The public faces the risk that critical services could be severely disrupted by the Year 2000 computing crisis. Financial transactions could be delayed, airline flights grounded, and national defense affected. The many interdependencies that exist among the levels of governments and within key economic sectors of our nation could cause a single failure to have wide-ranging repercussions. While managers in the government and the private sector are acting to mitigate these risks, a significant amount of work remains. The federal government is extremely vulnerable to Year 2000 problems due to its widespread dependence on computer systems to process financial transactions, deliver vital public services, and carry out its operations. This challenge is made more difficult by the age and poor documentation of many of the government’s existing systems, and its lackluster track record in modernizing systems to deliver expected improvements and meet promised deadlines. Year 2000-related problems have already occurred. For example, an automated Defense Logistics Agency system erroneously deactivated 90,000 inventoried items as the result of an incorrect date calculation. According to the agency, if the problem had not been corrected (which took 400 work hours), the impact would have seriously hampered its mission to deliver materiel in a timely manner. Our reviews of federal agency Year 2000 programs have found uneven progress, and our reports contain numerous recommendations, which the agencies have almost universally agreed to implement. Among them are the need to establish priorities, solidify data exchange agreements, and develop contingency plans. One of the largest, and largely unknown, risks relates to the global nature of the problem. With the advent of electronic communication and international commerce, the United States and the rest of the world have become critically dependent on computers. However, with this electronic dependence and massive exchanging of data comes increasing risk that uncorrected Year 2000 problems in other countries will adversely affect the United States. And there are indications of Year 2000 readiness problems internationally. In September 1997 the Gartner Group, a private research firm acknowledged for its expertise in Year 2000 computing issues, surveyed 2,400 companies in 17 countries and concluded that “hirty percent of all companies have not started dealing with the year 2000 problem.” As 2000 approaches, the scope of the risks that the century change could bring has become more clear, and the federal government’s actions have intensified. This past February, an executive order was issued establishing the President’s Council on Year 2000 Conversion. The Council Chair is to oversee federal agency Year 2000 efforts as well as be the spokesman in national and international forums, coordinate with state and local governments, promote appropriate federal roles with respect to private sector activities, and report to the President on a quarterly basis. As we testified in March, there are a number of actions we believe the Council must take to avert this crisis. In a report issued last month, we detailed specific recommendations. The following summarizes a few of the key areas in which we recommend action. Because departments and agencies have taken longer than we and others have recommended to assess the readiness of their systems, it is unlikely that they will be able to renovate and fully test all mission-critical systems by January 1, 2000. Consequently, setting priorities is essential, with the focus being on systems most critical to health and safety, financial well being of individuals, national security, and the economy. Agencies must start business continuity and contingency planning now to safeguard their ability to deliver a minimum acceptable level of services in the event of Year 2000-induced failures. In March we issued an exposure draft of a guide providing information on business continuity and contingency planning issues common to most large enterprises; the Office of Management and Budget (OMB) recently adopted this guide as a model for federal agencies. Agencies developing such plans only for systems currently behind schedule, however, are not addressing the need to ensure business continuity in the event of unforeseen failures. Further, such plans should not be limited to the risks posed by the Year 2000-induced failures of internal information systems, but must include the potential Year 2000 failures of others, including business partners and infrastructure service providers (e.g., power, water, transportation, and voice and data telecommunications). OMB’s assessment of the current status of federal Year 2000 progress is predominantly based on agency reports that have not been consistently verified or independently reviewed. Without such independent reviews, OMB and the President’s Council on Year 2000 Conversion have little assurance that they are receiving accurate information. Accordingly, agencies must have independent verification strategies involving inspectors general or other independent organizations. As a nation, we do not know where we stand overall with regard to Year 2000 risks and readiness. No nationwide assessment—including the private and public sectors—has been undertaken to gauge this. In partnership with the private sector and state and local governments, the President’s Council could orchestrate such an assessment. If the systems that support USDA’s various programs cannot operate reliably into the next