday and I do not

think much is going to happen then and that would kick it over to

Tuesday. Let’s see if we can get it up here by Friday, hopefully not

5. Do it at least by 4; there will be a lot of people running for

planes.

Do you have any comments, Mr. Benzen, on this from the States’ standpoint?

Mr. BENZEN. No, sir, I do not.

Mr. HORN. OK. I think that is about it on my side. I am yielding

now to the vice chairwoman of the Subcommittee on Government

Management, Information, and Technology, Mrs. Biggert of Illinois.

Mrs. BIGGERT. Thank you, Mr. Chairman. If I might submit my

opening statement for the record.

Mr. HORN. Without objection, it will be put in the beginning

where the opening statements appear as if read.

[The prepared statement of Hon. Judy Biggert follows:]

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Mrs. BIGGERT. I would just like to ask a couple of questions.

First, what is going to happen on December 31, 1999, as it rolls

over, in conjunction with these agencies and the States? Will the

offices be open in case there are glitches? Is this part of the contingency planning? You obviously are not going to be sending out

checks on January 1st. I would hope that people would have time

to celebrate as well as to worry about the Y2K problems. But will

there be somebody who is looking to see what the glitches are, if

any?

Mr. SPOTILA. In general, I think it is fair to say yes, there will

be someone, not just one person, but there will actually be teams

of people at each of these agencies. We are looking to the individual

business contingency plans in order to determine specifically how

agencies are approaching it. As we get that information, we will

certainly make that available.

Mrs. BIGGERT. Mr. Willemssen, in your statement you mentioned

the lateness in the year 2000 compliance for States and programs,

that there are nine States’ child support enforcement programs,

and then seven States’ food stamp programs, and then four States’ unemployment insurance programs. Can you name the States for

each of these potentially late programs?

Mr. WILLEMSSEN. Yes. Child support enforcement is New Hampshire, New Mexico, North Carolina, Utah, California, Oklahoma,

Alabama, and Illinois, and the Virgin Islands.

For food stamps, Illinois, New Hampshire, Ohio, Alabama, Oklahoma, Georgia, and the Virgin Islands.

Unemployment insurance, the District of Columbia, California,

Nebraska, and Vermont.

Mrs. BIGGERT. Being from Illinois, I think I am sorry I asked.

In your opinion, are these programs severely at risk for not being

ready for January 1, 2000?

Mr. WILLEMSSEN. I am most concerned about the risk status for

those States that have late completion dates and are at high risk

with their business continuity and contingency plans. As we get

closer to the rollover period, the business continuity and contingency planning element is going to play an even more crucial role.

To the extent that the States have these backup plans in place and

can implement them in the event of disruptions, then I think we

have reason to be more optimistic. If these kind of plans and day

one strategies are not in place, even for those States who like are

in good shape, then I am much more concerned.

Mrs. BIGGERT. In your written statement, you also said that at

particular risk are several States with systems that are not yet

Y2K compliant. Can you name those States?

Mr. WILLEMSSEN. Those States would be primarily by program.

So if you go down the 10 programs, there is variance. I think I

mentioned earlier, for example, Medicaid, the two States we would

be most concerned for about would be New Mexico and New Hampshire. I would concur with Mr. Hugler’s comments about the four

entities that he mentioned, starting with the District of Columbia

in the red alert status, and I believe there are three other entities

in the yellow alert status.

So I think we would generally concur with the comments that

have been made today that are program specific and State specific.

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But, again with the caveat, it is still very difficult to generalize on

a particular State because within that State you have different

agencies running the program.

Mrs. BIGGERT. Thank you. Thank you, Mr. Chairman.

Mr. HORN. Thank you very much.

I now yield to the gentleman from Oregon, Mr. Wu from the

Science and Technology Subcommittee.

Mr. WU. Thank you, Mr. Chairman. I have only a couple of questions.

With the passage of September 9, 1999, are we any more confident in the Y2K transition after we have gone by the 9/9/99 date?

