[Senate Hearing 105-777]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 105-777


 
                       TRANSPORTATION AFTER Y2K:
                      CAN WE GET THERE FROM HERE?

=======================================================================

                                HEARING

                               before the

                        SPECIAL COMMITTEE ON THE
                      YEAR 2000 TECHNOLOGY PROBLEM
                          UNITED STATES SENATE

                       ONE HUNDRED FIFTH CONGRESS

                             SECOND SESSION

                                   on

    DEFINING THE SCOPE AND SEVERITY OF THE YEAR 2000 PROBLEM IN THE 
                        TRANSPORTATION INDUSTRY

                               __________

                           SEPTEMBER 10, 1998

                               __________

                  Printed for the use of the Committee


 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 senate

                               -----------

                    U.S. GOVERNMENT PRINTING OFFICE
51-127 cc                   WASHINGTON : 1998

_______________________________________________________________________
 For sale by the Superintendent of Documents, U.S. Government Printing 
                                 Office
                          Washington, DC 20402





                        SPECIAL COMMITTEE ON THE
                      YEAR 2000 TECHNOLOGY PROBLEM

         [Created by S. Res. 208, 105th Cong., 2d Sess. (1998)]

                   ROBERT F. BENNETT, Utah, Chairman
JON KYL, Arizona                     CHRISTOPHER J. DODD, Connecticut,
GORDON SMITH, Oregon                   Vice Chairman
SUSAN M. COLLINS, Maine              JEFF BINGAMAN, New Mexico
TED STEVENS, Alaska, Ex Officio      DANIEL PATRICK MOYNIHAN, New York
                                     ROBERT C. BYRD, West Virginia, Ex 
                                         Officio
                    Robert Cresanti, Staff Director
              T.M. (Wilke) Green, Minority Staff Director

                                  (ii)


                            C O N T E N T S

                                 ------                                

                 OPENING STATEMENT BY COMMITTEE MEMBERS

Robert F. Bennett, a U.S. Senator from Utah, Chairman, Special 
  Committee on the Year 2000 Technology Problem..................     1
Christopher J. Dodd, a U.S. Senator from Connecticut, Vice 
  Chairman, Special Committee on the Year 2000 Technology Problem    11

                              PRESENTATION

Paul Hunter, professional staff, Special Committee on the Year 
  2000 Technology Problem........................................     4

                    CHRONOLOGICAL ORDER OF WITNESSES

Hon. Mortimer L. Downey, Deputy Secretary of Transportation, 
  Department of Transportation...................................     6
Hon. Jane F. Garvey, Administrator, Federal Aviation 
  Administration.................................................    13
Charles Feld, chief information officer, Delta Airlines..........    14
Deborah A. Freedman, senior vice president, SABRE Technology 
  Solutions......................................................    16
Paige Miller, commissioner, Port of Seattle......................    19
Joyce Wrenn, vice president of Information Technology and chief 
  information officer, Union Pacific.............................    34
Scott Skillman, vice president and chief information officer, 
  Crowley Maritime Corp..........................................    36
Chris Lofgren, chief technology officer, Schneider National......    38
Robin C. Stevens, chief, Year 2000 Compliance, New York 
  Metropolitan Transportation Authority..........................    40

                                APPENDIX
              Alphabetical Listing and Material Submitted

Bennett, Hon. Robert F.:
    Statement....................................................     1
    Prepared statement...........................................    53
Dodd, Hon. Christopher:
    Statement....................................................    11
    Prepared statement...........................................    54
Downey, Hon. Mortimer L.:
    Statement....................................................     6
    Prepared statement...........................................    55
    Responses to questions submitted by Chairman Bennett.........    57
Feld, Charles:
    Statement....................................................    14
    Prepared statement...........................................    60
    Responses to questions submitted by Chairman Bennett.........    61
Freedman, Deborah A:
    Statement....................................................    16
    Prepared statement...........................................    62
    Responses to questions submitted by Chairman Bennett.........    66
Garvey, Hon. Jane F.:
    Statement....................................................    13
    Prepared statement...........................................    68
    Responses to questions submitted by Chairman Bennett.........    70
Hunter, Paul:
    Statement....................................................     4
    Prepared statement...........................................    75
Kyl, Hon. Jon: Prepared statement................................    78
Lofgren, Christopher B.:
    Statement....................................................    38
    Prepared statement...........................................    78
    Responses to questions submitted by Chairman Bennett.........    81
Miller, Paige:
    Statement....................................................    19
    Prepared statement...........................................    82
    Responses to questions submitted by Chairman Bennett.........    83
Skillman, Scott:
    Statement....................................................    36
    Prepared statement...........................................    84
    Responses to questions submitted by Chairman Bennett.........    88
Smith, Hon. Gordon: Prepared Statement...........................    89
Stevens, Robin C.:
    Statement....................................................    40
    Prepared statement...........................................    90
    Responses to questions submitted by Chairman Bennett.........    93
    Excerpt from Year 2000/Millenneum Project--September 1998....    95
Wrenn, Joyce:
    Statement....................................................    34
    Prepared statement...........................................    98
    Statement of Edward R. Hamberger, president & CEO, 
      Association of American Railroads..........................   101
    Responses to questions submitted by Chairman Bennett.........   103

              Additional Material Submitted for the Record

Statement of:
    American Trucking Associations, Inc..........................   105
    CSX Corporation..............................................   108
    Stephen Roberts, chief information officer, Information 
      Technology Service Center of the National Passenger 
      Railroad Corp..............................................   109


                       TRANSPORTATION AFTER Y2K:
                      CAN WE GET THERE FROM HERE?

                              ----------                              


                      THURSDAY, SEPTEMBER 10, 1998

                               U.S. Senate,
                 Special Committee on the Year 2000
                                        Technology Problem,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 9:32 a.m., in 
Room SD-192, Dirksen Senate Office Building, Hon. Robert F. 
Bennett (chairman of the committee), presiding.
    Present: Senators Bennett, Smith, and Dodd.

  OPENING STATEMENT OF HON. ROBERT F. BENNETT, A U.S. SENATOR 
    FROM UTAH, CHAIRMAN, SPECIAL COMMITTEE ON THE YEAR 2000 
                       TECHNOLOGY PROBLEM

    Chairman Bennett. The committee will come to order. This is 
the committee's sixth hearing on the Year 2000 technology 
problem. And as in our past hearings which we have held on 
energy, utilities, health care, telecommunications, and 
financial institutions, I think we have assembled an excellent 
set of witnesses. I compliment the staff and thank the 
witnesses for their willingness to be here.
    I look forward to the help of the witnesses in defining the 
scope and severity of the Year 2000 problem in the 
transportation industry. Today we are going to explore the 
obvious safety and convenience concerns for the traveler as 
well as the potentially paralyzing effect the millennium bug 
could have on businesses that are increasingly reliant on 
technology, and just-in-time inventories and prompt 
transportation of manufactured goods to the marketplace.
    We will also be releasing the results of a staff survey on 
the transportation industry that is very disturbing. We will 
lead off with that in our testimony. Let me begin by noting the 
obvious which is that transportation is the life line of our 
global economy. Everyday thousands of American corporations and 
businesses depend upon air, rail, maritime shipping, trucking 
and mass transit to deliver safely, reliably, and economically 
millions of people and goods essential to their operations.
    There are 13 major and over 50 regional U.S. airlines, 7 
long-haul and more than 500 short-haul railroads, over 80,000 
trucking companies, about a dozen U.S.-flag-maritime shippers, 
and about 6,000 transit agencies that generate more than $500 
billion in revenues. And more importantly, they support 
businesses generating many billions more in revenues. A Year 
2000 related disruption within transportation could be more 
debilitating than any major corporate strike.
    I am concerned that the transportation sector as a whole 
may not be able to transition through the millennium without 
major disruptions. That is not to say that most of the 
individual companies that make up the sector are not working 
hard to correct the problem. It is rather that the 
interdependencies of these companies and their partners and 
suppliers, both foreign and domestic, make the transportation 
sector extremely complex, and thus the Year 2000 issue is very 
difficult to address.
    And one example of automation in the transportation sector 
is the global positioning system, GPS. Simple receivers such as 
this one have revolutionized navigation in maritime shipping. 
This device makes it possible with pinpoint accuracy, and I 
assure I did not do it [Laughter.].
    So it is probably correct, makes it possible to determine 
one's location anywhere in the globe and I can tell you that 
this hearing room is precisely at 38 degrees, 53 minutes, and 
32 seconds north latitude, and 77 degrees, 00 minutes, and 21 
seconds west longitude. It makes me sound like I really know 
what I am talking about. GPS use is increasing everyday in the 
transportation industry to track freight, trucks, rail cars, 
and stranded motorists. However, while the satellites and 
ground stations will be ready, there are over 60 manufacturers 
of receivers like this one used in thousands of applications, 
and we cannot be sure which of those manufacturers will have 
the hand-held systems Y2K ready. This one is likely to be 
because we borrowed it from the military, but the proliferation 
of the use of these devices is one example of how dependent on 
technology transportation has become.
    Now I will share with you some of the complicated Year 2000 
issues facing the transportation industry. If tomorrow were the 
Year 2000, the airline industry would not be ready. This does 
not mean that airplanes would fall out of the sky. That is one 
of the myths that has come around about the Year 2000, but 
there are serious problems facing the industry and first and 
foremost, of course, is flight safety. Jane Garvey, whom we 
will hear from today, shoulders the herculean task of making 
sure that the FAA's systems, air and ground traffic control, 
will be ready for the Year 2000.
    But that is only part of the airlines' problems. The 
airlines, airports, and all of the suppliers and partners that 
they depend on must also be ready. Critical systems such as 
aircraft maintenance, passenger ticketing, reservation systems 
could fail and cause reduced capacity, flight delays, 
cancellation and consumer discord. Airport runway lighting 
systems, firefighting equipment, building and jetway security 
systems, parking systems, or even the pipeline that supplies 
jet fuel to the eastern seaboard could all cause closure of 
some of our busiest airports if Year 2000 problems are not 
aggressively addressed and solved.
    I am concerned because the survey being conducted by the 
Air Transport Association shows that 38 percent of the airports 
surveyed do not have a Year 2000 plan. The other transportation 
modes also have serious Year 2000 problems. Maritime ships have 
over the years become more highly automated as have the ports 
and equipment used to offload cargo. It is of no use to have 
the ship arrive on time and be unable to be unloaded or unable 
to dock. Many shippers are concerned about whether the U.S. 
Customs Service systems used to clear freight will continue to 
operate and ensure the uninterrupted flow of imports and 
exports, and then they are also concerned about the ability of 
the Coast Guard to ensure safe operation within ports if their 
systems are not Y2K ready.
    Let me take the opportunity to clear up another Y2K myth, 
one frankly that I have helped spread out of ignorance for a 
little while until I became better informed. The railroads 
assure us that the computers can be overridden and that rail 
switches can indeed be manually switched in contrast to earlier 
reports by individuals who said that could not happen. 
Nonetheless, the railroads face significant challenges with 
their train control systems as well as their dispatching and 
scheduling systems.
    City officials face significant problems with traffic 
lights, easy-pass toll systems, traffic monitoring systems that 
help us avoid gridlock in cities. The New York Transit 
Authority, which we will hear from today, has 6 million riders 
a day, and they must address Y2K issues in mass transit, bus 
and subway ticketing systems as well as systems integral to the 
operation of the subway itself.
    Finally, we are releasing today the results of a survey 
conducted by the committee staff to assess the overall 
preparedness of the transportation sector. We undertook this 
survey because as is the case in previous hearings, we found 
that such assessments are not available from any other source, 
public or private. And the charts displayed show the results of 
the survey and frankly they are a little disturbing.
    First, we targeted a total of 32 airlines, airports, 
railroads, maritime shippers, trucking companies, 
transportation, metropolitan transit authorities and so on, and 
despite well over 100 phone calls to offer assistance and 
encourage results, which probably made us into something of a 
pest, particularly to those who were helping us, only 50 
percent responded. That is the 16 companies whose results are 
displayed on the table and, of course, the results of the 
survey will be available to everyone.
    We made the survey simple. I can only conclude that those 
who did not respond were either unaware of the severity of the 
problem or embarrassed on their lack of progress. Now, as you 
can see from the table, if you get into the details--I 
recognize that in the audience you cannot read it from there, 
but we will have a summary for you--only one-third of the 
companies who responded--understand what I am saying here now--
only half of the people we went after responded, and only one-
third of those that responded have completed assessment of 
their systems. This is a task that should have been finished a 
year ago.
    In addition, only one-half, again only one-half of those 
that have responded have begun any contingency plan. Keep in 
mind that we went after the leaders in the industry, those with 
vast resources. So presumably those that we did not survey are 
behind those that we have. And this gives us great pause. The 
hard part is yet to come: the testing and final implementation 
of Y2K solution. And I am forced to conclude that there may be 
significant interruptions in the transportation industry.
    I have often said that the three places I do not want to be 
on January 1, 2000 are in an airplane, a hospital or an 
elevator. I think maybe Ms. Garvey can make me feel a little 
bit better about the airplane in U.S. airspace. I still do not 
want to be in an airplane overseas. But I have not changed my 
mind fully. I hope the witnesses today will help me do that.
    To summarize better than I have the findings of this 
survey, we have asked Paul Hunter, who is on the professional 
staff of NASA, and he is a detailee to the committee--and we 
are very grateful that NASA has made him available to us--to 
give us a snapshot summary of the survey and the points that it 
made. Mr. Hunter, if you would proceed.

STATEMENT OF PAUL HUNTER, PROFESSIONAL STAFF, SPECIAL COMMITTEE 
                ON YEAR 2000 TECHNOLOGY PROBLEM

    Mr. Hunter. Thank you, Senator. As you pointed out, this is 
the work of the committee staff. I have prepared some brief 
oral remarks but we have prepared a more detailed written 
assessment we would like to submit for the record.
    [The prepared statement of Mr. Hunter and the survey 
results can be found in the appendix.]
    Mr. Hunter. The committee undertook this survey because as 
you mentioned, it is very difficult to get a cross-cutting and 
thorough analysis of any of these sectors of the economy that 
are susceptible to Y2K problems. So we attempted to try to----
    Chairman Bennett. Pull the microphone a little closer.
    Mr. Hunter. Excuse me, Senator. We attempted to obtain a 
snapshot of the readiness of the major players in the 
transportation sector. Our approach to do this was to conduct a 
confidential survey of major players in significant segments of 
the transportation industry which would include the airlines, 
the airports, railroads, shipping, trucking firms, and the 
metropolitan transit authorities. As you mentioned, we did 
attempt to target 32 organizations, which was roughly about 5 
or 6 per significant transportation mode and, as you also 
mentioned, we had received, as of yesterday afternoon a total 
of 16 responses.
    Now if I may refer to the charts that are on the left side 
of the room, my left side, from left to right, these charts are 
a summary of the survey. The survey was actually 21 questions 
and this survey is similar to the survey that was released on 
the utility industries. As we promised anonymity, we only 
identify companies by company type. Then from left to right, 
there is a column for the date that they became aware of Y2K 
problems and the date that they established their formal 
projects. There is a question as to whether or not they have 
completed their assessments and identification of how many of 
their systems they identified as mission critical.
    Then we touched upon the partnership and relationships 
aspects of the Y2K problem and we asked them whether they have 
been contacting their service providers and vendors. Next, we 
touched upon the legal and liability issues, and this question 
was a little bit more narrowly defined than general legality. 
The question was more to the effect are you concerned that a 
failure on the part of a service provider or partner will lead 
to legal liability on your part?
    We then asked whether or not contingency plans were 
complete at this time, whether or not they had been contacted 
by creditors or investors on their Y2K preparations and plans, 
and then finally will they finish on time?
    The response rate, if I might briefly summarize, was that 
about 62 percent of them had not at this time completed their 
assessment phase, which is disturbing, given that we have a 
little bit over 15 months before midnight December 31, 1999, 
and for point of reference, the Office of Management and Budget 
had directed the Federal agencies to complete their assessments 
by June 1997, over 1 year ago. So if we use the Federal 
guidelines for comparison, we would consider that given the 
lack of assessment being completed at this time, these parties 
are very late.
    I also point out that no respondent has completed their 
contingency planning, but even worse the reports indicate that 
over half had not even begun their contingency planning. This 
is significant. It indicates that they will be very late making 
contingency decisions. Fifty percent of the returns indicated 
some expectations of lawsuits and as I mentioned, it is more 
common to expect a failure from this survey on the part of a 
partner or service provider than on self-failure.
    We also captured the total Y2K costs of 15 of the 16 
parties and they reported a total of over $650 million for 
these 15 parties. We actually anticipate that being somewhat 
low although these are the figures reported. One of the reasons 
for this statement is that we saw wide variations in the costs. 
We actually discussed this with a few of the people/parties 
during the interviewing process in preparation for these 
hearings, and we found differences in the way that Y2K cost 
accounting is done.
    We asked the parties surveyed what would they recommend 
that the Congress do to get the country and the transportation 
sector ready for the Y2K millennium change? The most common 
response was a request for safe harbor or good samaritan 
legislation to protect those parties that are sharing 
information on the Y2K problem from product disparagement and 
other types of lawsuits. The next most common request was some 
sort of liability protection for parties executing due 
diligence in preparing for the Y2K event.
    Finally, there were several times that it was mentioned 
that Congress should promote the discovery and dissemination of 
valid and accurate Y2K information such as you just did in your 
opening remarks with regard to the railroad switches. And then 
the last item that was mentioned more than one time was that 
Congress should continue oversight of Federal agencies, power 
utilities, telecommunications, and other service providers that 
are in general very important to a broad cross section of the 
country.
    That concludes my remarks, Senator. I will be happy to take 
any questions you might have.
    Chairman Bennett. Thank you very much. We appreciate that 
and stay available because we may very well have questions for 
you.
    We would like to go now to our panel of witnesses. Because 
the transportation sector is so diverse, we have had a 
difficult time selecting the witnesses because we could have so 
many. We have talked to over 100 people in preparation for the 
hearing, and we think we have assembled the right set of 
formidable witnesses. We have invited witnesses from some of 
the biggest stakeholders in the transportation world and some 
with the best Year 2000 programs in the history.
    We have tried to be as objective as possible in our 
hearings and not resort to finger-pointing. We have on occasion 
perhaps made some witnesses a little uncomfortable and that is 
not our purpose; we are not trying to beat up on anybody. I 
must say that I feel disappointment at some corporations who 
were invited to come and for whatever reason decided that they 
would not come, and because I do not want to beat up on anybody 
I will not use any names. But the problem is so serious and 
involves the nation, indeed the world, in such a serious way 
that I am disappointed when someone who does have information 
that could be shared with this committee and through the 
committee with others decides that they will not participate 
when invited.
    And I would hope that the absence of representatives from 
these companies genuinely indicates a busy schedule rather than 
demonstration of where they think the importance of Y2K really 
is. We will revisit the transportation issue next year and I 
would hope these people would then respond to an engraved 
invitation and I would expect that they would then appear.
    Now having said that, I want to welcome today's witnesses. 
As I said, we are very pleased with the group that we have 
assembled and very grateful that each one of them is willing to 
come be with us. We will begin with Hon. Mort Downey, Deputy 
Secretary of the Department of Transportation, and Mr. Downey 
has been asked to set the scene for the hearing by discussing 
the level of automation in the transportation industry. Sir, we 
are very grateful to you for your willingness to do this and 
welcome you to the committee.

   STATEMENT OF HON. MORTIMER L. DOWNEY, DEPUTY SECRETARY OF 
          TRANSPORTATION, DEPARTMENT OF TRANSPORTATION

    Mr. Downey. Thank you, Mr. Chairman. It is a pleasure to be 
here and certainly we value the relationship we have with the 
committee in working on this issue which we really have to be 
in a partnership to achieve what we need to do.
    Chairman Bennett. Excuse me. I should make the point that 
Senator Dodd, the vice chairman of the committee, is having 
transportation problems this morning.
    Mr. Downey. Hopefully we did not cause them.
    Chairman Bennett. I do not know who caused them, but with 
the wonders of modern communication, he can tell us what we 
would have guessed a few years ago: he is stuck in traffic and 
will be here as quickly as he can. Go ahead, sir.
    Mr. Downey. Thank you, Mr. Chairman. And I have a written 
statement that I would like to provide for the record, if I 
could just summarize it.
    Chairman Bennett. Without objection.
    Mr. Downey. I think a hearing like this will be very 
helpful in our efforts in getting awareness of the problem, 
especially at the senior management levels in the American 
corporations and public agencies. That is the key really to 
success is getting senior management committed to the progress 
that needs to happen.
    There are many, many, as we know, computer-based 
improvements to our transportation system that have been put in 
place over the last two decades. They have made it far more 
efficient. Just-in-time deliveries, intelligent transportation 
systems, improved highway flows--most mornings--a lot of things 
have been done to make the systems safer and even more things 
will happen in the future, but all of them put the Achilles 
heel in place of the Y2K problem: will they continue to 
function or will they be a burden when the Year 2000 comes? 
That is why we put such a high priority within our Department 
to dealing with the issue.
    Just to summarize quickly where we are within the 
Department although I know the focus is primarily industry, we 
are making good progress. Our assessments are complete, have 
been complete for many months. We have completed repair of our 
own systems to the extent of 46 percent of the Department's 
mission critical systems. They are renovated, they are tested, 
they are certified. Our inspector general has reviewed them and 
given us comfort that it is done, and we believe we will 
substantially meet the next milestone which is 100 percent 
completion or renovation by September 30, leaving us the 
balance of the time before next January to focus on testing and 
on implementation, which really has to be going forward.
    All of our senior administrators in the Department, and you 
will hear later this morning from Ms. Garvey, are committed to 
this as their top priority. The Secretary and I are personally 
involved in it, and as I said, our inspector general is being 
very much a part of the team in assuring that whatever we are 
reporting, whatever we are saying, is, in fact, a fair 
representation of the situation at the time. So that when we 
issue a report to you or to OMB, this is documented and 
verified and hopefully gives us the direction where we need to 
go.
    But our broader concerns and something that now we feel 
that we have got the Department, at least, in a management 
sense moving forward, is what happens broadly in the system. We 
are working with other Federal departments through John 
Koskinen's council, which I personally participate in, to get 
all of the Federal agencies in all of the sectors recognizing 
their interrelationship, recognizing the steps we have to do.
    We have safety regulatory authority. In most of our modes 
it focuses on results. We do not tell precisely step by step a 
railroad or a transit agency how to assure safety in their 
system, but we want to be sure that they are doing the right 
things, and this is another area where we need to be sure they 
are proceeding. That requires awareness. It requires corporate 
responsibility. We are now conducting outreach, as you have 
done, to identify progress in the transportation sectors and to 
determine how best we can support their repair efforts.
    Let me summarize some of the cross-cutting issues. As your 
survey found as well, many private companies are reluctant to 
report or share information out of fear of liability. So 
surveys are incomplete or sometimes over-optimistic. Some 
sectors, airports and shipping in particular, are just emerging 
in their awareness of the problem, which means we need to do 
more in the way of outreach. Foreign airlines and foreign 
shipping companies, especially those from less developed parts 
of the world, are particularly limited in the steps that they 
have taken, and they are also short of the resources to deal 
with the problem.
    Many large enterprises, and I certainly include all of the 
U.S. airlines in that category, have their active repair 
programs in place, but like small businesses in other sectors 
many transportation suppliers and smaller operators are behind 
the curve. Our dependence on other sectors such as energy and 
telecommunications also means that even if we had all of our 
job done, we still may have transportation problems. That is 
one of the reasons why the President's Council is looking at 
broad-based contingency plans, not just Energy saying it is not 
our problem or Transportation saying it is not our problem. We 
recognize it as a mutual problem. We need to deal with it in 
that way.
    Finally, in terms of cross-cutting issues, there has been 
uncertainty about embedded chips in all of the transportation 
uses, and while we certainly cannot say we have run them all to 
the ground, in most cases in the transportation equipment and 
transportation systems, the chips seem to be event oriented. 
They focus on operating cycles. How many times has the engine 
been started? How many times, how many hours has the aircraft 
flown, as opposed to dates, so that while we are not out of the 
woods completely, we think this will be less of a problem than 
we had first anticipated but not totally resolved as yet.
    We are taking steps to assist our partners. As I said, we 
have met with industry associations, with businesses in every 
sector. We have held forums on aviation, on maritime, on rail, 
on pipelines and on surface transportation. And we will do more 
of that as the year goes on. We have reached out globally 
through the global aviation and maritime organizations. The 
Secretary has raised the issue at the European Conference of 
Ministers of Transport. He has raised it in his travels in 
Africa. I raised it in Asia earlier this year. So we are doing 
outreach with other countries. We will have a Year 2000 
transportation website. We have issued a brochure of guidance 
for the operators of intelligent transportation systems, the 
traffic control systems, identifying what they should do.
    We have issued guidance with respect to the use of Federal 
highway and transit and airport funds and where those dollars 
are made available to States, to localities, to airport 
operators. There are uses for Y2K compliance that are permitted 
and we are certainly encouraging those agencies to use our 
dollars to get this job done. There are other things they might 
want to invest in. They will always have a second chance at 
those. They will not have a second chance at getting the system 
fixes in place.
    You referred to the global positioning system earlier. We 
have been working with the Defense Department. We at DOT are 
the liaison with Defense on all civil uses of GPS. We have 
found that the safety certified receivers are Y2K compliant, 
will work. They also will work through next August rollover of 
the date on the GPS satellites, but some of the lower-end 
consumer receivers may be a problem. We are advising users 
through our Coast Guard outreach that they should contact 
manufacturers. This is an area certainly where better ability 
to share information will be very helpful. We would like to be 
able to broadly make that information available.
    We are working on contingency plans with each of the modes 
and we will use our existing authority where necessary to 
ensure transportation safety. If we have to step in to restrict 
or even shut down operations because we are concerned about 
safety, that will be our first priority in any mode of 
transportation.
    Let me conclude with some comments, as requested, what 
Congress might do that could help in the partnership to get 
this done. I certainly would hope that Congress will pass the 
proposed good samaritan legislation. We have heard this from a 
number of people in the transportation sector. They need that 
protection to be able to share information. The ability to 
share information will be critical in resolving the issues.
    I also certainly hope that Congress will enact the 
president's proposed contingent emergency funding supplemental 
to meet needs over the next year for our internal activities. 
It will give us the flexibility to respond not only to what we 
know we need to be but to things I am certain we will find that 
we need to do over the coming year.
    And third, I would ask that Congress be cautious in 
considering any new legislation to mandate specific steps. It 
is too late. It would be too late for us to issue regulations 
to say how to do this or to pass laws how to do it. We really 
need to work with industry on how to achieve the response. And 
also that we consider the impact of any other legislation on 
the Y2K effort. I have just issued a memo within the Department 
saying with respect to any new regulations that we have in the 
pipeline, analyze their impact and be sure we are not putting a 
burden on industry that takes away their attention from solving 
this problem. So if there are things that would require system 
reprogramming and they are postponable, we are saying make them 
effective late in 2000, early in 2001, but do not dilute the 
effort on compliance.
    And finally, Congress and the administration and business 
leadership have to continue the effort to raise awareness with 
our constituencies, with the general public. If we do that, if 
we do, as you have done this morning, give assurances where 
rumors have begun to spread, that we knock those down, but also 
pay attention to what really needs to get done, it is a major 
effort. I am certain we will not get 100 percent of it all 
across the country in every transit system, in every railroad, 
in every operation, but I think we will get enough to maintain 
the flow of commerce, the convenience of moving passengers, and 
most importantly the safety of the system which I think has to 
be our first goal and we certainly look forward to working with 
you, Mr. Chairman, on this issue.
    [The prepared statement of Mr. Downey can be found in the 
appendix.]
    Chairman Bennett. Thank you very much. That was very 
helpful. Let me comment on the congressional issues that you 
raised. On the good samaritan legislation, we have given the 
assignment on this committee to Senator Kyl, who sits on the 
Judiciary Committee, and he reports to me that there is good 
progress. We do expect that there will be some kind of 
legislation moving out of the Judiciary Committee very quickly.
    This committee, as you know, has no legislative authority. 
We can only recommend to the legislative committees, but 
Senator Hatch will be introducing a bill, I am told by Senator 
Kyl, and it will maybe even move without a hearing out of that 
committee as quickly as possible.
    Mr. Downey. We certainly would like to help as much as we 
could on that.
    Chairman Bennett. Yes. We feel good about that. The funding 
supplemental, of course, we are very focused on, and one of the 
advantages of this committee is that we have both the chairman 
and the ranking member of the Senate Appropriations Committee.
    Mr. Downey. And a key member of our Appropriations 
Subcommittee as well.
    Chairman Bennett. Yes. And it always helps to have that 
kind of pipeline into the appropriations process. Finally, I 
congratulate you on your willingness to put a moratorium on new 
regulations. The SEC has announced the same thing with American 
businesses, that the SEC will not be issuing any new 
regulations for now until the Year 2000 that would require 
diverting resources from the Year 2000 problem to reprogramming 
for those regulations. And I am delighted that you are doing 
the same kind of thing and congratulate you on that.
    Mr. Downey. If we have any issues where a safety matter 
would require the issuance of a reg, we would do it, but other 
than that it is clearly something that we would like to 
postpone.
    Chairman Bennett. Just an editorial comment. We may 
discover in the whole Government that the moratorium on 
regulations is a good idea, quite separate and apart from Y2K. 
Sorry. I could not resist that.
    We have been joined by Senator Smith and Senator Dodd. And 
they arrived in that order. Senator Smith, do you have an 
opening statement?
    Senator Smith. I do, Mr. Chairman. I will not take the time 
to read it but would ask that it be included in the record.
    Chairman Bennett. Without objection.
    Senator Smith. I would just comment how pleased I am that 
Union Pacific is one of the companies here that will be 
testifying. I say that because this is a great company, a 
railroad that services 23 States. It has recently gone through 
a merger with the Southern Pacific. That merger has been more 
problematic than I think they ever imagined, in part over 
computer issues in merging two companies. So I actually think 
we can learn a great deal from their experience and the 
disruption that that has caused to inventories, employment, and 
backups all over this country. And I hope that they will speak 
to that because I think there are many lessons to be learned 
there. Thank you.
    [The prepared statement of Senator Smith can be found in 
the appendix.]
    Chairman Bennett. Thank you. Senator Dodd, we announced 
that you were a case study for transportation problems this 
morning.
    Vice Chairman Dodd. Yes, classic one.
    Chairman Bennett. Classic one.
    Vice Chairman Dodd. Rock Creek Park.
    Chairman Bennett. We are delighted to have you. Do you have 
an opening statement?

