For Release on Delivery

Expected at

10 a.m. EST

Thursday,

January 27, 2000

GAO/T-AIMD-00-70

YEAR 2000 COMPUTING

CHALLENGE

Leadership and

Partnerships Result in

Limited Rollover

Disruptions

Statement of Joel C. Willemssen

Director, Civil Agencies Information Systems

Accounting and Information Management Division

Testimony

Before the Subcommittee on Government Management,

Information and Technology, Committee on Government

Reform, and the Subcommittee on Technology,

Committee on Science, House of Representatives

United States General Accounting Office

GAO

Page 1 GAO/T-AIMD-00-70

Mr. Chairman, Ms. Chairwoman, and Members of the Subcommittees:

Thank you for inviting us to participate in today’s hearing on the change

of century rollover. According to the report of the President’s

Commission on Critical Infrastructure Protection, the United States—with

close to half of all computer capacity and 60 percent of Internet assets—is

the world’s most advanced and most dependent user of information

technology.1 Moreover, America’s infrastructures are a complex array of

public and private enterprises with many interdependencies at all levels.

As a result, the United States was particularly at risk that system failures

resulting from the change of century rollover would have adverse

consequences on the public.

At this time, federal, state, and local governments as well as key sectors

report that they have successfully met the Year 2000 challenge. While Year

2000 failures have occurred—some significant but most considered

minor—these entities report that almost all of these failures have been

mitigated, either through the correction of systems or by the

implementation of contingency actions. Accordingly, few Year 2000

failures have adversely affected the public. While the Year 2000 challenge

is not yet over because some key business processes have not yet been

fully executed and because other risky dates remain, the nation’s success

thus far is a very positive indicator that these hurdles will also be

overcome. The leadership exhibited by the legislative and executive

branches and the partnerships formed by a myriad of organizations were

pivotal factors behind this success. Ensuring that the lessons learned in

addressing the year 2000 are effectively used to improve information

technology management is a key challenge now facing the federal

government.

After providing brief background information, today I will discuss (1) the

reporting structure established by the government to obtain information

on Year 2000-related failures during the rollover period, (2) examples of

Year 2000 errors and their resolution, and (3) lessons from the Year 2000

effort that can be carried forward to improve the management of

information technology activities. Appendix I provides our objectives,

scope, and methodology.

Because of its urgent nature and the potentially devastating impact it

could have had on critical government operations, in February 1997 we

1Critical Foundations: Protecting America’s Infrastructures (President’s Commission on Critical

Infrastructure Protection, October 1997).

Background
Page 2 GAO/T-AIMD-00-70

designated the Year 2000 problem a high-risk area for the federal

government.2 Since that time, we have issued over 160 reports and

testimony statements detailing specific findings and numerous

recommendations related to the Year 2000 readiness of a wide range of

federal agencies.3 We have also issued guidance to help organizations

successfully address the issue.4

The public faced the risk that critical services provided by the

government and the private sector could be disrupted by the change of

century rollover. As we have previously testified, financial transactions

could have been delayed, flights grounded, power lost, and national

defense affected.5 Fortunately, as we testified before your Subcommittees

in November 1999,6 at the urging of congressional leaders and others, the

Office of Management and Budget (OMB) and federal agencies

dramatically increased the amount of attention and oversight given to the

Year 2000 issue.

Most importantly, on February 4, 1998, the President signed an executive

order that established the President’s Council on Year 2000 Conversion,

chaired by an Assistant to the President and consisting of one

representative from each of the executive departments and from other

federal agencies as may be determined by the Chair. The Chair of the

Council was tasked with the following Year 2000 roles: (1) overseeing the

activities of agencies; (2) acting as chief spokesperson in national and

international forums; (3) providing policy coordination of executive

branch activities with state, local, and tribal governments; and

(4) promoting appropriate federal roles with respect to private-sector

activities. The council focused attention on the problem and provided a

forum for high-level communication among leaders in government, the

private sector, and the international community.

2High-Risk Series: Information Management and Technology (GAO/HR-97-9, February 1997).

3These publications can be obtained through GAO’s World Wide Web page at www.gao.gov/y2kr.htm.

4Year 2000 Computing Crisis: An Assessment Guide (GAO/AIMD-10.1.14, issued as an exposure draft

in February 1997 and in final form in September 1997); Year 2000 Computing Crisis: Business

Continuity and Contingency Planning (GAO/AIMD-10.1.19, issued as an exposure draft in March 1998

and in final form in August 1998); Year 2000 Computing Crisis: A Testing Guide (GAO/AIMD-10.1.21,

issued as an exposure draft in June 1998 and in final form in November 1998); and Y2K Computing

Challenge: Day One Planning and Operations Guide (GAO/AIMD-10.1.22, issued as a discussion draft

in September 1999 and in final form in October 1999).

5Year 2000 Computing Crisis: Strong Leadership and Partnerships Needed to Mitigate Risk of Major

Disruptions (GAO/T-AIMD-98-262, August 13, 1998).

6Year 2000 Computing Challenge: Noteworthy Improvements in Readiness But Vulnerabilities Remain

(GAO/T-AIMD-00-37, November 4, 1999).
Page 3 GAO/T-AIMD-00-70

Among the many initiatives undertaken by the government, which

improved its own as well as the nation’s preparedness, were the

following:

• On March 26, 1999 OMB implemented our April 1998 recommendation

that governmentwide priorities be set7 by issuing a memorandum to

federal agencies designating lead agencies for the government’s 42 highimpact programs (e.g., food stamps, Medicare, and federal electric power

generation and delivery; OMB later added a 43rd high-impact program—

the Department of Justice’s National Crime Information Center.) For each

program, the lead agency was charged with identifying to OMB the

partners integral to program delivery; taking a leadership role in

convening those partners; and assuring that each partner had an adequate

Year 2000 plan and, if not, helping each partner without one.