Mr. SPOTILA. We are very conscious of the fact that January 1

will be a key date in and of itself. And although in one sense it

is a comfort that September 9th was not a problem, we are pleased

with the progress, but very conscious that there is a lot of important work still to be done. So we have a general sense, particularly

from the standpoint of the Federal agencies, that we have reached

98 percent compliance on mission critical systems and we have a

plan for completing it. We are pleased with that kind of progress

and the hard work that has gone into it, but we are not over-confident. We are still focused on what remains to be done.

Mr. WU. I am reading between the lines that you are not taking

much comfort in passing what might have been a potentially minor

disruption date.

Mr. SPOTILA. Well, it is a good sign that we did not have a disruption on September 9, 1999. But it is not the end of the problem.

Mr. WU. One of my consistent concerns has been that despite

however well or poorly we might do in the United States in the private sector or at the Federal level in preparing for the Y2K transition, foreign countries and the private sectors in foreign countries

might not be nearly as well-prepared as the United States hopefully will be. The question is whether, in the arena that you all are

addressing today with respect to State programs, whether there is

a substantial risk basically of a cascade effect of problems in foreign countries cascading into the State preparedness arena?

Mr. SPOTILA. We are obviously all concerned that not every country in the world has matched the progress that we have been able

to accomplish here in the United States. We are looking at what

interrelationships there might be and interdependencies there

might be. On a general level, we are reasonably confident that

there will not be the kind of cascading negative effect you are describing affecting U.S. citizens. So I think we have a good confidence level there.

We are, speaking now in terms of the administration, we are sensitive to situations that vary from country to country. I would point

out that the President’s Council on Year 2000 Conversion, headed

by John Koskinen, has been very much involved in working on an

international level to try to promote year 2000 compliance and assess the risks. And I might add, and this ties into a question that

came earlier about individual citizens, the Council makes good, updated information available both on a website, http://y2k.gov, and

through a toll-free number, which is 1–888–USA–4–Y2K. That information is something people can monitor as it is updated. The

Council is giving out advisories; the State Department is giving out

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advisories on travel. So there are a variety of things happening to

try to get information to American citizens. In general, we feel this

is not a crisis affecting us from international Y2K compliance, but,

again, it is a risk that is a little difficult to assess in some countries.

Mr. WU. Are there any particular systems that you might consider more vulnerable to problems developing in foreign countries?

Telecommunication and aviation come to mind immediately. But I

would like to hear from the panel about any particular systems

that you all deem to be particularly sensitive.

Mr. SPOTILA. My understanding is that the major industries have

all been focusing on this, including the aviation industry which has

worked hard to ensure that we do not have major problems relating to Y2K. That does not mean that a particular airport in a particular country might not have a problem. And for this, I would

defer to the Council and to other updates that will be coming out

from now until the end of the year to give a better assessment. So

I do not think we can look so much by broad industry area. I think

most of the major industries are addressing the problem, but there

are going to be individual areas where there may be more risk.

Mr. WU. Thank you very much, Madam Chairwoman.

Mrs. MORELLA [presiding]. Thank you, Mr. Wu.

I apologize for having been at another hearing that I had to attend. I know this has been covered before, but before I ask you all

a final question, Secretary Watkins, I was not here to hear what

you said about what we can do to get Maryland moving faster in

terms of compliance. And what is wrong? We have been in the forefront. My county of Montgomery has been Y2K OK for a long time

and had a lot of drills. It is sad to think that one of the basic connects is not working at this point.

Ms. WATKINS. Maryland is waiting till December to be compliant.

Congresswoman Morella, you were not here and I will just restate

Maryland’s situation. It relates to the child nutrition program only.

Our food stamp program in Maryland is compliant and we have a

certification letter for the food stamp program. And the same is

true with the WIC. WIC is compliant. We do not have a certification letter yet, but we will get the certification letter from them

for WIC.

Maryland’s only problem area is with the school meals programs

and with child nutrition. That is not as critical for us, but we will

continue to work with them. They do have a manual system in

place. Their system crashed, but they were working aggressively

and will continue to do so. We will provide them any kind of technical assistance and support that is needed for child nutrition. And

when I say it is not as critical because they do not have a system

in place, it only affects the reimbursement rate that the school districts would submit to the State. It is not going to impact their

feeding of children throughout the State of Maryland. So we will

work with them and Maryland will be OK.

Mrs. MORELLA. I am glad to hear that.