 OPENING STATEMENT OF HON. CHRISTOPHER J. DODD, A U.S. SENATOR 
FROM CONNECTICUT, VICE CHAIRMAN, SPECIAL COMMITTEE ON THE YEAR 
                    2000 TECHNOLOGY PROBLEM

    Vice Chairman Dodd. Thank you, Mr. Chairman, and I do have 
a few remarks I would to share, but also let me commend you 
once again for the tremendous job you are doing here chairing 
this effort that is examining the full ramifications and 
aspects of this issue and, as you said on numerous occasions, 
our fervent hope is that this entire effort will prove that, in 
fact, nothing significant happened or happens on January 1, 
2000, but I think most people would agree that one of the 
reasons that may be the case is because we have insisted that 
various sectors of our economy pay attention to this issue 
early, and as each day goes by, of course, the date gets 
closer. So I am particularly grateful to you for those efforts.
    We had a series of very important and I think informative 
hearings up to this point covering utilities and banking, 
finance, telecommunications, and health care. They have been 
important, I think, and quite frankly, I have been heartened 
and at times concerned, both emotions, as to the level of the 
Year 2000 preparedness. Indeed, some agencies and some 
corresponding industries are well along their way to becoming 
ready for January 1, 2000. Yet, I think it is important that we 
state that very clearly, many are not or rather have been very 
slow to commit the necessary resources to meet this mammoth 
challenge.
    The potential repercussions and disruptions due to 
inadequate Year 2000 preparation to our industry, commerce, and 
financial systems become readily apparent, I think, and are 
extremely important. However, there are some industries and 
sectors where a failure in mission critical systems is bone 
chilling. One of these areas became apparent during this 
committee's health hearing. In that hearing, you will recall 
the critical nature of medical devices, for example, whether a 
cardiac monitor would function, was apparent to everyone.
    Today's hearing covers some similar critical ground. 
Perhaps the most frequently asked Y2K question concerns whether 
our airlines will fly and fly safely in the minute past 
midnight on January 1, 2000? However, inherent in this question 
is a thousand other questions that relate to airports, 
navigational systems, airline maintenance, airport security, 
just to name a very few. The transportation sector is not just 
whether or not our planes are going to fall out of the sky, but 
whether goods and services will get where they are needed when 
they are needed. A breakdown of the rail system, for example, 
means that food might not get from the farm to the grocery 
store. These are the kind of disruptions that we must begin to 
develop contingency plans for and to address.
    Let me also add, if I can here, that just this week I 
received the Office of Management and Budget's--the committee 
did--most recent progress report on Year 2000 conversion 
issues. The report tells us the Department of Transportation--
you will, I know, know about this, Mr. Downey--has improved its 
management oversight and has accelerated the rate at which the 
FAA is remediating air traffic control system components, and 
the report indicates that at the end of July 1998, the 
Department of Transportation percentage of mission critical 
systems renovated stood at 65 percent, a significant 
improvement over the 25 percent report in the previous quarter.
    However, with 10 percent of its systems tested and 3 
percent implemented, it remains significantly behind schedule. 
Clearly progress is being made and clearly more needs to be 
done. In OMB's government-wide summary, the Department of 
Transportation is rated as a tier I agency. Unfortunately, tier 
I denotes a troubled agency with tier III being the best.
    Nonetheless, I am pleased that we have such distinguished 
witnesses here with us, Mr. Chairman, and I look forward to 
hearing their testimony as well this morning. And this is a 
very important area and again I commend you, Mr. Chairman, for 
the work you've done.
    [The prepared statement of Vice Chairman Dodd can be found 
in the appendix.]
    Chairman Bennett. Thank you very much, Vice Chairman Dodd. 
I appreciate your kind words and I must reciprocate that one of 
the nice things about this committee is that we have no 
partisan bickering or difficulties and complete cooperation 
across majority-minority lines. Indeed, those lines blur very 
quickly which is as it should be when you're facing a problem 
of this challenge.
    I'm grateful to Vice Chairman Dodd for his contribution to 
that spirit and atmosphere of working together. Well, Senator, 
you have come in time to hear the Honorable Jane Garvey. Mr. 
Secretary, we thank you for your testimony. Stay close by. We 
may be back to you.
    Mr. Downey. Thank you.
    Chairman Bennett. Everybody wants to know about the planes 
falling out of the sky so we will go to Administrator Garvey 
and she will be the first member of an aviation panel. Sitting 
with her on the panel we will have Charles Feld, who is the 
chief information officer of Delta Airlines, to give us the 
perspective of a major international carrier. And then Ms. 
Deborah Freedman, who is the senior vice president of SABRE 
Technology Solutions. SABRE handles reservations for a number 
of airlines, and she will discuss airline reservations, 
scheduling and other support systems. And then the final panel 
witness will be Ms. Paige Miller who is commissioner of the 
Port of Seattle, who has oversight of the Seattle-Tacoma 
Airport. So we have the Federal agency, we have an airline, we 
have a reservation expert, and we have an airport. I think that 
combination should give us a pretty good understanding of where 
we can be New Year's Day if we want to be visiting somebody by 
air.
    Ms. Garvey, Administrator Garvey, we appreciate your being 
here and we will start with you.

STATEMENT HON. JANE F. GARVEY, ADMINISTRATOR, FEDERAL AVIATION 
                         ADMINISTRATION

    Ms. Garvey. Thank you very much, Mr. Chairman, Senator 
Dodd, and Senator Smith. Thank you very much. I appreciate the 
opportunity to appear before you this morning to discuss FAA's 
activities with respect to the Y2K problem. I have already 
submitted my formal written testimony and I would like to ask 
that it be made part of the record.
    Chairman Bennett. Without objection.
    Ms. Garvey. Thank you very much. I will offer just a few 
oral comments, if I can. Let me begin by assuring you, as the 
Deputy Secretary has, that the Y2K issue is a top priority for 
me. It is a top priority for the FAA. In February, we changed 
the management structure at the FAA, creating a Y2K program 
officer who reports directly to me. We have closed a 
significant gap in the OMB Federal Y2K Compliance Schedule, and 
we continue to make steady progress within the agency.
    Our teams in the field have already assessed every system 
in the FAA, not just the mission critical systems. We are now, 
as you have indicated, well into our renovation phase where we 
actually make modifications to the systems that need them. By 
the time of the next OMB quarterly report, the FAA is scheduled 
to complete renovation of 99 percent of all of the required 
systems. As we continue our wider repair efforts, we are on 
schedule to have a majority of our systems compliant within the 
Department of Transportation and OMB's deadline of March 31, 
1999. All of our systems will be fully compliant by the end of 
June 1999, a date that we have accelerated from our original 
estimate of November 1999, and we continue, at the Secretary 
and the Deputy Secretary's request, to evaluate our schedule 
and wherever possible, we will accelerate to meet the deadline 
of March 31, 1999, which OMB has established as the date that 
systems Government-wide will be Y2K compliant.
    We have overcome many obstacles to get where we are today. 
I am proud of the work that the staff has done, and I am proud 
of the fact that we have been able to accomplish so much. 
However, I also recognize that we face many other challenges 
and we do have a long way to go.
    One of the great challenges, as you have indicated, is 
working with our partners in industry to identify other areas 
within the aviation system that require a solution to the Y2K 
problem. Let me highlight some of the activities that we have 
undertaken at the FAA to address these industry-wide concerns. 
We have sponsored with ATA--ATA has been extraordinarily 
helpful--we have sponsored an Industry Day in June of this year 
and we have another one scheduled for late October. We have 
really had several goals in the Industry Day. One really is to 
assess the problem. Two is to offer some solutions, where we 
could, to the problem, and we also wanted to avoid duplication. 
We have a very short time table here, and we want to make sure 
that we are not duplicating each other's efforts.
    We have been able to bring together key stakeholders from 
all sectors of the aviation industry to raise the awareness and 
really to work together on Y2K problems. We have had over 120 
in attendance in our June meeting, and I expect in October a 
meeting that will be even larger. And, I think it is fair to 
say that we felt that the information and the cooperation that 
was generated was beneficial for all of us.
    We have also communicated with manufacturers of critical 
airport systems stressing the need for their products to be Y2K 
compliant and asking that pertinent information be sent to the 
affected airports and to the FAA. We have also developed and 
distributed a comprehensive airport system list to over 5,000 
public airports to help them identify and correct Y2K issues. 
We put that up on the FAA Y2K website and I know that airports 
are accessing that on a daily basis.
    On the international front, we have issued a Y2K 
International Project Plan in April, implementing coordination 
with our international partners. We are working very closely 
with ICAO to raise the awareness of Y2K issues in the 
international community, and we have assigned full-time an FAA 
employee to work with ICAO in their Montreal office to offer 
guidance and support in any way we can. We have identified the 
6 countries where 60 percent of our Americans travel and we 
have a workplan in every one of those countries to deal with 
the Y2K problem. And, either the Secretary or I have met with 
our counterparts in those countries.
    In September, 2 weeks from now in Montreal, I will offer, 
with the Deputy Secretary, two resolutions on Y2K. The first 
resolution will urge each ICAO member state to provide Y2K 
status in the form of a Notice to Airmen no later than July 1, 
1999. The second resolution will require ICAO to develop and 
publish for use by its member states an assessment criteria for 
each state so we will know exactly what progress has been made.
    Mr. Chairman and members of the committee, while I am 
pleased with the progress that the FAA has made in solving our 
Y2K problems, we recognize this is a unique situation. This is 
a deadline that will not slip. The solution will be found in 
cooperative and collaborative efforts between the FAA and the 
aviation industry. It is really essential for all of us to work 
together to make a smooth transition to the new millennium, and 
while I am pleased with the progress, I want to stress that I 
am not overconfident and will not be until January 2, 2000. 
Thank you.
    [The prepared statement of Ms. Garvey can be found in the 
appendix.]
    Chairman Bennett. Thank you very much. Mr. Feld.

  STATEMENT OF CHARLES FELD, CHIEF INFORMATION OFFICER, DELTA 
                            AIRLINES

    Mr. Feld. Thank you, Mr. Chairman and Vice Chairman Dodd, 
Senator Smith. It is really a pleasure and almost fun to be 
here today although the topic is not great fun. I think it is a 
very important topic as you pointed out. My name is Charlie 
Feld. I am the chief information officer at Delta Airlines, and 
prior to that, and I was particularly relating to Senator 
Bennett's remarks, I was the chief information office at Frito-
Lay where we had 15,000 trucks and a perishable product, and 
then more recently until July of last year, I was the chief 
information officer that was involved in the merger of the 
Burlington Northern and Santa Fe Railroad, in which case I went 
to retire, and before retiring Jerry Grinstein, who is the 
chairman of Burlington Northern, asked me to come over to Delta 
since he is on the Delta board. So I have now gotten in the 
airline business. So I have got a view of the problem in every 
direction.
    We submitted our answers to the questions so hopefully I 
will just give a summary of that and then be available for 
questions. The way we have attacked it at Delta is really to 
take care of business at home first and then move to the 
broader network so within the Delta borders we have had 
tremendous focus from the top. Our CEO Leo Mullin, has led the 
charge. We have made it our No. 1 priority. We have more than 
half of our development resources on Y2K and the rest of the 
company is pretty much standing down with other systems 
request, and Leo helps me explain on a weekly basis the word 
``no'' and what part of no do you not understand that you are 
not going to get this other request until we get Y2K done? So, 
Delta is getting strong leadership from the top.
    In 25 years of being a CIO, I have probably been to board 
of directors meetings a dozen or so times. I have been to every 
board of directors meeting since I have joined Delta last fall, 
and it is a topic of review by every board member. So 
visibility for the top has really powered us into this thing 
and it is our No. 1 priority. And that is why we feel we will 
be successful.
    We have got about 600 major systems in our airline, which 
is about twice what a railroad has, which I was kind of 
surprised at. It is pretty big information base, about 60 
million lines of code. A couple of hundred of those are mission 
critical. Our plan, and we are on track to that plan, is to be 
fully remediated by the end of 1998 and fully tested by mid-
year 1999 in terms of all of our systems.
    In addition to fixing the Year 2000 problem, we have really 
made this part of us getting healthier as an IT organization 
and as an airline so we are beginning as part of it to replace 
a lot of infrastructure, a lot of old machines that are out 
there that needed to be replaced anyway. So we will have an 
asset going forward. This is not just a cost to us. And we have 
treated it that way and it will set the stage for us to go into 
the 21st century including recentralizing a lot of our 
technology acquisition processes.
    On a broader scope, when you get outside of Delta's 
borders, we are focused on the major partners which obviously 
are the FAA, the airports, other airlines, reservation systems, 
the international front. So as we begin to expand the borders, 
we actually feel that that is getting healthier, but it is 
getting healthier at different rates. OK. I mean the question--
meetings, as short as 3 or 4 months ago, I would have felt 
worse. I feel much better now. We have calibrated with the FAA 
from a lot of different sources and I would agree with Ms. 
Garvey that we are on track. They are doing the right things 
from the distance that we can see it.
    The airports are kind of all over the map, as she 
indicated. Some of them are done. Some of them are just getting 
started. Some of them are trying to figure out how to get 
started. And as we increase our influence, we are going to keep 
pushing out to the airports through the ATA and IATA which are 
the two active partners that help us manage the airports. In 
terms of beyond the major partners, there are so many 
interfaces and so many things that we just do not know just 
trying to figure out where things are going to come in from as 
we go more toward electronic commerce, and our strategy here is 
to continue to press out after the major partners but then be 
prepared and strong to react to things with business 
contingency plans and a very strong programming force as we go 
forward.
    In terms of what Congress can do, there is a tremendous 
amount of overhead, filling out forms, answering questions, 
people playing not to lose, people being afraid to say 
anything, and I think the legislation would be important. Also, 
separating fact from fiction because there is enough fact in 
here that if we can just work on the facts that would be a lot 
better than dealing with a lot of the fiction. And more than 
anything else, although there is not a lot of time, there is 
still time, and I think what Congress needs to have is maybe 
not legislation but leadership.
    The red light came on. I guess I am done.
    Chairman Bennett. You are allowed to finish your thought.
    Mr. Feld. I think that leadership would be important, the 
same kind of leadership that our board of directors and our CEO 
has provided in terms of getting funds, getting focus, getting, 
you know, people to get on this, because this is just hard 
work. This is not nuclear science and the problem is just 
getting it up in the priorities, and I think these kind of 
meetings and this kind of pressure will really help a lot to 
CIO's and people that really want to get this done.
    [The prepared statements of Mr. Feld can be found in the 
appendix.]
    Chairman Bennett. Thank you very much. Ms. Freedman, are we 
going to be able to get our tickets?

STATEMENT OF DEBORAH A. FREEDMAN, SENIOR VICE PRESIDENT, SABRE 
                      TECHNOLOGY SOLUTIONS

    Ms. Freedman. Absolutely.
    Chairman Bennett. OK.
    Vice Chairman Dodd. That you will get. [Laughter.]
    Ms. Freedman. We have got a good story.
    Vice Chairman Dodd. Now, to get a plane--but you will get a 
ticket.
    Ms. Freedman. On behalf of the SABRE Group, a world leader 
in electronic travel distribution and information technology 
solutions, I appreciate the opportunity to address the issues 
facing the airline industry related to the Year 2000 technology 
problem. I am a senior vice president responsible for 
application development for the SABRE Technology Solutions 
Division of the SABRE Group. In that capacity I am responsible 
for coordinating the Year 2000 program for the SABRE Group and 
ensuring that our systems are Year 2000 ready for our customers 
who use SABRE Group information technology services and 
solutions, which include among others American Airlines, US 
Airways, and Canadian Airlines.
    The SABRE Group was formerly an operating division of 
American Airlines and is now a separate corporation. Twenty 
percent of the company's stock is traded on the New York Stock 
Exchange and 80 percent is still owned by the AMR Corporation, 
American Airlines parent. SABRE Group is a diversified 
information technology company that has two major divisions: 
the electronic travel distribution business and the information 
technology solutions and services business. Both components are 
interdependent as the electronic travel distribution business 
most commonly referred to as the computer reservation system, 
or CRS, is the largest distribution channel for airline 
schedules, prices, and reservations.
    Travel agents and others electronically book $66 billion of 
travel per year including about one-third of the air travel 
worldwide through the SABRE computer reservation system. 
Readying the SABRE CRS, the world's largest privately owned 
computer network for Year 2000 has been a large part of our 
company's effort. Consumers have come to depend on the one-stop 
shopping with their favorite travel agents and Internet sites, 
which in turn depend on a CRS offering, a seamless presentation 
of data collected from varying sources, airlines, hotels, car 
rental companies, rail, cruises, and tours.
    Airlines depend on computer systems for most all aspects of 
their operations including flight planning, crew scheduling, 
maintenance and engineering, capacity planning, pricing, 
ticketing, and billing. The day-to-day operations of a major 
air carrier require hundreds of individual systems to work in 
concert so that the carrier may deliver quality service to its 
customers. The platforms for these systems vary from large 
mainframes handling millions of transactions involving flight 
operations, schedule changes, code share partners, reservations 
and financial reporting, to such simple personal computers 
handling staff planning for small airports with just a few 
gates.
    Any observer of the airline industry will quickly notice 
its elaborate interdependencies, systems within the airline 
itself and between airlines and their partners, their 
passengers, and their cargo customers. For example, airlines 
regularly trade passengers with each other as they make their 
way from point to point on the globe, and the smooth transition 
of those passengers depends on the electronic transfer of data 
between carriers. Cargo operations exchange shipment data with 
forwarders, the Postal Service, and customers. Airlines require 
immediate availability of support services such as fueling, 
catering, and air traffic control, and the companies and 
government agencies providing these services are crucial to the 
reliable operation of the industry.
    Individual companies in the airline industry cannot 
realistically operate in isolation from each other. Indeed, the 
overall success of the industry in solving the Year 2000 
problem will largely be determined by how well industry 
participants ensure the reliable flow of information not only 
through their own systems but through each other's systems. 
Certain system failures could have dramatic and even cascading 
impacts on other members of the industry. The SABRE Group has 
made Year 2000 readiness a major corporate priority since 1995. 
The company's Year 2000 project has the goal of ensuring the 
hardware and software systems operated or licensed in our 
business including systems provided to our technology 
outsourcing customers, including airlines and travel agencies 
subscribers, are designed to operate and properly manage dates 
beyond 1999.
    SABRE Group has developed a rigorous systematic approach to 
the Year 2000 problem which focuses on a detailed inventory of 
applications, hardware, system software, and utilities, 
analysis and remediation, testing of all systems and the 
continued Year 2000 readiness through repeated testing.
    Early planning, high prioritization and clearly defined 
processes, careful correction, and thorough testing are keys to 
successfully managing the Year 2000 program. The SABRE Group's 
vast Year 2000 program involves checking more than 1,000 
applications, over 200 million lines of application code, 3,300 
third party products including operating systems and hardware, 
confirming proper system interfaces with more than 600 
suppliers and providing new software and hardware in excess of 
40,000 travel agencies. At peak, the SABRE group applied 
equivalent of more than 700 full-time employees to fixing the 
Year 2000 problem and to date has expended more than 1.2 
million labor hours on the project.
    We are pleased to report that the vast majority, over 94 
percent, of all our systems, have, in fact, been tested and are 
deemed ready, and in the remaining days of our program, we are 
currently focusing on the continued deployment of hardware to 
airports and travel agencies, clean management which is the 
continued readiness of the systems and hardware, industry 
interface test to ensure interoperability by validating data 
feeds from the suppliers, partners, government, and other 
members of the industry, business simulation testing which is a 
day in the life of the airline and the CRS, and business 
continuity preparation should a failure occur such as building 
defensive code into our systems and working with our customers 
to define manual procedures where feasible.
    As I have stated, the ultimate success of this effort in 
the airline industry depends in large measure on ensuring 
interoperability. The validation of industry components is 
already moving to the forefront of the testing initiative and 
will prove to be the final hurdle in the Year 2000 race. 
Efforts are currently underway to schedule Year 2000 testing 
with all the companies with which we and our customers trade 
information. At this point in time, we will be dependent upon 
many of our counterparts and partners and their completion 
schedules.
    Over the next few months, the SABRE Group will use industry 
interface testing as a bellwether for readiness of the 
industry. In our context to date, I regret to report that less 
than 50 percent of the companies with which we have tried to 
schedule testing are prepared to schedule testing or execute 
testing. I hope this hearing will serve as a wake-up call for 
the airline industry. In conclusion, the SABRE Group is working 
diligently to ensure that the customers and the traveling 
public can depend on our systems in the Year 2000 and beyond. 
Thank you.
    [The prepared statement of Ms. Freedman can be found in the 
appendix.]
    Chairman Bennett. Thank you. Appreciate that very much. Ms. 
Miller, we look forward to hearing you. I should point out 
again that in the survey the committee took only one of the 
airports we contacted responded. So you have a heavy burden 
here speaking for all of the airports, but we will only hold 
you for specifics for your own. So we look forward to hearing 
from you.