• OMB clarified its contingency plan instructions and, along with the Chief

Information Officers Council, adopted our business continuity and

contingency planning guide for federal use. In addition, on May 13, 1999

OMB required agencies to submit high-level versions of these plans.

• Council officials participated in monthly, multistate conference calls with

state Year 2000 coordinators. The latest of these calls occurred on

January 3; 36 states participated and discussed the results of the century

rollover. Moreover, in July 1998, March 1999, and October 1999, the

Council—in partnership with the National Governors’ Association—

convened Year 2000 summits with state and U.S. territory Year 2000

coordinators.

• The Council established a nationwide campaign to promote “Y2K

Community Conversations” to support and encourage the efforts of

government officials, business leaders, and interested citizens to share

information on their progress. To support this initiative, the Council

developed a toolkit that provided examples of which sectors should be

represented at these events, and issues that should be addressed.

• The Council established over 25 sector-based working groups and

conducted outreach activities, likewise consistent with our April 1998

recommendation.8 Also consistent with an April 1998 recommendation,

the Chair directed the Council’s sector working groups to assess their

7Year 2000 Computing Crisis: Potential for Widespread Disruption Calls for Strong Leadership and

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

8GAO/AIMD-98-85, April 30, 1998.
Page 4 GAO/T-AIMD-00-70

sectors. In 1999, the Council subsequently issued four public reports

summarizing these assessments.

We testified before you in November 1999 that as a result of these efforts

substantial progress had been made to reduce the risk posed by the Year

2000 problem.9

On June 14, 1999, the President created the Information Coordination

Center (ICC) to assist the Chair of the President’s Council on Year 2000

Conversion. The ICC was charged with making preparations for

information-sharing and coordination within the federal government and

key components of the public and private sectors, coordinating agency

assessments of Year 2000 emergencies and, if necessary, assisting federal

agencies and the Chair of the Council in reconstitution processes.

Accordingly, under the umbrella of the ICC, the federal government

implemented a large-scale reporting process to obtain information on

events occurring during the rollover weekend from major federal

agencies, states, key sectors, and foreign countries.

To obtain information from a variety of sources, including federal

agencies, states, localities, and key sectors, an ICC contractor developed

an unclassified reporting system, the Information Collection and

Reporting System (ICRS), which was used by these entities to provide

status and incident information to the ICC and others. Reporting entities

were to provide status information to ICRS through a series of

organization-specific input screens. If an incident occurred during the

reporting period, whether Year 2000-related or not, the reporting entity

was responsible for determining whether the situation was still normal

(“green” status), or whether the incident had resulted in reduced capacity,

capability, or service (“yellow” status), or significantly reduced capacity

(“red” status). The ICC directed all reporting entities to provide reports

twice a day and/or whenever a significant change in status occurred

between December 28, 1999, and January 7, 2000.

Each of the 24 major departments and agencies except for the

Departments of Defense and State reported on their status during the

rollover period using ICRS. Defense provided classified status information

via a secured telecommunications line to the ICC’s Sensitive

Compartmented Information Facility. State provided the ICC with verbal

reports and provided access to its Weathervane system in the Sensitive

9GAO/T-AIMD-00-37, November 4, 1999.

Information

Coordination Center

Established to Monitor

and Assess Rollover

Period

ICC Reporting Process

Structured to Obtain

Selected Status Information

From Federal Agencies,

State and Local

Governments, Key Sectors,

and Foreign Countries
Page 5 GAO/T-AIMD-00-70

Compartmented Information Facility. The Weathervane system provided

each embassy’s assessment of the status of its foreign country.

The Federal Emergency Management Agency (FEMA) was the primary

liaison for gathering information from state and local governments. FEMA

used its 10 Regional Operation Centers—interim command and control

sites that can be activated to monitor potential disasters such as

hurricanes—to monitor the rollover to the year 2000. From December 28,

1999, through January 4, 2000, the Regional Operations Centers

responsibilities included (1) reviewing states’ ICRS status reports,

(2) contacting states that did not submit reports and obtaining the state’s

status, (3) preparing and submitting regional ICRS status reports to FEMA

headquarters, and (4) participating in daily teleconference calls with

FEMA headquarters. If requested, the centers also sent representatives to

their respective states’ emergency operation centers for the rollover

period to provide on-site monitoring of states’ Year 2000 status, and help

states request federal assistance if needed. FEMA headquarters was

responsible for reviewing and assessing regional input and summarizing

national-level information.

Individual states were responsible for designating a point of contact

responsible for submitting ICRS reports and determining how local

reports would be provided to the ICC. With respect to local reporting,

states had the option of using their own reporting mechanism or obtaining

and distributing ICRS passwords to localities that would allow them to

submit ICRS status reports. According to the ICC, about 750 localities in

37 states and territories submitted ICRS status reports on or after

January 1, 2000. States were also responsible for reviewing and assessing

locality status information and entering state-level status information. In

addition, states were to submit a separate report on the status of federally

funded programs, such as food stamps and unemployment insurance.

