U.S. GOVERNMENT PRINTING OFFICE

60–939 CC WASHINGTON : 1999

OVERSIGHT OF THE YEAR 2000 TECHNOLOGY

PROBLEM: LESSONS TO BE LEARNED FROM

STATE AND LOCAL EXPERIENCES

HEARINGS

BEFORE THE

SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,

INFORMATION, AND TECHNOLOGY

OF THE

COMMITTEE ON

GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED SIXTH CONGRESS

FIRST SESSION

JULY 7, 8, AND 9, 1999

Serial No. 106–47

Printed for the use of the Committee on Government Reform

(

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

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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, 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

GRANT NEWMAN, Clerk

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C O N T E N T S

Page

Hearing held on:

July 7, 1999 ....................................................................................................... 1

July 8, 1999 ....................................................................................................... 125

July 9, 1999 ....................................................................................................... 317

Statement of:

Ho, Alan D., Y2K corporate manager, Commonwealth Edison; Dale Jensen, director, Y2K customer communications, Ameritech; Craig Whyte,

director, regional community relations, NICOR Gas; Philip Pagano,

executive director, METRA; Gary Mielak, vice president and chief technical officer, Edward Hospital ..................................................................... 210

Kettlewell, Larry, information resource manager for Federal and State

affairs, Kansas Department of Administration .......................................... 52

Lobeck, Al, news director, WIBW Radio, Kansas Broadcasters ................... 110

McKenzie, Shawn, Southwestern Bell ............................................................ 80

Moser, Joy, Adjutant General’s Department, Public Affairs Office .............. 64

Park, Bud, year 2000 project office manager, Western Resources ............... 75

Roosen, Jim, Y2K program manager, Detroit Edison; Raymond Lozano,

manager of Statewide community relations, Michigan Consolidated

Gas, accompanied by Tom Motsinger, director, information and technology management; James Johnson, vice president of computing and

information technology, Wayne State University; Don Potter, Southeast

Michigan Health and Hospital Council; and Dan McDougall, director,

southeast Michigan information center, United Way ................................ 448

Rubeck, Anne, director, communication technology, Kansas Hospital Association ......................................................................................................... 98

Splichal, Edwin, chairman, Y2K task force Kansas Bankers Association ... 102

Sullivan, Morey, information resource manager, Kansas Department of

Administration .............................................................................................. 48

Surdu, George, director, technical services organization, Ford Motor Co.;

Don Costantino, director, corporate year 2000 program, General Motors

Corp.; Roger Buck, DaimlerChrysler Corp.; and John Parker, vice president, information services, Northwest Airlines, Inc. ................................. 413

Swift, Clint, director of bank technology, Bank Administration Institute;

Delores Croft, seniors policy advisor, Illinois Attorney General’s Office;

Leonard Harris, president, Chatham Food Center; Ron Clark, treasurer, Illinois Ayers Oil Co.; Monty Johnson, communications coordinator, CITGO Gas; Mike Skarr, president and CEO, Naperville area

Chamber of Commerce; and Ed Paulson, author of Year 2000 Crisis

Survival in 10 Minutes, professional engineer, financial expert .............. 258

White, Jeff, director, budget research and information technology, city

of Topeka ....................................................................................................... 58

Willemssen, Joel, Director, Civil Agencies Information Systems, General

Accounting Office .......................................................................................... 9

Willemssen, Joel C., Director, Civil Agencies Information Systems, General Accounting Office; George Boersma, director, management and

budget, State of Michigan; Captain Ed Buikema, deputy State director

of emergency management, Michigan State Police; Arun Gulati, deputy

director, Department of Information Processing, Wayne County, MI;

and Kathleen Leavey, deputy director, Detroit Water and Sewerage

Department ................................................................................................... 324

Page

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Statement of—Continued

Willemssen, Joel C., Director, Civil Agencies Information Systems, General Accounting Office; Mary Reynolds, chief technology officer, Illinois

Governor’s Office; Don Carlsen, director of information systems, Department for the city of Naperville; Tom Mefferd, coordinator, DuPage

County Office of Emergency Management; and Robert Martin, manager

of water operations, DuPage Water Commission ....................................... 135

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

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

Illinois, prepared statement of ..................................................................... 133

Boersma, George, director, management and budget, State of Michigan,

prepared statement of ................................................................................... 366

Buck, Roger, DaimlerChrysler Corp., prepared statement of ....................... 429

Buikema, Captain Ed, deputy State director of emergency management,

Michigan State Police, prepared statement of ............................................ 373

Carlsen, Don, director of information systems, Department for the city

of Naperville, prepared statement of ........................................................... 181

Clark, Ron, treasurer, Illinois Ayers Oil Co., prepared statement of .......... 277

Costantino, Don, director, corporate year 2000 program, General Motors

Corp., prepared statement of ....................................................................... 421

Gulati, Arun, deputy director, Department of Information Processing,

Wayne County, MI, prepared statement of ................................................. 379

Harris, Leonard, president, Chatham Food Center, prepared statement

of ..................................................................................................................... 266

Ho, Alan D., Y2K corporate manager, Commonwealth Edison, prepared

statement of ................................................................................................... 212

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

California, prepared statements of ...................................................... 6, 129, 321

Jensen, Dale, director, Y2K customer communications, Ameritech, prepared statement of ........................................................................................ 233

Johnson, James, vice president of computing and information technology,

Wayne State University:

Letter dated August 9, 1999 ..................................................................... 506

Prepared statement of ............................................................................... 473

Johnson, Monty, communications coordinator, CITGO Gas, prepared

statement of ................................................................................................... 287

Kettlewell, Larry, information resource manager for Federal and State

affairs, Kansas Department of Administration, prepared statement of ... 54

Leavey, Kathleen, deputy director, Detroit Water and Sewerage Department, prepared statement of ........................................................................ 386

Lobeck, Al, news director, WIBW Radio, Kansas Broadcaster, prepared

statement of ................................................................................................... 112

Lozano, Raymond, manager of Statewide community relations, Michigan

Consolidated Gas, prepared statement of ................................................... 464

Martin, Robert, manager of water operations, DuPage Water Commission,

prepared statement of ................................................................................... 198

McDougall, Dan, director, southeast Michigan information center, United

Way, prepared statement of ......................................................................... 498

McKenzie, Shawn, Southwestern Bell, prepared statement of ..................... 82

Mefferd, Tom, coordinator, DuPage County Office of Emergency Management, prepared statement of ........................................................................ 186

Mielak, Gary, vice president and chief technical officer, Edward Hospital,

prepared statement of ................................................................................... 241

Moser, Joy, Adjutant General’s Department, Public Affairs Office, prepared statement of ........................................................................................ 66

Pagano, Philip, executive director, METRA, prepared statement of ............ 249

Park, Bud, year 2000 project office manager, Western Resources, prepared statement of ........................................................................................ 77

Parker, John, vice president, information services, Northwest Airlines,

Inc., prepared statement of .......................................................................... 434

Paulson, Ed, author of Year 2000 Crisis Survival in 10 Minutes, professional engineer, financial expert, prepared statement of .......................... 303

Potter, Don, Southeast Michigan Health and Hospital Council, prepared

statement of ................................................................................................... 482

Reynolds, Mary, chief technology officer, Illinois Governor’s Office, prepared statement of ........................................................................................ 177

Page

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Letters, statements, etc., submitted for the record by—Continued

Roosen, Jim, Y2K program manager, Detroit Edison, prepared statement

of ..................................................................................................................... 452

Rubeck, Anne, director, communication technology, Kansas Hospital Association, prepared statement of .................................................................. 100

Ryan, Jim, Attorney General, Illinois, prepared statement of ..................... 273

Skarr, Mike, president and CEO, Naperville area Chamber of Commerce,

information concerning local resources ....................................................... 298

Splichal, Edwin, chairman, Y2K task force Kansas Bankers Association,

prepared statement of ................................................................................... 104

Sullivan, Morey, information resource manager, Kansas Department of

Administration, prepared statement of ....................................................... 50

Surdu, George, director, technical services organization, Ford Motor Co.,

prepared statement of ................................................................................... 416

Swift, Clint, director of bank technology, Bank Administration Institute,

prepared statement of ................................................................................... 261

White, Jeff, director, budget research and information technology, city

of Topeka, prepared statement of ................................................................ 61

Willemssen, Joel, Director, Civil Agencies Information Systems, General

Accounting Office, prepared statements of ....................................... 11, 137, 326

(1)

OVERSIGHT OF THE YEAR 2000 TECHNOLOGY

PROBLEM: LESSONS TO BE LEARNED FROM

STATE AND LOCAL EXPERIENCES

WEDNESDAY, JULY 7, 1999

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,

INFORMATION, AND TECHNOLOGY,

COMMITTEE ON GOVERNMENT REFORM,

Topeka, KS.

The subcommittee met, pursuant to notice, at 1 p.m., at the Kansas State Capitol, 300 SW 10th Street, Old Supreme Court Room,

Topeka, KS, Hon. Jim Ryun presiding.

Present: Representatives Horn and Ryun.

Staff present: Subcommittee on Government Management, Information, and Technology: J. Russell George, staff director and chief

counsel; Matt Ryan, senior policy director; and Grant Newman,

clerk. Representative Ryun’s Office: Michele Butler, chief of staff;

Mark Kelly, legislative director; and Jay Rinehart, press secretary.

Mr. RYUN. Thank you all very much for coming today. I think

your presence indicates that there is a great deal of interest in the

subject. Today will be a time when we can discuss and determine

some of those potential problems, as well as some of the solutions

that have been arrived at.

Let me do a couple of business things. First of all, and this is

not a business thing, I want to introduce some people who are here

today. I want to begin with my wife Anne who is in the corner. Say

hello to everyone.

[Applause.]

Mr. RYAN. I would like to introduce you to my staff that are here

today as well, Michele Butler who has worked tirelessly on this.

Michele is over here, she’s my chief of staff in Kansas. We also

have Mark Kelly up in front, Mark Kelly is my legislative director.

Jay Rineheart is here, he is working with the press, he is my press

person, they are all here to help you. If there are any questions,

feel free to talk with them.

I also want to introduce to you a good friend of mine and colleague who has been very instrumental in helping bring greater

identification to the Y2K issue. In Washington we often turn to

Chairman Horn and say, ‘‘How are we doing?’’ And so today you

will have that opportunity. He is chairman of the House Subcommittee on Government Management, Information, and Technology. He is also the chairman of the House of Representatives

Task Force for the Year 2000. He has designated the year 2000

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problem as his top priority, as I think it should be. He is an expert

in Congress on this problem and in fact this morning, if some of

you had the privilege of listening to WIBW with Jim Case, we went

over some of the issues and some of what was happening. He will

be here today to answer some of your questions, along with the

panelists. And as we begin, I would like to turn to Chairman Horn

and have you welcome him as well. Thank you very much.

[Applause.]

Mr. HORN. Thank you very much, Jim. Jim does a terrific job in

Washington, he sits on three committees, which is one more than

I sit on, so he has got a lot of things going for Kansas. And this

is an international problem as well as a national problem. We are

delighted to be in Topeka, it’s a wonderful city. I have been here

about five times before because I have some good friends living

here starting with my junior year in college.

This hearing of the House Subcommittee on Government Management, Information, and Technology is not only going to be in

Kansas on this particular trip, we are going to Illinois tomorrow

and Detroit, MI the next day. We did this last year and went to

Louisiana and Texas and New York, you name it. We haven’t

missed too many cities in some kind of a hearing. We are an investigative committee and under the rules of the House and the Committee on Governmental Affairs in the Senate, as they call it. We

do swear in all witnesses. So Mr. Ryun who is acting chair will

swear in each panel as it comes that they will tell the whole truth

and nothing but the truth to this particular investigation.

The year 2000 computer problem affects just about every aspect

of Federal, State, and local government operations. Furthermore, it

affects private sector organizations and could impact the lives of

most of us. From Social Security to utilities to local emergency

management, these are all important issues. The so-called year

2000 computer bug or the millennium bug, whatever you want to

call it, has certainly been a large management and technological

challenge, but it is mostly a management challenge. There is no silver bullet to solve it. Everybody knew that in the 1960’s when they

said, wait a minute, we have got this huge computer that would

fill this whole chamber; your personal computer today has more capacity than those computers in a chamber this large. They said,

hey, why don’t we just put in ’67 instead of 1967, and we went to

the two digit year to save space in the memory. Of course they

knew that when the year 2000 came, it would be 00 and the computer wouldn’t know if it was 1900 or 2000. And many started

working on this years ago, the Federal Government has been lagging except for the Social Security Administration which started on

its own with no Presidential prodding, be it Republican or Democrat, and they started in 1989 and they are 100 percent compliant.

And the only other one that we have looked at recently on programming areas is the weather service. And I know that must be

good news to Kansas with your tremendous agricultural resources

and farmers getting up at 4 a.m., and 5 a.m., wanting to know

what the weather is going to be. So they are in good shape. And

then we have the various report cards. We have noted that the critical mission systems in particular agencies are coming along, but

it doesn’t mean that some of the problematic areas of that agency

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have all of the pieces together. And in our future reporting to the

Nation on this, both the Senate committee and our own committee

will stress that point, it doesn’t do much good to have a lot of the

agency’s computing operations corrected, but it’s a program that

deals with the people and has to put out checks, has to do analysis

in order to do something else, and so we are going to look at that

over the next few months and we will be in various parts of the

country to do that.

Back in April 1996 this subcommittee was the first to bring the

question up in Congress. The Senate finally got around to it in

early 1998 and we urged the President to do a number of things,

one is to get a person in charge, which really wasn’t happening.

And No. 2 is to use the bully pulpit, as Theodore Roosevelt said,

and talk to the people about this so that they don’t panic, because

we know from every witness that we have ever had that the longer

delay occurs, the more costly labor and human resources would be

to get the problem solved.

Current estimates show that the Federal Government will spend nearly $9 billion by the end of this fiscal year to remedy the executive branch computers. The legislative branch is on its own and so

is the Supreme Court. But that’s a drop in the bucket compared to the extensive executive branch. And we will probably get to $10 billion. But our estimates early on in 1996 was that it would be $30

billion, so in that sense, if that sticks, we are doing one-third of

what all of the experts said, and we will do it right by January 1,

2000.

Recently, the President’s Office of Management and Budget identified 43 essential Federal programs, I mentioned Social Security

and I mentioned the weather, well there are two more we are looking at very closely, and that’s Medicare which affects at least 43

million people, and the Air Traffic Control system. I told the Administrator of the FAA that I will be taking my every other week

flight from Dulles International Airport to Los Angeles International Airport on January 1st just to see what happens. She will

go from Washington to La Guardia, which is 45 minutes to my 5

hours. And I told her not to mess around with the controllers before we both board the plane. So with those 43 programs, 10 of

which are federally funded State run programs, and we will hear

a lot of good testimony today on that, Medicaid, food stamps, unemployment insurance, child support enforcement, several of these

State run programs are not scheduled to be ready for the year 2000

until December, leaving little, if any, time to fix unforeseen problems.

The data exchanges, which is a major thing we are looking at,

and the interdependencies between computers in the field and computers in the Federal Government and State government and your

local government, they exist at all levels and throughout the private sector. And a single failure in the chain of the information

could have severe repercussions if they don’t get all of those interrelations straightened out. For example, let me briefly illustrate

how the U.S.’ Social Security program uses computers. The Social

Security Administration maintains data containing pertinent Social

Security payment information for eligible citizens. When the payments are made, Social Security sends the payment data every

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month to the Department of the Treasury’s Financial Management

Service. This service then cuts the Federal check which is then

electronically deposited directly into the person’s bank account at

a local financial institution. Three organizations move and manipulate data to make these payments happen; each uses its own network of computers. If a payment is mailed to an individual’s home,

the U.S. Postal Service then plays a key role in the delivery of that

check.

The bottom line is that if any one of these entities fails, from the

Federal Government to the local bank or the Postal Service, a deserving individual will not receive a payment in time. And there

are 435 Members from the States, 5 Members from the territories

and 100 U.S. Senators who all know that they would have lines

outside their district office. And Representative Ryun is right

across the street in the Mercantile building, very accessible, and we

don’t want to see that happen. So we all have a vested interest in

making sure it doesn’t happen. But it takes thousands of people to

get this job done.

If you multiply the clients, the millions of people who receive

those benefits, you know the magnitude of it, one check a month

and 43 million people are affected by that. The other is Social Security, 50 million people, they also have disability checks that go out.

But for computers to work we need power, energy. One of the

most essential questions we are asking in the year 2000 challenge

is, ‘‘Will the lights stay on?’’ We will have representatives from the

power industry talking to us about that in this area. Without electricity our modern society would be relegated back to the proverbial

‘‘Stone Age.’’ From a personal standpoint I realize that when confronted with

a personal emergency, I can call ‘‘911’’ for assistance and feel confident that the phone will be answered promptly and that a competent authority will respond rapidly. Year 2000 computer problems present other potentially serious threats at local levels, from

the potential interruption of a citizen’s call for police assistance to

delays in a State’s ability to request emergency or disaster assistance from the Federal Government.

Congressman Ryun is unquestionably the greatest American

miler of all time. He raced as fast as he could toward a measurable

and foreseeable goal—1 mile and a finish line. Our Nation’s race

to solve the year 2000 problem requires the same preparation, determination, and stamina as that of Congressman Ryun. And this

is what we have tried to note to the administration, it doesn’t matter whether they are Democrats or Republicans, frankly the President has not had the tools until this last year to really deal with

this matter effectively.

And we know, as I said earlier, there are 177 days to go to January 1st and the clock is ticking and can’t be moved and the testimony we receive today here in Topeka will help our understanding

of the full exent of the year 2000 computer problem.

I would like to mention a few procedural things in this hearing

before I turn it over to Congressman Ryun to preside. We are going

to be passing cards out, for those of you who have questions, please

write out the question. That will enable us to get more questions

that we can ask either Mr. Ryun or myself. So some of our staff

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will be going along on both sides, just put your hand up, they will

give you a card and then if there are five cards with the same question, the staff will get it down to one question and that way we can

meet most of your needs. And then we have to run for a plane to

Chicago. Mr. Ryun stays here with his constituents.

The testimony we think will be very welcome and helpful here.

So that’s the cards. And then after Mr. Ryun swears in the witnesses, or if he wants me to swear them in, the witnesses who are

already panel one before us, and when he introduces them, the

transcript they have sent us, the presentation is excellent that each

one of them has written, that immediately goes in the hearing

record when their name is introduced. And then we will have them

speak from the heart for 5 minutes and boil that down in oral testimony. We have all read your presentations, that’s what’s going in

the hearing record. But in order for everybody to get into a dialog,

especially panel one, with both of us, that’s the best way to do it

we’ve found from a lot of experience in that.

We then will go into recess to our next hearing in Illinois from

here. So I’m delighted now to turn it over to Mr. Ryun to preside

and chair the meeting and we will follow his direction from now on

out.

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

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Mr. RYUN. Mr. Chairman, thank you very much. Again, I want

to welcome everyone. I want to say thank you to the panelists for

coming. I don’t think any of us fully know what will happen at the

end of the year and the purpose in today’s forum is to provide information to all of you that are listening.

What I have done is organized two panels. The first panel is

going to give the government’s perspective on the status and compliance of the government with the Y2K challenge. Let me introduce who’s on the panel. First of all, Joel Willemssen, who is the

Director of Civil Agencies Information Systems at the General Accounting Office. It’s the Federal Government office that oversees

the effectiveness of government programs and its agencies. The

GAO’s chief source of concern for Y2K problems is the readiness of

State and local governments. Joel is the GAO’s Director for Civil

Agencies Information Systems, he has testified before Congress

many times about the status of the Y2K preparations. I know you

look forward to hearing from him and I look forward to hearing

your testimony Joel.

Next we have Morey Sullivan, information resource manager for

the Kansas Department of Administration. Governor Graves has

been active in pursuing Y2K compliance since 1996. The department of Administration Division of Information Systems and Communications is the designated organization for coordinating and reporting on the State’s year 2000 efforts. Mr. Sullivan is the information manager for the State, he will be educating us on the

State’s activity and the level of preparedness for this next year.

Seated next to him in the middle is Larry Kettlewell, the year

2000 Federal and local interface manager of the Kansas Department of Administration. Larry advises the State’s chief information

technology officer on the status of Federal and State interfaces.

And he also serves as project manager for the State and local interface testing program. He will be discussing how the State of Kansas deals with the Federal Government on this issue.

Next to him is Jeff White. Jeff is director of budget research and

information technology for the city of Topeka. The city started addressing this particular issue back in January 1998, focusing primarily on water, sewers, and public safety issues. Jeff has been

working hard on the city’s compliance since the beginning of the

year and we will look forward to his testimony as well.

The last panelist is Joy Moser. She is public affairs officer for the

State Adjutant General’s Office. The Kansas Division of Emergency

Management has provided timely information to help people with

managing Y2K. The Adjutant General has sent out several different mailings, one of which is the Year 2000 Survival Test, another is the Executive Survival Guide for the Year 2000 and the

Year 2000 Workbook Book. She will be our final panelist and we

look forward to your testimony and remarks.

Mr. Chairman, would you like to swear everyone in?

Mr. HORN. Certainly. Would you stand and raise your right

hands, please.

[Witnesses sworn.]

Mr. HORN. The clerk will note that all five witnesses have affirmed.

Mr. RYUN. We will begin with the first panelist.

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STATEMENT OF JOEL WILLEMSSEN, DIRECTOR, CIVIL AGENCIES INFORMATION SYSTEMS, GENERAL ACCOUNTING OFFICE

Mr. WILLEMSSEN. Thank you, Congressman Ryun, Mr. Chairman, thank you for inviting the GAO to testify today. As requested,

I will briefly summarize our statement on the Y2K readiness of

Federal Government, State, and local governments and key economic sectors.

Regarding the Federal Government, the most recent reports indicate continued progress in fixing, testing, and implementing mission-critical systems. Nevertheless, numerous critical systems must

still be made compliant and must undergo independent verification

and validation. Our own reviews of selected agencies have shown

an uneven progress and remaining risk in addressing Y2K. And

that points again to the criticality of business continuity and contingency planning.

As we look beyond individual systems and individual agencies,

the Federal Government’s future actions will also need to be increasingly focused on making sure that its high priority programs

are compliant. In line with this, OMB has identified 43 high impact

programs such as Medicare and Social Security. As you know, Mr.

Chairman, we are currently reviewing those programs for you. At

this point it’s very clear that much additional work is needed on

almost all of these programs to make sure that they are ready in

time by the turn of the century.

Available information on the Y2K readiness of State and local

governments also indicates that additional work remains. For example, according to recent information on States reported to the

National Association of State Information Resource Executives

about 18 States have completed implementing less than 75 percent

of their mission-critical systems. State audit organizations have

also identified significant Y2K concerns in areas such as testing,

embedded systems and contingency planning.

Recent reports have also highlighted Y2K issues at the local government level. For example, a March 1999 National League of Cities poll of over 400 representatives found that almost 70 stated

that they would finish 75 percent or less of their systems by January 1, 2000.

Another area of risk is represented by the Federal Human Services programs which are administered by the States such as Medicaid, food stamps, unemployment insurance, and child support enforcement. Of the 43 high impact programs identified by OMB, 10

of those are the State administered programs.

OMB reported data on the systems supporting these programs

show that numerous States are not planning to be ready until close

to the end of the year. Specifically, a large number of State systems

are not due to be compliant until the last quarter of 1999. This is

based on data that has not yet been independently verified.

If we look at the risks beyond those faced by the Federal Government and the State and local governments, Y2K also poses a serious challenge to the public infrastructure, key economic structures

and to other countries. We have made a number of recommendations to John Koskinen who is the chairman of the President’s Y2K

Conversion Council. And the Council has made strides in obtaining

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needed readiness information in these areas. Nevertheless, there is

a good deal of variance among these critical sectors, and, accordingly, there is going to be over the next 6 months a need for continuing emphasis to make sure that the information on the readiness of these sectors is provided to the citizens of the country so

that we can have a better understanding of where our risks are

and the public can therefore be best positioned with that information.

That concludes the summary of my statement. After the panel is

through, I will be pleased to address any questions you may have.

[The prepared statement of Mr. Willemssen follows:]

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STATEMENT OF MOREY SULLIVAN, INFORMATION RESOURCE

MANAGER, KANSAS DEPARTMENT OF ADMINISTRATION

Mr. SULLIVAN. Thank you Congressman Ryun and Congressman

Horn and thank you for the invitation to show and share how we

in State government are progressing toward our year 2000 efforts.

The Department of Administration first started serious year 2000

discussion in 1995. Knowing that a great deal of work would have

to be done, we out-sourced some of that work, proposals were made

by several nationally respected information technology firms. The

successful bidder in our case was Computer Technology Associates

or CTA from Bethesda, MD. A contract was put in place in December 1996. Since that time hundreds of applications have been assessed, they have been repaired and they have been tested. To date

over 16 million lines of mainframe COBOL code have been remediated. We have identified 662 mission-critical applications that exist

across Kansas State government. These are software applications

that are critical to the running of the day to day operations of State

government.

Knowing that State government and local units of government

have common goals, Don Heiman, chief information technology officer, our boss, of the executive branch instituted a project called

Outreach to the New Millennium in the fall of 1998. This program

took nationally known speakers and IT professionals on the road

across Kansas to share with local units of government successful

strategies for dealing with year 2000 computer problems. Materials

covering the remediation disciplines were printed and shared with

each person who attended the Outreach summit. And I have copies

of all these books that we have printed and will be glad to share

them with you. Because of this program we feel that State government and local units are now better prepared to deal with Y2K concerns.

Currently the State government is approximately 95 percent

complete toward our goal of full compliance. To date the State government has expended over 171,000 staff hours, we have got about

17,000 hours left. Although we are close to being finished, there are

still lots of things to do. We are in the middle of Y2K auditing at

the present time. We are in the middle of contingency planning in

case some of those applications we have talked about don’t respond

the way we want it to when we roll over on December 31st.

Year 2000 has taught us in the IT community many things.

Among them is we are more interdependent now upon one another

than we have ever been. Just because your computer systems are

year 2000 compliant, you should not feel safe, because we have

linked our computers in so many ways, we must also be interested

in our neighbors’ Y2K compliance. State and Federal Government

are much the same way. There are myriad links that exist between

the two entities. Links that manifest in Kansas receiving funding

from the Federal Government for literally dozens of programs. This

funding then finds its way to thousands of Kansans across the

State. Not an unimportant issue. Our Y2K efforts have included

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tracking the Federal interfaces for just such compliancy. The gentleman who has guided us in this effort is Larry Kettlewell, seated

to my left, and Larry will now report on Federal interfaces and

share with you some other 2000 issues.

[The prepared statement of Mr. Sullivan follows:]

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STATEMENT OF LARRY KETTLEWELL, INFORMATION RESOURCE MANAGER FOR FEDERAL AND STATE AFFAIRS,

KANSAS DEPARTMENT OF ADMINISTRATION

Mr. KETTLEWELL. Thank you, Morey. Good afternoon, Mr. Chairman, Congressman Horn, we are glad to have you back in Kansas.

I’m very pleased to be part of the panel here today to give a status report on the efforts by the State of Kansas with respect to the

year 2000 problem as it relates to our Federal and local interface.

A word for a moment about the Division of Information Systems

and Communications [DISC], as it is known around here. Just so

that people inside the Beltway don’t think that we are a small time

operation, we have a $167 million budget. We are on the level of

about a Fortune 300 information technology organization. We have

1,500 workers and manage 18,000 intelligent devices throughout

the State. With that, Morey touched a little bit upon not what we

derive over all from this information technology architecture. And

very important to that is what we get from the Federal Government. The State of Kansas right now receives over $1.8 billion in

Federal funds, principally through automated processes known as

interfaces or data exchange. Kansas has 138 of these interfaces disbursed amongst 14 Federal agencies. The year 2000 readiness of

these interfaces obviously is very important in moving that $1.8

billion back to the State.

I’m very happy to report that as of this morning, and I would like

to make a correction for the record, from the State’s end we are

now 93.8 percent complete in terms of our compliance with Federal

interface. As of early May, Kansas was second nationally in its

overall Federal interface readiness. We no longer have available to

us statistics on our status vis-a-vis other States. That said, I believe this figure gives our citizens some measure of how well we are

doing.

Despite what some in Washington are saying about the Fed

being 92 to 94 percent compliant, I would like to point out that

that is an overall sort of figure. The Federal agencies that we deal

with here in the State and their relevant interfaces right now have

only about 72 percent compliance rate. This was, again, as of this

morning and as reported on the GSA Federal Website.

This brings me to raise a couple of issues in keeping with Congressman Ryun’s call for ‘‘straight talk.’’ That 72 percent figure

mentioned may be even lower. The figures that we have received

from the Federal end have always been without reporting on critical programs from the Health Care Financing Administration

[HCFA]. Mr. Willemssen touched briefly on Medicare and Medicaid

problems, this is exactly what we are talking about here. This continues to be a very serious concern to us.

On June 2nd we were told by the President’s Year 2000 Conversion commission that HCFA is ‘‘ready to go.’’ Further, there is the

thought about certain end-to-end testing on the top 10 programs

from the Office of Management and Budget, and that they should

commence with this end-to-end testing forthwith. Despite the assertions and assurances of HCFA’s readiness in the Medicare and

Medicaid programs, we remain skeptical.

Part of that skepticism is in part related to testimony by one of

our witnesses today, Joel Willemssen, from the General Accounting

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Office. In testimony before Congressman Horn’s subcommittee on

April 27th Mr. Willemssen presented a statement broadly aimed at

the ‘‘Readiness of Medicare and the Health Care Sector.’’ A great

deal of that testimony, by the way, was relating to HCFA and its

readiness. While that statement was made in April, it is clear that

the current environment surrounding HCFA’s mission-critical systems does not allow it to be ‘‘ready to go’’ now to test end-to-end.

I’m sure, Mr. Chairmen, both of you have seen this report, it is

very, very sobering.

The second aspect of this is the Payment Management System.

Congressman Horn, you have already alluded to the fact in earlier

testimony in your committee, this system moves $165 billion worth

of money back and forth between the Federal Government and the

States, yet it is not year 2000 ready. We are ready out here to

move money. We are confident that the Department of Revenue,

Office of the Treasury, Division of Accounts and Reports, they have

all gone through rigorous testing, we are ready to receive that

money from this end. The concern, however, is that we are going

to be treading water here outside the beltway and there is not

going to be much left to give us.

Finally, let me just note here a couple of real reasons why we

are here today. First, absent the work done by you, Congressman

Horn, to bring this issue to the public attention, and even to the

attention of some managers in Washington, we probably wouldn’t

be here today discussing this issue.

Second, as I understand from my years in Washington, there is

nothing like member-to-member contact to get things done in

Washington. Congressman Ryun has been very positive in continuing to reach out and inform people on this issue as you have

done here today. We thank you both.

[The prepared statement of Mr. Kettlewell follows:]

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STATEMENT OF JEFF WHITE, DIRECTOR, BUDGET RESEARCH

AND INFORMATION TECHNOLOGY, CITY OF TOPEKA

Mr. WHITE. I feel like small potatoes here today when Mr.

Kettlewell talked about the size of his organization. Let me give

you a little bit of scale, as well, about the city of Topeka. We have

1,350 employees, $135 million total annual budget for all city operations. We serve about 25 sites around the city in different city facilities. Again, I’m thankful today that I’m me and not Mr.

Kettlewell as we look at the scope of this Y2K issue.

I’m going to give you today primarily the information technology

perspective because that’s my primary scope. But because information technology touches every corner of our organization, I hope to

give you a bigger picture view as well.

We did begin in earnest with our Y2K preparedness effort in

January 1998. Everybody is working hard on this and it’s touched

every facet of the organization. We have a full-time information

technology staff of about 14 people, so we have relied on really a

team approach to ensure Y2K preparedness and have many Y2K

experts in every one of our operating departments.

We found ourselves in the situation of taking primarily a replacement strategy. We coupled our Y2K preparedness with a new information infrastructure. It certainly has been a cause of concern for

our governing body in terms of the cost, but we have been able to

achieve some improvements in our information infrastructure as

we have addressed Y2K.

I’m really glad that Morey Sullivan is here today so I can thank

him again for the efforts that the State of Kansas has made on

their outreach efforts to local governments in terms of Y2K preparedness. The information they have provided has been an excellent road map for us to follow and we have used that every day

as we move toward Y2K preparedness. So thanks again, Morey.

We are using the State Model for Compliance which involves assessment, application, mission-critical applications, remediating

those that have problems, testing, and auditing our fixes and, of

course, providing for business continuity through contingency planning. Also looking at tiers of mission-critical applications, those

that are absolutely critical we can’t do without and we can’t work

around them, if they don’t work, we are dead in the water. Those

that have to work without fail, but if they do fail, we can provide

or work around. And those that if they don’t work, we can live

without it, there are work arounds available. So if the automatic

coffee makers don’t happen to come on at the right time, that’s not

a big deal for us.

As of today, assessment is complete, although we are continuing

to keep our eyes open, as organizations change and we go through

time, we have to be continually cognizant of additions that may

create new Y2K problems that we have not taken a look at.

Our remediation efforts are almost complete as well. We have a

few software replacements that are scheduled in the late summer

to early fall, the majority of those are not mission-critical or at

least mission-critical in the sense that we don’t have work arounds.

I feel very positive that we have very few mission-critical applications that are home growns. Mr. Sullivan talked about all of the

lines of code they had to rewrite, we simply don’t find ourselves in

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that situation, we do not have a lot of in-house code redevelopment

that we have had to do. That’s a double-edged sword. We don’t

have to go through the effort of 171,000 staff hours to recode those

lines. The other is the fact that we rely very heavily on statements

by our vendors that when they say they are Y2K compliant, that

they really are. Again, we are using the testing protocol and such

provided by the State, as well as some interesting things like a test

lab where we can take our AS/400 or our legacy system, payroll

and finance, and actually, rather than taking the city on line go to

a testing environment, run those, and make sure they run correctly.

Testing has commenced and will continue through the Y2K turnover. And contingency planning has also commenced and will continue through Y2K. In our mind we look at Y2K in a lot of cases

the same as any other disaster, man-made or naturally that might

occur, and we have contingency plans already in place. Ice storms,

tornadoes, whatever might hit, and a lot of those same rules apply

as we look at Y2K. So I think we have got a head start as to contingency planning effort.

What’s left? Continuing to work with the vendors, as I mentioned, is critical for us. Clean management, making sure that the

fixes we make stay fixed. And that’s an issue with the State as

well. Public information is something I don’t think we have done

a terribly good job at and we need to do more as we get closer to

the century turnover. And then interdependency on other organizations, those links are also in place. We have to make sure our

neighbors are Y2K compliant as well.

People are mostly interested in the critical systems that we

talked about; water, wastewater, and public safety. Water, we are

ready to go. Contingency plans are mostly in place. We are going

to deal with full stocks of chemicals at the turnover. And, again,

we have contingency planning in place already for floods or power

outages or those type of things. Most of the operations of the water

plant are electromechanical. That means we can operate them

manually. And we have folks trained that know how to operate

those manually, which is important as well.

Wastewater is almost the same deal. Again, a contingency plan

is in place. Public safety, although the county here runs our 911

operation, we are obviously a big partner with them and they are

ready to go with 911. Southwestern Bell has been an excellent

partner with us to make sure that that’s the case.

Our biggest concern is lack of power, that really drives everything. We have worked closely with Western Resources to make

sure that we will have power. And we do have standby emergency

generation capabilities if we need them.

A couple of other concerns are civil unrest. What happens if people get a little weird in this Y2K turnover. The police and fire folks

are taking a look at that and making sure we are staffed up and

ready to go. And hoarding behavior is a concern as well. If everybody, for instance, goes to the bank and withdraws $5,000 in cash

on New Year’s Eve, the criminals are going to love it. And so we

want to be sure that the public information is out there to make

sure that people have taken appropriate precautions. It’s winter,

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it’s January, the power may go out due to an ice storm, folks ought

to have a few days supply of food on hand and they ought to have

blankets and warm bedding and just take the general precautions

for any kind of emergency.

[The prepared statement of Mr. White follows:]

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STATEMENT OF JOY MOSER, ADJUTANT GENERAL’S

DEPARTMENT, PUBLIC AFFAIRS OFFICE

Ms. MOSER. Thank you, Congressman. The Adjutant General’s

Department is the emergency response agency in Kansas and it

has been dealing with disasters for many years. The difference that

we have here is that Y2K we know when it is expected. With a tornado or snowstorm or flood, there is little to no warning. With

Y2K, December 31st is certainly a crucial time. And, therefore, we

are working to prepare ourselves and to provide preparation for the

public.

Preparedness is what we do in the Adjutant General’s Department. It has the Division of Emergency Management whose mission is to prepare for and coordinate the response and recovery activities in the event of a disaster. It also has the Kansas National

Guard whose State mission is to provide emergency response when

called upon to assist the citizenry. So both the groups in our department are working hard to be ready for a response in case it’s

needed on December 31st or in the days that are following.

There are three areas that we are addressing. First of all, what

we are doing prior to December 31st; the plans that we have in

place for December 31st and January 1st; and then what we think

the public ought to do to prepare themselves to help themselves.

The Division of Emergency Management and the Kansas National Guard are planning and training to respond if there is an

infrastructure failure due to Y2K related problems. We are preparing by doing the same kinds of things that we do for snowstorms, ice storms, floods and tornadoes. So it’s that type of thing.

For instance, in a thunderstorm or a snowstorm, or flood, or tornado, you might have power outages and you also might have telephone communication losses. Those are things that we are also

planning for with Y2K. We know that we need to look at getting

water, making water available, making sure that there is food, and

that there is warmth and shelter during the winter months. And

that’s the kind of thing that we deal with regularly when we respond to snow or ice storms and tornadoes and flooding. The Division of Emergency Management coordinates State and volunteer

agencies efforts to provide relief as indicated in their operations

plan. We want the public to know that we are in fact doing that

for Y2K. It’s just a different type of disaster or emergency that we

need to plan for.

Internally, the Kansas National Guard is testing equipment to

make sure they are ready and it will be functioning at midnight

on December 31st. All level logistics systems in the State have

been upgraded. So those computer systems are working and they

can fulfill the tasks of supply and service, should that be needed.

Also, in May, a communications exercise was held with high frequency radios and we communicated with the Pentagon in Washington, DC. And we are a communication node so, we communicated with the seven States that are in our area. So we will be

able to communicate if there is a disaster for Y2K. We also have

inception for another communications exercise. At this time we are

going to go to the armories within the State and we will be communicating with each one of the armories. We will have people availVerDate 11-MAY-2000 08:04 Apr 06, 2001 Jkt 010199 PO 00000 Frm 00070 Fmt 6633 Sfmt 6601 E:\HEARINGS\60939 pfrm02 PsN: 60939
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able so that if there is a need on December 31st we can help the

citizenry.

Prior to December 31st, State agencies will also be coordinating

public service information so that we can provide informational

preparation to the citizenry. A campaign is expected to begin in

September, and will continue through December 31st. We believe

this is beneficial to the public because it will help the public to understand the steps that we are taking to respond in case of an

emergency. It will also provide them with the information to help

them help themselves.

On the 31st, we intend to have people in our Emergency Operations Center here in Topeka to communicate with the media about

what is going on. We expect also to have personnel in the Division

of Emergency Management that will respond to requests that we

may get. And we also will have a Kansas National Guard military

operation center in effect here in Topeka. That center will be open

at 6 p.m. on December 31st and it will go through the night,

through January 1st, and will end at midnight on January 1st. And

then we will have people at the battalion headquarters that will

also be able to communicate and help.

The third area that are we were talking about was to help people

help themselves. And some of the things that we are talking about

there is backup heat sources such as fireplace, blankets, extra batteries if the power goes out, bottled water, extra food supplies, all

of these are things that we suggest you use for any other disaster.

And we will continue to provide that information. Thank you.

[The prepared statement of Ms. Moser follows:]

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Mr. RYUN. I want to thank all of our panelists. We are going to

go to some questions. I know we have some questions that are

being generated on the cards. There are cards that are still being

handed out. If you would like to write a question, one thing that

I have to respect is the fact that the chairman has a plane to catch,

so we will have maybe another 15 minutes roughly of questions

and then we will move to the second panel. But I actually would

like to begin with Mr. Sullivan. And one of the concerns that we

have is a continuing readiness aspect of compliance with Y2K

issues as we enter into the millennium. You had said earlier that

you’re 95 percent ready, you’re still about 5 percent before you can

be completed. Can you identify what that 5 percent is? You said

also that it will take probably another 17,000 hours roughly to finish what has to be done. Is there sufficient time?

Mr. SULLIVAN. Yes, there is. Much of what remains to be done

is testing continuity planning. We have looked at primarily all of

our COBOL codes, we have assessed everything, we have repaired

most everything. There are a few applications out there in the

State government that have received a little attention, but not as

much as what there needs to be. So in answer to your question,

yes, there is sufficient time to get there because that 17,000 hours

is spread across State government and across the many thousands

of employees that we have. So that is not a problem. We just need

to continue to complete our auditing.

Mr. RYUN. Chairman Horn, any questions?

Mr. HORN. Let me read some from the audience because we know

the panelists have to leave for other engagements, we know you

are all busy people. But one of them is this: ‘‘During this period of

correcting Y2K problems is the entire information network of government agencies becoming vulnerable to computer hackers? What

security is there?’’ Mr. Willemssen, do you know the answer to that? Let’s have the

power of the GAO and its thousands of reports hone in on this

question.

Mr. WILLEMSSEN. I think that’s an excellent question. One issue

that we have previously addressed as Y2K is being addressed and

as systems are increasingly opened up to make the fixes and also

bringing in other parties to help make the fixes and test those

fixes, there is enhanced risk from a security perspective. And we

have previously testified that managers, therefore, must be very attuned to that security risk when going about their Y2K programs.

And therefore, I think it is an excellent issue. One that information security is the next Y2K, as we see it. It’s increasing in scope

and severity and an issue that the Federal Government I know will

have to increasingly begin to focus on.

Mr. HORN. I think you will all enjoy the second question, we are

in the middle of some of this, ‘‘Why can’t we as the people just decide to change the date similar to daylight savings time so the

problem is solved? We all agree and then later change it back.’’ At first appearance you might think there is something wrong

with that question, but I’m planning to hold a hearing on one of

my colleagues’ bills, Mr. Linder of Georgia, that will move the January 1st date to Monday if it isn’t there now, and that will give

them the whole weekend to be working on it should something go

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wrong. In order to get this good idea explored, we also have to get

the Subcommittee on the Civil Service, which is part of the Government Reform Committee, and I don’t know how many other hands

want to get into it or don’t want to get into it.

But you tell us, Mr. Willemssen, has some thought been given to

this and what has the discussion been about?

Mr. WILLEMSSEN. There has been discussion about making January 3rd, which is a Monday, an additional holiday. Based on information we know, however, from the standpoint of several agencies

they already have very detailed plans in place, assuming that is

not a holiday, and, therefore, to make a change at this relatively

late date could potentially for those organizations cause more problems than solutions. So we need to be very careful about doing

that. Especially some of the leading agencies such as the Social Security Administration, they have their time table down to the

minute on exactly what they are going to be doing every minute

through the roll over period. And upsetting that apple cart at this

point could introduce more risk than solve.

Mr. HORN. If we get that hearing, we will make sure you’re

there.

Mr. RYUN. I know this morning as we were talking on Jim Cates’ show you expressed great confidence in the ability to fly on January 1 after you said that a few moments ago. Part of what I think

the question is going to be dealing with is the understanding, if you

will, that part of what this issue relates to is the labor intensive

having to go back and change little chips in different places. You

expressed great confidence that your flight would leave Washington

and land in L.A. In fact, you have expressed greater confidence in

that than the elevators in Canada would work for you, I think you

had some difficulty there.

So I think part of what we are dealing with is that a lot of places

where the light needs to shine with regard to the Y2K issue and

we have begun the process of making the changes in some of those

areas.

Mr. HORN. Along that line, one of the things, and maybe you

would like to respond to it, having to go through this tedious operation in order to make up and adapt and all of that, I hope a lot

of you have said, ‘‘Hey, do we really need this system? Let’s get rid

of that.’’ How much of that really was part of what you did and you

just got rid of it because it isn’t working?

Mr. WHITE. We have used this opportunity to do a lot of standardization on types of software we use, desktop on PC’s. And we

have used a lot of old stuff our AS/400 systems and found out that

people weren’t really using them and if they were, there were easier ways to do it.

Mr. SULLIVAN. We found that to be true in the State government

as well.

Mr. KETTLEWELL. I’ll just comment on that. One of the things

about this is that the United States being so information technology driven, if you will, this has been an excellent opportunity for

all of industry to stop the train, assess what they have done and

for all intents and purposes. Like with, for instance, the city of Topeka has done, edit what they have got, throw away the old programs that are not standard and so old they are no longer efficient.

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And we have done that in the State, we have a program like that

we have gone through and pitched a lot of programs. So there is

a degree of standardization and modernization.

Mr. HORN. Ms. Moser, did the Adjutant General do some of that?

Did you get rid of some of that stuff?