    STATEMENT OF PAIGE MILLER, COMMISSIONER, PORT OF SEATTLE

    Ms. Miller. Thank you, Mr. Chairman. I will do my best.
    Chairman Bennett. Thank you.
    Ms. Miller. Good morning. I am Port of Seattle commissioner 
Paige Miller. I am one of the five elected officials who are 
responsible for the operation of Seattle-Tacoma International 
Airport. And I am here on behalf of the citizens of King County 
in Washington State to explain how seriously we take the Y2K 
issue at Sea-Tac, as we call it, and to share with you some of 
our experience and to provide some suggestions on how Congress 
might help all airports deal with this crisis.
    I am proud of the fact that a recent Air Transport 
Association review found that we appear to be ahead of many 
other airports in preparing for Y2K, but I am also here to 
express our concerns about how the airport industry will 
accomplish the Y2K program in the short time remaining.
    The Port of Seattle is a leader in Y2K program 
mobilization. We started in 1993 replacing old computer 
programs to make sure that they will handle the Y2K transition 
and in 1997 we started looking at mechanical devices in our 
inventory for the embedded computer chip problems that could 
also fail. What we found was that practically everything in the 
airport was potentially affected and that we had better get 
moving fast to find the problems and get them fixed.
    Examples of key systems that are high on our list: Security 
controls, runway lighting, baggage conveyers, fire alarms, 
backup generators, 911 response systems, storm water treatment, 
heating, and parking garage systems. If those systems fail, we 
obviously would have a difficult time maintaining even a 
minimal throughput of airplanes, passengers, and cars. Given 
the magnitude of the threat, we have mobilized a Y2K team. 
Today, there are 10 full-time staffers in that office, and 
there will soon be 30. That team is following the GAO 
recommended Y2K project plan available on the World Wide Web. 
That plan says find and assess each system, fix or replace it, 
test to ensure compliance, and make contingency plans in case 
it all falls apart anyway.
    I have with me, by the way, our Y2K project plan, and I 
will make it available to your staff. As of today, we have 
identified 113 systems. We have completed initial assessment on 
all of them. We are just beginning to fix and test. At this 
point, roughly a third of our systems are not compliant 
according to vendors, a third are compliant according to 
vendors, and a third are still unknown because the vendor has 
not given us a definitive answer or is not in business anymore.
    Our budget for fixing known non-compliant systems and 
testing all systems is approximately $10 million. Fixing 
systems found to be non-compliant in our testing and testing 
them could potentially cost another $10 to $20 million. In the 
worst case scenario, this would represent nearly a third of our 
annual operating budget.
    A number of factors make it difficult to solve the Y2K 
problem. First is the rock hard, unmovable deadline. January 1, 
2000 will be here in 477 days. And every business, every 
airport, every government office from the Senate down to the 
dogcatcher must meet that same deadline. That means we are all 
competing for the same technically competent people at the same 
time to fight the same deadline. Another important factor, as 
has been mentioned, is the liability concerns of vendors and 
owners which can delay their sharing of information and 
developing optimal solutions together. Finally, once you fix 
the system, you have the added effort to keep it fixed because 
when you fix something else, that may impact the system you 
have already fixed.
    I am not here to assure you that we will complete our Y2K 
program on time despite our best efforts with our most capable 
people. We will do everything humanly possible to organize, 
manage, and deliver solutions for each of the 113 systems at 
Sea-Tac and to have contingency plans in place for their 
possible failure. In some cases, we are cannibalizing our own 
offices, pulling some of our best people away from other 
projects that badly need them, but the problem is worldwide and 
industry-wide involving airlines, airports, and air traffic 
control systems. What we know about other airports is that for 
the most part they have started their programs later than we 
have and they are planning to spend fewer resources than we 
are.
    I will end with a few suggestions for ways Congress could 
help with the crisis. First, lead by example. The time for 
study is past. We urgently need to produce an emergency plan 
for the country which prioritizes sectors of the economy, 
identifies key resources that need to be redirected from the 
least important to the most important, and pass legislation to 
accomplish that. To do that, you may have to defer other urgent 
issues while you devote time to this one.
    Also, consider some sort of emergency funding mechanisms to 
assist entities such as airports that serve the national 
interest to replace diverted operating and capital funds that 
they have depleted by Y2K. Some funds should also be used to 
make sure that all the compliance data that we and other 
airports create as we deal with this problem is immediately 
available to other airports that are trying to catch up on Y2K. 
That way they will not have to reinvent the wheel.
    From 9-year-olds doing their homework on the net to the 
counting of ballots that put all of us in office, everyday 
technology is becoming more and more integrated in the daily 
lives of Americans. That is why the Y2K problem has the 
potential to create so much economic, political, and personal 
crisis. That is also why we need you to lead the country by 
aggressively organizing a national Y2K program and providing 
critical resources in funding. If you start now, you can do it 
and the Port of Seattle stands ready to help you.
    [The prepared statement of Ms. Miller can be found in the 
appendix.]
    Chairman Bennett. Thank you very much. We appreciate your 
forthrightness and your candor. I have often said facetiously 
the way to solve the Y2K problem is very simple and that is to 
start in 1994. Your example in doing that is noted here.
    Administrator Garvey, the flying public is probably most 
concerned about air traffic control. It is the issue that comes 
up first every time we talk about transportation and you have 
indicated a lot of progress from the last time we looked at 
this and that is very comforting. One of the things we have 
been trying to do in these hearings is to allay public concern 
that might be overblown and I have to ask you why the GAO and 
Air Traffic Controllers Association are more skeptical about 
your ability to be prepared than you have indicated in your 
testimony here? Can you address those concerns directly?
    And Secretary Downey, any time you want to step in to any 
of these issues, we would love to have you comment as well.
    Ms. Garvey. I see that the Deputy Secretary is letting me 
begin here. Thank you so much. [Laughter.]
    Chairman Bennett. He is just being gallant.
    Ms. Garvey. Well, first of all, let me address the issue of 
the GAO. That is something I do take very seriously. First of 
all, I think they are right to keep the pressure on us and we 
certainly know that that is part of the role that they have. As 
I looked at their most recent testimony, there were three 
issues that they raised that we have focused on. One is, for 
example, they say that they do not believe we will meet the OMB 
deadlines as they have been established, and they are quite 
right in that.
    We have a deadline that is slightly different from the OMB 
deadline. For example, the full implementation and completion 
is March 31, and while we expect to have the majority of our 
systems completed by that point, for us, given the complexity 
of what we are dealing with, we believe June is a more 
realistic deadline. I will again reiterate, though, we are 
trying very, very hard at the Deputy Secretary and Secretary's 
request to pull that forward and to try as get as close to the 
March 31 deadline as we can. But we are trying to balance the 
reality and not overpromise, and we still believe that June is 
very, very doable.
    The second issue that they raise, which I think is an 
important one, is do we have an accurate assessment of where 
our systems interface and have we really a plan in place to 
renovate those interfaces? For both of those questions, I would 
say yes, we are very much on target to have both the assessment 
and the renovations done by September 30, but again I think it 
is fair for them to point that out as an issue and we are very 
much focused on that and working on that.
    There was an error, getting back to GAO. It just may have 
been a miscommunication on our part. I think they talk about 40 
systems that they think we need to replace. It is actually a 
much smaller number than that and it is 40 components within 
the system. It is actually six systems that we focused on. So 
we are continuing to work with GAO. They will keep the pressure 
on and we will respond as we have, I think, in the past.
    With our air traffic controllers, they have raised some 
issues about our contingency plan, about which we are meeting 
with them next week. We are just beginning the development. I 
think the key is to bring them into that process. That has been 
our plan to develop the contingency during the month of 
September. They will be meeting with us next week to begin to 
flesh out those contingency plans in earnest. So we will look 
forward to some good discussion with the air traffic 
controllers, and I have met with the senior leadership on this 
issue, and I think those meetings will be very helpful.
    Chairman Bennett. Mr. Feld, you are a user of all of the 
services represented at the table, not only the air traffic 
control system but reservation systems and, of course, 
airports. You have listened to this testimony, as we have. As a 
user of these systems, how comfortable are you that they will 
be available and ready to go?
    Mr. Feld. I guess I will just go down the line and go left 
to right. I think, like I said earlier, the FAA, it is hard to 
sort the fact and the fiction a few months ago, but I think it 
is becoming clear. You know everything we can tell in terms of 
methodology, quality of people working on it, and how they are 
attacking it, you know, particularly the centralized systems 
which are the safety systems, are just basically everything 
that I would do and I feel comfortable as you can without being 
in the middle of it managing it.
    I have also pulsed people. Over the years I have gotten 
to--25 years of being in the business--gotten to know people at 
IBM, who were pretty vocally critical, and they have turned 
positive now, and they said they think they have got it. So I 
mean fairly high up in IBM. So that. You know a couple of data 
points along with the methodology, the focus, the quality of 
the people working on it, from an external point of view feel 
very confident that the air traffic part will be there.
    As you go down the line to reservation systems, much like 
SABRE, our reservation provider is WorldSpan. There are four 
major res providers: WorldSpan, Galileo, Amadeus, and SABRE. 
They have all been on it early. WorldSpan is Y2K compliant in 
the things that hit us, and we have been testing with them. 
They also have good connectivity to SABRE, Galileo, and 
Amadeus. So that part of the industry is about as healthy as 
anything I have seen.
    As far as the airports go, you know, we have just begun to 
really look up and get involved through the ATA to really try 
and focus on the airports and really try and work with 
American, United, my counterparts there, for all of us to try 
and figure out a way to help out. Each one of us has a 
dominance in a different airport and, therefore, you know, I 
think this is the kind of thing if you can reach out and help 
with methodology, with capability, I think we are just going to 
have to get in that spirit of things to get the airports along. 
Some of them are fairly healthy and some of them are just 
starting to figure it out. So kind of from left to right, that 
is kind of how we are viewing it at this point.
    Chairman Bennett. Let me ask anyone. You heard from Mr. 
Feld about where his airline is. Do you have concerns about 
other carriers, regional carriers? I do not necessarily want 
names but categories. Is there one part of the airline industry 
where you think there is a weak link?
    Ms. Garvey. Again, I think you are right, Mr. Chairman, 
that in terms of some of the larger airlines, I think we are 
feeling very, very confident. Walt Coleman, is a really key 
member of the RAA, the Regional Airports Association, has been 
just terrific about coming forward to the Industry Day and 
working with us. One of the results of the last Industry Day 
was to create a working group for airports; and the regionals 
have been very involved in that with us. So again, I think, you 
know, we have work to do and probably, as Paige said, there is 
some variety of where they are, but I think we are focused on 
it and certainly the leadership at RAA is very focused on it as 
well.
    Chairman Bennett. Yes.
    Ms. Miller. In discussing this with staff, because I am not 
a techie, one of the places that we have talked about maybe 
needing some special attention is not the big folks, not the 
airlines, but some of the vendors. We control a lot of systems 
at our airport, but there are some that we do not. For 
instance, the security access control system is going to be 
provided by a subcontractor to an airline. Those companies tend 
not to be that big and maybe are not that sophisticated, but if 
that system, for instance, were not to work, we would not be 
able to move people through our airport. So I think when we 
think about it, you think about some of the big players, you 
need to think about who might be a smaller player controlling a 
critical piece of the infrastructure.
    Chairman Bennett. Vice Chairman Dodd.
    Vice Chairman Dodd. Thank you, Mr. Chairman, and thank all 
of our witnesses. I would note, by the way, that Secretary 
Slater and Secretary Garvey were in, I think, yesterday in Nova 
Scotia, went up to be with the families on Swiss Air flight 
111. We appreciate that immensely and commend you for your 
sensitivities of that tragedy where I think it was--was it 132 
Americans who lost their lives?
    Ms. Garvey. That is correct.
    Vice Chairman Dodd. Several of my constituents, Mr. 
Chairman, from Connecticut. So we thank you for doing that. Let 
me pick up on the first question that the chairman raised, and 
he sometimes is more gentle than I am about these things. But 
just as a background, I mean I am looking down, I am trying to 
just collect data/numbers for people, I mean in a sense. There 
are 13 major U.S. airlines in this country. There are 34 
national airlines. There are 52 regional airlines. There are 
670 airports certified by the FAA and there are about a half a 
billion people who implaned last year in this country, just 
domestic traffic. I do not know if those numbers are quite 
right, but I think they are pretty accurate.
    And when we get reports, and I again appreciate your 
comments, Ms. Garvey, and Secretary Downey, why do not you pull 
up a chair here too because I want you to get on this. 
[Laughter.]
    Ms. Garvey. Thank you so much, Senator.
    Vice Chairman Dodd. Sitting back there in spectator status 
here. But, you know, I read this memo--it is August 14--it is 
only a couple of weeks ago here now--and I get to the second 
page of this. This is the memo from the inspector general to 
the Deputy Secretary of the FAA, and they get down to the last 
point here, and I will just read it.
    It says the report to the OMB shows that 63 critical 
systems and underlined--they underline it--will not be 
renovated and implemented by March 31, 1999, a date established 
by the OMB. Sixty two are in the FAA and one is in the Coast 
Guard. But the point is, I mean there you got this, you have 
got--we had testimony in Hartford--this is before this 
committee was established--the chairman knows about. I had 
Richard Swagger, who was the national technology coordinator 
for the traffic controllers, and he testified in February that 
while he thought the FAA would improve its progress which at 
the time was dismal, he saw no way that the FAA could catch up 
and thus no way that we could sustain 100 percent of normal 
flight capacity on January 1, 2000.
    I mentioned the GAO. We have heard from others here. Now, 
again, you know, I like rosy scenarios here, but it seems to me 
when you start looking at people who are looking at this thing, 
this is the notion somehow, the statement that by the next OMB 
report, quarterly report, FAA is scheduled to complete 99 
percent of all required systems. I appreciate your words, but I 
am not terribly reassured when I hear from the inspector 
general and from other organizations that I do not think have 
any--I do not know of any particular purpose they would have in 
raising the specter here of some serious problems.
    Mr. Downey. Let me respond and then ask Jane to amplify 
that. We had the very same concern when we started to take a 
close look at what was going and the FAA was telling us that 
November 1999 was their target date for having all of their 
systems renovated, tested and implemented. We said that was 
totally and completely unacceptable and come back with a new 
plan. The plan they have come back with sets June 1999 as their 
target date and a commitment from Ms. Garvey and her staff that 
they will seek to even accelerate that to March. I would be a 
lot more comfortable if they were saying we have a plan to get 
everything done by March and we are looking system by system. 
In fact, we met yesterday on those 62 systems and said many of 
them are freestanding, they are not connected to air traffic, 
can we get those put in place so we can focus on any lagging 
systems?
    But it has been a long push, but the progress is definitely 
there. On September 30, the renovation phase, which is 
renovation not yet tested, not yet implemented, will be 
completed for the majority of the FAA systems and that is a big 
step forward from where they were earlier, but I am sure we 
still have a long ways to go and we are making it No. 1 
priority. When I meet monthly with each of our administrators, 
the very first question is where are you on this and each time 
I have met, we have seen more progress, and each time I say 
that is good, how much more can we do?
    Vice Chairman Dodd. Well, I would hope this committee will 
be kept informed almost on a weekly basis, we ought to be kept 
informed, because this is--you know, when I get the General 
Accounting Office saying in August it is doubtful the FAA can 
adequately do all this in the time remaining, accordingly they 
ought to ensure continuity of critical operations and so forth, 
I think we want to monitor this on a very, very close basis as 
to how you are proceeding.
    And second, I remind you you have got to be tough now when 
you talk to these people because finding the truth out at the 
top of the pyramid here is difficult because everybody wants to 
pass along good news. And the chairman has said this before and 
it is tremendously accurate. The hardest job for a person in 
that position is to find out what the truth is, and you are the 
ones we talk to in these committee hearings. So we are 
expecting from you all to be rigorous, rigorous in your 
questioning and in determining whether or not this information 
is being, not just progress is being reported, but whether or 
not it is being achieved. I could care less about whether or 
not it is being reported. I expect it to be reported. I want to 
know whether you are getting the job done.
    Ms. Garvey. Senator, if I could just add one thing. I meet 
with Mr. Mead every other week, who is our inspector general, 
and his staff. They are part of our team. They are an integral 
part of the team. The 63 that he refers to in the memo, we 
absolutely agree with. We have said they will be done by June. 
What it will not be is the March 31, and that is the piece 
that, as the Deputy Secretary said, we are still trying to move 
that forward. But we will be done by June, and he is in 
agreement with us on that as a schedule.
    I also want to mention that his staff validates our 
progress. In other words, every time we get a progress report, 
if I say 60 percent is renovated, we have an independent 
outside contractor validating that and the inspector general 
validates that as well. So we have really two data points, if 
you will, for validation. The meetings with the inspector 
general have been extraordinary from my perspective. We talk 
definitely weekly and sometimes almost daily on this very topic 
and his senior staff people are part of the team that are 
working on this.
    I frankly do not think I can do it alone. And I rely on 
people like that, as you do as well, to say: ``Time out, we 
have got a problem here.'' So we are in agreement on that 
schedule. We are in agreement on that number of 63. We will get 
it done by June, and we will try our darnedest to get it done 
by March 31.
    Vice Chairman Dodd. Let me ask you quickly because I do not 
want to take up time here. I talked about domestic operations 
here. I want you to take me offshore a bit because we have an 
awful lot of people--Delta is certainly an airline that a 
substantial part of its business is offshore. I want you, Mr. 
Downey, to give us a very cold assessment right now, and I have 
asked the question before on domestic flights as to whether or 
not you would fly on January 1, 2000. If I were to ask you 
whether or not you would get on an international flight on the 
date January 1, 2000, what is your answer to that question?
    Mr. Downey. It would depend where it was going.
    Vice Chairman Dodd. Well, how about giving us some idea? If 
it is going offshore, you have serious questions; is that what 
you are telling us?
    Mr. Downey. As Ms. Garvey said, we are working very closely 
with the air traffic authorities in the six countries that 
accommodate half of all of our passengers. We are feeling 
pretty good about those. But there are parts of the world where 
air traffic control is rudimentary and where attention to this 
issue is so far almost non-existent. That is one of our reasons 
for going to the ICAO meeting later this month and asking for 
an international resolution to require reporting so that we can 
then take appropriate action. If the appropriate action is an 
advisory, which in some cases it would be, we would do that. If 
the appropriate action were to be to ban American flights to a 
particular part of the world, we would also do that if we feel 
it is necessary.
    Vice Chairman Dodd. Are you working with the State 
Department on this and other agencies?
    Mr. Downey. Working through State on this and working with 
the embassies around the world, and ICAO is a U.N. organization 
to which we have an ambassador who is part of the State 
Department and a delegation that will come from transportation 
including the airlines and the unions to underscore the 
importance of the issue.
    Vice Chairman Dodd. Time has expired, Mr. Chairman.
    Chairman Bennett. Thank you. Senator Smith.
    Senator Smith. I would like to pick up where Vice Chairman 
Dodd just left off, and I have always thought that government 
standards were very critical but actually rather minimal 
standards. And I want to ask Mr. Feld if you have a business 
standard that you are going to employ to pull the plug, if you 
will, on flights overseas? Do you have a standard different 
than the Government's, higher than the Government's?
    Mr. Feld. I think what I have seen in the airline 
business--I have only been in the airline business since last 
fall--is a tremendous conservatism in terms of safety. I mean I 
was in the railroad business, and I mean we kill a lot of 
people in the railroad business just sitting on tracks and, you 
know, you cannot stop a train at that rate, and I thought the 
railroad business had a pretty safety minded kind of idea about 
it. You come to an airline and it is like the air you breathe. 
I mean pilots will not push back if they are not 100 percent 
confident in completing their flight as planned. I mean there 
are so many gates along the way where somebody can just pull 
the plug and say I am not flying.
    And, you know, even though on-time is critical and cash 
flow is critical, I have never seen a culture where safety is 
so critical that pushing back a flight is not anything that 
anybody gets pressure to go do. We are beefing up our business 
continuity plan. I mean we are less worried about air safety at 
this point than we are about things like cash flow, service, 
finding bags, things like that, because I mean we believe that 
going up is unacceptable if it is just not for whatever reason. 
This just happens to be a very big event.
    Senator Smith. I am glad that safety is the first criterion 
and will be the standard by which you will measure whether or 
not you are going to let flights go, but then you get to the 
point Ms. Miller made, and that is all the back-up systems, all 
the vendors; what if the security systems are not fixed in 
Bangladesh, are you going there? Or do you go there now?
    Mr. Feld. No.
    Senator Smith. I mean what will you do if it is apparent 
that an airport is just not going to be able to get bags from 
your plane to where the passengers are going to get them? Are 
you going to pull the plug on those flights? Are you alerting 
these airports that that is the case?
    Mr. Feld. Yes. I think that, you know, the whole system has 
to work. We have had a lot of discussion about success in the 
whole airline industry; if it is not we are done. And we are 
really starting to look up and starting to actively offer help 
to anybody that needs help, both methodology and people, 
because the system will not work. The other thing about the 
airline business is a problem in any city will cause problems 
to back up anyplace and it is pretty immediate. So there will 
be gridlock. I mean nobody will go anywhere; right. So I just 
think the system is a self-correcting system in terms of just 
not going if you cannot get there, there is no place to put 
planes, there is no place to park, there is no place to go. You 
see it in a thunderstorm. Everybody sits down and waits until 
the time comes. So, you know, again, I mean our major concern 
is air safety first and then the things that follow from there, 
and, you know, we are a lot more optimistic.
    I will just say in response to the inspector general, and, 
you know, I have my own burden to bear with auditors that have 
predicted our death over and over again every month, and they 
serve a purpose, but that is their job, right, to go find it. I 
would like to get the amount of work--I mean we spend probably 
40 percent overhead on fixing this problem, dealing with people 
externally, internally, auditors, everybody else, trying to 
prove, document, that we fixed it, who fixed it, in case 
something goes wrong. I mean if we spent 100 percent of our 
time fixing the problem, we would go a long way toward it, 
recognizing that audit has a role and everything else in terms 
of pointing to where the big problems might be. But I am 
actually a lot more optimistic. We have pulsed every chairman 
of every major technology company that has come through, both 
Leo Mullin and I, and, you know, it ranges from total meltdown 
on the part of, you know, some things you read in the press to 
it is kind of a bogus thing, there is nothing going to go on 
here. And I think most people feel that no technology, whether 
Lou Platt, chairman of HP, or anyplace that, you know, there is 
going to be some discontinuity but not a meltdown if we stay on 
it. And that is the issue. We have got to stay on it. We have 
got to use every bit of the next 16 months helping each other 
out and figuring out ways to get it done, not ways we are not 
going to get it done.
    Senator Smith. Ms. Garvey, there are lots of Y2K rumors 
around right now, and one I picked up on the Internet with 
respect to the FAA is that the FAA plans to ground all flights 
in the United States at 6 p.m. on December 31, 1999, and will 
not let any take off until January 1, 2000 at 6 a.m. I wonder 
if you want to dispel that rumor today?
    Ms. Garvey. Well, that will be news to me since I'm 
planning to travel to California that day.
    Senator Smith. OK.
    Ms. Garvey. So that is simply a rumor.
    Senator Smith. OK. Thank you. Ms. Miller, as a 
northwesterner, I salute you. I thank you for what you are 
doing to prepare at Sea-Tac for Y2K. I wonder if you can speak 
to the back-up and feeder airports in the Northwest? Are they 
as prepared as you? Is the flight from Pasco to Sea-Tac, one 
that I take fairly frequently, going to be drastically 
impacted?
    Ms. Miller. I would have to say based on what we know, most 
other airports, even large ones, are behind us, and certainly 
the smaller ones tend to be behind the larger ones. The one 
note of consolation is their systems tend to be a bit simpler 
and they can be bypassed in a more effective way. You can walk 
from the tarmac around the airport building if you have to in a 
lot of the smaller airports in a way that you would have a 
difficult time doing at a larger one. So they are behind, but 
then again maybe they have better ways to work around it.
    Senator Smith. How is Portland doing?
    Ms. Miller. I can get our technical person to answer that 
if you want.
    Senator Smith. That is OK. I go there more often than Sea-
Tac--but I assume also a difficulty these feeder and backup 
airports have is the vendor problem you described. Their 
problem would be even greater, I assume?
    Ms. Miller. The other issue we have is our systems are 
integrated with others. Will the utilities work? Will the 
traffic lights in our surrounding city work? Will all those 
systems that we rely on work? And the other thing is in 
planning for contingencies, do we have each contingency plan on 
something else? For instance, apparently our first cut at 
contingency if our ground phone lines do not work, we will use 
cell phones, and the cell phone contingency was if the cell 
phones do not work, we will use ground phone lines. You know 
obviously that is not a good contingency plan.
    Senator Smith. Thank you. Thank you, Mr. Chairman.
    Chairman Bennett. Thank you. I am not going to ask you to 
name the six countries. I think I can guess where most of them 
are located in the world. Can any of you give us an indication 
of what would happen to the domestic system if a substantial 
number of international flights were canceled? What kind of a 
rolling back-up problem would be created at JFK, for example, 
most of whose traffic is international? At Dulles? All of a 
sudden flights do not start to go, what is the immediate 
impact? You mentioned a thunderstorm in one part of the world 
then ripples through the whole system. What is going to happen 
if we can, in fact, only send flights to six countries and what 
will be the impact over time on the American system if that 
happens?
    Mr. Downey. I think Mr. Feld's comment on that earlier was 
right on target. This system works like a Swiss watch when it 
is working well, but all the parts have to be working, and it 
will ripple through. If you would like to come visit sometime 
out in Herndon at the FAA's flow control center, you can see 
that on the big screens. You can see in any given day how all 
of the airports are interrelating, how all the flights are 
interrelating. How something as simple as a thunderstorm can 
cause massive changes to the system all across the country and 
something like this would be very difficult to recover from.
    Mr. Feld. Yes. I think, you know, depending on how quickly 
we could get on it. That is why I say I think getting the core 
systems working, getting the big pieces working so we can have 
all of our programming and process capability and business 
contingency focused on the seams that are not working. If it 
was a matter of days, right, there would just be, you know, 
discontinuity, and it would be like, you know, just a series of 
bad days with thunderstorms. If it went longer, I think we 
would have to step back. And again I am making this up because 
I have been in the airline business, right, a fairly short 
period of time, but I think we would just have to readjust our 
schedules. We have in our large case, you know, a large part of 
our franchise is domestic, and we would, I assume, just have to 
readjust until the longer term issues were settled.
    Chairman Bennett. Well, you have gone the direction that I 
have been thinking, which is that you should not wake up on 
January 1 and say oh, my gosh, here are the countries we cannot 
fly to, what do we do? Senator Smith has raised the issue do 
you have a schedule already laid out? I would think you ought 
to be addressing the schedule issue. If we cannot fly to these 
countries, we ought to know that and start scheduling for it in 
September or October/November 1999 so you do not get the sudden 
hit of oh, my gosh, all these flights are now canceled for 
safety reasons or airports that cannot handle them wherever, 
and the ripple effect through the entire system then becomes 
crippling. I know this is a very sensitive issue. It is going 
to raise bilateral problems in the bilateral air agreements 
that we have signed as a nation if another nation says what do 
you mean you are not going to allow an American carrier to fly 
to us and you are violating your treaty obligations and so on 
and so on. But is anybody in the Department of Transportation 
thinking about this and talking about the impact on bilateral 
relationships?
    Ms. Garvey. Just a couple of points. First of all, I think 
that is why the assessment, Mr. Chairman, is so important and 
the work we are doing with ICAO right now and over the next 
several months and the Montreal meeting is really critical for 
us. A good part of the discussion will be on Y2K. Getting that 
assessment so we can make some judgment about schedules will 
be, I think, really very important and we will be involving ATA 
in those discussions as well. In terms of the bilaterals, it is 
probably more within the International Office of the Secretary 
and Charlie Hunnicutt's shop.
    Mr. Downey. And this is why the Secretary raised it at the 
European Ministers Conference to sort of lay the marker down 
that we have to make progress. This is just one area of many 
where we need continuity plans. Our contingency plan has to be 
broader than just one system is not in place, another one will 
suffice, but really how do we assign priorities to the 
continuity of commerce and the continuity of travel that will 
require working with the various carriers whether it is 
airlines or railroads or trucking companies, but that is the 
approach we are taking.
    What is the function more broadly for the economy that is 
being served and how do we make sure that it works well? If it 
means we had to make some tough decisions about making 90 
percent of the system work well by sacrificing service to some 
places that are questionable, that is the kind of thing that we 
would have to do, and I agree with you we would have to do it 
early to do it well. So that is again one of the reasons why we 
have been pushing for the earliest possible assessment of the 
system so that we can then move forward with the contingency 
plans knowing the system is working, here are the contingencies 
that we have to worry about, and we want our mind focused 
primarily on that during the mid-months of 1999.
    Chairman Bennett. OK. I just have one more question and it 
relates to your answer, sir. The FAA had planned to issue both 
a business continuity and contingency plan with an end-to-end 
test plan by 31 August 1998. We have not seen that. Do you want 
to tell us where you are on that and when we can expect that?
    Ms. Garvey. Mr. Chairman, we have expanded it to be more 
encompassing than we had first planned including some of the 
industry elements and so the business plan will be ready by 
December, in large part again because we have broadened it. We 
also want to include in it the contingency plans that we are 
working on with and will work on with the unions so it will be 
by the end of the December that we will have that plan ready to 
go.
    Chairman Bennett. Senator Dodd.
    Vice Chairman Dodd. Yes, thank you, Mr. Chairman. That was 
a question I had as well. So it is not ready yet. The August 31 
date you did not meet?
    Ms. Garvey. That is correct because we changed the scope.
    Vice Chairman Dodd. OK. I was very impressed and have been, 
Ms. Miller, with the Port Authority in Seattle. It is a 
wonderful facility. The few times I have been there I have been 
very impressed with how well things run, the intercoordinated 
efforts in the city, and as someone who comes from the other 
part of the country I have always been deeply impressed with 
the quality of people who have been involved in the city of 
Seattle's management of their transportation systems.
    A concern I have--we have raised this with others--is the 
cooperation we are getting from the private sector on this. I 
gather, Mr. Chairman, that the Judiciary Committee is about to 
mark up a liability bill in the next few days.
    Chairman Bennett. The Judiciary Committee is scheduling a 
mark-up of the bill, and it will be the Hatch, Leahy, Kyl, 
Bennett, and Dodd bill, if you are willing to leave your name 
on it.
    Vice Chairman Dodd. Sounds like a bad law firm. [Laughter.]
    Well, we will take a look at it. I want to see what is in 
this. We have introduced it, you and I, as--what do they say--
it is----
    Chairman Bennett. By request.
    Vice Chairman Dodd [continuing]. By request of the 
administration. But I am concerned because the chairman has 
indicated that we have had actually a very low level of 
cooperation, I would identify it as, from the private sector in 
terms of letting us know and letting respective agencies know 
about where they are. We have reported out of the some 2,000 
companies that produce medical devices, we have had about now 
500 that have responded to correspondence. I mean we are not 
even--it is not a question of whether or not they are complying 
with it. I do not know if they are even letting you know where 
they are. I do not know what this bill is going to look like, 
but my patience level with providing a liability cover for 
someone that will not even write back a Federal agency to let 
you know where you are is very low.
    I do not know where others are on it, but I certainly 
understand the implications on this, but when you get such a 
tiny minuscule level of cooperation on something so important 
as this, I find it terribly disheartening and I am concerned 
about the level, the numbers, Mr. Chairman. You indicated only 
one really--we have heard from one major facility.
    Chairman Bennett. At the opening of the hearing, we pointed 
out we contacted 32 entities in transportation generally. That 
includes the next panel as well as this one. Sixteen responded. 
And out of that group of 32 that only 16 responded, there was 
only 1 airport that responded.
    Vice Chairman Dodd. Well, what has been your experience in 
this, Ms. Miller? What sort of cooperation are you getting from 
suppliers, vendors, and then I am going to come to you, Mr. 
Feld? Again, you are here representing one airline, and I am 
not going to ask you to draw you into a competitive discussion, 
but it has been noted here that Delta has been very, very 
forthcoming, and I will utilize this opportunity here to 
commend Delta for its aggressive, proactive efforts, and I 
would hope that others would act accordingly. But give us some 
indication of what sort of cooperation you are getting as you 
are trying to get this?
    Ms. Miller. As I mentioned, of the 113 systems, a third of 
them are ones where either the vendor has not responded to our 
inquiry or they have gone out of business. So there is a large 
problem there with just getting the information that the vendor 
has about whether a system is compliant or not and in what 
circumstances, and what that means if you do not get it from 
the vendor, you are going to have to start from scratch in 
testing it. It would be tremendously useful if we could up that 
cooperation, and I do believe that a large part of why they do 
not respond is concern about the hoards of lawyers who might be 
out there ready to file class action suits on anything they 
might do.
    It is a ticklish public policy question for you. I mean I 
am a lawyer, went to law school in your great State as a matter 
of fact.
    Vice Chairman Dodd. No wonder you are so successful out 
there. [Laughter.]
    Ms. Miller. And for me, I sit here and go how could it be 
that products were still being sold last year that had this 
problem? How could it be that the most farsighted people, the 
technology people, still were selling noncompliant products, 
and should you folks be in the business of somehow limiting 
liability for people who were in my mind irresponsible? On the 
other hand, if you do not find a way to give some assurances 
and limit liability for those who are acting in good faith and 
trying to help, who fear that they will increase their own 
exposure if they cooperate, then those of us who are scrambling 
to fix the problems that we have got will not get their help. 
And it seems to me that that is the crux of what you need to 
deal with in whatever legislation you pass.
    Vice Chairman Dodd. Have you publicized the names, for 
instance, of companies that have not responded in a public way, 
so as to avoid the obvious defense that we never got the 
letter, we did not hear about this? We have been talking about 
doing something in a similar vein with other companies from 
various agencies; we have suggested that we are going to 
utilize the bully pulpit, if you will, of this committee and 
the Congress to publicize the names. First, it might just 
embarrass people to start to get on the stick, but second it is 
going to limit your defense somehow that you were not aware 
that this was going on. Have you done anything like that?
    Ms. Miller. It is risky. Once you do that, the chances of 
getting their cooperation are going to go down farther.
    Vice Chairman Dodd. You think so.
    Chairman Bennett. We have found the contrary, that a lot of 
folks did not want to be on that list when Senator Dodd and I 
stand up on the floor. They have been coming forward.
    Ms. Miller. I wish I had your clout.
    Vice Chairman Dodd. It is vastly overrated. [Laughter.]
    Mr. Feld. The Delta board asked two questions when we went 
through the original presentation as to what this is going to 
take. One, can we get it done? And we said, yeah, but there is 
a lot of other stuff that is not going to get done. OK. The 
second question was what have we learned from this? How did 
this happen; right? And I think that that is a lot to take out 
of this in terms of I mean I believe as a chief information 
officer that technology has run amok and what has happened is 
people are beginning to understand how dependent we are on 
technology, and Y2K is a wake-up call to most boards. And 
second, how interdependent we are and ever increasingly 
interdependent, and with no standards--right--no inherent I 
mean policy in companies where every department buys what they 
want; there is no standardization. I mean this problem if well 
constructed should have the date in one place and every program 
in that company ought to point to that date and fixing this 
should have been an afternoon's worth of work--right--instead 
of dates all over the place on everything. As you said before, 
it is still going on. People are just, you know, we are not 
learning anything from this.
    Vice Chairman Dodd. We had witnesses before the committee a 
few weeks ago, literally we saw the hospital, the local 
hospital here in Washington, where they are getting medical 
equipment.
    Mr. Feld. Right.
    Vice Chairman Dodd. Sophisticated costly medical equipment, 
dialysis machinery at $14,000 a copy, that was produced 2 years 
that is noncompliant.
    Mr. Feld. Yes.
    Vice Chairman Dodd. I mean, you know, they have to replace 
all of this stuff.
    Mr. Feld. I think, you know, in net, we got to figure out 
two things, a way to get out of this in a way where people work 
together, and one of the things that I take away from this 
because really I have not looked up that much because I have 
been so focused on what we are doing, is I have access to just 
about every chief information officer that surrounds me, and I 
do not need Congress and I do not need anybody to call them and 
say let us sit down and talk about this, right, the head of 
American Airlines, the head of United. I mean we are all 
friends. We know each other. We can do a lot.
    Vice Chairman Dodd. Has there been any effort like that to 
bring together the major airlines?
    Mr. Feld. Yes, I mean it is starting. I mean it was not 
here 6 months ago. It is now. The second thing is to somehow 
get some sort of public policy around standardization and some 
certification rules around what is happening, as we go into the 
21st century. Let us assume we get it fixed.
    Vice Chairman Dodd. Yes.
    Mr. Feld. Let us not let it keep happening.
    Vice Chairman Dodd. I know we have to get to the next 
panel, but I wanted to ask Mr. Downey and you, Ms. Garvey, I 
went down the list of the 13 major airlines, national airlines, 
regional airlines and airports, and major international 
carriers, have letters and correspondence gone out to all of 
them requiring or inquiring as to where they are in all of 
this? And I would like to know to what extent you have heard 
back from these entities and what sort of information you are 
getting back and whether or not we are hearing back from people 
not responding and whether or not you are getting the proper 
communication because I tell you this is another area where, 
again, I think, for airports and airlines that are not 
responding to requests for information, I would like to know 
who they are?
    Mr. Downey. The first step on that, Senator, was to reach 
out to each of those entities through the usual channels. The 
chief inspector who works with them warned them that we wanted 
this information. It was followed up with letters. And 
September 30 is the first response date, and we expect to hear 
back from the airlines and the airports a general response by 
September 30 and a specific response by the end of the year on 
the status of their plans. So we will have two benchmarks, and 
we certainly will follow up. Anyone we do not hear from is 
going on a watch list as suspect for operations.
    Ms. Garvey. One additional piece is we do have the added 
ability through our inspectors, as the Deputy suggested, 
particularly with manufacturers to build that into the 
inspection checklist so that that is a good piece of it. I 
would also just mention that with the new equipment we are 
getting, we are finding some of the same issues, which is even 
the new equipment is not Y2K compliant. So, we have built that 
into our contracts and have since March and are discovering, 
though, that we cannot simply take the word of the contractor, 
but we need to do an independent validation and before it is 
deployed, before we have implemented the contract and paid for 
the contract, we tested it in our technical center in New 
Jersey. So, it is important to do that.
    Chairman Bennett. Yes.
    Vice Chairman Dodd. Thanks.
    Chairman Bennett. Very good. We thank you all.
    Vice Chairman Dodd. Ms. Freedman, you gave such excellent 
testimony, I do not have any questions for you.
    Mr. Feld. We are virtually done.
    Chairman Bennett. Secretary Downey, you probably ought to 
just stay where you are. [Laughter.]
    The next panel will deal with the other modes of 
transportation besides aviation, and the first witness will be 
Ms. Joyce Wrenn, who is vice president of Informational 
Technology and CIO of Union Pacific Railroad. Next will be Mr. 
Scott Skillman, who is vice president and CIO of Crowley 
Maritime Corp. Crowley is one of the nation's largest and most 
highly automated marine freight shipping companies. Then we 
will have Mr. Chris Lofgren who is chief technology officer of 
Schneider National, which is one of the United States top five 
trucking companies. And the last witness, Ms. Robin Stevens, 
who is chief of the Year 2000 Compliance for the New York 
Metropolitan Transportation Authority.
    So where we have had a major emphasis on aviation the first 
time, we are now going to have railroads, trucks, maritimes, 
and mass transit.
    Vice Chairman Dodd. Only one, Pony Express, is not here. We 
did not get them.
    Chairman Bennett. Well, the Pony Express----
    Mr. Lofgren. That would be us.
    Chairman Bennett. We have just dedicated the Pony Express 
Memorial statue in Salt Lake City, Utah, and it seemed 
relatively low tech. [Laughter.]
    Vice Chairman Dodd. It is that horse Y2K compliant?
    Chairman Bennett. Yes. All right. We will go in that order. 
Ms. Wrenn, we will start with you.