To obtain status information from key sectors, six federal organizations

also worked with private-sector organizations designated as National

Information Centers to provide information to the ICC on critical sectors

during the rollover period. For example, for the rollover period the

Department of Energy implemented an emergency operations center that

included representatives from the North American Electric Reliability

Council, American Gas Association, American Petroleum Institute, and

the Interstate Natural Gas Association of America—each a National

Information Center. Along with the Department of Energy, these entities

were charged with monitoring reports from the field and performing

impact analyses. Both the Department of Energy and the North American

Electric Reliability Council periodically submitted ICRS reports. The
Page 6 GAO/T-AIMD-00-70

Department of Energy reported on the status of its mission-critical

systems, online computer systems, headquarters building infrastructure,

field building structure, operational health/safety systems, federal electric

power, electric power, oil, and gas areas. The North American Electric

Reliability Council reported on the status of specific electric power

organizations. Table 1 lists the sectors that had National Information

Centers, responsible private-sector organizations, and lead federal

organizations.

Table 1: National Information Centers

Sector

National Information Center

Organization Lead Federal Organization

Airlines Air Transport Association Department of Transportation

Cyber Assurance

Cyber Assurance National

Information Center Information Coordination Center

Electric Power

North American Electric Reliability

Council Department of Energy

Financial Services Securities Industry Association

Securities and Exchange

Commission

Natural Gas American Gas Association Department of Energy

Natural Gas

Interstate Natural Gas

Association of America Department of Energy

Oil American Petroleum Institute Department of Energy

Pharmaceuticals National Pharmaceutical Alliance

Department of Health and Human

Services

Pharmaceuticals

National Association of Chain

Drug Stores

Department of Health and Human

Services

Retail National Retail Federation Information Coordination Center

Telecommunications

Network Reliability and

Interoperability Council National Communications System

Source: ICC.

To obtain international information, the ICC relied on information

provided by the Departments of State, Defense, and Transportation, the

National Security Council, and the National Information Centers. In

addition, the ICC obtained information from the International Y2K

Cooperation Center’s10 Global Status Watch system. This system,

developed and operated by an ICC contractor, was used by foreign

countries to post information, using a standard template, on the status of

major infrastructure areas such as energy, telecommunications, water,

and government services. Similar to the ICRS, this system called for

10The International Y2K Cooperation Center was created by the United Nations to promote strategic

cooperation and action among governments, peoples, and the private sector to minimize adverse Year

2000 effects on the global society and economy.
Page 7 GAO/T-AIMD-00-70

countries to report on Year 2000- or non-Year 2000-related events and

whether each sector was operating at normal capacity, reduced capacity

or service, or significantly reduced capacity or service. During the rollover

period, the Chair of the President’s Council on Year 2000 Conversion also

participated in telephone calls with other national Year 2000 coordinators.

To accomplish the goal of gathering, analyzing, and summarizing

information on system operations, the ICC had a core administrative staff

that was supplemented during the rollover period with officials detailed

from federal agencies. During the rollover period of December 28, 1999,

through January 7, 2000, the ICC was organized by sector, each headed by

federal agency leads (see table 2).

Table 2: ICC Structure

Sector Lead Federal Organization(s)

Cyber-assurance

ICC, Critical Infrastructure Assurance Office, the Federal

Computer Incident Response Capability, and the National

Infrastructure Protection Center

Financial services Federal Reserve Board

Small business Small Business Administration

Chemical related

manufacturing Environmental Protection Agency

Drinking water Environmental Protection Agency

Hazardous materials Environmental Protection Agency and the U.S. Coast Guard

Wastewater treatment Environmental Protection Agency

Emergency services FEMA

Mission-critical systems Office of Management and Budget

Public safety Department of Justice

State & local governments FEMA

Tribal governments Department of the Interior

Education Department of Education

Employment-related

protection Department of Labor

Federal benefits payment

programs Social Security Administration

Food supply Department of Agriculture

Health care Department of Health and Human Services

High-impact federal

programs Office of Management and Budget

ICC Gathered and Analyzed

Status Information During

the Rollover Period
Page 8 GAO/T-AIMD-00-70

Sector Lead Federal Organization(s)

State-administered federal

programs Office of Management and Budget

National security &

international affairs Departments of Commerce, Defense, and State

Building operations General Services Administration

Energy Department of Energy

Communications

Federal Communications Commission/General Services

Administration

Transportation Department of Transportation

Source: ICC.

Sector leads, and their supporting staff, were responsible for maintaining

continuous understanding and current status information on their sector

during the century rollover period. In performing these duties, they

reviewed ICRS status reports, obtained relevant information from their

respective organizations through telephone conversations, faxes, and emails, and reviewed media reports. Each sector also provided periodic

summaries of its status. These summaries were used to provide status

information to the Chair of the President’s Council on Year 2000

Conversion as well as to the public.

Since ending full operations on January 7, the ICC discontinued ICRS

reporting and directed federal agencies to report on their status daily via

e-mail until January 31. The ICC plans to begin full operation again during

the leap year rollover between February 28 and March 1.

On the basis of our observations, the ICRS reporting processes generally

worked as expected. In particular, during the peak reporting times of

December 31, 1999 through January 3, 2000, ICC officials and sector leads

and supporting staff reviewed and assessed ICRS status reports as well as

media reports. Where it was determined to be significant and relevant,

they followed up on possible Year 2000-related incidents with their

agencies and others. For example, the Small Business Administration

representatives at the ICC obtained information from the agency’s

regional offices on problems being experienced by some small businesses.

In some cases, agencies were able to determine that a reported problem

was false. In another example, a Department of Health and Human

Services representative at the ICC contacted the Food and Drug

Administration about a problem with a hospital dispensing system that

had been reported on an Internet site. The Food and Drug Administration

investigated the reported problem and found it to be false.