Ms. MOSER. We got rid of some of our old junk, yes, sure.

Mr. HORN. Was that the COBOL? That’s a language of the

1960’s. And, believe me, people that retired and were experts in

COBOL, the Civil Service Commission, now called the Office of

Personnel Management for Federal employees, is getting them out

of retirement, they can keep the $100,000 contract, to solve the

COBOL problem, and keep their pension. So it’s a good deal for

people that mastered COBOL. I remember making a program out

of one, only one, in the 1960’s.

But that’s a language that is all over the Federal Government,

I don’t know about the State governments. Do a lot of yours use

COBOL?

Mr. KETTLEWELL. Most of them do, yes.

Ms. MOSER. We went to mainframe last year. So we should be

OK.

Mr. HORN. That’s great. One question here is: ‘‘Will the Congress

watch the President over Christmas? We have heard the President

will declare martial law while the Congress is on vacation.’’ There

is nothing to that, folks. The courts of the United States are open

and the Congress is open. We are very careful, not just under this

President, any of the last Presidents. If there is a need for us to

get into session, that’s the way the adjournment resolution is written by both the Senate and the House. The Speaker of the House

can call the House together, the Majority Leader of the Senate can

call the Senate together. So there no chance of that. But these rumors hop around all of the time. ‘‘Please make a statement about security of bank accounts and

balances, availability of cash, availability of fresh food supplies,

state of police, fire, military, medical.’’ Well, we have got good people here in the Adjutant General’s Office to deal with that and we

have got Mr. Willemssen on broad international as well as National

review. So the security of bank accounts and balances, the Federal

Reserve I think has done a terrific job, Mr. Greenspan, 2 or 3 years

ago when I talked to him when we started in on our operations,

he appointed Board of Governors member Kelly to be in charge of

this. And most of the banks of the United States you don’t have

to worry about. Some of the State banks you might have to through

your own regulatory authority in Kansas. I don’t know where you

are on that. Maybe some of the officials in the State of Kansas like

Mr. Kettlewell knows that question on the banks.

Mr. KETTLEWELL. In a broad way I do, yes. The Kansas Corp.

Commission really is a controlling factor in that. That said, about

3 weeks ago I was down in Hillsboro, KS addressing about 150 citizens. At the time we had the regional FDIC examiner come in from

Memphis, TN and he told me that of the I believe it was around

10,000 or so banks, there are only about 10 or 15 that are doomed

for failure, and those banks are going to be taken over. It is one

of the most heavily regulated industries, so that the failure rate

there—the bottom line is you need to keep your money in the bank,

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don’t put it under the mattress, don’t hide it in the silo, don’t hide

it in the barn, keep it in the bank.

Mr. HORN. I think we will ask panel two’s group because there

are some talents there, bankers and others. On the fresh food supply, I think it’s prudent, and I think Mr. Ryun agrees with me on

that, just to be reasonable about it. You don’t need all of the food

for a year, but you might need 1 or 2 weeks, vegetables—now, remember, your refrigerator might go out if there is a power failure.

So you have got all those things that could happen.

But when you come from California as I have, where you have

got fires, earthquakes, floods, I have got the biggest flood project

in the Nation in my district. For example, 500,000 people are affected by it and we are trying to get it done in the next year and

a half so that the levees won’t overflow. And you know what that’s

like in Kansas and Iowa and Illinois, to say the least. I think somebody said this morning, I think it was, that quoted one of the newsmen, was it, when Cates talked to us and said there would be a

shortage of toilet paper. This is on something 10 years ago, and indeed the next day all of the toilet paper disappeared from the grocery stores.

So little things like that you might just use common sense on.

I don’t think it’s something to panic about. A lot of people are going

to make money on books they write on Y2K. I’ve got a long shelf

of them. I have just packed them to send to the National Archives.

Maybe the next millennium they can pull that box out and see

what happens. But I’m not going to collect them anymore. But you

will have all of the little papers that you see in the grocery lines

for a couple of bucks they want to scare the living daylights out of

you. And some people fall for that stuff, we don’t exactly—in some

areas—have a very literate constituency to work with on this. But

even sometimes people get a panic there might be some reason behind it and we in government need to do the best we can to avoid

that situation to keep our heads calm to solve the problem, not just

talk about it.

Any comments, Mr. Willemssen, on the food supply, the fresh

food supply to be exact, availability of cash? Mr. Greenspan has ordered an extra amount of Federal Reserve notes to be in the bank

so if there is a run on them, they have plenty of money. And it was

said, and you’re right, to take it and put it in your pocket at home

is where the burglars will head. They also watch television. If

you’re smart, you will leave it in the bank and let them hold the

responsibility for it.

Mr. RYUN. I have one final question. I know we are just about

out of time. I want to ask Mr. Kettlewell very quickly about an

issue I know is very important to a lot of our seniors out here. You

said earlier that HCFA is not—that the administration keeps saying that they are ready, but they really aren’t ready in your opinion. What can we do to make that correction? What sort of contingency plans are there for our seniors that are out there?

Mr. KETTLEWELL. Well, a couple of thoughts on that, Congressman Ryun. First of all, you’re going to have to have a contingency

backup plan, obviously. As I heard one representative from HCFA

testify in front of Congressman Horn’s subcommittee last fall and

their contingency plan at that point was manually processing

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claims. Now, they process 20 billion claims in a year. I don’t know

how many temp workers they are going to be able to bring in and

process those claims and that amount of money. So I don’t know

what the good solution is in terms of their business continuity.

What I do know is that some way or another Health and Human

Services in Washington, DC has to provide better information with

respect to its status on Medicare and Medicaid. People in Washington have to be singing off the same song sheet or they have to

have one spokesman to tell what the real story is, because there

is just a tremendous amount of confusion out there right now.

From one person we get one story.

As I say, as I quoted in my statement, but if I listen to your committee and listen to the GAO, and I again go back to that testimony of Mr. Willemssen, they are not going to be able to perform.

There is not a really good short answer to your question. I think

right now they are besieged, they are in a very difficult situation

in HCFA. How they are going to solve that problem perhaps is add

more resources to it, maybe stop coming out here and auditing the

State agencies, for instance. We have already been through a State

Aging audit, we passed with flying colors, both from HCFA and the

Administration on Children and Families.

So I think really what they need is they need to focus back in

Washington and less focus out here in the States, because I think

the States by and large are doing a lot better job in managing their

systems than what’s going on in Washington.

Mr. HORN. We did have the problem a year ago where Social Security, which has led the pack since 1989, found that they forgot

to include their State supported operations.

Mr. KETTLEWELL. Yes. We found that out in March, sir.

Mr. HORN. And those have been fixed.

Mr. KETTLEWELL. Yes, they have.

Mr. HORN. Joel, do you have anything to say on HCFA? HCFA

means the Health Care Financing Administration.

Mr. WILLEMSSEN. It does administer Medicare and helps the

States administer Medicaid. Just to provide a broader context to

this, unfortunately HCFA got an extremely late start on Y2K for

Medicare. Second, they have an extremely complicated set of computer systems and data exchanges, much of which is not under

their direct control. You combine those factors with the limited

amount of time available and also their relatively poor track record

in managing information technology, and that’s why they are in the

risk status they are currently in.

I’m a little more optimistic now with the Health Care Financing

Administration than I would have been last fall, in part because

the leadership of the Administrator, she’s done what she can in the

limited time remaining. She also has put a primary emphasis on

contingency planning and they have done some good work in that

area. Those plans now include options beyond just manual processing of claims. Some of those options cannot be publicly disclosed

because they give a security perspective that we talked about before. But it’s possible there will be some disruptions in Medicare.

Again, I feel more confident, though, that they have gotten their

act together on contingency plans. So to the extent those disruptions occur, they have backups in place to address them.

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Mr. HORN. Thank you. I want to ask Mr. White, here’s a question

for you. ‘‘What is the city of Topeka doing as a contingency plan

for emergency services such as police, fire and hospital, the 911

and so forth?’’ That seems to be a nationwide problem.

Mr. WHITE. Absolutely. Really good question. Again, we have

contingency plans already in place for any kind of disaster and certainly work very closely with the Adjutant General’s office and with

Shawnee County who runs our 911 system. They have secondary

backup plans for running 911. And certainly, as she mentioned,

this is a potential disaster that we can prepare for.

So the police chief and the fire chief are coordinating very closely

with the other emergency providers to ensure that if we have a police emergency, we will have a police car there. If we have a fire,

we will have a fire truck there. If you need an ambulance, ambulance service will be available. If you have any concerns, questions,

emergencies, you can call 911, somebody knowledgeable will pick

up and dispatch the appropriate folks to you.

Mr. HORN. In other words, you have a real human being there

at that center.

Mr. WHITE. We have about nine of them at any given time.

Mr. HORN. I take it, because this has nothing to do with the millennium, but it’s something we have had to deal with for years, and

that is the relationships of surrounding fire departments, police,

law enforcement agencies, and do you have enough frequencies for

them to communicate with each other?

Mr. WHITE. I’m not involved with the radio issues. The Adjutant

General’s office might be able to speak better to that. I would imagine that’s one of those things they are looking quite closely at.

Ms. MOSER. Certainly we are looking to communicate within our

own system and then we will communicate out to the local level.

So I think that we could make that connection.

Mr. HORN. When I was a university president 10 years ago, the

county of Los Angeles went into an extensive emergency situation,

we have 81 cities in that county, 10 million people, and we have

about probably 15 universities with their own police force and jurisdiction for several miles around, but we didn’t have the frequencies, they were all sitting in New York on the east coast and

we had to work it out. We couldn’t communicate with each other.

When you have got that many people, 81 cities, it’s pretty tough.

So they are slowly working that one out and they have had 10

years to do that because we knew we had real problems.

Ms. MOSER. That is always a problem is whether or not the frequencies are the ones you can communicate across. But we are

working on that and I think that we will be able to do that.

Mr. HORN. Here’s a very well written one. It says, ‘‘Coal is used

to power a majority of our Kansas electric utilities. From all of that

I have read, the railroads absolutely will not be ready. How will

we keep our electricity up and going if they cannot get coal?’’

Any comments from State government, Mr. Kettlewell?

Mr. KETTLEWELL. I defer to my colleague from Western Resources on that, but basically, from my conversations with them before, they have weighed in extensive amounts of coal, even if the

railroad ceased to run, so that reserve supplies for coal for coal

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fired utilities would be available. But, again, I defer to my colleague from Western Resources.

Mr. HORN. Here’s a question for Topeka, it’s on the water. And

I might say this is the best water I have tasted in a long time, so

you have got a good water department, it’s very marvelous. I have

been getting all I can get. We have to get bottled water in Washington. The Corps of Engineers did a wonderful job in 1859 with

the distribution system. But the city of Washington has not replaced much since 1859. And when the metal starts to glow when

we were having x rays, we went to bottled water. That’s what they

say happened to the Rose Republic, for those who want to talk

about it. That’s about it. We will pursue some with the next panel.

We need to move to panel two, Mr. Chairman. I think we have got

a good round on that.

Mr. RYUN. Thank you all very much for coming. I appreciate it.

[Applause.]

[Witnesses sworn.]

Mr. RYUN. The second panel is going to be dealing more with industry. For those of you who would like to participate, there will

be some staffers around the edges who will have cards, if you

would like to write out questions and submit them, we will ask

those questions as we proceed.

Let me begin by introducing the first panelist, it’s Bud Park. Bud

is the year 2000 project office manager for Western Resources who

provides power to homes and businesses. The KPL division is a

Kansas Gas and Electric subsidiary that provides electricity to over

614,000 retail and 75 wholesale customers in more than 500 Kansas communities. It is a member of the three power tools, coal, nuclear, natural gas, oil, diesel fuel, these units generate a net capacity of nearly 5,300 megawatts.

STATEMENT OF BUD PARK, YEAR 2000 PROJECT OFFICE

MANAGER, WESTERN RESOURCES

Mr. PARK. Chairman Horn, Congressman Ryun, distinguished

guests and ladies and gentlemen, good afternoon. I thank you for

this opportunity to speak with you today.

Mr. RYUN. Mr. Park, let me interrupt you just a moment. If you

would like to submit your comments and just speak off the record,

you can add those to the record and we will be happy to include

them.

Mr. HORN. Automatically we put the full comments in the record

when the chairman calls your name. In order to get through the

day, we would like you to take 5 minutes and express yourself on

it and then we will go to the next witness. And that gives us more

of an opportunity to have a dialog on your panel, as well as the

members here today.

Mr. PARK. Certainly, I’ll be happy to. Basically we come here to

tell you the message that as of last week Western Resources is now

year 2000 ready.

We started our project over 3 years ago, I think that’s a little

earlier. I think we had a jump on a lot of companies. And so we

have had plenty of time to address the year 2000 issue. We have

done what has become the de facto standard year 2000 program,

including all of the steps that you have probably heard many times

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before. And we concluded the project last week on June 30th with

the dispatch of a letter to the North American Electric Reliability

Council who, as you know, has been doing an assessment since last

year of the nationwide power grid. That letter essentially told

NERC that Western Resources had concluded its assessment, remediation and testing of all of our NERC critical systems, software

and hardware that contain embedded chips and we have tested

them all and our testing shows that we expect to be able to provide

service to our customers after January 1st, 2000 just like we do

now.

We have established extensive contingency plans as part of our

program. We have also put into place clean management procedures to ensure that all readiness work that we have done to date

doesn’t get undone by some well-meaning programmer who makes

a change that might not be compliant with the year 2000 roll over

before January 1st.

So the bottom line is we expect to keep the lights on. Our testing

has shown that we believe that will be true. We will participate in

a drill that NERC is hosting on September 9th. We expect that the

results of that nationwide drill will help prove what we have come

here to say, that we expect no service interruptions.

[The prepared statement of Mr. Park follows:]

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Mr. RYUN. Thank you very much. We will go to our next panelist

here. Fortune Magazine has described Southwestern Bell as the

most admired telecommunications company in the world. Shawn

McKenzie is here to give us his testimony. Southwestern Bell is the

largest or the biggest local telephone provider in Kansas, it provides service to 1.4 million customers. We are pleased to have you

here.

STATEMENT OF SHAWN McKENZIE, SOUTHWESTERN BELL

Mr. MCKENZIE. Thank you, Congressman Ryun, thank you,

Chairman. I appreciate you giving me the opportunity to do this,

especially since I’m sure much of what I’m saying and what other

panelists are saying today you have heard before. I really appreciate the opportunity to address the constituents that are here

today. I’m going to be talking from a set of about 15 slides that are

in the packet. I’m holding this up with the back to you so that the

folks behind me can see what I’m talking about.

I wish I had more time to talk, not necessarily because I have

a lot to say, but because my preacher is here today, Dr. Jim

Congdon is over here in the bright shirt. Every Sunday morning he

gets 30 minutes of my time and I thought it would just be fair if

I get 30 minutes of his time.

[Applause.]

Mr. MCKENZIE. I apologize for any levity with which I address

this, but as I mentioned to Matt before we started, we see the light

at the end of the tunnel now and we have a little levity that we

didn’t have just 3 years ago when we started this process.

Dr. Congdon made a comment in his sermon a couple months ago

when he was talking about potential Y2K problems that the telephone system may fail on January 1st, 2000 and I was about the

third row and under my breath I said ‘‘not a chance,’’ apparently

it was a little too loud and he noted that I had said that and I became part of the sermon for the following week. What I want to

do now is just substantiate what I said that morning and what I

repeat now. Southwestern Bell’s telephone network in Kansas and

in the other States served by SBC communication companies,

which includes Pacific Bell, Nevada Bell, Cellular One, Southern

New England Telephone and many, many, many wireless companies will be ready January 1st.

There is a potential for problems. The biggest problem we have

a potential for is the same one outlined concerning the toilet paper.

If everybody on January 1st picks up the phone at the same time,

I guarantee you it will not work. I guarantee you that if everyone

got up tomorrow morning and picked up the phone at the same

time, it will not work. Much like the Nation’s highways are not designed for every car to be on them at the same time, nor are the

Nation’s telephone networks designed for everybody to be on them

at the same time.

SBC Communications is a large company, 37 million access line

telephone customers are what we serve in seven different States.

We have had a lot of resources since 1996 devoted to solving the

problems with our systems. We’ve spent over $190 million, we are

doing 3,000 hours of work a day on this issue. We have rewritten

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340 million lines of software already to have this problem taken

care of. We are about 98 percent ready to go.

On January 1st our system will be ready, but we are not going

forward as if everything will be OK. We are also making our own

contingency plans just in case things don’t go OK. I think Western

Resources will be ready January 1st as Bud just described, but just

in case there is some glitch, we have our generators ready to go to

provide our own power.

So we suggest to our customers that if they want to be as ready

as they can and make sure their phones work that day, that they

have a telephone available to them that’s not dependent on commercial power, because our system on January 1st will not be dependent on commercial power and you will be able to use your

phone even if commercial power fails.

We are going to be ready to move forward. We have groups of

employees that are going to be staffed in addition to the normal

work hours that day to respond to any problems that may come up

that we had not foreseen. So if something doesn’t come up that we

don’t foresee right now, come January 1st everything will be working. And rather than work my way through the rest of these slides,

I’ll yield time and answer questions later. Thank you.

[The prepared statement of Mr. McKenzie follows:]

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Mr. RYUN. Our next panelist is Anne Rubeck, who is the director

of Communications Technology for the Kansas Hospital Association, of which there are 143 hospitals that are part of this organization. And I’m particularly interested in her testimony with regard

to readiness for critical areas in rural areas, because I know that

I have a great deal of rural people that are very concerned about

what’s going to be available. We certainly look forward to your testimony.

STATEMENT OF ANNE RUBECK, DIRECTOR, COMMUNICATION

TECHNOLOGY, KANSAS HOSPITAL ASSOCIATION

Ms. RUBECK. Thank you, Congressman Ryun. We do appreciate

the opportunity to speak with you about hospitals and the Y2K

issue.

Hospitals and other health care organizations really face a

unique challenge in dealing with year 2000 issues. Not only must

their business and financial systems be ready for the date change,

but be ready to work with various insurance companies, as well as

the Federal Government. But advanced medical devices must also

be compliant so as not to jeopardize patient safety. Hospitals recognize the tremendous amount of trust placed in them to safeguard

the health and well-being of those for whom they care. Hospitals

concern is first and foremost for the patients that they serve.

Kansas hospitals have been working diligently on the Y2K issue

for quite some time. The Kansas Hospital Association for whom I

work has provided voluminous amounts of information and educational programs to its members regarding identifying and possibly replacing affected equipment, creating and implementing Y2K

readiness plans, creating awareness and information materials for

use with their communities in the preparation of contingency

plans. We have also contracted with the Georgia Hospital Association to provide access for Kansas hospitals to their ongoing Y2K

educational series via teleconference. Hospitals are very well aware

of this issue and we should make sure that they are.

The KHA has also participated and cooperated with the three

surveys that have been conducted by the Docking Institute of Public Affairs which is part of Fort Hays State University. The final

report on the second survey was published in December 1998. The

third survey is currently in progress. The December 1998 report

states that hospitals reported the highest level of preparation in

many aspects of delivery of services.

Hospitals are also involved in contingency planning as well as

continuing to identify and work with vendors of medical equipment.

Some of the biggest challenges that hospitals face is that each entity is unique in and of itself in the kind of systems that they run,

and in many cases the kind of equipment that they use. So there

is not going to be one solution that every hospital can use. Each

hospital has to come up with its own way of dealing with the problem and its own way of being ready.

But just to show that hospitals are on top of the issue, the American Hospital Association has also conducted a survey of the Nation’s hospitals which indicates that they are hard at work to ensure patient safety and a smooth transition of business affairs at

the end of this year. The survey shows that 90.4 percent of hosVerDate 11-MAY-2000 08:04 Apr 06, 2001 Jkt 010199 PO 00000 Frm 00104 Fmt 6633 Sfmt 6601 E:\HEARINGS\60939 pfrm02 PsN: 60939
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pitals report that they are predicting compliance of their medical

devices or expect no adverse effect. It is very important to note that

if a medical device is noncompliant, that does not necessarily mean

it will be nonfunctional. Many times the date chips inside a piece

of medical equipment will possibly create paperwork type errors as

opposed to anything that would have anything to do with patient

safety. Obviously this isn’t true for 100 percent of medical devices,

but noncompliance does not necessarily mean nonfunctionality.

And hospitals have prepared for those kind of situations in their

contingency planning. The vast majority of hospitals, 94.2 percent,

report that their information systems are either currently Y2K

compliant or are moving toward total compliance without major difficulties. This is the business end, so they have two major areas

that they have to follow.

As everyone knows, I think, the Y2K event is completely unprecedented and therefore presents a tremendous challenge for anyone

who has to deal with technological devices. Hospitals are doing everything they can to be as ready for the event as possible, as well

as making the detailed contingency plans I mentioned before. We

will continue to work unceasingly through January 1st and beyond

to ensure that patient care and safety are protected. And that concludes my comments.

[The prepared statement of Ms. Rubeck follows:]

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Mr. RYUN. Thank you very much. The next panelist we have

been watching what’s been going on in banking for some time and

I hope I’m saying your name correctly, Ed Splichal. Mr. Splichal is

with the Kansas Bankers Association with approximately 400

members throughout the State of Kansas, total assets of $34 billion. As we have heard before, you have done a lot to get prepared

for Y2K and we are looking forward to your testimony.

STATEMENT OF EDWIN SPLICHAL, CHAIRMAN, Y2K TASK

FORCE KANSAS BANKERS ASSOCIATION

Mr. SPLICHAL. Thank you Mr. Chairman and Congressman

Ryun, I appreciate this opportunity to appear before you to discuss

Y2K and its impact on the banking industry here in Kansas. I’m

serving currently as the president-elect of the Kansas Bankers Association and am chairman of the Association’s Y2K Task Force.

The KBA represents 99 percent of the 400 plus banks presently

doing business in Kansas. Our banks have been working diligently

for many months in preparation for the century date change. Untold hours and millions of dollars have been expended by these

banks to make certain that banking operations throughout the

State will make a smooth transition into the new year.

One of the major reasons why the preparedness has gone so well

has been the leadership role assumed by the various regulatory

agencies. I firmly believe the banking industry here in Kansas and

throughout the Nation would not be as well prepared if it had not

been for the well-planned procedures that the Federal and State

regulatory agencies required the banks to complete by June 30th

of this year.

By requiring banks to complete each phase of the Y2K preparedness procedures by a time certain, it kept the banks on top of the

situation and avoided hurried, last-minute attempts to be ready for

business on January 1st, 2000. These procedures included identification of possible problems, correction of problems, testing of all

date sensitive procedures, development of business resumption contingency plans, and, finally, verification. Banks are well aware of

the serious consequences Y2K noncompliance can have not only on

their customers, but also on the future viability of their banks and

their communities.

I’m happy to report that as of this date the technical phases have

gone well for Kansas banks. During the final months of this year

our banks will also be placing a major focus on their customer

awareness plans.

It is this phase where the Y2K Task Force of the KBA has been

most involved. The Task Force, composed of nine bankers from various regions of the State, has established six main goals to accomplish before the end of the year.

They include: (1) providing materials that Kansas banks could

use to in keeping their customers informed about Y2K issues; (2)

working with the regulatory agencies to exchange pertinent information on technical, liquidity, and customer awareness issues; (3)

meeting with newspaper, radio, and television personnel to discuss

Y2K; (4) meeting with public officials to seek their assistance in

keeping the public accurately informed about Y2K; (5) sharing pertinent information on Y2K with all member banks in the State

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through mailings and articles in the Association magazine; and, finally, (6) implementing a statewide radio and newspaper campaign

that emphasizes the Y2K readiness of Kansas banks.

To implement one of the goals the Task Force held a meeting

with representatives from the FDIC, OCC, Federal Reserve and the

State Banking Department in March. This proved to be a very valuable meeting for the exchange of information on what the regulatory agencies and the banks had done to that point. We plan to

meet with the same regulators again in early September.

We have also worked to involve public officials in the Y2K awareness campaign. Representatives of the Federal Reserve and the

FDIC plan to appear at a press conference with the Kansas Attorney General, Carla Stovall, here in Topeka tomorrow. At that press

conference the Attorney General will discuss the need for Kansas

citizens to not be misled by Y2K rumors and their need to be aware

of possible scams that may be perpetrated based on those rumors.

I would once again emphasize how pleased we have been with the

cooperative attitude displayed by the regulatory agencies and public officials in working with us on these issues.

In the articles I have written for our Association magazine I have

tried to stress the need for banks in each county to work together

in developing their customer awareness plans, organizing community informational meetings, and initiating discussions with the

local media. I have also emphasized that banks must also develop

a strong customer awareness program so that all customers will

understand what the banks have done to make sure all systems

will function smoothly as the new year begins. The response that

we have had to the customer awareness packet prepared for us by

the KBA Task Force would indicate that banks are taking this responsibility very seriously and will continue to do so for the next

6 months.

We have also discussed with the banks the need to have sufficient liquidity at the end of the year in case it’s needed. The Federal Reserve has been very helpful in working through these details since Kansas is a large State and many of our community

banks are located in areas many miles from urban centers. This is

an area of the Y2K preparation process that our Task Force will

continue to monitor closely in the coming months.

We appreciate the efforts in Congress to try to bring some common sense to the area of Y2K litigation. We have no objection to

legal action against any corporation that has failed to properly prepare for the date change. But there should be limitations that

would diminish the possibility for frivolous litigation relating to

Y2K problems. Without such legislation there is a very significant

risk that litigation may be even more costly than the technical preparedness for Y2K has been.

We are well aware there is no margin for complacency in and

bankers in this State plan to continue testing our systems, working

with our customers and staying in close contact with our regulators

to make sure it will be business as usual when the year 2000

dawns.

[The prepared statement of Mr. Splichal follows:]

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Mr. RYUN. Our last panelist is Al Lobeck from WIBW, he represents the Kansas Association of Broadcasters which represents

90 percent of all the TV and radio stations in the State, it includes

22 TV stations and 140 radio stations. He also represents Jim

Cates, who this morning was gracious enough and throughout the

week to make people aware of this time today. I appreciate your

support and am looking forward to your comments.

STATEMENT OF AL LOBECK, NEWS DIRECTOR, WIBW RADIO,

KANSAS BROADCASTERS

Mr. LOBECK. Thank you very much. We go from the KBA to the

KAB.

The Kansas Association of Broadcasters has prepared a handout

that’s in the packet that you have that goes into quite a bit of detail illustrating not only what Kansas broadcasters, but nationally

broadcasters are doing and what the Federal Communications

Commission has advised to be done.

As one Kansas Association of Broadcasters board member said,

Y2K is like a tornado warning for which we have months to prepare. Like a tornado, Y2K could be very serious, or it might not be

serious at all. No one will know until the time is here. As in any

disaster, preparation is the key to minimizing the impact of a potential Y2K disaster.

Broadcasters throughout the State and the Nation are working

diligently to prepare for any possible problems that might occur.

And, for example, the Kansas Association of Broadcasters at their

annual convention, which will be in September, are having several

panels to discuss fine tuning any plans that are out there.

A bit of background about our particular operation so that you

can understand the impact that our stations could have for communication in the community and to show you what we have done to

prepare ourselves. WIBW the AM station is the 14th most powerful

signal in the United States, it has the 14th largest coverage area.

We broadcast farm news in the mornings, regular news and sports

and talk programming such as you commented on. Our FM station

is Topeka’s most listened to radio station, 97 Country, and broadcast news and weather as needed at times.

Our five person news staff also operates the Kansas Information

Network which is a news organization that broadcasts via satellite

to about 40 stations throughout the State of Kansas. So we have

the ability to communicate statewide on a regular basis, and we do.

We also originate the Kansas Agricultural Network which has

about 40 stations that also broadcast agricultural news on a daily

basis.

We are also a key entry point for the emergency broadcast system which, as you well know, is designed to notify the public here

as well as statewide almost instantaneously of any kind of emergency. And we are also the emergency notification station for the

Wolf Creek power plant, so if there is a problem there, they call

us and we broadcast it.

I want to give you that background so you can understand that

we do take the coverage of news and providing news to the public

very seriously. As a result, for years we have had the capability to

be able to broadcast completely without the benefit of telephone

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lines or electricity from the public utilities. We have emergency

power generators at both of our transmitter sites for the AM and

FM as well as at our studios. So we don’t anticipate that there will

be any interruption of any kind for our broadcasting and would be

ready to do anything that would be necessary to communicate to

the general public.

I would point out that the Federal Communications Commission

has made a couple of comments that I would like to read from this

particular sheet. And according to their assessment, they said the

public should continue to have access to critical broadcast news,

emergency information, and entertainment services on January 1,

2000. Individual Y2K related disruptions should be isolated and because virtually all listeners and viewers have several free over the

air broadcast servers available, service outages that may occur likely will leave affected viewers and listeners with several alternative

broadcast stations.

They also point out some hints which I thought were rather interesting and I wanted to mention them here in case someone

doesn’t get a copy of that. The Federal Communications Commission suggests that you consider having a battery powered radio or

television set available with sufficient supply of batteries. If a station suffers technical difficulties, tune to another station in your

area for information. If you use your VCR tuner to change stations

on your TV set, be sure you know how to bypass the VCR in case

it has technical problems.

And, finally, they suggest you have a television antenna handy

in case there would be a disruption of cable TV.

[The prepared statement of Mr. Lobeck follows:]

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Mr. RYUN. Thank you for your comments. We are looking forward to some questions. I would like to begin with Mr. Park, if I

may.

As I have traveled and as we have all tried to evaluate all of

what’s going on with regard to readiness for Y2K and the new millennium. There seems to be a single threat that ties all this together and that comes back to the electricity. What assurances can

you give us that everything is going to work, that the lights will

be on whether we have a holiday January 1st or not? Have you had

an entire systems check, so to speak, or how have you proceeded

in that regard.

And then kind of a part (b) if I may, it was actually asked during

the first panel questions with regard to rail cars, whether you have

enough rail cars to get coal to your plant to provide sufficient energy.

Mr. PARK. That’s a mouthful. I’ll try to address all of those. First

of all, as far as assurances that there will be no power outages, of

course I can’t do that because I can’t give you assurance that the

next thunderstorm that comes through wouldn’t cause a power outage. What I can assure you is that we have tested all of the critical

systems necessary for us to provide power. We have simulated

moving those systems into the 21st century. We have tested the

critical dates many of the people are unaware of. Everybody knows

January 1st is the date that we seem to be concerned with, but

there are about 14 other dates that we have also tested that we

feel could cause problems if a computer chip misbehaves.

Mr. HORN. For the sake of the record, could you maybe identify

some of those dates that have already passed, so they will understand that.

Mr. PARK. Of the dates that have passed, January 1st, 1999, because any program that does a year forward look would be looking

forward to January 1st, 2000. So we passed January 1st, 1999

without a problem. September 9th, 1998 would also be the same

one year look forward for September 9, 1999 which deals with the

9/9/99 situation. July 1st was the beginning of the fiscal year for

many organizations, and that is essentially 2000 in the fiscal year.

That date is now relatively in the past.

So we have done this testing. The results of our testing shows

no issues that would cause power to have any outage that wasn’t

connected with an ice storm, a thunderstorm, lightning strike, an

errant driver hitting a utility policy and knocking wires down.

Those kind of outages could still occur, certainly. But we don’t expect system-wide outages.

I would like to address this rail service question that was asked

of the earlier panel. I don’t know where the person who asked the

question got his information, but that is 180 degrees opposite from

the information we have from the railroad. The assurances we have

from them is that they have done similar remediations of their systems, they don’t expect interruptions to rail service. Because we

cannot control the rail service, however, one of our contingency

plans is to stockpile coal. Three of our power plants are coal fired

and we have on a normal basis anywhere from 30 to 45 days of coal

stockpiled. So even if there is a brief interruption of a few days to

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even a few weeks in the rail service, which we don’t expect, but if

it happens we will be ready for it with coal on hand.

Mr. HORN. I’m just picking up also some of the things from the

previous panel. ‘‘How can you have unknown ready dates for key

programs in Federal Government . . .’’, and Mr. Willemssen we

will have you come back and bring your chair, we always include

Mr. Willemssen with the second panel because he brings the national and international perspective to this, ‘‘. . . on various dates

for key programs? Does this mean anticipated failure of those systems on January 1, 2000?’’ No, I don’t believe they do. I will leave

it to Mr. Willemssen.

Mr. WILLEMSSEN. I think some of the dates that were talked

about earlier, some of the key dates that Federal agencies are testing for also. In addition, obviously the 2/28, 2/29, 3/1 roll over next

year. So many of those dates are also being tested for.

Mr. HORN. A question for Western Resources. ‘‘How much have

you spent on Y2K to date?’’ Mr. PARK. Chairman Horn, we have spent approximately $6.5

million on our efforts, and our total budget we are estimating is

right at $7 million.

Mr. HORN. For Western Resources also, ‘‘What are you doing to

combat terrorism via hacking?’’ Mr. PARK. We have systems in place to prevent that. I would prefer not discussing them publicly because that would defeat the purpose of some of the protective measures that we have put in place.

We do have measures put in place to protect our computer systems,

though.

Mr. RYUN. Mr. Chairman, may I interrupt for a question along

the lines of what you’re talking about?

Mr. HORN. Sure.

Mr. RYUN. Following the line of thinking with Mr. Park on the

cost involved. The Federal Government has at this point spent

roughly $9 billion.

Mr. HORN. Right, by the end of this fiscal year.

Mr. RYUN. How many billions of dollars will the private sector

have spent?

Mr. HORN. Well, the original estimate of the computer consultants, they were one of our witnesses when we started in on this

in April 1996, they said this is a $600 billion worldwide problem.

Since we are half of the computers in the world we are $300 billion

and the rest of the world was $300 billion. And I asked what do

you think the executive branch will cost us, they said it will be

about $30 billion. And within about 5 months I said my instincts

looking at this is that it will be around $10 billion. Right now I’m

closer than the experts are. That’s simply a hunch. It turned out that way. But they are going to spend about $9 billion through this

fiscal year, and that’s 3 months, October, November, and December, prior to January 1st.

So let me ask you on Western Resources, how many plants do

you have that you have to worry about? Did you go plant by plant?

Mr. PARK. Yes. We have seven power plants that we went

through all of the systems, and each of them were tested.

Mr. HORN. And each of them are now in conformity?

Mr. PARK. Yes.

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Mr. HORN. As part of the grading of the Federal Government

progress we recently evaluated readiness of 43 essential Federal

programs, I’m just reading that inclusion to a number of questions.

For some programs like food safety inspection, public housing, we

remarked that the program readiness was unknown because we

needed more data as to when the computer systems and contingency plans would be ready. Social security has had an A from us

in every corner. Social Security also gets an A on the program

money going out. They not only started it, but they stuck with it.

It took them really 10 or 11 years.

And so the other I mentioned was the weather system, they have

got a fancier name now, but it’s still the weather system as far as

I’m concerned, it means the farmers will find out when a storm is

coming in Kansas. And we have obviously a whole series of things

such as Medicaid and Medicare that we aren’t convinced yet that

they have got this thing working right up to January and in compliance before January 1st, I think they will.

Federal Aviation is another one. I’ve held four hearings on that

this last year and the Aviation Committee of the House has held

another hearing and so it goes. But we think that will be in good

shape based on the current administrator and what she’s doing. So

I think we can fly. As I have said to many, she and I are both flying that night. I’m going to Los Angeles, she’s going to New York.

I hope the plays are good and I hope Los Angeles’ weather will be

good because it will be snowing at Dulles or getting ready for it to

snow on January 1st. My wife thinks I’m crazy, but that’s OK, that

isn’t a new thought. I just thought I should give my faith over to

the air controllers. And I have told the Administrator not to mess

with them before we get on board.

Southwestern Bell, ‘‘Just last week there was a software problem

that created a temporary 3 hour phone outage. Supposedly this was

not Y2K related. And realizing there can be problems at any time,

when will the contingency plan be implemented, 1 hour, 2 hours,

3 hours, etc.?’’ Do you have any estimate on that?

You’re absolutely right. When President Kennedy was assassinated everybody picked up the phone in Washington and everything came to a standstill, and that can happen any day as people

wonder about their friends and relatives and so forth.

Mr. MCKENZIE. Our network has been improved since the Kennedy assassination so that when everyone does pick up their phone,

there are essential lines that are maintained such as pathways between emergency agencies, so it won’t be as serious of a problem

as it was back then. Contingency plans for us kick in instantly once

we realize there is a problem. We have dealt with disasters since

the beginning of telecommunications, we know how to deal with

disasters.

The problem last week, and I’m glad it came up because it was

not Y2K related. A very good technician of ours made an error

when making a software upgrade. And he instantly knew he made

an error, we ended up rebooting the system to make it work right.

The system never completely failed, it just moved slow. We are now

working with the provider of that piece of equipment so that we

also have a fail safe should another technician sometime in the future make that error. I have been in this business 20 years and I

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know one technician for sure in Topeka, KS that will never make

it again.

Mr. HORN. Isn’t the Internet designed to solve that problem if

there was a catastrophe to get around the obstacles? To what degree are there plans to use the Internet? That’s why it was started,

it was for National Security.

Mr. MCKENZIE. I was told it was to collect taxes.

Mr. HORN. You have just given us an idea. Frankly, they would

try to tax the air if they could.

Mr. MCKENZIE. With the exception of very few, most people access the Internet via Southwestern Bell. So the contingency plans

we have in place for local telephone voice calling is the same that

we have in place for data communication.

Mr. HORN. But I just wondered, you haven’t really tried the

Internet at this point to see if that would be helpful?

Mr. MCKENZIE. I do not have a specific contingency plan that depends on the Internet to answer your question directly, no.

Mr. HORN. I just wondered if anybody has given thought to that.

I probably should ask the Vice-President, apparently he invented

it. He would take that in good spirit.

‘‘If hospitals can’t get their bills out correctly over the systems

they have now, how can they truly assure us, convince us, that

things will go smoothly?’’

What’s the answer to that, Ms. Rubeck?

Ms. RUBECK. Well, as I said before, each hospital has to deal

with its own unique situation. Billing errors are not unique to the

health care industry, as I myself can attest, and errors do occur.

Because humans are entering the data, errors do occur. What I can

assure you is that first and foremost the very first line of attack

that hospitals took was inventorying every piece of medical equipment in their hospitals and contacting vendors, finding out by serial number about compliance, yes or no. If it’s no, it’s replaced.

So patient safety has always been the very first and foremost

concern and was the first thing addressed. The business issues, the

business side of it, is also being addressed. And while I can’t say

that no errors are ever going to occur, because errors occur now,

and, like I said, it’s not unique to our industry, I know from working with the information systems people in Kansas hospitals that

those systems are also being addressed in detail.

Part of our concern and something that was expressed in the earlier panel is the interfaces that we have to make with various insurance companies, including HCFA for Medicare and Medicaid

claims. If HCFA isn’t ready, hospitals will be affected very adversely or they could be. We also like to make the assurance that

regardless of whether that system is up and whether our hospitals

are able to communicate with HCFA. That’s a separate issue from

patient care. Patients will continue to be cared for regardless of

what paper snarls we have to untangle.

Mr. HORN. Last year when we were in Cleveland we had excellent testimony as to what they had examined in terms of emergency room particular equipment. There is a Website nationally

where all hospitals can plug in their particular thing, whether it

be x ray or whatever, MRI. And I take it you’re all using that same

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thing to save energy, because if you put the model number, manufacturer, it’s all there. If it isn’t there, you make a new entry.

Ms. RUBECK. Right. It is a fee based service. We have made that

available to our hospitals at an extremely reasonable cost because

especially many of our rural hospitals, aren’t able to pay thousands

and thousands of dollars to find this.

But there is a service on the Internet where you can any time

of day, 24 hours a day, 7 days a week you can find a piece of equipment by serial number and get the manufacturer’s statement of

compliance or noncompliance.

Mr. HORN. The Nuclear Energy Regulatory Commission told us

that they were monitoring about 10 percent of the reactors. We

questioned that and we still haven’t heard from them in writing.

We wanted 100 percent. They said orally that, ‘‘Well, we have different types of reactors than the French do and thank heavens

than the Soviets do.’’ So they are not worried as much as some people are. We don’t have that many reactors in this country, rather

than only 10 percent of them. So I don’t know if any of you can

comment on that. Any of you use nuclear reactors to generate

power? Mr. Park.

Mr. PARK. Chairman Horn, Western Resources is part owner of

Wolf Creek Nuclear Power Plant. We are not the operating agent

so it’s the Wolf Creek Nuclear Operating Corp. that runs that

plant. But we have worked very closely with them. And my counterpart at Wolf Creek, Mr. Bill Eils, and I work together on many

occasions, share information, share readiness progress on both of

our projects. I know that the NRC is looking at Wolf Creek because

they have been there to do an audit, which Wolf Creek passed with

flying colors.

I also know that the NRC has issued a generic letter to all nuclear power plants that requires them to be ready and certify their

readiness to the NRC to keep their operating license valid. To my

knowledge Wolf Creek is fully on track to be able to certify to the

NRC that they are ready and expect to keep their operating license.

Mr. HORN. The question that gave me the information for the

other part says that utilities themselves you have to remember are

self-reporting. And that’s of course our situation in looking at each

Federal agency, those are all self-reporting. When we send the

General Accounting Office they verify that, and the Inspector General’s of the various agencies verify that, and they also hire outside

consultants to verify that. And the proof in the pudding, of course,

will be on January 1, 2000 to see if the information given us in the

last quarter or last 2 to 3 years is accurate. If it isn’t accurate, they

will have a few problems. So this nuclear regulatory review apparently was requested by the Department of Energy.

And in fact the author of the question says, ‘‘The real test of Y2K

readiness on an industry level is set for September when a full

dress rehearsal of December 31, 1999 will be simulated.’’ On another question he says, ‘‘If electricity is such a critical measure,

why was it decided to report via a self reported survey and what

level of oversight is provided directly inside the utilities themselves?’’ Since we have two utilities here, give us your best shot as

to your verification system if it’s self reported.

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Mr. PARK. It is self reported, but I think that if we were reporting anything grossly different from the majority of other utilities,

the other electric utilities in the country, that might raise some

eyebrows. The fact that that is not true would lend credence to the

fact that what we have found through our remediation, and it is

admittedly self reported to NRC, we are finding the same sorts of

things that the majority of other utilities are finding.

On a different note, we have had an external agency in to audit

our year 2000 efforts, an independent auditor, Arthur Andersen. So

it wasn’t just our own eyes looking at this.

Mr. HORN. Mr. McKenzie.

Mr. MCKENZIE. I’m not familiar with our self-reporting requirements. I know the process we have followed within the company

has been to find the problem, fix the problem, test the problem,

physically use whatever has been fixed and then we have pretty

much celebrated from that point on. There is no gain for us to pretend we did something we didn’t do or to hide something that

didn’t work right.

Mr. HORN. And the individual that wrote this question on the

nuclear power industry points out that the banking industry is onsite regulated by various regulatory agencies that require outside

verification of that. And apparently the Department of Energy really has not required that, but they have asked the Nuclear Regulatory Commission to take a look at it. And that is in part an outside agency. And presumably some of the State public utilities commissions have done that.

Have you been in States where that’s true, where they want outside verification? Say the Kansas Public Utility or if you go outside

of Kansas, you have a number of States, I would think, in your

area, don’t you?

Mr. PARK. Actually, for electric service we deal with Kansas. And

the Kansas Corp. Commission has inquired into our readiness.

However, they have accepted the NRC status report, that’s North

American Electric Reliability, the organization that we have been

reporting to on a monthly basis. The Kansas Corp. Commission receives that data and accepts that as our input to them.

Mr. HORN. One general question for all of you. ‘‘To what extent

are you relying on suppliers and how can you be certain that those

organizations and its products are year 2000 compliant?’’ Mr. MCKENZIE. I’ll go first. We have about 1,400 suppliers that

provide us with about 15,000 different products, and we are about

96 percent compliant with them right now. They test, we retest and

we use it to prove that it really does what the test says it will do.

Again, we are 96 percent complete with that process.

Mr. HORN. Any other comment on that?

Ms. RUBECK. Hospitals deal with many suppliers, whether it’s

from medication to basic medical suppliers, many kinds of things

like that. I know that the American Hospital Association is assisting us in making sure that supply lines will be operational given

any number of contingencies. And like many other agencies here,

much of hospital planning is very similar to disaster planning. If

supply lines are down, laying extra supplies, power generators,

that kind of thing is all part of a hospital’s preparedness for any

kind of disaster.

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So I know personally, at least anecdotally, of many hospitals that

are contacting every single person they do business with to assess

their Y2K compliance. I’m filling out four to five surveys from our

own members every week wondering whether the Association is

year 2000 compliant. Even though we have no connection with how

they provide patient care or how they do any kind of billing. Every

single entity that they do business with, they are contacting.

Mr. HORN. Any other comments? Mr. Willemssen, any comments?

Mr. WILLEMSSEN. No.

Mr. HORN. Let me close out the questions with posing an answer,

and the question is obvious. Our staff director, Mr. George, happened to buy the Kansas City Star today and the Ann Landers column is worth reading.