    STATEMENT OF JOYCE WRENN, VICE PRESIDENT OF INFORMATION 
    TECHNOLOGY AND CHIEF INFORMATION OFFICER, UNION PACIFIC

    Ms. Wrenn. All right. Good morning, Chairman Bennett and 
Vice Chairman Dodd.
    Chairman Bennett. We appreciate your patience while we have 
gone through the other. Your problems are not less important, 
but maybe for the press they are little less sensational.
    Ms. Wrenn. It was a very interesting discussion to hear. My 
name is Joyce Wrenn. I am vice president of Information 
Technologies for Union Pacific Railroad. I want to thank you 
for the opportunity to speak to you today about one of the most 
critical issues facing businesses today and that is the Year 
2000 compliance.
    Union Pacific is the largest railroad in the country, 
operating 36,000 miles of track in 23 States. More than 50,000 
employees on our railroad use computer technology every day and 
in almost every facet of their job to make sure that the goods 
entrusted to us are transported safely and according to plan.
    Year 2000 has implications in all areas of our business and 
for our business partners. Our senior management places the 
highest priority on ensuring that Union Pacific Railroad is Y2K 
compliant prior to the next century. We are committed to making 
January 1, 2000 just another day.
    I have submitted a written statement outlining specific 
measures Union Pacific has taken to achieve this goal. The 
Association of American Railroads has provided an attachment to 
my statement that outlines the industry status on Year 2000 
issues. In my comments today, I would like to highlight Union 
Pacific's technological preparations for the turn of the 
century.
    Beginning in 1994, Union Pacific's management recognized 
the importance of Year 2000 issues and began allocating 
resources accordingly. Union Pacific Railroad expects to spend 
just under $50 million by the time this project is completed. 
By 1996, Y2K compliance efforts were in full swing and have 
been a No. 1 priority ever since. Currently we have over 100 
employees working full time on Year 2000 issues relating to 
software, hardware, and embedded chips. This encompasses a vast 
amount of information. The issue of embedded chips alone 
includes locomotives, automated train switching systems, 
computer-aided train dispatching systems, signaling systems, 
computerized fueling stations, weigh-in-motion scales, cranes, 
lifts, PBX systems, and computerized monitoring systems 
throughout the company.
    Despite the seemingly overwhelming task, I am pleased to 
report that Union Pacific's Y2K project is on plan and many of 
the sub-projects will be implemented, fully tested and 
certified Year 2000 compliant by the end of 1998. The Office of 
Management and Budget has recommended a five-step Y2K 
compliance program including awareness, assessment, 
remediation, validation, and implementation. Under these 
guidelines, UP has completed steps one and two. Step three, 
remediation planning, is also complete in most areas. The last 
two steps, validation and implementation, are well underway and 
many areas are scheduled to be completed this year.
    We monitor our progress on these tasks through formal 
project review meetings held several times each month and 
quarterly updates to senior management and the board of 
directors.
    Our progress toward Y2K compliance has been noted by more 
objective parties as well. On July 21, 1998, Electronic Data 
Systems conducted an independent audit of UP's Y2K readiness. 
They noted that--in quotes--``an exceptional Y2K readiness 
project is in place. Union Pacific can and should be proud.''
    Let me address a few critical issues in greater detail.
    One of the most pressing issues for the transportation 
industry is guaranteeing public safety. We are confident that 
the railroad will be just as safe on January 1, 2000 as it is 
today. There has been considerable concern expressed to the 
railroad industry about signals and highway grade crossing 
devices. Industry research and testing indicate that signals 
and grade crossing devices do not employ date calculations and 
do not depend on dates. Because of this, they are not subject 
to the sort of Year 2000 problems that are of the greatest 
concern to this committee.
    Nonetheless, the industry will continue to research and 
test until we are assured that every safety critical component 
and system will operate properly before, during and after the 
century change. At Union Pacific specifically, we are testing 
selected critical software, hardware and embedded systems even 
if they have been certified compliant by the vendor.
    In addition, in cooperation with AAR, Union Pacific is 
sharing information on the compliance and testing of safety 
critical components common to the industry. UP has committed to 
help fund the development of a shared web site for this purpose 
and access to this information should be available in the third 
quarter of 1998.
    Union Pacific is also concerned with maintaining smooth 
business operations for ourselves and our customers. By July of 
this year, we had asked 335 essential suppliers to inform us of 
the Y2K status of their internal systems. Over 90 percent have 
responded to our surveys indicating they have a solid Y2K 
project plan. Our Y2K project also covers electronic exchanges 
of information with customers, vendors, other railroads, and 
banks. UP is taking a very active role with the AAR in testing 
a new four-digit year standard for the railroad industry and 
trading partners and testing is expected to be largely 
completed by the end of this year.
    UP is also maintaining support for older versions of 
electronic transactions that interpret a two-digit year for 
customers an vendors who continue to use the two-digit system. 
Despite these measures, we recognize that total coverage of all 
internal and external Year 2000 problems is unlikely. 
Therefore, we are developing a Y2K contingency plan in 1998 and 
adjusted as needed in 1999. Currently, we plan to have a Y2K 
command center staffed 24 hours a day for technical experts 
beginning in the fourth quarter of 1999 and continuing into 
early 2000 for any problems that might occur due to Y2K.
    Although we have planned for January 1, 2000 to be just 
like any other day, contingency plans will be ready to 
implement just in case. We believe we have adopted a 
responsible course of action that will allow us to continue to 
serve our customers and protect our employees and the public 
well into the next century. Again, thank you for the 
opportunity to discuss Union Pacific's Year 2000 plans. I would 
be happy to answer any questions.
    [The prepared statement of Ms. Wrenn can be found in the 
appendix.]
    Chairman Bennett. Thank you very much. Mr. Skillman.

     STATEMENT OF SCOTT SKILLMAN, VICE PRESIDENT AND CHIEF 
          INFORMATION OFFICER, CROWLEY MARITIME CORP.

    Mr. Skillman. Good morning. I am Scott Skillman, senior 
vice president and chief information officer of Crowley 
Maritime Corp. I am pleased to have the opportunity to address 
the committee regarding the Year 2000 issue, its effects on our 
company and the maritime industry.
    Crowley is a privately held company engaged in----
    Chairman Bennett. Could you move the microphone just a 
little closer to you?
    Mr. Skillman. Sure.
    Chairman Bennett. Thank you.
    Mr. Skillman. Crowley is a privately held company engaged 
in maritime transportation and related services. The company 
has primarily two operating subsidiaries, Crowley American 
Transport and Crowley Marine Services. Crowley American 
Transport provides containerized liner cargo services between 
North America, South America, Central America, and the 
Caribbean. It has 121 locations serving 40 countries with 50 
ships and barges. Crowley Marine Services provides worldwide 
contract and specialized marine transportation services. It 
operates a diverse fleet of 200 tugs and barges and specialized 
equipment including oil tankers, tank farms, heavy lift cranes 
and large all-terrain vehicles.
    In general, the international maritime industry has some 
unique issues it deals with which could be impacted by the Year 
2000. The documentation of imports and exports of cargo and 
associated governmental regulations for Customs duties, 
international negotiable bills of lading and documentation of 
shipping manifests, EDI with customers and vendors. We see Year 
2000 concerns for the industry in that the governmental 
organizations required to clear cargo and vessels in and out of 
ports including customs, immigration, naval or Coast Guard 
services and taxing authorities may not be able to perform 
their normal processes which causes bottlenecks, delays, port 
congestion, and reduced commerce.
    Another industry issue is the electronic tracking of fleets 
of containers, chassis and trailers and consequently our cargo 
from customers. Electric power and telecommunications problems 
could severely reduce the ability to provide these functions. 
Crowley, and we assume other shipping lines, have the usual 
Year 2000 issues with computer applications, computer 
equipment, voice and data communications, and satellite 
communications. The operating equipment on our vessels contain 
Year 2000 issues with embedded chips. There are issues with 
navigational systems, GPS, communication systems, engineering 
monitoring systems and components in the steering.
    In the case of chartered ships from third parties we are 
obtaining Year 2000 warranties in the agreements, but presently 
there is no certification process to verify these ships in the 
worldwide fleet are Year 2000 compliant. As it relates to 
operating equipment on terminal facilities, there are cranes, 
scales, refrigeration equipment, forklifts, and other automated 
yard equipment. And finally, we are investigating the impact 
from critical business partners we have in the United States 
and internationally.
    As far as Crowley is concerned, we have established a 
worldwide Year 2000 company project. The project is headed by 
an executive steering committee composed of the chairman and 
CEO and other senior officers of the corporation. It reports 
quarterly to the board of directors. The core project team is 
composed of more than 100 senior personnel selected for their 
expertise and knowledge in the particular areas including land, 
marine, and international operations, purchasing, 
administration, finance, legal, and the information technology 
department.
    We have already remediated all of our mainframe 
applications and we are presently in the testing process. We 
are replacing some of the old systems and that will be done by 
March. It is important to note that the success of our program 
to date is the result of the company's realization that it is 
really a business continuation issue and not an information 
technology department issue. Business contingency plans are 
being focused on for unexpected problems that impact our 
operations including those due to noncompliance or difficulties 
with our partners. We expect this contingency planning process 
to be especially burdensome.
    The general preparedness of the maritime shipping industry 
is sketchy right now. At this time, we are not aware of any 
maritime industry organization that has provided an overall 
forum to discuss the preparedness of the industry. However, the 
U.S. Coast Guard and insurance clubs have sponsored maritime 
industry Year 2000 conferences and third party maritime 
interaction within the United States shows a confidence in 
their abilities to be prepared.
    As it relates to our offshore locations preparedness in 
Latin America and the Caribbean, I can offer you the following. 
Large companies, mostly multinationals, are addressing the 
problem. Small companies appear to be approaching the problem 
as a technology issue. The foreign public sector is a concern. 
Being very large and decentralized institutions, there are 
several departments handling pieces of the function separately. 
Efforts appear to have started very late. Many have limited 
resources and are limited by the budget of the governments.
    Customs in most countries are still a question. Problems 
will force the use of alternative manual procedures which will 
cause delays. The review of power and communication companies 
have not yielded any conclusive responses as to whether they 
will be able to operate. At the present time, many government 
controlled organizations are in the process of privatization. 
This could either help or hinder the situation. Again, I would 
like to emphasize that we are operating in Latin America and 
the Caribbean. Trade routes to Europe, the Middle East, and 
Asia are another complement of issues.
    Actions that we believe Congress or others should take to 
speed up the Year 2000 remediation efforts. The unsettled legal 
environment is obstructing the ability of consumers of products 
or services from obtaining clear and timely information from 
those markers regarding their Year 2000 readiness. Second, we 
feel it would be helpful if the maritime industry would form 
action teams to share data on maritime related equipment and 
electronic processes in order to use leverage of the industry 
to ensure that the equipment and processes are properly 
addressed.
    And finally, we would like to have a clear understanding 
from the foreign public sector as to the plans and status of 
the Year 2000 programs by the various agencies which could 
affect the international trade. Thank you very much for the 
opportunity.
    [The prepared statement of Mr. Skillman can be found in the 
appendix.]
    Chairman Bennett. Thank you. Mr. Lofgren.

STATEMENT OF CHRIS LOFGREN, CHIEF TECHNOLOGY OFFICER, SCHNEIDER 
                            NATIONAL

    Mr. Lofgren. On behalf of Schneider National and our Year 
2000 projet manager Tom Kemp, in attendance here today, I want 
to thank Senator Bennett, Senator Dodd, and the other committee 
members for providing this opportunity to testify today. We 
believe the topic is timely and important to the trucking 
industry and while the issues and risks are significant, we 
have a great deal of faith in the trucking industry, working 
with their customers, that we will navigate successfully 
through this issue. As background, Schneider National is the 
largest truck load carrier in North America. We employ 
approximately 12,000 driver associates and 3,000 independent 
contractors. In addition, we operate a logistics company that 
contracts with over 1,000 third-party carriers, across all 
modes of transportation, in managing over $1.3 billion in 
freight or freight bill for our customers.
    We have a long history of being an industry technology 
leader, starting with being the first to deploy satellite 
communication to the tractor and continuing with our world 
class operational systems. By our very strategy, to leverage 
technology for low-cost operations and to deliver significant 
value to our customer supply chains, we have tightly integrated 
information and communication technology into both our business 
and to our customer's operation. We no longer have the luxury 
of being a technology island unto ourselves. As a result, we 
have been actively pursuing our Y2K remediation projects.
    It started in May 1995 when one of our service team leaders 
inadvertently hit zero instead of nine and put a driver on 
vacation until 2005. [Laughter.]
    It generated an error and thus began our Y2K project----
    Vice Chairman Dodd. With pay?
    Mr. Lofgren. What?
    Vice Chairman Dodd. With pay?
    Mr. Lofgren. No. Well, it would have been. Some 25,000 
hours of effort later, we were poised within 7,000 hours of 
testing in early 1999 to be able to successfully continue the 
same customer service in the early days and weeks of 2000 that 
has fueled our growth in the past. As you have heard today and 
probably in the other sessions, it basically has come at a 
significant cost without much benefit for us.
    From interacting with the third parties in our logistics 
business, we can make the following assessments concerning the 
trucking industry in general. Large carriers have or will be 
impacted by the Y2K issues but they most likely possess the 
technical staff and the financial resources to work through the 
issues if they have started early enough. Small carriers will 
most likely suffer minimal impacts. Most of these small 
carriers use pen and paper, spread sheets, some electronic mail 
through service providers that likely can be updated quickly. 
Medium-size companies are probably most at risk. Their 
operations are large enough that they rely on technology. In 
most cases, they implemented/purchased technologies with 
smaller IT staffs and therefore may not have the control of the 
software, the staff, or the financial resources necessary to 
address the problems in a timely manner.
    With respect to Government's role in the Y2K challenge, we 
have the following comments. Any organization of size that has 
not started down the path of Y2K remediation is probably not 
going to be ready by January 1, 2000. Those that have would 
only be negatively impacted by new requirements from 
legislation. What is important: That Congress facilitate an 
environment of open disclosure both for innovative solutions to 
be shared to facilitate the collective progress of American 
business and for known problems that will not be cured to allow 
contingency planning to be developed.
    This open environment is crucial but could be thwarted by 
individuals and organizations lining up to turn these 
disclosures into their private gain and liability for good 
faith providers of solutions and also good faith disclosures of 
unresolvable issues. We have provided the committee with a 
written statement both in terms of the survey and a statement 
for this testimony. Again, on behalf of Schneider National, 
thank you for the opportunity to participate and your 
commitment to ensure that American business and the American 
people will move successfully into the new millennium.
    [The prepared statement of Mr. Lofgren can be found in the 
appendix.]
    Chairman Bennett. Thank you very much. Ms. Stevens.

STATEMENT OF ROBIN C. STEVENS, CHIEF, YEAR 2000 COMPLIANCE, NEW 
           YORK METROPOLITAN TRANSPORTATION AUTHORITY

    Ms. Stevens. Good morning, Mr. Chairman, members of the 
committee. My name is Robin Stevens, deputy chief financial 
officer of the MTA and chief, Year 2000 Compliance. On behalf 
of the New York State Metropolitan Transportation Authority, I 
am pleased to participate in your hearing on the Year 2000 
problem. I have provided a copy of my testimony and ask that it 
be entered in the record.
    Chairman Bennett. Without objection.
    Ms. Stevens. The MTA shares your concern and appreciates 
your interest in understanding the problem and its impact on 
mass transit. Before I speak about the Y2K issues facing us, I 
think it would be helpful for me to tell you a bit about our 
organization. We are the largest transit service provider in 
the Western Hemisphere serving a 14 million person, 4,000 
square mile service area that covers 2 States, 14 counties and 
dozens of cities. While we are widely recognized for operating 
the MTA New York City Transit bus and subway system, we also 
operate the nation's two largest commuter railroads, MTA Long 
Island Rail Road and MTA Metro North Railroad, which serve New 
York City's eastern and northern suburban counties as well as 
two counties in Connecticut, and MTA Long Island Bus which 
provides intermodal connections to Long Island Rail Road and 
New York City Transit.
    We are also the steward of Robert Moses' legendary 
Triborough Bridge and Tunnel Authority, now MTA Bridges and 
Tunnels, operating nine bridge and tunnel facilities. All told, 
the MTA carries over a quarter of all transit riders in the 
country, 6 million a day, many of whom use more than one of our 
modes daily.
    We are very much cognizant of the impact we could have on 
our region if there were unresolved Y2K issues that affect our 
services. That is why I am happy to say to you that we are 
working pursuant to an executive order by Governor George E. 
Pataki to all State agencies and authorities to give priority 
to resolving Y2K issues. We have worked closely with the 
State's Year 2000 Project Office sharing information and 
coordinating regional issues.
    Our story in some ways is more complicated and in some ways 
less than that of other transit systems. It is complicated by 
the fact that because of our size, we have many hundreds of 
software applications that support our train and bus services. 
We also however operate a transit system that due to the eras 
in which some of the critical operating systems were built has 
many critical aspects that are very manual in nature to this 
day and therefore not directly affected by software issues.
    Nevertheless, we began our comprehensive Year 2000 effort 
in early 1995 beginning with understanding the extent to which 
our mainframe systems would be affected. An all agency effort 
was formalized with interagency workgroups and project teams. 
In early 1996, we began to define code to be remediated and 
identify other midrange and microsystems that needed 
remediation and systems that would be replaced rather than 
remediated. As we began to understand the size and scope of the 
effort, we realized we had to focus on critical systems. Later 
in 1996, we identified other areas that could be affected by 
Y2K including embedded chip technology and continuity of goods 
and services from our business partners and suppliers.
    Each of our operating systems agencies has its own project 
group led by its chief information officer and involving staff 
from both technology and operating departments. These groups 
report progress to each agency president on a monthly basis. 
MTA headquarters staff oversees the efforts of the agencies and 
prepares periodic reports to the finance committee of our board 
of directors.
    To date, we have spent $25 million for internal information 
technology staff involved with remediation, for consultants and 
for hardware and software. This dollar figure does not include 
the cost of systems that will be replaced. We expect that costs 
could exceed $30 million before we conclude the project. Our 
program includes an audit component which requires agencies to 
document their efforts and test plans and results.
    The agencies have identified approximately 357 application 
systems used in their operations. To focus our efforts and 
ensure that critical systems were remediated as early as 
possible to allow for recovery time for unexpected problems, we 
focused on critical systems and divided the work into critical 
and non-critical categories. We have a goal to remediate 
critical systems by the end of 1998. Completion is defined as 
remediated, forward date tested, and operating in a current 
production environment.
    Some 141 systems have been identified as critical and all 
will be completed by the end of 1998 with the exception of 6 
systems which will be completed by the first quarter of 1999. 
Computer chip technology has found its way into technical 
systems and mechanical equipment including telephone systems, 
communications devices, elevators, heating, ventilation and 
cooling systems, and Long Island Rail Road and Metro North 
Train equipment control systems and signal systems.
    This may be one area, however, where the age of our systems 
has advantaged us. With the exception of one new technology 
test train, the entire subway fleet and subway signal system is 
not affected by embedded chip technology. This is different 
from the situation that newer transit systems may face. We do, 
however, have such technology in our systems. Agency staffs 
involved in train, bus and facility operations have completed a 
survey of critical physical plants and identified a total of 
489 devices critical to our operation. They determined whether 
there is embedded technology, if the date function exists, if 
it's compliant or not, whether it is active or passive. Thirty-
Five percent of the devices have been determined to have no 
embedded date function, no embedded technology or date function 
or to be compliant.
    All critical devices are subjected to testing, even where 
the vendor has assured us that it is compliant. Our goal for 
completion for identifying and resolving critical embedded chip 
technology including the development of contingency plans is 
the end of first quarter 1999. We have identified a total of 
1,244 critical suppliers. Letters seeking information have been 
sent to all of them. Our initial response was less than 25 
percent. Second mailings brought that up to 40 percent. Where 
firms have not responded or not responded adequately, 
management staff is contacting them by phone or in person to 
discuss compliance. We expect to complete our surveys by the 
end of the year and develop contingency plans by the end of the 
first quarter 1999.
    This area is the most troublesome since we, as many other 
entities, rely on so many companies for goods and services 
including key ones such as power and telecommunications. We 
have no choice but to rely on the word of suppliers. However, 
in instances where a supplier is unique and critical, we are 
reviewing their efforts at a more detailed level.
    Contingency plans are, as you know, an essential part of 
our business. Our standard plans address both isolated failures 
such as elevators not operating to larger system-wide failures. 
Agencies are reviewing those plans in the context of Y2K and 
will develop supplemental plans as needed.
    As I mentioned earlier, New York State Governor George E. 
Pataki issued an executive order for all State agencies and 
authorities giving priority to the Y2K problem. The State has a 
Y2K project office with which we share information and 
participate in forums.
    A Y2K Tri-State Planning Group was formed in July in an 
effort to enable various organizations to share knowledge and 
experience that could affect our region. The MTA and its 
agencies participate in this group. It also includes State, 
Federal, and city representatives as well as participants from 
the private sector. We believe that our extensive and 
comprehensive efforts to address the Year 2000 problem will 
ensure mass transit service through the millennium. Our early 
start, the involvement of senior management, as well as teams 
of staff from the many disciplines that manage and operate the 
vast infrastructure necessary for mass transit gives us 
confidence that we have thoroughly addressed the problem. We 
will provide any additional material you may require in your 
effort to reduce the risks of Year 2000 failures. Thank you.
    [The prepared Statement of Ms. Stevens can be found in the 
appendix.]
    Chairman Bennett. Thank you. Mr. Skillman, you have raised 
a specter that frankly I had not thought of--that happens at 
all these hearings. You just get reassurance in one area and 
you get concern raised in another: The documentation that must 
accompany all goods that are shipped in international waters at 
an international port that cannot go forward. If you are 
shipping something that is perishable and you cannot get it out 
on time, even if we had the U.S. Customs thing all solved on 
this side and the port completely Y2K compliant in the United 
States, you could still run into serious difficulty getting the 
goods in a foreign part. Frankly, that had not occurred to me 
as a Y2K consequence until we had your testimony. So that is 
something new for me to worry about.
    Let me raise with you--this is not your area of expertise 
because you do not operate literally in these waters, but I 
have to ask you because the trade association that represents 
your industry has been singularly non-forthcoming with 
information. I am sorry that that is the case, but their 
reaction to our inquiries was: Well, this is a problem that 
each individual member of our trade association is more than 
equipped to handle by themselves and we do not need to worry 
about it.
    Oil coming into this country from Saudi Arabia, we learned 
20 years ago, 25 years ago, is essential to our economy and if 
it is interrupted for any period of time, there is a serious 
recession that is created. Do you have any sense of what would 
happen in terms of offloading oil in the Persian Gulf and 
elsewhere because of Y2K problems at those ports, both in terms 
of the paperwork that would have to accompany it as well as the 
physical offloading on to the ships of the oil itself or have I 
asked you a question that is completely out of your canon? If 
it is, I will understand.
    Mr. Skillman. I would say it is about three-quarters of the 
way out of my scope.
    Chairman Bennett. OK.
    Mr. Skillman. There are certain pieces----
    Vice Chairman Dodd. You got to speak close to that 
microphone. We cannot hear you if you do not. Right up close to 
it.
    Mr. Skillman. I would say it is about three-quarters of the 
way out of my scope. The vessels themselves like everybody in 
the industry, we are doing checking of our own systems. As far 
as how you unload it, you would have to deal with the different 
environments of their automation. As far as the documentation 
and the paper, it really will boil down to the individual 
countries and what they determine as their alternative 
approaches. It would be very nice to be able to have those 
conversations prior to that timeframe so there is consistency 
between the different lines, between the different countries, 
and that you are not dealing with it one way with one country 
and another way with another country.
    Chairman Bennett. Mr. Downey, do you have any conduit 
through which you could have these discussions? Should it go 
through the State Department?
    Mr. Downey. That is occurring through the State Department 
and through the embassies as well as through some international 
organizations. I know we just completed a questionnaire for 
APEC on behalf of the U.S. Government. They are attempting to 
get the same information from all the countries within APEC and 
I think other similar efforts are underway to at least assess 
what the situation will be with respect to Customs, which will 
not only be a port issue but I also point out a land border 
issue in this country where the movement of the data that 
accompanies the goods is oftentimes the holdup and we could 
have serious problems if that data is not moving.
    Treasury Department and Customs are on our sector group for 
transportation because we recognize that those have to work 
together and in the council, and we will both through State and 
through Treasury be working on this.
    Chairman Bennett. Mr. Lofgren and Ms. Stevens both, in 
conversations with the Federal Highway Administration 
preparatory to this hearing, pointed out that one of the 
challenges that we face with Y2K has to do with stoplights. 
Particularly in the Washington area if the stoplights do not 
work, the burden placed on mass transit would be very 
significant. And Mr. Lofgren, I am sure that trucks have to 
unload somewhere and they are not always at big terminals that 
are out of town, that there has to be a concern about the 
gridlock that would occur in the cities in terms of your 
ability to deliver goods if the stoplight system breaks down.
    I do not suppose you have any information. Maybe Ms. 
Stevens, since you work for a public entity and the public 
entities run the stoplights, you have had some conversations 
with some folks. Is there any light that you can shed on this 
subject, not to make a pun out of it?
    Ms. Stevens. Well, we have been assured by the city of New 
York that their traffic control systems, their streetlights are 
Y2K compliant. We have been working with them in interagency 
workgroups.
    Chairman Bennett. Mr. Lofgren, have you talked to anybody 
in any of the municipalities where you operate to find out 
about that?
    Mr. Lofgren. No, I think we will probably handle it very 
similar to how we handle when we have to deliver in Manhattan. 
You know I think that it certainly poses a critical issue in 
terms of how we are ultimately going to deliver and do so in a 
timely manner, but it has not been something from a contingency 
plan that we have to deal with. Ideally, we will be able to 
communicate with the driver through the satellite system so we 
will know as it starts to occur and probably be able to notify 
drivers inbound before they encounter the problem to take 
action. They can, you know, stop at one of our operating 
centers or other truck stops until that gets resolved.
    Chairman Bennett. OK. Ms. Wrenn, Union Pacific had some 
difficulties by virtue of their merger with Southern Pacific. 
They were not necessarily Y2K difficulties, but they were 
computer difficulties. I personally can identify with those. I 
used to be vice president of an airline that was formed by the 
merger of three smaller airlines. The merger took place at 
midnight and at 12:01 disaster struck when we discovered that 
the computers could not talk to each other. There were 
literally telephone calls to airport managers saying will you 
go out and look in the back hangar and see if there is one of 
our planes there? It is big with blue paint on the tail and, 
you know, call us back if you can find it because they just 
went off the computer screens.
    Union Pacific has worked through those problems and your 
level of service is back now to where it was before you had 
those difficulties and I commend you for that. But do you have 
any experience that you might share that you think would be 
useful as to what happens when computers cannot really function 
the way they are supposed to?
    Ms. Wrenn. Well, I guess I really need to clarify what 
happened in the past year and a half as we have been merging 
the Southern Pacific into the Union Pacific, and that was all 
completed from a computer standpoint July 1. Actually, the 
systems were merged together technically very well. There were 
no outages or glitches. We maintained the Southern Pacific 
systems for a period of time along with the Union Pacific 
systems and by territory merged pieces of the Southern Pacific 
Railroad into the Union Pacific and encompassed that portion of 
the railroad into the Union Pacific systems.
    We determined early on, because Union Pacific was larger, 
that the business processes to run Union Pacific would be the 
ones that we would run the merged company with. Consequently, 
that caused some difficulty in learning the business processes, 
from the Southern Pacific's way of doing things to the Union 
Pacific's, and there were some problems there as well as 
training, although we did extensive training in the Union 
Pacific systems which are not new. I mean Union Pacific has had 
them installed for many years.
    There were, as you would expect, start-up problems in 
people in understanding how to use the system, and so each time 
we put more people into the field to do the training and so 
forth. The last cut over in July was very smooth, to solve any 
problems we even had an open conference line. So we are 
experienced in how to handle these kinds of situations where we 
had a 24-hour open conference line to resolve any issues as 
they occurred. That piece went very smoothly. And I am sure 
that today people are very comfortable using the systems.
    There was a lot of misunderstanding, I think, in terms of 
the nature of the problems when we merged those two companies. 
From a technical standpoint, the computer systems did come 
together very easily, and when I say easily, I mean cleanly 
technically. It is the business processes and the training, 
getting used to these new systems, that I think took some time. 
Now what we are doing with Y2K is making compliant with Y2K all 
of these Union Pacific systems, and that will then be 
transparent to the users of the systems. In fact, since we have 
most of them now tested--the mainframe area--we put them into 
production as soon as we have tested them for Y2K compliance. 
They are running the railroad today. So they are in operation. 
And there is not any perceptible difference to that end-user of 
the system.
    Thus, the problems were more a merging of two different 
cultures than computer systems that did not talk to each other.
    Chairman Bennett. I see. Thank you. Vice Chairman Dodd.
    Vice Chairman Dodd. Thank you, Mr. Chairman, and I thank 
all of our witnesses here for your statements. Just going over, 
as I mentioned with the airline industry, just to put it in 
perspective, I went down just collecting the basic data and 
information about systems; I think it may be interesting. As we 
have it, in the railroad area there are some 700 railroads 
operating in the United States that cover almost a quarter of a 
million miles of track, there are 20,000 locomotives, and 1.2 
million freight cars operating in the United States, and over 
265,000 people work in the railroad industry in the country.
    Amtrak has 20 million intercity passengers, 48 million 
commuter passengers, 300 locomotives, and 1,700 passenger cars. 
The maritime industry and ports, 16 million jobs nationwide 
directly linked to maritime. I do not have the number of ships 
and so forth in this data, but just indication with your 
company give a size of the magnitude. And trucking, there are 
400,000 trucking companies in the United States. There are 
about 80,000 fleets that have 10 or more trucks. Some 77 
percent of all our communities in this country rely exclusively 
on trucks to get their produce and supplies in and out of them. 
There are about 9.5 million people employed in your industry, 
and in 1996 alone, trucks traveled 166 billion miles in the 
United States. I think many of those are in Connecticut. I see 
them on the road all the time. [Laughter.]
    Public transit, there are almost 6,000 transit U.S. transit 
agencies in the United States covering 3.7 billion miles, 246 
million hours of annual service, and employing 300,000 people. 
I mean just the magnitude of this industry in terms of its 
economic impact and from an employment standpoint, not to 
mention the interagency, which raises the question, Mr. Downey, 
so much of what we are talking about here is dependent on what 
happens locally. I am talking about traffic lights and so 
forth, but one of the things we are trying to promote in 
Connecticut is the intermodal transportation needs of my 
constituencies, people who travel from Connecticut to New York 
to go to work everyday, Fairfield County, for instance, and you 
will understand this, Ms. Stevens, many of them, you know, 
parking lots are filled. You have a waiting list now to get a 
parking space next to a train station in Connecticut.
    They are as valuable as real estate to be able to get one, 
you know, so how people can get from the rail system, their 
cars or bus systems and so forth, I do not need to make the 
case to this panel. You understand there are modal needs. And I 
am wondering, Mr. Downey, if you could comment to what extent 
the Department of Transportation has been focusing some 
attention on the notion of intermobility that is going to be 
critical and represented by the various modes of transportation 
that are gathered at this table today where to the extent they 
are able to interconnect, it is one thing for computer systems 
to talk to each other in an similar industry, in the same 
industry, in rail and airlines. But will they be talking to 
each other from a local to a regional system, for instance, in 
terms of the Y2K issues?
    Mr. Downey. This is key to success in the transportation 
business whether it is Y2K or any other year. The intermodal 
operations----
    Vice Chairman Dodd. And is not just people; it is goods and 
services, too.
    Mr. Downey. Yes, goods and services, right.
    Vice Chairman Dodd. That ship that arrives at a port relies 
on a train system or an air system that is going to deliver it 
to a truck that is going to then deliver to a community. So I 
mean it all----
    Mr. Downey. All of these things have to work together. 
Fortunately we have developed, I think, some good 
relationships, building out of the legislation, ISTEA 
legislation of 1991, and added to by the TEA-21 legislation 
this year. We really have gotten the public agencies and the 
private sector who move people and goods beginning to recognize 
the importance of intermodal transportation. Transportation 
does represent about 10 percent of the GDP and clearly could be 
a real deterrent to economic growth if it is not working well.
    The thing that has knitted it together in recent years has 
been what we call intelligent transportation systems using 
computer technology to make these systems interrelate and work 
together, and we recognized Y2K could be an Achilles heel in 
this area. We held a conference earlier this year. We will hold 
another one in the early part of next year to see that this 
intelligent transportation systems area is ahead of everybody 
else in worrying about this issue and really taking the lead in 
making sure the systems do work together. Stoplights, for 
example, we could have everything else fixed, and if all the 
lights are blinking red, nothing will be moving. So we pull 
together the professionals in the transportation industry, the 
Institute of Traffic Engineers, the State highway officials, 
public transit officials, trucking industry, and got them to 
begin to talk to each other and we will follow up in January to 
be sure that they are making progress on how these modes do 
interrelate. It is critical.
    Vice Chairman Dodd. Again, I think it is important to keep 
us posted and also ideas and suggestions I mean can be helpful 
that we can convey to our own respective States and localities, 
and I know our colleagues would be very interested in knowing 
ways in which they can be cooperative in assisting in this.
    Mr. Downey. Coming out of that summit meeting, we actually 
have produced a brochure--it should be off the press within the 
week--of tips as to what the transportation agency should be 
doing to get ready, and we certainly want to work with you on 
getting the widest possible distribution of that information.
    Vice Chairman Dodd. Thank you. Ms. Stevens, obviously you 
bring the issue directly home to me. All of you do. I have 
ports and rail lines and obviously a lot of trucking in my 
State and major companies in my State in trucking. But also 
mass transit is a big issue for us in the Northeast. You have 
heard Senator Bennett and I raise concerns about the response 
of partners, private and public partners in these issues, and 
you pointed out in your statement that the response rate by 
your critical business partners--those are your words, the 
critical business partners--has been abysmal: 40 percent of the 
1244 critical suppliers.
    You indicated that to achieve even this level, you needed 
to send second letters as well as follow-up phone calls. I just 
want to take this opportunity to--again we would like to the 
extent we can help--I would like to know who they are? Who is 
not even getting back to you on this stuff? And it goes through 
right across the spectrum. I have said this over and over 
again, but here we are with 477 days, I think, one witness 
indicated before this clock runs, and if people do not have 
enough common sense to understand the importance of this, I 
think we ought to know who they are and use whatever vehicles 
we have available to us here to make the case that do not go 
running to court claiming ignorance at some point because that 
is what this may come down to for a lot of these people.
    And so I would like to know from you if you can keep us 
posted as to who these people are that are not responding to 
your systems. And I would like to know what your contingency 
planning for a massive public transportation system such as the 
MTA is if, in fact, it crashes.
    Ms. Stevens. Well, we are very confident of our ability to 
operate. As I mentioned, we will have our major systems 
remediated--our major application systems--remediated by the 
end of this year with the exception of a few, and it is very 
achievable to get those finished by the end of the first 
quarter of 1999. With embedded chip technology, we are finding 
although we have it, it basically often does not include date 
calculations that affect the operation of the system. We can 
operate the system. Maybe it is a maintenance device that has a 
recording function as well, and that function may not record 
accurately the date, but the device will still at its most 
elemental level operate its most essential level.
    Vice Chairman Dodd. Let me try to come at this a different 
way. Do you have a contingency plan?
    Ms. Stevens. We have contingency plans as a normal routine 
operating matter.
    Vice Chairman Dodd. No, I understand, but for this?
    Ms. Stevens. And we are supplementing those for what we 
think might happen here. Those are being developed.
    Vice Chairman Dodd. So we do not have one yet?
    Ms. Stevens. They are being developed. They are in various 
stages of preparation for the various aspects of the systems. 
We think for the most part we will be able to remediate 
embedded chip technology where we have problems with it.
    Vice Chairman Dodd. I understand that. I express your 
confidence level. But we are looking at a system here that has 
huge implications if it does not work right.
    Ms. Stevens. We understand that. We understand that fully, 
and we are prepared for this.
    Vice Chairman Dodd. But you know when you got 40 percent of 
your suppliers in critical areas that are not responding to 
your letters, you got 477 days to go. I think, hell, you know, 
we ought to have--excuse me--we ought to have a contingency 
plan here pretty quickly.
    Ms. Stevens. Well, we are working to develop those and we 
also--I think the suppliers are very concerned about their 
legal liability, as everybody else has expressed on the panel. 
I suspect that most----
    Vice Chairman Dodd. You do not accept that answer, do you, 
as a reason for not responding to a Metropolitan Transit 
Authority?
    Ms. Stevens. No. That is why we are continuing to speak 
with them and continuing to go after them, but it is a reality 
that that is their concern.
    Vice Chairman Dodd. I mean I would make that as a prima 
facie case of guilt you did not respond, let alone defense.
    Ms. Stevens. I think that more of the suppliers are 
probably ready than they are ready to commit on paper already.
    Vice Chairman Dodd. Have you had any experience where 
vendors have certified the devices are compliant and, in fact, 
they have turned out not to be? We had heard that now from 
several witnesses.
    Ms. Stevens. Yes, we have. And that is a reason that we are 
testing devices even where we have a vendor certification.
    Vice Chairman Dodd. You are not relying on that 
certification?
    Ms. Stevens. No.
    Vice Chairman Dodd. Have you found that is it more than 
just anecdotal? Any indication of how widespread that is?
    Ms. Stevens. No, it is not pervasive. It is on an exception 
basis that we have had that problem.
    Vice Chairman Dodd. All right. I hope you will keep us 
posted too on this and how things are going.
    Ms. Stevens. Yes.
    Vice Chairman Dodd. I wonder if you, Mr. Lofgren, can give 
us some indication of what you perceive as a showstopper in the 
trucking industry with the Y2K issue? I kind of understand 
airplanes and shipping, I think, and rail, mass transit 
obviously. Trucking seems a little bit more removed from this 
issue, at least in my mind, and yet obviously you have 
indicated that there is a tremendous dependency today on this 
sophisticated technology in your industry. So give me some 
indication here of what could be as I described a showstopper 
in the trucking industry with a breakdown in the system?
    Mr. Lofgren. Well, clearly for us, one of the issues that 
we are trying to understand is how we are going to handle 
issues in the power grid? We pretty much run centrally out of 
Green Bay, WI so we look at issues around making significant 
investments in a generator. We are already hooked in from two 
different power grids but if regionally they go down, what is 
the issue there, and how far does this go? So the issues around 
power and the utilities is one for us from an operating 
standpoint and telecommunications is another big one. Those are 
probably the large ones. We have the luxury that we do not have 
things up in the air that are subject to gravity, you know. 
They are already touching the ground. So----
    Vice Chairman Dodd. You have got the GPS system that you 
use.
    Mr. Lofgren. Actually we do not rely on GPS. There is 
another form of satellite triangulation from QualCom who is our 
supplier of satellite communications that runs that, and we 
have been assured that that is Year 2000 compliant. So I think 
that it is just the issues of how do we exist in this very, 
very integrated supply chain. The example is a number of our 
automotive manufacturers that were running in freight just-in-
time. The question is what will happen when these issues crop 
up? To the extent that we find alternative ways to communicate 
across a pretty wide geography if we lose the telephones, then 
we have mechanisms to continue tightly coupled services? And so 
there probably will need to be put in place some contingencies 
to somehow let people be aware as things may break down. But, 
you know, for us, I guess, we have kind of gone around the 
block a number of times.
    We feel pretty good about where we are positioned, and we 
ask what are we missing? I think a lot of the issues come at 
the integration point with other suppliers and customers as 
opposed to anything substantially from our operations. So it is 
timing and effectiveness and levels of service that are 
probably as much the issues that we are dealing with.
    Vice Chairman Dodd. Yeah. The clock has run out here and I 
have got some other questions, Mr. Chairman, if we could submit 
I presume to our panel here?
    Chairman Bennett. Yes.
    Vice Chairman Dodd. And I hope you would all be willing to 
respond to them. We will submit them to you.
    I was concerned, Mr. Skillman, when the chairman indicated 
that we have not had as much response. I think you were 
addressing this to Mr. Skillman.
    Chairman Bennett. Yes. Yes, it was not necessarily his 
company.
    Vice Chairman Dodd. No, no, I understand that.
    Chairman Bennett. But his trade association has been very 
unresponsive.
    Vice Chairman Dodd. Are you out of Crowley, LA? Is this 
where?
    Mr. Skillman. No. Oakland, CA.
    Vice Chairman Dodd. Oh, Crowley. You mentioned the 
Caribbean and the Gulf areas. Well, I would hope you would go 
back and convey that we appreciate your presence here today and 
your willingness to be before the committee, but let me also 
take advantage of your presence here to ask you to be the 
messenger back to your industry here that they have got to be 
more responsive and obviously the trade associations can play a 
pivotal role here in communicating most effectively to their 
individual members the importance of this issue and I would 
hope you would be willing to carry that message back for us 
here today. We will convey it as well to your industry, but it 
would be helpful if you would also bring it. And let me just 
briefly ask you what international concerns you have?
    We talked earlier and listened to Ms. Garvey and others, 
obviously Secretary Downey, talk about their deep concerns 
about international travel in the air industry. Tell me 
briefly, if you can, what concerns you have in the maritime 
industry about this issue of Y2K as it affects shipping 
worldwide.
    Mr. Skillman. OK. First of all, yes, I think it is a great 
idea to try to get the other lines involved and I will do so.
    Vice Chairman Dodd. Thank you.
    Mr. Skillman. As far as the foreign aspects, and again I 
limit that to our trade routes are for the most part Western 
Hemisphere, Latin America, Central America, Caribbean.
    Vice Chairman Dodd. Right.
    Mr. Skillman. We do have a lot of concern. The assumption 
is if those organizations whether they are governmental or 
private do not get themselves Year 2000 compliant, it slows 
down the whole process, whether it is documentation being held 
up, whether it is ships being held up, whether it is the supply 
chain for major companies heading either south or north. So it 
really does throws a real wrench into the operations for 
everybody. There will not be a shipping line that is a winner 
and one that is a loser. Everybody will be in the same boat 
when it deals with the foreign entities. Again, Europe will 
deal with different problems and the Far East will deal with 
different problems as well. But, yes, we have problems in most 
of the countries we deal with.
    Vice Chairman Dodd. OK. Thank you. Mr. Chairman, I thank 
you very much.
    Chairman Bennett. Thank you. Secretary Downey, you 
mentioned TEA-21, and this is the first opportunity for State 
and local governments to tap into Federal funds for Y2K 
efforts. Have you issued any guidelines to these agencies as to 
how they can make application for grants and have you received 
any applications so far?
    Mr. Downey. I am not aware of any we have received. We have 
issued guidance through our State and regional offices. It is 
the normal process because these are the normal funds. It 
should be a programming choice that a State or a transit agency 
would make to take the funds that come to them under the 
formula and allocate them for Y2K remediation purposes. We 
certainly have publicized the fact that they are able to do 
that and as I said we are encouraging them to do that.
    Chairman Bennett. One of the crusades I am on is to make 
sure that we do not have Y2K problems because we do not have 
the money.
    Mr. Downey. Right. As we have said to the States, the money 
is there. If they say but we need it to build a highway, my 
answer has been you can do that next year.
    Chairman Bennett. That is exactly right. The money is 
there. I do not want an entity, whether it is the Federal 
agency or a State agency, to say oh, my gosh, the Federal 
treasury doors have just swung open and in the name of Y2K, we 
can run and loot the treasury for whatever purpose we want and 
say this will be the Y2K memorial courthouse, this will be the 
Y2K [Laughter.].
    Vice Chairman Dodd. Talking about a CETA program.
    Chairman Bennett. Right. Right. But we have insufficient 
time, we have insufficient people. It would be intolerable if 
we exacerbated the problem because we said, well, we did have 
the people available and they could have done it in the time 
available, but we did not have the money. And that is why 
Senator Stevens and Senator Byrd are ex officio members of this 
committee. Senator Stevens, as you know, initiated the 
emergency fund which is now up in excess of $3 billion and it 
is a true emergency. I say to my colleagues in the House this 
is a true emergency and do not hold this up trying to find an 
offset for it. This is inside baseball talk that some people in 
the room might not understand, but all the budgeteers 
understand it.
    Mr. Downey. I understand and we agree.
    Chairman Bennett. And it sounds strange coming from a 
conservative Republican that says let us spend money before we 
do an offset for it, but we can get back to our ideological 
purity after we get this problem behind us. I would hope you 
would continue to stay in close touch with State and local 
DOT's, not only for the obvious things, but for things like 
traffic lights and other situations that could cause us serious 
problems. We will undoubtedly be submitting additional 
questions to you. Let me thank all the members of the panel, 
thank your organizations that allowed you to come, recognizing 
as I did at the outset that there were some organizations who 
did not allow a spokesperson to come, and that is one of the 
most distressing things about this.
    I would also include for the record the written testimony 
of Steven Roberts of the National Passenger Railroad 
Corporation.
    [The prepared testimony of Mr. Roberts can be found in the 
appendix.]
    Chairman Bennett. The one final caveat I would give to 
people who are following this issue is that while the testimony 
today has been quite encouraging, both from the first panel and 
from the second one, we have to remind ourselves that these are 
the people who are willing to come forward and tell us where 
they were. And as I began, the information from the survey 
conducted by this committee is very disturbing in that it 
indicates that there are a number of people who are not willing 
to come forward. They may be hiding behind the advice of their 
lawyers or they may, in fact, be covering up the fact that they 
are far from ready. That the somewhat encouraging picture we 
have gotten today may not be the true picture when you get 
beyond those who are willing to speak. So again we are grateful 
to you for your willingness.
    Secretary Downey, we are grateful to you for your 
willingness to stay through the whole hearing and participate 
all the way through both as our lead-up witness and as our 
final witness. And we are grateful to the Department of 
Transportation for its focus on this issue. The hearing is 
adjourned.
    [Whereupon, at 12:25 p.m., the committee was adjourned.]