ICRS Reporting Processes

Generally Worked as

Expected
Page 9 GAO/T-AIMD-00-70

Information gathered from these various sources at the ICC was intended

to concentrate on events that were the result of system and operational

disruptions or that might be impacted by such disruptions. Accordingly,

not all Year 2000 incidents were expected to be reported and assessed. At

the same time, the Director of the ICC stated that he encouraged entities

to use the remarks section in the ICRS to elaborate on other important

Year 2000-related incidents. However, he stated that organizations’ use of

the remarks section was “mixed”—some organizations provided a

considerable amount of data on minor anomalies while others had no

incidents or elected not to elaborate on any issues that they might have

had.

With respect to key sectors, while private-sector representatives in the

United States provided information to the ICC, it is not likely that all Year

2000-related errors were reported since the government could not

mandate that all incidents be reported. Indeed, on January 3, 2000, the

Chair of the President’s Council on Year 2000 Conversion stated that

“probably some of them [private companies] are having computer glitches

and not reporting it to us.” He added that if a business is having a minor

problem that they were probably not reporting it.

Data limitations were particularly applicable in the international arena.

On January 2, 2000, the Chair of the President’s Council noted these

limitations. He stated that U.S. embassies were not collecting data at the

same level as in the United States, and that they did not have the same

ability to check with all of the private-sector providers in other countries.

The Chair characterized the Department of State’s Weathervane system,

which captured information from U.S. embassies, as a users’ report on

whether there were any problems with areas such as power and

telecommunications. Moreover, the International Y2K Cooperation

Center’s Global Status Watch system reflects self-reported data and, as

discussed earlier, concentrates on the reporting of problems that cause

sectors to operate in a reduced capacity or service.

Few Year 2000-related errors reported during the rollover affected the

delivery of key services because they were reported to be corrected

quickly and/or contingency plans were implemented. A key reason that

Year 2000-related errors had little effect on business operations and the

delivery of key services is that federal agencies and other organizations

used the rollover weekend to identify and correct errors before the

problem resulted in operational consequences.

Reported Year-2000

Incidents Addressed

Quickly and Had Little

Effect on the Delivery of

Key Services
Page 10 GAO/T-AIMD-00-70

In guidance on planning for the rollover period, called “day one” or “day

zero” planning,11 we stated that organizations should activate

coordination/command center(s), conduct facility inspections, and

perform post-rollover tests, evaluations, and assessments of key business

processes and supporting systems. According to the Chair of the

President’s Council, every emergency operating center in the federal

government was operating on January 1, 2000, and agencies used the

weekend to test their systems and operations. In addition, the Chair

stated that organizations running critical services in the private sector

were also staffed on January 1, 2000. For example, major banks and

exchanges both in the United States and in foreign countries used the

rollover weekend for final systems and interconnectivity testing in the

year 2000 prior to opening for business.

The following are specific examples of how testing during the rollover

weekend helped to identify and correct problems quickly.

• Shortly after the rollover to the year 2000, the General Services

Administration and other agencies began checking federally owned and

leased buildings to determine whether any Year 2000-related problems

had occurred. As a result of these inspections, certain building

operations—such as access control systems—were found to have

malfunctioned and were corrected and/or contingency plans

implemented.

• A “zero day” test of the DOE Oak Ridge facility’s Dynamic Special Nuclear

Material Control and Accountability System—a system normally not

operating during the weekend—found a Year 2000-related file transfer

error. After the rollover, one segment of the software began generating

file identifiers with a 4-digit year format, while the file transfer software

was expecting a 2-digit year format. As a result, the test of the transfer

failed. According to DOE, contingency plans that had been updated and

tested because of the Year 2000 problem were implemented and magnetic

tapes were used to successfully transfer the information and the Year

2000 failure was corrected a short time later.

• A foreign country reported to the International Y2K Cooperation Center’s

Global Status Watch system on January 2, 2000, that “numerous tests

[were] carried out in banking, administration, and industries. Only minor

problems [were found], corrected on the spot.”

11GAO/AIMD-10.1.22, October 1999.
Page 11 GAO/T-AIMD-00-70

Before the rollover period, we testified before you that the federal

government’s overall progress had been significant—from a low of

compliant mission-critical systems of 19 percent in August 1997 to a

reported 99 percent in October 1999.12 We also testified that while not all

actions were completed at that time, the government had made progress

in addressing our recommendations related to the key areas of prioritysetting, end-to-end testing, and business continuity and contingency plans.

The federal government’s efforts have paid off. During the rollover period,

most Year 2000-related errors reported by the federal government were

minor and did not have an effect on operations or the delivery of services.

Even those that were significant (those that resulted in degraded service

or, if not corrected, would have resulted in degraded service) were

mitigated by quick action to fix the problem or through the

implementation of contingency plans. Among the most significant

incidents were the following.

• On January 1, 2000, the Deputy Secretary of Defense reported that one of

its satellite-based intelligence systems experienced a Year 2000 failure

shortly after the rollover of Greenwich Mean Time; Defense was not able

to process information from that system. According to the Deputy

Secretary, the problem was with the ground processing station, not the

satellite itself. The Deputy Secretary also stated that Defense adopted

backup procedures, which resulted in its operating at less than its full

peacetime level of activity but allowed it to continue to meet its highpriority needs. Defense reported that the satellite ground processing

system was returned to full operational status on January 3, 2000.

• The Health Care Financing Administration’s (HCFA) Medicare program, a

high-impact program, was affected by Year 2000-related errors

experienced by its business partners. For example, on January 3, HCFA

was informed that a bank that handles electronic fund transfer

transactions for six contractors to the Federal Reserve could not receive

those transactions electronically. A temporary workaround was

implemented which involved having the contractors send diskettes with

the transactions to the bank via overnight mail until the bank fixed and

tested the electronic communication software error on January 6, 2000.