It says,

Dear Ann, please warn your readers about a scam I just heard about, elderly folks

are particularly vulnerable. Here’s the way it works. The con artist calls and says

he or she represents the person’s bank, he informs the person that the bank is having difficulty meeting requirements to be computer ready for Y2K. The con artist

says, ‘‘The bank needs you to transfer your money to a bond account structured to

protect your money until the bank can be fully Y2K compliant.’’ Then he asks the

person to confirm his or her account number and give verbal authorization to transfer the funds. This is a huge scam, banks are almost all Y2K compliant and would

never ask a client to confirm a bank account or its number over the telephone. If

you give out this information, these con artists could get their hands on your money

and you will never see it again.

Please, Ann, tell your readers never to give out this kind of information no matter

who asks, and to report such calls to the phone company or the State Attorney General’s Office. Thank you for getting the word out. ——SP in Missouri.

your neighbor.

Dear Missouri, some scam artists are so smooth and sound so convincing that the

average person would suspect nothing. Your admonition never to give an account

number or approval for transferring funds over the phone should be carefully heeded. Thank you for the heads up.

So, you know, scum are scum and the scum are the ones that are

now working the Y2K problem. So that’s a pretty sad state of affairs.

Mr. Chairman, I’m going to thank the staff who participated in

this. J. Russell George, the staff director and chief counsel seated

down there. Matthew Ryan is the senior policy director for the year

2000 hearing. Patricia Jones in the middle down there is the American Political Science Association. Grant Newman is the clerk for

the subcommittee, and we have the three interns in Washington

did a lot of work on this, Lauren Lufton, John Phillips and Justin

Schlueter.

And from Congressman Jim Ryun’s office, they have been very

helpful. I must say Kansas has the nicest people I have run into

in a long time. Mr. George is from New York, so he’s not used to

that kind of treatment. But I kid him a lot. We go up there and

we can’t find the subway, we went into the mayor, he said, we

know where it is.

Anyhow, Michele Butler, chief of staff, we thank her very much.

And Amy Glaze, the constituent service representative, Ron

Cheevers the department of administration here in the Governor’s

area, and the court reporter Sandy Rider. Thank you for the help.

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And, Mr. Chairman, I am yielding back to you, we are going to

recess to the Illinois hearing and then the Michigan hearing, so

this is a continuing body here like the U.S. Senate.

Mr. RYUN. Mr. Chairman, first of all, let me say thank you very

much for coming to Topeka. I know I can speak for all of us that

we have been greatly informed, we have learned a lot, there are

still questions to ask, but I also know that as a result of your presence and the panelists and the information that they have provided, you have helped accomplish three of the things that I had

hoped to do.

I might mention that my coach Bob Timmons is here, he’s the

one who taught me at a very young age it’s always worthwhile to

have a goal and purpose. I actually had three purposes for this

time today. One was to dispel the rumors, to be able to provide answers. Another was to provide information, to let those that were

listening and also the subcommittee to be able to glean information

from this part of the country. And also the third part was to ask

and answer questions. And it’s been very interactive.

I know we did something today, actually the first time, that is

passed out little cards so that there would be interaction from you,

the constituents having an opportunity to ask questions.

So on behalf of all of Kansas I would like to thank you and the

subcommittee for coming and thank all of you for coming today.

And let’s just say that if there are other questions or other concerns that you have, the office of the Second District does stand

open ready and willing to help you.

And I guess it’s mine to say that we are now in recess. Thank

you very much.

[Whereupon, the subcommittee was recessed subject to the call of

the chair.]

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OVERSIGHT OF THE YEAR 2000 TECHNOLOGY

PROBLEM: LESSONS TO BE LEARNED FROM

STATE AND LOCAL EXPERIENCES

THURSDAY, JULY 8, 1999

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,

INFORMATION, AND TECHNOLOGY,

COMMITTEE ON GOVERNMENT REFORM,

Naperville, IL.

The subcommittee met, pursuant to notice, at 9:10 a.m., at

Naperville City Hall, Naperville, IL, Hon. Stephen Horn (chairman

of the subcommittee) presiding.

Present: Representatives Horn and Biggert.

Staff present: J. Russell George, staff director and chief counsel;

Matthew Ryan, senior policy director; Grant Newman, clerk; Patricia Jones, American Political Science Association congressional fellow; Bonnie Heald, director of communications; Kristin Wolgemuth,

legislative director; Kathy Lydon, district chief of staff; John Hoffman, district director; and Yadira Rosas, staff assistant.

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

order. I would like to welcome and thank your representative, Congresswoman Judy Biggert, who is the vice chairman of this committee in Washington, for being such a gracious host as the subcommittee meets in her hometown here of Naperville. It’s a beautiful area, as we told your distinguished mayor, George Pradel, and

we are most grateful for all the courtesies that have been given to

the subcommittee in making these arrangements with both Congresswoman Biggert’s staff and the mayor’s and city’s staff. It’s a

lovely area you’re in.

The year 2000 computing program affects just about every aspect

of Federal, State, and local government operations. Furthermore, it

affects private sector organizations and could impact the lives of

most individuals.

From Social Security to utilities to local emergency management,

the year 2000 computer bug has certainly been a large management and technological challenge for all of us. No single organization, city, State, even country can solve the problem alone.

The problem, of course, dates back to the mid-1960’s, when you

had computers that would fill a room this size, and right now your

personal computer contains more storage than they had in the sixties. So somebody had the bright idea, look, we use a lot of dates,

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why are we punching in 1967, why don’t we just put in ’67; and

we moved from a 4-digit year to a 2-digit year.

And they knew at the time that as you got to the year 2000,

you’d have some trouble. In other words, January 1, 2000, on the

computer, it’s 00. The 20 is not there. So the computer thinks it’s

1900 and you’re back to the days of McKinley. Might not be too

bad, but there it is. And they said, Oh, well, we’re Americans, we’ll

solve that. Technology will solve it. Technology has not solved it.

In the estimates we had in our very first hearing on this in April 1996 when we started this in the Congress was that it was a $600

billion worldwide problem and since America has half the computers, it is a $300 billion American problem. And I asked at that

time, what would it cost to remedy and adapt the Federal Government’s computers, and the Gardner Group estimate was $30 billion. As the year went on and I held more hearings, I thought they

were a little high and turns out I’m right and they’re wrong, but

they get a lot of money as consultants and we don’t; that is, the

fact that we are spending $9 billion in Federal money to get their

computers adapted in the executive branch between now and the

end of the fiscal year on September 30th. It might well get to $10

billion before we’re done. But again, there’s no simple solution to

this, but hard work of going through the various codes and all of

this.

Current estimates show the Federal Government will spend going on, as I say, $9 to $10 billion. The President’s Office of Management and Budget has identified 43 essential Federal programs

such as Social Security, Medicare, the Nation’s air traffic control

system. Each day these programs provide critical services to millions of Americans. Of these 43 programs, 10 are federally funded

State-run programs, including Medicaid, food stamps, unemployment insurance, and child support enforcement. Several of these

State-run programs are not scheduled to be ready for the year 2000

until December, leaving little if any time to fix unforeseen problems.

Data exchanges and interdependencies exist at all levels of government and throughout the private sector. A single failure in the

chain of information could have severe repercussions. For example,

let me briefly illustrate how the U.S. Social Security program uses

computers. The Social Security Administration was the first to deal

with this problem. No President told them to do it. They just did

it and it’s the best run agency, without question, in Washington.

It was in the sixties, and it is in the nineties. And so they started

on adapting their tapes where they had millions of code that had

to be checked. They are fully in compliance now with the year 2000

and there shouldn’t be any problem.

But they provide the data to the financial management service

of the Department of the Treasury that actually cuts the 43 million

checks for one part of Social Security and 50 million checks a

month in another part. Turned out the financial management service in the Department of Treasury was having real trouble, and

over the last few months, by focusing on them, they’ve pulled out

of that and they now cut the checks and electronically deposit it

in your bank account. And there are a number of other organizations that are related to that.

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So what we’re talking about here is a very interactive, interrelated system and many of the Federal agencies, when we said

what’s your contingency plan, they said our contingency plan is the

post office. In other words, if we can’t work the code and we can’t

get the electronic deposits, we’ll just mail it to them. Well, that

didn’t quite work. We had the post office before us and the post office had no contingency plan if they dropped down. So those are the

kind of things that you run into.

The bottom line is if any of these entities fail, from the Federal

Government to the local bank or the Postal Service, a deserving individual will not receive the payment. Now multiply the situation

by millions of people that receive Social Security benefits. There’s

43 million in one program, 50 million in the other, and you can appreciate the magnitude of just one aspect of the year 2000 issue.

Fortunately, the Social Security Administration has been working on the problem. As I say, it’s in good shape. But the computers

to work, we need power, and that’s one of the questions we asked

everywhere we go.

We are holding six of these field hearings this summer. We started in Topeka yesterday, recessed to Naperville and will recess to

Detroit and then we will be back in Washington for the opening of

the session again.

So electric power is key here because thousands of plants, if that

power due to either a malfunctioning microchip or whatever it is,

is not delivered, we will just have people laid off and everything

else. But I don’t think that’s going to happen if we all do what we

have to do and we’re going to be glad to hear it from the companies

that relate to the power, whether it’s coal or hydro or wind or solar,

nuclear; whatever it is, we’re asking that question.

So we want the lights to stay on. From a personal standpoint,

I realize when confronted with a personal emergency, I can call assistance 911 and feel confident the phone will be answered appropriately and a competent authority will respond rapidly.

Well, in some areas we’re having a problem on that. Sometimes

there aren’t enough frequencies for law enforcement areas. When

we went through emergency planning in Los Angeles County, it

would have been 10 years ago at this time, we realized most of the

frequencies were in New England and the East. We needed them

in the West. We have 81 cities in the county of Los Angeles which

has 10 million people and when you need all those police departments and sheriffs’ offices to merge, you have real problems in coordination, be it an earthquake, a fire, a flood, whatever.

And Illinois is used to floods and other things, just as we’re used

to all of them and we don’t have tornadoes that the South seems

to have. Although we did have a roof torn off in my hometown last

year, which had never happened in 100 years. One thing for sure,

there are only about 176 days till January 1, 2000. The clock is

ticking and, accordingly, the testimony we receive today is very important and we thank the witnesses for coming.

Let me explain some of the procedure. Mrs. Biggert will preside

at this session as the vice chairman of the subcommittee. I’m simply here to ask a few questions now and then. She will swear in

the witnesses. This is an investigating committee of the House of

Representatives so all of the witnesses, when that panel comes up,

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if you would stand before we start, raise your right hands, and

Mrs. Biggert will administer the oath. Then we will go down the

line, based on the agenda, and one by one we will hear the testimony.

And we have your written presentations. They will automatically

go in the record when she calls your name, and then we’d like you

to spend 5 minutes, not more than that, to give us sort of a summary orally. We don’t want you to read your statement. If that

happens we’ll be here till midnight, and we can’t because we’ve got

to be in Detroit. So 5 minutes will be when the gong comes.

Mr. Ryan, the counsel to the subcommittee, among others here,

will put up the 1-minute marker so you know you’ve got 1 minute

to go to finish that particular round. The reason we do this is we

want a dialog to occur after you make your key points. We want

the panel to interact with itself. We want Mrs. Biggert and myself

to interact with you, and we are also asking the audience for questions.

We will be passing out cards, and if you have a question particularly of this panel, please, if you know what the subject is, just

enter the type of area, and say here’s the question; it will be picked

up; we will eliminate the duplicates because seven people will have

the same question; and put it to them after the panel is done with

its presentations and then that will get the audience into it. It will

get Mrs. Biggert and I into it, and our own staff has already given

us, I don’t know how many questions, which we do just as we go

through the testimony. So we hope that way we do get all the

issues on the table.

And now it is my great pleasure to turn it over to the vice chairman of the subcommittee who’s conducting the rest of the hearing.

Thank heavens.

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

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Mrs. BIGGERT. Thank you, Mr. Chairman. Welcome to the 13th

Congressional District of Illinois. I’d like to say, with as much modesty as possible, that you are in one of the most vibrant and exciting parts of the country right here in Naperville, IL. I’d also like

to thank Mayor Pradel and the city council and the city of

Naperville for allowing us to conduct the hearing here today. It is

a wonderful facility and we really appreciate being able to hold the

hearing here. Let me thank all of you for coming here today.

The purpose of our hearing today, which we have entitled are

you Y2K OK, is to help people understand what they should expect

from the millennium bug and how they can prepare. I think our

panelists today will help to answer the questions that many of us

have.

The media is full of stories about the Y2K bug. I’m told a disaster movie is on the way. One of my younger staff members even

informs me that it was the basis of an episode on ‘‘Beverly Hills

90210’’, obviously I can’t—that doesn’t roll off my tongue, so I

haven’t watched it. I suspect also that programmers who dropped

the two digits from their computer codes had no idea that they

were actually developing plot lines for Hollywood. But the Y2K bug

is not simply a creation of the media. It is real and it is coming.

A recent poll showed that more than two-thirds of Americans believe that they will experience at least minor problems related to

the bug. I think they are right to be at least a little concerned.

There should be some disruptions in services. There may be some

shortages. I believe that we should prepare for this as we do for

a big snowstorm. This is Chicago land and there may be no serious

Y2K problems, in which case you’ll be ready for the next snowstorm which inevitably will come probably in January or February,

right after the turnover.

So what does it mean to prepare commonsense things? I think

we should have extra food and water on hand. Make sure your

car’s gas tank is half full. If you take prescription medicines, to

have at least a week’s supply. And I think the panelists will come

up with a whole list of things and advice.

Since I don’t expect America to suddenly become a set for a disaster movie or even anything close, in many ways our Nation is

prepared for the Y2K bug but in other ways we are not. As the vice

chairman of the subcommittee, I can say that there has been a lot

of progress in the Federal Government, largely because of Chairman Horn’s efforts to raise awareness of this issue.

But it troubles me, for example, that the Air Traffic Control System is not yet prepared and we have not been given a date when

it will be prepared. Does that mean that the planes are going to

be falling out of the sky on December 31st? Absolutely not. But I

can tell you that I might not be in the air that day. I don’t travel

during snowstorms if I can avoid them and I don’t plan to travel

as the clock ticks over. But if progress continues to be made, and

I think it will, there may only be some small glitches. But as a

former Girl Scout, I am taking to heart the advice of ‘‘be prepared.’’

So I look forward to hearing from the panelists today and what

we should be doing and what we don’t have to do because the year

2000, January 1st, should be a time of celebration. It is the turn

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of the century so we want to make sure that we can enjoy the rollover and not have to worry about these glitches.

I think I’ll swear in the panelists and then introduce them. If you

could all stand, please.

[Witnesses sworn.]

Mrs. BIGGERT. Today we’ll have three panels and then we’ll have

questions after the first panel. Speaking first today will be Joel

Willemssen. He’s from the General Accounting Office in Washington. With the way that the weather has been in Washington, I

suspect that he’s probably glad to be out of Washington for a few

days since they’ve had weather over 100 degrees. And Joel has testified before our committee many times, and his agency is really

the watchdog of what the Federal agencies are doing. So we look

forward to his testimony.

Mary Reynolds is the chief technological officer for the Office of

Governor Ryan in the State of Illinois and is an old friend. I’m

happy to see her. I miss being down in Springfield and seeing all

my old friends.

Don Carlsen is the information systems director of the city of

Naperville and will be talking about the city services that are being

affected. And this is his hometown, and I know we’ll hear good

things from him.

Tom Mefferd is the coordinator for DuPage County Office of

Emergency Management, and we’re in the heart of DuPage County,

so thank you for coming, Tom.

Robert Martin is the manager of water operations for the

DuPage Water Commission, and the water commission provides

service to 700,000 residents, so he’s got a big job to ensure that

that water will be ready for us on the rollover.

So thank you all, and we’ll begin with Joel Willemssen. Thank

you.

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

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STATEMENTS OF JOEL C. WILLEMSSEN, DIRECTOR, CIVIL

AGENCIES INFORMATION SYSTEMS, GENERAL ACCOUNTING

OFFICE; MARY REYNOLDS, CHIEF TECHNOLOGY OFFICER,

ILLINOIS GOVERNOR’S OFFICE; DON CARLSEN, DIRECTOR

OF INFORMATION SYSTEMS, DEPARTMENT FOR THE CITY

OF NAPERVILLE; TOM MEFFERD, COORDINATOR, DuPAGE

COUNTY OFFICE OF EMERGENCY MANAGEMENT; AND ROBERT MARTIN, MANAGER OF WATER OPERATIONS, DuPAGE

WATER COMMISSION

Mr. WILLEMSSEN. Thank you, Vice Chair Biggert, Chairman

Horn. Thank you for inviting GAO to testify today.

As requested, I’ll briefly summarize our statement on the Y2K

readiness of the Federal Government, State and local governments

and key economic sectors.

Regarding the Federal Government, the most recent reports indicate continued progress in fixing, testing, and implementing mission-critical systems. Nevertheless, numerous critical systems must

still be made compliant and must undergo independent verification

and validation. Our own reviews of selected agencies have shown

uneven progress and remaining risks in addressing Y2K and therefore point to the importance of business continuity and contingency

planning.

If we look beyond individual systems and individual agencies, the

Federal Government’s future actions will need to be increasingly focused on making sure that its highest priority programs are compliant. In line with this, the Office of Management and Budget has

identified 43 high-impact programs such as Medicare and Social

Security and, as you know, Mr. Chairman, we’re currently reviewing those programs for you to determine the executive branch’s

progress. But what I can tell you at this point, it is very clear that

much additional work is needed to make all these programs compliant by the turn of the century.

Available information on the Y2K readiness of State and local

governments also indicates that, overall, much work remains. For

example, according to recent information on States reported to the

National Association of State Information Resource Executives,

about 18 States had completed implementing less than 75 percent

of their mission-critical systems.

State audit organizations have also identified significant Y2K

concerns in areas such as testing, embedded systems, and contingency planning. Recent reports have also highlighted Y2K issues at

the local government level. For example, March 1999, the National

League of Cities’ poll of over 400 representatives found that almost

70 stated that they would finish 75 percent or less of their systems

by January 1, 2000.

Another area of risk is represented by Federal Human Services

programs administered by States; programs such as Medicaid, food

stamps, unemployment insurance and child support enforcement.

Of the 43 high-impact priority areas I mentioned earlier, 10 of

these are State-administered Federal programs.

OMB reported data on the system supporting these programs

shows that numerous States aren’t planning to be ready until close

to the end of the year. Specifically, a large number of State systems

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are not due to be compliant until the last quarter of 1999. Further,

this is based on data that has not yet been independently verified.

Beyond the risks faced by our governments, Y2K also poses a serious challenge to the public infrastructure and key economic sectors in other countries. We’ve made a number of recommendations

to John Koskinen and the chair of the President’s Y2K Conversion

Council, and the council has made strides in obtaining needed

readiness information in key sectors. Again, nevertheless, there’s a

great deal of work remaining in the less than 6 months we have

until the turn of the century.

Accordingly, there still needs to be a great deal of emphasis on

those areas to make sure that they’re ready in time.

That concludes the summary of my statement and after the

panel is done, I would be pleased to address any questions you may

have. Thanks again.

[The prepared statement of Mr. Willemssen follows:]

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Mrs. BIGGERT. Thank you. Ms. Reynolds.

Ms. REYNOLDS. Thank you very much. Congressman Horn, welcome to Illinois. And Congresswoman Biggert, it is great to see you

again. Thank you for inviting me to share where the State of Illinois is in its preparation for Y2K.

Governor Ryan has made Y2K a priority in his administration

and has taken very aggressive steps to make sure that every agency of State government has in fact done all of the reasonable steps

to become Y2K ready. In the first weeks of his administration, Governor Ryan created the Illinois Technology Office. Included in my

duties as the head of that organization, I oversee the Y2K efforts

of State government.

This spring we’ve designed and implemented a new monthly reporting system by State agencies that adopts a unique approach to

definitions and public reporting. I am not aware of any other State

in the Nation that is publicly reporting the amount and depth of

information Illinois is providing in regard to the Y2K readiness of

State agencies.

While many organizations have chosen to remediate computer

systems, our focus has been to ensure that the functions of government are Y2K ready and operational. We ask each agency to report

the functions and services that it is required to perform and then

list each of those systems or components that support the function.

Agencies are asked about the detailed readiness of all the components to support those functions of government. The supporting

components include all types of computer systems: Mid-range, PCs,

desktop, mainframes as well as the electronic data interfaces, embedded systems, and supplier customer dependency chains.

We do not consider a system as Y2K ready until all the supporting systems and components that support that are in fact

ready. That is a very difficult definition to meet.

Within the monthly report, we ask each agency to rank the tiers

by functions. Programs, services, or functions included in tier 1

could not be interrupted for more than 24 hours without endangering the public health, welfare, or safety of the citizens of Illinois

or seriously impacting the State’s revenue streams. Tier 2 functions

are those that cannot be interrupted for more than a week, and tier

3 functions are everything else.

A new monthly report will be released next week, but according

to our latest report as of May 31st, State agencies have completed

85 percent of the effort to be Y2K ready.

Our current focus among the agencies is now on contingency

planning. We’re doing this on two levels statewide. The Illinois

Emergency Management Organization is coordinating our statewide consequence management plan while the individual agencies

are preparing contingency plans for their own functions of government. Overall, I’m coordinating these plans to make sure we integrate the functions of government and are able to employ the resources where they are needed.

Governor Ryan is also emphasizing the need for State government to work with other levels of government as well as the private sector to prepare for Y2K. Over the past several months we’ve

worked closely with Federal agencies as well as local governments

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and private industries to coordinate efforts and assist each other

in preparations.

Overall, under Governor Ryan’s leadership, the State of Illinois

is doing everything it reasonably can to prepare for Y2K. We must

now make sure that citizens are aware of our efforts and take a

reasonable approach to their own preparations. Later this summer

and fall, we’ll be conducting community forums throughout Illinois

at many of our community colleges. We’ll also be distributing literature and pursuing public awareness campaigns, and we will

continue to update our new enhanced Y2K Web page to make sure

the latest information is also available electronically.

We believe the best way to relieve and ease public concern and

apprehension over Y2K is by communicating openly and frequently

about the status of our Y2K efforts. We appreciate your attention

to this matter and at the appropriate time I’ll be happy to answer

any questions.

Mrs. BIGGERT. Thank you very much.

[The prepared statement of Ms. Reynolds follows:]

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Mrs. BIGGERT. Next is Mr. Carlsen.

Mr. CARLSEN. Congressman Horn, Congresswoman Biggert,

thank you for allowing me to testify today. I think the city welcomes this kind of a hearing because we have really done a lot of

work in this area and really feel confident that we’re working toward compliance.

To date, the city, the computer systems in the city, are 96 percent compliant. We expect to be 100 percent compliant by September. I think the State has adopted some great compliance

guidelines that I think we may look into as well. There’s some really nice definitions as far as the linkages between the systems. It’s

something we’re going to look at.

The systems that we’re looking at that we feel that citizens need

to know more about that may be affected in our area really come

under four main areas. Those would be the 911 system, the utilities, mainly electric and wastewater.

We own the electric utility in Naperville, which is not common

in Illinois. It may be more common in California, Texas, those

types of places, but we buy power wholesale from ComEd so we

have some linkages there: Traffic signals and heat for residents,

which really fall under Nicor, and natural gas as well as ComEd.

As far as the 911 system goes, the city does operate a public safety answering point in the police department, and we have conducted rigorous tests on the software, hardware, and phone interfaces, radio interfaces with those systems, and to date they have

all proven to be compliant, and we have done some upgrading of

those systems to make—some of them were not compliant originally. We have made them compliant at this time. Really a lot of

work went into that. We actually had to travel to some test sites

to do some work and really did a lot of work with our software vendor in that area.

Within the utility arena, as I mentioned, the city owns and operates the electric distribution, water distribution, wastewater collection, and reclamation systems. We’ve tested a lot of our computerized and embedded systems within those plants and we are close

to compliance on a number of those systems.

Like many cities, we receive electricity and water from outside

source. I mentioned ComEd, DuPage Water Commission, and we’re

pleased to note that both ComEd and DuPage Water Commission

have worked closely with us to assure us of compliance and we’re

really—we’re happy that they’ve done a lot of work in that area.

Traffic signals present an interesting concern for residents not

only in Naperville but a lot of different communities. The city is responsible for 118 signals within our jurisdiction. All of our signals

have been tested, and we have found no problems with any of our

systems. There is an issue with electricity if they do go out. The

contingency plan is to use the full-length stop signs which would

obviously cause a little bit of trouble in traffic but hopefully it

wouldn’t be a longstanding problem.

As far as heat goes, living in the Chicago area we’re obviously

concerned that the weather may be bad, that there may be some

problems with heating, with electricity or natural gas and, as I

mentioned, we’re working with Nicor and with ComEd to make

sure that’s not a problem.

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As far as contingency planning goes, we met actually yesterday,

with all the department directors, representatives from different

departments, to discuss contingency planning, and what we’ve really done is moved from the focus on computer systems to the focus

on public safety, those types of areas. And that is being headed by

our Emergency Management Agency, and I think within the next

couple of months we’ll have some contingency plans set so we can

handle any kind of public safety situations, those types of things

that may occur.

In conclusion, I’d like to say we’re cautiously optimistic that

there will only be minor interruptions and no show-stoppers relative to Y2K within the city of Naperville. As Congresswoman

Biggert stated, we’re adopting the statement philosophy. We’re urging residents prepare as they would for a snowstorm. Our biggest

problem that we feel may be out there may be the overreaction to

any problems that occur on or around the new year.

I look forward to answering any questions. Thank you.

Mrs. BIGGERT. Thank you very much.

[The prepared statement of Mr. Carlsen follows:]

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Mrs. BIGGERT. Mr. Mefferd.

Mr. MEFFERD. Thank you, Vice Chairman Biggert, Chairman

Horn. I would like to address real quickly the issues relative to

DuPage County’s preparedness as we look at the overall picture.

One of the things that we need to look at is DuPage County’s response in two fronts.

First of all, internally, DuPage County is a facility much like everybody else’s facility in big business. What we’ve tried to do is look

internally at our computer systems. We’ve looked at our life safety

systems. As of the end of June, we had been advised by our Management Information Department that we are 99.4 percent complete in upgrading for our computer systems and should reach 100

percent compliance by the end of July.

Relative to our life safety systems, we’ve looked at things such

as our ability to generate backup power if that was necessary. Heat

and cooling capabilities for the county jail, for example, the convalescent centers and our other facilities, and we feel we are in

good shape relative to those issues.

Externally there are three major areas we looked at from the

county’s perspective. One of the biggest issues that we addressed

externally was the issue of utility reliability. I’m not going to address that in great detail as you’ll hear from them, not only with

Mr. Martin directly following myself, but in the second panel. But

with the assurances we have received, we feel pretty comfortable

that utility reliability will be there, which allows us to move on to

other areas.

Second, as we looked at external issues, we looked at the issue

of emergency communications, 911, our emergency radio transmitter sites around the county, that we’ve been assured that those

systems are in good working shape. There’s been a significant

amount of work done with the countywide computer-aided dispatch

system to ensure that it, in fact, is reliable. There’s been some

hardware changes made in that area which assures that it will be

up and running.

Also, the issue of traffic control is something we looked at. The

county has looked at five of its different type of controller systems

which are common to all of our 100-plus intersections that we control. Every one of those five different types of controllers that the

county uses has been tested by allowing the clock and the system

to run from 10 minutes prior to midnight to 10 minutes after midnight into the year 2000. There’s not been one glitch in any one of

those traffic control devices, and that information has been shared

with all of our municipalities to ensure the reliability of their systems which are using the same type of controllers.

As we move on to the area of public safety, and that’s really

where I want to focus today, a lot of questions routinely get asked

around the country as we talk about emergency planning. Will do

DuPage County develop a specific Y2K emergency planning? The

answer to that question is no. The reason for that is that DuPage

County, like every other county in the State of Illinois as well as

around the country, is required by the State law as well as by the

Federal Emergency Management Association to maintain an all

hazard emergency plan. That plan must address everything from

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tornadoes and floods to utility failures or any type of other incident.

The county emergency operations plan 2 years ago was reformatted, if you will, to be in concert with the Federal response plan.

Specifically with the thought of the fact that if we have a disaster

of large proportion that would be large enough to implement our

entire emergency plan, it would definitely be big enough to bring

in the Federal Government. And we wanted to ensure that we were

all signing off of the same sheet of music, if you will. So our emergency plan that is currently in place is currently undergoing a revision at this time to make sure that it is compliant. That is required, by the way, by State and Federal requirements on a biannual basis. That will be completed by October 1st.

Under that system, not only DuPage County but all of our municipalities operate under something called the Incident Management System or IMS. Under that system, there is one technical

lead agency that assumes responsibility for any type of hazard that

may occur, again whether it is a tornado or a flood or a civil disturbance or, in this case, the Y2K issue.

As we have looked at our primary threats relative to Y2K, the

major areas of concern as we look at this issue are law-enforcement-related, so we have addressed that. The sheriff’s office as well

as local law enforcement are the technical lead in dealing with the

Y2K-related problems that we anticipate. This Y2K response not

only involves the sheriff’s office but will involve a variety of other

areas, such as the Department of Human Services and others.

The County Emergency Operating Center, located in Wheaton,

will be staffed prior to December 31st and through the rollover of

the millennium, to make sure the county is available and is prepared to deal with any type of emergency.

Let me real quickly close with two other areas that we feel are

important. One is the importance of community preparedness, individual family preparedness. We realize, as you’ve indicated, Vice

Chairman Biggert, that every person has a responsibility in this

issue, not just government, and we are urging through a program

called the Family Disaster Preparedness Program that individuals

develop emergency plans on their own, that they have emergency

supplies that will be available not only for a rollover in a Y2K scenario but any type of major emergency or disaster.

Also, public information. We’re working very hard at the county

level to make sure every public information officer that represents

any level of government within the county has the same information, has up-to-date information so that as they receive informational requests, we can address them.

To close, let me bring up one very important point to ponder. We

need to remember that the rollover will occur on January 1st. January 1st, 1999 saw this county as well as much of northern Illinois

suffer through a major blizzard, a blizzard that was so large that

the President of the United States declared us a Federal emerVerDate 11-MAY-2000 08:04 Apr 06, 2001 Jkt 010199 PO 00000 Frm 00190 Fmt 6601 Sfmt 6601 E:\HEARINGS\60939 pfrm02 PsN: 60939
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gency area. We need to remember that Y2K does not create snowstorms. And if in fact, as you’ve indicated before, we prepare for a

snowstorm because again this is occurring in the middle of winter,

then we ought to be prepared for Y2K.

Mrs. BIGGERT. Thank you very much.

[The prepared statement of Mr. Mefferd follows:]

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Mrs. BIGGERT. And now Mr. Martin.

Mr. MARTIN. Thank you. Just on a little bit of a background. The

DuPage Water Commission purchases water from the city of Chicago for resale to utilities in DuPage County. The commission has

water purchase agreements with 25 municipal utilities, Argonne

National Laboratory, and one private utility with six service areas.

It is estimated that the commission’s utility customers provide

service to approximately 700,000 people.

The commission has been working on the year 2000 compliance

issue for close to 2 years. The two main information systems that

the commission has are a supervisory control and data acquisition,

known as a SCADA system, and a local area network. The SCADA

system is the instrumentation that the commission uses to monitor

and control water operations. The local area network serves as the

administrative system used for word processing, payroll, accounting, purchasing, and preventative maintenance.

The commission has contacted its hardware and software vendors, and with our testing we feel that our hardware and software

is year 2000 compliant.

The commission’s operations rely heavily on the Chicago Water

Department, Commonwealth Edison and Northern Illinois Gas.

The commission has sent Y2K compliance letters to these supporting utilities, and the following are the responses received from

these utilities.

The Chicago Water Department has retained a consulting firm to

work with city staff to evaluate the issue. Fortunately, the Jardine

Water Purification Plant which is the plant that treats our water

is in the process of installing a SCADA system and it would appear

that their water treatment equipment is not vulnerable to Y2K.

Commonwealth Edison has responded to the commission’s inquiry stating that their goal is to finish a companywide year 2000

compliance by the third quarter of 1999. In addition, Commonwealth Edison’s Y2K program Website indicates that January 1,

2000 falls on a weekend when electrical demand is relatively low

and ComEd expects and plans to have excess generating capacity

available at that time.

Northern Illinois Gas has indicated that they have the necessary

contingency plans.

The commission is performing the necessary activities to minimize service disruptions due to Y2K problems. The one significant

concern for the commission is if there were minor electrical outages

at midnight on January 1, 2000. In this event the commission

would not be able to close the discharge valves at the 74 delivery

points to prevent the distribution system pressure from dropping

below the Illinois Environmental Protection Agency required minimum pressure of 20 pounds per square inch. If the distribution system pressure did drop below 20 psi, it would be necessary to issue

a countywide boil order. To reduce this possibility, the customer

utilities have been directed to have all their reservoirs and storage

facilities filled by 11:45 p.m. on December 31st. At this time the

outlet valves on the connection points will be closed. The commission will continue pumping at a reduced rate during this period. If

there is no interruption in electrical service by 12:30 a.m. on January 1st, water service will resume. This temporary interruption in

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service should have no effect on water users because of the requirement for the customer utilities to maintain 2 times average day

storage. The water usage during winter months is generally 90 percent of average water usages.

If you have any questions, I would be glad to answer them.

Mrs. BIGGERT. Thank you very much.

[The prepared statement of Mr. Martin follows:]

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Mrs. BIGGERT. That brings us to the questions from the subcommittee and then we will—if you have questions and have not

turned them in yet for this panel, can you pass them over and

somebody will pick them up.

First of all, I’ll ask a couple of questions. Mr. Mefferd, you mentioned about the traffic signs and how many there are. Is it a contingency plan—let’s assume the traffic lights all went out. Is it a

contingency plan to have all of those lights, or do they already have

the type of stop signs that drop down so that you could have a stop

sign there or what would happen?

Mr. MEFFERD. The plan is on the county intersections that those

stop signs would be installed.

Mrs. BIGGERT. But they have not been now?

Mr. MEFFERD. That is the plan for later this year.

Mrs. BIGGERT. That would be beneficial not only for Y2K but

for——

Mr. MEFFERD. Absolutely; any power outage that occurs.

Mrs. BIGGERT. Saturday, I attended a cardboard boat regatta and

I thought it was just little cardboard boats that they raced across

this lake, but it turned out that they would have as many as 10

people in these boats and the first—one of the first boats was

named Y2K Bug, and I have to say it was the first boat that sank.

So I hope we have sunk the bug and taken care of all of our problems. But it was a nice bright yellow boat, but it didn’t make it

even out of the starting box, as I recall. I think maybe we have

solved all the problems.

Ms. Reynolds, what are you doing, in the message at the public

forums, are you recommending that people take precautionary

steps?

Ms. REYNOLDS. The public forums are really intended to get a

sense of what’s going on around the State so we have asked the

community colleges around the State of Illinois to in fact host their

community leaders and we will bring a State team in then to help

moderate, to provide information, and to really organize and structure the events. But our message really is to what the State is

doing, and then to find out how the communities are in fact preparing, and it really involves a panel such as you’ve organized

today.

But it also is, I think, incredibly important to make sure that the

public knows how their own community leaders are preparing and

then to offer suggestions as we would again with any winter storm.

This is in the middle of winter. It is Illinois. Just make sure you

are taking precautions as you would for the spring tornado season

as well.

So it really isn’t a message of make sure you’ve got your basement full of food. It really is a message of take reasonable approaches to your own preparations, but we want to make sure that

you know where your local governments are. It is also a way for

us to assess where we need some State resources or some State attention in regional areas of the State or in specific communities

that may need additional help.

Mrs. BIGGERT. Thank you.

Mr. Carlsen, what are you doing to communicate your message

to the residents?

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Mr. CARLSEN. We’ve started what our community relations people have termed a 3-pronged approach on using newsletters that

are sent out to all residents. We’ve already sent one out. We have

a copy of the original newsletter that was sent out as one of the

handouts. Our Website is really a big focus. Naperville has a lot

of people who have computers or have access to the Web, and that’s

where we’ve pointed them.

Newspaper articles through the press. They’ve been really good

with us as far as talking to us about what’s going on and there’s

been a lot of really good articles done that way. I think those are

the three main areas that we’ve used but we also communicate at

each council meeting through an FYI device to the council to let

them know where it is at and also that those agendas are available

to the public as well.

Mrs. BIGGERT. Do you have a budget for what’s been spent on the

Y2K?

Mr. CARLSEN. Yeah, we do. We’ve spent about $600,000 to date.

That’s actually kind of low for a city our size, but the reason that

is, is because a lot of our normal replacement programs have funded a lot of the replacement of computers that would not have been

compliant but they weren’t done for compliance sake. So $600,000

was spent strictly as a result of things that were not compliant.

Mrs. BIGGERT. Thank you.

Mr. Martin, have you recommended contingency planning for

municipalities in case there is an interruption in your services?

Mr. MARTIN. We have not. We don’t feel there will be a problem

and if there is, as I’ve indicated, a minor electrical problem because

of the 2 times average day storage that they’re required to have,

that problem should be resolved before the water is used up in

storage.

Mrs. BIGGERT. So you are really putting your percentage at 100

percent that there’s not going to be—— Mr. MARTIN. Yes.

Mrs. BIGGERT. Good. Positive thinking.

Mr. Willemssen, you have kind of the overview of the whole situation and have done so much with the Federal agencies. Do you

think that maybe just people here would like to know if you think

that all the Federal agencies will be compliant by our next deadline? As you know, Mr. Horn gives pretty tough report cards to the

agencies, and I think that’s based on your work.

Mr. WILLEMSSEN. I would say overall I’m much more optimistic

today on where Federal agencies stand compared to a year ago and

much more optimistic compared to 2 years ago, in large part because of the oversight done by Chairman Horn and his subcommittee. There has been much more urgency on the part of top

Federal leaders to address Y2K that, frankly, we didn’t see 2 years

ago. I can remember hearing in July 1997 with the Office of Management and Budget indicating that they didn’t think this was a

major issue. Shortly thereafter they changed their tune and so has

senior Federal leadership, so I’m more optimistic today than I was

at that time.

Nevertheless, as I mentioned earlier, there are some major risk

areas among Federal programs that have to be addressed. As

Chairman Horn indicated in his most recent grading session of the

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43 high-impact programs, the data supplied to the subcommittee

only indicated that 2 were ready and 41 were not, and it is July

1999. So there is still a lot of work to be done, and I don’t think

Federal agencies can rest easy until it is done.

Mrs. BIGGERT. Thank you. Those are my questions.

Chairman Horn.

Mr. HORN. I’m going to ask a couple for the panel in general, and

just if anybody is willing to respond to this. If you had to do this

over again, what have you learned that you should have done first

after you’ve gone through this exercise—not that we’ll go through

it again, maybe? I would like to get your wisdom after you’ve dealt

with this for months or even years. Any thoughts? Let’s just go

right down the line.

Mr. WILLEMSSEN. I’ll offer a couple of comments. I think if we’re

starting over again, one thing we’ve learned is where the emphasis

needs to be. While systems are important and we have to address

the computer systems and address the 2-digit problem for the year

in those systems, we probably should have earlier on had more of

an emphasis on providing programs, functions, and services to the

public. Because the bottom line to the public is they don’t really

care if the system works. What they care about is that they get

their benefit or their service that is expected. That kind of emphasis, at least from a Federal agency perspective, didn’t occur until

this year so that was a little late.

Second, I think the other thing that’s been learned is when many

went into this Y2K issue early on, they thought of it primarily as

a mainframe problem and as they started peeling the onion, they

found out it was much bigger than that. There was little discussion

a few years ago about drinking water and wastewater, little discussion on telecommunications, electric utilities. It was predominantly

talking about old IBM mainframes and COBOL. As more work was

done on Y2K, we quickly understood that it was a much broader

problem in scope and that’s something that I think if we could have

done that earlier would have been beneficial.

Ms. REYNOLDS. My only regret is not having started on this earlier. We only took office 6 months ago, so I wish we would have

been in office last year to be able to address this a little earlier.

But at this point I really have no regrets. We have done exactly

what he suggested of taking a functional approach to government

and services.

I didn’t feel like I honestly could have gone to the Governor and

said three critical systems may not be compliant, Governor. He

would have said, ‘‘What does that mean? I want to make sure the

services of State government can in fact be delivered. Period.’’ So

that’s what our approach has been. I really have no regrets to this

point.

Mr. HORN. Mr. Carlsen.

Mr. CARLSEN. I would echo that sentiment. We started in 1997

and involved about 20 or 30 employees over the term of what we’ve

done. I think we didn’t take a functional approach at the beginning. I think that might be something I would say that I wish we

would have done and we’ve done more of that now. I think that’s

because we focused on systems. That’s what we’re trained to do.

When we moved on those things and got some of those things out

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of the way, we were able to move on and start taking a higher level

approach as far as functionality. That would have been nice to

start that way.

Mr. HORN. Mr. Mefferd.

Mr. MEFFERD. I think in the same light, one of things we’re fortunate about in this county is we have a good working relationship

between the county government and our municipalities. One of the

real benefits we have reaped from this, and I can’t say we want to

go back and do it over again, but we have opened some doors relative to closer cooperation not only with the government agencies

but more with the private agencies, and we’ve found ways to better

coordinate and better cooperate not only for this emergency but

others.

And I guess we can always say if we had more time to do more

of it, we could come up with a perfect world. I think the more time

we are in preparation for any disaster or a major emergency event,

the better off we can be prepared and better ensured of public safety. That’s our ultimate goal.

Mr. HORN. Mr. Martin.

Mr. MARTIN. We have with our water system a pretty sophisticated instrumentation system, but we’ve always taken the approach that at some time the system might not operate. So we’ve

always tried to prepare ourselves with contingency plans in the

event that we don’t have a working control system and so we really

had—it was just modifying our systems for the year 2000, but we

had already come up with contingency plans and we just modified

them.

We’re a newer agency so we have the advantage there in that we

were able to include this in the original design but we really

haven’t—I don’t think there would be anything that we would really do differently.

Mr. HORN. Ms. Reynolds, since you are the chief technology officer for the State of Illinois, let me ask you to what degree has the

various Federal programs that the State administered and Federal

agencies been in touch with you and are the interconnections being

made that have to be made once they give you the money you administer it? What’s happening on that front?

Ms. REYNOLDS. We have had several teams of Federal auditors

in Illinois that I have met with as a State perspective, and then

they have been going over individual agencies’ programs. Just this

week I have spent another day with a second team from HCFA to

go over, in fact, the Medicaid programs with our Department of

Public Aid and our Department of Human Services. So they have

been very thorough and they have been very supportive of our efforts and there’s been a nice coordination.

About a month ago I spent a day with the FEMA regional meeting of 6 States and that was a very productive day as well, and

they had all the Federal agencies represented there as well. And

about 2 months ago I was invited by the Chicago Federal Executive

Board, which is a conglomerate of all the Federal agencies in this

region, to work with them on Y2K efforts. So there’s been extremely good cooperation both among the Federal agencies and the

State government as well as, I might add, the city and municipal

governments.

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The one in particular that I’m working with on a weekly or

monthly basis is the city of Chicago. And we are working with

them very closely and I would echo really this has been—Y2K is

an opportunity to strengthen those types of relationships. And it’s

also been a great opportunity to get a better sense of inventory, I

think, than certainly government and probably private industry

has ever had in terms of technology. So I really look at it as an

opportunity to work with the Federal agencies on a day-to-day

basis in the future beyond January, hopefully.

Mr. HORN. I think that’s very well said. You are absolutely right.

If nothing else comes out of this and we get improved Federal,

State, and local cooperation, I think it’s been an exercise worth

having done.

Let me ask you, what is the major mistake that you think people

have made in this area and you’d try to remedy that again? So you

don’t have to confess yourself, but just from what you hear and see

in terms of other governmental entities and other States. You are

all parts of States’ associations.

Ms. REYNOLDS. The biggest mistake, I think, is people aren’t

communicating the full ramification of both their efforts or their remediation plans, and I think the general public is just scared. I

mean, they’re generally skeptical of the government ‘‘I’m from government, I’m here, you can trust me’’ kind of attitude. So I think

people are generally skeptical and they want to see details.

Whether they use that detail I think is immaterial. It is important to me that we communicate very openly about where we’re at.

I’ve told the agencies I don’t want you to lie. If the truth is bad,

I want to know the truth. It doesn’t matter to me whether you’ll

be done December 31st or July 1st. To me, I want to know the

truth in where you’re at. Because I think that’s critical to how the

public reacts to that preparation. So I think the biggest mistake

people have made is not communicating the full truth or the full

story.

My other sense is that people haven’t taken it seriously in all

areas or all levels of government or public utilities. I think the

larger facilities and the larger companies and the larger municipalities have certainly done an admiral job of addressing the issue.

But I think there are some smaller communities, smaller companies, smaller businesses, that have in fact not taken it seriously

and may not have the staff or the resources to do much about it,

and those are probably the links in the chain that I’m most concerned about.

Mr. HORN. That’s well said. Does anybody have another point

they’d like to make before I get into the audience questions?