                            A P P E N D I X

                                ------                                


              ALPHABETICAL LISTING AND MATERIAL SUBMITTED

                                 ______
                                 

            Prepared Statement of Chairman Robert F. Bennett

    Good morning and welcome to the Committee's sixth hearing on the 
Year 2000 technology problem. As in our past hearings on the energy 
utilities, health care, telecommunications, and financial institutions, 
I believe we have assembled an excellent set of witnesses. I look 
forward to their help in defining the scope and severity of the Year 
2000 problem in the transportation industry. Today's hearing will 
explore the obvious safety and convenience concerns for the traveler, 
as well as the potentially paralyzing effect the millennium bug could 
have on businesses that are increasingly reliant on technology, ``just-
in-time'' inventories, and prompt transportation of manufactured goods. 
We are also releasing today the results of a staff survey of the 
transportation industry that is very disturbing.
    Let me begin by saying that transportation is the ``lifeline'' of 
our global economy. Everyday, thousands of American corporations and 
businesses depend on air, rail, maritime shipping, trucking, and mass 
transit to safely, reliably, and economically move millions of people 
and goods essential to their operations. There are 13 major and over 50 
regional U.S. airlines, 7 long-haul and more than 500 short-haul 
railroads, over 80,000 trucking companies, about a dozen U.S.-flag-
maritime shippers, and about 6,000 transit agencies that generate more 
than $500 billion in revenues. More importantly, they support 
businesses generating many billions more in revenues. A Year 2000 
related disruption within transportation could be more debilitating 
than any major corporate strike.
    I am concerned that the transportation sector as a whole may not be 
able to transition through the millennium without major disruptions. 
That is not to say that most of the individual companies that make up 
the sector are not working hard to correct the problem, rather the 
interdependencies of these companies with their partners and suppliers 
both foreign and domestic make the transportation sector extremely 
complex, and, thus, make Year 2000 issues difficult to address.
    As with other industries, technology is becoming increasingly 
important to the transportation sector, from the airline reservation 
and air traffic control systems to the dispatch and driver log systems 
that are increasingly prevalent in the trucking industry. Indeed, the 
level of automation in today's freighters, super tankers, and ports 
would make it difficult to operate without computers.
    One example of automation in the transportation sector is the 
Global Positioning System (GPS). Simple receivers such as this one 
(hand held example) have revolutionized navigation in maritime 
shipping. This device makes it possible to, with pinpoint accuracy, 
determine one's location anywhere on the globe. For example, I can tell 
you that this hearing room is precisely at 38 degrees, 53 minute, 32 
seconds north latitude and 77 degrees, 00 minutes, 21 seconds west 
longitude. GPS use is increasing every day in the transportation 
industry to track freight, trucks, and rail cars, and help stranded 
motorist find their way. However, while the satellites and ground 
stations will be ready, there are over 60 manufacturers of receivers 
(such as this one) used in thousands of applications that may or may 
not be Y2K ready.
    Now, I'll share with you some of the complicated Year 2000 issues 
facing the transportation industry. If tomorrow were the Year 2000, the 
airline industry would not be ready. While airplanes will certainly not 
fall out of the sky, there are nonetheless serious problems facing the 
industry. First and foremost is flight safety. Jane Garvey, who we will 
hear from today, shoulders the Herculean task of making sure that FAA's 
air and ground traffic control systems will be ready for the Year 2000. 
However, FAA's systems are extremely complex and testing is not yet 
complete. I am concerned that there may be too much to do and too 
little time to do it.
    The airlines, airports, and all of the suppliers and partners they 
depend on must also be ready. Critical systems such as aircraft 
maintenance and passenger ticketing and reservation systems could fail 
and cause reduced capacity, flight delays, cancellations, and customer 
discord. Airport runway lighting systems, fire fighting equipment, 
building and jet way security systems, parking systems, or even the 
Texas pipeline that supplies jet fuel to the eastern seaboard could 
cause closure of some of our busiest airports if Year 2000 problems are 
not aggressively addressed. I am concerned because a survey being 
conducted by the Air Transport Association shows that 38 percent of the 
airports surveyed do not yet have a Year 2000 plan.
    The other transportation modes also have serious Year 2000 
problems. For example, maritime ships have over the years become more 
highly automated, as have the ports and the equipment used to off load 
cargo. In addition, many shippers are concerned about whether the U.S. 
Customs Service systems used to clear freight will continue to operate 
and ensure the uninterrupted flow of imports and exports. They are also 
concerned about the ability of the Coast Guard to ensure safe operation 
within the ports if their systems are not Y2K ready.
    Ever increasing automation within the railroads, the trucking 
industry, and our nation's mass transit systems make the Year 2000 a 
formidable challenge for them as well. Let me take this opportunity to 
clear up another Y2K ``myth.'' The railroads assure us that the 
computers can be overridden and the rail switches can indeed be 
manually switched in contrast to earlier reports by individuals who 
were obviously misinformed. Nevertheless, the railroads face 
significant challenges with their train control systems as well as 
their dispatching and scheduling systems. City officials also face 
significant problems with traffic lights, easy pass toll systems, and 
traffic monitoring systems. The New York Transit Authority, which we 
will hear from today, has six million riders a day. They must address 
Y2K issues in mass transit bus and subway ticketing systems as well as 
systems integral to the basic operation of the subway.
    Finally, we are releasing today the results of a survey conducted 
by the Committee staff to assess the overall preparedness of the 
transportation sector. We undertook this survey because, as in previous 
hearings, we have found that such assessments are not available from 
any other source, public or private. The charts (displayed) show the 
results of the survey, and they are a little disturbing. First, we 
targeted a total of 32 airlines, airports, railroads, maritime 
shippers, trucking companies, and metropolitan transit authorities. 
Despite well over a hundred telephone calls to offer assistance and 
encourage results, only about 50 percent responded (the 16 companies 
displayed on the tables). We made this survey so simple that I can only 
conclude that those who didn't respond are either unaware of the 
severity of the problem or are embarrassed over their lack of progress.
    As you can see in the table, only one third of the companies 
responding to the survey have completed assessment of their systems--a 
task that should have been finished over a year ago. In addition, only 
half have begun contingency planning. Keep in mind that we only 
surveyed leaders in the industry with the vast resources to apply to 
the problem, so presumably others in the industry are farther behind.
    With the hard part yet to come--testing and implementation--I am 
forced to conclude that there may be significant interruptions in the 
transportation industry. I have often said that there are three places 
I don't want to be on January 1, 2000--an airplane, a hospital, or an 
elevator. I haven't changed my mind, but I'm hoping our witnesses will 
help me do that.
                               __________

           Prepared Statement of Senator Christopher J. Dodd

    Thank you Mr. Chairman, I am pleased that we are continuing to 
review the year 2000 readiness of industry and government. To date we 
have had a series of very important and informative hearings covering 
utilities, banking and finance, telecommunications and health care. 
These have been important hearings and quite frankly, I have been both 
heartened and at times very concerned as to the level of year 2000 
preparedness. Indeed, some agencies and some corresponding industries 
are well along the way to becoming ready for January 1, 2000. Yet many 
are not, or rather have been slow to commit the necessary resources to 
meet this mammoth challenge.
    The potential repercussions and disruptions due to inadequate year 
2000 preparation to our industry, commerce and financial systems become 
readily apparent and are extremely important, however, there are some 
industries and sectors where a failure in mission critical systems is 
bone chilling. One of these areas became apparent during this 
committee's health hearing. In that hearing the critical nature of 
medical devices, *  *  * for example, whether a cardiac monitor will 
function, was apparent to everyone.
    Today's hearing covers some similar critical ground. Perhaps the 
most frequently asked Y2K question concerns whether our airlines will 
fly and fly safely on the minute past midnight on January 1, 2000. 
However, inherent in this question is a thousand other questions that 
relate to airports, navigational systems, airline maintenance and 
airport security just to name a very few. Some of these same concerns 
can be related to our highway system, our trains and our urban mass 
transit apparatus. Year 2000 malfunctions in the area of transportation 
are at their best an inconvenience, they can escalate to cause serious 
commercial palpations, but they must not and cannot put our citizens at 
risk.
    Just this week, I received the office of management and budget's 
most recent progress report on year 2000 conversion. This report tells 
us that the department of transportation has improved its management 
oversight and has accelerated the rate at which the FAA is remediating 
air traffic control system components and the report indicates that at 
the end of July 1998, the department of transportation's percentage of 
mission-critical systems renovated stood at 65 percent, a significant 
improvement over the 25 percent reported in the previous quarter. This 
is good. However, with 10 percent of its systems tested and 3 percent 
implemented, it remains significantly behind schedule. Clearly progress 
is being made and clearly more needs to be done. In OMB's government-
wide summary the department of transportation is rated as a tier one 
agency. Unfortunately tier one denotes a troubled agency, with tier 
three being the best.
    Nonetheless, I am pleased that we have such distinguished witnesses 
which represent a broad spectrum of transportation. It is crucial that 
our planes fly that our ships dock and that our traffic lights and 
subways run smoothly. We all have the same purpose here * * * that all 
Americans wake up on January 1, 2000 to the same safe and functioning 
environment that they knew the day before.
                               __________

                Prepared Statement of Mortimer L. Downey

    Senator Bennett, Senator Dodd, Members of the Committee: Thank you 
for the opportunity to testify on the transportation industry's efforts 
to prepare for the Year 2000 problem.
    Let me thank you for your leadership in this matter. Congress, and 
especially this Committee, has been extremely supportive of the Year 
2000 initiatives that the Administration has been putting in place, and 
we look forward to continuing this important partnership.
    It's crucial that we do so. Like other sectors, transportation and 
its users have benefited from computer-based technologies. These 
technologies are primary tools in transportation: they have enhanced 
safety, doubled the effective capacity of our air traffic system, 
upgraded air and sea navigation, improved highway traffic flow, and 
made possible efficient, ``just-in-time'' deliveries.
    The technologies that contribute to the safe, smooth, and 
productive functioning of our transportation system today can generate 
even greater benefits in the future through such computer-based 
enhancements as ``free flight,'' Positive Train Control, Intelligent 
Transportation Systems, and similar measures.
    However, we face a challenge in the Year 2000 problem, one that, 
unmet, could pose risks to safety and disrupt the flow of commerce. 
That is why President Clinton and Vice President Gore have made solving 
the Y2K problem a top priority for them, for us, for their 
Administration, and for the country.
    Within the Department of Transportation, we've made substantial 
progress in repairing our own systems: 46 percent of the Department's 
616 mission-critical systems have been tested and certified as Y2K-
compliant.
    Although we've found that enthusiasm for getting the job done has 
caused progress to be overstated in a few areas, such as air traffic 
control, we believe that we will substantially meet OMB's September 30 
milestone for renovation. Jane Garvey and the other heads of our 
operating administrations are committed to keeping our program on 
track, Secretary Slater and I are increasing our scrutiny of problem 
areas to make sure that we do so, and our Inspector General is 
verifying all progress reports.
    Our concerns, however, aren't limited to how the Year 2000 problem 
directly affects the federal government. While transportation 
operations are typically the responsibility of the private sector, 
ensuring their safe, smooth functioning is a matter of national 
concern.
    In cooperation with the President's Council on Year 2000 
Conversion, we're encouraging our partners to evaluate their own 
systems and to make any needed fixes. Given the nature of our 
regulatory authority, which typically focuses on results, we can't 
compel system operators to take particular assessment or repair steps, 
nor can we perform universal evaluations of their repairs.
    However, we can, and must, raise awareness and make it clear that 
solving this problem is not just a public and a corporate 
responsibility but is, in fact, good business. We also can promote the 
sharing of effective strategies to ensure the system's safe 
performance.
    We're now conducting outreach to identify progress in the various 
transportation sectors, and to determine how best we can support repair 
efforts. We've found several cross-cutting issues, which I'll 
summarize.
    Many private companies are reluctant to report or share information 
for fear of liability, making surveys at best incomplete and at worst 
over-optimistic. Some sectors, such as airports and shipping, have an 
emerging awareness of the problem, which points to the need for 
continued and expanded outreach.
    Foreign airlines and shipping companies, especially those in less-
developed countries, also appear to have limited awareness and few 
resources to deal with the problem.
    Many large enterprises, including all U.S. airlines, have active 
repair programs in place. However, like small businesses in other 
sectors, many transportation suppliers and smaller operators are behind 
the curve.
    Transportation's dependence on other sectors, such as energy and 
telecommunications, means that we could have transportation failures 
even if this industry is itself Y2K-compliant. Underscoring our 
interdependence, such sectors as agriculture and energy in turn rely on 
efficient transportation to get their products to consumers or their 
fuels to power plants.
    Finally, there is uncertainty over the impact of embedded chips 
because of their varied uses and a lack of documented manufacturers' 
information. However, most of the chips in transportation applications 
seem to be event-oriented, focused on operating cycles rather than 
dates, so there is a growing consensus that their Y2K effect will be 
comparatively minimal.
    Based on these early discussions, we're taking steps to assist our 
partners. We've met with industry associations and businesses in every 
sector, and have held industry-wide forums for aviation, maritime, 
rail, pipelines, and surface transportation.
    We're also reaching out globally, especially through the 
International Air Transport Association, the International Civil 
Aviation Organization, and the International Maritime Organization. 
Secretary Slater has raised the issue at such forums as the European 
Conference of Ministers of Transport and during bilateral discussions 
such as those during his recent mission to Africa.
    Products such as our forthcoming Year 2000 website and our ``Steps 
for Action'' guidance for Intelligent Transportation Systems will 
provide needed information.
    We've urged states and localities to use their regularly-allocated 
federal highway and transit funds for Y2K repairs to Intelligent 
Transportation Systems components such as traffic signals or traffic 
surveillance cameras. And, in certain circumstances, airports are 
eligible to receive Airport Improvement Program funds for Y2K.
    Although the Defense Department has told us that the Global 
Positioning System itself won't have Y2K problems, the GPS receivers 
used in civil transportation may not be Y2K-compliant. Through the 
Coast Guard, we're advising civilian users to contact manufacturers to 
ensure that their GPS receivers will work.
    We'll also work with operators under the umbrella of the 
President's Council to develop contingency plans for each 
transportation mode and for its connecting modes. It's vital that every 
industry have plans to continue the safe and orderly flow of commerce 
even in the wake of failures, and we will facilitate industry efforts 
to create such plans.
    Finally, we'll use our existing authorities to take whatever 
actions are necessary to ensure transportation safety. We will be ready 
to step in to restrict or even shut down operations made unsafe because 
of Year 2000 problems.
    For example, the FRA could issue emergency orders to restrict a 
railroad's operations, the FAA could limit or halt an airline's 
flights, or the Coast Guard could require special handling for tankers 
entering harbors. We hope that such steps won't be necessary, but we're 
fully prepared to take them to protect the public as we maintain the 
flow of commerce.
    Let me conclude my statement by answering your question about what 
Congress can do to reduce the risk of Year 2000 failures.
    First, I ask that Congress pass the President's proposed 
legislation to protect from liability those who, in good faith, share 
information on this problem. That would alleviate some of the concerns 
about sharing data or making reports.
    Second, I ask that Congress enact the President's proposed fiscal 
year 1998 contingent emergency funding for Year 2000 computer 
conversion activities. Ensuring Y2K compliance will require flexibility 
to respond to such unanticipated requirements.
    Third, I ask that Congress be cautious in considering any laws 
mandating specific steps for Year 2000 compliance in the transportation 
industry. Specific, new laws or regulations could unnecessarily burden 
industry and, perhaps, limit its flexibility to respond to a fluid 
situation. I also ask that Congress carefully consider the impact of 
other laws on the Year 2000 effort, just as we at DOT are looking 
closely at new regulations to ensure they don't add to the burden.
    Finally, I ask that you continue to exercise leadership on this 
issue, raising awareness among your constituents and the general 
public.
    The partnership we've forged with you on this issue has been 
increasingly successful, and we look forward to continuing to work with 
Congress in the coming months.
    If there are few problems, and I hope that is the case, we can give 
that assurance to the American people before unfounded rumors and fears 
have become widespread. We owe it to ourselves, to our citizens, and to 
the future of our transportation industry. Thank you.
                                 ______
                                 