Mr. Hugler, did you have a chance to tell them about the booklet

that you have put together?

Mr. HUGLER. I did not make any remarks about the Secretary of

Labor’s recent release of the future work report, but I appreciate

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your mentioning it. It is quite a bit of insight into the workplace

of the future, which, really, it is upon us now because there is a

very heavy emphasis on computer engineering and other related

skills. But I thank you for mentioning it.

Mrs. MORELLA. Yes. There is definitely a connection between

Y2K remediation and work force readiness too, which has been one

of the problems why it has been so costly, why so many companies

and States and localities and even the Federal Government has

had some particular problems. I often think Admiral Grace Hopper,

who was involved with the COBOL beginning, I used to say she

was the one who kind of designed it, and then someone said, ‘‘Oh,

no, I was on that committee and it was a committee that did it.’’ I just think that it has posed a challenge that we have been trying

to take care.

I know that the agencies have all stated that they are confident

that their own systems and kind of cautiously optimistic that the

State systems will be compliant and interoperable. Is there a role

that you see that Congress can and should play in these remaining

86 days? I just wondered if I might just go through the panel and

see if you have any comments about that.

Mr. Willemssen.

Mr. WILLEMSSEN. Two comments on two different levels. One, I

think each Member of Congress would be well served by inquiring

about their own State, if they have not already. That inquiry

should start at the level of the Governor in terms of getting information on readiness and making sure that information, if it has

not already, has been given to the public so that the citizens know

where the individual State is with respect to readiness.

The second thing I would offer, more in the traditional congressional role, is I think the Congress needs to be postured in the

early January timeframe should there be any Y2K events and risks

that realize themselves. I think the executive branch has set itself

up with its information coordination center and working through

FEMA and the FEMA regions to be in a position to know what

problems may occur. That could lend itself eventually to some sort

of a request to the Congress to be ready should funding, for example, be needed for implementation of contingency plans. Something

that we have testified on before that we thought was important is

that OMB have in hand how much it would cost if contingency

plans need to be implemented on any kind of widespread basis. I

think the Congress needs to be at the ready in the unlikely event

that something like that occurs.

Mrs. MORELLA. I think it is a very good idea that we get the

word out to our members to communicate with their States to inquire about and indicate their interest in making sure that the

State is compliant. I am not quite sure what you mean by Congress

being properly postured with the exception of the financial thing

you mentioned.

Mr. WILLEMSSEN. That is essentially what I am getting at.

Mrs. MORELLA. OK. Great. Thank you. I appreciate the comment.

Mr. SPOTILA. What I would add, Congresswoman, as John

Koskinen indicated in his August report, one of the areas that concerns us is that individuals and small businesses around the country may, even at this late stage, not be sufficiently aware of the

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need for Y2K compliance. NFIB, for example, did a survey of small

businesses earlier in the year and, based on what they were hearing from members, they predicted that there might be 850,000

small businesses not ready for Y2K. I think that Members of Congress are in a unique position to communicate with their constituents, to continue to try to articulate this message and create

awareness. I think that is an important function.

Mrs. MORELLA. I think that is a very good point. I also wanted

to thank you. In your oral statement, you also had some very laudatory comments about Congress and its interest and involvement

in moving the Federal Government and State and local governments ahead, and I certainly appreciate that.

Mr. Callahan.

Mr. CALLAHAN. Yes. I think the key emphasis, and it has been

mentioned here by a number of people, has been the need to have

very strong and operable business continuity plans in the case of

some system failures. I think it is fair to say there may be some

isolated or sporadic system failures in any number of areas, and,

if that occurs, we have to fall back very, very quickly and readily

to these continuity plans so the citizens will receive the services

they need and require.

Mrs. MORELLA. I hear more and more of that, people who are not

sure of how they should react and some small businesses are saying we know this will pass, it will be all right. Again, there is a

little bit of frustration about what you do about it. We have had

a lot of different kinds of town meetings and given them legislative

assistance in terms of encouraging openness and all. But I do agree

that we need to inform the public about what needs to be done.

Secretary Watkins.