Let me start on the audience questions, and it comes at a very

good time. Mr. Martin, you are the manager of water operations for

DuPage County Water Commission. The first question here is, Will

the toilets flush? This is by, obviously, a practical person in the audience here who is in touch with reality.

Mr. MARTIN. Yes, they should. I know one of the concerns that

people have with the fact that we’re going to stop providing service

to our municipal customers, but they have again—and that’s the

reason you have water storage is so you can operate during interruptions in electrical power service.

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I don’t anticipate anything going wrong with the water system

because we’ve been told by the electric utility that we should have

electrical service. Things can happen and that’s why we maintain

the 2 times average day storage so we can survive periods of time

without electricity. So I think you can flush your toilets.

Mr. HORN. Well, that’s helpful. I take it the water I’m drinking

is under your commission’s jurisdiction?

Mr. MARTIN. Yes. Isn’t it good?

Mr. HORN. I must say, it is a great pleasure for all of us to get

out of Washington where we have to use bottled water. And yesterday in Topeka, and now Naperville, we’ve got great water. I keep

drinking it all the time. But back there we have wonderful reservoirs and everything that the Corps of Engineers built in 1859,

but the city of Washington hasn’t upgraded our distribution system

since 1859. And we decided, I guess when x rays started showing

metal in our bodies, that we would get private water, although the

L.A. Times series says there isn’t much difference. I envy you with

decent water out in the hinterlands, so keep it coming.

Mr. Willemssen of GAO, maybe you can explain to an individual

in the audience, What’s the difference between Y2K OK, Y2K

ready, and Y2K compliant?

Mr. WILLEMSSEN. Those terms have been thrown around loosely

by many different organizations and you really have to rip away

the detail behind the definitions to clearly understand what they

are. I think, for example, the State of Illinois testified that their

definition of compliance includes making sure that all the exchanges have been thoroughly addressed. Other organizations do

not do that before deeming their systems compliant. Other organizations just simply look at the application code and once that’s

fixed, they view their system as compliant, irrespective of whether

the supporting hardware and operating system are compliant.

So I think it is a valid question. It is one of the issues that in

the guides that we initially put out in draft form in February 1997,

we said an organization, one of the first things you need to decide

is defining what you mean by Y2K compliant and making that definition clear to all, because there continues to be a wide variety of

definitions used by differing organizations.

Mr. HORN. The next one I think is also directed at you. Since

there’s a vast quantity of items that are imported along with the

crude oil and some foods, how will Y2K affect these supplies after

January 1, 2000, the foreign countries being much further behind

and transport being suspect?

Well, you are absolutely right on both refinery and oil and other

liquid resources. There are problems with microchips on a lot of the

tankers, and there’s also a lot of them on the pipelines. Let’s take

Russia, for example. Mrs. Biggert mentioned the snows in January

here. Russia provides most of the natural gas for eastern Europe

and parts of central Europe, and if their pipelines go down because

of malfunctions due to the particular microchips they have in either diverting it in certain pipes and in certain methods and the

particular refinery ships, they will have some real problems in central Europe in freezing at that point in the year. Now, this was

what happens afterwards. Hopefully things will get back to normal

afterwards.

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Mr. Willemssen.

Mr. WILLEMSSEN. I think that’s a very valid issue, one that we’ve

done some work on, and one that we’ve made some suggestions to

John Koskinen, the chairman of the President’s Y2K Council. In

particular, the oil issue was one of concern to us.

Because of the many unknowns surrounding other countries’ readiness on their oil production and distribution system and because of our heavy reliance on imported oil, we had recommended

to one of the working groups of Mr. Koskinen that they put together some credible national-level risk assessments and develop

national-level scenarios and contingency plans in the event that

there was a disruption with oil imports, and put those contingency

plans together so that they can be ready if that disruption occurred. They agreed with those suggestions. They are in the process of putting together those contingency plans so that in the event

the disruption occurs, that there will be some backup plans in

place.

Mr. HORN. Next question is directed to county officials and some

local officials. It says: I called the DuPage emergency group and

the Kane County to request a representative to speak to a local

government group. Both said they weren’t getting involved till the

end of August. Why?

Mr. MEFFERD. I think we have in fact been speaking on a regular

basis to various groups. I’m not aware of any specific request that

came in. I would be more than happy to respond to that.

Mr. HORN. We’ll point that anonymous person and push them in

the direction of Mr. Mefferd. I think we all agree that the sooner

we get information out, the less rumor and panic and the rest of

that nonsense, and people wanting to make a living on misery,

writing books; and now you mentioned the movie that I guess is

starting in ‘‘Melrose Place’’ or something, Beverly Hills—what’s the

difference? OK.

Mr. Willemssen, State contingency programs at National and

State levels must go on through testing. I understand testing is

considered 60 percent of the work. If so, we’re in trouble. What do

you think on that?

Mr. WILLEMSSEN. I think there is reason for concern on some of

those State administered Federal programs, especially where we

see completion dates targeted for the fourth quarter of 1999. And

what we’ve seen to date, at least Federal agencies, is very typically

underestimation of the amount of testing that’s required. And cutting that a little finer, it’s the amount of effort involved in resolving the problems that result from the testing. So when we see

those fourth quarter 1999 completion dates, it is cutting it very

tight.

And in some cases the fail date is not January 1, 2000. In some

cases it will be October 1, 1999. In the case of State unemployment

insurance agencies, we had a fail date of early January 1999 and

four States and territories actually didn’t have their systems done

in time and had to implement a contingency plan. So I think there

is a reason for concern in that area.

Mr. HORN. The last question from the audience—the others will

go over to panel 2 where they’re more pertinent. Ms. Reynolds

states that Illinois provides more information on Y2K compliance

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than any other State. Where does this information go? I haven’t

seen much.

And no matter how many times we always can say something in

any agency, Congress, executive branch, States, we don’t reach everybody; and one person wisely said, When you are tired of saying

it about the 100th time, that’s just when you begin sinking

through. So what’s the State of Illinois doing to do this? And when

bills are sent out by city, county utilities, I would think that’s one

good way to get the message out.

Ms. REYNOLDS. I hadn’t thought about it till now. Property tax

notices are due all over the State right now. We probably should

have sent it out with the property tax notices.

In terms of public information, we’ve certainly put out press releases this spring and the beginning of the monthly reports, once

we got the report redone and enhanced in the way that I have suggested. But it is all available. The monthly reports are downloadable on our Website which is www.state.il.us/y2k. It is available off

the State home page. It is also available in printed format through

our office, the Governor’s office. We’d be glad to supply that to anybody who requested it.

It’s also been made available to the media throughout the State

and there simply has not been a lot of coverage on it. My suspicion

is this fall when people begin to get back to school and focus on

the end of the year, I think there will be more public attention to

the matter, but we have in fact tried to provide it. It is a fairly

lengthy report in terms of our monthly report. This summer we’ll

be doing a pamphlet and we’ll be providing more, smaller packets

of information available to people in terms of a very public way

statewide.

Mr. HORN. Your suggestion on the schools is fine. How about the

libraries throughout the State?

Ms. REYNOLDS. Anybody can get access to the Internet and access to the home page through their libraries. That is one way to

access the Web page, certainly. The libraries, in terms of their

preparation—is that your question?

Mr. HORN. Yes. People ought to know—I think you were wise if

we could have gotten it on that property tax. That’s a good idea.

Ms. REYNOLDS. I just thought of it right now. People probably

wouldn’t have been appreciative of State information in their tax

bills. That’s not always one of their favorite pieces of mail they receive. But at any rate, we will try it this fall and try through public

service announcements and through other avenues. Our intention

is to try to get information out through numerous avenues this fall.

Mr. HORN. I think you’ve got to remember that most of the citizenry do not know how to work a computer. Not everybody is going

to get into the Worldwide Web so we’ve got to reach them another

way.

Thank you very much. Appreciate it.

Mrs. BIGGERT. I would like to thank the entire panel. I think

that your testimony and your comments were very helpful to us,

and we really appreciate your taking time out of your busy schedules to come. So I will excuse this panel and we will call the second

panel up. Thank you very much.

If you’d all like to stand, I’ll administer the oath.

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[Witnesses sworn.]

Mrs. BIGGERT. I think for this panel I’ll introduce you one at a

time so that the audience will be able to have a better background

as you start.

Our first panelist of the second panel is Alan Ho from Commonwealth Edison. He’s going to review how Commonwealth Edison is

becoming or is Y2K compliant. Thank you very much.

STATEMENTS OF ALAN D. HO, Y2K CORPORATE MANAGER,

COMMONWEALTH EDISON; DALE JENSEN, DIRECTOR, Y2K

CUSTOMER COMMUNICATIONS, AMERITECH; CRAIG WHYTE,

DIRECTOR, REGIONAL COMMUNITY RELATIONS, NICOR GAS;

PHILIP PAGANO, EXECUTIVE DIRECTOR, METRA; AND GARY

MIELAK, VICE PRESIDENT AND CHIEF TECHNICAL OFFICER,

EDWARD HOSPITAL

Mr. HO. Good morning. Thank you for the opportunity to testify

here today. I had testified last September and stated a few things.

I would just like to go back to that, just to provide some continuity.

We at Unicom and ComEd recognize the important role that we

play in this whole Y2K issue, and indeed last September I stated

that if we are unsuccessful in our readiness efforts, why then the

readiness efforts on the part of others would really go unnoticed.

I’m glad and pleased to state today that as of June 30th, Unicom

and the ComEd company is Y2K ready.

And so what do I mean when I say that? That includes all

Unicom companies, ComEd’s nuclear stations, ComEd’s fossil generating systems, our transmission and distribution system, our enterprise wide mainframe computer systems and applications. It includes our distributed computer operations, our local area and wide

area networks, our office facilities, and our supply chain.

Some of the activities that we’ve undertaken this year to increase

the certainty of our readiness and strengthen our readiness include

independent verification and validation activities where we’ve hired

third-party reviewers to come in and review our management process as well as dig into the computer code that’s been renovated and

remediated as well as the embedded systems work.

We’ve also had peer reviews by other utilities come in and review

our work and we’ve reciprocated by going to those other locations

as well to provide lessons learned and share information.

Another activity we undertook this year to further demonstrate

our readiness is performed numerous integration tests. This year

alone we’ve performed over 90 integration tests on our electric operating system. That includes our generating stations as well as

our transmission distribution system and our computer systems.

These are date rollover tests that we’ve conducted with dates including this year, the year 2000, and into the year 2001. Again,

these tests are tests that were performed on our actual systems,

not computer simulations, actual tests at our plants and our facilities.

Third, the fact that we are today Y2K ready, we need to maintain a vigilant position. We have instituted a Y2K moratorium

starting on July 1st to manage the risk and maintain our readiness. We’ve implemented a clean management program and a program that requires senior officer approval to make any changes to

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our computer systems and our embedded systems. So there’s very

tight control. Because we’ve worked so hard to make our systems

Y2K ready, we want to keep it that way through the rollover period.

Last, we have prepared numerous contingency plans and have

developed what I call an operating plan, which I will use to run

our Y2K command center on New Year’s Eve. Basically, it will be

our playbook that will guide us through the various scenarios that

we’ve developed. And between now and then, we will be practicing

monthly exercising and practicing getting ready for our September

nationwide drill that will be coordinated through NERC, and

there’s also a drill that we’re helping with the NRC in October, all

in preparation for New Year’s Eve.

Last, I would like to offer a practical tip for our 3.4 million customers. I would just ask that our customers keep to their normal

electrical usage pattern. The reason for that is having a predictable

load pattern will allow us to avoid any additional challenge that

may come up on New Year’s Eve.

I would be glad to answer any questions that you might have.

Thank you.

Mrs. BIGGERT. Thank you very much for your testimony.

[The prepared statement of Mr. Ho follows:]

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Mrs. BIGGERT. And now we have Dale Jensen, Ameritech director, year 2000 customer communications. Thank you.

Mr. JENSEN. Good morning, Vice Chair Biggert, Chairman Horn.

Thank you for inviting me to present testimony on Ameritech’s activities to address year 2000 issues within our company. In the interest of time, I propose to direct my testimony to the following five

areas: The scope of our initiatives; the identification and status of

key areas of the initiative; additional readiness activities underway

at Ameritech; our participation in industry year 2000 readiness activities; and some tips for consumers, courtesy of the Federal Communications Commission.

We began our year 2000 initiative at Ameritech in 1996.

Throughout our efforts, our overriding goal has been to make the

year 2000 event transparent to our customers by working to ensure

that the products and services we provide avoid material problems

associated with the year 2000.

Our year 2000 initiative includes reviewing more than 2,500

products and services; remediating an IS portfolio of approximately

1,000 applications; upgrading 1,400 host and remote switches; analyzing and preparing thousands of desktop and office components;

and preparing the access and security systems, heating and cooling

plants, alarms and elevators in over 12,000 buildings and equipment vaults.

A major component of Ameritech’s year 2000 initiative is ensuring that we address and resolve any year 2000 issues within three

critical areas of our business.

The first area was our network infrastructure; which includes

our local exchange, cellular paging, advance data services, video

and long distance networks.

The second area is our information services infrastructure, which

includes the information services hardware; applications, and operating systems that enable us to conduct the day-to-day operations

of our business.

And the third area was our operating infrastructure; which includes items such as real estate properties that we occupy as well

as employee support tools such as desktop personal computers.

Having broadly defined the critical areas of our initiative, I

would like now to discuss the status of each of those areas as of

March 31, 1999. While I recognize that this hearing is taking place

in July 1999, at Ameritech we report our results to our customers

on a quarterly basis, and we’re still in the process of compiling our

data for the second quarter of 1999. We expect to post those results

on our Internet Website in mid-July.

For Ameritech’s network infrastructure, as of March 31st, all

identified mission-critical network components of Ameritech’s local

telecommunications services, dedicated voice and data transport

services are year 2000 ready. Similarly, as of March 31st, all identified mission-critical network components for Ameritech cellular,

paging, and long distance service networks are year 2000 ready.

Corrective activities are also far along for our cable television

service infrastructure and those mission-critical network components are expected to be made year 2000 ready well in advance of

the turn of the century.

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As of March 31st, Ameritech had completed its year 2000 remediation activity on all of the mission-critical information services systems and applications in its IS infrastructure, and they are now

year 2000 ready.

And, finally, as of March 31st our operating infrastructure was

over 95 percent year 2000 ready.

As I mentioned, at Ameritech we’ve made significant progress to

address and resolve the year 2000 issue, and we believe that we’ll

have all Ameritech systems essential to maintain customer service

completely year 2000 ready well before the turn of the century, perhaps even as early as July 31st.

In addition, although we are confident that we have taken appropriate steps to assure that we do not encounter year 2000 issues

within our company, we are also developing business recovery and

continuity plans designed to quickly address and resolve any significant potential problems that may arise.

In addition to internal company activities focused on addressing

year 2000 within Ameritech, we were also participants in several

industry forums that focused on addressing and resolving year

2000 issues within the telecommunications industry. As a member

of the Telco Year 2000 Forum, a nationwide group of the largest

telecommunications companies, Ameritech participated in intranetwork tests covering voice, high-speed data and 911 emergency

services. Almost 2,000 tests produced only 6 anomalies, a 99.9 percent success rate, and each anomaly was corrected.

Before I conclude, I would like to share several consumer tips

that were published by the FCC in its recently released Y2K communications sector report wire line telecommunications sector. In

that report the FCC suggests some tips for consumers, including

try to place some important telephone calls, particularly those overseas, before or after New Year’s Day; minimize phone use on New

Year’s Day. Heightened traffic volume could overtax the network.

And have at least a phone available that doesn’t rely on electric

power to operate. Cordless phones normally do not work without a

separate power source.

I would like to conclude my testimony just by saying, as the subcommittee has recognized, the year 2000 issue represents a significant challenge to Ameritech’s business and residential customers

as well as to the government. As had been noticed, it is a worldwide concern which has been declared by many industry experts as

the largest single project many companies will have to face. Resolving the issue requires strong project management, timely and informative communication, and cooperation across industry boundaries. At Ameritech, we’re confident that we’ve addressed those

challenges. I thank you for the opportunity to share these thoughts

with you today.

Mrs. BIGGERT. Thank you very much.

[The prepared statement of Mr. Jensen follows:]

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Mrs. BIGGERT. Next is Craig Whyte from Nicor Gas. He says that

gas service will not be interrupted.

Mr. WHYTE. Yes, you will have gas. Of course. Thank you again,

Congresswoman Biggert and Congressman Horn.

On behalf of Nicor, we’re very pleased to be here. We’ve been

working on this project since 1996. We’ve had a committee established of 40 people and have made tremendous progress. As Alan

mentioned, we believe we’re Y2K ready as well. However, we’ll continue to do testing throughout the end of the year.

In order to make my testimony more concise—which I’m sure you

appreciate—as well as informative, we’ve put it on a video, and the

video will be made part of the testimony when we’re done. So in

lieu of any more time, I think we’ll just roll the video and if time

permits, I’ll wrap up afterwards.

Mrs. BIGGERT. That will be included in the testimony, without

objection.

Mr. WHYTE. Additional copies will also be made if needed.

[Videotape played.]

Mr. WHYTE. We’ve made that tape available to all of the local

municipalities that we currently service, over 400. A majority of

them have used it on their cable access channel to put the word

out. We’ve also distributed it to all of the local television, newspapers, and so forth. So the word is out there. We started our presentations early in January. We’ve been very successful with local

and civic organizations and so forth. With that, I would be happy

to answer any questions you might have.

Mrs. BIGGERT. Thank you very much. That was a different type

of testimony than we’re used to.

Mr. WHYTE. It’s a lot easier for me, that’s for sure.

Mrs. BIGGERT. Next we have Gary Mielak, vice president and

chief executive officer at Edward Hospital.

Mr. MIELAK. Thank you, Vice Chairwoman Biggert and Chairman Horn.

In 1992, Edward Hospital launched an orchestrated attack on

the millennium bug. As the community’s health care provider, we have invested more than $41⁄4 million on the project. We have also

invested labor that’s equivalent to four full-time employees. As a

result of this 7 year Y2K project, Edward has made provisions to

enter the new year with adequate power, supplies, staffing, communications and fuel, along with Y2K compliant medical devices.

Edward Hospital has deep roots in Naperville, having served as

the community’s health care provider for decades. Edward Hospital

today is a medical center providing a broad spectrum of health care

services to Naperville and a widening area of surrounding communities.

Like other hospitals, Edward maintains a posture of readiness

for emergencies and disaster response. Because of this orientation,

Edward is among those at the head of the pack. According to a Chicago based consulting firm, Edward is among the Nation’s top 25

percent of hospitals in Y2K preparedness. The bottom line for us

is anything with the potential to affect our patient’s health and

welfare is a high priority.

Let’s look at the Y2K problem in the context of health care delivery. While Edward and other hospitals have a history of emergency

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readiness, the Y2K bug is a unique animal for us. In the worst case

scenario, many of the interdependent services could be cut at one

time, requiring hospitals to survive on emergency backup systems

and processes which were really never meant to sustain a hospital

for an extended period of time. Failure in the chain of major utilities supply distribution, communications, and financial services

would cripple a hospital’s ability to serve its community, and this

is a serious threat.

Y2K presents an incredibly complex planning job and challenge

for the hospitals. The sheer number of areas that must be addressed is vast. The issues involve interdependency among patients, doctors, suppliers, payors, and agencies.

In addition to care delivery and office management issues, we’re

also dealing with potential supply chain problems beyond our control. For example, manufacturers and vendors are not always

aware of their products’ Y2K readiness because some of the components come from yet another supply chain. However, many areas

remain that we can affect and minimize the impact of Y2K.

And here are some of the things that Edward has done: First,

medical monitoring equipment with microprocessors and embedded

chips. These are devices that are critical to life support in a lot of

cases. These include infusion pumps, glucose monitors, ventilators,

dialysis machines, heart machines, defibrillators and others. So far,

of the date sensitive equipment that is high priority, we have found

that less than 3 percent of the devices have required repair or replacement.

Next, the hospital has emergency power from its routine backup

generators as well as a large extra generator leased for additional

power during this period of time that will sustain us during any

kind of an emergency. Information systems, of course, affect everything from patient scheduling to clinical records and inventory

management.

To date, close to 100 percent of the computer software and hardware products the hospital uses are compliant. A new control computer for the heating and ventilating system had to be replaced because it was not complaint. The hospital has made provisions for

bulk delivery of water and fuel oil, for heating and electricity generation, as necessary. And Edward will keep an additional 7 day

patient food supply on hand during critical Y2K periods.

Security systems have been checked and made compliant. Elevators will operate. The telephone system is being tested, as we

speak today, for compliance at the manufacturer’s site. A radio station is working with the hospital to provide emergency communications for calling in staff. A network of CB radio users will be

formed for communication if necessary.

Internal and external communications to the staff and public are

an integral part of the preparation. We will continue to inform the

public about what we are going to do in case of an emergency.

Planning is underway to ensure appropriate staffing levels. Interhospital planning has just begun and we’re working with our colleagues to make sure plans and ideas are shared.

In conclusion, behind all of the devices, processes, and plans are

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people. Our health care professionals’ ingenuity, integrity, and

pride in providing quality health care will drive us all regarding

Y2K preparedness. Thank you for the opportunity to make our

presentation today.

Mrs. BIGGERT. Thank you very much for being here.

[The prepared statement of Mr. Mielak follows:]

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Mrs. BIGGERT. Now, Mr. Pagano.

Mr. PAGANO. Thank you for inviting us here today. For the benefit of those not familiar with Metra, let me start with a brief summary of what we do. You’ll quickly see why we took this very seriously and aggressive approach to the Y2K readiness situation.

In terms of ridership, Metra is the second largest commuter rail

system in the United States. Last year we carried 77 million people, which was our highest ridership since 1984. This year we are

ahead of that mark and intend to set another record.

In terms of our network, however, we are the largest commuter

rail system in the United States. We operate over 11 lines, have

500 route miles, have 130 locomotives, 900 passenger cars. We

service an area the size of Connecticut and carry nearly 300,000

passengers weekly.

Finally, we operate this network with a great deal of reliability

and it is recognized as the leading commuter rail agency in the

United States.

If some computer glitch forced those riders out into Chicago’s

expessway system, we’d have instant regional gridlock. I’m happy

to say that we don’t think that will happen. We’ve been working

on the Y2K compliance since 1996. We have found no Y2K problems in our computers, facilities, or equipment that would cause a

disruption to our computer rail service.

Looking for possible Y2K bugs, we first focused on large mainframe legacy financial administrative systems. We then broadened

our focus to include all areas of computer use and established an

internal Y2K task force.

That group surveyed and assessed support computers and embedded computers in equipment and facilities. They also evaluated

the readiness of key suppliers, service providers, and other railroads that interact with Metra.

For all areas of computer use, we employed a methodology of

awareness, inventory, assessment, testing, and implementation.

During the assessment phase, we measured each computer system

for Y2K processing issues and classified each as mission-critical or

not. We gave remediation priority to systems that are mission-critical to safety reliability of train operations, revenue collection, and

compliance with government regulations.

Throughout this process, Metra’s Board of Directors, senior management and auditors, along with the Federal Transit Administration and the Federal Railroad Administration, have received regular reports. Specific areas of investigation include mainframe and

administrative computer systems, locomotive and passenger cars,

track and signalstations, so on and so forth.

Of course, we can’t guarantee that nothing will fail or that our

service is totally immune to disruption from a third-party problem.

We are prepared to respond to any such situation with the same

dedicated manner as during other unexpected or winter-related disruptions to service. We rely on established procedures within our

operating rules and contingency plans for power losses or problems

caused by bad weather. We also rely on federally required manual

backup systems and procedures for components or equipment failures.

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We’re confident that we won’t have to do this. As I said earlier,

we really don’t see any Y2K problems. So far, to date, we have spent about $750,000, and again we have found very few of our systems that had to be tinkered with or modified. With that, we’ll answer any of your questions.

Mrs. BIGGERT. Thank you very much.

[The prepared statement of Mr. Pagano follows:]

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Mrs. BIGGERT. That concludes the testimony for this panel, so I

think I’ll ask Chairman Horn to ask questions.

Mr. HORN. Let me ask you generally the same question I asked

the last panel. And that is if you had to do it over again, what have

you learned that you should have done first? Let’s just go down the

row with Mr. Ho.

Mr. HO. There isn’t much I think that we would do different. I

do believe there is significant value gained now on a go-forward

basis beyond these Y2K rollover dates, and that comes from the additional configuration of control that we have over our computer

systems. We have inventoried everything. We have also retired

non-standard applications, so we’ve taken an opportunity to standardize work so that—standardized applications as well as systems.

And so that has value both internally and across our supply chain.

Mr. HORN. The next gentleman, Mr. Jensen.

Mr. JENSEN. I would agree with Alan. I think at Ameritech, we

have a strong program in place. I don’t—in retrospect, I don’t think

we would have done anything different. Certainly, probably everyone would have started earlier but—and I suspect in the future if

we run into a situation like this, we probably will start earlier.

But overall inventory, the benefits are numerous going forward

from an inventory control, supplier management and supplier relationship and so I don’t think we would have changed very much,

if anything, in our program.

Mr. HORN. Mr. Whyte, Nicor Gas.

Mr. WHYTE. I would have to agree with the comments made. We

started in 1996, which is really a 4-year tenure, which gives us a

lot of time to prepare. We started our informational process up

early, which has been very beneficial. So I really can’t say that we

would have changed anything drastic.

Mr. HORN. Mr. Pagano, Metra.

Mr. PAGANO. I think what we learned was, as a benefit, we had

many of the people that had put in the systems for us on staff so

that they were able to quickly make an assessment. I think in the

future what we’ve learned is that there needs to be more documentation of procedures so that recordkeeping is there in case you

don’t have the old heads around to followup.

Mr. HORN. Mr. Gary Mielak, the vice president and chief technical officer for the Edward Hospital.

Mr. MIELAK. I think the two issues that we learned more about

than anything going through this process was that interaction with

our professional colleagues, other hospitals and agencies. I wish we

would have had more time to do that, because everybody was so

busy focusing on their own areas of expertise within their own facilities and hospitals that people just didn’t have time to look

around. Even having started in 1992, we only found the time recently to start looking outward from our facility.

Mr. HORN. Did you start in 1992?

Mr. MIELAK. We started in 1992.

Mr. HORN. I congratulate you, because you were 6 years ahead

of the executive branch of the Federal Government, and it took us

3 years to prod them into doing anything, and they didn’t do it

until 1998.

Mr. MIELAK. Thank you.

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Some of the supply chain concentration also is another thing that

I think that we could have spent and should spend more time on

between now and the end of the year. But it is very difficult for

a lot of the suppliers to even know their situation for us to appropriately interact with them.

Mr. HORN. Perhaps you can answer the question that was filed

with the first panel, but we really didn’t have an expert on this:

What is the situation with the drug manufacturers? As a pharmacist in the community, says the writer, a common question is,

How much of a supply should I keep in store and on hand that’s

extra? What we have been told is a 90-day period we ought to prepare for.

Can any of you comment on a contingency plan regarding the situation?

Well, I guess, Mr. Mielak, you have the same problem they face?

Mr. MIELAK. I think we probably do. However, hospitals, of

course, having always an emergency preparedness plan, even for

pharmaceuticals and other items that patients use, we really do

keep several days’ and sometimes a week or more worth of supplies

on hand, and one can usually tell from your inventory turnover

how fast that supply will deplete in each one of the drugs. It is not

our intention to hoard supplies or to bring weeks’ worth of supplies

in, but to be prudent about what we think maybe an inventory

shortage might be, and work with our suppliers to have an adequate supply on hand for a week or so.

Mr. HORN. OK. Do we have any more questions here from the

audience?

With concern in it being a leap year—I guess it means about a

leap year and turning—I really—staff is going to have to put it into

English I can read. I can’t read it.

Mrs. BIGGERT. I’ll read it. With concern with it being a leap year

and the turn of the century, will there be any problems on February 29th? Will this affect us?

Mr. HORN. I guess I’ll answer that first. The leap day, February

28th, 29th, and March 1st have been dates that have been included

in our overall test program so our electric systems and our computer systems can handle that date in the year 2000 and beyond.

Mr. MIELAK. There are several applications also in the hospital

area where we have started testing software a few months ago for

date changes that might be applicable all the way until the year

2004. So there are several dates along the way that I know in our

applications we have to be mindful of.

Mr. HORN. Next question is, Where and when can a citizen obtain the summary of this hearing?

The hearing transcripts will be printed shortly, but the testimony

that the members before you have given in three panels—we have

two panels so far—they will be put on our Website and the Website

is www.house.gov/reform/gmit. It stands for Government Management, Information, and Technology. So right now they can put this

testimony on when they get back tomorrow.

Mr. Ho of Consolidated Edison, what are the ComEd staffing

plans for December 31st to ensure delivery of power and as a contingency if the power fails?

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Mr. HO. We have normal staffing every day around the clock. For

New Year’s Eve and for the other rollover dates, we have planned

additional staffing to be at the ready. So we will be in a ready posture, with staff physically located throughout our northern Illinois

territory so as to monitor the system as well as respond, should

there be any outage occurrences, whether Y2K related or otherwise. And so we look to have a rapid response to any occurrence.

Mr. HORN. Mr. Whyte of Nicor—gas is supplied through a network of pipelines with gas moved along by pumps operated by turbines and generators. Is there a problem if electrical power is disrupted?

Mr. WHYTE. We currently have 8 major pipelines coming into our

area, all independently operated. To have all 8 of those pipelines

go down, I think, would be very remote. But should that happen,

it is important to know that a majority of the natural gas industry

is run on mechanical, by nature, so most of the valves can be overridden. If not overridden, they can certainly be hand-manipulated

open or shut. That night we will also have a full staff on, as well

as people at these locations should the power fail. We do have generators to rate our own electricity, so to speak, if we need to. And

should that fail, for whatever reason, we have a manual override.

Should that fail, we physically can put someone out there and

crank open valves if necessary.

Mr. HORN. Mr. Mielak, representing the Edward Hospital, and

you partially answered the pharmaceutical question, but another

one along that line puts a little different wrinkle on it. As a major

percentage of prescription medicines are imported, what contingencies are being made to ensure adequate availability? It should

be noted that insurance only allows monthly purchases. Is that correct? Or do you have a pharmacy in the hospital?

Mr. MIELAK. We have an internal pharmacy at the hospital and

there are the Naperville pharmacies who are independent of the

hospital. I really don’t have an exact answer to that question. It is

very difficult for me to look out into that supply chain and make

comments on it.

Mr. HORN. Well, I would think the Pharmaceutical Association

for the State of Illinois would be working on that problem and since

every pharmacist probably pays dues to that agency, get them to

work if they haven’t answered that question.

Now, on the utilities in general, with respect to the utilities, do

you rely on what they tell you, or do you audit their statements?

What type of independent verification efforts has each utility undertaken?

In other words, we face the same problem with the Federal Government. We ask the inspector generals in each agency that are

really one step apart—they don’t report to the Secretary. They’re

independent people, and the General Accounting Office that Mr.

Willemssen represents and is here, they’re part of the legislative

branch. To look at the financial and programmatic aspect of the executive branch, and so they’re asking the same now of utilities.

Have you gotten outside independent verification, or is this simply

your own people verifying it and should we trust them?

Mr. HO. We’ve had several levels of independent review. We’ve

had third-party consultants come in, assess our management procVerDate 11-MAY-2000 08:04 Apr 06, 2001 Jkt 010199 PO 00000 Frm 00260 Fmt 6601 Sfmt 6601 E:\HEARINGS\60939 pfrm02 PsN: 60939
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ess as well as the coger-mediation embedded systems renovation

work and those reports have been given to the senior officers of the

corporation as well as our Board of Directors.

Second, the NRC has come in, the Nuclear Regulatory Commission has come in and audited our Braidwood Station and indeed

our entire nuclear fleet, our corporate IS, our supply chain activities, and given us high praise in their January report. They’ve

since followed up and reviewed our contingency planning activities

and there will be a report coming out later this month.

We’ve also had peer reviews where we’ve had other utilities come

and look at our process, look at our results, and we’ve shared and

exchanged resources and information to that point. So we think

there’s a very solid basis for the results that we’ve achieved and

reported.

Mr. HORN. Was that the Nuclear Regulatory Commission, the

Federal Commission?

Mr. HO. Yes.

Mr. HORN. How many different facilities of yours did they look

at? Just one?

Mr. HO. They looked at all of our nuclear facilities. There was

a very strong focus at our Braidwood Nuclear Station. They asked

to look at the results across our nuclear fleet.

Mr. HORN. So the answer would be they have looked at every

single facility in your company’s jurisdiction that has nuclear reactors?

Mr. HO. That’s correct.

Mr. HORN. I’m glad to hear it because when they started out,

they said we’re only going to audit 10 percent, and we argued with

them on that and we said we wanted to see 100 percent. They’ve

never given us an answer to our letter on why they were doing just

10 percent. So at least in your situation, you got 100 percent audit

from them.

Mr. HO. That’s right.

Mr. HORN. Thank you very much on that.

Mr. Willemssen is still here, I’m sure. There’s a chair right down

here at the end, Joel. From the audience, despite all the optimism

stated by your committee—I guess he’s referring to us—the consensus in the technical computer world is that no one really knows

what really will happen. A worst-case situation may be a lack of

power and utilities for several months. Are you even considering a

worst-case situation?

Mr. WILLEMSSEN. I think even in those Federal agencies who are

far ahead of the game, such as the Social Security Administration,

they have also been on the forefront of doing business continuity

and contingency planning, recognizing that they, along with other

organizations, cannot provide an absolute guarantee that there

won’t be some Y2K problems at the turn of the century or at other

critical dates. And therefore they have put a lot of emphasis on

contingency plans to have them available in the event of disruptions and have them available to trigger at appropriate points in

time.

I think a scenario that was laid out in the question of widespread

electric power disruption over a couple months, I don’t think any

reasonable organizations have thought that far out in terms of

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worst-case scenario. Worst-case scenarios for the contingency plans

that I’ve reviewed, and I have reviewed several, do not go beyond

a few weeks in terms of electric power outage. Frankly, if we did

have that situation, and we don’t have any evidence to suggest that

would be the case, we would be looking at an entirely different scenario than the one we’ve talked about today.

Mr. HORN. Thank you very much for that.

Mrs. BIGGERT. Thank you, Chairman Horn. I have just two more

questions from the audience. The first one is addressed to Mr. Ho.

Can Commonwealth Edison isolate themselves from the power grid

to continue to service their customers if the power grid is in trouble?

Mr. HO. The simple answer to that is yes, but the Eastern Interconnection in the grid, as everyone refers to it, is really designed

to be a robust system and reliable because everyone shares in that

pool. And so our plans are not to island or isolate ourselves should

there be a problem. The real benefit to the grid is that ComEd can

help support, and the surrounding utilities can support one another

should there be a stability problem on the system. And so we look

to not implement a sort of islanding or isolation-type of approach.

The grid is very robust and we look to maintain that.

Mrs. BIGGERT. Thank you.

And then the last question is for all of you. Should glitches occur

in service, how will they be communicated to the public? Will there

be additional staff on board to handle these calls? And third, will

we call the same service numbers that we currently call or will hotlines be set up? I think we can start with Mr. Ho and just go down

the line.

Mr. HO. On New Year’s Eve, we will start our staffing of our

command center early in the morning, 6 o’clock New Year’s Eve

morning, and we’ll have an eye on the globe. We will be providing

press releases and system status reports three times throughout

that business day. By 8 o’clock that evening, we will be fully

manned at our command center, at which time we will start hourly

system status reports. Those status reports will go out across the

normal channels through our account managers for those commercial industrial customers, through our public affairs directors, to

the various municipalities, such as here in Naperville. We’ll have

media briefing and, in fact, media will be with us at our command

center.

So we look to have constant reporting and increased frequency

of reporting as the day goes on. So there will be additional staff,

like I said, across our territory; and our communications staff will

certainly be right in the thick of it with us.

Mr. JENSEN. Like Alan, Ameritech will also have a command center in place and we’ll be undergoing many of the same activities

and preparation.

I think that what I would like to address here is on the other

side of the coin: What would we ask our customers to do in the

event that they encounter a problem? And we’re asking customers

to do the same thing that they do today; call the same trouble reporting number, follow the same procedures. We don’t want to confuse the issue by putting anything different in place. We expect,

just like probably Alan and everyone else, to have additional staffVerDate 11-MAY-2000 08:04 Apr 06, 2001 Jkt 010199 PO 00000 Frm 00262 Fmt 6601 Sfmt 6601 E:\HEARINGS\60939 pfrm02 PsN: 60939
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ing on hand to take care of any additional calls that we may get.

So keep it simple is kind of our watch word. Our customers just

call the same number that they would call today if they encounter

a problem.

Mrs. BIGGERT. Thank you.

Mr. Whyte.

Mr. WHYTE. Real briefly, the service numbers they call right now

will certainly be the same numbers they will use then. As far as

staffing, it’ll definitely be beefed up. I know I will be there, as well

as all of our representatives, they will be there. We’ll have our

labor staff available.

As far as communications are concerned, we are in the process

now of developing a list of all key contacts through all of our municipalities that we serve so that on that night, should they have

any issues or questions, they’ll know who to call as well as when

we have updates throughout the day and night, we have someone

to contact as well.

Mrs. BIGGERT. Mr. Pagano.

Mr. PAGANO. Yes, they’ll be using the same hotline phone numbers. We’ll have additional staff there to take care of any problems.

Mrs. BIGGERT. Thank you.

Mr. MIELAK. Assuming normal communications, telephone,

pagers, cell phones stay in operation, we don’t have any problems

in those areas. All of our normal service lines will be open, and

there will be staff there to answer any telephone calls or concerns

by patients in the communities or others looking for information.

Should that not be the case, our fallback readiness position, of

course, in an emergency is always to go to the radio systems that

the emergency folks have both in Naperville and the hospital. Ambulance services are all equipped with these standby emergency

systems. Of course, we can’t get out and talk to the general public

about what’s going on under those conditions, but we certainly can

try to get out to the radio station and get out the word otherwise

through some means that we have yet to talk about.

Mrs. BIGGERT. Thank you.

Mr. WILLEMSSEN. The Federal Government right now is in the

process of setting up a command center that will be led by retired

General Peter Kind, and they’re putting their procedures together

right now. They intend to get contacts and links set up with all the

major Federal agencies and also with States so that the reporting

process will occur as the rollover happens. In addition, they will be

monitoring the activities through the State Department of all other

countries. As you know, obviously we have a tremendous built-in

advantage in our country. We will have lead time to see what happens in other countries as the clock switches there before it does

in our country.

Mrs. BIGGERT. Thank you. Again, this is all part of being prepared, and I hope that none of these hotlines have to be called or

none of these phone numbers—they won’t be busy if somebody does

call, because there won’t be the problems. But I think as long as

everybody is ready and have those contingency plans, that things

will go smoothly.

So I thank you all on this panel for coming. I think it’s been very

enlightening. And to hear what our utilities are doing, what our

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hospitals, transportation, is all very important to all the citizens of

this area and to the State and to the country. So thank you very

much for coming.

We’ll then call up the next panel.

Mr. Skarr, if you want to come up and join the panel. We will

have to do a little switching of mics, but I think there’s almost

room.

If you all want to stand.

[Witnesses sworn.]

Mrs. BIGGERT. Thank you again. This is the third panel of the

hearing this morning, and I think again I will start by just introducing you as each of you speak and if you can limit that to 5 minutes, particularly since we have a larger panel this time, it would

be appreciated.

The first member of the panel is Clint Swift who is director of

Banking Technology, the Bank Administration Institute of Chicago.

Thank you very much for coming, Mr. Swift. You may proceed.

STATEMENTS OF CLINT SWIFT, DIRECTOR OF BANK TECHNOLOGY, BANK ADMINISTRATION INSTITUTE; DELORES

CROFT, SENIORS POLICY ADVISOR, ILLINOIS ATTORNEY

GENERAL’S OFFICE; LEONARD HARRIS, PRESIDENT, CHATHAM FOOD CENTER; RON CLARK, TREASURER, ILLINOIS

AYERS OIL CO.; MONTY JOHNSON, COMMUNICATIONS COORDINATOR, CITGO GAS; MIKE SKARR, PRESIDENT AND CEO,

NAPERVILLE AREA CHAMBER OF COMMERCE; AND ED

PAULSON, AUTHOR OF YEAR 2000 CRISIS SURVIVAL IN 10

MINUTES, PROFESSIONAL ENGINEER, FINANCIAL EXPERT

Mr. SWIFT. Mr. Chairman and Madam Vice Chairman, thank you

for providing a public forum on the year 2000. Just a week ago, the

banking industry passed the last of the major federally mandated

milestones for year 2000. The bankers are intensely aware that the

challenge has shifted from a technological one to a psychological

one. It is crucially important that people understand the lengths to

which banks have gone to ensure that it will be business as usual

before, during, and after January 1, 2000.

As one independent observer after another has told you, the reality is that financial services are in good shape. Banks, thrifts,

credit unions will be spending much of the next 6 months ensuring

that the key energy, telecommunications, and other providers they

rely on are ready as well.

I can state this for the record. First, your bank will be ready for

the century date change. Many of them are ready now. The rollover

is going to be a non-event for almost all bank customers. Your bank

is the safest place for your money. Your money is insured there up

to $100,000, but there are at least two other significant issues.

Your bank will have accurate records of your accounts and you’ll

be able to get the cash you need when you need it.

How can I say these things? First, for the last 2 years I’ve been

working day to day with 50 of the Nation’s largest banks. Institutions that represent about two-thirds of this Nation’s banking assets. I know personally the quality of their planning, their systems

inventories, their code repairs and their testing. These institutions

have verified that the systems that support checking, savings, cerVerDate 11-MAY-2000 08:04 Apr 06, 2001 Jkt 010199 PO 00000 Frm 00264 Fmt 6601 Sfmt 6601 E:\HEARINGS\60939 pfrm02 PsN: 60939
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tificates of deposits, loans, and other products and services, process

dates accurately before, during, and after January 1, 2000. Now

they’re monitoring Y2K progress at the suppliers and service providers they rely on.

Second, banking is a highly regulated industry. As part of Y2K

preparation, Federal examiners have visited each bank in this Nation at least three times. At the end of May, more than 98 percent

of the Nation’s 10,000 federally insured depository institutions had

received the highest ranking. During the next 6 months I can

promise you that the handful that didn’t can look forward to a very

personal relationship with your examiners.

To ensure that banks have plenty of cash for anyone who needs it, the Federal Reserve has accelerated printing of nearly $50 billion in currency, and they’re placing that at 100 locations, closer to

banks than their own Federal vaults are.

In this highly interconnective world, nobody with any sense is

going to give you a guarantee that there will be no disruptions at

the century date change. For all but a handful of Americans, the

lights are going to come on. By the time you get the phone to your

ear, there is going to be a dial tone. Where outages do occur, research and testing across industries say they will be localized and

of short duration.

In case one of those limited local outages occurs in DuPage or

Kane Counties, let me also observe that banks, thrifts, credit

unions have always been among the first to reopen after a hurricane, tornado, or other natural disaster. Why? Because they’re

practiced masters at contingency plans. Banks have always been

required to keep multiple backup records of your transactions in

case of power outages or computer problems, and fresh backups are

made every day. Banks have now supplemented their existing contingency plans with special preparations to cover the glitches that

may occur due to the year 2000 date change.

Before I close, I want to address the notion that people need to

withdraw a month’s worth of cash to get through the rollover period. I live in the next town north of here, Wheaton, with my wife

and son. Based on what I know about banking, I’m going to withdraw the same amount of cash that I would for any other holiday

weekend. I know that if I need more, I’ll be able to get it from an

ATM or from a teller. In the meantime I know I’m not going to be

contributing to a sudden shortage that could keep my neighbors

from getting the cash that they need.

And keeping large amounts of cash outside the bank is not just

unnecessary, it is dangerous. Local law enforcement officials are

some of the most outspoken opponents of stashing months of cash

around your house. Theft is a very real threat. At a recent White

House Community Conversation I attended, a police chief said that

90 percent of thefts in his jurisdiction involved people close to the

victims, such as family or so-called friends.

You can have confidence in the year 2000 preparations of your

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bank. It is going to be business as usual at the bank today, tomorrow, during the year 2000, and after.

If you have questions about the details of bank readiness, I

would be pleased to try to address them.

Mrs. BIGGERT. Thank you very much for your testimony.

[The prepared statement of Mr. Swift follows:]

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Mrs. BIGGERT. Next we have Leonard Harris, president, Chatham Food Center. You may proceed.

Mr. HARRIS. Good morning, Vice Chairman Biggert and Chairman Horn. Thank you for the invitation.

What I hope to do today is three things: Introduce you to FMI

and what we do as an association; tell you about what we’re doing

to give you some assurances that we will be ready for the Y2K; and

to voice our concerns.

Food Market Institute has 21,000 members. They do $220 billion

in sales, and we represent more than half of the supermarket sales

in the United States. We represent national chains, local chains,

and independent operators. I’m happy to say as a member of FMI,

as a single store operator in the city of Chicago, that I have been

closely intertwined with what’s going on with the technology group,

which means stores big and small are involved and being communicated to about what’s going on in the industry.