       Responses of Mortimer L. Downey to Questions Submitted by

                            Chairman Bennett

    Question 1. Mr. Secretary (Dept. of Transportation), testimony from 
several sectors of the Transportation Industry indicate a global 
concern for Y2K issues beyond the boundaries of the United States. What 
are the implications on the U.S. transportation industry if 
international air space, airports, seaports, etc., experience Y2K 
problems? What is your Department doing in conjunction with the State 
Department and other U.S. Government agencies to bring these Y2K issues 
to the attention of the foreign governments involved?
    Answer. Global commerce may be affected if the Y2K problem is not 
addressed successfully. Any significant disruption of international air 
space, airports, seaports, railroads, and other means of conveyance of 
people and materials could cause widespread operational problems for 
the U.S. transportation industry. The degree of impact may depend on 
how much commerce the United States has with the affected countries. 
For example, if international air traffic systems are not Y2K 
compliant, our air carriers may have to deviate from established flight 
plans to avoid entering foreign airspace controlled by a non-Y2K 
compliant air traffic system. If international airports are not 
compliant, our air carriers may be unable to deliver passengers and 
cargo to those destinations causing significant disruption. Also, our 
seaports are of critical importance since they receive the vast 
majority of our commercial goods.
    The Department worked with the State Department to include language 
in a cable that requested U.S. embassies to discuss the Y2K problem 
with their host country's governments whenever the opportunity presents 
itself. We are also supporting State through the President's Council on 
Year 2000 Conversion.
    The Secretary and other senior officials have also been active 
raising awareness in the international arena. At the May 1998 European 
Conference of Ministers of Transport in Copenhagen, Denmark, Secretary 
Slater emphasized the importance of international cooperation and joint 
efforts to resolve Y2K problems that might adversely impact 
international transportation. He invited the Transport Ministers to 
attend the Intelligent Transportation Systems (ITS) summit hosted by 
the Department in July of this year, and representatives from Belgium, 
Portugal and Albania attended. Secretary Slater also raised the subject 
of Y2K in bilateral discussions like those held during the recent 
mission to Africa. We have also raised the Y2K issue in bilateral 
contacts with transportation officials from Japan and Korea, and 
multilaterally with the Transportation Working Group of the Asia 
Pacific Economic Cooperation (APEC) forum. The Department also plans to 
address the subject at the Western Hemisphere Ministerial in December. 
Finally, we are working with international associations, most notably 
the International Air Transport Association, the International Civil 
Aviation Organization (ICAO) and the International Maritime 
Organization.
    Recently, the Administrator of the Federal Aviation Administration, 
introduced two resolutions for the United States at ICAO's General 
Assembly which were adopted. One resolution requires a Notice to Airmen 
by each nation to provide public assurances of the validated safety of 
their systems. The other resolution requires ICAO to develop and 
publish international Y2K assessment criteria along with status 
information. These data will provide FAA with a basis for any necessary 
future action. FAA has also established a number of international 
working groups. Examples include recent work with Canada and Mexico to 
develop plans for testing interfaces between our air traffic control 
systems.
    The Coast Guard's Chief Information Officer attended an 
international conference in London to discuss Y2K issues with 
representatives of the shipping industry around the globe.
    Also, the Coast Guard has obtained agreement from the Maritime 
Safety Committee of the International Maritime Organization to publish 
a circular encouraging member governments to bring the Y2K problem to 
the attention of ship owners, ship operators, ship masters, and other 
interested parties in the shipping industry. The circular will 
encourage the global shipping industry to become familiar with the Y2K 
problem; assess the impact on their operations; and, take action to 
renovate, replace or retire affected systems.
    Question 2. Has your Department made specific proposals to the 
President or the Congress for assistance in dealing with these 
potential foreign source Y2K problems? If so, what are they?
    The Department has not made specific proposals to the President or 
the Congress for assistance in dealing with potential foreign source 
Y2K problems. The Department did include a revised Y2K cost estimate in 
the President's proposed fiscal year 1999 contingent emergency funding 
to support, among other things, increased international Y2K outreach 
efforts.
    Question 3. Mr. Secretary, inter-modal transportation is the norm 
for both passengers and freight in the U.S. To what extent and by what 
means is your department directing and/or coordinating these Y2K 
efforts to ensure gaps do not exist between various operating segments?
    Answer. To date, our outreach efforts have been conducted largely 
by our individual operating administrations. To ensure a more 
integrated approach to outreach, the Department recently established an 
Outreach Action Team (OAT). This team of representatives from across 
the Department will:
  --improve communications within the Department, within the 
        transportation sector and with other sectors and the public;
  --better coordinate and focus outreach efforts with the 
        transportation sector and across other sectors; and
  --address regulatory, legal and enforcement issues.
    The OAT is using the Transportation Sector Outreach Plan as a 
baseline. This plan was developed under the auspices of the President's 
Council on Year 2000 Conversion and identifies outreach plans across 
all segments of the transportation sector. Through the Transportation 
Sector Working Group of the Conversion Council and the OAT, we will 
continue to update and revise the plan to ensure that it reflects the 
Y2K efforts of all Federal agencies including all DOT operating 
administrations; and to ensure that no component of the transportation 
infrastructure is overlooked.
    Question 4. FAA is partnering with the Air Transport Association 
(ATA)--an umbrella organization in the airline industry--on Y2K issues. 
Which umbrella organizations/associations does DOT work with in other 
transportation sectors?
    Answer. The U.S. Coast Guard (USCG), the Maritime Administration 
(MARAD), and the Saint Lawrence Seaway Development Corporation (SLSDC) 
are working with the International Maritime Organization (IMO), the 
Ship Operators Cooperative Program (SOCP), the Chamber of Shipping of 
America, the American Association of Port Authorities (AAPA), the 
American Petroleum Institute (API), the Cargo Handling Cooperative 
Program (CHCP), and numerous private shipping and maritime industry 
businesses (e.g. Sealand Corporation, Intertanko, Chevron Oil, Maersk 
Shipping, BP Marine, Inland Marine Underwriters Association, etc.).
    The Federal Railroad Administration (FRA) is working with the 
Association of American Railroads, the American Public Transit 
Association (APTA), the American Shortline and Regional Railroad 
Association, the Railway Progress Institute, the Brotherhood of 
Locomotive Engineers, the Class I freight railroads, AMTRAK, numerous 
commuter, regional and shortline railroads, and suppliers of signaling, 
dispatching, telecommunications and computing equipment used by the 
rail industry.
    The Federal Highway Administration (FHWA), the Federal Transit 
Administration (FTA), and the National Highway and Traffic Safety 
Administration (NHTSA) are working with the American Association of 
State Highway and Transportation Officials (AASHTO), the Automotive 
Industry Action Group (AIAG), the American Public Transit Association 
(APTA), the Institute of Transportation Engineers (ITE), individual 
motor carrier and trucking companies, State Departments of 
Transportation, and local governments.
    The Research and Special Programs Administration (RSPA) is working 
with representatives from the American Gas Association, the National 
Association of State Pipeline Representatives, the Interstate Natural 
Gas Association of America, the National Association of Regulatory 
Pipeline Commissioners, the American Public Gas Association, and the 
American Petroleum Institute.
    Question 5. You have previously mentioned that the Transportation 
Equity Act for the 21st Century (TEA21), guaranteeing $198 billion for 
highway, transit, and intermodal projects, is the first opportunity for 
State and local governments to tap Federal funds for Y2K efforts. Have 
you issued any guidance to grantees so that they know how to apply for 
the money? Have any Y2K related applications been received to date?
    Answer. The FHWA has issued guidance to its Regional and Division 
Administrators on the use of the Federal-aid program and has 
established processes which facilitate a State or local agency's 
ability to receive funding. Federal-aid highway funds may be used for 
Y2K fixes either as direct costs through an existing Federal-aid 
project or as an indirect cost built into the State's indirect cost 
rate. The guidance addressed eligibility, environmental issues, project 
programming and procurement. Regional and Division Administrators have 
been strongly encouraged to quickly convey this information to their 
State and local partners, and to impress upon them the urgency of their 
need to act.
    In addition, the Department recommended and the Congress has 
passed, legislation to allow fiscal year 1999 Aviation Insurance 
Program (AIP) funds to be used by commercial service airports to assess 
the Y2K compliance of facilities, technology systems or equipment 
directly related to airport activities. Once assessment is completed, 
any subsequent work to attain Y2K compliance will be eligible under 
normal AIP eligibility rules.
    Question 6. In DOT's August quarterly OMB Y2K report, remediation 
cost estimates increased by $31M to $213M. These increases were 
primarily due to refinement and validation of remediation cost 
estimates. We understand the cost could increase further. How do you 
plan to fund these additional increases? What is the impact if 
additional Y2K funding is not available?
    Answer. The Department included a revised cost estimate in the 
President's proposed contingent emergency funding to address fiscal 
year 1999 Y2K work. If the additional funding is not made available, 
the Operating Administrations will have to support Y2K efforts by 
reducing other programs.
    Question 7. State and local governments are responsible for 
maintaining surface transportation and mass-transit systems. What 
specifically are you doing to ensure that State and local governments 
are actively addressing Y2K issues? Who is coordinating Y2K work among 
State and local governments? How ready are State and local governments? 
Do they have funding problems? How can State and local governments best 
be incentivized to actively and aggressively pursue Y2K?
    Answer. The primary coordination between the Federal Government and 
the States is through the Federal Chief Information Officers' Council 
and the National Association of State Information Resource Executives 
(NASIRE). Through the CIO Council we are providing information about 
data exchanges and interfaces with State governments. This information 
is being shared with the States through a website.
    Most of our work with State and local government is being done 
directly through the Department's operating administrations and through 
umbrella organizations. For example, FHWA and ETA are working closely 
with the American Association of State Highway and Transportation 
Organization (AASHTO) and the American Public Transit Association 
(APTA), respectively, to raise awareness. At the recent APTA Annual 
meeting Year 2000 was the subject of a panel discussion. Some State and 
local governments are further along in their Y2K remediation efforts 
than others, and some State and local governments are experiencing some 
of the same funding shortfalls that we have in the Federal Government. 
One incentive the Department has offered to State and local governments 
is the availability of funds provided by the Transportation Equity Act 
for the 21St Century (TEA21) mentioned in your previous question.
    Question 8. Other Federal agencies (e.g., HHS) have told this 
Committee that they did not receive full cooperation when they tried to 
collect Y2K information from the industries they regulate. What is your 
experience with various transportation sectors--i.e., airline, 
maritime, automotive, mass-transit, and rail industries? How can 
Congress help?
    Answer. The Department has received fairly good cooperation from 
operating entities in the transportation industry (airlines, transit 
operators, States, etc.) in sharing information about their Y2K 
preparedness. The issue of liability has been the prevalent reason 
cited by manufacturers and other private sector entities for not 
responding or providing incomplete information. Recent passage by the 
Congress of the Year 2000 Information and Readiness Disclosure Act 
should go a long way towards encouraging industry to share useful Y2K 
information that could benefit a large audience.
    Question 9. Mr. Secretary, could you please describe how DOT is 
working to develop contingency planning with the transportation 
industry? For example, if there were to be significant disruption in 
one sector or region, what methods or mechanisms would be employed to 
ensure that critical goods continue to move?
    Answer. To date, the Department has addressed contingency planning 
primarily from an internal systems/exchange partners standpoint. The 
Federal Aviation Administration (FAA) is working with its unions to 
finalize a comprehensive contingency plan which will address continuity 
of air commerce. However, the primary emphasis of our Y2K outreach 
efforts with the transportation industry has been awareness of the need 
to factor in contingency planning as industry takes steps to avert 
business interruptions associated with the Y2K problem. The question of 
how to mitigate significant disruptions, both within and outside the 
transportation sector, has not been addressed to our satisfaction. We 
do note that the Coast Guard is taking a lead role in forming Regional 
Y2K Readiness Committees to assess economic and operational 
vulnerabilities of U.S. ports, and to prepare for them.
    Also, the Department is working with the President's Council on 
Year 2000 Conversion to address potential Y2K failures and associated 
disruptions in a comprehensive manner with input from all sectors of 
the economy, including transportation. We will work with the Council to 
ensure that the continuity of commerce issues for the transportation 
sector are addressed and that appropriate mechanisms are in place to 
mitigate significant disruptions and ensure that critical goods 
continue to move.
                               __________

                   Prepared Statement of Charles Feld

   impact of the year 2000 problem on delta and the airline industry
    The airline industry is heavily dependent on information technology 
to run its daily operations. Much of the technology relied upon, such 
as aircraft maintenance systems, air traffic control environments, 
reservations and ticketing systems, have issues with date functionality 
when processing a year date of 2000 or beyond. Implications could range 
from erroneous processing to failure of the function. Delta's flight 
operations, flight support units and other business support units 
depend on internal and external computer systems and equipment that are 
affected by the Year 2000 issue.
    Delta currently believes that completed and planned modifications 
and conversions of its internal systems and equipment will allow it to 
be Year 2000 compliant in a timely manner. There can be no assurances, 
however, that the Company's internal systems and equipment or those of 
third parties on which Delta relies will be Y2K compliant by Year 2000. 
Nor can assurance be made that contingency plans will mitigate the 
effects of any non-compliance. Contingency plans to support a continued 
safe operation depends greatly on the efficacy of the respective 
contingency plans of critical third parties, including the providers of 
infrastructure critical to the airline industry such as the FAA. The 
failure of Delta's systems or equipment or those of industry third 
parties could result in reduction or suspension of the flight 
operations or internal business operations and have a material adverse 
effect on the Company's business or financial statements.
    Like all other airlines, Delta has a Year 2000 problem to solve. 
Our worldwide presence coupled with our partnerships with other 
carriers and travel related businesses accentuates our 
interdependencies. Economic viability depends heavily on the airline 
industry domestically and globally.
             delta's approach for dealing with the problem
    Achieving Y2K readiness is a top priority for Delta. Delta has 
implemented a four phase program to address its internal systems and 
equipment which includes: (1) identification; (2) assessment including 
prioritization; (3) remediation including renovation, replacement or 
upgrading, or retiring; and (4) testing. The Company is also reviewing 
Year 2000 readiness of third parties which provide goods or services 
which are essential to Delta's operations. In addition, Delta is 
revising its existing business interruption contingency plans to 
address issues specific to the Year 2000 problem.
    The work is being scheduled based on business criticality of the 
function. Criticalities were determined on the ability to continue 
operations keeping safety, security, and customer services as 
priorities. Delta's program is supported and led by Chief Information 
Officer, Charlie Feld. Senior management and Board of Directors are 
updated monthly as to safety of flight systems and equipment, critical 
internal business systems, facilities, supplier readiness, and 
contingency planning. High critical internal business systems are on 
schedule with remediation expected to be completed by December 1998. 
All other critical systems are expected to complete testing by June 
1999. Customer Service hardware will be replaced with upgraded Y2K 
compliant hardware beginning with airport installations in September 
1998 and is expected to be completed in all Delta served airports by 
December 1999.
    Delta has been an active proponent and participant of the ATA & 
IATA programs. Company representatives hold key Y2K leadership 
positions in these programs and spearhead Delta's efforts for industry 
Y2K readiness with airports, regulatory agencies, and supplier programs 
globally.
  general preparedness of the airline industry to maintain continuous 
                         uninterrupted service
    During the latter part of 1997, Delta recognized the need for an 
organized industry effort and the necessity for the FAA to properly 
address Y2K issues. The Company took an aggressive leadership role to 
raise awareness among airlines and to ensure an organized industry 
effort. Delta's participation contributed to the approval of an ATA Y2K 
committee in December 1998, and lobbied for a parallel program for 
IATA, resulting in the formation of an IATA Y2K Executive Steering 
Committee in April. Company representatives hold key leadership 
positions in these programs, i.e., membership in the ATA Y2K Committee, 
membership in the IATA Y2K Executive Steering Committee, and 
chairperson of the ATA Airport Y2K subcommittee.
    The U.S. aviation industry appears to be leading the rest of the 
world in its efforts to address Y2K issues. With the information shared 
thus far, we have confidence in the FAA's efforts to become compliant 
and are currently comfortable with where they are with their schedule. 
Within the United States, airlines, airports, regulatory agencies and 
suppliers have primarily focused on their own businesses. With progress 
being made on internal systems and equipment and more active 
participation in industry efforts, a better understanding is evolving 
as to the critical interdependence of airlines, airports, regulatory 
agencies and suppliers. This emerging focus on an integrated view of 
the airline industry Y2K problem will require the different entities to 
work together to solve the problem. Progress with airports is being 
made, but Delta is concerned as to the number of airports assessed thus 
far that ATA data indicate as having no plan or are more than three 
months behind schedule in their plan. Needless to say, there is much 
work to be done for the air transportation system to become Y2K 
compliant.
                                 ______
                                 

          Responses of Charles Feld to Questions Submitted by

                            Chairman Bennett

    Question 1. Are you aware of any overarching assessment of the 
overall Y2K preparedness of the airlines? If not, can you speculate on 
the overall preparedness?
    Answer. Yes. ATA and IATA are working with its member airlines 
regarding common external dependencies of the air transport industry, 
which includes airports, industry suppliers and regulatory agencies.
    Question 2. Delta Air Lines has been eloquent in their testimony of 
the need for governmental actions to head off potential Y2K 
deficiencies for the air transport industry. Do you or your industry 
representatives have specific requests that you would propose for the 
several areas of concern? If so, have you submitted these requests to 
the Administration or specific Committees of the Congress?
    Answer. Yes and yes.
    Question 3. Does Delta have specific concerns related to operation 
in other countries? Are you satisfied that these concerns are being 
addressed? If not, what more should be done, and by whom?
    Answer. Delta has been concerned with the readiness of the many air 
traffic systems internationally. Through our efforts along with United 
Airlines and Northwest Airlines, we are satisfied with IATA's plan for 
assessment of such systems. Delta, as well as other IATA member 
airlines, should continue to play an active role in IATA's Y2K program, 
monitoring progress to achieve acceptable results.
    Question 4. What assumptions does Delta's Y2K planning make in 
regard to electric power and telecommunications services. Are there any 
backup plans for them in Delta's Contingency Planning?
    Answer. Electric power and telecommunication services are highly 
critical and are included in our top supplier list. ATA is assessing 
those companies common among airlines. Additionally, questions 
regarding the preparedness of these companies are being raised through 
our efforts with facilities readiness. We have encouraged and are aware 
The Edison Electric Institute is leading industry efforts with utility 
companies in a similar manner to ATA's lead with the air transport 
industry. Through an active role with the Atlanta Y2K Users Group 
(community outreach with the Chamber of Commerce), we will be 
sponsoring a public utilities Y2K session for local companies. Yes, we 
will have back up plans for key strategic buildings in case of electric 
power failures, but sustaining operations will be difficult. Even with 
contingency planning, there is not much we can do to avoid disruption 
in operations if these suppliers fail.
    Question 5. Have you received sufficient Y2K responses from 
aircraft and airport equipment manufacturers to identify Y2K effects on 
aircraft and airport systems?
    Answer. Regarding aircraft, yes. We have determined there are no 
safety-of-flight issues with aircraft and onboard flight support 
systems. We are currently in the remediation phase for other onboard 
flight support systems which maximize operational efficiency, but are 
not essential to the safe operation of flights.
    Regarding airport equipment manufacturers, yes in regards to the 
equipment we own as an airline. For the equipment and systems owned and 
assessed by airport authorities, we do not have this level of detail. 
Safe Harbor legislation can assist with the sharing of this 
information.
    Question 6. For Y2K non-compliant versions of the inertial 
navigation system, what do you intend to do to remedy reported 
problems: fix, replace, or propose alternative procedures? If 
alternative procedures are considered, have these procedures been 
developed and submitted to FAA?
    Answer. All of our inertial navigation systems are Y2K ready.
                               __________

               Prepared Statement of Deborah A. Freedman

                              introduction
    Good morning Chairman Bennett, Vice Chairman Dodd, and 
distinguished members of the Special Committee on the Year 2000 
Technology Problem. On behalf of The SABRE Group, a world leader in 
electronic travel distribution and information technology solutions, I 
appreciate the opportunity to address the issues facing the airline 
industry related to the Year 2000 technology problem.
    My name is Deborah Freedman and I am Senior Vice President--
Application Development for the SABRE Technology Solutions division of 
The SABRE Group. In that capacity, I am responsible for coordinating 
Year 2000 programs both for The SABRE Group and for the company's 
airline customers, which include, among others, American Airlines, US 
Airways and Canadian Airlines.
    While The SABRE Group is a diversified information technology 
company, we are perhaps best known for our groundbreaking computer 
reservations system, or CRS, through which travel agents and others 
electronically book $66 billion of travel per year, including about 
one-third of air travel worldwide. Readying the SABRE CRS, the world's 
largest privately owned computer network, for Year 2000 has been an 
enormous part of our company's effort. However, our responsibilities in 
this area also extend to many other participants in the transportation 
industry.
    Until 1996, The SABRE Group was the information technology 
operating division of American Airlines. In October of that year, our 
company had an initial public stock offering. Today, almost 20 percent 
of SABRE is traded on the New York Stock Exchange, with the remainder 
owned by AMR, American's parent company. Although our ties to American 
Airlines, our largest customer, are thus quite strong, we are rapidly 
expanding our business relationships with other air carriers and travel 
providers, through a growing number of joint ventures and similar 
transactions. Our unique expertise in developing information technology 
solutions for the travel industry--a legacy of American's leadership in 
this area--has created increasing opportunities for us as a supplier of 
software tools and outsourcing services to airlines, hotels, railroads 
and others. In this capacity, we have helped our customers, 
particularly our airline customers, address the Year 2000 problem. At 
The SABRE Group, we have developed a rigorous, systematic approach to 
the Year 2000 problem that I am pleased to share with the Committee 
today.
    In the remarks that follow, I will explain (i) the particular Year 
2000 challenges for the airline industry, (ii) the SABRE Group's 
implementation plan for Year 2000 readiness, (iii) the company's 
current state of compliance and (iv) our current airline industry 
assessment.
            ii. year 2000 challenges in the airline industry
    As the Committee is now acutely aware, the Year 2000 problem 
surfaces when computer systems fail to recognize and process date/time 
information across the turn of the century and beyond. The airline 
industry depends heavily on computer automation for advance travel 
bookings and complex planning functions. Because of their early booking 
and planning needs, many airlines require systems that can process Year 
2000 dates during the first quarter of 1999. This challenge is made 
even more complex for the airline industry because of the high level of 
automation and the operational reliance on date/time scheduling. 
Additionally, because of the elaborate interdependencies of the airline 
industry, individual companies cannot realistically operate in 
isolation from other industry participants. Indeed, the overall success 
of the industry will largely be determined by how well industry 
participants ensure the overall flow of information not only through 
their own systems, but also through others.
    Airlines depend on computer systems for almost all aspects of their 
operations including flight planning, crew scheduling, capacity 
planning, pricing, ticketing, and billing. The day to day operations of 
a major air carrier require hundreds of individual systems to work in 
concert so that the carrier may deliver quality service to its 
customers. The platforms for these systems vary from large mainframes 
handling millions of transactions involving flight operations and 
reservations, to simple personal computers handling staff planning for 
small airports with just a few gates.
    A telling, visible example of how a single system failure could 
directly affect the flying public is ``electronic ticketing,'' a 
technology only introduced over the past three years, but which is 
quickly becoming an industry standard. Flying ``ticketless'' has added 
a great deal of flexibility and convenience for a growing number of 
airline passengers. Ticketless passengers carry no paper tickets; they 
merely verify their identity and receive their boarding passes. A 
failure of the electronic ticketing system would make it impossible to 
retrieve the ticketing information for those without paper tickets. The 
traveler in most cases would have limited information to present to the 
agent to prove that he was a paying passenger. Regardless of the Year 
2000 readiness of all other systems, if airlines were unable to 
recognize passengers ticketed for each flight, operations would 
dissolve into chaos. The challenge for air carriers is to ensure Year 
2000 readiness of all critical systems so they can continue to provide 
uninterrupted service to the traveling public.
    Along with ensuring the Year 2000 readiness of carriers' individual 
systems, the airline industry must validate the interoperability of the 
systems throughout the industry network. Airlines regularly trade 
passengers with each other as they make their way from point to point 
on the globe, and the smooth transition of those passengers depends on 
the electronic transfer of data between carriers. Consumers have come 
to depend on one stop shopping with their travel agents or their 
favorite Internet sites for air travel and other reservations through a 
seamless presentation of data collected from varying sources. The 
systems providing the data as well as the communications lines carrying 
the data must be Year 2000 ready in order for the industry to continue 
operating efficiently.
          iii. year 2000 readiness--the sabre group's approach
    Individual corporations in the airline industry must undertake 
aggressive programs to guarantee their Year 2000 readiness prior to 
experiencing time/date related failures. The following describes The 
SABRE Group's recommended approach to program implementation.
    Comprehensive Year 2000 programs begin with a complete inventory 
and assessment. During this phase, the portfolio of systems, hardware 
and software, third party products, and infrastructure components are 
identified. The inventory is classified by taking into account ``the 
time horizon to failure'' of the systems, the impact of time/date to 
the systems processing, the consequences of failure on the systems, 
business criticality and system interdependencies. At the completion of 
this phase, and based on these classifications, a master implementation 
plan is developed.
    Within the implementation plan, more detailed project plans outline 
the resources and effort required for analysis, design, remediation, 
and testing. These detailed plans roll up to the high-level 
implementation plan to ensure that any slippage in one project reflects 
the impact to downstream systems.
    After the detailed plans for each system are completed, remediation 
and testing of the relevant infected components begin along with the 
testing of systems believed to be compliant. Comprehensive testing 
includes three cycles. In the first cycle, an initial baseline test 
captures the exact functionality and date processing of the system as 
it currently operates. The second testing cycle is completed after 
remediation modifications are completed, and the results are measured 
against the baseline to ensure the system processes correctly in the 
current date. The third cycle of testing involves future date testing, 
which measures system processing during the turn of the century into 
the Year 2000. The tests include standard date testing, measured 
against the baseline results, along with other critical Year 2000 dates 
such as leap year 2000.
    The final step of the Year 2000 process is a comprehensive project 
completion review. The review focuses attention on the level of 
analysis, validation of the component level inventory, completeness of 
the documentation, and validation of the tests performed and the 
resultant outcomes.
               iv. the sabre group's year 2000 readiness
    The SABRE Group has made Year 2000 readiness a major corporate 
priority since 1995. The company's Year 2000 project has the goal of 
ensuring that hardware and software systems operated or licensed in its 
business, including systems provided to our travel agency subscribers 
and technology outsourcing customers, including airlines, are designed 
to operate and properly manage dates beyond 1999.
    Dedicated to providing the world's most technologically advanced 
and most reliable travel and transportation management systems, The 
SABRE Group has invested significant financial and human resources to 
ensure our Year 2000 readiness. Early planning, careful correction and 
thorough testing are keys to successfully managing a Year 2000 program. 
The SABRE Group's vast Year 2000 project involves checking more than 
200 million lines of software code, confirming proper system interfaces 
with more than 600 hundred suppliers, and providing new software for in 
excess of 40,000 travel agencies. At peak, The SABRE Group applied the 
equivalent of more than 700 full-time employees to fixing the Year 2000 
problem, and to date, the company has expended more than one million 
labor hours on the project.
    The SABRE Group utilizes a methodology focusing on detailed system 
analysis and complete, repeated testing of all systems. A master 
implementation plan takes system interdependencies into account to 
prioritize and schedule system completion across the program. This 
analysis determines the amount of testing and type of remediation each 
system requires. The tests involve detailed examinations of the systems 
in both the current date and other dates through the turn of the 
century and beyond.
    As a result of this carefully executed implementation plan, The 
SABRE Group is pleased to report that the majority of its core systems 
are either completed or are in the final testing phases of the Year 
2000 project:
  --The core SABRE computer reservations system is currently Year 2000 
        ready.
  --The core functions of The SABRE Group's other real-time computer 
        systems, including flight operating systems used by airlines to 
        check-in passengers, determine aircraft weight and balance, 
        plan routes and process bags, among other things, are Year 2000 
        ready. Only testing of minor subsystems remains to be 
        completed.
  --Year 2000 testing of other software systems operated by The SABRE 
        Group is substantially completed and dozens of systems are 
        currently being used to process dates beyond 1999.
  --In May 1998, The SABRE Group began installing Year 2000 ready 
        software and hardware at travel agency customer locations 
        around the world. This effort is expected to be completed by 
        the first quarter of 1999.
  --Substantially all of the other software marketed by the SABRE Group 
        to customers in the airline, hotel, trucking, rail and other 
        industries is expected to be Year 2000 ready in the second 
        quarter of 1999. More than 70 percent of these applications are 
        to be completed by the end of 1998.
  --75 percent of the hardware testing is complete to date with the 
        remaining planned to be complete by the end of the year. Much 
        of this testing was accomplished by first testing at the vendor 
        site on identical hardware, and then testing the devices within 
        the SABRE data center. When the process began two years ago, 25 
        percent of the devices originally tested failed the SABRE test 
        scripts.
    With the vast majority of system level testing and validation 
completed, the focus of The SABRE Group has now turned to business 
continuity planning and industry component testing. Business continuity 
planning includes coverage requirements for key dates, such as the 
rollover of the century and ``day in the life'' testing, which 
simulates business operations in the next century. It also involves 
contingency planning to determine how manual processes could be used to 
assist with day to day operations in a Year 2000 failure. Planning now 
for the unexpected failure may enable the business to continue 
operations in the event that a failure comes to fruition. While 
failures may cause business operations to experience a degradation of 
productivity, we are working to prevent the worst case scenario--
shutting down operations.
    Industry component testing is the validation of the data feeds and 
interfaces each company receives from other members of the industry, 
suppliers, and the government. Testing of industry components validates 
the interoperability of systems within the travel and transportation 
network. As an example, The SABRE Group's systems mentioned above 
interface with 600 external companies throughout the industry. The Year 
2000 program team is aggressively analyzing every interface to 
determine the priority of the interface and the potential affect on the 
business. Efforts are currently underway to schedule Year 2000 testing 
with all of the companies with which we trade information. The SABRE 
Group's ability to schedule testing with external companies and the 
government will in large part be dependent on their completion 
schedules. The interfaces range from weather feeds to pricing data, as 
well as the transfer of passenger and cargo information between 
carriers. Timely industry component testing will in large part 
determine the industry's overall success.
                     v. airline industry assessment
    The interrelationships among participants in the airline industry 
is such that individual system failures can have dramatic impacts on 
other members of the industry. As an example, a passenger may be booked 
by a travel agent on multiple air carriers within the same trip. The 
reservation is processed through the travel agent's CRS, and that data 
is then transferred to the carriers on which travel will occur. Let's 
assume that one of the air carriers failed to complete its Year 2000 
work. As the data for the flights was processed by the travel agent the 
traveler could receive his itinerary clearly showing travel dates/
times, flight numbers, carrier, and seat assignments. A later failure 
of a single carrier could leave that passenger trapped mid-way through 
his trip without ongoing reservations. Imagine the disappointment and 
inconvenience of setting out from Washington, D.C. to the Bahamas for a 
New Years 1999 celebration, only to find yourself stranded in a 
connecting city with no hotel, no car, and no way to reach your final 
destination.
    The individual compliance efforts of industry members will need to 
be competed by the end of 1998 to ensure adequate testing time for the 
interlocking components of the industry. For those companies that are 
significantly behind, tough triage decisions will be required as to the 
systems which those companies choose to let break, when they determine 
full compliance is not reasonable alternative given the time and 
resources available. The validation of industry components is already 
moving to the forefront of the testing initiatives and will prove to be 
the final hurdle in the Year 2000 race. As time and resources continue 
to be at a premium, it is crucial for industry participants to dedicate 
appropriate personnel and system capacity to validate interoperability 
throughout the industry. As many companies within the industry are not 
yet finished with their internal Year 2000 readiness, industry 
component testing has not yet become a priority for those members. Over 
the next few months, The SABRE Group will use industry component 
testing as a bellwether for readiness of the industry. In our contacts 
to date, less than 50 percent of the companies with which we have tried 
to schedule testing are ready.
    From an international perspective, The SABRE Group has seen a 
similar geographical disparity in aviation industry readiness as has 
been noted in other industries. In general, U.S. airlines appear to 
have gotten a head start on carriers from other regions of the world. 
Most companies are addressing the problem, have active plans for 
completion, and are completing the final stages of internal system 
testing. Europe is behind the U.S. in completion but is actively 
addressing the problem. Corporations in the Far East appear to have 
only recently focused any attention on the problem and lag the rest of 
the world in completion.
    In general, the airline industry has taken an aggressive approach 
to addressing the Year 2000 challenge, but the validation of industry 
interoperability has only just begun. The true determination of the 
state of the industry will become more apparent over the next six 
months as corporations succeed or fail in demonstrating their readiness 
to those who must interoperate with them. Those who fail in this effort 
will be at high risk of finding fewer companies willing to continue the 
strategic business relationships that are the lifeblood of the airline 
industry.
    The International Air Transport Association (IATA) and the Air 
Transport Association (ATA) are both engaged in significant efforts to 
determine the readiness of airports, travel related suppliers, and air 
traffic control. I will defer to other members of this panel whom I am 
confident will address these efforts in detail.
                             vi. conclusion
    The SABRE Group is working diligently to ensure that our customers 
and the traveling public can depend on our systems in the Year 2000 and 
beyond. The company believes, however, that the airline industry as a 
whole, as well as related government agencies, must also work to ensure 
that the world's transportation infrastructure is ready for the Year 
2000.
    I would like to commend the Committee for its fine work and 
leadership on this important policy matter and express my thanks again 
for allowing me to address the Year 2000 challenges for the airline 
industry.
                                 ______
                                 