While this workaround allowed HCFA to make payments to providers

within the required 30 days, payments were nevertheless delayed.

Specifically, at least $50 million in payments to Medicare Part A health

care providers (e.g., hospitals and nursing facilities) were delayed 1-day.

12GAO/T-AIMD-00-37, November 4, 1999.

Reported Year 2000-Related

Errors in the Federal

Government
Page 12 GAO/T-AIMD-00-70

Medicare provider claims are being returned because claims have been

submitted dated 1900 or 2099. Some Medicare data centers reported that

they received claims from providers with these erroneous dates after the

rollover. For example, according to HCFA officials, one contractor had

received about 11,000 claims with these erroneous dates in the first two

weeks of January. According to HCFA’s Deputy Director of Information

Services, most of these claims were traced to providers that had not

upgraded their systems. The Medicare contractors have advised the

providers to update their systems, and HCFA has instructed the data

centers to return claims with erroneous dates.13

• The Federal Aviation Administration’s (FAA) air traffic control system,

another high-impact program, reported experiencing Year 2000-related

systems problems. According to FAA, none affected safety, service, or

capacity and some merely involved inaccurate date displays. In all cases,

FAA reported that it was able to quickly fix the system or implement

contingency plans that allowed operations to continue.

Two key FAA systems that had problems were the Low Level Wind Shear

Alert System and a contractor-maintained Kavouras Graphic Weather

Display System. In the case of the Low Level Wind Shear Alert System, the

system displayed an error at eight sites14 following the rollover from 1999

to 2000 Greenwich Mean Time, and failed to operate. FAA field staff

rebooted the systems, and the longest length of time that one of the

systems took to return to normal operations was 2 hours and 12

minutes.15 Because the systems were not operational for this short period

of time and because FAA does not operate backup systems, this problem

could have affected aviation operations if weather conditions had been

severe. In the case of the Kavouras Graphic Weather Display System, ten

minutes after the Greenwich Mean Time rollover, the system began

sending data showing the year as 2010. This resulted in the system

rejecting weather data from the National Weather Service and failing to

properly update data going to 13 Automated Flight Service Stations.16

13Before receiving this instruction from HCFA, the contractor that had received approximately 11,000

erroneous claims in the first two weeks of the year had electronically modified these claims.

According to HCFA’s Deputy Director of Information Services, HCFA directed this contractor to stop

this practice because it was concerned about modifying claims information without the concurrence

of the provider.

14Tampa FL, Denver CO, Atlanta GA, Orlando FL, Chicago IL, St. Louis MO, LaGuardia NY, and New

Orleans LA.

15The length of time these systems were out of operation varied widely, ranging from 5 minutes at one

site to 2 hours and 12 minutes at another site.

16Altoona PA, Leesburg VA, Millville NJ, Macon GA, Loiusville KY, Columbia MO, Conroe TX, Elkins

WV, Buffalo NY, Williamsport PA, McKeller TN, Gainsville FL, and Wichita KS.
Page 13 GAO/T-AIMD-00-70

Within 10 minutes, the contractor reloaded system software in order to

restore the service and all systems were reported to be normal in about 2

hours.

As we previously testified,17 the Departments of Agriculture, Health and

Human Services, and Labor took action to help states successfully

transition the 10 high-impact state-administered federal programs into the

year 2000.18 For example, the Department of Agriculture’s Food and

Nutrition Service obtained a contractor to conduct on-site visits to certain

states and territories to provide technical assistance in areas such as

software testing and contingency planning. The success of these efforts is

demonstrated by the relatively minor Year 2000-related errors reported in

these programs. In total, the Departments of Agriculture, Health and

Human Services, and Labor reported that 11 states and territories had

Year 2000 errors in one or more state-administered federal programs.

These errors ranged from cosmetic printing or display problems to

failures that resulted in minor disruptions of services. For example:

• Oregon had Year 2000-related errors in systems used for the Food Stamps,

Child Support Enforcement, and Temporary Assistance for Needy

Families programs. Regarding food stamps, the state’s system for

processing daily updates failed, creating a backlog of batch records. This

problem was corrected by the installation of a new system on the next

business day, and no impact on business operations was reported. The

state’s system that tracks data in numerous programs, including Child

Support Enforcement and Temporary Assistance for Needy Families, had

a Year 2000-related problem that was fixed by January 7, 2000. This

problem resulted in a 1-day delay in payments to clients.

• Florida and Kentucky reported Year 2000-related problems with their

unemployment benefits’ automated telephone call processing system

which would not allow claims to be processed for claimants filing claims

on January 3, 2000, who had earnings in 1999. About 100 claimants were

affected in Florida and fewer than 50 in Kentucky. Claimants were

17Year 2000 Computing Challenge: Readiness of Key State-Administered Federal Programs (GAO/TAIMD-00-9, October 6, 1999), Year 2000 Computing Challenge: Federal Efforts to Ensure Continued

Delivery of Key State-Administered Benefits (GAO/T-AIMD-99-241, July 15, 1999), and Year 2000

Computing Challenge: Delivery of Key Benefits Hinges on States’ Achieving Compliance (GAO/TAIMD/GGD-99-221, June 23, 1999).

18The 10 high-impact state-administered federal programs are the Department of Agriculture’s Child

Nutrition, Food Stamps, and Special Supplemental Nutrition Program for Women, Infants, and

Children; the Department of Health and Human Services’ Child Care, Child Support Enforcement,

Child Welfare, Low Income Home Energy Assistance Program, Medicaid, and Temporary Assistance

for Needy Families; and the Department of Labor’s Unemployment Insurance.