What we have done; 2 years ago we issued a year 2000 white

paper for the purpose of helping members understand the broad

scope of the problem and to develop comprehensive solutions. The

first of this year we set up an electronic share group with an Internet-based discussion platform for the purpose of members being

able to access the Internet, and not only leave questions on the

Internet to be answered but also to see the answers from other

members who have had questions and have had their answers left

on the Internet.

FMI and the Grocery Manufacturers of America have produced

a joint Y2K business contingency plan framework and they’ve held

three joint Y2K contingency planning forums. FMI is working with

the Y2K Food Sector Working Group of the USDA and the President’s Council on Year 2000 Conversion and Communications Industry Readiness.

There’s a lot of talk in the industry about reduction of inventory

levels. At one point in time, the average inventory in the pipeline

was 120 days. The industry has cut that inventory level down to

60 days and its store level down to 2 weeks. We believe that will

be more than sufficient inventory to deal with any contingency. We

issue a quarterly newsletter and we’ve had seminars discussing the

issue at our major convention each year in Chicago.

Our concerns are with those industries that are outside of our industry, primarily utilities and the government’s food assistance

program, the EBT program. Certainly there have been breakdowns

in that program on an ongoing basis, and we’re concerned that not

only the system be running properly January 1, but also that there

be no new revisions or conversions of that system before the first

of the year.

Certainly I’m happy to be present here. I have been reassured,

listening to the conversations and testimony from our utility groups

and our transportation groups, and I will be happy to report back

to our chairman and our president that this committee is doing an

excellent job and we just hope that you stay on top of this. Thank

you.

Mrs. BIGGERT. Thank you very much.

[The prepared statement of Mr. Harris follows:]

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Mrs. BIGGERT. Delores Croft, seniors policy advisor, Office of Attorney General Jim Ryan. Thank you for coming in. You may proceed.

Ms. CROFT. Good morning, Chairman Horn and Vice Chair

Biggert. By now you are familiar with the term Y2K. I will attempt

to give you a different perspective on how others will use Y2K as

a means of exploiting you. Fraud is a big business in America, taking in about $100 billion

a year according to the U.S. Office of Consumer Affairs. Law enforcement officials believe that seniors are the targeted customers.

The FBI estimates that approximately 10 percent of the Nation’s

140,000 telemarketing firms are fraudulent and nearly 80 percent

of the crooked companies target seniors.

Y2K provides another opportunity for unscrupulous individuals

and companies to scam the seniors. This is a time that con artists

will choose to prey on the elderly. They will attempt to cash in on

fears about the year 2000. Beware of people telling you where to

hide your money. Some hiding places being recommended to seniors are wrap your money in aluminum foil and place it in the

freezer, wrap it in dirty laundry and hide it in the laundry. Stuff

the money in your spare tire in the trunk of your car. Remember,

the same people that tell you where to hide it will be the very ones

to return and to rob you.

One senior stated to me that she was told, ‘‘Your money is safe

in the house of the Lord.’’ Beware of these statements where you

are told that you should remove your money from the bank and

place it elsewhere.

Be especially weary of phone solicitors. Many times they will call

and want you to verify certain personal information. They may ask

for your bank account number, stating that they’re calling from the

bank. They may ask you to tell them the last purchase that you

charged on your credit card. And because your cards are supposedly insured, they may ask you to verify exactly how many

cards you have and at some point during the conversation, they

may ask you for your card number. Beware.

Social Security numbers also provide a means for the con artist

to claim a new identity—yours. Beware. Con artists prey on seniors

all year, not just during the Y2K period. Remember, don’t make

purchases for your home or auto from unfamiliar companies. Take

your time before making a decision, consult others that you trust

such as family members or friends. Be suspicious when a salesman

or telemarketer tells you that you must make the purchase so that

there will be ample opportunity for it to be in place before the new

year.

What can you do to be prepared? You should prepare for an

emergency that might arise from a Y2K problem as you would prepare for any other emergency situation. Just keep in mind that con

artists materialize during emergency situations. Before allowing

any stranger into your home, ask for a picture identification first.

If in doubt, call the company or agency they work for. This includes

employees from the gas company, the light company, and the telephone company. You should not have any difficulty verifying your

local policeman or fireman because they should be in a marked car

or truck. However, if in doubt call the agency first. If you have any

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questions, do not hesitate to call the Attorney General Jim Ryan’s

Senior Citizen Hotline at 1–800–243–5377.

And Illinois Attorney General Jim Ryan would like to thank you

for inviting the office to give testimony on this important issue.

[The prepared statement of Mr. Ryan follows:]

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Mr. HORN. I congratulate you on that statement. Yesterday in

Topeka, another distinguished resident of Chicago, IL who happens

to have her column in the Kansas City paper—and that’s Ann

Landers—she had a great column yesterday on just the point of the

senior citizen fraud by the Y2K bit. They’re phoning up saying that

we’re from the bank, of course; we’re checking; we want to move

your money from accounts into the bond accounts so they can’t be

hurting you in any way, and all this nonsense. So you’ve got a lot

of scum out there that are going to take advantage of senior citizens throughout America.

Thank you for making the point. Ann Landers closed her column

with saying call your State Attorney General’s office.

Ms. CROFT. Good. We’ll be there to answer.

Mrs. BIGGERT. Thank you for your testimony.

Next we have Ron Clark, treasurer, Illinois Ayers Oil Co., representing the National Association of Convenience Stores. You may

proceed.

Mr. CLARK. Vice Chair Biggert and Chairman Horn, thank you

for inviting us here today. Our company in west central Illinois operates 27 convenience stores, doing business as Ayerco Convenience

Centers. All of our stores sell convenience goods and 25 of our

stores sell gasoline.

We are happy to be able to provide this testimony on how Illinois

Ayers Oil Co. and the convenience store and petroleum marketing

industry have responded to the year 2000 challenge.

I appear before you representing NACS as you stated, an international trade association representing over 2,100 retail members

operating approximately 65,000 convenience stores nationwide.

Convenience stores sell 55 percent of all U.S. gasoline. Approximately 2,700 convenience stores are operating within the State of

Illinois.

Illinois Ayers began assessing its software and hardware for Y2K

compliance in spring of 1998, followed by the upgrade of non-compliance stores, including the installation of new systems and training store employees on those systems. Overall we’ve budgeted approximately $350,000 for equipment alone, such as the new personal computers and point-of-sale terminals.

Probably the biggest area of concern for Illinois Ayers was the

supply of gasoline and convenience goods to our retail sites. In contacting each of our 12 fuel suppliers, we found that most were either in the midst of, or had already completed, their Y2K readiness. We use one grocery supplier for our entire chain, and they

have assured us that they are compliant and we should not experience any disruption in deliveries. At this time our Y2K readiness

is approximately 85 percent complete.

The central point Illinois Ayers and NACS wish to make is that

unless they are without electricity for extended periods of time, the

vast majority of convenience stores should adhere to their normal

operating hours on January 1, 2000. NACS has provided industry

retailers with information and resources to assist them in achieving Y2K compliance, and through NACS our industry is represented on the President’s Council on the Year 2000 Conversion

as part of both the Oil and Gas Sector Working Group and the

Food Supply Working Group.

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According to the results of the NACS year 2000 survey released

just this week, these efforts are bearing fruit. The survey found

that 95 percent of store owners and petroleum marketers planned

to be Y2K ready by November 30, 1999. By November, also, 94 percent of the respondents plan to have a contingency plan in place;

that is, a plan of action for dealing with uncertain operational

events caused by the Y2K problems.

Sixty-five percent of respondents have been gathering equipment

compliance documentation from business partners, while 20 percent have been conducting joint contingency planning. The NACS

survey also found that the majority of industry operators, 72 percent, are concerned about the possibility of consumer overreaction

to Y2K in the manner of hoarding food, gasoline and/or money.

This finding will become more important as we near the close of

1999. Retailers are deservedly skittish about consumer reaction

during the last few weeks of 1999 and into the year 2000. Consumer reaction is the wild card in all of our industry Y2K efforts.

While the aforementioned responsible efforts and survey results

should help allay any consumer concern, we’re also well aware that

a minority of consumers will remain concerned. For that small minority, NACS urges that they act responsibly.

Specifically regarding gasoline, we suggest that concerned consumers make sure to keep their gasoline tanks at least half full

starting in early December. As for the storing of extra gasoline,

NACS urges extreme caution. Consumers should contact their local

fire department for more information on the rules and regulations

governing gasoline handling and storage. If consumers do not overreact, we do not expect either gasoline rationing or shortages. We

also urge all consumers to seek information from responsible parties. The President’s Council on Year 2000 Conversion can be

reached via phone at 1–888–USA4Y2K or via the Internet at

www.y2k.gov.

In addition, the Council’s Oil and Gas Sector Working Group and

Food Supply Working Group have Web pages offering responsible

information on our industry’s Y2K readiness as well as consumer

information. Through such meetings and hearings as this, as well

as retail industry and public education efforts, consumers should

begin to feel more confident. NACS and Illinois Ayers stand ready

and willing to assist as our means dictate in any efforts to ensure

that consumers know that the convenience store and petroleum

marketing industry is preparing for Y2K.

Again, I thank you for inviting me to appear today. I would be

pleased to answer any questions.

Mrs. BIGGERT. Thank you very much.

[The prepared statement of Mr. Clark follows:]

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Mrs. BIGGERT. Next is Monty Johnson from Citgo, representing

the American Petroleum Institute.

Mr. JOHNSON. Thank you. First of all, I want to thank Mr. Horn

and Mrs. Biggert for the opportunity to be here today. I am particularly pleased to be in Naperville. I had a chance to walk around

your beautiful city last night, and I plan to come back.

With the help of staff, I’m going to step through a quick slide

presentation. I’m here really in my role as chairman of the Public

Information Group of the American Petroleum Institute’s Y2K Task

Force.

Explain the role of the task force: It is approximately 50 of the

major oil companies that began in 1997 meeting every 6 to 8 weeks

to share information, do benchmarking studies, set up committees

on key areas of the Y2K issue and share information with both the

government and the public.

Some of the things that we’ve accomplished so far: We have a

very comprehensive Website where we share information not only

among the member companies but also with the public. We’ve established a data base of readiness information on equipment that’s

common throughout our industry. We’ve interfaced considerably

with other industry organizations.

Mr. Clark’s presentation was a good lead-in because NACS is one

of the areas that we coordinate with very closely.

We’ve established a contingency plan framework that all of our

member companies are following, just so we have some consistency

in exchanging information among ourselves. We’ve set up an effort

to meet with all our supply chain partners because many of us in

the petroleum industry deal with the same suppliers and vendors,

so rather than 50 of us contacting a pump supplier, for instance,

we can contact them once and get the information and share it

among our members.

We’ve also set up standards for testing embedded systems. We’re

very involved currently on assessing the readiness of some of the

international supply areas.

Mr. Horn, you mentioned Russia. A number of our member companies operate around the world. So our companies have a very

personal interest in assuring the readiness of the infrastructure of

those companies to support their operations. And our task force is

also the focal point for the government for the oil industry.

The next slide talks about our role as the focal point of the industry to the President’s Council. The President’s Council has been

mentioned several times today but the API Y2K task force is the

focal point for the oil and gas industry. The other segments of that

task force are shown there and our reports are given quarterly to

FERC as we report the findings of surveys that we’ve done quarterly to assist the readiness of the overall industry.

Next slide shows members of the task force, which shows it is a

pretty broad representation of all the major segments of the oil and

gas industry.

Gas Processors Association: We had gas utility reporting on their

readiness efforts a little earlier.

The Petroleum Marketers Association of America: We don’t have

NACS directly in our reporting relationship, but we’re certainly

sharing information and coordinating a lot of effort, since many of

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our member companies market our products through convenience

stores.

The current focus of our activities: We have ongoing working

groups, and this is representatives from our member companies

that are focusing on the specific areas of embedded systems, retail

automation, all the dispensing equipment, point-of-sale equipment

at our retail operations.

Supply chain, both the vendors and suppliers that provide services and equipment to our companies as well as our customers

downstream. We believe a disruption anywhere in that supply

chain could have a severe impact on our ability to operate, so we’re

concerned with not only what’s upstream of us but also what’s

downstream.

International issues as they relate to our domestic operations:

Contingency planning is a big focus currently. And public information is the reason I’m here today.

We do benchmarking studies every 6 to 7 weeks among our member companies, and this has been a tremendous help to us in sharing information and helping us all find out if we have common

problems. We can come up with solutions that we can share among

our members. We feel like this has saved us a tremendous amount

of time and effort that we each would have had to do individually

had we not had this information sharing operation.

Hot issues for this year. Managing public perception: A number

of people have mentioned today that public reaction to the Y2K

issue is probably a bigger concern than some of the technology

issues, and that’s very much our belief.

Cross industry reliance: We’re very active in sharing information

with both the electric utilities and the telecommunications industry

since those are where we feel our greatest vulnerabilities are, and

we have a very high confidence that those facilities will be in operation.

Contingency planning is our big focus, and international vulnerability as it relates to our ability to supply products and have gasoline at the pump when you need it.

In summary, our oil and gas companies are focusing on our operations to be reliably able to have the gasoline there when you want

it. Our efforts are very comprehensive, all the way from planning

the effort to resolving the problem. All of our companies are currently in either their remediation or contingency planning stages

and very near resolution, and we feel we’re well on the way to Y2K

readiness.

And with that, I’ll focus your attention on a news release, copies

of which are outside, and you have a copy for the record.

These are the results of a survey of 1,250 oil and gas companies

that are task force conducted. The results were reported on June

28th after they were presented to FERC and this shows that of

these 1,250 companies, 95 percent of them showed that they are

going to be Y2K ready by September of this year, and the results

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of this survey represent 93 percent of the domestic oil and gas demand in the country. So it is a very high representation of the industry and their ability to provide services.

With that, I’ll be prepared to answer questions.

Mrs. BIGGERT. Thank you very much.

[The prepared statement of Mr. Johnson follows:]

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Mrs. BIGGERT. I think I’ll skip over Mr. Paulson, our author, for

just a moment and go to Mike Skarr who is the president and CEO

of the Naperville Area Chamber of Commerce to talk about businesses, and then we’ll come back to you.

Mr. SKARR. Thank you, first of all, for your flexibility in listening

to a few comments I’ve got. I will be very brief today. First of all,

let me thank Congress for the recent passage of legislation dealing

with the potential liability issues of the Y2K issue. We lobbied very

hard that legislation be passed. We think it brings a sense of sanity, hopefully a sense of sanity into a world of the future that most

of us don’t know very much about. So we’re very appreciative of

that.

For those of you who don’t know, the Naperville Area Chamber

of Commerce is an organization of 1,600 members. We’re one of the

largest Chambers in the State of Illinois. We have some of the

large businesses, many who testified here today are members,

down to many small home-based businesses.

We have a very active technology committee that’s been in operation for over 3 years and I think ties in to many of the comments

that have been made today.

Much of the testimony that’s been presented today really focused

on government or infrastructure services, and while I found that all

very informative, I’m glad I did come. The reality is that the private sector, in my opinion, has an even greater interest in this

whole area.

Using stockpiled food and using stockpiled water implies to me

that businesses have been forced to shut down. Production stops,

services stop, and most importantly paychecks stop. The possible

economic consequences of that scenario, in my opinion, are disastrous.

We have been discussing the issue at the Naperville Area Chamber of Commerce for quite some time. There isn’t a month that

doesn’t go by that we either don’t hold a seminar or training session or include articles in our newsletter relative to the Y2K issue.

I would point out, though, that America’s success to a great extent

rests on the shoulders of small business. Our organization reflects

the composition of business in America. Y2K to a great extent is

going to rest on the shoulders of small business rather than big

business, ultimately to us in local communities.

As a result of that challenge, we have assembled resources for

use by our members. Local resources or local solution providers are

really the key issue in the Y2K case as far as we’re concerned.

Washington will not be solving the problems of many of our local

businesses here in our community; fellow business members will.

I will leave copies of the local resources we have assembled here

in our local community.

[The information referred to follows:]

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Mr. SKARR. I also encourage, as you listen to other testimony, encourage other business organizations to focus on developing local

resources that local businesses, particularly smaller businesses, can

use to become Y2K compliant and Y2K ready.

Last, I would congratulate you on the forum you’ve created

today. It is reassuring to know that our government is in fact working on our behalf, and I thank you for the opportunity to be here

today.

Mrs. BIGGERT. Thank you very much, Mr. Skarr, for those kind

words.

Now, last but not least, is our last panelist, Ed Paulson, who is

the author of the book, Year 2000 Crisis Survival.

Mr. PAULSON. Thank you for the invitation to address the committee this morning. I appreciate it. As you said, my name is Ed

Paulson. I’m a local native Chicagoan and also a local western suburban resident. I’m the author of 12 business and/or technology

books, including the recent book from McMillan on Y2K and specifically a consumer-oriented guide.

I’m also a registered Texas professional engineer and I have been

in high technology now for longer than my nephew has been alive,

but well over 20 years.

What I would like to do is, I have studied this problem, kind of

cursory, for 15 years; but I would like to take what I’ve learned

over the last 2 years of really intensively following this Y2K problem.

The good news is I think that the Y2K situation improves every

day. A lot of it is due to the work of the committee, such as this

one, the Senate committee chaired by Senator Bennett and Senator

Dodd, and also John Koskinen and his committee. I think that the

public awareness brought from these committees and bringing people in from the different industries to address what they are doing,

I think everything works better with a deadline, and I think the

committees have worked real well to move the United States forward.

And the good news is the United States is further ahead than

anybody else in the rest of the world. There’s some bad news associated with that, too, which I’ll address in a moment.

Another good news item that I’ve seen is that the embedded controller problem is a smaller item today than it was originally assumed to be early on. I think that’s good news. Is it still a problem?

Yes. But is it as big a problem as everyone was afraid it was? I

think the answer to that is now no. I’m hearing numbers of 2 to

3 percent as opposed to a 95-plus percent problem, which is good

news for anybody.

My major domestic concern is that if people do not prepare for

Y2K eventualities, that they may at the last minute start to panic.

I go back to my situation of trying to buy a snow blower last January here in Chicago. I would call, and 15 minutes later, four snow

blowers would have gone out of the local Menard store.

I had this flash when I was going through that situation last

January. I had this flash in my head of what would it be like January 1st, 2000, if all of a sudden the power did go out for whatever

reason, and the gas did go out for whatever reason, and people now

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go to their local grocery store to buy food and they find out everyone else has had the same idea and the shelves are barren.

All of a sudden now, I think people can start to kick in a whole

new level of concern, and that concerned me. So that’s why I’m out

talking to people, saying please take this problem seriously. It is

not going to be the end of the world. We’re not going to have Mad

Max Beyond Thunderdome happening in January, but we are going

to have, I think, a possibility of a problem arising. And I think if

people prepare for that, we’ll be better served going into the new

year. I’ll talk a little bit more about that in a moment.

The other uncertainty I have and concern I have is international,

and that I think the United States is well ahead of the rest of the

world, but that means everyone else is behind us. I think that presents problems from both an economic perspective in that if I need

a part for a car and that part is in Korea and I need to get that

part for domestic production, what’s the possibility of me getting

that part in?

The second one is a humanitarian issue, and that it is cold in Siberia, and if those people don’t have food, water, and/or services,

I think the United States and the other more ready countries may

have the humanitarian position put in where we’re having to assist

these other countries. And I would suggest contingency planing in

those areas. It may indeed be going on and I don’t know about it,

but I think that’s an area that the more prepared countries are

going to have to deal with.

Here at home, I think folks can take a look around their house

to see what the susceptible devices are. The ones that are most susceptible are the ones that have day, date, and year associated with

them. Your VCR, if you are one of the few people who can actually

program one and you do take advantage of that, if—there is a good

chance that it may or may not have a Y2K problem. It is worth it

to check it out.

Home computer absolutely should be checked out, including the

applications on it. Believe it or not, your camera may be because

it puts a little day and date on it. It may have a problem in that

the year 2000 is a leap year, but a lot of people didn’t know that

when they were creating the programs so there are possibilities of

problems in that area, and also watches could be a problem.

Devices, though, that are on a 24-hour timer or devices that are

event driven, do not have that kind of exposure. So your car, stove,

refrigerator, microwave, TVs, those kinds of things will not typically have problems unless they have a day or date associated with

them.

So I would suggest that people prepare for sporadic outages.

Why? Because the problem is simply so complex. 85 to 95 percent

of bugs can be caught in advance of putting them into production.

That’s basically a software industry standard. That means 5 to 15

percent are not caught. Because of that, when you started adding

those 5 to 15 percents together through large networks, there’s a

higher than likely possibility of something going wrong. Not to the

end of all utilities as we know them, but I think sporadic outages.

I’m concerned, too, that if people don’t take individual responsibility, that—if they try to rely on the local services of FEMA and/

or the local community services, that they’re going to be in a posiVerDate 11-MAY-2000 08:04 Apr 06, 2001 Jkt 010199 PO 00000 Frm 00306 Fmt 6601 Sfmt 6601 E:\HEARINGS\60939 pfrm02 PsN: 60939
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tion where they’re going to be disappointed. Because those folks are

going to be busy taking care of other problems.

On the top of page 3, you’ll see a preparation matrix which I

won’t go through in detail, other than there’s two down here at the

bottom that you’ll see if the public is not prepared and there are

no Y2K problems, we’re just flat lucky; and if there are Y2K problems and the public is not prepared, we could have panic and trouble, and that’s my major concern.

So the minimum preparation steps that I suggest people take: I

suggest people stockpile up between 2 and 4 weeks’ of food. Not a

year’s worth of freeze-dried raisins, but 2 to 4 weeks of food.

I don’t think there’s need for razor wire around your house either. Please make sure you have a means of opening the cans.

Don’t wait till December to do this. Gradually stockpile the food

over the course of the year so you do not put a major drain on the

distribution channels we talked about. Make sure you have a way

of safely cooking that food over a period of time that you need to.

Have a full tank of gas going into December 31st. Keep all of

your financial records for the last 6 months of 1999, and specifically for December, because if there are problems with the financial

industry, which I do not expect—I agree that industry is probably

as prepared as anybody—but if there are, if you have paper

backup, it is a good idea.

Leave your money in the bank. It is FDIC-insured and way safer

there than in your mattress or buried in the backyard. I would suggest you also verify the readiness of your mutual funds and also

how they’re assessing the securities in which they have specifically

invested. Hold them responsible for doing the management activities that you are paying them to do with your fees.

Have a little extra money on hand. I encourage you not to have

it in cash, because the less-than-honorable people in our society

would love that. But I suggest having them in the form of travelers

checks. If you are traveling internationally, I encourage you to

check with the country specifically. The State Department is going

to make an announcement later this year, I believe it is in September, about what countries they feel are the most ready, and I

think if you are planning to go to a country that the State Department has got concerns about, I would be concerned about it. Also

Y2K travel insurance should be considered.

Medication: If you have medication that you are required to take,

talk to your doctor and pharmacist to find out if indeed if there is

a problem, how are you going to get that critical medication? And,

finally, prepare yourself by reading more about the problem

through books like mine or other books that are on the market.

I suggest people treat Y2K like an extended storm. They prepare

just like they’re expecting a 2-week ice storm or hurricane to hit,

without the massive damage of a hurricane. And just make the

proper preparation for their own local household.

We can and will recover from Y2K as a technology problem, but

recovering from the damage caused by a Y2K panicked public will

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have farther reaching, longer term consequences that are best

avoided by education and moderate preparation.

I thank you for the invitation to present, and I’ll answer any

questions.

Mrs. BIGGERT. Thank you very much.

[The prepared statement of Mr. Paulson follows:]

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Mrs. BIGGERT. I appreciate all of your testimony.

First question. Mr. Johnson, since we already have enough batteries with enough capacity to move our cars, trucks, planes, and

trains—although I have seen a new car they’re developing, or new

truck, so that might be on its way but it won’t be ready by January

1st, I guess—we really need our oil and gas products. And the oil

and gas industries have relied on—the United States has a great

dependency on foreign countries to augment our own supply. And

in the last 3 months, our country has seen prices go from recent

all-time low to high—higher than expected. So don’t you have concerns that the foreign countries will not be ready for the year 2000,

and what alternatives have you for the shipping industry and how

about the prices? Do you expect those to go up because of this problem?

Mr. JOHNSON. First of all, price is very much a function of worldwide supply and demand, and demand for petroleum products anywhere in the world is going to have an impact on what we pay at

the pump here in this country.

As far as our supplies coming from foreign suppliers, the three

major sources of the foreign crude that comes into this country are

Venezuela, Saudi Arabia, and Mexico, and all three of those entities have representatives on our API Y2K task force.

So we do have very current firsthand information about their

readiness. We have high confidence that those three suppliers are

at the same level of readiness as the domestic companies. So, as

far as there being a disruption in those supplies, we didn’t believe

that is very likely.

Now, what the prices will do later in the year, it is anybody’s

guess. I mean, once again there are economic political factors

around the world that are going to affect supply and demand, and

I don’t have a crystal ball to predict where that may be by the end

of the year.

Mrs. BIGGERT. Thank you. Mr. Paulson, you talked about the

problem internationally with some of the foreign countries, too; and

I think that we have had some real concerns, particularly about

Russia and being ready. I know that there was a recent meeting

of the United Nations discussing this problem, and 173 countries

attended that meeting and there were very mixed reactions as to

who was really compliant or whether they’ve really begun or not.

It is my understanding that Yeltsin has just sent out a letter to

his cabinet, or his government, suggesting that they start to look

at the Y2K problem. This gives me great cause for concern that if

a country of that size and with those power plants is beginning to

look at Y2K—when really you are starting in 1996 which still was

the average time—was not way ahead, whether these countries will

be ready?

Mr. PAULSON. I would share your concern completely, because

when you look at the caliber of people who sit on the panels presenting to the committees and you realize the money and talent

and resource that we’ve been putting behind us in the United

States for 3 to 5 years in some instances, and these companies are

still now just getting ready—for somebody who’s planning to do

this in 6 months, for a country, to me that just would be a huge

cause for concern. I would share your concern on that completely.

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Mrs. BIGGERT. Thank you.

And then, Ms. Croft, I thank you for that testimony really to let

people know that there are the scam artists that are out there. And

this is one forum to do that. But what else is Jim Ryan’s office

doing to ensure that the public knows about what’s happening,

what’s been happening in the neighborhoods?

Ms. CROFT. We have an outreach department that is staffed by

people that do nothing except go out and give consumer education

to different organizations and groups, as they request. And we just

feel that the most important thing is to educate the public; and if

they’re educated, then they can be aware of the problems that may

possibly exist.

Mrs. BIGGERT. Do you target different areas or is this just what

the organization—— Ms. CROFT. We’re statewide. We go all over.

Mrs. BIGGERT. Thank you.

Mr. Clark, have you begun to see people starting to put goods

aside, or is this something that you wouldn’t know about if it is

done on a gradual basis?

Mr. CLARK. We wouldn’t really have a way of knowing that. We

track our sales, naturally, by month to month and we have not

seen a large increase in sales. Naturally, we like to see increases,

but we have not seen enough of an increase to say that it has anything to do with the Y2K problem at all.

Mrs. BIGGERT. At one of our hearings it was stated that you cannot buy a generator now, that they are all gone. Some people must

be feeling concerned and going out and following suggestions. I

don’t advise buying a generator because I don’t think that we’ll

need it, but I think there are people that are planning to have it.

Mr. CLARK. I feel there’s going to be a certain number of people

that will be concerned no matter how much information we throw

at them. But I think that our industry is going to be prepared. If

all else fails, we started with a hand system, we can go back to a

hand system, and barring any electrical outages, people should be

able to come to our units and get gas and other things that they

need.

Mrs. BIGGERT. Thank you.

And, Mr. Harris, kind of the same question about whether you

are seeing people starting to put aside goods but also when you

stock your stores, and this is done by inventory that I would assume is by computer; so that you really need to ensure that your

computers are working in order to be able to get the inventory in.

Mr. HARRIS. Correct. Everything nowadays is done by electronic

data transfer. So we’ve checked with our wholesaler to make sure

they were compliant and that our systems are working properly. As

to the question of hoarding, I would think that most of the hoarding would be done in staples and in perishables, and so it is far

too early at this point in time to tell.

All the information that I have would suggest that the consumer

may keep an extra week’s supply. Most customers shop twice a

month anyway. My customers probably shop a little more often

than that, feeling that they get fresher merchandise by shopping

two or three times a week. But my feeling is, especially after being

here and listening to the testimony today, is that any shortages or

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problems with Y2K would be short term. So I would suggest at

most 1 week’s supply. As I’ve already stated, in the pipeline we

have 120 days supply so I don’t see any major concerns.

Mrs. BIGGERT. Thank you. I’ll yield to the chairman, Mr. Horn.

Mr. HORN. Thank you very much. We will go through some of the

questions that have been handed in by members of the audience to

the staff of the subcommittee. And let’s just start with what are the

preparations that all the panelists are making in their own homes

regarding toilet flushing, food, water, heat, and medicine, credit

cards, cash, and stock accounts? Anybody want to say what they

are doing on this? Let’s go down the line. The author, and then on

down.

Mr. PAULSON. I’ve pretty much written what I’m going to do. I

think it is prudent. As I said, I don’t expect that there’s going to

be a major disruption for months and/or years on hand, but I think

a few weeks is prudent and that’s what I’m doing.

I’m basically stockpiling every time I go to a store. I’ve set aside

an area in my basement, a cool area. Every time I go to the store,

I buy a couple extra cans and/or non-perishable items that I can

just keep on hand as a contingency. And then I make sure that expiration dates are after March 2000 and basically accumulate that.

Also water. Some people are doing a form of bottled water and

every time they go, they buy an extra 5-gallon bottle of water and

they save up 10 or 15 of these. Worst case, if it doesn’t turn out

to be a major disaster, you just eat the food in February or March;

but if it does turn out to be a problem, I’ll feel better to have it

on hand.

Mr. HORN. You can have a neighborhood picnic on February 1st

or so.

Mr. JOHNSON. I’m not taking any extraordinary measures at my

office. I live 2 blocks from my office. It is a holiday weekend. I’ll

be working. We’re going to staff 24 hours for the day before New

Year’s Day and the day after. If I’ve got to walk to work, I’ve done

that before. It is a holiday weekend. It is New Year’s Day. I hope

to watch the Rose Bowl, watch Dick Clark drop that new Waterford

ball at Times Square and pretty much have a holiday weekend just

like I normally would.

Mr. HORN. Mr. Clark.

Mr. CLARK. To date, I have not done any extra preparations. I’m

an optimist and I feel fairly certain that in Quincy, IL we’re going

to be operating business as usual throughout the city. So I’m not

anticipating at this point.

Mr. HORN. Ms. Croft.

Ms. CROFT. Well, my family tells me that I hoard food all the

time so I don’t think I really need to buy any additional food. I do

have bottled water at home. I plan on having a full gas tank in my

car. I will have probably a couple of dollars in the house, no more

than I would have if it were any other holiday, and I think that’s

the basis. I don’t really take medication, so that lets that out.

Mr. HORN. Mr. Harris.

Mr. HARRIS. I intend to have a week’s supply of food at home,

and we have bottled water at home, so we usually have a couple

extra jugs which is about a 3-week supply, and have a full tank of

gas and that will be the extent of my contingency plan.

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Mr. HORN. Mr. Swift.

Mr. SWIFT. I’ve got a colleague who likes to sign his e-mail,

‘‘Hope for the best, prepare for the worst.’’ but that is not a way

I think that businesses and rational people ought to prepare. You

have to temper the impact with the likelihood of it actually happening.

I’ve already stated, and I believe after listening to some of the

people we’ve heard here today, for 2 years, that any shortages are

going to be local and brief. I’ve already said that I think cash is

a non-issue. I’m not going to have any extra. We are a family that

drinks bottled water. We will have some of that on hand, and I

would like nothing better to see my family eat its way through

what’s in the pantry.

Mr. HORN. Mr. Skarr.

Mr. SKARR. I really don’t intend to do anything except maybe

stockpile red wine, because if any of these come true, the red wine

will provide me more comfort than anything else will.

Mr. HORN. Question 2 from the audience is: If you receive a

phone call from someone conducting a survey about a product, company, or political situation, should you answer the questions over

the telephone?

I don’t know if any of us are capable on some of it. If they claim

they’re in a political situation, most of us that run for office do participate sometimes in surveys, and we’d certainly like honest information when we do a random sample of the home.

But, gentlemen, and Ms. Croft, if you have any thoughts let us

know. Actually, it was directed to you, Ms. Croft, since you mentioned some of the scams going on.

Ms. CROFT. If it is merely a survey and if they want to answer

the questions, I think it is fine. The first time they act like they

want to sell something, if they’re not interested, I would just simply say I am not interested and hang up immediately.

Mr. HORN. Right. That’s a technique I used. Sometimes their

automatic dialer comes back to you, and especially people with

phones not in the book. You get sort of irked more with the product

than anything else when you find a call coming in, especially at

dinner time.

Mr. Johnson, a member of the audience says, how would you

evaluate international Y2K readiness for delivery to the United

States? Do we have any more thoughts on that one?

Mr. JOHNSON. Well, other than what I mentioned about our three

biggest sources of imports, our committee has really struggled on

how to report what our member companies know about the countries in which they do business. Most of that is because those companies are there at the invitation or at the whim of the local or the

State owned oil companies, so they’re very reluctant to be critical

of those facilities. However, the three countries where we do get

our biggest sources of imported crude, we have firsthand information about their level of readiness and a high level of confidence

that they will be ready.

Mr. HORN. The additional part of the question then—I guess I

can answer that, Mr. Willemssen—is what is the overall percentage

of international readiness? It is a very difficult situation to assess.

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Some capitalist-countries, democracy in Europe, when I talked to

some of their leaders for the last year or so, they’ve said, ‘‘Oh, well,

you know, these things work out—and blah, blah, blah.’’ I thought,

brother, are you in for a surprise on January 1st. Some of those

smaller countries will be, and they have the money to deal with it.

The countries that really have a problem, of course, are the developing nations in Africa, in southern Asia, some in the Middle

East and so forth. They have a real problem in this area.

So we’ve had the Central Intelligence Agency look at a lot of it

and it is pretty gloomy if you’ve got to interact with them.

And of course a lot of our international business, you are talking

about interaction in particular countries. We did suggest back in

1997 to the Secretary General of the U.N. that he needed to educate his members; and he appointed a very able Ambassador from

Pakistan to do that. And last fall, December actually, we had the

first conference of the 120 nations represented in New York on

this. And just 2 weeks ago, I think it was 173 nations that came

to New York.

So it isn’t too late, but they’re in the last stretch for most people.

And the World Bank is trying to fund some of the developing nations to get this solved.

I don’t know. Mr. Willemssen, you know a lot about it. If you

want to add anything, feel free.

Mr. WILLEMSSEN. I think you summed it very well, Mr. Chairman.

Mr. HORN. We go to question 4: Can you suggest some Websites

for the year 2000? And that’s for Mr. Paulson, the author. Mr.

Paulson, how about it? What Websites should the average citizen

ought to tap into. We read ours 2 hours ago or so.

Mr. PAULSON. There are so many Websites on the Internet related to this. One of the hardest challenges I had in writing this

book is finding information I trusted. There’s a difference between

finding Websites with information and finding Websites with valid

information that doesn’t have somebody trying to drum home a

point. I’ve got one that I’ve put on my own Website, which is—I

won’t try to sell you blankets or sleeping bags or, as I said, raisins

or bottled water. It is strictly for people’s use to go to the Website.

It is www.edpaulson.com, and there’s a year 2000 link, and on

there they’ll find divisions for different areas—finance, government—and that will then take in other links.

So I’m hoping what people will do is use that as a resource to

get to the other specialized locations, like the Board of Governors

Website for the Federal Reserve. It is a hard one to find unless you

know how to find it, but there you can find really credible information about what the finance industry is doing, right directly from

the Federal Reserve’s own statements. And there are others.

Mr. HORN. That is a great service and I thank you for offering

that. The vice chairman has a question for you.

Mrs. BIGGERT. Not really a question. I just wanted to add, in the

information that we have out there, we do have some of the

Websites for general sites, and then government sites, and it is a

sheet I believe that’s out on the table.

Also, how to get testing tools and software patch sites so you can

check out your software. Again, you always take it with what you

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find there, but at least it is a way to start and get into the Internet

on this issue.

Mr. PAULSON. There’s another site that I found that I’ve come to

discover lately that I really like. It is www.y2ktoday.com. It is been

out for a while, but I’ve been going to it regularly and checking it

out. I actually like that site a lot. That’s another alternate site I

would recommend to people and that will take them to other locations.

Mrs. BIGGERT. That’s on this list also, as is yours.

Mr. HORN. I’m glad you mentioned it because I was going to

praise you for it. This is the best list I have seen any Member of

the House do, and your representative has done it and it is on the

table out there. It is Y2K Readiness Guide to U.S. Representative

Judy Biggert, 13th District of Illinois.

[NOTE.—See prepared statement of Judy Biggert.]

Mr. HORN. And that’s very useful information I think for all of

you, and you don’t have to scribble notes in the audience or anything else.

I’m going to ask one last question of this panel, which I’ve asked

every panel. Now that you are into this, what have you learned

that, if you ever had to go through it again, ought to be No. 1? Let’s

start with Mr. Skarr up there.

Mr. SKARR. I think particularly for small business, because I’m

not sure we’re home free yet relative to small business, it is creating greater awareness. And even hearings like this probably

should have been done earlier on just to build a sense of national

awareness of the importance of this. So just plain old public awareness and business awareness is probably the issue that we needed

to start a little bit earlier in my opinion.

Mr. HORN. Mr. Swift.

Mr. SWIFT. Four things come to mind. One, like everybody else,

I wish we started earlier because a large portion of this work could

have been accomplished as part of routine enhancements or upgrades to hardware and software.

No. 2, I wish that the lines of business in all our major organizations had accepted the reality that this is not just a technology

issue but it is one that threatens whole businesses.

Three, directors and officers, I think they needed in some cases

to have stepped up to their responsibilities earlier. If you asked the

Federal examiners, What is the common characteristic of banks

that have not performed satisfactorily? They will tell you it is not

a matter that they do not have the money to throw at this or something; it is that their directors and officers have not asserted themselves aggressively in the process and have the project leaders reporting to them, and on a scheduled timetable. And then,

finally——

Mr. HORN. I completely agree with you on that. I’ve preached

that now for 3 or 4 years, and I think they got very bad advice

from some of their general counsels, which sort of was, Hey, chief,

if you don’t say anything, they can’t do anything to you in court.

Well, that’s just utter baloney. You should have done what—both

the government organizations and private sector and nonprofits— they should have said, ‘‘Hey, we’re going to do everything we can

now and if some idiot wants to sue us,’’ which a few are out there

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waiting now that they don’t have all that tobacco money and the

tort bar, ‘‘that we should do the best we can,’’ and when you do the

best you can, nobody is going to be able to touch you very much.

And I think you are right on the target there.

Mr. SWIFT. You just stated my fourth point which is communications. I think you are going to find this summer and through the

fall, banks will be much more ready to state the readiness of their

organizations.

Mr. HORN. Ms. Croft.

Ms. CROFT. I think that communication and consumer education

and hearings such as this to make the public aware of what is

available to them and what they should be cautious of. I think

those are the most important issues. From the beginning of Jim

Ryan’s term, he has been very instrumental in making the public

aware of the problems that possibly exist and giving them a forum

in which to call for information if they’re in doubt.

Mr. HORN. Mr. Clark, any thoughts of what we should do first,

next time around?

Mr. CLARK. I would have to echo the thoughts of others, is that

we probably would have been better off starting a little earlier. But

all in all, it helped us get a better handle on our inventory of

equipment and so forth, but just timeliness would have, had we

started earlier, would have been better.

Mr. HORN. Mr. Johnson.

Mr. JOHNSON. I think once you mentioned about breaking down

the barriers of sharing information. I think the Y2K Readiness Act

that was enacted last fall got a lot of the attorneys off of our backs

and allowed us to speak more freely about what our readiness

plans were. It has done a tremendous amount in our industry to

help us share information among ourselves, and I think the lingering benefit of this exercise is that we have broken down barriers, and I think the technology and the advancements we’ve made

are going to extend way beyond what we’re gaining just as a Y2K

issue.

Mr. HORN. Thank you. I agree with you completely on getting everybody off everybody else’s neck and it’s really been encouraging

to see very bitter rival firms working together and sharing information because they’ve got a common interest.

Mr. JOHNSON. And we’re interdependent.

Mr. HORN. Yes, exactly.

Now we have Mr. Paulson. Any more thoughts on that?

Mr. PAULSON. The only comment I would have is from my perspective is I wish I had gone public, proactively public earlier with

this, trying to raise the awareness with some of the other people

who were the early evangelists on public awareness on this topic.

I think the other thing I would have probably promoted is to

have business start to treat this as a new beginning, not an end.

I think a lot of the business has been reactive to this, like they’re

being attacked. And the context of how they did the work was, I

think, initially almost antagonistic. Where now what I’m starting

to see, that as my colleagues in the information technology industry are going through this, they’re saying, ‘‘You know what, we’ve

really cleaned up a lot of our systems.’’ And a lot of them are treatVerDate 11-MAY-2000 08:04 Apr 06, 2001 Jkt 010199 PO 00000 Frm 00320 Fmt 6601 Sfmt 6601 E:\HEARINGS\60939 pfrm02 PsN: 60939
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ing this like we’re really going into 2000 on a brand-new, stable,

solid technology footing. It is kind of like cleaning house.

Some of the technology in this industry are now treating it that

way, and instead of treating it like a bad thing, they’re treating it

like a good thing. I wish I had seen that earlier, to be able to push

this.

Mr. HORN. When we question government agencies, we say, ‘‘Now, did you learn something in the process of getting rid of some

of the systems or buying them, rather than having to do the expense and—when that isn’t going to take you too far with the next

generation?’’ You should be wanting the new generation.

The Federal Government is very far behind the private industry

in a lot of things, computing power that they have, and they don’t

have this. They had to bring people out of retirement to do

COBOL. Well, most people thought COBOL hasn’t been used for 30

years, but it has been and it is. And those people in COBOL who

didn’t retire from the Office of Personnel Management said, Hey,

you can keep your pension check every month. God bless you on

the $100,000 contract you are getting. People wonder where did

this come from. I think those are all useful thoughts. I will try to

use these when I’m trying to justify the Office of Management, because the Office of Management and Budget simply doesn’t give a

hoot about management problems, they’re so overwhelmed with the

budget problems.

So hopefully we will get something done on that front. I thank

you for all your one-liners.

I want to thank you, Judy, for the great hospitality your staff has

offered us and for your being here. You do an excellent job in

Washington. I’m glad to see your constituents are here to see what

you are doing. You sent one fine lady to Washington, DC, and I will

tell you and her predecessor, who is also a great Member, we appreciated that.

I do want to thank the staff, both your district office that has

helped us on these arrangements, Kristin Wolgemuth, the legislative director; Chris Close, legislative aide; John Hoffman, your district director; Yadira Rosas, staff assistant; and intern, Peter

Rayor. And then your chief of staff, Kathy Lydon, and Caroline

Stillman, an intern.

And then for us—put your hand up—Russell George. You are in

the audience. He’s the staff director of the Subcommittee on Government Management, Information, and Technology—a little shy,

you can see, sitting in the audience—and chief counsel. Matthew

Ryan who is to the chair’s left and your right, senior policy director. He brings a great deal of experience to this situation. And then

we have Patricia Jones. Where is she here—oh, she’s on her way

to the airport—American Political Science Association congressional fellow. Grant Newman, our clerk. There he is, back in the

audience. And Laura Lufton, intern; John Philips, intern; Justin

Schlueter, intern; and during the summer we have a lot of free

labor. That’s why we have so many interns.

And our court reporter today is Laurie Harris. Thank you, Laurie. It is great to get the transcripts from you. They’re very helpful.

And I want to thank the Chair, and if she has any closing statements she’d like to make, please make them.

316

Mrs. BIGGERT. Thank you very much, Chairman Horn, and thank

you so much for coming. I know it is quite a distance from California and we really appreciate it. I think the field hearings, where

the members of the public really have an opportunity to hear about

what we’re doing in Washington, is a reminder this the Government Reform Committee’s Subcommittee on Government Management, Information, and Technology and our chairman has led the

way in really examining the Y2K bug; and I have to say that I

think that that boat is almost sunk, that we really are on our way

to solving the problems of Y2K.

And I want not to leave you with anything that would cause anybody to panic. Because I think that’s why we’re having these hearings, why people are proceeding the way that they are. So, that we

will be able to celebrate the year 2000 rather than to have to worry

about the glitches because it is—the year 2000 is going to be—the

new millennium is going to be a wonderful time. And we want to

be able to celebrate it rather than to be out in the forest by a fire.

So this is going to happen, I think. I really thank you for all that

you have done over the years, and I’m very privileged to be on this

committee and to have the opportunity since January to participate

in these discussions. And I think that we’ve all learned a lot today,

at least I have, I hope that everyone has, in what we should do,

what responsibility we as citizens should take to be prepared for

the year 2000.