       Responses of Deborah A. Freedman to Questions Submitted by

                            Chairman Bennett

    During the course of normal business operations, all companies are 
susceptible to and face IT failures due to hardware, data, and 
application problems. Companies have established manual processes to 
work around the problems. In some instances, the work-arounds are 
implemented immediately when the problem is critical. Non-critical 
problems normally await technical resolution.
    The Year 2000 problem will not generate symptoms different from 
ones experienced today by hardware failing or an application 
incorrectly calculating. The number of items that can fail 
simultaneously is higher than normal and as a result the amount of time 
to fix a larger number of problems is likely to be longer.
    A successful Y2K readiness plan includes:
  --completing remediation and testing work to ensure Y2K readiness;
  --testing with external entities that have a significant impact on 
        business;
  --monitoring critical service providers;
  --planning for contingencies should a failure occur; and,
  --scheduling resources to provide coverage as a time horizon to 
        failure (the date at which a system begins to process year 2000 
        data) approaches to quickly address identified problems.
    Responsible players in the aviation industry are implementing this 
plan and giving it the highest level of priority. We face similar 
problems to those faced by other industries, but there are large 
interdependencies that create special challenges. The SABRE Group is 
pleased to have the opportunity to share our views with the Committee.
    Question. From SABRE's unique perspective, i.e. visibility over 
many players in the aviation industry, what are the most serious Year 
2000 problems facing the industry?
    Answer. The Y2K readiness of Critical Service Providers (CSP) to 
the industry and the overall interoperability of these providers are 
the keys to success for the airline community. CSP are those 
organizations, from both the public and private sectors, domestic and 
international, that support:
  --passenger handling services (reservations, ticketing);
  --private sector airport services (fuel, gate handling for departures 
        and arrivals, airplane maintenance and engineering including 
        parts suppliers, etc.); and,
  --public sector airport services (air traffic control, weather 
        information, etc.)
    Today, airline business functions include a wide range of equipment 
and data that are supplied by numerous organizations and the 
interoperability of all providers is critical for an airline to 
continue operations. Should any one provider incur a failure today, an 
airline has work around solutions or contingency plans in place.
    Most passengers have experienced the implementation of work arounds 
or contingency plans at some time during their travels due to bad 
weather, service lapses or system failures. A few examples include:
  --departures or arrivals delayed;
  --reservations rescheduled;
  --flights cancelled;
  --aircraft pulled from operation and replaced;
  --flight plans adjusted, flights rerouted to land at another airport, 
        and passengers bussed to the original destination; and,
  --weather data obtained from alternative sources.
    Today, organizations that support the airline industry make changes 
to their operations, equipment and systems and work with upstream 
suppliers or downstream customers to ensure the changes do not impact 
operations. If each organization has taken appropriate steps to be Y2K 
ready then the steps to test interoperability would be little different 
from the steps taken today.
    The effort needed for the airline industry to become Y2K ready is 
massive. A large number of CSP, from both the public and private 
sectors, domestic and international, are needed to keep the airlines 
operational. Some key problems facing the industry will occur when:

    (1) A CSP fails to address the Y2K problem. The ability to 
identify, remediate and test the problem is too late. Another CSP would 
need to be found and inserted into the operation. The ability of an 
airline to quickly insert an alternative CSP is limited unless 
contingency plans were pro-actively identified.
    (2) The airlines do not ``dust-off'' and review work around 
processes and contingency plans should failures occur and refresh staff 
on the implementation of those actions.
    (3) A CSP expended the effort to become Y2K ready but does not 
schedule testing with external entities to ensure interoperability.
    (4) A CSP does not schedule sufficient resources to provide 
coverage should a failure occur as the time horizon to failure 
approaches.
    (5) The number of failures is so significant that work arounds and 
contingency plans are insufficient to continue operations.

    Question. Your testimony describes ``electronic ticketing'' as an 
emerging technology that is being increasingly used by a growing number 
of airlines. Can you estimate what percentage of the passengers and 
airlines are using this technology? To your knowledge, are those using 
this technology actively engaged in contingency planning should the 
technology fail?
    Answer. With few exceptions, domestic airlines use electronic 
ticketing. Large carriers in other countries have electronic ticketing 
functionality. The status of local or regional carriers operating in 
foreign countries is unknown. The use of electronic ticketing is 
increasing. The number of tickets that are issued as ``electronic'' is 
close to 50 percent for domestic travel. The business markets have been 
the largest adopters of the functionality while the leisure market is 
slower. Several large airlines have electronic ticketing for select 
international routes.
    For the SABRE Computer Reservation System (CRS), if the electronic 
ticketing function fails, the failure will be uncovered in early 
February 1999 because the system begins to process year 2000 data at 
that time. February 1999 is ample time to identify and fix problems in 
the host system. Additional disruptions from hardware failures could be 
experienced during the century rollover.
    Today, the airlines are susceptible to system failures that might 
prevent an airport agent from accessing a boarding list. The process to 
manually board electronically ticketed passengers exists today for most 
airlines. Contingency plans are being developed, such as printing 
passenger manifests two to three days in advance of the turn of the 
century, for flights scheduled during the first week of January.
    Question. What percentage of the airline tickets is booked by 
travel agents? Can you estimate what percentage of the agent's systems 
will fail, and what the implications of such failure would be in terms 
of lost revenue?
    Answer. Approximately 70-80 percent of all airline tickets are 
booked by reservations agents using one of four Computer Reservation 
Systems (CRS). The CRS are mainframe based applications with some 
front-end graphical user interfaces. Access to the host based system is 
very dependent on network connectivity. Disruption in the travel agency 
business would be the result of one of three areas failing:

    (1) the PC or hardware in the travel agents location and the 
associated operating systems would not be Y2K ready;
    (2)the network that is the connectivity between the PC and 
mainframe would fail; and/or,
    (3) the application and host system does not operate.

    The likelihood of a travel agency not being able to book travel 
through the CRS is small. SABRE has extensive efforts underway to 
ensure that the hardware and software used at travel agency sites will 
be Y2K ready by 1Q99, the work on the SABRE host CRS is complete, and 
our work with the network providers is underway. Several successful 
tests have been conducted between the SABRE CRS and the other three 
CRS.
    Today, there are outages that occur and travel agencies perform 
work arounds until recovery is complete. All parties in the event of an 
outage due to Y2K would take similar actions.
    As stated in my testimony $66 billion dollars of travel 
transactions flow through the CRS annually. The reservation and booking 
curve for leisure markets begins to climb three to four months prior to 
day of departure and for business travel the curve climbs two to three 
weeks prior to day of departure. The biggest inconvenience would be for 
travelers who book the day before or day of travel.
    Most CRS host systems begin to accept reservations for travel in 
the January or February 1999 time frame. If problems occur on the SABRE 
CRS in February 1999, a reservation for a January 2000 flight can not 
be made, the problem can be corrected and travel agencies can book a 
few days later.
    Question. Are there any safety implications should airline industry 
support systems, such as those provided by SABRE and its competitors, 
have unforeseen Y2K failures, or would it primarily result in 
disruptions, reduced service, and lost revenue?
    Answer. The question needs to be broken down into two components. 
The first component is related to current day activities. The second 
component is related to future activities or calculations.
    Failures during current day activities have no different safety 
implications than exist today if a system or service fails. Public and 
private CSP, and airlines would implement work around processes or 
contingency plans. A current day failure would likely result in 
disruptions, reduced service and/or lost revenue.
    Systems that forecast future activities or perform future 
calculations that are not Y2K ready may have compliance and safety 
implications for airline industry participants who do not undertake and 
complete Y2K remediation and testing. For example, a number of 
maintenance and engineering systems calculate part replacement dates in 
the future. Should the calculations be erroneous then a part may not be 
replaced in a timely manner.
    The SABRE Group supports three maintenance and engineering 
forecasting systems. These systems forecast dates five years in the 
future. The time horizon to failure started in 1995 and the remediation 
process began at that time. The SABRE Group Y2K remediation and testing 
efforts are complete on two systems. The third system was developed to 
be Y2K ready and was recently implemented. Formal Y2K validation 
testing has started.
    Most other forecasting systems are related to scheduling, yield 
management, and pricing. Calculation errors in those systems would 
impact customer service and revenue.
    Question. To your knowledge, is there any end-to-end testing 
planned for the airline industry such as being undertaken by the 
Securities Industry Association?
    Answer. At this time The SABRE Group is not aware of any planned 
end-to-end testing. However, Price Waterhouse has been conducting 
studies for several airlines, the ATA and IATA on their Y2K initiatives 
and efforts worldwide. Several recommendations and suggestions are 
expected from the PW effort. Should one of the recommendations outline 
the need for end-to-end testing for the airline industry, both The 
SABRE Group and American Airlines would be prepared to participate.
    While there is no industry coordinated initiatives, a number of 
major carriers are conducting individual initiatives to test their 
industry wide connections.
                               __________

                  Prepared Statement of Jane F. Garvey

    Mr. Chairman and Members of the Committee: I appreciate the 
opportunity to appear before you this morning to discuss the impact of 
the Year 2000, or ``Y2K,'' technology problem on the aviation industry 
and Federal Aviation Administration (FAA) efforts to address Y2K 
readiness of our systems.
    You have already heard this morning from Deputy Secretary of 
Transportation Mortimer Downey about some of the potential impacts of 
the change in millenium on the transportation community. Let me 
reassure you that the FAA is dedicated to making sure that the advent 
of the new millenium will not bring any compromise in aviation safety 
with it.
    I have given my commitment to the American public, and now commit 
to you, their representatives, that aviation safety will not be 
compromised on January 1, 2000, or on any other day. In fact, 
addressing the Year 2000 technology problems is one of my highest 
priorities. In February of this year, I changed the FAA's approach to 
the Y2K problems. In assessing where the FAA was in solving the Y2K 
problems, I found that one line of business within the FAA, Air Traffic 
Services, had developed a successful approach that involved centralized 
management, with a clear plan, process, and milestones. I made that the 
model for the rest of the agency and created an agency-wide Year 2000 
program office reporting directly to me. I asked the manager of the Air 
Traffic Y2K program, Ray Long, to head the new agency-wide office. 
Under Ray's guidance and leadership, Air Traffic Services did not miss 
a single Y2K deadline, and now that he's leading the FAA program 
office, we have closed a significant gap in the Office of Management 
and Budget's (OMB) Federal Y2K compliance schedule, and continue to 
move steadily toward our final solutions.
    Our teams in the field have already assessed every system in the 
FAA--not just mission-critical systems that are absolutely necessary to 
the FAA's commitment to aviation safety, but every single system. We 
are now well into our renovation phase, where we actually make 
modifications to the systems that need them. By the time of the next 
OMB quarterly report, the FAA is scheduled to complete 99 percent of 
all required systems.
    With respect to the HOST computer system, one of our core air 
traffic control systems, with the help of our vendors we have developed 
a well-defined strategy for the successful transition of the HOST 
computer into the next century. The existing system is scheduled to be 
completely replaced by the year 2000. However, as a contingency to HOST 
replacement, we have already completed renovations of the HOST as of 
July 31, two months ahead of OMB's September 30th renovation deadline. 
If there is a need for the HOST to be operational in the Year 2000, we 
are assured that it will transition to the new millenium in a routine 
manner.
    We have already started our next phase, validation, or testing of 
individual components and systems, for some systems. Validation will 
begin in earnest next month. In addition to our validation process that 
incorporates General Accounting Office (GAO) guidelines, we are 
planning comprehensive end-to-end tests, which test the 
interrelationships of systems and whether individual fixes of 
components will work together as a whole. These end-to-end tests will 
be conducted at our Technical Center in Atlantic City, which can 
simulate any of our Air Traffic Control Centers, and at operational 
facilities in Denver. These end-to-end tests will reinforce our 
assurance that individual system fixes will work together in an 
operational environment and thus ensure aviation safety.
    As we continue our wider repair efforts, we are on schedule to have 
the majority of our systems compliant within the Department of 
Transportation's and OMB's deadline of March 31, 1999. All FAA systems 
will be fully compliant by the end of June 1999, a date that we have 
accelerated from our original estimate of November 1999. We continue to 
evaluate our schedule to accelerate it, wherever possible, to meet the 
deadline of March 31, 1999, which OMB has established as the date that 
systems government-wide will be Y2K-compliant.
    We have overcome many obstacles to get where we are today, and I am 
very proud of the work that we have been able to accomplish thus far. 
Nevertheless, we recognize that we face many other challenges in the 
months ahead. We have strengthened our program management by teaming 
with an outside business partner, Pricewaterhouse Coopers, which has 
the expertise to support us through the management and oversight of 
this project. In doing so, we have been able to better focus the 
strengths of FAA personnel, such as extensive knowledge of the National 
Airspace System (NAS), and successfully leverage our technical 
resources. We have been able to make such significant progress because 
we have taken this new approach.
    At this point, I'd like to turn the focus of my remarks today to 
our collaborative work with our industry counterparts. First, I'd like 
to say a few words about our plans for collaboration with our labor 
partners. In June, we briefed the National Air Traffic Controllers 
Association (NATCA), the Professional Airways Systems Specialists 
(PASS), and the National Association of Air Traffic Specialists (NAATS) 
on our Y2K efforts. We are also planning follow-up briefings and 
workshops with these and other labor groups to receive and incorporate 
their input into the FAA agency-wide contingency plan, which we expect 
to publish in December 1998. The contribution of our workforce is 
essential to completing this activity.
    We have also made great strides in our partnerships with the 
aviation industry, both domestically and internationally. The FAA 
sponsored an ``Industry Day'' in June of this year, and we have 
scheduled another for late October. These Industry Days bring together 
key stakeholders from all sectors of the aviation industry to raise 
awareness and work together to solve Y2K problems that are specific to 
aviation safety and efficiency. Our June Industry Day included 
participants from the FAA, as well as representatives from airlines, 
airport authorities, aircraft manufacturers, the communications field, 
and international groups. The agenda focused on identifying Y2K issues 
with our industry partners, and potential solutions to those issues. 
Over 120 attendees from all sectors of the aviation community attended, 
and I think it's accurate to say that we all felt that the information 
and cooperation that we generated was beneficial for all of us. For our 
upcoming Industry Day, we are planning to invite a full range of 
representatives from the aviation community. Our focus on that day will 
be the status and progress of our industry partners, the external 
activities of the FAA, and the FAA's next steps towards validation 
testing of FAA systems.
    We have formed an airport industry working group to facilitate a 
clear understanding of airport Y2K issues within the airport operator 
community, and we have developed an Internet web page for the 
dissemination of Y2K airport information and guidance. We have 
communicated with manufacturers of critical airport systems stressing 
the need for their products to be Y2K compliant and asking that 
pertinent information be sent to affected airports and FAA. We have 
developed and distributed a comprehensive airport system list to over 
5,000 public airports to help them identify and correct Y2K issues, and 
are currently developing a letter to FAA-certificated airports 
outlining responsibilities for assessing and remediating Y2K problems. 
Finally, we have made every effort to include them in our Industry Days 
to make sure that their specific concerns are raised.
    Moreover, our work in the international arena has been an important 
focus of our Y2K efforts. In April of this year, we issued a Year 2000 
International Project Plan, implementing coordination with 
international partners. We are working closely with the International 
Civil Aviation Organization (ICAO) to raise awareness of Y2K issues in 
the international community. We have assigned a full-time FAA employee 
to work with ICAO in their Montreal, Canada office, to offer guidance 
and support in any way we can. We have also initiated informal working 
groups with different international entities to solve common Y2K 
problems. We recently completed a testing agreement with Canada and are 
currently coordinating an agreement with Mexico, to test data exchanges 
and directly interfacing air traffic control systems to ensure that 
travel between the U.S. and these countries continues to flow smoothly 
at the turn of the millenium.
    In summary, Mr. Chairman, I want to say that although I am pleased 
with and proud of the progress that the FAA has made in solving our Y2K 
problems, we do recognize that Y2K presents a set of problems we have 
never encountered before, and that there are differing views as to how 
those problems should be defined and solved. We also recognize that 
different stakeholders will have widely ranging resources and expertise 
in solving Y2K problems. The FAA is committed to doing whatever we can 
within the scope of our authority to assist the members of the aviation 
industry to make a smooth transition to the new millenium.
    I would also like to take a moment to thank you, Mr. Chairman and 
Members of the Committee, for focusing the Nation's attention on the 
Y2K technology problem, and helping all of us in government and 
industry to find the solutions. This Committee's willingness to seek 
ways for Congress to help reduce the risk of Y2K failures is sure to 
encourage everyone to work collaboratively to ensure that our 
transition to the new millenium is successful. The work of this 
Committee and our partnerships with industry are generating awareness, 
and generating action and results--this is an immovable deadline that 
we have to meet together, and with your guidance, I am sure that we 
will make it.
    I appreciate the opportunity to address the Committee this morning, 
and I would be pleased to answer any questions you may have.
                                 ______
                                 

         Responses of Jane F. Garvey to Questions Submitted by

                            Chairman Bennett

    Question 1. Ms. Administrator (FAA), you indicated in your 
testimony there are many interrelationships between the FAA and other 
segments of the airline industry. Please tell the Committee which 
relationships are most critical from a Y2K standpoint (other than air 
traffic control)? In these critical relationships, to what extent is 
the other participant with FAA going to be Y2K compliant (airports, 
airlines, etc.)? What is the basis for your assessment?
    Answer. The aviation community's Y2K readiness is, to a large 
extent, dependent on the successful efforts of the airlines, airports, 
and suppliers--both domestic and international. Recognizing this, the 
FAA continues to work with these groups to promote and accelerate the 
industry's Y2K readiness. A snapshot of their progress is provided 
below:
                                airlines
    As reported by the Air Transport Association (ATA), all U.S. 
airlines have Y2K programs in place and plan to be Y2K ready no later 
than the second quarter of 1999.
  --As of July 1, 1998, inspectors advise air carriers, air operators, 
        and air agencies of concerns associated with Y2K.
  --FAA is requiring that all air carriers, air operators, and air 
        agencies provide a letter by September 30, 1998, stating that 
        they have developed and implemented a plan to evaluate their 
        flight and maintenance activities as they relate to Y2K. By 
        January 4, 1999, these companies must also send a letter 
        stating that the company and its outsource contractors will be 
        able to show regulatory compliance with operations and 
        maintenance requirements after January 1, 2000. If the FAA does 
        not receive these letters or these letters indicate that the 
        company will not be Y2K compliant, we will contact the carrier 
        directly to obtain the requested information.
  --Y2K compliance is indirectly part of our inspection process, 
        through surveillance of required regulatory items. We 
        anticipate that additional Y2K surveillance activities will be 
        added to our routine surveillance activities.
                                airports
    Many airports are just now realizing how much work must be done to 
become Y2K ready and are responding appropriately by stepping up their 
efforts in identifying and addressing potential problem areas, 
including fuel supply.
  --ATA has devoted considerable resources to assessing airport Y2K 
        status and monitoring efforts to fix problems in airport 
        systems. Part of an ATA special fund of $15 million has been 
        used to employ a consultant to:
                --conduct on-site assessments of approximately 150 
                commercial service airports,
                --compile a list of airport systems that may use 
                computers or have embedded chips (which the FAA has 
                used in developing its list of systems),
                --contact manufacturers of airport equipment for 
                information on Y2K compliance, and
                --maintain a large database of the status of individual 
                systems at each airport included in their survey.
    In these airport outreach activities, the FAA has learned that some 
airports, particularly smaller airports, are having difficulty with Y2K 
compliance because they lack the resources to hire the necessary 
personnel with the unique expertise to conduct assessments of their 
existing airport facilities, technology systems or equipment.
    Although the FAA does not have authority to regulate the terminal 
and landside parts of the airport that do not involve safety, the 
agency is concerned about the airports' ability to move passengers 
through without delays. Thus, the FAA has proposed a special one-year 
expansion of Airport Improvement Program (AIP) eligibility to permit 
airports to use these funds to assess all airport systems that are AIP 
eligible, and those systems that would not be typically eligible, such 
as parking lots, gates, and baggage systems, if they are owned by 
airport operators. Only entitlement and state apportionment funds can 
be used, and are limited to one year: FY 1999. The expanded eligibility 
of these funds apply only to assessment of the Y2K problem, not the 
costs associated with fixing the systems, unless they are AIP eligible.
  --The airlines through ATA and FAA are working together with airports 
        in order to enable a comprehensive approach to Y2K readiness 
        without duplication of effort.
  --In July 1998, FAA sent letters to manufacturers of critical 
        airfield systems, asking that information be sent to the 
        airport and the FAA on the Y2K compliance status of their 
        products.
  --FAA has developed an Airports Y2K web site to act as a focal point 
        for Y2K airport information and disseminate guidance.
  --To determine the status of Y2K compliance/Y2K contingency plans at 
        Part 139 airports (airports that are certificated by the FAA), 
        FAA plans the following action:
                --The FAA established an FAA/Industry Y2K Airfield 
                Working Group, (FAA, ATA, ACI-NA, AAAE, RAA, NBAA, 
                NASAO, and the Airport Consultants Council), which has 
                met regularly since June and last met on August 11 at 
                ATA to exchange information and recommendations on 
                action to address Y2K issues at airports, and to avoid 
                duplication of effort.
                --One product of this effort is a list, developed from 
                information collected by ATA and ACI-NA, of all the 
                systems at an airport that are likely to use a computer 
                processor of some kind. In July 1998, the FAA sent a 
                letter to more than 5000 public airport operators 
                emphasizing the importance of the Y2K issue and 
                enclosing a copy of this list to help them identify and 
                correct Y2K issues.
  --FAA has established a national team with representatives in each 
        region to monitor each airport operator's progress in 
        determining Y2K compatibility for all Part 139 systems 
        indicated in a list provided to approximately 600 airports. 
        Team members will accomplish this through site visits, phone 
        calls, and correspondence. Documentation will be requested.
  --Internationally, we do know directly about the Y2K status of some--
        but not all--foreign air traffic control and airports to which 
        US carriers fly and accept information about the progress that 
        others are making on their systems.
                         avionics manufacturers
    Major manufacturers are aware of the Y2K challenge and are well-
prepared for the year 2000 date change. Smaller manufacturers are 
capable of switching to manual operations.
  --FAA has requested all U.S. approved avionics manufacturers perform 
        a self-assessment their products and product manufacturing 
        tools. Responses were due in August 1998. The responses are 
        still incoming, and are currently undergoing review. FAA is 
        also developing criteria to add to the manufacturers' 
        inspection process (Aircraft Certification System Evaluation 
        Program (ACSEP)) to ask of manufacturers during an inspection. 
        The results of the inspection and the surveys will be compared.
  --If there is an inconsistency between the self-assessment and FAA 
        inspections, and that inconsistency could have a safety impact, 
        FAA will perform a special site visit to investigate the source 
        of the inconsistencies and to determine the appropriate action. 
        This visit will involve both engineering and inspection 
        personnel. Safety will be the focus of all investigations.
  --FAA has made Year 2000 compliance part of the avionics inspection 
        process by including it as part of all ACSEP evaluations 
        conducted before Year 2000, and has made it a part of routine 
        surveillance by both engineers and inspectors.
                                security
    Y2K readiness of the various security systems throughout airports 
will be important to the overall success of the aviation community's 
compliance efforts. These systems include automated access control 
systems, explosive detection equipment software, automated baggage 
control systems, and automated profiling systems.
  --The FAA surveyed security systems owners to determine their Y2K 
        status. The survey inquired about the following: automated 
        airport access control systems, vehicle and personnel 
        identification systems, certified explosives detection systems, 
        trace explosives detection systems, walk through metal 
        detectors, and X-ray screening equipment.
                --With regard to automated access and vehicle and 
                personnel identification systems, FAA performed site 
                visits at 81 large airports. The remaining 107 airports 
                were surveyed. Several airports have reported that they 
                are currently system ready, and those that are not have 
                preparations in place and are working with contractors 
                to be ready no later than February 1999. Smaller 
                airports without automated security systems do not, 
                therefore, have Y2K issues.
                --A Y2K compliant chip for certified explosives 
                detection systems was successfully developed. As a 
                result, all models of CTX, the certified explosives 
                detection system, are scheduled to be Y2K compliant by 
                December 31, 1998.
                --Compliance of trace explosives detection systems is 
                contained in the contract specifications. These systems 
                are expected to be ready for the year 2000 date change.
                --Walk through metal detectors are Y2K compliant as 
                they do not require micro-processor calculations to 
                function properly. Similarly, all X-ray screening 
                equipment is found to be compliant.
    Question 2. The flying public is probably most concerned about air 
traffic control since it is the most visible portion of your 
responsibility. What hard information do you have available now to 
indicate your current status in this area? What causes the GAO, your 
own IG, and the Air Traffic Controllers to be so skeptical about the 
data demonstrating your Y2K progress in air traffic control?
    Answer. Within the Air Traffic Control System, which is under the 
Air Traffic Services (ATS) purview, there are 225 systems defined as 
mission critical. The ATS organization completed all renovations on 
September 30, 1998. The following details the ATS Year 2000 (Y2K) 
inventory:

  --Mission Critical Systems......................................   225
  --Non-Mission Critical Systems..................................    58
                        -----------------------------------------------------------------
                        ________________________________________________
  --ATS Systems Total.............................................   283
                        =================================================================
                        ________________________________________________
  --Mission Critical Systems Requiring Renovation.................    68
  --Mission Critical Systems Renovated by 9/30/98.................    68

    The OIG and GAO--both of which are investigatory bodies to provide 
impartial information on government-funded programs--have closely 
monitored the FAA's progress toward Y2K readiness and have communicated 
their concerns. The agency, in turn, has been very responsive by 
directly addressing these specific areas of concern and working out any 
potential problems.
    Despite their skepticism, both the OIG and GAO have noted the 
significant and substantiated progress FAA has achieved. In a recent 
hearing before the House Committee on Science, Subcommittee on 
Technology, an OIG official credited the FAA for taking ``decisive 
actions concerning the Host and many of its other computers'' in 
reducing the risk of Y2K-related problems. A GAO representative also 
commented that the ``FAA has made progress in managing its Year 2000 
problem and has completed critical steps in defining which systems need 
to be fixed and how to fix them.''
    Labor partners have also expressed skepticism, due in part to 
limited up-to-date information available to them and only being 
peripherally involved in the agency's efforts prior to September 1998. 
To remedy this, the FAA has reached out to the unions in periodic 
meetings and has directly involved them in the development of the FAA-
wide Y2K contingency plan.
    Question 3. Would you please tell the Committee what type of 
contingency planning that you are conducting to protect the safety of 
the flying public in the event of Y2K lapses?
    Answer. FAA has a wide range of existing contingency plans in place 
to deal with a multitude of problems that may occur in the air traffic 
control (ATC) system. Specifically, each air traffic facility has a 
current contingency planning document per FAA orders 1900.47A and 
6030.31E, which address restoration processes within the NAS. For 
example, if the Host computer system fails for even a fraction of a 
second, there is backup for the Host. If that fails in any way, then 
the DARC computer system is activated as a back-up. If DARC ever 
falters, processing of flight data is carried out manually.
    Additionally, each system has an additional contingency plan that 
was completed during the Assessment Phase and addresses Y2K specific 
issues.
    Currently, the FAA Y2K Program Office also is developing a FAA-wide 
Contingency Plan to handle potential domestic and international Y2K-
related problems. By the end of this year, the plan will encompass all 
of FAA's business and air traffic systems.
    FAA has been involving our unions and encourages their involvement 
in the development of the FAA-wide Business Continuity and Contingency 
Plan. On June 9, FAA briefed the National Air Traffic Controllers 
Association (NATCA), the Professional Airways Systems Specialists 
(PASS), and the National Association of Air Traffic Specialists (NAATS) 
on the agency's Y2K efforts. On September 18, we initiated discussions 
with all labor groups to strategize our Y2K contingency planning. FAA 
has also scheduled a follow-up meeting with these groups on October 8-9 
to collaborate on our contingency planning activity. These meetings 
will enable us to complete the FAA Business Continuity and Contingency 
Plan, the agency-wide contingency plan, by the end of the year.
    Question 4. FAA has stated that it plans to complete renovation of 
157 of 159 mission critical systems by 9/30/98 (three weeks). The DOT's 
August quarterly report to OMB stated that FAA had completed renovation 
on 93 (59%) of these systems as of 7/31/98. How many of the remaining 
64 renovations were completed in August? Is it reasonable to expect to 
complete all of the remaining renovations in the next three weeks?
    Answer. FAA has 154 of 156 mission critical and 94 of 94 non-
mission critical systems that were renovated by September 30, 1998. As 
of September 29, 1998, 141 of 156 (90 percent) mission critical 
systems--compared to 69 percent as of August 31, 1998--completed 
renovation. Of the 94 non-mission critical systems requiring repair, 87 
(93 percent) have completed renovation.
    These figures are being confirmed through an independent validation 
and verification (IV&V) process being performed by both FAA (SAIC) and 
the DOT OIG.
    Accelerated progress is attributed to the following: active 
involvement of top FAA management in the effort; continued utilization 
by the FAA of the largest system integrators; other FAA resources 
working double shifts; and the application of ``lessons learned'' from 
the earlier stages of the Renovation Phase.
    Question 5. FAA planned to issue both a business continuity and 
contingency plan for the National Airspace System and an end-to-end 
test plan by 8/31/98. What is the status of each plan? Does the 
business continuity and contingency plan include the possibility of 
nation-wide system failures?
    Answer.
                business continuity and contingency plan
    The FAA is currently developing a FAA-wide Y2K business Continuity 
and Contingency Plan, scheduled for publication by December 31, 1998. 
This plan will (1) specifically address Y2K problems from a national 
perspective; (2) include international issues; and (3) encompass FAA 
business systems.
                           end-to-end testing
    The draft of the FAA-wide end-to-end test program plan was 
finalized August 31, 1998. FAA is defining the functional scenarios and 
the detailed test cases, including interfaces that will be tested in 
the end-to-end test. Additionally, the FAA has already started to 
coordinate such tests at the FAA William J. Hughes Technical Center in 
Atlantic City, New Jersey with identified stakeholders. The testing is 
being planned at the Technical Center and designated field sites.
    Question 6. Examination of data exchanges is essential to every 
Year 2000 program. Once data exchanges are inventoried; exchange 
partners must be contacted; agreements with these partners must be 
reached as to what corrections must be made, by whom, and on what 
schedule; and requisite testing must be defined and performed to ensure 
that the corrections do, in fact, work. In early August 1998, FAA's Y2K 
Program office did not have a complete inventory of its data exchanges. 
Additionally, it did not know if interfaces in its incomplete inventory 
exchanged date-related data. What has FAA done to get a better handle 
on data exchanges? How many of the interfaces in this inventory 
exchange date-related data? How many of these interfaces need repair? 
What percentage of the exchange partners for these interfaces needing 
repair have been contacted?
    Answer. The FAA has completed an inventory of the interfaces of all 
systems currently being renovated. This inventory of 653 systems 
identified 375 systems containing interfaces. Of these interfaces in 
this inventory that exchange date-related data, 123 interfaces required 
repair. All exchange partners for those interfaces needing repair have 
been contacted.
    Question 7. Certain versions of inertial navigation system (INS) 
have been identified by aircraft manufacturers as being Y2K non-
complaint. The Y2K effect has been characterized as significant since 
under current pre-flight procedures the aircraft will be precluded from 
dispatch. What testing have FAA engineers in the Certification Office 
performed of the INS? Has FAA verified the industry's claim that these 
systems have no in-flight safety concerns?
    Answer. FAA engineers have not conducted testing of the INS. 
Responsibility for testing is with the manufacturers. FAA continues to 
work with the manufacturers. To date, the agency has not discovered any 
in-flight safety concerns. However, the FAA continues to monitor this 
issue with industry partners.
    Question 8. It has come to the Committee's attention that the FAA 
may be planning to require all airports to certify Y2K compliance by 
June 30, 1999. One industry insider has remarked that the criteria to 
be used as part of this certification, which reportedly include (1) 
evidence of vender certification, (2) completion of written contingency 
plans, and (3) evidence of an existing test plan on file are inadequate 
criteria on which to judge compliance. Can you comment on any FAA plan 
to require such certification? If such a plan does in fact exist, can 
you comment on the assertion that the criteria to be used for such 
certification may be inadequate?
    Answer. The FAA plans to monitor the Y2K compliance status of 
systems that airport operators may use to comply with safety 
requirements set forth in 14 C.F.R. Part 139. In this regard, FAA has 
recommended to airport operators that they adopt a target date of June 
30, 1999, to certify that these Part 139 systems are Y2K ready. As an 
alternative, the airport operator can develop a contingency plan for 
meeting the Part 139 requirements that does not rely on computers or 
microprocessors (i.e., switching the operation of runway lights from an 
automated system to a manual operation).
    FAA recently provided the following criteria to airport operators 
for making their Y2K compliance determinations:

  --Manufacturer's certification that the system does not contain any 
        computers or microprocessors.
  --A written description of the testing performed to determine that 
        the system is Y2K compliant.
  --Documentation that replacement hardware or software is Y2K 
        compliant.

