The Year 2000:

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Agencies' Year 2000 Denial Draws Derision

By Dennis McCafferty

Staff Writer

Sipping cups of kona coffee, a crowd of 300 infotech executives laughed as the federal plan to combat year 2000 software problems was likened to the five stages of dying: awareness, assessment, renovation, validation and implementation.

"We can get our systems to work for us, not against us," Sally Katzen, administrator of the Office of Management and Budget, assured the breakfast gathering in McLean, Va.

Infotech industry leaders remain deeply skeptical.

Until recently, they say, the federal government remained stalled at another stage of dying - denial - in correcting governmentwide software conversion problems. The collective evolutionary crawl to acknowledgment has left agencies woefully behind the curve to solving a potential crisis that private industry has been talking about for years.

A recently released OMB report indicates that most agencies didn't establish a plan to address the problem until late last year. Some, like NASA and Veterans Affairs, did so as late as last month. Although defense agencies are considered at the forefront in year 2000 issues, one defense official in charge of date-coded command systems scoffed just nine months ago at any hint that a situation existed, said an executive at a prominent integrator company.

Indeed, agencies touted to be ahead of the pack, such as the Social Security Administration, have not attacked the year 2000 problem with any concrete strategy, one infotech executive said, putting at risk massive Social Security check-handling systems. While denying the charge, SSA officials said all agencies have been directed to refer year 2000 media inquiries to OMB. The OMB doesn't have anyone besides Katzen to address the issue, and Katzen did not respond to requests for comment.

Meanwhile, private industry has already leaped to prevent year 2000 snafus and is grabbing the best available talent to do it. The federal government will be left with third-stringers to correct and test its systems and may have to pay generously to do so, company officials say.

Perhaps most serious of all, the OMB's fresh $2.3 billion projection is wildly low-balled, industry leaders say.

"It's so low, it's not credible," said Harris Miller, president of the 11,000-member Information Technology Association of America. "It doesn't even pass the laugh test."

The debate appears to be getting more attention from the U.S. Congress. The General Accounting Office released a report this month that flags the year 2000 situation as a high-risk area for government infotech. To prod the agencies into further action, Rep. James Sensenbrenner, R-Wis., chairman of the House Committee on Science, plans to hold a hearing in March. On Feb. 24, Rep. Steve Horn, R-Calif., chairman of a key technology panel, will hold a hearing at which several agency information chiefs will lay out year 2000 plans. Horn is also expected to announce the results of a rough survey of each agency's effort to manage year 2000 problems.

The year 2000 dilemma boils down to this: Programs built on two digits to describe a year will fail after the clock strikes midnight on Dec. 31, 1999. For instance, if a tax program is supposed to handle returns for the year 2003, the faulty technology will recognize the data as that dating to the year 1903, and you'll likely be waiting until the year 2103 before the whole mess gets straightened out.

So federal officials - who have indicated that everything operating from office elevators to missiles may be affected by the situation - are now looking at changing up to 15 billion lines of code to avoid disaster, industry officials say. While all indicate they'll have technology that is year 2000-compliant no later than December 1999, infotech leaders question that prediction.

At another conference this month, Navy Chief Information Officer Marvin J. Langston was cornered on his department's $90 million estimate to make his technology year 2000-compatible. The projection is much lower than other defense branches. In fact, the Air Force estimate is four times higher.

"[The Navy estimate] is either incredibly smart or incredibly stupid," Langston said, "and I don't know which it is."

There's a sense of disarray lingering throughout government corridors, a sentiment confirmed by infotech industry officials who are looking to make federal market inroads via year 2000 remedies. They've already targeted the likely losers if federal spending is dramatically shifted to year 2000 fixes without additional funds: Vendors selling software upgrades and other technology enhancements.

The biggest winners look like engineers well-versed in COBOL. So, like the retro-1970s revival of old disco songs, COBOL engineers are back in style and are commanding $150,000 salaries with $20,000 bonuses, said Susan Marshall, a research analyst on year 2000 issues with McLean, Va.-based Federal Sources Inc.

"Companies are signing them on even if they don't have the [federal] business yet," Marshall said. "And I think it's just going to get worse."