I thank you very much and I again thank Mayor Pradel for the

opportunity to be here in the great city of Naperville and to hold

this hearing here. Thank you very much.

Mr. HORN. I want to give you a little advice from a person who

is a bank vice president. I think he’s right on the mark. He said: ‘‘I would like to remind everyone that the bank records for the end

of December, particularly the last 3 days, 2 days, may not be available till January 4 and 5. Data processors and printing will be

overloaded to get the statements out so please be patient, for they

will be accurate and available.’’ And I think that’s good advice.

And with that, we go into recess until we pick up this hearing

tomorrow in Detroit. And with that, we’re in recess.

[Whereupon, at 12:20 p.m., the subcommittee was recessed.]

(317)

OVERSIGHT OF THE YEAR 2000 TECHNOLOGY

PROBLEM: LESSONS TO BE LEARNED FROM

STATE AND LOCAL EXPERIENCES

FRIDAY, JULY 9, 1999

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,

INFORMATION, AND TECHNOLOGY,

COMMITTEE ON GOVERNMENT REFORM,

Detroit, MI.

The subcommittee met, pursuant to notice, at 9:06 a.m., in the

Wayne County Commission Chambers, 600 Randolph Street, Detroit, MI, Hon. Stephen Horn (chairman of the subcommittee) presiding.

Present: Representatives Horn and Knollenberg.

Staff present: J. Russell George, staff director and chief counsel;

Matthew Ryan, senior policy director; and Grant Newman, clerk.

Mr. HORN. In the interest of the time of the witnesses and also

we have a few people that will be coming in, I believe Mr. Conyers,

your Representative from this area, will be possibly here; Mr.

Knollenberg, who is in the suburbs, he is driving in now, but I do

not want to hold everybody up.

So let me thank first Commissioner George Cushingberry for

helping us to arrange this beautiful historic building here and this

particular Commission room. I studied General Wayne over the

years when I was writing a book on President Washington’s first

administration and the Congress’ first, so he was a great figure in

American history and it is a great name. So thank you, Mr.

Cushingberry, we appreciate the help.

Let me just outline some of this—I am Stephen Horn, a Member

of Congress from Long Beach, CA and chairman of the House Government Reform Committee’s Subcommittee on Government Management, Information, and Technology. This is an investigating

committee, so we have a practice here of swearing in all the witnesses that testify before us.

Our main concern is of course the year 2000 computer problem,

which affects about every aspect of Federal, State and local operations. Further, it affects private sector organizations and could impact the lives of many individuals in our Nation. From Social Security to utilities to local emergency management, the year 2000 computer bug has certainly been a large management and technological challenge for all of us. No single organization, city, State or

even country can solve the year 2000 problem alone.

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The problem, of course, dates back to the mid-1960’s when I

think most of you, if you are around my age—and most of you are

not, but those that are, you will remember a whole room this size

would be filled with mainframe computers. They had very little

memory capacity and I guess maybe nationally programmers all

over said, ‘‘Gee, why are we putting in 19 when we are putting in

1967, let us just put 67?’’ and we gained a lot of memory in that.

And of course that whole room could be reflected now in your personal computer in terms of memory. But they knew when they hit

the year 2000, that the 00 would be a problem and the computer

would think it is 1900, not necessarily 2000. And so they said oh

well, do not worry about it, American technology, we will always

solve that problem. The fact is, there is no silver bullet, they did

not solve the problem. I do not know how many people have even

tried, but it is a long, laborious situation where they go through

the codes and they are bringing COBOL people out of retirement,

in the case of the Federal Government, which is good for those who

had to study COBOL. I only did a program in it once, so it is way

in my past.

The problem that we face is really a management problem, it is

not a techie problem. And the ones that have succeeded in this

have been individuals that have organized properly and gone

through this what I called earlier a laborious matter.

More than 3 years ago, in April and June 1996, this subcommittee held the first congressional hearing on the year 2000

problem. Since that time, we have held almost 30 hearings, issued

eight report cards to monitor the status of the Federal Government’s year 2000 computer solutions. Current estimates show the

Federal Government will spend by the end of this fiscal year on

September 30, about $9 billion to fix its computer systems. I have

often said the figure will probably reach $10 billion, and we have

a few months to go after September 30th.

Recently, the President’s Office of Management and Budget identified 43 essential Federal programs, such as Social Security, Medicare and the Nation’s air traffic control system. Each day these

programs provide critical services to millions of Americans. Of

these 43 programs, 10 are federally funded, State-run programs, including Medicaid, food stamps, unemployment insurance, child support enforcement. Several of these State-run programs are not

scheduled to be ready for the year 2000 until December, leaving little, if any, time to fix unforeseen problems.

Data exchanges and interdependencies exist at all levels of government and throughout the private sector. A single failure in the

chain of information could have severe repercussions.

For example, let me briefly illustrate how the U.S. Social Security program uses computers. And Social Security has always received an ‘‘A’’ on our report cards. They faced up to this way back

in 1989. The Department of Transportation could have if they had

listened to the woman programmer that had laid it all out for

them, but they knew better. So they are getting ‘‘F’s’’ and ‘‘D’s’’

usually in the last eight report cards. And of course, in that agency

is the FAA, the Federal Aviation Administration. But Social Security is a prime example of how to get the job done well. When the

payments are made, however, Social Security sends the payment

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data to the Department of the Treasury’s Financial Management Service. The Service then cuts the Federal check for about $43 million in one program and $50 million in the other, which is then

electronically deposited directly into the person’s bank account at

a local financial institution. There organizations move and manipulate data to make these payments; each uses its own network of

computers. If a payment is mailed to an individual’s home, the U.S.

Postal Service then plays a key role.

And many of the agencies in the Federal Government have said

to us when we have asked where is your contingency plan, they

said, ‘‘Oh, we will use the post office.’’ In other words, mail the

check, do not electronically deposit it. The humorous thing about

that is when we held a joint hearing with the Postal Service Subcommittee of our full committee, the post office did not have a contingency plan. So we will see what happens.

The bottom line is if any one of these entities fails from the Federal Government to the local bank or Postal Service, a deserving

individual will not receive a payment. Now multiply this situation

by millions of people that receive the Social Security benefits and

also remembering there are 435 Members of Congress, there are 5

from the territories and commonwealths and there are 100 U.S.

Senators. And you can believe it, if grandma does not get her

check, there will be a long line out of our district offices. So we are

trying to avoid that situation.

But for the computers to work, we need, of course, power. One

of the most essential questions concerning the year 2000 challenge

is will the lights stay on? Without electricity, our modern society

will be relegated back to the proverbial stone age.

I see our colleague from the suburbs of Detroit has made it

through the rain, Mr. Knollenberg.

Mr. KNOLLENBERG. Good morning, how are you?

Mr. HORN. Joe, it is great seeing you. Joe is one of the most powerful guys in my class, being on the Appropriations Committee. So

he can do a lot of good for the State of Michigan and the country,

and he does. So we are glad to have you with us. Come on up here,

Joe, you can sit here.

Mr. KNOLLENBERG. I can sit in the big chair.

Mr. HORN. No, I got rid of the big chair, but you can sit in a

chair that you do not have to go backward on or something.

We are reminded of the Speaker’s chair in the House, sort of as

a catapult into the wall.

One of the most essential questions on the year 2000 challenge

is will the lights stay on? Without electricity, our modern society

would be relegated back to the proverbial stone age. I wonder how

automobile plants would continue to manufacture cars without

power, even if only for a short time.

From a personal standpoint, I realize that when confronted with

a personal emergency, I can call 911 for assistance and feel confident the phone will be answered promptly, that a competent authority will respond rapidly. Year 2000 computer problems present

other potentially serious threats at local levels—and we will cover

some of those today—from the potential interruption of a citizen’s

call for fire or police to the delays in the State’s ability to request

emergency or disaster assistance from the Federal Government.

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One thing is for sure, there are only 175 days left until January

1, 2000. The clock is ticking, you cannot change the date. Accordingly, the testimony we receive today will be very helpful into our

understanding of the full extent of the year 2000 problem.

I would ask my colleague, Mr. Knollenberg, do you want to make

any opening statement here?

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

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Mr. KNOLLENBERG. Mr. Horn, I will be very brief.

Steve is very kind to introduce me as a person of influence because I am on the Appropriations Committee. That means I write

the checks and obviously sometimes that is not so easy because I

also sit on the Budget Committee and I have to style the budget

to get to the point where we can write the checks, but nonetheless

everybody likes me because I am the check writer. But I hope you

understand that everybody likes to talk to me about whatever is

on their mind.

I, very briefly, will just add this. Steve Horn has been a leader

on this issue from the very, very beginning. And with his leadership, the Federal agencies are closer to compliance. And I think he

has already told you, they are not there either, and you hear stories about, for example, the FAA air traffic control is not yet prepared to deal with the day January 1, 2000.

I think that he may have already talked to you about the point

that we have reached here is that the House did pass overwhelmingly the Y2K litigation reform, 404 to 24. I think you might have

mentioned also that the Senate did likewise on the very same day,

July 1st. So we are moving forward, but as Steve Horn says, the

clock is ticking, there is 175 days now and the end, while it is not

near, the end of the time that it takes to actually bring about

architecting the right kind of program that leaves us frankly on top

of things and not behind the eight ball is rapidly approaching.

So I am going to conclude with those remarks. I am just delighted to be here with Steve and look forward to the testimony of

the panel and obviously to the point of perhaps asking a question

or two.

Thank you.

Mr. HORN. Thank you very much. We appreciate you coming.

When Members are home in the District, it is awful nice of them

to break away from that and get their wisdom on some of these

questions.

Let me just note our procedures here. We have panel one before

us and there will be panels two and three. And the way we work

is we swear in all witnesses, as I mentioned earlier, and when we

introduce you—and we introduce you in the system laid out on the

agenda—your full statement is automatically put in the record. We

do not want you to read your statement, we have had a chance of

those that we do have, to read them, and we would like you to sort

of summarize it in 5 minutes. And the reason for that is we can

then get into a dialog between members of the panel and between

ourselves and the panel. And we get a lot more from that than

hearing statements we already have.

So if you could just summarize it in 5 minutes, we will—counsel

for us will hold up a 1-minute sort of marker, so that you will know

you have 1 minute to wind it up. He is keeping the time.

We also have another routine on these field hearings in the

States. We started in Topeka 2 days ago, and were in the Chicago

area yesterday and Detroit will end it. And we found it very useful

that we pass out cards for those in the audience, and if there is

a question you would like us to raise with the panel, we are glad

to do that. And we found we have been able to get a tremendous

amount of information out of that because a lot of people in the auVerDate 11-MAY-2000 08:04 Apr 06, 2001 Jkt 010199 PO 00000 Frm 00329 Fmt 6601 Sfmt 6601 E:\HEARINGS\60939 pfrm02 PsN: 60939
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diences often have some real questions from their industry standpoint or the governmental standpoint.

So, if the panel will stand and raise your right hands, we will

swear you in.

[Witnesses sworn.]

Mr. HORN. Thank you. The clerk will note that all five witnesses

affirmed the oath. And we will begin with a witness that has probably had about 100,000 miles of travel with us over the last couple

of years, and that is Joel C. Willemssen, the Director for Civil

Agencies Information Systems of the General Accounting Office.

The General Accounting Office is part of the legislative branch of

government under the Budget and Accounting Act of 1921. It is

Congress’ right arm, originally for fiscal review, in the traditional

accounting office role. But in the post-war period, for programmatic

review. And they do an outstanding job on doing that and doing

special studies for the Appropriations Committee, the Government

Reform Committee, this subcommittee, so forth.

So Mr. Willemssen has one of the most overall bits of knowledge

on this problem. So Joel, go ahead.

STATEMENTS OF JOEL C. WILLEMSSEN, DIRECTOR, CIVIL

AGENCIES INFORMATION SYSTEMS, GENERAL ACCOUNTING

OFFICE; GEORGE BOERSMA, DIRECTOR, MANAGEMENT AND

BUDGET, STATE OF MICHIGAN; CAPTAIN ED BUIKEMA, DEPUTY STATE DIRECTOR OF EMERGENCY MANAGEMENT,

MICHIGAN STATE POLICE; ARUN GULATI, DEPUTY DIRECTOR, DEPARTMENT OF INFORMATION PROCESSING, WAYNE

COUNTY, MI; AND KATHLEEN LEAVEY, DEPUTY DIRECTOR,

DETROIT WATER AND SEWERAGE DEPARTMENT

Mr. WILLEMSSEN. Thank you, Mr. Chairman, Congressman,

thank you for inviting GAO to testify today. As requested, I will

briefly summarize our statement on the Y2K readiness of the Federal Government, State and local governments, and key economic

sectors.

Regarding the Federal Government, the most recent reports indicate continued progress in fixing, testing, and implementing mission critical systems. Nevertheless, numerous critical systems must

still be made compliant and must undergo independent verification

and validation. Our own reviews of selected agencies have shown

uneven progress and remaining risks in addressing Y2K, and

therefore point to the importance of business continuity and contingency planning.

If we look beyond individual agencies and individual systems, the

Federal Government’s future actions will need to be increasingly focused on making sure that its high priority programs are compliant. In line with this, OMB has identified 43 high impact programs

such as Medicare and Social Security. And as you know, Mr. Chairman, we are currently reviewing for you the executive branch’s

progress in addressing those programs. However, at this point, it

is very clear that much additional work is needed to make all those

programs ready for the turn of the century.

Available information on the Y2K readiness of State and local

governments indicates that much work remains. For example, according to recent information on States reported to the National

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Association of State Information Resources Executives, about 18

States had completed implementing less than 75 percent of their

mission critical systems. State audit organizations have also identified significant Y2K concerns in areas such as testing, embedded

systems, and contingency planning.

Recent reports have also highlighted Y2K issues at the local government level. For example, a March 1999 National League of Cities poll of over 400 representatives found that almost 70 stated

they would finish 75 percent or less of their systems by January

1, 2000.

Another area of risk is represented by Federal human services

programs administered by States, programs such as Medicaid and

food stamps. Of the 43 high impact priorities that I mentioned earlier 10 of these are State-administered Federal programs. The

available OMB reported data on the systems supporting these programs show that numerous States are not planning to be ready

until close to the end of the year. Specifically, a large number of

State systems are not due to be compliant until the last quarter of

1999. And further, that is based on data that has not been independently verified.

If we look at the risks beyond those facing our governments and

the risks that Y2K poses to our infrastructure, key economic sectors and to other countries, we have made a number of recommendations to the chairman of the President’s Y2K Conversion

Council, John Koskinen, and the Council has made some major

strides in addressing these areas. Nevertheless, there is a good

deal of variance on the Y2K readiness among these various sectors.

Accordingly, there will be a need for continuing emphasis, which

will be critical to fully address those areas in the less than 6

months that remains.

That concludes a summary of my statement and I will be pleased

to address any questions that you may have.

Thank you.

Mr. HORN. Thank you very much for that. We will move through

the various witnesses and then we will open it up to questions.

Mr. George Boersma, the director of management and budget for

the State of Michigan is our next witness. Welcome.

[The prepared statement of Mr. Willemssen follows:]

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Mr. BOERSMA. Thank you. I appreciate the opportunity to be here

today to talk about the State of Michigan and what we have done

to provide Y2K readiness for State government services.

When the State started this program in earnest in the middle of

1996, we wanted to make sure that the year 2000 project addressed

issues such as correcting date problems to prevent any material impact to government services to our citizens. We wanted to make

sure it was cost-effective. And we also wanted to go and make sure

that we took something away from this as opposed to just fixing

the problem, we were able to use something down the road.

We have gone and we have been able to look at the executive

branch of State government in a lot of different areas as it relates

to application software, systems software, hardware, telecommunications, physical plant as well as the State vendors that we have—

that we deal with, to make sure that they are Y2K compliant as

well.

We spent a lot of time in the 1996–1997 area to do discovery and

assessment. In 1997 and 1998, we spent a lot of time fixing the

problem and 1999 is a year that we are making sure that the problems that have been fixed are in fact correct, so that we can go and

do business as usual in the year 2000.

I am happy to report that of the 672 critical applications within

State government, that 99 percent are compliant and back in operation. There are five applications that still need to be compliant

and they will be done around the end of—the schedule right now

is the end of August and they will all be completed.

So we have spent a lot of time and effort to make sure that all

of our systems are up and running. We are spending 1999 to make

sure—as I said earlier, we are working on closing the remaining

open systems that we have. We are making sure that our infrastructure is ready with additional testing. We are working on all

of our embedded technology in all of our areas, whether it be in our

hospitals or prisons, et cetera, to ensure that all of those particular

chips have been tested and are compliant.

We have a supplier compliance data base listing close to 7,000

items that we have on the Internet for not only the State to use

but also for letting others use as well, to see what issues are compliant.

In addition to the regular testing that we have done on our very

critical applications, we have done what is called end-to-end testing, to make absolutely sure that these critical applications are in

fact compliant. And to date, we have had very, very little problems

in doing that end-to-end testing.

We have had independent consultants come in to do an independent verification and validation of all of our processes within all

of our agencies, and we have gotten an approval with our agencies

on the way we have handled this entire operation.

I should also point out that many of the Federal agencies have

had auditors come in to check all of our applications and at this

point in time, again, we have received a clean bill of health on all

of those particular applications that they have audited.

We are spending a lot of time in the awareness and communications area, both within government, but also outside of government

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and Captain Ed Buikema will talk more about that in his presentation.

We are spending a considerable amount of time now on business

continuity and contingency planning. We have identified some 82

essential functions that we believe are essential—that need to be

basically provided within the zero to 5 day category. So we are in

the process of completing contingency plans on all of those essential functions right now. We have the first drafts in and we are reviewing those at this time and they look—right now, they look very

good.

The other thing we are doing is we are calling it zero day planning. Basically we have identified some key dates, October 1st,

which is the State’s fiscal year, as well as the end of the year,

whereby we are basically looking at best practices as to what we

should do, each agency should do, on those particular dates to

make sure that come January 3rd, that the State government can

work as normal. And so we are working in that regard as well.

We have prepared a tool kit that is in the packet that I have submitted to you, which has been sent to all the local governments and

school districts for their review, so that they can go and look at

what the State has done. And this is a guideline that they can use

to do that. We also have gone and, as I said, prepared various

types of awareness sessions throughout the State.

I would be happy to answer any additional questions later.

Mr. HORN. Well, thank you. That is a very interesting proposal

that you have been through and that has been successful.

Our third witness on this panel is Captain Ed Buikema, the deputy State director of emergency management for the Michigan

State Police. Welcome.

[The prepared statement of Mr. Boersma follows:]

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Mr. BUIKEMA. Thank you, Mr. Chairman, and good morning;

good morning, Congressman Knollenberg. I appreciate the opportunity to be here this morning testifying before your committee.

By statute, the director of the Michigan State Police is the director of emergency management within our State. But the legislature

created the Emergency Management Division to manage the dayto-day activities within the State and local jurisdictions pertaining

to emergency management.

Our responsibility is to coordinate State government response to

emergencies and disasters of all kinds. Now as we face the Y2K

issue, we figured—we determined that the issue of information was

absolutely critical, that we could get our arms around what to expect, what level of planning had taken place and what kind of guidance and information we could provide, especially to local units of

government in preparing for Y2K.

So we embarked on a series of infrastructure round tables where

we would bring folks in and ask them some very direct questions

as to where were they in their preparedness activities for Y2K,

what kind of problems could we expect and what kind of guidance

could we provide to local government in terms of emergency planning. We have held infrastructure round tables, which is what we

are calling them, with electric utilities, for both the big electric utilities as well as with the rural electric cooperatives and the municipal power providers, with natural gas providers, chemical manufacturers, transportation, telecommunications, water and waste water,

as well as with the Michigan Hospital Association, and we are

planning a round table with 911 providers at the end of the month.

During each of these round tables, we would have a transcriber

present, who would transcribe the proceedings. We then passed

them out extensively to local government, we put them on our

Website, with the intention again of providing the best and most

recent information about those elements of the critical infrastructure to local government, to provide them a basis for putting together plans for Y2K.

A companion effort in that regard was providing guidance to

local government as to how to proceed with planning for this Y2K

issue. We produced a couple of documents similar to what has been

done in other States. First of all, we put together an assessment

tool which has been provided widely to local jurisdictions in the

State of Michigan to again help them assess their risks and

vulnerabilities. And then we developed a contingency planning

guide as well that has been widely distributed to help them put together contingency plans for their jurisdictions as they look at the

Y2K issue. Again, both of those documents have been placed on our

Website and have been widely distributed throughout the State.

The State of Michigan then on June 2nd, conducted an exercise

for State agencies and there were about 125 persons present at

that exercise, and we asked a lot of the what-if questions and

worked our way through those in the form of a table top. We are

in the process of developing an after-action report for that exercise,

which should be completed very soon.

In terms of training and outreach to both State government, but

specifically to local government, there has been a lot of activity in

our State this year. We have a structure in our State where we

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have district personnel and we have encouraged them, as well as

the local emergency managers that exist all over the State, to conduct town meetings within their jurisdictions or conferences or forums or seminars. And from our staff, we have provided support

to those folks, and at last count, we have appeared at over 100 of

those local presentations around the State of Michigan.

More recently, we put on three large Y2K symposiums throughout the State and we brought in a number of State agency representatives to describe where their agencies were in terms of Y2K

preparedness, as well as our partners from the utilities as well, to

again describe where they were. And we received pretty good

media coverage as well, describing that entire effort.

For the end of the year, again as with most States, the State

Emergency Operations Center here in Michigan will be activated.

We will be asking for information from local units of government

on a timely basis; specifically, on January 1st, to tell us what, if

anything, has occurred in their jurisdiction. We expect to put together a joint public information center where we are partnering

with a variety of State agencies as well as with our utilities, making sure we can receive information in from local jurisdictions and

provide guidance and direction as well to the media as well as to

our citizens throughout the turnover.

We recognize that this is a unique situation for us, as you mentioned, the Y2K date is non-negotiable. But we also recognize that

it provides a real opportunity for us to strengthen the relationships

in the emergency management field and we expect to reap the benefits of those relationships well beyond the turnover.

So with that, that gives you an overview of some of the activities

that have been taking place in our State and I would be happy to

answer any questions later on. Thank you.

Mr. HORN. Well, that is very helpful and I think we will probably

have a lot of questions because that point you made in ending, particularly, on the relationships that are established in the long run

is what is really helpful here out of this.

Our next presenter is Mr. Arun Gulati, the deputy director, Department of Information Processing for Wayne County, MI. Glad to

have you here.

[The prepared statement of Captain Buikema follows:]

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Mr. GULATI. Good morning and thank you for giving us the opportunity this morning to share the information with you in regard

to the actions the county has taken to ensure to our stakeholders

that our services will not be impacted because of the Y2K issues.

Realizing the importance of having management involved as well

as the number of days left to address the Y2K issue, last year the

county formed a management team which includes the directors of

all departments and representation from the legislative branch as

well as the judicial branch. The executive team also includes representation of elected offices as well as agencies.

The goal through this management team is to ensure that we

have the necessary team to make the necessary decisions to move

forward in a manner so that we can quickly make the decisions

and correct the Y2K issues.

The Y2K program is being directed by Ms. Carol Steffani, she is

the director of information processing. Our program follows a detailed charter and we have all the information relating to the charter on the Internet to share with our public. The county program

includes three areas—technical, legal and the contingency planning.

The technical area is to ensure that we have identified all the

areas and taken the necessary steps to ensure that components will

work as we move into Y2K.

The legal is to ensure this team that we are minimizing the liability by taking the necessary steps to do that by communicating

to our vendors as well as suppliers as well as our other partners.

Contingency planning is to define that we must have backup

plans to ensure that all critical systems will operate as we move

into Y2K.

The county has adopted the GAO standard which includes different phases—awareness, inventory and assessment, conversion/

remediation, test, and implement and certification. Though these

are different phases, they are being run to ensure this team that

not only we remediate, but after we remediate, we go back and test

to ensure this team if the remediation was not correct, we can go

back and forth to ensure that it is functioning as we designed it

to.

The county has completed the inventory and assessment of all

the information technology components and also completed the remediation of the system running on the mainframe. Though some

of the systems will not be implemented in production until later in

this quarter, we expect to complete the remediation of the mainframe applications as well as the network by the end of September.

In order to ensure that all technical components are Y2K compliant, we are also going in and remediating approximately 3,200 PCs

and we have provided the necessary tools to our users as well as

the departments to ensure this team that they run the necessary

check, that not only the applications are Y2K compliant, but also

the data on those applications.

The county is also examining 70-plus facilities. These facilities

include jails, airport, some of the key buildings within the county.

In order to manage all the projects that we have, we have a Y2K

program office which is presently tracking over 250 projects and

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out of those 250, there are 42 that are mission-critical. And that

is producing the necessary reports for the management team.

Through some of the testing we have done, we have found that

some of the applications that the vendors informed us were Y2K

ready, when we plug in all the dates that are related to the Y2K,

they are not ready and some of the vendors have gone back and

they are going to bring in the necessary changes to ensure that

those products are Y2K ready.

The key dates for the county to be ready for the Y2K are June

30th, that is the date to be ready and have all the contingency

plans for the airport. The airport must complete compliance documentation of all critical systems and put written contingency plans

in place. That is the key date and yes, we have completed that.

July 16th is a date when we are going to bring the management

team together for a table top emergency preparedness exercise.

September 30th is the date to complete the remediation and also

the testing.

Wayne County has also adopted a formal emergency readiness

plan which specifically defines the steps that we will take to ensure

this team that we have prepared for the Y2K.

Contingency plans are being prepared as we speak, and yes, we

will have the contingency plan for all mission-critical systems.

Realizing the complexity that we face with the Y2K, we are also

looking at developing the transition plan into the last quarter of

this year. This transition plan will assure that as we gather and

learn new information, we have the team together to manage the

risks for going into the year 2000.

In conclusion, yes, we will be ready for the Y2K. But again, we

have realized over the last 2 or 3 years now that not only our computers, but the operation of all computers that may be of the citizens, of the State or the Fed, must function properly in order to

be ready for the Y2K.

And we very much appreciate your having this forum to share

this information and giving us the chance to learn about others

also. That is the overview of my testimony and I will be here to

answer any questions later on.

Mr. HORN. Thank you. We appreciate that.

Our last presenter on this panel is Kathleen Leavey, the deputy

director of the Detroit Water and Sewerage Department.

[The prepared statement of Mr. Gulati follows:]

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Ms. LEAVEY. Good morning, Congressman Horn and Congressman Knollenberg. I appreciate the opportunity to be here this

morning to advise you on the status of our Y2K readiness.

I can tell you that we are confident that we have identified and

are in the process of remediating all of our mission-critical systems

and processes so that we can fulfill our mission of providing water

and sewer service on January 1, 2000.

Because we are an environmental agency and because we are

charged with public health and safety responsibilities, we have followed the EPA guide on the process that should be followed for the

readiness on Y2K. That includes the same steps that are in the

GAO, but they are a little bit different. We do have awareness, assessment, correction/remediation, contingency planning, testing and

implementation.

We are working on all of these areas simultaneously. I am the

department’s Y2K coordinator, I have a team that is comprised of

both consultants and employees who have been working on this

process for the last 3 years. We have gone through the department,

we too have a lot of facilities, and most of our facilities are active

process service facilities. We have a concern, obviously, that we be

able to turn on our tap on January 1st and get water, et cetera.

We have been meeting with all of the other utilities in southeastern Michigan to ensure that we are all on target for January

1st. The electric industry, Michigan Consolidated, Ameritech, ourselves and any other utility services have had a round table that

we have been working in for the last year. Our purpose is to assist

each other and to know what each other’s contingency plans are,

so we are all on the same line on December 31st. I can tell you in

meeting with the other utilities that we are confident that they are

doing everything possible to be ready, as are we, on January 1st.

We also have been participating and working with the State

emergency planning. There also is a regional planning center that

is an emergency center that is going to be set up, an operations

center in I think it is Northfield, for the State. We are going to participate in that. We also have a city of Detroit Emergency Center

which we will participate in, but we also will have our own emergency operations setup.

At this point we have, for the last 16 years, done table top exercises and contingency planning, again because of the nature of our

business. We have worked closely with the University of Michigan

and they are developing and we have already done one Y2k table

top. We will do others and probably later on in the year, we will

involve our customers in that as well.

We have a service area that is approximately 1,000 square miles.

We serve 126 communities with water, we serve 76 communities

with wastewater services. We have formed a customer task force on

Y2K because we want to be able to keep the lines of communications open with our customers. They are an integral part of our

contingency communication plan and they will be involved in assisting in either manning or operating processes in the various

areas where they are located.

We, as I said, are doing everything we think is necessary. Our

contingency plans are not real complicated. We are intending to invest a great deal of money to provide backup service at stations

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and facilities that we have identified as critical. Those generators

are being manufactured as we speak and installed and tested as

we progress through the year. In order not to waste any money on

that, we have very involved plans for their use after the rollover

date.

But that is our primary contingency plan. However, as I indicated, we have been doing table top emergency exercises for over

16 years. We are treating the Y2K rollover as if it were an emergency, because essentially, if our services stop, we want to find alternative ways to provide service to our customers. We do have a

redundant system; that is, most of our large water plants, all of our

large water plants and our customers have service, water service

coming from two different directions. So if it is shut off in one direction, we have the ability to feed from another. We have water

plants located as far north as Port Huron and as far south as Allen

Park, we have a total of five. Most of the water plants predate the

computer in 2001, so we do not have to worry really about embedded chips there. They have never been operated by computers, they

have a life span that exceeds most computers and they will be operating fine and they have been tested.

On the wastewater side, we have some newer computerized processes and those we have been remediating for at least 3 to 5 years.

We, again, feel very confident that we will be on target on January 1. What we have tried to do is to get information to our customers and that is our biggest concern at this point. We do not

want people panicking, but we do want people to be prepared in

the event that something other than Y2K happens.

As the State Police Chief mentioned, this is an opportunity for

all of us to bone up on our emergency operations. We pulled out

a booklet that we have had for about 15 years and are using that

as one of the things that we distribute to our customers, what to

do if you are concerned about a water emergency, what are you

going to do if you are concerned about the rollover time, December

31. So we are giving advice in those regards in both water and

wastewater service areas.

So our next area we are going to tackle is trying to find a way

to make sure our employees are comfortable when they come to

work that night, and that is making sure their families are in a

place that is safe and sound and they can feel confident and comfortable that their families are OK.

That concludes my testimony, I will be here for questions obviously. Thank you.

[The prepared statement of Ms. Leavey follows:]

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Mr. HORN. Thank you. Let us now open it up for questions. I

would like Mr. Knollenberg to begin the questioning and we will

sort of alternate maybe every 5 minutes and we will get the questions from the audience and then we will get a dialog among yourselves. So Mr. Knollenberg.

Mr. KNOLLENBERG. Thank you, Mr. Chairman. And thank you

for your testimony.

Let me start with Ms. Leavey, regarding the water situation, you

seem to feel comfortable that things are in relatively decent shape.

There is about 200,000 public water systems regulated under, as

you know, the Safe Drinking Water Act that serves some 240 million people. The balance of the population is serviced of course from

private wells.

Can the Detroit Water and Sewerage Department ensure that

there are no violations associated with the Safe Drinking Water

Act?

Ms. LEAVEY. Yes, we can do that now, we expect to be able to

do that on January 1st. We have never had a problem with that,

our water source is very clean, the Detroit River and Lake Huron

are very good sources for our customers.

Mr. KNOLLENBERG. And the redundancies you spoke of, you feel

pretty comfortable about those functioning as backups in the event

there are failures?

Ms. LEAVEY. Yes, we do. We think that if there is any kind of

failure in the electric grid, that it will probably be isolated, but we

are looking at a normal situation when the power goes down, how

do we respond. Normally we have a 3-day turnaround, 1 day turnaround. We can have the same thing happen if a water line breaks

like it did in Auburn Hills, where we have people without water

service for several days.

So we do not expect Y2K to shut us down. We really do not expect to be shut down by Edison or any of the other utilities. Our

biggest concern is that it is the winter time, in the city of Detroit,

that is the time where we have more breaks than anything else,

and we are concerned that people, if anything happens, will say ahha, Y2K. And that is not what is going to happen.

Mr. KNOLLENBERG. It becomes a whipping boy, I take it, for everything.

Ms. LEAVEY. Oh, sure.

Mr. KNOLLENBERG. If I could, Mr. Chairman, one other question

I would like to direct. This could be to any of the panel members,

but it has to do with emergency management and I think Captain

Buikema, you are probably the person that this could go to.

As I travel throughout this part of the State and my district and

beyond, I have become acquainted with the inconsistency of the 911

systems that are in place and some rely on older telecommunications, some are certainly—and the best computer equipment is

available in some cases. Have you done an assessment that looks

at testing these various computer systems associated with both the

police force and the fire department in the State of Michigan?

Mr. BUIKEMA. Well, we are planning, as I mentioned, to do a

round table with—we have invited I think something like 50 911s

to attend at the end of the month on July 30th. And we expect to

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have an extensive dialog with them about that very issue at that

time.

Up to this point, we have reached out to 911 directors and 911

centers, both—we have encouraged the local emergency management coordinators to have a dialog with those folks to ask the questions that you just asked as well as the State police post commanders—and there are some 64–65 State police posts in the State

of Michigan—to also have a dialog with our 911 providers.

We hear anecdotal information concerning various pieces of

equipment, some of which have been installed as recently as last

year, that are not Y2K compliant, and we are hearing stories that

the typical public safety answering points, PSAPs is what they are

called, are having to spend anywhere from $20,000 to $40,000 to

bring them up to be Y2K compliant.

But we do not have a good assessment overall on that, which is

why we want to hold that round table at the end of the month, to

get our hands around it a little bit better.

Mr. KNOLLENBERG. Would you say that that is something in your

discussions with members from other States that is a problem that

they have as well?

Mr. BUIKEMA. Yes, just this past Wednesday, I participated in a

public safety round table in Washington, DC, with John Koskinen.

And there were representatives from around the country there and

the issue of 911s was one of the areas of uncertainty, let me put

it that way. I think it is just unknown—there were statistics, there

are estimates I guess that there are something like 7,000 911 centers in the United States. Assessments have been done in some

fashion, but only less than half of them have returned their surveys back. So there are still a lot of unknowns concerning them

and Michigan is no different than any of those other States.

Mr. KNOLLENBERG. Thank you. Mr. Chairman.

Mr. HORN. I was very interested in the water and sewerage particularly. Did you read about the Los Angeles situation? That was

not a really Y2K situation, but tell me what you have learned from

that and are you testing along the line they were? That was what,

a 300 million sewage—— Ms. LEAVEY. Gallons of sewage, yeah.

Mr. HORN [continuing]. Spilled, yeah.

Ms. LEAVEY. It was our understanding—and yes, we are aware

of it certainly, it gave everybody a heads up. It was our understanding that they were in fact doing a Y2K test on some of their

machinery and discharged accidentally. We certainly have no intent of discharging intentionally or accidentally but we are aware

now that we have to test those portions of the system as well. However, we already have been looking at those in terms of assessment

and inventory, checking with the manufacturers, et cetera, doing

the normal process to determine if they are Y2K compliant. We are

pretty confident that they are.

Mr. HORN. Well, that is good news, because I think that is one

of the things that would really disrupt a community, not just the

water, but what the use of the water is.

Ms. LEAVEY. Well, yeah. We do have a concern about that, but

our greater concern is individual—well, we have two concerns, the

water consumption, public health. We also have a concern about

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public health in regard to any backups into people’s basements. If

there is a very large storm and there are any power shutdowns related to the transmission system for either water or for wastewater, then to protect public health, we may discharge into the Detroit River. But it is our expectation that at that time of year, we

would not experience anything like that. But we have met with the

State Department of Environmental Quality. In an emergency situation, we would always opt for that as opposed to storing it in people’s basements.

Mr. HORN. One question that I am always interested in is since

you have gone through this situation of planning and adapting and

remediating and so forth, I ask the whole panel, what have you

learned that if you had to go through this situation again, what

would you want to do first that maybe you did not do in this, because we have all been working our way along trying to solve the

problem, or at least remediate it.

Let us start with the first presenter here and that is—we will

wait on Mr. Willemssen a minute. Mr. Boersma, what do you think

from the State level you would have done differently?

Mr. BOERSMA. I started as the CIO of the State in July 1996 and

that was the No. 1 priority that we dealt with. So I think that from

that perspective, we certainly had to initially in the first year, year

and a half, we had to make up some time. And so we really pushed

forward, because the goal—knowing that a lot of IT projects,

whether it be public or private sector, do not get done on time, we

wanted to make sure that we were not in that situation because,

as you said earlier, the date is not going to change.

So we made it a goal that the majority of our critical applications

had to be remediated, tested and back into service by the end of

this past year. We were successful in doing almost all of those with

the exception of a few. So that was a very critical thing. Obviously

I think everybody would say one of the key issues is to start earlier

on this so that there was more time to go and do this. But we

have—as a State, we have learned a lot with Y2K and that is the

fact that we did this centrally so we took best practices, even

though all of our agencies were involved in this. We took best practices of the agencies and really made it a team effort and we put

over a million hours of effort into this and we had very good reporting, so we knew application by application exactly where we were

from an effort perspective. It took a lot of upfront time and effort

by the agencies to put all this information together, but it proved

to be very successful.

Because as you do, we have given all our agencies score cards as

well, and I can tell you, the ones that were in the red, we had various meetings with them and their goal was to get out of the red

very quickly and that proved to be very beneficial for us.

Mr. HORN. Well, I am glad to hear that. A number of Cabinet

officers have told me in Washington that our report card has given

them a good excuse to beat the bureaucracy to get the job done. So,

they do not like the ‘‘F’s’’ and ‘‘D’s’’ and ‘‘C’s,’’ but it has worked

out, some of them are now at the ‘‘B’s’’ and the ‘‘A’s,’’ which was

the whole aim of the thing.

Let me ask Mr. Buikema, what have you learned that you would

like to have done differently?

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Mr. BUIKEMA. I probably would echo what George Boersma just

said, in terms of getting started earlier. I think the process that we

are following getting information from the critical infrastructure,

promoting awareness, developing guidance, that is a sound process,

working closely with the Federal agencies, specifically FEMA on

this issue, as well as with local agencies and State departments.

But I wish we could have gotten started earlier like everybody else

did.

But I think we are building on what exists for all hazards, as

most States or all States are. There is an existing emergency management structure in the United States that has all hazard emergency operations plans that are flexible enough to respond to most

hazards. The Y2K issue of course has some unique circumstances

to it, which is why we are promoting contingency planning.

And in summary, I guess we could have gotten started a little

bit earlier on that aspect.

Mr. HORN. Mr. Gulati, now that you have been through it, what

would you have done first next time around?

Mr. GULATI. I guess if we had more time, that would have definitely helped. And also in an ongoing operation of anything, I think

we need to take in account that when the programmers developed

applications back in the 1960’s, they only thought that they were

developing for only the next 5 years. We need to look at it that yes,

we are making something for a much longer period of time.

And another challenge we ran into is the inventory aspect, of

what all do we have. I think the county adopting a mechanism so

that on an ongoing basis we know what we have, so that if a need

arises, to come up with a plan to address whatever, you have the

necessary information there to be able to make the management

decisions on that.

Mr. HORN. Well, thank you. Ms. Leavey, what would you do differently?

Ms. LEAVEY. I would definitely start earlier, for sure.

Mr. HORN. When did you start?

Ms. LEAVEY. We started in 1996, but really I do not think at the

start, anybody had a sense of the volume of what we would have

to do.

I think another thing that we would do is begin educating the

public a lot earlier, getting our Websites up and running earlier.

Mr. HORN. Let me just go back down the line on the date when

you started.

Mr. Gulati, when was that?

Mr. GULATI. We started back in 1996.

Mr. HORN. In 1996. And Captain, when did you start?

Mr. BUIKEMA. We really did not start on Y2K until last fall.

Mr. HORN. Well, you are about like the executive branch of the

Federal Government on that one.

How about it, when did the State of Michigan start on this?

Mr. BOERSMA. We had new applications that we had installed in

the early 1990’s that we made sure they were Y2K compliant, but

we really did not start in earnest on this until mid-1996.

Mr. HORN. Federal Government did not really in earnest start on

this until April 1998, despite 2 years of prodding this subcommittee

had given them. But they finally faced up to it.

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Mr. Willemssen, what would you like to ask or comment after

what you have heard?

Mr. WILLEMSSEN. Just a couple of points I would like to emphasize of what I heard from the other witnesses. One is that it is especially important from here on out that the organizations make

sure that they do have independent verification and validation of

their efforts. Another set of eyes to let top management of the organizations know that the testing and remediation has gone as expected. It is usually the case that some things have been overlooked or some things have been missed and therefore, an independent verification and validation agent can be especially useful

in focusing on that.

And second, I think it is also very important for the organizations to look beyond the boundaries of their own organization. It is

one thing to say that they are Y2K compliant, but unfortunately

because of the high level of connectivity and the reliance on other

organizations in our computerized world, they also need to make

sure that they understand the compliance status of the other organizations they interact with. So that will be increasingly important

over the next several months.

Thanks.

Mr. HORN. Thank you. I want to ask Commissioner Cushingberry

if he has any questions he would like to ask the panel, since he,

like Mr. Knollenberg and I, are down there at the grassroots and

we get a lot of questions from a lot of people and they wonder how

they are doing.

Mr. CUSHINGBERRY. Mr. Chairman, for the record, I serve as a

member of the Information Tech Committee of the National Association of County Commissioners, so I am pleased to be here to testify on our behalf. We are meeting with the Allied Council in St.

Louis, MO, where all the county commissioners across the country

get together. We are pleased that your committee has had such

leadership. We are participating as part of the Information Task

Force through the National Association of County Commissioners.

My distinguished colleague, Commissioner Cavanaugh of the east

side of Detroit, is also on what is known as the Research Technology Committee and we are trying to work with the major universities across the country to see to it that we get the better theoretical methodologies included in our future plans.

[Inaudible comments.]

Mr. HORN. Well, thank you. If I had to sit here making decisions

every week, I would day dream and just look at the architecture.

So how do you focus around here with this type of beauty. Thank

you again.

Mr. Knollenberg, any further questions?

Mr. KNOLLENBERG. I am satisfied, Mr. Chairman, thank you.

Mr. HORN. Mr. Willemssen and I are on the same track, because

I was going to get on verification and I think he is very right.

Sometimes we have internal verification but sometimes you need

external verification.

So we thank this panel.

We did not have any questions from the audience that the staff

picked up. But hopefully there are other things, as we go ahead

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this morning, feel free to write the questions and we will put it to

the panel.

But thank you very much, those on panel one, you have given us

some good testimony and we appreciate it.

So panel two will come forward. We have Mr. Surdu, Mr.

Costantino, Mr. Buck, Mr. Parker.

Gentlemen, if you would stand and we will administer the oath.

[Witnesses sworn.]

Mr. HORN. The clerk will note all four witnesses took the oath.

And we will begin with George Surdu, the director of technical

services organization of the Ford Motor Co. We are delighted to

have all of you automobile people here. It is key to the country.

Please proceed. And as you heard earlier, if you could summarize

the testimony in 5 minutes or so, that gives us more time for interaction because we do have your fine statements.

STATEMENTS OF GEORGE SURDU, DIRECTOR, TECHNICAL

SERVICES ORGANIZATION, FORD MOTOR CO.; DON

COSTANTINO, DIRECTOR, CORPORATE YEAR 2000 PROGRAM,

GENERAL MOTORS CORP.; ROGER BUCK, DAIMLERCHRYSLER CORP.; AND JOHN PARKER, VICE PRESIDENT, INFORMATION SERVICES, NORTHWEST AIRLINES, INC.

Mr. SURDU. I would first like to thank the subcommittee for affording Ford Motor Co. the opportunity to provide an update on the

year 2000 program. As you just mentioned, I am the director of

technical services and the global year 2000 program manager for

Ford Motor Co. I have been in that position since the inception of

our program in 1996.

In 1996, Ford Motor Co. initiated a formal program to address

this year 2000 challenge. We established a senior level steering

committee that has been headed up by our chief financial officer,

our vice president of quality and process leadership and our chief

information officer. A global year 2000 program office was created

and a robust program management process was put in place to

guide compliance actions across all the potential impact areas.

I believe we did a very innovative thing within Ford Motor Co.

in that we really sliced the business across technology lines. So we

began taking a look at all the major impact areas, which include

business computer systems. Ford Motor Co. has about 300 million

lines of code, about 2,700 systems, and about a third of those have

been deemed mission critical.

In addition, we have looked at our technical infrastructure, our

plant floor equipment, our product development test equipment,

our suppliers, dealers and affiliates, end-user computing which includes all of the spreadsheets and the access databases, those kinds

of things that our business partners create on a year-to-year basis

to support the business, our building infrastructure, and of course,

our vehicle components.

In addition, we have continued to monitor the compliance actions

of other impact areas as we move forward on the programs, such

as our transportation carriers, our medical equipment suppliers

and in fact customs offices around the globe.

The sophistication of this program has been recognized by the Information Technology Association of America, with certification

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that Ford’s program meets the challenging Y2K best practices

standards.