century, it would not take long for the effects to be felt. USDA’s systems support many vital public health and safety and economic activities and, if not properly fixed, tested, and implemented, severe consequences could result, such as the following. Payments to schools, farmers, and others in rural communities could be delayed or incorrectly computed. The economy could be adversely affected if information critical to crop and livestock providers and investors is unreliable, late, or unavailable. The import and export of foodstuffs could be delayed, thus increasing the likelihood that they will not reach their intended destinations before their spoilage dates. Food distribution to schools and others could be stopped or delayed. Public health and safety could be at risk if equipment used in USDA’s many laboratories to detect bacteria, diseases, and unwholesome foods is not compliant. USDA’s Chief Information Officer (CIO) is responsible for leading the department’s preparation for the Year 2000 date change and ensuring that all critical USDA information systems are Year 2000 compliant and operational. In October 1997 USDA’s CIO established the Year 2000 Program Office under the direction of a Year 2000 Program Executive. This office is responsible for providing oversight and guidance for the department’s Year 2000 program, and serves as USDA’s liaison with other government entities on the Year 2000 issue, such as the CIO Council. Direct accountability for assessing, renovating, validating, and implementing systems conversion, however, rests with USDA’s 31 component agencies, which include staff offices. The Secretary of Agriculture has required each component agency administrator to appoint an executive sponsor specifically accountable for Year 2000 issues, establish technical and program teams, ensure that an action plan is developed, and certify that critical agency systems are reflected in Year 2000 implementation plans. USDA’s component agencies have a great deal of work still to be accomplished in the next 19 months in making its mission-critical systems ready for the year 2000. As figure 1 indicates, for the 10 component agencies in our review, 250 mission-critical systems were initially assessed as compliant. As of this month 132 have been reported as repaired or replaced, while work remains to be completed on 596 mission-critical systems. Looked at another way, about 80 percent of the work remains for these component agency systems. In addition, about 42 percent of the reported 596 mission-critical systems awaiting action are to be replaced. This is cause for some concern, as replacement systems are often a high risk because federal agencies, and USDA in particular, have a long history of difficulty in delivering planned systems on time. Further, some USDA replacement systems are already scheduled to miss the March 1999 implementation deadline established by OMB and are at risk of not being compliant on January 1, 2000. For example: AMS’ planned replacement of its Marketing News Information System—which provides critical market information to producers, processors, and distributors of agricultural commodities throughout the United States—is currently not scheduled to be implemented until August 1999. Further adding to the risk of this tight schedule is the fact that AMS is currently not working on this and three other replacement systems (which are scheduled to be implemented in September 1999), pending approval by the CIO to do so. Although ARS plans to replace its existing Nutrient Data Bank System, it does not yet have a contract in place to develop it. Concerned that it may not meet USDA’s March 1999 deadline, ARS now plans to develop a contingency plan. In April 1998 Forest Service decided to delay agencywide implementation of the Foundation Financial Information System until October 1, 1999, because of significant unresolved issues related to its capabilities. Forest Service has not yet decided what to do about the over 20 existing applications that are scheduled to be replaced by the Foundation Financial Information System. In addition to these risks, we identified two agencies that were inaccurately reporting the number of compliant systems. GIPSA and RMA reported 1 and 14 systems, respectively, as compliant, even though these systems were under development or were planned. The GIPSA Year 2000 Executive Sponsor stated that the GIPSA system was reported as compliant because the system is replacing a manual process. According to the RMA Year 2000 Program Manager, RMA systems were reported as compliant because they were being developed as compliant. We do not agree with GIPSA and RMA. It is misleading to list systems as compliant when work is still to be completed. USDA’s Year 2000 Program Executive stated that he agreed that these systems should not be listed as compliant. At the same time that USDA is facing an enormous challenge to replace, repair, and retire its mission-critical systems, component agencies are beginning to report losses of information technology staff. While USDA has not performed a departmentwide assessment of its Year 2000 technology staffing needs and losses, several component agencies have recently expressed concern that the loss of staff will affect their ability to complete their Year 2000 programs. For example, FSA stated that it had lost 28 of 403 (7 percent) of its information technology staff between October 1997 and April 1998, and Forest Service officials said that they lost 12 information technology staff in the past 5 months.