Addressing the year 2000 problem means more than changing lines of code, and many federal agencies just don't see the big picture, industry officials say. In fact, many indicate that code changes represent just a fraction of the price tag, perhaps one-quarter. Tracking down codes that need to be corrected and testing the results will cost the most. Then, there's dealing with system links to the new code lines.

"The question of responding has fallen on the federal systems applications engineers' laps," said Noel Goyette, technical director of the military systems center at El Segundo, Calif.-based Computer Sciences Corp. "But it exists in hardware, software and interfaces."

IBM Corp., for example, isn't modifying old mainframe systems such as the OS 390. So the system must be replaced with new software and hardware totaling more than $10 million, said George Haynes, research director on government for International Data Corp. in Hackensack, N.J.

The Treasury estimate is second largest at $318.5 million. But that includes the IRS, which has undergone a public struggle to pinpoint the cost of meshing year 2000 fixes,
tax code changes and efforts to modernize its systems.

"Unfortunately, a cold dose of reality is needed to get people to realize they need help," Haynes said.

The ITAA's Miller and many others say the government is naive in thinking it can correct the technology on existing budgets. The government's $2.3 billion estimate, for example, doesn't even count its share of costs for state system programs such as welfare that are linked to federal computers.

Indeed, industry estimates to make federal technology compliant are three to 30 times higher. Gartner Group, the Stamford, Conn.-based market research company, estimates the cost at $30 billion. That's six times larger than the recently awarded Defense Information Systems Agency megacontract.

"Everyone in private industry knows they're going to have to use additional resources to handle the problem," said Miller, whose association represents the public policy views of the infotech industry. "But the government, which should be a leader, just says it's going to
use existing resources. It sends the wrong
message."

Although the government estimates year 2000 code corrections cost roughly $1.10 a line, private industry is offering $2 a line and the price is going up. This puts companies such as PRC Inc. of McLean, Va., in the prickly position of foregoing more lucrative business opportunities to remain faithful to its federal client base. Companies like PRC, which is marketing solution offerings such as Viasoft's US2000 as an alternative to code changes fixed by human hand, would like to see the federal government come closer to private industry on price.

"Even though in the next three years, we can do better going somewhere else, we won't do that," said Tony Manganello, the PRC executive now overseeing year 2000 preparedness assignments. "It's not our schtick."

Other companies are more than willing to look elsewhere.

"We're turning a jaundiced eye toward the federal marketplace," said Allen Smith, year 2000 business manger at Science Applications International Corp., San Diego. "It's not to say we're ignoring the federal government. We're taking steps to educate them. It's just that the government is proceeding slowly."

Staff writer Neil Munro contributed to this report.

Year 2000 Cost Estimates
Agency Total ($ millions)
Agriculture $ 89.2
Commerce $ 89.7
Defense
Air Force $ 371.0
Army $ 218.0
Navy $ 90.0
Defense-Other $ 290
Energy $ 128.1
HHS $ 90.7
State $ 135.2
Transportation $ 80.4
Treasury $ 318.5
Veterans Affairs $ 144
Total Government $ 2,292.4
Source: Office of Management and Budget

The Year 2000:

A Business Bonanza

Even as the alarms are being sounded, industry leaders view the year 2000 as a big opportunity in the federal market. Companies are now just beginning to push designated "big fix'' products to federal agencies.

Computer Associates International Inc. just snagged a 1997 Product of the Year award from Datamation magazine with its Discovery 2000 Solution, which tracks where the codes are that must be corrected. That's expected to save the government tremendous costs on COBOL-oriented programmers, whose traditional $40-an-hour fees have tripled and are expected to keep surging.

Or take Viasoft Inc. of Phoenix, which views its US2000 as a way to improve upon its federal market share, and is negotiating with five federal agencies. Federal work
accounted for just 5 percent of Viasoft's $45 million in annual revenues last year. Viasoft's decision to charge the government only maintenance cost to use US2000 - saving 88 percent more than commercial customers - is a clear indication of its eagerness to establish a presence. Company Vice President Kevin W. Schick calls the tactic "the anti-Christ of the vendor world.''

"When you talk about setting the bar,'' Schick said, "we just set it so you can step over it. Now, we're asking the competition to lower the bar again.''

-Dennis McCafferty

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