We established stretch objectives back in 1996 across all of these

major impact areas, and to have all of those impact areas compliant by the middle of this year. We are going to be fundamentally

there in all those areas, we are going to use the summer shutdown

period to complete some of the remediation work, but I would like

to give you some data to give you a sense of where we are at across

the program.

As of this report, 98 percent of all of our critical systems are compliant, 97 percent of all systems are compliant, that is all 2,700

systems. They have been remediated, tested and are now back in

service.

In addition, an enterprise test plan has been established for all

of our key business processes, with completion of that enterprise

testing by September.

On the plant floor side, for the 167 plants and warehouse facilities around the globe, we presently have 99 percent of all the

equipment has been remediated. We have got a handful of equipment that we are waiting again until the shutdown period to make

sure that all of that is working properly.

In conjunction with the Automotive Industry Action Group, and

I think you will hear from my team mates here today a little bit

more about that, we have been involved with the AIAG, the Automotive Industry Action Group, and other organizations similar to

that around the globe, the VDA in Europe, as an example. We have

been participating in a global supplier readiness program for our

production and what we call our non-production suppliers and that

includes our utilities, of course some of the folks that have already

provided feedback this morning.

As of this report, 80 percent of these suppliers are responding

that they are ready. That is as of June, with 100 percent to be

ready by the end of the year. About 10 percent of our suppliers

have not responded and we have additional actions underway to

validate the status of these suppliers and any suppliers that are

not anticipating being ready by September.

We have a very similar program that we have put in place for

our affiliates and today 89 percent are ready, with 100 percent

ready by the end of the year.

Compliance in some of the other impact areas that I would mention very quickly, 86 percent of all of our critical product development test equipment are compliant and back in service; 93 percent

of all of our end-user using technology is compliant; 95 percent of

all of our technical infrastructure is compliant; 83 percent of our

end dealership systems and 93 percent of all of our physical properties and infrastructures. And finally, 100 percent of all of our vehicle components are compliant and have continued to be compliant

since we began evaluating that back in 1996.

As previously stated in our most recent SEC filing, Ford is anticipating spending about $375 million to complete the program. When

it actually formally commenced, we absorbed our funding initially

within our own process leadership organization when we kicked

this program off, but this $375 million began about mid-1997 and

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is going to carry us through about the middle of 2000. This outlay

accounts for about 10 percent of our total infrastructure costs.

We are very, very confident in our readiness as well as that of

our affiliates, dealers and suppliers. However, the inter-dependence

of the entire supply chain—and you heard a little bit about that

this morning—does represent the greatest risk to Ford. In particular, an extended infrastructure failure; that is, electric, gas or

water, would make it difficult for us to operate our manufacturing

operations. Accordingly, during the fourth quarter of last year, we

began to develop contingency plans. Most of those plans are now

complete, we are going to validate those plans by September. In addition, we have created what we have called a global response center, we actually launched that July 1st, and that center is collecting information and will act as an information clearinghouse for

the most current status available as we enter the new millennium.

Finally, I should mention that we have notified a small number

of our employees that we intend to have onsite or on call over the

holiday period, to coordinate any unexpected glitches that may be

experienced.

Finally, and it was mentioned again earlier, we have engaged an

outside organization to do independent verification and validation.

Even though all of our critical systems were compliant, those—a

third of the inventory that I mentioned were all compliant by the

end of last year. We have been doing enterprise testing and now

we have an independent organization that is reviewing all of those

critical systems to make sure that we have not missed anything.

So with that, that is a summary of my prepared statement and

I would be happy to answer any questions when the time comes.

Mr. HORN. Well, thank you, that is very helpful information.

Next is Don Costantino, director of corporate year 2000 program

for the General Motors Corp.

[The prepared statement of Mr. Surdu follows:]

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Mr. COSTANTINO. Good morning, Congressman Knollenberg and

Representative Horn.

Mr. HORN. Thank you for being here.

Mr. COSTANTINO. I am happy to be here today to represent General Motors.

We too have a very formal program inside of General Motors. It

is headed up by our vice president and chief information officer. We

report directly to both the Board of Directors and our Automotive

Strategy Board, which is our lead group, on a regular basis.

Getting into some of the specifics of our program, we have approximately 6,100 application type systems—things like financial

systems, scheduling systems, et cetera—comprising probably a billion and a half lines of code. At the present time, we are well over

99 percent complete, we have less than a handful of those left to

be done. They have all been inventoried, they have all been assessed, they have all been remediated and put back into service.

From the systems and component area where we talk about the

plant floors, we talk about engineering work stations, computers,

et cetera, we have over 1.4 million of these devices which we had

to inventory and assess. We are currently in a position now of well

over 99 percent of those complete and they will be finalized during

the month of August during the plant shutdown period. So we will

be basically complete with the remediation and testing of all of our

applications and infrastructure globally.

We have moved into a very serious readiness testing phase. This

is a phase in which we basically test all of our systems, either singularly or connected, since most of our functions connect, of course,

across different departments. These are done in a setting of a future clock, with future data, so that basically they are all being

tested, in an environment that duplicates the year 2000. We are

probably going to run about 3,000 of these tests either individually

or in conjunction with other systems in an integrated fashion. At

this point in time, we are probably about 90 percent complete with

that testing.

We have also put in place what we call a live production test in

all of our assembly and manufacturing plants. We have run over

100 of these so far, and this is actually building cars or parts in

the plant with future clock, future data. So we have basically put

our assembly plants into the year 2000, run the product and then

turn the clock back to bring it back into the current timeframe.

As with, I am sure, everybody else on this panel, we are also

doing independent verification of our systems with an outside firm.

Although in our case, we also use EDS obviously that did most of

the remediation of our applications work.

From a supplier standpoint, this has always been a very critical

area of our program. We obviously participated with the Automotive Industry Action Group [AIAG], in the self-assessment survey but we went I think quite a bit farther than that. We have had

teams in place globally for at least the last 21⁄2 years. We have

done onsite visits with trained assessors at over 3,500 suppliers.

We have held workshops across the globe that have brought in another 3,000 suppliers and basically feel at this point in time we

have an excellent understanding of our supplier base and it’s readiness. We have narrowed this down now to several hundred supVerDate 11-MAY-2000 09:03 Apr 09, 2001 Jkt 010199 PO 00000 Frm 00425 Fmt 6601 Sfmt 6601 E:\HEARINGS\60939 pfrm01 PsN: 60939
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pliers that we believe still need some additional attention, which

is less than 10 percent of our supply base. And we are in the process now of further evaluating them to determine what type of contingency plans we will have to put in place if in fact they are unable to be ready for the year 2000.

In conjunction with that, we have also looked at logistic suppliers

worldwide, and obviously we are looking at both indirect and direct. We have also just in the last 3 months spent a great deal of

time internationally looking at the infrastructure in various countries focusing on utilities. We are fairly satisfied that the United

States is in pretty good shape, but since we have operations worldwide and suppliers worldwide, in order for us to better understand

what type of contingency plan we would have to develop, we needed an understanding of the overseas utilities environment and that

is basically now complete and we are now applying that against

our supplier base to determine what type of contingency plan we

will have to put in place.

Contingency planning, as mentioned by George, is ongoing now

in all areas and will be complete and basically be in the test phase

starting in September; although in most cases, the contingency

planning is actually a reflection of our normal planning that we

would have for any type of a disaster recovery.

Command centers are being put in place, one in Detroit and the

rest of them globally. They will be integrated throughout the

month of December and January to assure that we can respond

properly to any issues if we do have them, although at this time

we do not anticipate anything of a real material impact, but probably more like a minor shutdown. We have informed, as George

has at Ford, our employees, a number of them that they will not

get vacation, they will be working and the EDS organization has

put all people on notice throughout their company, from the month

beginning the middle of December through the middle of January,

so we will have our technical resources in place if we need them.

Finally, from an expenditure standpoint, GM, is at the current

time estimating that we will spend about $540 to $600 million.

About $190 million of that will go to EDS, our primary supplier of

services.

Thank you.

Mr. HORN. Well, thank you, we appreciate the testimony.

Next is Roger Buck of the DaimlerChrysler Corp.

[The prepared statement of Mr. Costantino follows:]

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Mr. BUCK. Thank you, Representative Horn and Knollenberg for

asking me to be here today. Before I begin, I need to cover a topic

on this non-receipt of Federal funds. We are filling it out currently

and will have it to your office shortly.

We take this issue at DaimlerChrysler of Y2K very seriously. We

have project teams in both Stuttgart and Auburn Hills and we are

coordinating our efforts. These efforts began, of course, when we

were separate companies, Daimler-Benz and Chrysler.

Each team is responsible for developing a comprehensive compliance program to assess potential problems within DaimlerChrysler

and its key suppliers, implement and verify remediation action and

devise contingency plans. Each team has allocated resources based

on our internal assessments to address the issue, and the potential

impact to our company, both its operations and financial conditions.

The teams both report to the Board of Management of

DaimlerChrysler AG which is our parent company.

We believe we will achieve our goal of substantially completing

Y2K remediation at our facilities around the globe by September

30th of this year. This includes addressing the problems of Y2K

with our business computer systems, our shop floor devices, our

sales and service activities and PCs for each of our business units.

Critical business computer systems were 99 percent remediated at

the end of 1998. This has allowed us to perform additional integration testing using CPUs rolled forward into the year 2000. The upgrading of critical shop floor equipment will be completed this summer with our shutdown period. There are several items that needed

1 to 2 weeks to actually fix. We cannot find a single failure in any

of our vehicles when the clock rolls over to January 2000.

In addition, the European Airbus consortium has issued a report

indicating that date sensitive embedded chips in Airbus products

will not be materially adversely affected by the Y2K problem. Our

automotive dealer’s business systems in all the major markets are

Y2K ready. Even our employees are wrapping up their efforts to

make sure their desktop PCs are ready for Y2K.

DaimlerChrysler’s largest Y2K business risk continues to be our

suppliers. We participate in some automotive industry trade associations, both in North America and globally, the AIAG here in

North America and the VDA in Europe. Each group has developed

a common approach to the compliance along with its members,

which includes seminars for first, second, third tier suppliers and

confirming compliance through either questionnaires or reviews.

We have sent questionnaires and done reviews and about 85 percent of our suppliers have said they will complete their remediation

by June 30th of this year. We also offer remediation assistance to

suppliers who we believe have not made adequate progress and we

are also reviewing suppliers on a selective basis for compliance. We

are now asking each of our key suppliers to provide a statement

of readiness to confirm that they have achieved their expected compliance. Suppliers that are not compliant by September 30 will be

reviewed, and if appropriate, asked to establish contingency plans

to ensure an uninterrupted supply of parts for DaimlerChrysler.

As part of DaimlerChrysler’s Y2K efforts, each of its sites is required to prepare a Y2K rollover plan. This rollover plan will asVerDate 11-MAY-2000 09:03 Apr 09, 2001 Jkt 010199 PO 00000 Frm 00433 Fmt 6601 Sfmt 6601 E:\HEARINGS\60939 pfrm01 PsN: 60939
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sess the readiness of key infrastructure items, including process

equipment, business computer system availability, building facility

readiness which includes such things as electricity, gas, water, sewage, heat, fire alarms, emergency services, securities and phones,

and community readiness—police, fire, emergency management

services, hospitals, et cetera. Each site will report their status to

a central location on Saturday, January 1st and Sunday, January

2nd.

We do not have a crystal ball to tell us where the world might

have missed Y2K problems. Disruptions to basic critical infrastructures like electricity, gas, water, sewer, telephones, et cetera will

make it virtually impossible to operate plants. We believe, however,

DaimlerChrysler has taken every possible step to ensure that internal Y2K problems have been eliminated in all material respects

and external risks have been significantly reduced. We fully expect

all DaimlerChrysler facilities to operate normally on Monday, January 3, 2000.

I will be available for questions.

Mr. HORN. Thank you very much. After Mr. Parker, we will.

John Parker is the vice president, information services, Northwest Airlines. I take it we should all fly Northwest now since you

have the highest paid flight attendants in the United States and

the world. [Laughter.]

Congratulations. You are one of my favorite airlines.

[The prepared statement of Mr. Buck follows:]

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Mr. PARKER. Thank you for inviting me to appear before this

committee to give you an update on Northwest Airlines’ Y2K readiness. I would like to begin by assuring the committee that Northwest Airlines expects to offer its passenger and cargo customers a

full, regular and normal schedule of services as we begin the new

century. As always, we will make any adjustments necessary to ensure the safety and integrity of our operations and the convenience

and comfort of our passengers. Ensuring safe operations is the No.

1 priority of our airline and the basis on which we have built our

Y2K program.

Northwest recognizes the importance and magnitude of making

the necessary changes required for operating successfully in the

21st century and is working both internally and with external entities worldwide to ensure a smooth transition to the Y2K.

I will give you a brief overview of how we at Northwest have approached the Y2K challenge, our collaboration within the airline industry, the current status of our program and what we expect to

do for the remainder of 1999.

Northwest’s effort on the Y2K transition program began in January 1996. We currently employ a full time staff of 26 who are dedicated to leading more than 200 Northwest people on Y2K related

activities. Our estimated costs for Y2K related activities is somewhere between $45 and $55 million and we have currently spent

over $30 million to date.

Our objectives are clearly defined and focused to ensure that

Northwest’s computers and computer-related systems will function

properly on January 1, 2000 and beyond; to assess the Y2K compliance of the external organizations on which we rely; to develop

workable contingency plans which will enable Northwest to maintain safe, reliable air transport of passengers and cargo.

To effectively address the Y2K issues, Northwest adopted the

methodology prescribed by the General Accounting Office’s Guide

on the Y2K Computing Crisis. The phases that we followed were

awareness, assessment, renovation, validation and implementation,

as outlined in this document and it has served us very well in dealing with the complex and interdependent nature of the problem in

the airline industry. In a similar way, we followed the GAO’s Business Continuity and Contingency Planning guidelines which were

published last year. Additionally, we have an assessment and evaluation of all supporting documentation and compliance to these

guidelines that is subject to independent verification by the Northwest Audit and Security Department.

Within this context, we have identified 531 internal systems

which are approximately half of all of our systems, which required

conversion or replacement to be Y2K compliant. In addition, all of

our business areas were tasked with identifying and assessing

their critical components and suppliers for Y2K compliance; again,

which followed the guidelines.

Assessment of domestic and international airport and air traffic

control systems readiness has been undertaken with a cooperatively and jointly funded effort with the Air Transport Association

and the International Air Transport Association, and other trade

groups. Member airlines, in addition to their own Y2K programs

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have invested $44.5 million in the Y2K programs of these associations.

Northwest has worked closely with Boeing and Airbus to assess

and test our fleet of more than 400 aircraft and our fleet of 20

flight simulators which must be identical to our actual aircraft to

be suitable for training and certification of pilots.

To assess the readiness of the worldwide infrastructure systems,

Northwest initiated a collaboration with the Gartner Group that is

being used by many airlines.

And finally, we have established a cross department steering

committee which was charged with identifying and developing contingency plans for processes considered essential for maintaining

the airlines’ normal operations and where the potential for failure

is high.

At present, Northwest has completed approximately 98 percent

of its application remediation and completed testing of more than

90 percent of our high priority applications. The remaining renovation and testing is on target to be completed within the third quarter of 1999.

Minor modifications have also been made to bring Northwest’s

aircraft fleet into Y2K compliance. It is important to note that no

Y2K safety of flight issues have ever been documented within

Northwest’s aircraft fleet.

Northwest’s reservation systems were successfully renovated and

capable of booking and selling tickets through all of our distribution channels, including our Internet site. Since February 4 of

1999, and to date we have—more than 75 of Northwest’s major internal systems have successfully passed their initial failure dates.

I would also like to highlight two industry reports that give a

snapshot of the industry. The ATA reported to the President’s

Council on Year 2000 Conversion on July 1, 1999, that United

States and Canadian airlines are 95 percent finished with their

Y2K remediation efforts. The Nation’s airports are on schedule

with their own Y2K efforts and the FAA has met its June 30, 1999

completion date for Y2K remediation. And that final independent

verification by outside contractors and government agencies is

pending.

An additional status report was presented to the International

Civil Aviation Organization, ICAO, to the United Nations National

Y2K Coordinators Meeting on June 23rd. It reports substantial

progress in all critical areas of air transport and in the development of contingency plans for all contracting States of ICAO.

Mr. Chairman, what I have been discussing to this point has

shown how Northwest Airlines and the aviation industry are addressing Y2K readiness. For the remainder of 1999, Northwest will

shift its primary focus into what we are calling transition management. This consists of executing contingency plans as necessary,

developing alternative flight schedule scenarios as required and

dealing with events as they actually occur through the transition.

As the year progresses and more information becomes available

on the status and readiness of our destinations, Northwest will

make and announce changes to our flight schedule. And you can

rest assured, Mr. Chairman, that should any adjustments to NorthVerDate 11-MAY-2000 10:21 Apr 09, 2001 Jkt 010199 PO 00000 Frm 00438 Fmt 6601 Sfmt 6601 E:\HEARINGS\60939 pfrm01 PsN: 60939
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west’s schedules be deemed necessary, those changes will be

promptly communicated to the traveling public.

Northwest will continue to be actively engaged with industry activities to complete remediation and to reassure the public that

they can plan to travel during the transition period with full confidence and that the same standards for safety, which have been

the hallmark of the airline industry, have been rigorously applied

to our Y2K remediation work.

In conclusion, I want to again assure you and the committee that

Northwest Airlines is on track with its Y2K program, that we are

working closely with our industry associations to complete readiness and contingency planning activities and that we expect to

have normal operations at the start of year 2000.

I will be glad to take any questions.

[The prepared statement of Mr. Parker follows:]

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Mr. HORN. Thank you very much. We will now go to questions.

Mr. Knollenberg.

Mr. KNOLLENBERG. Thank you, gentlemen, for the testimony. I

am particularly pleased that we have the big three—I guess it is

the big three still—in the audience—getting bigger, each one.

And it is no surprise, Chairman Horn, that they would be here.

They do not call this MoTown for nothing, it is motor town, it is

vehicle town. And with no apologies to anybody and certainly now

we have multi-national connections and obviously all three of you

represent those multi-national connections. So I am delighted you

are here.

I have heard from each of you about how close you are to compliance and what you have got in place to get there before D-day.

About these suppliers, for example, you have hundreds, thousands

of them, and you have them in foreign countries. When it comes

to the percentage of those—and I think, Mr. Surdu, you mentioned

was it 10 percent have not responded? How critical are those 10

percent and what percentage of the criticality of the automobiles

that are being made depend on their contribution? Is that something that we could focus on for a moment? And if there is a problem there and they do not respond, do you have backup suppliers?

Mr. SURDU. First of all, the 10 percent is an overall number at

this point. That number is, I believe—and I would have to verify

it—less than 2 percent in terms of our critical suppliers. For those

that have not formally responded through the AIAG process, we

have had onsite visits to validate where they are at, so in terms

of all of our critical suppliers, we are very, very confident on where

they are at. The other suppliers, as I mentioned, that have not responded to date, we are taking a look at them, we have got other

actions in terms of additional onsite visits very similar to what Mr.

Costantino mentioned from General Motor’s plan, and we need to

validate, you know, their state of readiness, not assuming that they

are in bad shape. But if you take a look at the percentages, the

percentages for failure are consistent for us around the globe. So

as we take a look at the state of readiness of our suppliers in North

America versus other parts of the globe, the numbers are fairly

consistent.

In terms of our business contingency planning, of course, that

has come into play. We have been mapping that, we do have alternative sources if need be, but we have no plans on doing that. We

feel very, very strongly about the relationship we have with our

supply base and what impact they would have on our facilities are

all a function of our contingency plans.

Mr. KNOLLENBERG. Could I pose the same question to Mr.

Costantino and of course Mr. Buck. Mr. Costantino, if you would.

Mr. COSTANTINO. With respect to the supplier base, I would say

right now that out of our critical suppliers—we have obviously got

thousands of suppliers, many of which would not really impact us

if they did not operate on that date. When you get down to the absolutely critical number, you are probably down in the 3,000 to

4,000 range. We have probably got, I am going to say, 400 to 600

of them that we are watching closely right now that we have probably not only had site visits but actually have put people out there

to help them remediate.

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Mr. KNOLLENBERG. Let me pose this question, are most of the

suppliers who have not responded or who are dragging their feet,

are they in North America or are they overseas?

Mr. COSTANTINO. I would say right now that the majority of the

ones that we are currently working on are not in the United States,

they are basically outside, off shore. And our teams overseas are

now working with them. Anyone on that list has been visited, everyone on that list will have a contingency plan put together, including, if need be, our going in to provide technical assistance if

in fact there is no alternative to ensure the supply chain.

Mr. KNOLLENBERG. Mr. Buck.

Mr. BUCK. Yes, our about 15 percent that we are trying to wrap

up with, we are meeting personally face to face with them. They

are having to come into Auburn Hills and meet with our buyers.

Basically by the end of this quarter, if we cannot be satisfied that

they are ready, then we will have a contingency plan with them,

which could go as far as banking parts. That is how we are assessing that situation.

Mr. KNOLLENBERG. Thank you.

Let me go to the question about—I think it was Mr. Parker who

mentioned the Gartner Group who is addressing or working with

several airlines to address your problems. Was there a single

group, for example, with the automotive companies, that you

sought help from to contribute to eliminating or alleviating your

problems, or did you do it internally?

Mr. BUCK. We worked together at the Automotive Industry Action Group since February 1997 and they are having a common

problem with our suppliers, so our suppliers would not have to do

a GM way or a Ford way or a Chrysler way, now DaimlerChrysler

way of determining what they needed to do. And the first thing we

did was put together joint sessions. We invited our top 5,000 suppliers between us to a session, a half day session. We invited the

chief executive officers in May 1997. We brought them in and said,

you know, you probably know you have got this problem with your

computer systems, but you also have a problem on your shop floor.

We went through and showed them that our plans——

Mr. KNOLLENBERG. When you say we, you mean all three of you?

Mr. BUCK. It was a joint program. And actually we used our

audit firms of Deloitte & Touche and Coopers to put this program

together. We have a common year 2000 Office for our suppliers, actually several other auto companies have joined that also. We offered it to the world. And we have been sharing information. Basically we talk all the time, ‘‘Gee, did you know that when we did

this, this happened at one of our sites?’’ That has really made us

take action in making sure that we had the problem handled.

Mr. KNOLLENBERG. So you have worked in a fairly unique fashion then, as I see it.

Mr. SURDU. Consistent with the Automotive Industry Action

Group practices, it is really an opportunity for companies like Ford,

GM and DaimlerChrysler to get together on common issues, and

certainly this was a common issue for us.

Mr. KNOLLENBERG. Here is a common issue as well, the big

three, as you are seated there, have over the years and recently

produced automobiles that have a great deal of amenities, one of

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which is the on-board computer. I understand some of these computers are used for the purpose of fuel injection and navigation.

What can you tell me about—have you communicated to the consumers, to the customers, just what the potential problems might

be if there are any? Have you reassured them that there will not

be problems? Are you doing that now?

Mr. SURDU. Let me begin and we will—I think you will probably

hear very similar programs.

But first of all, we have communicated to our entire population,

we have responded to every inquiry, several thousand inquiries in

terms of the readiness not only of Ford Motor Co. but of its vehicles, both past and present. And we have sent communications out

through our dealer body as an example. So there have been very

many different mechanisms that we have communicated our readiness and our status. And in particular your question about vehicles, the interesting thing about the technology that is in the vehicles is that the chips themselves are not like the chips you find on

a PC. They do not have a system date, they do not carry that kind

of functionality. And so there is no date-related functions in the

chips themselves. We verified that through our chip manufacturers,

our subassembly manufacturers, we have done internal testing. We

have even gone so far as to do a global all-employee message or inquiry as to any past or present thoughts that our entire work force

might have in terms of our vehicles and researched all of those.

And all of those findings came out zero.

You could theoretically put some functionality from a software

standpoint into your vehicle that might be date-related, but if you

think about the functionality in the vehicles themselves, and certainly in particular in our vehicles, we do not care about the date.

If I am looking for maintenance, and the example I like to give our

customers is that if you park your Ford vehicle in the garage for

6 months, you do not want the on-board computer to say that it is

time for maintenance. We care about things like engine cycles, we

do have counters which get reset every time the vehicle is started.

So there are no date-related functions that care about the year,

that affect either the safety or the performance of our cars.

Mr. COSTANTINO. From our perspective, we are doing the same

thing, we have a great deal of communication through the Internet

even to try to assure all of our customers, current, future, that we

have found no problems in past or current vehicles and we have

done the same level of extensive testing on those vehicles. I think

our focus has been even more on the dealerships to ensure that

they clearly understand this and ensure that they are ready because, quite frankly, they are the face to the public and we want

them to be fully operational come the transition period as well.

Mr. KNOLLENBERG. Mr. Buck.

Mr. BUCK. For DaimlerChrysler, it is the same situation. In our

vehicles, we have not found anything that would impair or affect

in any way running that vehicle. And we have communicated it

through the means mentioned. Also, I believe all three of our companies have a statement that is on the National Transportation

Safety Board site that also says the same thing. So it is out on the

Internet available to the public.

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Mr. KNOLLENBERG. I think Y2K may have hit me already, I have

a car that has an on-board computer and it tells me I need an oil

change, the dealer says it does not need an oil change. I will work

that out but I think it may be the fact that somebody did not reset

it or some such. So I am not going to blame that on Y2K yet.

Mr. Parker, just in regard to—and I will close with this question—with regard to the airlines, you just heard the automotive

people are working together to share information and I remember

your saying again that Gartner has worked with several airlines.

Is there any communication between the various airlines on this

matter, that may go beyond Gartner or maybe in addition or

worked in with Gartner?

Mr. PARKER. Yes, it is very substantial. When I was referring to

the Air Transport Association and the International Air Transport

Association, there are upward of 120 airlines that are working to

share information about—if I can drawn an analogy to the supplier

network in the automotive industry—we share airspace control and

airport control functions around the world and so we have been

very active from the very beginning sharing information, finding

out the state of the programs of the different agencies that control

those and share that. That is the majority of where our cooperative

effort has been focused.

Mr. KNOLLENBERG. Do you feel good about the year 2000, January 1, 2000?

Mr. PARKER. I do.

Mr. KNOLLENBERG. Are you going to travel?

Mr. PARKER. I would travel. I will be with my programming staff

at our data center.

Mr. KNOLLENBERG. So you are going to have your critical employees that will be available during that timeframe, that December

15–January 15 timeframe?

Mr. PARKER. Yes. We have—we will have, much like you have

heard earlier, we have canceled all of our vacations for our technical staff. They will be positioned either at our data center or at

our major sites such as our major hub airports. We also will have

our executives and other decisionmakers in a command center type

program, similar to what you have heard from my colleagues, ready

to make decisions and reaction to events as they occurred.

Mr. KNOLLENBERG. Is this called insurance, pretty much just in

case.

Mr. PARKER. Yeah.

Mr. KNOLLENBERG. But you feel good about where you are. And

I guess I am hearing that from all of you, but you also want to

make sure that there is no glitch at the end and you are going to

be available to handle customer problems.

Mr. PARKER. Yes.

Mr. KNOLLENBERG. Thank you very kindly for your testimony,

gentlemen. And Mr. Chairman, thank you. Back to you.

Mr. HORN. Thanks a lot, Joe. Good to see you.

We appreciate having Mr. Knollenberg with us this morning.

Since he is getting a little car advice, let me ask Mr. Surdu.

I have been a quite happy customer of Mercuries for a long time,

and the reason I bought my 1988 Mercury was one reason and that

was that dashboard. And now I do not see anybody using it. It was

441

terrific, you can know what the speed is with a 1 inch numeral and

I love it. A little bit of the electronics went out and I really do not

care about that part of the dashboard, but what happened? Why

are we back to those crazy needle things that you can hardly see

in any car that I have seen?

Mr. SURDU. You know, I wish I could answer that question.

Being a systems professional for the company, I cannot answer an

engineering question, but I think it has to do with customer needs

and customer wants and customer interests. We still have, by the

way, some of those dashboards with big dials. I can put you in a

vehicle that has one, if you would like.

Mr. HORN. I just wondered, do I have to buy a Lincoln or something to get that dashboard back? Is that the motive?

Mr. SURDU. I will take that back with me. How is that?

Mr. HORN. OK. But I always wondered what happened, because

you go in, and really those dashboards with that crazy little needle,

you cannot even see it and usually the steering wheel is blocking

it and that wonderful dashboard of 1988, which I still have that car

and it has worked great for 11, going on 12 years. But I did not

know if that was obsolescence or all the other things we hear, but

it is a great board, get back to putting it in and I think we will

all be happy.

Let me ask you a couple of the questions I did the previous

panel, just for the record.

When did Northwestern start undertaking the year 2000 bit?

Mr. PARKER. We began looking at it in 1995 and funded the program in January 1996.

Mr. HORN. And when did Chrysler start that?

Mr. BUCK. Both Chrysler and DaimlerChrysler began in 1995,

both sides of the company.

Mr. HORN. I see. So even though you had not merged at that

point, why your brains were thinking along that line?

Mr. BUCK. Yes.

Mr. HORN. Well that is great. How about General Motors?

Mr. COSTANTINO. I would say in earnest, 1996.

Mr. HORN. And how about Ford?

Mr. SURDU. June 1996.

Mr. HORN. In June 1996?

Mr. SURDU. Right.

Mr. HORN. Because your leadership under Mr. Peterson was a

very international oriented leadership that did a lot for Ford and

I just wondered if you would be ahead of that or not, based on that

international executive experience you had there.

Mr. SURDU. Well, we seem to think that we certainly have this

well under control. You know, you asked the question earlier on in

terms of what would we do differently, obviously I would parrot

back ‘‘more time’’.

Mr. HORN. Yeah.

Mr. SURDU. But certainly we have learned a lot from this program, there is a lot of positive that has come out of this for us. We

understand more than we ever did before the technologies that we

have in place on a global basis. And if I would say we would like

to start earlier, it would be to take advantage of the things that

we now know in terms of some of the things that we are moving

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forward with. So it has been a very worthwhile, at the end of the

day, experience for us, one I would not like to do too often, but certainly it has been of real value to us.

Mr. HORN. Well, you raise an interesting point. What about your

foreign competitors in those days, both Europe and Asia, were they

into this earlier than you or after you, or what?

Mr. SURDU. Well, I certainly cannot speak for our competition. I

can tell you what—and we have kept very, very close to organizations like the Gartner Group and Forrester and others and our own

internal, if you will, intelligence in terms of where the globe is in

this Y2K issue. And generally speaking, we agree with all the documentation that Europe has been behind North America, in particular, and other parts of the Far East and South America are

working very hard to catch up.

We, within Ford Motor Co., when we initiated the program in

1996, it was a full global program, so we put a full court press on

for us internally and began working, as the panel here has indicated, from the big three, with our supply base very, very early on

a global basis. But I cannot speak for the other automotives.

Mr. HORN. One of the interesting things is when you look at the

global picture, it is mostly in developing countries that the problem

exists. And as you know, the United Nations held two conferences

on this, and they had a great turnout at the last one just 2 weeks

ago, I think 173 countries were represented, whereas the one in the

preceding period had been about 120 countries. So the message is

getting through, but as you look at the globe, it is the developing

countries that frankly do not have the money to do some of this,

and the World Bank, I gather, is trying to help them on that. But

some of you have plants in these developing countries. Is that a different situation when you are surrounded by people who have not

really corrected the tapes and all yet and would that affect you or

are there any interactions between your plants and the surrounding economy? I mean, does it make a difference when you are

in those developing countries?

Mr. COSTANTINO. Oh, the answer is, I think, it does. But I think

we are treating each one of those as we would the United States.

In all of our operations, we put the Y2K teams in place. The supply

base, I think for all of us, is really global in nature. So in many

cases, those suppliers that are actually supplying a Brazilian operation could very well be supplying a North America operation as

well. So I think the desire to basically ensure those suppliers are

ready is there for not only the international, but also domestic.

I think the piece that we have added is to really take a hard look

at the utility situation in those countries, because we may find ourselves where a supplier is ready, but our intelligence tells us that

the chances for outages of 2 or 3 days is imminent and therefore,

you need to do something from a contingency standpoint to protect

your supply chain and also that supplier. And that is an effort that

is going on right now.

Mr. HORN. You heard your colleague from Ford say time would

have been helpful on this. What was your experience, if you had

to do it again now, what is it that you wish you had done?

Mr. COSTANTINO. One thing I wish we had done is kept a better

inventory. It took a lot of effort, way more than I think people

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thought it would take, to really get an understanding of all of the

plant floor equipment, et cetera. And now that we have this information, I hope that we maintain it so if we ever needed it again,

we could move more quickly.

Mr. HORN. Was that in relation to the codes in particular processes?

Mr. COSTANTINO. It is everything. I mean just simply knowing

where you have 1.4 million devices and how to get to them all took

an awful lot of effort and I think the Gartner Group has under-estimated in some cases the front end of the work that had to be done.

In addition, for General Motors, we had the complication of being

kind of diverse and therefore, we do not have singular systems in

many cases, which made the job even more difficult. Again, opportunities in the future though to take advantage of what we have

learned.

I am not sure on the time, I think we are where we need to be

right now and I think it is the right time. The concern I have is

one I was reading last year, people saying they are ready for Y2K.

Then they must have an industry that is making no changes because one of the most difficult things we will all face in the next

6 months is managing change, because the world around us, the

computers, the things they want to change fast, the systems want

to change fast, the plant floor wants to change fast. If you go and

think you are done a year and a half ago, you are not done, because

I doubt you could shut down change. So I think we are kind of in

a good position there because we know the changes have to come

but we want to try to manage them.

Mr. HORN. Well, on that matter, as you went through this process for the year 2000, were you able to get rid, able to combine

some of your systems that you had to look at and rather than just

adapting them, getting rid of them?

Mr. COSTANTINO. I am not sure this is good or bad news, but we

eliminated probably between 3,500 and 4,000 systems already.

Mr. HORN. Yeah, well it makes a lot of sense.

Mr. COSTANTINO. Oh, yes.

Mr. HORN. How about DaimlerChrysler?

Mr. BUCK. Just to change the question slightly. Instead of what

have I learned, what would I do different; what have I learned that

is going to make me do something different in the future. When we

ran what we call time machine tests of our manufacturing plants,

we found a bug that would have shut our plants down for one shift.

And so we are now looking at, you know, what if this had occurred,

what could we have done on January 1st and 2nd so we would

have caught this in time and not shut our plants down. We are seriously right now looking at operating a plant Saturday night, January 1st, a third shift operation, running for 4 hours, then running

all the systems behind that as though it was a normal work day,

giving us a day to fix any bugs that we have missed.

You know, we all run tests, but the real world where you are

going through a telecommunications company that is in the year

2000 and you are going to suppliers who are bringing in just in

time material, and you are doing everything, so that we have some

reaction time so that on Monday, the 3rd, we would have a higher

degree of certainty that we are ready.

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Mr. HORN. Mr. Parker, how about Northwestern, if you had to

do it over again, what is it that stands out that you wish you had

done first?

Mr. PARKER. Interestingly enough, I think that we allocated

enough time to the overall effort. I think starting earlier would

have made the whole program a little bit cheaper because it would

have been less of an auxiliary effort and more of a mainstream effort. But there are probably three things I would have done differently. I would have liked to have educated the business community inside Northwest, to understand that it was not just an IT

problem, to get them involved with business process changes and

contingency planning and things much earlier in the cycle. I think

we would have been much more aggressive about retiring older systems than—as opposed to fixing them, because we could use this

as an opportunity to build for the future better than perhaps we

did. And I think we also could have encouraged our industry associations to begin digging for information much sooner than we did.

Mr. HORN. Now when Northwestern began its efforts was about

what?

Mr. PARKER. It was in January 1996.

Mr. HORN. Yeah, January 1996. By the way, Mr. Willemssen,

come on up and join the panel for the last couple of questions. He

is our worldwide expert. We have a chair for you.

What I am interested in is what else needs to be done, if anything, by the Federal Government on the awareness side and what

do you wish had been done by the Federal Government in that respect—not that it is doing your work, but what could it have done

to be helpful. They finally got around to it. I think they are doing

a pretty good job now and it is happening, but it took years to get

them to face the music. They ignored it—well, they ignored everything up until, as I said, April 1998. That is when they finally got

Mr. Koskinen in there to do the job.

So anything else we could have done on our side on awareness,

whatever?

Mr. PARKER. I think on the—from the airline industry, having

more visibility into the program sooner, having the—particularly

the FAA and other government agency programs started sooner

and made aware of the progress to us sooner would have helped.

Because we had to start our programs with assumptions that we

would have at some point run into some additional work because

the assumptions did not hold.

Mr. HORN. I take it on verification, some of you have used inside

verifiers, others have used outside verifiers, on the fact that your

codes have been adjusted and so forth. What has been the practice

at Ford on that, did you have an outside team do it? I remember

you mentioned a few accounting consultant firms.

Mr. SURDU. We actually have addressed this in two fashions. Internally, we used both internal and external resources to assist us

in the remediation testing and initial verification. We actually did

verification work prior to testing. It turns out it simplifies the process to find the problems up front before you get into testing and

it facilitates testing. So we used both internal and external resources for that.

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Same thing on the auditor side, our general auditor’s office has

been engaged from the very beginning on this program, and we

have used Coopers Price Waterhouse as well.

On the pure verification now, we are taking another pass at it

and that is all using external resources.

Mr. HORN. How about General Motors, somewhat similar?

Mr. COSTANTINO. Very similar, actually almost exactly the same.

We have multiple testing obviously inside and again, we use EDS

which brings in additional outside resources, although they are a

prime supplier. But many of our critical systems have been going

through independent verification with a totally outside third party.

Mr. HORN. How about Chrysler—Daimler?

Mr. BUCK. At DaimlerChrysler, when we had finished 99 percent

of our business systems at the end of last year, we raised the tier

or the measurement of completeness to doing integration testing

with stand-alone main frames or stand-alone servers, and this signoff with not only the IT individuals, but with our customers—we

are involving all of our customers in our testing and they have to

sign off on critical applications. We are using Deloitte & Touche to

do independent verification.

Mr. HORN. Mr. Parker, how about your situation in Northwestern?

Mr. PARKER. We follow a similar program, we do an internal IT

testing and validation; we then go to our business units and have

them sign off for completeness after user acceptance testing. We

have an internal auditing department which validates the results

and we have also used Ernst & Young as our external audit group.

We are also using Price Waterhouse Coopers in our contingency

planning efforts, which is an umbrella that sits above virtually all

of the program and they have looked at it as well.

Mr. HORN. For the workers you have on America’s assembly lines

and on the airlines, how have your companies trained employees to

recognize and address possible year 2000-related problems? Are

they sensitized to that?

Mr. COSTANTINO. In our case, basically we are just taking our

normal practices which say that every single plant we have, for example, has procedures—and I am sure it is true for both gentlemen

here—to handle any kind of situation such as a power outage or

a supplier issue. I mean we deal with these things every day. Y2K

is really almost an extension of what we do deal with. So we are

back in there just doing two things—making sure everybody is following and understands those procedures and is prepared, and also

if there is any uniqueness with respect to potential Y2K ones, how

to deal with it. But in many cases, we will also have some technical

teams, if we run into a problem that is beyond our capability, that

we will then send out to handle any technical problems.

Mr. HORN. How about Ford, about the same way?

Mr. SURDU. Yeah, the one other item in response to your question is we have gone out with numerous all-employee communiques

in terms of not only the year 2000 challenge but where the company was and what the company was doing. In addition to that,

they have been personally engaged as a result of our end-user computing process. Every desktop owner, we have provided a tool, we

have provided training on how to use the tool, and they actually

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personally go through a compliance and analysis and a validation

phase through the things that they develop. So there is a rich

amount of awareness within Ford with our employee base.

Mr. HORN. How about DaimlerChrysler?

Mr. BUCK. In addition to the, what we call incident management

teams at each site and what we call our PC rollout where everyone

who has a PC has to run a program and assess whether they have

created anything that is not compliant, we have put posters all

over our company, both an English version and German version,

telling the employees here are the types of things we found going

wrong. If you know of anything that you think is not compliant,

here is who you contact. So we have tried to do everything we can

to get down to the employee level, to make sure that if there is

something that we have missed, that they are asking the questions.

And they are, they are asking the questions. Their interest is growing as we near the year 2000.

Mr. HORN. If you have got an extra set of those posters, I would

like it filed with the subcommittee and its chairman in particular,

to see if my German has any relationship to my English.

Mr. BUCK. Sure.

Mr. HORN. How about Northwestern?

Mr. PARKER. We have a formal communication plan that includes

all of our constituencies. As it relates to the employees, what we

have found with the front line employees is that most of what they

need is a consistent way to answer customer questions, passenger

questions. So what we have done is given them some documentation both in written form and on their systems that they can access

to be able to answer those questions. And we have also instructed

them to point our customers to our Website which contains kind of

our formal communication to our customers.

At a leadership level, we have worked with the different departments throughout the organization to ensure that they have a consistent way of communicating to the work force. And then from a

decisionmaking standpoint, those people that are required to make

decisions that would recognize Y2K events and make decisions to

modify the airline plans, we have gone to a much more formal area

and we have attached that in our command center approach with

our existing command center and lengthened the time window to

be able to accomplish that. So it is more of a formal plan than a

communication plan.

Mr. HORN. Well, thank you.

Mr. Willemssen, what needs to be asked of this panel that I have

not asked?

Mr. WILLEMSSEN. The one thing that I think that I would like

to emphasize is to extend on some of the remarks that were made

earlier. I think it is especially important for the companies here to

continue publicizing verified facts to the public. That is the best

way to combat any rumor or potential panic down the road. I think

one comment was made about making sure that the dealerships,

since they are the face to the customer, have that information in

hand. I think that is especially important, because as we roll into

the fall, there are going to be a lot more questions raised about

Y2K than have been raised cumulatively to this point. So I think

it is especially important that the companies continue putting the

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word out, here are the facts of the situation and here is what we

know about our products and services and their compliance status.

Mr. HORN. Yeah, I agree with you that is very important, because as we get closer to January 1st, you are going to have people

selling their books, selling their solution and all the rest of it. And

there is going to be a lot of fear mongers, shall we say, in those

wonderful little tabloids as you go through the grocery store line— that kind of thing. So they will turn to that and we just need to

head them off by, as you say, getting the facts out there for the

public to know.

And I think on the previous panel of public people with the bills

they send to the citizens, they might want to put a little information in there about what is happening on the utilities and the

water and the electricity and so forth. And we are getting to the

electric panel.

One question has come here from the audience—is there another

one? Just one. It is for both Northwest and the General Accounting

Office. What is the preparedness of other countries like Jamaica in

terms of air traffic control? Northwest got any feelings on that?

Mr. PARKER. We do. I cannot specifically speak to Jamaica, but

we keep a very close eye on all of that. We would agree, I think,

with the assessment that I heard earlier that the United States is

in better shape than the rest of the world. Europe is somewhat lagging behind, Asia would probably fall into that area and then a lot

of unknowns still remain in the rest of the world.

As you look at the rest of the world, there are really—that part

that is the unknowns, there are really two states of being. One is

their systems are so old and their normal processes are so inconsistent, that it will just be like a regular day if they were to have

a Y2K problem. And we know how to deal with that, we deal with

that every day.

The other part is where they have made some modernization of

their systems, but we do not know how far they are going to be

going into the remediation effort.

Our general read on things now is that it will be safe to fly. Airworthiness, flight safety issues will be addressed, but some passenger convenience things like moving sidewalks or elevators or

HVAC systems, heating and cooling systems, may not be ready and

may run into some problems in the smaller countries.

Mr. HORN. Mr. Willemssen.

Mr. WILLEMSSEN. I think there is reason for concern in other

countries in the air traffic control system, not necessarily because

of what we know, but because of what we do not know. Later this

fall, the State Department working with the Transportation Department, plans to issue travel advisories to the citizenry where

they have real concerns about the systems within those countries.

I think that is a reasonable step from a public information perspective.

Mr. HORN. Yeah, I agree with you. I have a lot of faith in the

American Federal Aviation Agency and the Administrator that

runs it now. They sort of dragged their feet for awhile and then

when she got in there, she started to clean house a little. So I think

that is going to happen, at least in the American sweep, but obviously our planes are flying all over the world. And there are some

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situations where I am sure they are going to have to really clean

up and the ICAO, International Civil Authority ought to be working on that right now with the developing countries.

You have raised a good question. We have not particularly satisfied all the answers; but in terms of the U.S. situation, the Administrator has the power in law from Congress to ground any planes

that are in any unsafe situation. So I think there is a lot of effort

going on in the towers of this country, and by the way, at L.A.

International 4 years ago, they had a few vacuum tubes still, and

they had post-its on the windows and things like that. We are getting a little beyond that now hopefully and I long ago suggested to

FAA when I was on the Aviation Subcommittee, why do you not

go look and see what Lufthansa is doing and 2 years ago, I had

a chance to go over there and look and guess what, Ratheon equipment, all over the tower in Berlin. The FAA, in 1993–1994 had

blown $4 billion to try and accomplish the same thing Ratheon had

already done with Lufthansa. So hopefully we learn from these experiences.