Reported Year 2000-Related

Errors in State and Local

Government
Page 14 GAO/T-AIMD-00-70

instructed to complete and mail claims forms that had already been

provided in advance. Florida reported correcting its system on January 4,

while Kentucky reported fixing the problem on January 7.

• Guam reported it had successfully implemented contingency plans (i.e.,

manual processing) in the Food Stamps, Women, Infants, and Children,

Medicaid, Temporary Assistance for Needy Families, Child Care, and

Child Welfare programs. Such contingencies were necessary because the

systems that supported these programs were not compliant and the

replacement systems were not implemented before the century change.

In addition to state-administered federal human services programs, other

state and local Year 2000-related errors were found. Examples include

Year 2000-related problems with issuing drivers licenses for the wrong

number of years and marriage license software registering the date as

1900 (both of these problems were reported as corrected). In another

example, the Navajo Nation Law Enforcement Office reported that seven

of its eight computer-aided dispatch system servers failed and a manual

process was used until the servers were fixed. According to a Navajo

Nation Law Enforcement Office information systems analyst, all of the

servers were fixed by January 19, 2000.

Essential to the transition to the year 2000 was the successful rollover of

the organizations that manage the nation’s infrastructure (i.e., energy,

telecommunications, and water) and major sectors (e.g., banking and

finance). Fortunately, there were no reported Year 2000-related errors in

these sectors during the rollover period that affected their ability to

continue providing these critical services. The leadership of the

President’s Council on Year 2000 Conversion and federal agencies which

oversaw or created partnerships with major private-sector entities were

essential to this success.

Many of the reported problems in the private sector related to the retail

sector, including a retailer whose cash registers and other systems did not

work until a software patch was installed, slot machines that did not

work, and a small business that could not access its accounting

information. Perhaps the most widespread Year 2000-related problem

related to retail credit card processing. Credit card companies reported to

financial regulators on January 6, 2000, that they had identified a Year

2000 failure resulting in over 470,000 duplicate transactions on charges

generated after January 1, 2000. The problem was due to over 7,000 small

merchants and mail-order businesses using a particular electronic credit

card processing system that they had not upgraded although the vendor

Reported Infrastructure

and Key Sector Year 2000-

Related Errors
Page 15 GAO/T-AIMD-00-70

stated that it had notified users in February 1999 that upgrades would be

necessary. The merchants were notified of the problem and the credit

card companies prohibited them from receiving settlement services until

their systems had been upgraded.

According to an official at the Federal Reserve, credit card industry

representatives participating in an industry-wide effort to resolve this

issue reported that as of January 19, 2000, a small number of merchants

remained to be contacted, and over 5,800 merchants have fixed their

systems. On January 26, 2000, officials from two major credit card

companies told us that the vast majority of the duplicate transactions had

been corrected.

Another Year 2000 incident occurred in the Federal Reserve System,

which is instrumental to our nation’s economic well-being since it

provides depository institutions and government agencies with services

such as transferring funds and securities. On January 3, 2000, the Federal

Reserve Bank of Chicago reported a Year 2000 failure involving the

transmission of about $700,000 in tax payments of 68 area banks to the

Treasury’s general account. Banks have various options for providing

payment instructions to make tax payments to the Treasury using a voice

response mechanism. However, an interface linking the Bank’s voice

response unit with the Treasury Tax and Loan system did not operate

properly during the rollover period and it was unable to transfer tax

payments totaling nearly $700,000 to the Treasury for banks that had used

the voice response system (the Federal Reserve Bank of Chicago

processed about $5 billion in tax payments that day). The problem was

corrected overnight and the tax payments were processed the next day

with an as of date of January 3.

The President’s Council on Year 2000 Conversion launched several

initiatives in the international arena to address Year 2000 readiness in

foreign countries. In particular, the Chair of the President’s Council

attended National Y2K Coordinators’ meetings hosted by the United

Nations and is a member of the Steering Committee of the International

Y2K Cooperation Center. Further, as we testified on October 21, through

its leadership of the President’s Council’s International Relations Working

Group, the Department of State had worked to increase awareness of the

Year 2000 problem throughout the world, collected and shared

Reported International Year

2000-Related Errors
Page 16 GAO/T-AIMD-00-70

information on the problem with other federal agencies and foreign

nations, and encouraged the remediation of faulty computer systems.19

Several foreign countries reported Year 2000-related errors to the

International Y2K Cooperation Center’s Global Status Watch system, but

none were reported to have resulted in reduced capacity, capability, or

service. For example:

• On January 5, 2000 Grenada reported that a compliant version of the

computer systems for their customs services would not be installed until

January 30, 2000 but that a manual backup system was “just as efficient.”

• On January 6, 2000, Kazakhstan reported that a technology process at a

power station had been handled manually since January 1, 2000, because

noncompliant systems had not been replaced due to a lack of funds.

According to the report, “manual handling causes certain difficulties,

since at every power unit there are 250 devices to be controlled.”

• On January 12, 2000, the Sudan reported that the interbank

communications between two banks was delayed by 2 days due to a Year

2000 problem in the communications software. This problem was

reported as fixed.

Other Year 2000-related errors were also found. For example, in the

United Kingdom before the change of century, retailers had problems

with credit card readers that looked 4-days ahead. According to the

United Kingdom’s government millennium center, this problem affected

about 5 percent of terminals supplied by banks to process credit and debit

card transactions. The problem was reported to have been largely

resolved by the morning of December 30.