Ms. WATKINS. Congresswoman Morella, I could not agree more

with the panelist who have spoken before me about your advocating and being there to let the general public know, particularly

those people who are on nutrition assistance programs and who use

those benefits, and joining with Governors and our other State

partners and with retailers around the country to assure people in

the various communities that the systems are Y2K compliant and

that they will receive their benefits. I could imagine that if you

were in Montgomery County, with the large number of people that

we have eligible for these programs, and you had a public event

with retailers and the Governor and someone from Health and

Human Services and Education, to let them know that the systems

are OK and that they should not worry about Y2K and they are

going to have food. If this was done around the country with the

various Members of Congress and Governors and our State partners, who have done an outstanding job, I think it certainly would

send the right signal.

Mrs. MORELLA. It might be that a mailing would be more effective. Sometimes with these meetings you just do not get as many

people as you would like to have show up to them. And so maybe

something that would comfort them. I have been thinking I am

going to give Christmas and Hanukkah gifts of baskets with a Y2K

survival kit to hold you over for a weekend, with foods, and batteries, and whatever, and just let them know in advance not to be

alarmed.

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Mr. Hugler.

Mr. HUGLER. Madam Chairwoman, I would concur with everything that has been said by the panel thus far in response to your

question. I would particularly highlight the value of Members of

Congress interacting with their respective Governors over the

issues concerning Y2K. The public events suggestion I think was

a very good one. The important point here is I think it would be

beneficial if the States would hear the same message that they

hear from the Department of Labor and other departments represented here about what is important. I would second what Mr.

Callahan said, for example, about business continuity and contingency plans. That is something where we need to finish that work.

As good a job as we have done and we know our partners have

done, we still need to be prepared for the unforeseen and be able

to continue business in the temporary absence of automated systems.

Mrs. MORELLA. Mr. Benzen, I am sorry I did not hear your oral

presentation, but I do have your written testimony. I would love to

hear from you now.

Mr. BENZEN. Just very quickly. To answer your question, I think

I would have to agree with everyone at this table. I think they are

on target with what efforts need to be continued. I would point out

the efforts of this committee have helped the States certainly in

that it is an evangelizing role, if you will. It has called attention

to the problem and it has gotten action. The idea of making sure

the Governors know it is important, I think the Governors really

already know what is important. I do not think the problems we

are seeing are because of inactivity or because of ignorance. I think

it is a matter of just a tremendous amount of work to do that needs

to be done.

Mrs. MORELLA. And it all starts from the top, and those who recognized it and started early, and it kind of pyramided out to touch

many more people.

We have 86 days to solve our remaining Y2K problems. The Y2K

technology challenge has shown how closely our society is dependent on computers. It illustrates our interdependence also on each

other. The Federal Government has many critical business partners that help carry out essential programs such as you have discussed, Medicaid, temporary assistance for needy families, food

stamps, and unemployment insurance. Millions of lives will be severely disrupted if even one State-run program fails.

States and counties need to be ready. Many have significant

work left to do. Today, we have named several States that face a

significant challenge in the coming months. If computer systems

are not ready, I strongly urge State and local governments to develop and test practical contingency plans. Some have done it, some

have not.

Our society lives with minor disruptions and inconveniences each

day, whether it is the traffic congestion or the weather. However,

our Nation cannot afford to experience significant service delivery

problems to our essential programs. We still have time to get the

programs ready, but I think you all agree we must redouble our efforts.

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I just think this has been a great panel. I want to thank you all

for being with us. There may be some other questions with regard

to what is happening in some States on some of the programs that

we have not had a chance to discuss that, with your agreement, we

may forward to you for responses.

I want to thank the following people. On the majority staff, J.

Russell George, staff director and chief counsel; Matt Ryan, senior

policy director; Bonnie Heald, communications director and professional staff member; Chip Ahlswede, clerk; P.J. Caceres, Deborah

Oppenheim. On the Technology Subcommittee, Jeff Grove, staff director; Ben Wu, Joe Sullivan. On the minority staff, Trey Henderson and Jean Gosa. And the Subcommittee on Technology, Michael

Quear, Marty Ralston. Also, the court reporter, Ruth Griffin.

The meeting is now adjourned. Thank you all very much.

[Whereupon, at 11:59 a.m., the subcommittees were adjourned, to

reconvene at the call of their respective Chairs.]

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