Year 2000 Countdown...

By Richard McCaffery



In the last eight months, federal agencies have nearly doubled the number of computer systems that are year 2000 compliant, but lawmakers and private sector experts say the government isn't out of the woods and federal agencies will continue to feel the heat.

"Some agencies will make it, and some agencies won't," Sen. Robert Bennett, R-Utah, said about the government's March 30, 1999, deadline for all agencies to have their mission-critical systems repaired.

"I think we have to keep the heat on," said Bennett, chairman of the Senate Special Committee on the Year 2000 Technical Problem. "I'm comfortable we're not looking at a total disaster, but that doesn't mean we're on a glide path to success."

Rep. Steve Horn, R-Calif., whose report cards on the government's year 2000 progress are famous inside the Beltway, gave the government a D on its overall rate of progress as of Nov. 13. He failed five agencies: Health and Human Services, the departments of Energy, State and Justice and the Agency for International Development. He gave the Department of Defense a D minus.

"The picture is a gloomy one," Horn said late last month.

According to his latest report, 61 percent of the government's mission-critical systems were Y2K compliant as of Nov. 13, up from 35 percent Feb. 15. Horn estimates just 69 percent of the government's most important systems will meet the March 30 deadline, meaning 31 percent won't be fixed in time to ensure nine full months of testing.

Horn has asked that President Clinton and Vice President Gore address the problem more frequently, perhaps in fireside chats from the White House. Clinton first spoke in detail on the issue July 14 in a speech at the National Academy of Sciences in Washington.

The news isn't all bad, however. The Social Security Administration, which started its Y2K effort nearly 10 years ago, continues to lead the pack and expects to be 100 percent compliant by March 30. Horn also gave kudos to the Small Business Administration for completing renovation of its 42 mission-critical systems Sept. 30, six months ahead of schedule. The SBA, which plans to spend a total of $10.6 million fixing its systems, started Y2K work in 1995 and stepped it up last year.

"One reason we got an early start is we deal with loans that mature after the year 2000," said Lawrence Barrett, the SBA's chief information officer. The agency's computers will need to accurately calculate interest and payments on those loans for the year 2000 and beyond.

Seeds for the widespread year 2000 computer flaw were planted years ago when programmers formed the habit of writing dates with just two digits because it saved memory. The date 1967, for example, would have been written 67. The practice became standard, and as a result many computers won't recognize the year 2000.

The glitch could cause computer systems to process data incorrectly or shut down altogether, and could lead to problems ranging from malfunctioning security systems to rejected credit cards, lost files and delayed paychecks. Consider the Defense Department. It has 2,581 mission-critical computer systems, and just 52 percent of them were year 2000 compliant as of Nov. 13.

Edward Yardeni, chief economist at New York-based Deutsche Bank Securities Inc., has predicted a 70 percent chance of a global recession as a result of the year 2000 glitch. His prediction is based in part on the government's lack of progress.

Yardeni said the recession would start in January 2000, last a minimum of one year and be at least as serious as the 1973-1974 recession sparked by the Organization of Petroleum Exporting Countries (OPEC) oil crisis.

Bennett expects year 2000 damage to come in two waves. "My sense of smell is we will have a bump in the road in this country that will have a measurable impact but won't shut things down," he said. "There will be a more serious impact overseas that will wash back and affect us."

The U.S. government, with its 6,336 mission-critical systems and millions of lines of code, faces a massive challenge preparing for the millennium because of its reliance on computers.

John Koskinen, the Clinton administration's year 2000 czar, said the agencies' latest estimate for the total cost of fixing the year 2000 problem is now slightly over $6 billion, more than double the initial estimate of $2.3 billion in February 1997. But others place the price tag even higher, including the General Accounting Office, whose last estimate was $7.2 billion.

The issue has become a priority in every information technology department in the federal government. Departments like the Health Care Financing Administration (HCFA) have begun shifting funds away from other IT projects to deal with the year 2000 problem.

Some disagree with Horn's report cards and say the government is making good progress. Koskinen said he's never understood Horn's grading system, which estimates future progress according to past performance and uses "linear extractions."

"I am increasingly comfortable with the federal government part of this problem," said Koskinen, a former Office of Management and Budget official. Koskinen expects 85 percent to 90 percent of mission-critical systems to be fixed by the March 30 deadline and said "virtually all will be fixed by June 30."

Despite disagreeing with the Horn report, Koskinen said Horn's efforts have been successful. "He's done good work," Koskinen said.

Perhaps more than anything, the easy-to-read reports have raised awareness of the issue, Y2K experts say.

"Agencies pay attention to them," said Joel Willemssen, a director at the GAO who is leading that agency's year 2000 campaign.

Koskinen acknowledged that some agencies face major challenges. The departments of Energy, Defense and Health and Human Services have a lot of work to do, he said. Officials from those agencies are meeting monthly with Koskinen and the OMB.

Lawmakers and other experts are worried particularly about the departments of Energy and Defense and the HCFA, a division of the Department of Health and Human Services which oversees Medicare.

Horn blasted HCFA in his report, saying its lack of progress is the main reason Health and Human Services received a failing grade. Repair efforts must be stepped up dramatically or "failure of Medicare's systems is inevitable," he said. Just seven of HCFA's 100 mission-critical systems are compliant, according to the report.

Nancy-Ann DeParle, HCFA's administrator, shot back in a Nov. 23 statement that Medicare beneficiaries will receive health care services Jan. 1, 2000, "just as they have for the last 33 years."

HCFA has delayed other IT projects, hired independent experts, established a Y2K war room, rehired retired programmers and secured additional funding to complete repair work.

"Beneficiaries are depending on Medicare to cross the year 2000 finish line on time, and we intend to do that," DeParle said in her statement.

But Bennett, who has focused his attention on industry segments rather than specific federal agencies, said he's so worried about HCFA that he plans to closely monitor its progress.

"If HCFA isn't ready, the ripple effect through the entire health care industry will be very, very significant," he said. "It's the largest industry in the United States."

Many other agencies will be asked to testify before Bennett's committee in 1999 as the senator conducts a second round of hearings focusing on eight industry segments: utilities, health care, telecommunications, transportation, finance, general government, businesses and litigation. A schedule of the hearings has not been finalized.

At least one integrator working on the government's Y2K problem is optimistic about its chances of success.

"I think all the mission-critical work will get done," said Jerry Cranfill, Unisys Federal Systems' year 2000 program manager. "That's not to say there won't be hiccups, but I think they will be minor in nature."

Unisys Federal Systems has done year 2000 work for the Department of State, the Defense Department's Military Sealift Command, the U.S. Postal Service and the Department of Agriculture.

In September, the company completed a 14-month re-engineering project for the Department of State's Bureau of Administration, installing a new database and related system that are year 2000 compliant.