A variety of biomedical devices had Year 2000-related errors in foreign

countries but none were reported to affect patient safety. For example,

Sri Lanka reported that a hospital found that two blood gas analyzers

were noncompliant. However, Sri Lanka reported that the problem had no

significant effect on the clinical tests being carried out by the analyzers.

Another hospital in Sri Lanka found that a E.C.G. Monitoring Unit was not

compliant and that it could not be used.

19Year 2000 Computing Challenge: State and USAID Need to Strengthen Business Continuity Planning

(GAO/T-AIMD-00-25, October 21, 1999).
Page 17 GAO/T-AIMD-00-70

For many federal agencies, the threat posed by the Year 2000 problem

was a much-needed wake-up call. Because of the urgency of the issue,

agencies could not afford to carry on in the same manner that had

resulted in over a decade of poor information technology planning and

program management. As we reported in October 1999, the Year 2000

problem has laid a foundation for longer term improvements in the way

the federal government views, manages, and protects computer systems

supporting the nation’s critical infrastructure.20 Among the lessons

learned were the importance of

• providing high-level congressional and executive branch leadership,

• understanding the importance of computer-supported operations,

• providing standard guidance,

• establishing partnerships,

• facilitating progress and monitoring performance, and

• implementing fundamental information technology improvements.

A recent report issued jointly by the Intergovernmental Advisory Board21

and the General Services Administration provides information on similar

experiences from federal agencies, states, local governments, and foreign

countries.22

One of the most important factors in prompting attention and action on

the Year 2000 problem has been proactive leadership at the highest levels

of government. In particular, congressional oversight played a central role

in addressing the Year 2000 challenge. For example, congressional

hearings on agency-specific, national, governmentwide, and international

Year 2000 problems exposed the threat that this problem posed to the

public. In addition, the President’s Council on Year 2000 Conversion

provided strong, effective leadership, focusing attention on the problem

20Critical Infrastructure Protection: Comprehensive Strategy Can Draw on Year 2000 Experiences

(GAO/AIMD-00-1, October 1, 1999).

21The Intergovernmental Advisory Board was established to bridge the gap between federal, state,

and local governments and to educate information technology professionals nationwide on finding

solutions to intergovernmental challenges.

22The Many Silver Linings Of The Year 2000 Challenges (Intergovernmental Advisory Board in

cooperation with the General Services Administration, January 2000).

Lessons Learned From

the Government’s Year

2000 Efforts Can Be

Used to Improve

Management of

Information Technology

Providing High-level

Congressional and

Executive Branch

Leadership
Page 18 GAO/T-AIMD-00-70

and providing a forum for high-level communication and partnerships

among leaders in the government, the private sector, and the international

community.

In the Silver Linings report, Georgia reported similar experiences with the

effectiveness of executive branch leadership and legislative oversight.

Georgia’s Chief Information Officer reported that the principal direction

for the state’s Year 2000 program was set by the governor. Further,

Georgia created a Y2K Executive Oversight Committee comprised of

members of the state legislature and representatives from the state’s

executive branch that provided oversight and support.

According to officials involved in conversion efforts, the Year 2000

challenge served as notice to many who were previously unaware of our

nation’s extensive dependence on computers. For example, the Secretary

of Transportation stated that the Year 2000 issue had caused the

department to become more enlightened about the importance of

technology in its ability to deliver services, and that prior to the Year 2000

issue, he did not fully recognize the degree to which technology was being

used in the transportation sector.

The Silver Linings report also highlighted benefits in this area. For

example, Michigan reported that it had to focus on its core business

processes and how they work, which it believes will be useful in

identifying opportunities for information technology to play a pivotal role

in transforming business practices. The Commonwealth of Virginia

reported that one area it can capitalize on to improve its use and

management of information technology is the extent to which such

technology has permeated agency operations, and the attendant

operational risks such dependencies entail.

In addition, the telecommunications sector stated that due to the Year

2000 problem, management now fully understands its dependence on

technology and the importance of good engineering practice, process, and

continuity. Similarly, the pharmaceutical industry reported that that it had

spent a great deal of resources understanding every aspect of its

downstream distribution system.

Standard guidance that was universally accepted, adopted, and

implemented facilitated Year 2000 conversion efforts and related

oversight. In particular, guidance issued by OMB, the Chief Information

Officers Council, and by us (1) provided a level of consistency across

government by providing standard terms, tools, and techniques based on

Understanding the

Importance of ComputerSupported Operations

Providing Standard

Guidance
Page 19 GAO/T-AIMD-00-70

best practices, (2) imposed structure and discipline, (3) increased the

rigor of testing and assessment efforts, (4) promoted consistency in data

gathering and reporting, and (5) facilitated evaluation of actions by both

agency management and auditors. In the Silver Linings report, Michigan

noted that it developed a consistent methodology for managing large

information technology projects that it can carry forward.

To address the Year 2000 problem from a national perspective, the

President’s Council on Year 2000 Conversion and federal agencies

established partnerships with several private-sector organizations, such as

the North American Electric Reliability Council, to gather information

critical to the nation’s Year 2000 efforts and to address issues such as

contingency planning. The Department of Energy reported that this

private/public partnership was a benefit of the Year 2000 problem.

Other types of partnerships were also formed to address the Year 2000

issue, partnerships that should serve the nation well in the future. Several

organizations reported to the President’s Council on Year 2000

Conversion on the benefits of such partnerships. For example,

• The telecommunications industry reported that industries came together

to support a common national interest.