All of you have given some very important testimony and we appreciate your doing it and we are glad to see people working together, because I know we passed that Good Samaritan Act so competitors could work together without somebody saying it is an antitrust violation, and I have been delighted to see all over this country firms that are pretty—very competitive and did not particularly

like their colleagues, are working together to solve this problem.

And I think that is good news for the American public. So thank

you very much for coming.

We will move to panel three now. Panel three is Mr. Roosen of

Detroit Edison; Mr. Lozano of Michigan Consolidated Gas; Mr.

Johnson of Wayne State University; Mr. Potter of the Southeast

Michigan Health and Hospital Council and Mr. McDougall of the

Southeast Michigan Information Center, United Way.

OK, we have got everybody, if you would stand and raise your

right hands.

[Witnesses sworn.]

Mr. HORN. The clerk will note six witnesses affirmed the oath.

We will begin with Mr. Jim Roosen, the Y2K program manager for

Detroit Edison. Glad to have you here.

STATEMENTS OF JIM ROOSEN, Y2K PROGRAM MANAGER, DETROIT EDISON; RAYMOND LOZANO, MANAGER OF STATEWIDE COMMUNITY RELATIONS, MICHIGAN CONSOLIDATED

GAS, ACCOMPANIED BY TOM MOTSINGER, DIRECTOR, INFORMATION AND TECHNOLOGY MANAGEMENT; JAMES

JOHNSON, VICE PRESIDENT OF COMPUTING AND INFORMATION TECHNOLOGY, WAYNE STATE UNIVERSITY; DON POTTER, SOUTHEAST MICHIGAN HEALTH AND HOSPITAL COUNCIL; AND DAN McDOUGALL, DIRECTOR, SOUTHEAST MICHIGAN INFORMATION CENTER, UNITED WAY

Mr. ROOSEN. Thank you, Mr. Chairman. My name is Jim Roosen

with Detroit Edison Co. and I am one of several Y2K program managers working in our program office. I had submitted some formal

testimony and I would like to make some additional comments, if

I may.

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Mr. HORN. Right, and you have all heard that your statement

goes in the minute we introduce you. We would like you to summarize it, do not read it, 5 minutes, and then we can have more dialog.

Mr. ROOSEN. Correct.

The scope of Detroit Edison’s Energy year 2000 Program is quite

fast. Just for purposes of the audience and the committee, we serve

2.1 million customers in southeastern Michigan in 13 different

counties and have 9 power plants and 36,000 miles of distribution

line.

We are keenly aware of the seriousness of the year 2000 issue

and we are committed to providing a safe, reliable flow of electricity well into the millennium. We began working on our Y2K

program in 1996. We, subsequent to that work in our Information

Technology Group, we established an enterprise-wide year 2000

program office to oversee all of the year 2000 activities. We have

a dedicated team of five executive managers, who have over 125

years of utility experience and they have been assigned to the

project. They have both IT experience and operating experience.

We have committed over 450 employees to the effort over the last

21⁄2 years.

We have a rather structured program that reports directly to the

office of the president of DTE Energy, and we regularly report to

the audit committee of the Board of Directors.

Additionally, we have issued a call to action memo to all of our

employees in July 1998, to advise them that we would—not to arrange for vacations during the rollover, that there are certain

needs that we will have in order to carry out our contingency plans

and to be prepared for the unknown.

Where are we? We are on track after 3 years of the program, and

the intricate planning and implementation to address the Y2K

issues.

In summary, our inventory and assessment considered over

140,000 individual assets and that is complete. Our compliance

testing of those assets was completed and of those assets that were

determined to be not ready, about 2 to 3 percent of the total assets,

99 percent of that equipment is ready for the year 2000. Everything has been remediated, we are now in the testing phase of that

remediated code. And the final system, which has nothing to do

with delivering electricity, but it is the back office, the billing systems and some of the support systems, will be moved into production no later than October 1st.

However, the systems that are necessary for the generation, the

transmission and distribution of power are ready as of January

30th. In fact, we have sent letters to the North American Electric

Reliability Council, who have been asked by the Department of Energy to provide oversight of the national grid, we have sent letters

to them informing them that all of our facilities, all of our systems

that are necessary for generation, transmission and distribution

are in fact complete by the June 30th date.

Additionally, we have sent a letter to the Nuclear Regulatory

Commission with regard to our nuclear plant, Fermi 2, that it is

ready, has complete Y2K readiness and was complete by June 30th.

So those have been completed.

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We are in the process now of moving from that asset phase, the

individual assets, to what we call a business process approach

where we look at it from an integrated standpoint enterprise endto-end, to make sure that those systems when all hooked together

will continue to provide the level of service to our customers that

they expect and deserve. We have operated five of our generating

units successfully into the millennium mode and some of them are

still operating with a millennium year 2000 clock.

We developed some rather detailed business continuity plans and

they basically are extensions of our present readiness plans, but

with the kind of Y2K twist to them. We are continuing to communicate and to integrate our efforts with others, as other witnesses

have said today. We have participated in depth in utility consortium to exchange information and strategies and solutions and

testing procedures through the Electric Power Research Institute

and other agencies, EEI, the Edison Electric Institute, and others.

We are in the process of assessing and have really completed the

assessment of our key mission-critical vendors. There are over

1,200 mission critical vendors and we pared that down to 20 and

have worked with each of those vendors to make sure that the supply chain will continue on an acceptable basis through the millennium.

We have been conducting a lot of meetings with the local and

State governments and particularly with emergency management

organizations here in Michigan, including FEMA in some of the

meetings, working with the State police and other agencies to ensure that everyone in southeastern Michigan is working together

for infrastructure types of things like electricity and water.

We did participate also in some national tests that were indicated to be held by the North American Electric Reliability Council.

One was in April, and there is another one scheduled for September and we will be participating in that. Those tests are not of

the grid, those are tests of communication systems that are necessary in the case some unknown event occurs and electronic communications is not available.

Mr. HORN. Let me ask you at this point, are there any tests for

the grid?

Mr. ROOSEN. The actual electric grid itself is up and running and

the risk of testing it while it is up and running is too great. Simulation tests have been conducted and we have high confidence, because of the lack of a lot of computer operation of the grid, it is

basically a manual operation and has a lot of manual backup, that

there is very low risk of any Y2K induced interruption of the grid.

Mr. HORN. Based on the New York blackout, the regional blackout, San Francisco had a blackout in the last few months, what

have we learned from that, anything that applies to the Y2K situation?

Mr. ROOSEN. Those were all equipment failures. Equipment fails

mainly due to overload. And during the heavy load periods during

the summer, you will have equipment failures, and they happen

every day. In fact, you could not testify today that there are no customers out in Detroit Edison’s territory, there will be customers

out. But we are used to that, that is our normal operation, and our

approach is as fast a response as possible to restore to normal.

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The New York one is a particularly interesting one because they

have an all underground system and they had some cable failures

and it particularly interfered with getting them back because everything is under the street and it takes a long time to restore.

Those are the only particulars I have.

We have similar systems, although not as extensive as New

York, but we are prepared to respond in a reasonable period of

time. Normally a 3-day outage is what we advise our customers to

prepare for and we have a fairly good track record of sticking to

those 3-day outages. There are the exceptions, of course.

Mr. HORN. Well, thank you, I just wanted to get that on the

record right now.

Mr. ROOSEN. Right.

One other thing in terms of integrating our efforts, we have been

hosting forums with our partners in gas, water, telecommunications, to make sure that we are all well aware of our remediation

status or our compliancy status.

In summary, we anticipate no widespread or sustained interruptions of service as a result of the turn to the new millennium. We

cannot, of course, give 100 percent guarantee, like I said, even on

a normal day-to-day operation like today, but we can give the guarantee that we will be prepared to respond in the manner that we

have become accustomed to because our response systems are well

tuned to this kind of an emergency.

That prompt response to unusual circumstances is really our

day-to-day job. We will be doing continuous monitoring and coordinating communications with all the emergency management organizations and we will have an emergency communications center

manned and be participating both with the Federal and local government.

Mr. HORN. Well, thank you very much, we appreciate that.

Our next witness is Raymond Lozano, the manager of Statewide

community relations for Michigan Consolidated Gas and he is accompanied by Mr. Tom Motsinger, director, information and technology management.

[The prepared statement of Mr. Roosen follows:]

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Mr. LOZANO. Mr. Chairman, good morning. Thank you for the opportunity to testify here.

As mentioned, I am Ray Lozano, manager of statewide community relations.

In summary, MichCon provides natural gas service to about 1.2

million homes throughout the State in terms of factories, businesses and institutions throughout Michigan. On any given day, we

deliver gas to about 4.5 million residents.

We want to fully assure the committee today that—and all of our

customers, that come January 1st, we are expecting that natural

gas will continue to flow to our homes and businesses that we

serve. Very simply, we are committed to delivering the gas service

that we have been delivering throughout our 150-year history.

We have been working, in terms of replacing our business systems, since early 1995 and established a corporate-wide Y2K office

in 1997 that reports to a vice president that in turn reports to the

chairman of our parent company, MCN, and to its Board of Directors.

We have, in fact, inventoried our systems and developed a schedule for prioritizing and assessing any concerns. We have identified

all of our partners with whom data is shared, to prevent the disruption of information flows. And we have worked with our suppliers and established milestone to track this progress.

In summary, we have focused on five mission-critical processes— the incoming calls from our customers, our gas supply, gas storage

and transmission operations, gas leak and emergency response capability and appliance service requests. In fact, this effort addresses all aspects of our business, including our customer information

systems, our communications equipment that includes telephone,

radio and emergency systems, the control equipment that we employ for gas handling, storage and meter reading, and of course

interfacing with our suppliers, partners and financial institutions.

I would like to report that we are on schedule, we fully expect

to be year 2000—that we will be ready by the end of September

on Y2K issues, and most of our systems already are. Those that are

not currently ready are being modified or replaced.

Even though we had expected everything to be ready by the end

of September, we developed contingency plans also and we have

been testing these plans since last December. As with Edison, we

are working in coordination with other utilities and the Michigan

State Police Emergency Management Division and other EMD departments throughout the State. Also involved with the AGA and

its member utility companies in terms of the DOE coordination of

member utilities.

Probably nowhere have we sensed more a sense of partnership

than with our major gas suppliers and transmission pipelines. The

cooperation that we have had from them in this effort is dedicated

to keeping adequate supplies of gas flowing in our system. The

safety of our customers and our employees is our major concern

and we think with this sense of partnership, we have even more

ensured this capability.

Our goal, of course, is to keep gas flowing to our customers and

continue to dispatch technicians, even if we are to lose all commercially provided electricity, even if every piece of electronic control

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and measurement equipment in our transmission and distribution

system, and even if our current telecommunications links were to

be interrupted. Right now, we fully expect that we will be able to

maintain critical services even in the event of the loss of those scenarios.

Even in the unlikely event of this kind of a system failure, we

are prepared to operate our systems manually. In fact, our major

gas handling systems are designed to function in emergency situations without electricity or computer controls. In this AGA combined effort that we have doing, it has been reported that less than

one in five Americans think that the Y2K problem will affect their

natural gas service and we think that is a remarkable level of confidence.

We would like to thank you again for this opportunity to be here

and invite any questions.

[The prepared statement of Mr. Lozano follows:]

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Mr. HORN. Well, we appreciate you coming.

Let me just ask you a question before I forget it. We have been

worried about what is happening in eastern Europe with the Russian natural gas supply and a lot of that is what keeps the industry and the homes warm in January in particular when this date

situation is going to occur, and the problems they have found in

east Europe is some microchips in the refineries’ operation, in the

ships’ operation if they are bringing anything in to a refinery and

in the pipelines. And I just wondered, your source is really domestic United States, I take it, in terms of natural gas, so you do not

have any of those worries that the Russians might be having?

Mr. LOZANO. Right. Most of our supplies are domestic, and even

Michigan provides a source and we have over 40 billion cubic feet

in our own storage reserves that fully can take us through a normal winter.

Mr. HORN. How long would that last if it was run down for one

reason or the other?

Mr. LOZANO. I am sorry?

Mr. HORN. How long would that supply you have in your inventory right now—how many days would that give everybody in

Michigan a chance——

Mr. LOZANO. That normally takes us through a normal winter.

Mr. HORN. A normal what?

Mr. LOZANO. Winter season.

Mr. HORN. Normal winter. So you could last with that inventory

over a month?

Mr. LOZANO. An extended period of months, yes.

Mr. HORN. When does it run out?

Mr. LOZANO. It depends really on weather conditions and the

usage that customers are using, but it—40 billion cubic feet takes

us through our normal heating season which begins in October and

runs through April.

Mr. HORN. So you really could do it without further supplies between October and April?

Mr. LOZANO. I think we could take it through a critical period.

I cannot say that we are not getting additional supplies during that

time period, there are purchases on the spot market.

Mr. HORN. Well, that is interesting to know, you have a very

long span then, just based on what is in the pipeline and everything else.

Mr. LOZANO. Yes.

Mr. HORN. OK. Well that thought had not really reached Washington, DC, so it is going to reach it now. We thank you for that.

Mr. James Johnson is the vice president of computing and information technology for Wayne State University. Glad to have you

here.

Mr. JOHNSON. Thank you very much, Mr. Chairman, for the opportunity to testify today. I would also like to thank you for holding

these hearings. I think it is very critical that we have an awareness of the year 2000 problem through our institutions and through

our society.

Wayne State University has been dealing with the year 2000

problem for approximately 4 years. Universities are not notorious

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for being early to the game, but in this case, we have been fairly

early to the game.

We have gone through a metamorphosis of probably three stages,

I would say. The first stage was awareness that we had a computer

problem with large administrative systems. The second awareness

was the awareness that we have embedded systems throughout the

University running the gamut from building heating systems and

elevators to distributed laboratory equipment in the medical school.

I think the third stage of awareness has been our concern about

critical suppliers. I would like to just mention briefly where we are

in each of those three areas.

We have been at the administrative game with the large administrative systems for registering students, handling financial

records and handling human resource records, for about 3 years.

We did our last test over the July 4th weekend. We did encounter

a problem, even though we had tested extensively when we put the

system into production; we had one glitch that caused us to be unable to register students for 3 days. The lesson there is you can test

all you want, but until you put something in actual production,

there is always something that is going to catch you somewhere.

In embedded systems, we have identified about 10,000 pieces of

laboratory equipment, about 2,000 of them have date-sensitive

chips in them. We have already tested and evaluated 1,000 of them

and we are finding about 1 percent of the embedded chip systems

have year 2K problems that are going to have to be remediated or

overlooked, as the case may be. We have 9,000 personal computers

throughout the campus, 90 percent of them are compliant.

One area we have been surprised in as we have looked at the

core administrative system is that a lot of our departments have

their own spreadsheets and systems as well. We have identified

3,300 departmental systems and of the 3,300, 56 percent are noncompliant, and so we are in the process of remediating those at this

time.

Suppliers, we are in a little different position than the large

automakers in the sense we do not have this same level of clout

with suppliers. And I think that that concern runs from utility

service—we have been tested last week in that arena, having on

successive days lost power and the lost water. We call that pre-year

2000 planning.

With the suppliers, we have had a lot of difficulty getting them

to indicate whether they were compliant or not. In some instances

where they have said they have been compliant, they have not

when we have tested the system. In other cases where they said

they would become compliant, they come back to the table and say

ah, but you have to get a new version of our software at a cost of

$100,000 or something like that. So that is our concern right now

is in that area.

Last, but not least, we do expect problems and therefore, we have

a contingency plan in place. Our employees will not have vacations

as with most IT employees. We have also involved public safety in

the program as well.

We have carried out a lot of the practices that have been recommended by the General Accounting Office in terms of getting

compliance throughout the University. As you well know, univerVerDate 11-MAY-2000 11:25 Apr 09, 2001 Jkt 010199 PO 00000 Frm 00477 Fmt 6601 Sfmt 6601 E:\HEARINGS\60939 pfrm01 PsN: 60939
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sities are very decentralized with people having different sources of

funds and they do not always respond well to orders. We have had

a lot of success with report cards, with holding individual departments responsible rather than the IT area responsible, by having

sponsors in every department, in every school, and by having training and workshop programs.

One innovative program we have put in place is a student awareness program, which makes our students aware of how year 2K

may affect their lives and their interactions with the university. I

do not know of other schools that have done that.

What has been a large help to us has been publicity, through efforts such as yours, which has made the campus aware that there

is a problem. And the other thing that has been very helpful, are

tool kits that we used, particularly from the Department of Education. Which was surprising.

In closing, I would like to say there is a bright side to this. I

think we have really sharpened our skills in dealing with crisis and

recovery. We have really improved and enhanced communication

between areas of the University. We have been forced to put new

systems and processes in place sooner rather than later, from

which we will gain benefits in efficiency down the road.

That concludes my comments, thank you.

[The prepared statement of Mr. Johnson follows:]

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Mr. HORN. Well, we thank you for that. Let me just ask a couple

of questions. On the 3,300 systems at the departmental level, are

a lot of those faculty personal computers that can tie into the University in one way or the other?

Mr. JOHNSON. No, those are mainly the PCs, individual systems.

What I was talking about was essentially business systems such as

spreadsheets in departments. We have used Focus as a report generator, so there are a lot of Focus programs we have had problems

with and so on down the line.

Mr. HORN. You have a very fine medical school, have you got a

hospital that goes with that?

Mr. JOHNSON. No, the hospital is separate, that is the Detroit

Medical Center, which has the affiliation with Wayne State University.

Mr. HORN. So you do not have a problem on worrying about an

emergency room or anything.

Mr. JOHNSON. No, I have had that in a previous incarnation, but

fortunately not in this one.

Mr. HORN. And you got into another incarnation fast, huh?

Mr. JOHNSON. That is right.

Mr. HORN. I can understand that.

Mr. JOHNSON. Actually, before we looked at like the operating

room and we found 320 embedded devices in there.

Mr. HORN. Yeah. Well, my impression is, and we will hear from

Mr. Potter, to see if my impression is right, is that there has been

very good cooperation in terms of a national Website and all that

in equipment. So Don Potter, Southeast Michigan Health and Hospital Council, you are going to bring all the knowledge to us in this

area.

Mr. POTTER. I will be glad to do so, Mr. Chairman, thanks very

much for having me here this morning and thank you for coming

to town to gather the information that hopefully will be helpful to

you and your colleagues in Washington as we tackle this challenge

together.

Mr. HORN. It will be.

Mr. POTTER. My hope this morning is to provide a sense of what

our hospitals and health systems in southeast Michigan have done,

are doing and will do to combat the dreaded millennium bug to ensure that their operations are uninterrupted come New Years Eve

1999. I would also like to provide thanks for what you and your

colleagues in the Congress have done to date to ease this effort and

to provide recommendations on what you can and should consider

for future assistance to our hospitals as they complete their efforts

on this major issue.

By way of background, you should know that the hospitals and

health systems in southeast Michigan are a relatively consolidated

group with more than 90 percent of our 55 hospitals as part of

broader health systems, so that centralized talents and capabilities

have assisted in developing consistent programs, able to deliver

consistent results with inherent economies in the Y2K issue.

Our hospitals are all organized as not-for-profit entities with

community service as their primary missions. And they have been

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tion at this stage, and feel very confident that things have been

moving along well.

The focus of their activities of course has had to be internal on

the information systems they have, their medical equipment and

devices and their facilities, with the external focus on suppliers and

device manufacturers, insurance companies, certainly the Medicare

program at the Federal level has been a concern just in terms of

basic cash-flow for our hospitals to make payroll, and we are confident that you have taken care of a number of those concerns at

the Federal level.

We have heard and had some meetings locally with our utilities,

collective activity on the part of all of our hospitals and health systems through our hospital council, but we of course have police and

fire and ambulance services and other external publics that are important as well.

By way of contingency plans, please know that our hospitals and

health systems are in the business of dealing with emergent conditions and the unexpected on a routine basis. They are used to mobilizing quickly in the face of natural disasters and human carnage.

They routinely hold drills to ensure that such mobilizations are

successful and that no stone is left unturned in appropriate preparation for disasters that seldom happen. There is no reason to believe they will not be ready for the year 2000, whether or not every

medical device in their facilities is Y2K compliant. Further, patient

safety is the highest priority for our hospitals and health systems

and their ultimate contingency plan is to have caregivers at the

bedside of all patients as they do 24 hours a day, 7 days a week,

365 days a year.

Should a medical device turn out to be non-compliant even after

testing, it is very likely that the ramifications will be limited, because it is the hospital’s people who take care of patients, not a

hospital’s medical devices.

In many ways, it is fortuitous that the Y2K millennium bug dilemma is focused on New Years Eve 1999. This is a time of the

year when the hospital census is the lowest and only the sickest

patients remain in our hospitals. All of our hospitals and health

systems have advised our office that they are examining a range

of options, but all have told their employees, as others you have

heard from this morning, not to plan vacations for this coming holiday season, as they have in the past. They are planning to have

staff at the bedside of every patient where a medical device is in

use and the manpower pool will be significant.

Remaining concerns that our hospitals have in becoming Y2K

compliant include a reliance on manufacturers of products and the

role of the FDA in assisting them. Our hospitals have historically

and continue to rely on manufacturers for representation of the fitness and safety of their products. The FDA’s Y2K guidance to manufacturers emphasizes the responsibility of manufacturers for their

products’ Y2K compliance and safety. The FDA has also stressed

that the technical know-how for determining the compliance status

of devices rests with the manufacturers.

A challenging question that hospitals face is whether to undertake independent testing of their medical devices and equipment.

And this is a decision that must be made with the judgment of

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those at each hospital and health system, based on whether clear

and complete information on the device’s Y2K compliance status

has been obtained from the manufacturer. External guidance from

national resources suggests that the testing a provider can accomplish is superficial and may provide false assurances about compliance in a wholly different set of problems.

Although a few hospitals nationally have identified discrepancies

between what some manufacturers have reported in their own tests

of medical equipment, the numbers of these occurrences is reportedly very small and none are mission critical.

The FDA has taken a leadership role nationally in working with

the manufacturers to encourage their provision of complete lists of

individual products that are Y2K compliant. It is critical that the

FDA continue to monitor the reporting of manufacturers about

these devices and equipment because they have the expertise, resources and authority to ensure that their products are safe and reliable.

At the same time, our national association is encouraging the

FDA to play a rumor-control role, monitoring such arenas as the

Internet and the media to make sure that information that circulates about the effects of Y2K on medical devices and equipment

is accurate and corrected when it is wrong.

Liability matters are another concern for our hospitals. A dubious distinction that has haunted our hospitals and health systems

in southeast Michigan for a number of years is that they pay some

of the highest, if not the highest, medical liability insurance premiums in the country. The history and the culture of Detroit as the

home of the auto manufacturers has resulted in an extremely active plaintiffs’ bar and a very high propensity of the public to bring

suit to seek redress for any wrong they perceive to have occurred.

Our hospitals are not able to ultimately face the Y2K challenge

alone, they rely on medical device manufacturers as well as vendors and suppliers who have ultimate influence over the manner

in which their services are provided to the people they serve.

Our hospital Y2K compliance programs have resulted in thousands of letters being sent to manufacturers, vendors and suppliers

to ascertain whether their services and equipment are Y2K compliant. Unless the hospitals are provided the necessary and truthful

information from these external sources, they will be in a position

of facing uncertain circumstances, which could result, unfortunately, in patient harm, though that is clearly not a high probability.

Nonetheless, in spite of all that is being done, problems could

still arise and our hospitals understand and appreciate the desire

to avoid litigation. Resources diverted from serving patients are resources lost to the mission of our hospitals. That is of utmost importance. It is therefore important that our hospitals remain on a

level playing field when defending personal injury cases. They

must retain all of their current rights to take legal action against

a vendor or a manufacturer whose product is involved in a claim.

It is our hope that proposals entertained by Congress to address

the liability matter relative to Y2K issues not create a disadvantage for our hospitals because it is essential that if a hospital is

sued by a patient for a Y2K-related event, explicit language must

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be included in any congressional proposal to ensure that the hospital has the same recourse against a vendor or a manufacturer

that it has today. H.R. 775 recently passed by the House does this

and we encourage you to maintain that posture.

Our third concern is the issue of costs. Our hospitals in southeast Michigan have expended close to $150 million thus far on Y2K

compliance. It appears that nearly half of those expenditures have

been devoted to upgraded equipment, which will result in enhanced

efficiency on their behalf. Nonetheless, the unplanned nature of

this expenditure at a time when our hospitals are facing unprecedented challenges from all who purchase and pay for health care

is presenting great challenges.

With respect to the role of Congress, we would like to thank you

and your colleagues, Mr. Chairman, for the passage of the good samaritan legislation that has shielded from liability those who

would work together, and we have competing hospitals and health

systems working together locally on this in part as a result.

As I have previously alluded, we would encourage you to provide

the FDA the resources and impetus necessary to enforce its requests for information from medical device manufacturers and to

serve a rumor-control function regarding those devices. Further, we

support a recent proposal by John Koskinen, chairman of the President’s Council on Y2K Conversion, that mentioned the possibility

of creating a contingency fund which States, in the case of Medicaid programs for example, or hospitals, could draw moneys needed to continue operating in case of Y2K disruption.

And finally, Medpac, the congressionally developed oversight

body for the Medicare program, has included in its recommendations for fiscal year 2000 funding an additional one half of 1 percent payment increase to hospitals to cover their Y2K compliance

costs. We would encourage you and your colleagues in Congress to

support that as well.

Thank you very much for the opportunity to be here. I think I

can convey that our hospitals and health systems have been aggressively working on this problem for at least 2 years and are feeling relatively confident about their positions today.

[The prepared statement of Mr. Potter follows:]

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Mr. HORN. Now the hospitals have a Website, do they not, where

they can check out equipment against it in terms of the manufacturer’s name, the model number and all that, so they do not have

to be repeating this all over America?

Mr. POTTER. This is being assisted by the FDA in their gathering

of information from the manufacturers, but also by the American

Hospital Association as well. My information is that about 70 percent of that equipment is easily accessible in terms of information

right now.

Mr. HORN. That is very helpful.

Our last witness on this panel is Dan McDougall, who is the director, southeast Michigan information center for United Way.

Mr. MCDOUGALL. Thank you for the opportunity to speak today,

and especially today on the last panel, because I think I represent

an industry that is very different than the industries you have

heard from earlier today, and that of course being the human services sector that provides support services to people in our community.

I thought what I would do today is talk to you not so much about

how our individual United Way is dealing with Y2K internally, but

how the human services sector in southeast Michigan is dealing

with the Y2K issue and kind of what we see as some of the possible

solutions, and I will try to summarize my report.

Clearly, the non-profit sector does not have the dollars and the

resources behind it that some of the corporations that we have

heard from today do. Our first—at United Way, our first attempt

at addressing the issue among the smaller non-profits in our area

was to send a letter out to non-profits in September of last year,

kind of outlining the Y2K issue and asking folks to start looking

at it in their individual organizations.

In addition to that, we worked with George Surdu from Ford

Motor Co., who was here earlier today, to develop a Y2K handbook

for non-profit organizations. We have heard a lot of people talk

about the Good Samaritan Act and I keep thinking of that when

I talk about our relationship with Ford Motor Co., because it is

only because of Ford Motor Co. that we have been able to address

the Y2K issue in the non-profit sector locally here.

Since September though, unfortunately what we have found is

that non-profits just are not looking at the issue serious—the Y2K

issue seriously. And part of this has to do with the culture of the

small non-profit community. Non-profits are expected to operate

with budgets far less than the for-profit sector, and very often the

funding distribution to non-profit organizations stipulates that

money cannot be spent on capital, things such as computer equipment. The result is that most non-profits are operating with computer systems that are the castaways from the for-profit sector. So

although we love it when the big corporations give us their old

computers, what is happening now is that the corporations are giving us their computers that are going to crash in January. [Laughter.]

We like to take things from everybody, but unfortunately, this

one is not helping.

So unfortunately, we have this cyclical nature of the non-profit

sector not getting the funding to deal with the issue and then also

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non-profits just being too burdened by the day-to-day tasks that

they have to really look at the Y2K issue. It is just not in our culture to deal with technology very much.

Late last year, the Nonprofit Times and Gift in Kind International did a national survey of the non-profit sector in technology, with a little bit of focus on the Y2K issue and what they

found is that non-profit organizations with an annual budget of less

than $1 million are the most susceptible to issues with respect to

Y2K and that is because most of these organizations are dealing

with this loaned equipment or donated equipment and they are

usually processors that are 386 level or below. Sixty-three percent

of the non-profits in that survey said that they have absolutely no

money budgeted for technology or technology training, no budget at

all. So they are really depending on Board members who give their

old computers and who come and teach classes to their staff.

And then also, 40 percent of the respondents in that survey stated that their biggest roadblock to Y2K issues was money. And of

course we always want to focus on the equipment aspect of the

Y2K issue for non-profits but it is also training and technology

planning. So we are really seeing that the problem is more than

just hardware for us.

In terms of our local picture, in the seven-county area that we

call southeast Michigan for the purposes of United Way, there are

a little over 6000 registered non-profits and those are of the size

that they are a million budget or less, which is the focus that we

have. If we were to say that one—if we looked at the trends in

terms of the kinds of computers that smaller non-profits have, replacing one computer for each organization would cost a little over

$1.3 million and that does not include training and updating of

software and things like that.

So in our mind, it is really an issue of focusing on a cadre or a

mosaic of services and hardware issues that non-profits have. And

so what I would like to do is talk about a program that we have

locally that we think works, but of course is not big enough.

We work with a national project called Team TECH which is a

collaborative arrangement between IBM, United Way and the

Corp. for National Service. We use AmeriCorps volunteers at

United Ways throughout the country to distribute IBM hardware

and also provide technical training and technical planning. In Detroit, this has made a huge impact on the ability of small non-profits with one and two staff members to start looking at technology

in new ways and to address the Y2K issue in their organization.

And so one of the things that we are looking at is because of the

Y2K issue, we have had organizations like Ford and IBM come to

us and want to provide us technical assistance so that we can help

non-profits do things better. And so for us, coming from a culture

of not using technology very much, we are seeing this issue as an

opportunity and we would like to say that we would like to take

the Y2K lemon and try to make some technology lemonade out of

it for non-profits.

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So what we are looking forward to is the results of this hearing

helping us bring together some of the other good samaritans in our

community to help the non-profit sector.

I will conclude my testimony there.

[The prepared statement of Mr. McDougall follows:]

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Mr. HORN. Well, thank you very much. Let me ask the panel

generally a couple of questions. Let us just say when did it start,

some of you told me and I just want to get it on the record. Mr.

Roosen, when did you start this Y2K adaptation and awareness

and all the rest of it?

Mr. ROOSEN. 1996.

Mr. HORN. 1996? And then when, early in 1996 or later?

Mr. ROOSEN. We started, as I recall, in our Information Technology Department somewhere in mid-1996.

Mr. HORN. OK, we will say June then.

Mr. ROOSEN. That would be fair.

Mr. HORN. When did the gas company find time to start on it?

Mr. LOZANO. We started replacing our business systems back in

1995, but instituted our Y2K office corporate-wide in 1997.

Mr. HORN. 1997, 1995.

And then how about the Wayne State University, when did you

start?

Mr. JOHNSON. We started in 1996 with awareness and we were

budgeted in fiscal year 1997 which starts October 1st.

Mr. HORN. And then how about the Health and Hospital Council,

when did they start on this, roughly?

Mr. POTTER. Speaking collectively on behalf of all the hospitals

in the region, Mr. Chairman, we are seeing late 1997 and early

1998 for the system-wide formation of steering committees to actually take on the matter.

Mr. HORN. How about the non-profits with the United Way?

Mr. MCDOUGALL. Well, it varies from non-profit to non-profit.

Our United Way started focusing on our internal systems in late

1996, but we just started working with assisting other non-profits

in middle to late 1998.

Mr. HORN. Now that you have a lot of experience in this area,

we can start down the line again, what do you wish you had done

that you did not do and what would be No. 1 for you next time

around, if we ever had this experience? Mr. Roosen, what do you

think?

Mr. ROOSEN. I think as one of the earlier witnesses said, the

inventorying your assets and knowing what you have makes it a

lot easier to do something with them and I would say that would

be the one large learning if you had to do it over again.

Mr. HORN. How about you, Mr. Lozano?

Mr. LOZANO. With me is Tom Motsinger, director of technology

and information systems, and we had a discussion about this and

we just echo that sentiment, that inventorying——

Mr. HORN. Well, you are the expert, Mr. Motsinger, what do you

think?

Mr. MOTSINGER. That is correct, the inventory has been our biggest issue. As was said earlier by the auto industry, the—you are

definitely surprised by the number, the count of pieces of equipment and how much is out there that you really do not know about.

Mr. HORN. Does that mean that sort of in the future everybody

is going to have a going, running inventory.

Mr. MOTSINGER. Ongoing.

Mr. HORN. Yeah, ongoing. How about it, Mr. Johnson, what has

been Wayne State’s experience with——

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Mr. JOHNSON. Well, first, I would replace probably another core

system rather than remediate it. I would echo what everyone else

said; the other factor I would mention is keeping up to date with

software because when you bring in the compliant software, if you

are not up to date, you have got to bring it up to date and then

go from there. And the third I think would be a broader national

awareness. It has been pretty late for people to discover the year

2K problem is a much broader problem than an information technology problem. And it has only been recently that we have really

been able to get the attention of the skeptics that there is a problem and they need to do something about it.

Mr. HORN. Yeah.

Mr. JOHNSON. One thing fueling that was obviously some Federal

agencies saying you have to assure compliance for funding.

Mr. HORN. We urged the President to do just that in 1997 and

he did give the speech to the National Academy of Sciences in the

summer of 1998, I believe, and of course they were the last people

that needed to be educated, they already knew about it. And I

think there are three speeches that have been given, so the bully

pulpit has not been used very much, as Theodore Roosevelt called

the Presidency, and it is too bad. But you are right, general awareness.

And what would you say on the issue that you would rather do

first next time and you did not do it for one reason or the other?

Mr. POTTER. I think our inventory has turned out to be relatively

solid, thank goodness, in our hospitals and health systems. The big

issue that jumped up was really the cost issue. Health care reform

did not die in Congress in 1995, it switched its colors and our hospitals here in Detroit have had 5,000 layoffs in the last year just

to live with the dollars they have. So to factor $150 million out of

their patient care dollars has not been an easy proposition, to be

spending money on upgrading information systems when they

could be taking care of patients.

So probably the surprise, at least in the short run, was what it

did cost ultimately for them to update their systems and how to accommodate that in the short run.

Mr. HORN. That is a very interesting point. In terms of Medicare,

is there sort of an administrative base that is recognized as part

of your cost structure?

Mr. POTTER. Yes, we are under Federal price controls and Medicare pays hospitals a given amount to take care of a patient of a

given diagnosis and that amount is updated on an annual basis. In

my testimony, I alluded that there is this group called MedPac that

Congress appoints to make recommendations through the appropriations process to determine what should be the annual change,

if any, in prices. Unfortunately, it is going down rather than up

right now, by virtue of the Balanced Budget Act of 1997.

Mr. HORN. Yeah. Well, it is interesting because you have had an

extra expense you did not know several years before, you would

have, because very few people did. And has there been an adjustment in that base?

Mr. POTTER. The recommendation has been made, but it is not

clear to me that the appropriations process has accommodated it

this year. There is a lot of reluctance in Congress, as you well

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know, to tamper with anything that came out of the Balanced

Budget Act, but the Balanced Budget Act, if you may recall, cut

Federal spending by $122 billion over 5 years and $116 billion of

that came from Medicare, which is only 13 percent of the budget.

And 95 percent of that came from health care service providers, not

in cuts of eligibility or benefits to Medicare enrollees. So it is the

providers who have got the problem.

Mr. HORN. You have made a good point and I will ask the staff

to follow it up and see what is happening with the Appropriations

Committees on this.

Mr. POTTER. I appreciate that.

Mr. HORN. This point has not really been raised before and so

I think that is a real contribution.

Now let me ask those of you that represent various utilities, you

send out sometimes monthly billings to large clientele. To what extent have you used some of that sheet that tells them what they

have got to pay to educate them on the Y2K situation and to sort

of reassure the citizenry that you are on top of these things, because there is a lot, as I have said numerous times, a lot of scaremongers out there for their own delights and their own moneymaking, who will try to scare a lot of your customers that gee, we

are not doing this, we are not doing that. You have got a lot of tort

lawyers also that are sitting there salivating. And I was just curious, to what extent have you tried to educate your clientele, our fellow citizens, with this information. Mr. Roosen.

Mr. ROOSEN. Well, from Detroit Edison’s standpoint, there are

really three approaches. You are right, the bill stuffer is one approach, but as we all know, when we are paying our bills, a lot of

times we throw that stuff away. I know I have that habit.

We have used the bill stuffer and we have done it, I believe,

three times since last summer. Annually, we send out notices to

our customers, we have a lot of storms in the spring, starting in

about March, so we took advantage of the early storm tips to also

put in a Y2K twist.

And then we have 18 offices and we have some advice to customers on preparation. We have booklets that we have made available to them.

And then third, we have a speakers corps and any time any—

whether it be a garden group or a church or whatever, any time

that they ask us, we volunteer a speaker to go out and do something on Y2K.

Mr. HORN. How about it, Mr. Lozano, what has been the approach?

Mr. LOZANO. Mr. Chairman, we have similar efforts as does Edison. We have had one bill stuffer that has gone out to customers

and most of ours has been more responsive to the community

groups and the individuals that call either through our public affairs offices or through the Y2K office, responding to individual requests for information or just verbal information or speaking before

groups. As we are located throughout the State, we have been involved in multiple presentations throughout the entire State and

usually in a panel type of situation involving the communication

industry and local municipalities.

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Mr. HORN. I do not think—let us see, did the rest of you really

have that kind of communication going on? Well, hospitals send

bills too, but I do not know if they want it read on anything but

the bottom line when the poor patient gets it. Was that not the reason we always get rolled out of a hospital in a wheelchair, because

they show you the bill on the way out? [Laughter.]

Mr. POTTER. We really do have a problem, Mr. Chairman, on this

one. I learned it just a couple of weeks ago when my 73 year old

mother-in-law told me there are two places she was not going to

be on New Year’s Eve, one was on an airplane and the other was

in a hospital. And I asked ‘‘Where does this come from that it is

part of the public thinking?’’ Whether she watches day time television or what, she at the same time asked me if I would like to

go halves with her on a generator after she had purchased three

cases of canned goods to put in her basement.

So we have got a real problem with the general public that needs

to be dealt with and it is something that we are kind of looking

at collectively in our hospital council to see what we can do as an

industry.

Mr. HORN. Did you ever find out where she got her information?

Mr. POTTER. It turns out there is a—she lives in west Michigan

and there are some very high profile kooks out there stirring up

the pot and holding meetings and individuals are going, almost like

the old time revivals. And there is this cult that has developed, of

which I am afraid she is on the fringe, and Lord knows what it is

going to take, but she wants to know everything I know about Y2K.

And I will even give her a copy of my testimony today and see if

that will help, but it has not thus far.

Mr. HORN. When we were in Topeka the other day holding a

hearing our staff director happened to pick up the Kansas City

Star and Ann Landers had a column in there on the scams that

are being worked on senior citizens with the Y2K being it. They

phone up the senior citizen and say we are the bank and we need

to move your money from your account to this bond account and

all. And you know, utter baloney. But people are going to be hurting senior citizens just like they do on other scams. So we need to

help head that off, and the Attorney General of each State needs

to really be leading that front.

Mr. Willemssen, why do you not sit in one of the Commissioners

chairs here, it is a cushy one, better accommodations than you

have had in most hearing rooms.

What do you make of all this and what should we discuss to get

it on the record?

We are going to have to wire you for sound wherever you go.

Mr. WILLEMSSEN. Thanks, Mr. Chairman. A couple of thoughts

that I thought I would raise to you that may be a little bit unique

that we had not talked about at the other field hearings. One having Wayne State here, you may want to inquire about the extent

of coordination that they have had with the Department of Education on their data exchanges on student loans and student

grants.

And also with a representative from the hospital association, I

think it is useful to point out that beyond the Website that the

Food and Drug Administration has, they also plan to begin some

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independent efforts on a sample of critical care life support biomedical equipment items, to independently check behind the compliance certifications of the manufacturers and see what evidence

is behind that, for those critical care and life support items.

So I thought I would just raise those couple of points.

Mr. HORN. Well, those are excellent questions. Let us deal with

the student loan one and student grant, the Pell grants. We are the

first Congress that ever got them paid to the highest mark you possibly could have in Pell grants. So I am curious what the Department of Education is doing in relation to Wayne State University.

Mr. JOHNSON. They have an awareness program and they are

one of our suppliers that assures compliance with the year 2000.

We have not tested it yet.

Mr. HORN. Now they have intermediaries, do they not, that do

a lot of the—— Mr. JOHNSON. Yes.

Mr. HORN. It is not directly Department of Education.

Mr. JOHNSON. It is not always done directly, the transfers, that

is right.

Mr. HORN. And it is the same as Medicare in that sense, they

have intermediaries between the hospitals and Medicare providers.

Mr. JOHNSON. Right. It is a very dispersed problem.

Mr. HORN. Yeah. So what has been your experience then on this

situation with grants and loans, I did not quite hear that.

Mr. JOHNSON. I am not aware of a problem of non-compliance.

I will not confess to being infinitely wise in this area.

Mr. HORN. Yeah, if you would ask your director of financial aid,

it might be interesting and we will put it in the record at this

point, if you want to write us a letter as to what the experience

is.

Mr. JOHNSON. OK, I will do that.

Mr. HORN. That would be very helpful.

[The information referred to follows:]

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Mr. HORN. OK, Mr. Potter, on the Medicare/Medicaid intermediary, is there a problem there at all with the hospitals and the

interactions on the computing with the State government and the

Federal Government and its intermediaries?

Mr. POTTER. We have just solved another problem because we

have the third intermediary—— Mr. HORN. You want to move the mic a little closer, I cannot—— Mr. POTTER. I am sorry. Our hospitals in Michigan are dealing

with the third Medicare intermediary that has been used for the

last 5 years. So we have just worked through another change, it

is now in Wisconsin, but the technology of the day has made life

a lot easier and although Medicare does not pay enough, the dollars are flowing and there are no major concerns at this point.

Mr. HORN. How about on the Food and Drug aspect of equipment

that Mr. Willemssen mentioned?

Mr. POTTER. I appreciated that insight, that is new news to me

and it is good news, because we do have some manufacturers that

have been reluctant to even respond to mailings, and if they have,

they have done so in such a manner so as to guarantee absolutely

nothing. And the FDA’s control over these device manufacturers is

an extremely important tool to our hospitals because as I said in

my testimony, they do not have the expertise to go into this machinery and remediate it and if you really do get to the point where

you cannot do that and no one is responsive, then once again, you

have to go buy a new piece of equipment, perhaps unnecessarily.

So I am very glad to hear that.

Mr. HORN. Yes, it is a very important point and between GAO

and our staff, hopefully we can get that sorted out with FDA as to

what degree is this a problem, because I think that is an excellent

point that Mr. Willemssen has made.

Any other thoughts, Joel?

Mr. WILLEMSSEN. I think you summed it up very well, Mr. Chairman.

Mr. HORN. Well, I want to thank each one of you. Do you have

any comments you might want to make based on your colleagues’

testimony?

[No response.]

Mr. HORN. It does not look like you do, so I want to thank you

very much. We really appreciate it.

And I thank all that have been involved in preparing this. On

our own side, we have got J. Russell George, our staff director and

chief counsel is here. He is holding up that Corinthian column

there that I am looking at. And Matthew Ryan is to my left and

your right. He is the senior policy director involved in this type of

hearing. And Grant Newman, our faithful clerk, who has probably

broken his back lugging stuff around this country. Where are you,

Grant? There you are in the back, the well-dressed young man. I

do not think our interns are here, but they helped, and that is

Lauren Lufton and John Phillips, Justin Schleuter, they are back

at the office.

And then for Wayne County, we particularly appreciate the cooperation we have had from your Assistant County Executive, Suzanne Hall, she was an excellent witness a few weeks ago in Washington; and Sue Hanson, deputy director, Y2K Program Office; Al

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Montgomery, clerk of the Commissioners; and Mr. Cavanaugh,

county commissioner, and—Mr. Chrisopher Cavanaugh. We really

appreciate them, and we appreciate, as we said earlier, George

Cushingberry, Jr., county commissioner, and his help.

And then we had also your Wayne County manager of information technology for the Commission, and that is Orlando Gloster,

and we appreciate all that he has done.

And last but not least, because he has got the big workout in one

of these hearings, is Bill Warren, the court reporter that took all

this down. I still do not understand how they can do it that fast

and listen to the next word, but that is OK, the transcript comes

out fine and we appreciate it.

So with that, this committee, which began in Topeka and was

also in Naperville, IL outside of Chicago in recess, and it was recessed to Detroit and it is over now and so we will adjourn this

meeting. Thank you.

[Whereupon, at 12:14 p.m., the subcommittee was adjourned.]

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