• The oil industry reported that U.S. oil companies formed informal

partnerships with associations in other countries.

In the Silver Linings report, Tennessee reported that the Year 2000

challenge encouraged all parties, especially in the government arena, to

work together.

Both the executive branch and the Congress used techniques to facilitate

and monitor performance in addressing Year 2000 conversion activities.

During 1997, OMB instituted a quarterly reporting routine to facilitate

monitoring of agency progress in making their critical systems compliant.

In addition, many congressional committees actively monitored progress

by holding hearings to obtain information on the Year 2000 readiness of

federal agencies, states, localities, and other important nonfederal

entities, such as the securities industry.

The development of project metrics to monitor progress internal to the

organization was also a useful tool that was often developed in response

to the Year 2000 challenge. In the Silver Linings report, agencies and

states cited the following.

Establishing Partnerships

Facilitating Progress and

Monitoring Performance
Page 20 GAO/T-AIMD-00-70

• The Department of Housing and Urban Development reported that it

developed a system to track progress and view interdependent

relationships between information development efforts.

• The U.S. Customs Service reported that it developed a master schedule

that was the foundation for measuring project progress.

• Michigan reported that it determined the need to develop a

comprehensive project reporting system.

• North Carolina reported that statewide project planning and analysis as

well as statewide project management and status reporting were Year

2000 activities that set the groundwork for a new, more efficient direction

in enterprise management and business integration.

The Year 2000 challenge resulted in many agencies’ taking charge of their

information technology resources in much more active ways than they

have in the past, and provided them with the incentive and opportunity to

assume control of their information technology environment. In many

instances, it forced agencies to inventory their information systems, link

those systems to agency core business processes, and jettison systems of

marginal value. Also, agencies focused on their relationships with

business partners critical to the delivery of services, especially for the

government’s 43 high impact programs. Moreover, agencies’ development

of business continuity and contingency plans should also help in the

future in the event that an emergency occurs that negatively effects an

agency’s ability to perform services electronically.

The Year 2000 problem has also prompted some agencies to establish

much-needed information technology policies in areas such as

configuration management, risk management, and software testing. In

addition, Year 2000 efforts have reinforced an understanding of the

importance of consistent and persistent top management attention, which

is essential to solving any intractable problem. According to officials at

OMB, the Year 2000 problem also gave agency Chief Information Officers

a “crash course” in how to accomplish projects. Many Chief Information

Officers were relatively new in their positions and expediting Year 2000

efforts required many of them to quickly gain an understanding of their

agency’s systems, work extensively with agency program managers and

Chief Financial Officers, and become familiar with budgeting and

financial management practices.

Many of these same critical information management technology

practices were also cited as improvements in the Silver Linings report.

Implementing Fundamental

Information Technology

Improvements
Page 21 GAO/T-AIMD-00-70

For example, (1) Georgia reported that new testing standards were

initiated to meet critical Year 2000 deadlines, (2) Michigan reported that

lessons learned for the future included the development of a formal risk

analysis and comprehensive quality assurance program, and (3) Howard

County, Maryland, reported that its Year 2000 projects required a

complete inventory and assessment of technology resources used

throughout county government.

While the end of the Year 2000 challenge is in sight, it is crucial that

organizations not lose the momentum that they have established in

conquering this issue. These organizations must remain vigilant in

identifying and reporting Year 2000-related incidents. Moreover, it is

important that the government and individual organizations

institutionalize the processes that they have established to contend with

the Year 2000 problem so that future information technology initiatives

can benefit from this undertaking and the valuable long-term lessons it

has spawned.

Mr. Chairman, Ms. Chairwoman, this concludes my statement. I would be

pleased to respond to any questions that you or other members of the

Subcommittees may have at this time.

For information about this testimony, please contact Joel Willemssen at

(202) 512-6253 or by e-mail at willemssenj.aimd@gao.gov. Contacts
Page 22 GAO/T-AIMD-00-70
Page 23 GAO/T-AIMD-00-70

The objectives of our review were to assess and report on (1) the

response of the ICC and key federal agencies during the century rollover

period, and (2) the nature and extent of Y2K-induced disruptions that

occurred during the rollover period. In addition, as requested, we

reported on lessons learned by the government and others while

correcting their Year 2000 problems.

To meet these objectives, we placed observers at the ICC, key federal

organizations (see table 3), the 10 FEMA Regional Operations Centers,

and the District of Columbia during the rollover weekend.

Table 3: Federal Organizations Where GAO Observed Rollover Activity

Federal Organization

Information Coordination Center

FEMA

Federal Aviation Administration

Social Security Administration

Department of Energy

Department of Health and Human Services

HCFA

Federal Communications Commission

Federal Reserve System

Department of State

Department of Defense

U.S. Postal Service

As part of observing the rollover, we obtained and reviewed agency day

one strategies, reviewed ICRS and incident reports, and discussed issues

with appropriate personnel, including the Director of the ICC. We also

reviewed key ICC documentation, such as the ICC Operations Guide. In

addition, we received comments from the Director of the ICC on a draft of

this testimony. The Director of the ICC stated that he generally agreed

with the facts in the statement and provided some technical corrections

which we incorporated.

Appendix I

Objectives, Scope, and Methodology
Appendix I

Objectives, Scope, and Methodology

Page 24 GAO/T-AIMD-00-70

We performed our work between December 1999 and mid-January 2000 in

accordance with generally accepted government auditing standards.

(511817)
United States

General Accounting Office

Washington, DC 20548-0001

Official Business

Penalty for Private Use $300

Address Correction Requested

Bulk Rate

Postage & Fees Paid

GAO

Permit No. G100