    These criteria mirror the criteria that the agency is using for its 
internal systems.
                               __________

                   Prepared Statement of Paul Hunter

      senate y2k committee announces survey results measuring y2k 
       preparedness of nation's largest transportation companies
    Washington, DC.--At the sixth hearing of the Senate Committee on 
the Year 2000, members discussed the threat of the Y2K bug on U.S. 
transportation systems and released the results of a new survey gauging 
the Y2K readiness of major players in the transportation industry.
    The survey results follow:
                           executive summary
    The Special Committee on the Year 2000 Technology Problem recently 
conducted a survey of large companies and service providers in the 
transportation sector. Representatives were selected from major 
airlines, airports, railroads, maritime shippers, trucking companies, 
and metropolitan transit authorities. Important items learned from the 
survey include:
  --Sixty-two percent of the respondents reported that they had not 
        completed their Y2K assessment process. This is disturbing 
        given only 15\1/2\ months until December 31, 1999. For 
        reference, the Office of Management and Budget directed all 
        Federal agencies to complete their assessments by June 1997.
  --One hundred percent of the respondents reported they don't have 
        completed contingency plans. What is even more disturbing is 
        that just over half reported that they were not even working on 
        contingency plans at this time.
  --Ninety-four percent reported their total expected Year 2000 
        expenditures which at this time total over $650 million.
  --Fifty percent of the respondents reported that they anticipated 
        being involved in litigation due to the Y2K problem.
  --Ninety-four percent report they will finish their Y2K preparations 
        on time. The committee staff feels this is overly optimistic 
        given that most of them have not yet completed the process of 
        fully assessing the scope of their Y2K problem
  --Six of the eight which answered the question on what percent of 
        their assessed systems are ``Mission Critical'' report 70 
        percent or more are Mission Critical.
                        purpose and methodology
    The committee staff asked survey respondents for information on 
their automated systems used to manage and operate their respective 
transportation systems and utilities; these include both their 
computers systems and embedded systems such as process control units 
used in their production and distribution systems. While the survey is 
not statistically representative of the transportation industry at 
large, the inclusion of 32 of the operators and service providers 
ensures broad representation of the industry. Pledges of 
confidentiality were made to survey respondents in order to facilitate 
honest and candid answers to survey questions.
    Other studies have concluded that smaller companies are not as 
advanced in their Y2K preparedness as their larger counterparts. Hence, 
the results presented here probably represent the best-prepared portion 
of the industry.
                        findings and conclusions
    Out of 32 companies targeted for the survey, the committee staff 
received 16 responses by the evening prior to the September 10, 1998 
hearing. This overall response rate of 50 percent varies within 
transportation modes and providers from a high of over 80 percent for 
railroads and trucking firms to a low of 20 percent for airports.
    This survey raises the most concerns about aviation given the poor 
response to the survey from both airports and airlines. Given the 
concern that already exists about the readiness of the Air Traffic 
Control system, this will add to the general unease about air travel. 
The committee staff finds the case for the Y2K flight readiness of 
commercial jet-liners is convincing and planes will not literally 
``drop out of the sky'' on Jan. 1, 2000. But if the ground-based 
information systems supporting overall air travel are not Y2K 
compliant, the system will be severely limited in its overall capacity, 
leading to lost revenue for the airlines, lost productivity in the 
economy, and significant public dissatisfaction with the air 
transportation system.
    The transportation firms surveyed did not become aware of Y2K 
problems until 1995 or later. Almost all have reported establishing a 
Formal Y2K Office and/or project within their company.
    Companies have the best handle on their main frame and client-
server applications and are furthest behind on the embedded chip 
assessment and remediation aspects of the problem.
    Reported costs varied widely across survey responses. In an attempt 
to penetrate this deeper, the committee learned at least part of this 
is due to a lack of uniformity in the way that companies are accounting 
for Y2K expenditures.
    A little more than half the surveyed parties were worried at this 
time about being a party in litigation due to Y2K failures and upsets. 
More had concerns about the failure to deliver of business partners and 
providers, but some felt that they could plan for these contingencies.
    Organizations were also asked what the Congress should be doing to 
facilitate addressing Y2K problems. By far, the most common answer 
(about 50 percent,) was Congress should be producing legislation that 
supports good faith sharing of Y2K information and limits the liability 
organizations are exposed to by Y2K problems, upsets, or failures. 
Several other actions were mentioned by more than one respondent: (1) 
Congress should lead in the discovery and dissemination of valid Y2K 
information to offset the misinformation widely disseminated today, (2) 
anti-trust protection is needed for companies who normally are 
competitors but who cooperate on Y2K programs, and (3) Congress should 
continually oversee the Y2K programs of Federal agencies and service 
providers important to all industry such as power utilities and 
telecommunications.

                                                       SENATE COMMITTEE ON THE YEAR 2000 TECHNOLOGY PROBLEM--TRANSPORTATION SURVEY RESULTS
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                   Percent      Contacted
                                                                      Establish    Assessment      systems       service      Legal or     Contingency    Contacted     Contacted     Will you
                    Company type                       Date  aware     formal       complete       mission     Providers/     liability       plans          by            by        finish  in
                                                                       project                    critical       vendors    concerns \1\    complete      creditors     investors       time
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 1. Airline.........................................         1995          1995            No      No reply           Yes           Yes            No           Yes           Yes           Yes
 2. Airline.........................................         1995          1995            No        75% IT
                                                                                                    38% emb           Yes           Yes            No           Yes           Yes           Yes
 3. Airline.........................................         1995          1996           Yes           30%           Yes            No            No           Yes           Yes           Yes
 4. Airport.........................................         1996          1996            No           70%           Yes           Yes            No            No            No           Yes
 5. Railroad........................................         1995          1995            No      No reply           Yes           Yes            No           Yes           Yes       Mission
                                                                                                                                                                                       critical
 6. Railroad........................................         1996          1997            No      No reply           Yes            No            No           Yes            No           Yes
 7. Railroad........................................   early 90's      No reply           Yes      No reply           Yes            No            No           Yes           Yes           Yes
 8. Railroad........................................         1994          1995           Yes      No reply           Yes            No            No           Yes            No           Yes
 9. Shipping........................................         1995          1996           Yes       100% IT
                                                                                                    Emb. ??           Yes           Yes            No           Yes            No           Yes
10. Shipping........................................         1996          1996           Yes           85%           Yes           Yes            No            No            No           Yes
11. Transit Authority...............................         1995          1995            No           75%           Yes           Yes            No           Yes           Yes           Yes
12. Trucking........................................         1995          1995           70%       Unknown           Yes            No            No           Yes           Yes           Yes
13. Trucking........................................         1995          1995            No      No reply           Yes           Yes            No      No reply            No           Yes
14. Trucking........................................         1995          1995           Yes           N/A           Yes           Yes            No           Yes            No           Yes
15. Trucking........................................         1994      No reply            No           75%           Yes            No            No            No            No           Yes
16. Trucking........................................         1996      No reply            No           30%           Yes            No            No            No            No          Yes
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Respondents were asked about potential Y2K legal exposure caused by vendor / supplier failure. Some respondents answered in general about overall legal exposure.
 
Notes: 1. The 15 companies that reported cost expect to spend over $650 million collectively on Year 2000 problems.
        2. While no company had completed contingency plans, 9 have begun such planning.
 
 Source: The Committee staff.

                 Prepared Statement of Senator Jon Kyl

    The Year 2000 technology problem continues to make its presence 
felt in all of our Nation's critical infrastructures and transportation 
is no exception. The transporting of goods across the complex landscape 
of the United States has never been an easy challenge. However, 
integrating information technology and embedded systems greatly 
increased the efficiency, reliability and robustness of the 
transportation infrastructure. During the past decades we have 
increasingly moved to just-in-time delivery and consequently, many 
sectors of the economy now rely on the daily uninterrupted flow of 
goods. The time sensitivity of today's business environment increases 
the criticality of our vast transportation infrastructure. However, 
shipping, rail, trucking, and air all face serious challenges from 
potential Y2K problems. A significant breakdown in the movement of 
food, fuel, medical supplies or parts for factories may have an 
immediate and far reaching impact on a large number of Americans.
    From a policy perspective it is important that we consider 
carefully the contingency planning that may be necessary to mitigate a 
Y2K disruption in the different transportation sectors. We need to 
carefully investigate of how a potential failure in a key sector like 
shipping, rail or trucking could affect the flow of critical goods. For 
example, what impact would a disruption in the trucking industry mean 
for the movement of goods such as medical supplies and food? How would 
we--Industry and Government--resolve such problems? What types of 
contingency plans would enable us to prioritize the movement of 
critical goods and energy? How would the private sector interface with 
the government to resolve an unexpected and troublesome Y2K disruption? 
How would the different sectors of the transportation industry 
coordinate problems among themselves? We must endeavor to ensure that 
critical goods such as energy, medical supplies, and food would receive 
the necessary priority.
    The Department of Transportation is the lead Agency for 
transportation working group of the President's Council on Y2K 
Conversion and has the responsibility for reaching out to the Industry. 
I look forward to hearing about the Department's efforts to raise 
awareness, prompt the flow of information and stimulate contingency 
planning within the transportation industry.
    The flow of technical information is critical to the timely 
resolution of Y2K problems. The complexity of the supply chain forces 
companies to reach out and request the Y2K readiness of their 
individual business partners. However, the current legal atmosphere 
hindering the free exchange of Y2K-related information.
    As a member of both the Y2K Committee and the Judiciary Committee, 
the Chairman has asked me to carefully examine ``The Year 2000 
Information Disclosure Act'' (S.2392) as it was introduced and make 
sure that it meets the needs of our nation's critical infrastructures 
such as the Transportation Industry. During the August recess, the 
staff of the Y2K Committee and the Judiciary Committee held numerous 
joint briefings to investigate the problems and the existing legal 
impediments to sharing Y2K information. In addition, I wrote to 
numerous industry association and organizations for comment. We hope to 
be able to provide an update on the progress of this legislation in the 
next few days.
    It is my hope that the increased flow of technical information, Y2K 
readiness disclosures and realistic contingency planning will enable 
the transportation infrastructure to keep moving in the Year 2000 and 
beyond.
                               __________

              Prepared Statement of Christopher B. Lofgren

    This Statement is being presented in response to the request for 
testimony by the United States Senate's Special Committee on the Year 
2000 Technology Problem, and follows the requested structure contained 
in correspondence from Senator Robert F. Bennett, Committee Chairman, 
dated September 1, 1998.
                  schneider national, inc. background
    Schneider National, Inc. and its subsidiaries constitute the 
largest truckload motor carrier in North America, if not the world. 
Schneider National's motor carrier services include van, bulk, and 
specialized. Schneider National is also one of the largest providers of 
outsourced logistics services in North America and Europe. Schneider 
National is a privately owned company headquartered in Green Bay, WI, 
employs approximately 20,000 associates, and had revenues in excess of 
$2.7 billion in 1997.
    Schneider National's tractors and trailers are distinctive for 
their orange color, and we proudly refer to the company as ``The 
Orange, On-Time Machine.'' Schneider National serves over two-thirds of 
the Nation's ``Fortune 500'' companies, has literally thousands of 
customers, and has long been a leader in the use of advanced technology 
to bring differentiable value to those customers. In particular, 
Schneider National was the first carrier to employ satellite 
communications with each of its over 12,000 tractors, and maintains and 
continues to develop a code base of over 14 million lines of 
proprietary software that constitute its copyrighted SOURCE and SUMIT 
systems operating the business today.
    Schneider National is part of the $420 billion freight 
transportation industry. The trucking industry carries approximately 60 
percent of domestic tonnage. In addition, 77 percent of all communities 
in the United States depend solely on trucks to deliver goods. To 
further illustrate the significance, in 1996, over 9 million people 
were employed throughout the economy in jobs related to trucking. As 
part of the total supply chain, the trucking industry plays a large and 
ever-expanding role.
      impact of the year 2000 problem on schneider national, inc.
    Schneider National's goal is to become Year 2000 compliant in every 
way possible in order to continue its service to customers in an 
uninterrupted fashion. On-time delivery is crucial to the success of 
Schneider National and its customers' businesses. A late load, for 
whatever reason, could have a devastating effect on a manufacturing 
line that depends on the materials carried in that truck. Almost 
everything available on the market today found a home on a truck at 
some time. It is Schneider National's opinion that nothing should want 
for availability come Saturday, January 1, 2000.
    To that end, Schneider National supports over 8,000 internally 
developed modules of source code for its operations. Of these 8,000 
modules, 651 were identified to contain Y2K problems. Schneider has 
already spent over 25,000 hours of effort preparing for the Year 2000. 
This includes time spent scanning the entire code base, making the 
necessary repairs, and testing these applications in a simulated Y2K 
environment. An additional 7,000 hours will be necessary in the early 
part of 1999 to complete the work.
    One area of focus has been Electronic Data Interchange, or EDI. 
Since December of 1997, EDI standards have been available that fully 
support a four digit year. Schneider National processes about 4,000 EDI 
messages daily, often to as many as 500 different trading partners. 
Systems using this form of electronic communication, or any other form 
of electronic communication, are at risk for problems due in large part 
to outdated systems which only support a two digit year. Schneider 
National, however, can now support customers that transmit the new 
standard with four digit years. For customers not using this latest 
standard, Schneider National will employ a ``windowing approach'' to 
determine the correct century. Briefly explained, ``windowing'' implies 
that if a two digit year is greater than 50, the century will be 
treated as starting with ``19''. If the two digit year is 50 or less, 
then the century will be treated as starting with ``20''. Since most 
data transmitted by EDI is of recent origin, this solution, although 
not perfect, should address the problem.
    Between the hours of valuable associate time, and additional 
hardware and software, Schneider National expects to spend over $5 
million in its Year 2000 project. This is a substantial burden for the 
company to absorb, with no apparent direct additional business benefit. 
Nevertheless, we continue to address issues and concerns to prepare for 
the turn of the century, having already successfully received an order 
with information dating to 2007.
    Of course, Schneider National is not a business run in isolation. 
As a result, and as is the case in our highly complex and integrated 
economy, Schneider National cannot go it alone. Therefore, Schneider 
National must rely on its vendors and suppliers, such as electricity, 
gas, and water, in order to ensure continuous, reliable service to its 
own customers. Additionally, Schneider National is working with truck 
and trailer manufacturers (engine control units, anti-lock brake 
systems, electronic dashboards, monitoring equipment, and 
communications equipment), EDI vendors, telephone service providers, 
financial institutions, facilities providers (security systems, fire 
suppression systems, lighting control systems, elevators), and many 
others, to ensure that such businesses are addressing the Year 2000 
issue and are dealing with it appropriately.
    Schneider National has participated, and will continue to 
participate, in conferences with vendors, suppliers, and customers in 
an effort to minimize the potential negative effects of the Y2K 
challenge. We at Schneider National are proud of our efforts to date 
and look forward to reaping the rewards of our preparedness.
             general preparedness of the trucking industry
    The trucking industry is highly competitive in nature, from the 
independent operator to the multifaceted aspects which comprise a large 
company like Schneider National. One common element is that margins are 
thin and therefore the margin for error is even thinner. Yet, when it 
comes to the Y2K challenge, the similarities may diverge.
    For example, small motor carriers might not be as affected because 
many, if not all, of their operations are not highly automated, instead 
relying on pencil and paper, telephone, facsimiles, or possibly 
electronic mail through an online service provider. Large carriers, on 
the other hand, will likely experience a significant impact of the Y2K 
problem, but at least may have the financial and human resources 
necessary to deal with the problems, provided they have started early. 
Notice the emphasis on ``started''. Without that, it may be too late. 
Although large carriers may have the resources to address the problem, 
this is not to minimize the substantial financial and human resources 
capital necessary to deal with the problem, resources which, quite 
frankly, could have been employed more efficiently elsewhere were the 
problem not to exist.
    In the estimation of Schneider National, medium sized companies may 
be most at risk. They may be automated enough to force a reliance on 
systems that are not be Y2K compliant, and in many cases have purchased 
software to address their technology needs. Most of these companies 
have only a small staff of information technology professionals to 
integrate the software and maintain the computing infrastructure. Given 
the highly competitive nature of the trucking industry, these companies 
may not have the additional financial and human resources necessary to 
replace software systems that their current vendors have not upgraded 
to be Y2K compliant. Schneider National believes this breakdown by size 
likely parallels most other industries.
    For those businesses which have not started Year 2000 work, time 
grows short. Although there may not be enough time to fix Y2K problems 
for these businesses, there still may be time to identify problems and 
develop contingency plans to address the fallout.
                          the role of congress
    The Federal Government itself has a significant challenge to 
prepare for the Year 2000. Therefore, as the government addresses its 
internal efforts, we believe there are three potential avenues through 
which Congress can help, or at least minimize, the impact on the 
trucking industry.
    First, the government can work to minimize its demands or business 
interference in 1999 with companies working aggressively to establish 
their Year 2000 readiness. Additional requirements and/or new 
initiatives which place a burden on business at this time would only 
serve to derail important efforts currently underway, and may 
potentially negate efforts already completed.
    Second, Congress can help by passing legislation designed to 
promote more open sharing of Year 2000-related information. While the 
proposed ``Safe Harbor'' legislation may help protect those who 
carefully share information on Y2K solutions, or whether a product or 
service is Y2K-compliant, such legislation must provide American 
business with the freedom to aggressively pursue solutions and 
contingencies without fear of overzealous regulators and litigants. 
Unfortunately, some companies may not desire to share information out 
of fear of antitrust, reliability, and liability claims being visited 
on their already stretched budgets. Therefore, legislation which allows 
corporations to more openly reveal the Year 2000 status of their 
products, along with protection from litigation, will promote the 
development of appropriate solutions. Sharing information will aid the 
transportation industry in planning for contingencies that individual 
companies working alone may miss, but collectively may cure. Such 
``immunity'' if you will, would allow the industry to focus its efforts 
more intently on those goods and services that suppliers, customers, 
and manufacturers deem critical to the continued functioning of our 
economy.
    Third, Congress and the Federal Government can set the appropriate 
tone in public communications. Although urgency is in order, panic 
helps no one. Continuing a calm and reasoned approach through public 
service announcements and other communications to the public to blunt 
hyperbolic fear mongering will help create the climate necessary for 
all to concentrate on the challenge of Y2K and not on the fear of the 
challenge of Y2K.
                              conclusions
    While predictions on the dramatic effects of the new millennium 
range from disaster to a non-event, time will quickly tell. In that 
regard, it is our assessment that the trucking industry is aggressively 
working to mitigate the negative effects, and in general should be well 
positioned to continue effective operations during that crucial time. 
We at Schneider National, at the same time, believe that there is 
little opportunity for ``crash'' projects, and that companies without 
substantial efforts to date will most likely not be able to solve 
successfully their Y2K issues in 1999.
    Ultimately, we simply cannot allow the good faith efforts by 
transportation providers to be subverted by those motivated by 
litigious and other short-sighted agendas. As has always been true, 
American business and the American people will seek and find solutions 
to the Y2K challenge in order to continue to enjoy the benefits of the 
most sophisticated supply chain in the world.
                                 ______
                                 

     Responses of Christopher B. Lofgren to Questions Submitted by

                            Chairman Bennett

    Question 1. Has Schneider National made any concrete proposals to 
the Administration or any committees of Congress to address the Y2K 
issues that they deem to be critical. Knot, has Schneider National 
encouraged their industry representatives to propose Y2K ameliorative 
measures?
    Answer. Schneider National has not made any proposals to the 
Administration or any committee of Congress to address the Y2K issue. 
We have also not encouraged any of the industry representatives to 
propose measures.
    Schneider National continues to focus on doing the best we can to 
be ready for whatever may occur come January 1, 2000. This includes 
continued testing, contact with our key suppliers, vendors and 
customers and contingency planning. Schneider National does not feel a 
strong need for legislative assistance in solving this problem.
    Question 2. Can you characterize Y2K problems identified by the 
major truck manufacturers within either their vehicle components or 
their manufacturing processes?
    Answer. The major truck manufacturers have not identified to 
Schneider National any vehicle components that might have a Year 2000 
problem. Arthur Data at Navistar indicated that ``These engines will 
not stop working on or after January 1, 2000. Similarly, it is our 
understanding that the heavy duty engines manufactured by Caterpillar, 
Cummins, and Detroit Diesel, at least since 1993, similarly have a 
system operation clock for controlling engine operation and will not 
cease functioning as a result of the Transition.''
    Freightliner stated, ``(The plan to be Year 2000 compliant) also 
extends to the on-board electronic components in trucks built by 
Freightliner.''
    The account representative to Schneider National from Detroit 
Diesel indicated that there were no electronic components or other 
embedded chip issues in their engines that would cause them to fail on 
1/1/2000. He did indicate that two add on features that measure the 
ongoing performance of the engine for the benefit of the driver and/or 
the owner do have problems and will soon be corrected. These, however, 
do not affect the continued efficient operation of the engine.
    As far as their manufacturing processes, Schneider National has 
little first hand knowledge. The Detroit Diesel account representative 
indicated that he was not aware of any embedded chip, or any other Year 
2000 issues in their manufacturing process.
    Question 3. Would you please explain how intelligent information 
systems are integrated into the trucking industry and how they are 
being assessed for Y2K compliance?
    Answer. Intelligent information systems are being integrated into 
the trucking industry in ever increasing ways. This includes, but is 
not limited to trip planning, automatic dispatch, satellite 
communications, log book tracking, vehicle monitoring, etc. Information 
constantly flows from the customer service floor to the truck and back 
again via satellite technology. This information becomes the source for 
efficient tracking, problem solving, decision making and ultimately 
customer satisfaction.
    All of these systems can be assessed for Y2K compliance in the same 
fashion that any data processing application is assessed. Look at the 
data and confirm that four digit years are available and look at the 
code to ensure four digit years are being used as part of the process. 
If four digit years are not available, then expansion to four digits 
should be attempted. If it is not possible to expand to four digit 
years, a windowing approach must be considered. Once the solution is 
chosen and implemented, the system must be tested. Current date testing 
is performed to insure the changes did not introduce any new defects. 
Date altered testing confirms that the modified system can handle dates 
after 12/31/1999.
    Question 4. Would you please describe the process you are using for 
inventorying, assessing, remediating and testing both embedded systems 
and data exchanges, systems interfaces that are other than EC/EDI.
    Answer. Schneider National does not have any manufacturing 
processes that depend heavily on embedded systems.
    System interfaces, other than EDI have been remediated in one 
fashion or another to accommodate for the Year 2000. Either the data 
format was expanded to four digit years, or a windowing solution was 
employed to deduce the century. Coordination with the company supplying 
or receiving the information was essential to a successful 
implementation of either solution. The choice of a windowing solution 
causes less impact to the interface, since the interface layout does 
not need to change. Depending on the nature of the data, this may be 
the perfect solution for data being passed with two digit years.
    Question 5. Can you describe what types of Y2K contingency plans 
you are developing?
    Answer. Currently our contingency planning is concentrating on what 
can be done in the event of a power outage, a telecommunication 
failure, and a fuel supply failure. Our planning horizon has been 
limited to three days. Our assumption is that if any of these three 
areas fail for longer than three days, there will be other issues to 
deal with besides trying to run a successful business at 100 percent 
capacity.
    The plans we are currently working on will also assume these 
failures will be regional in nature and not global. Again, if these 
failures occur on a global scale, there will be other issues to deal 
with besides trying to run a successful business at 100 percent 
capacity. These plans will also include how our satellite offices will 
address issues related to the rollover from 12/31/1999 to 1/1/2000 
should their region be the one affected.
    We have already considered Schneider associate contingencies, i.e. 
helping our associates prepare at home and at work for the rollover 
from 12/31/1999 to 1/1/2000. Addressing concerns regarding heat, 
lights, food and safety.
    Finally, we will be preparing a plan for the worst case scenario. 
This plan will assume a position of protecting the business versus 
maintaining business as usual. This plan will address how to 
methodically slow down and potentially stop the business for a period 
of time addressing issues like asset protection and associate concerns.
    Question 6. What Y2K show stoppers do you foresee for the trucking 
industry?
    Answer. As mentioned in question 5 above, the show stoppers for the 
trucking industry are:

  --Failure in any of the infrastructure items, electricity, natural 
        gas, water;
  --Failure in the telecommunications industry, fax, e-mail, voice;
  --Failure in the reliable supply of fuel to power the trucks.
                               __________

                   Prepared Statement of Paige Miller

    Good Morning, I am Port of Seattle Commissioner Paige Miller. I am 
here on behalf of the citizens of King County in Washington State to 
explain how seriously we take the Y2K issue at Seattle-Tacoma 
International Airport, to share with you some of our experience, and to 
provide some suggestions on how Congress might help all airports deal 
with this crisis. I am proud of the fact that a recent Air 
Transportation Association review found that we appear to be ahead of 
many other airports in preparing for Y2K. But I am also here to express 
our concerns about how the airport industry will accomplish the Y2K 
program in the short time remaining.
    The Port of Seattle is a leader in Y2K program mobilization. We 
started in 1993 replacing old computer programs to make sure they will 
handle the Y2K transition, and in 1997 we started looking at mechanical 
devices with ``embedded'' computer chips which could also fail. What we 
found in our inventory was that practically everything at the airport 
was potentially affected, and that we had better get moving fast to 
find the problems and get them fixed.
    Examples of key systems that are high on our list are: security 
controls, runway lighting, baggage conveyors, fire alarms, back-up 
generators, 911 response systems, storm water treatment, heating, and 
parking garage systems. If those systems fail we would obviously have a 
difficult time maintaining even a minimal throughput of airplanes, 
passengers, and cars.
    Given the magnitude of the threat, we have mobilized a Y2K team. 
Today there are 10 full time staffers in that office, and soon the 
number will be 30. That team is following the GAO recommended Y2K 
project plan, available on the World Wide Web. That plan says, find and 
assess each system, fix or replace it, test to ensure compliance, and 
make contingency plans in case it all falls apart anyway. As of today 
we have identified 113 systems and completed initial assessment on all 
of them. We are just beginning the fix and test phase.
    At this point, roughly a third of our systems are not compliant 
according to vendors, a third are compliant according to vendors, and a 
third are still unknown because the vendor has not given us a 
definitive answer or is not in business any more. Our budget for fixing 
known non-compliant systems and testing all systems is approximately 
$10M. Fixing systems found to be non-compliant in testing could 
potentially cost another $10 or $20 million. In the worst case scenario 
this would represent nearly a third of our annual operating budget.
    A number of factors make it difficult to solve the Y2K problem. 
First is the rock hard, unmovable, deadline. January 1, 2000 will be 
here in 477 days. And every business, every airport, every government 
office (from the Senate down to the dogcatcher) must meet that 
deadline. And that means we are all competing for the same technically 
specialized resources (people) at the same time to fight the same 
deadline. Another important factor is the liability concerns of vendors 
and owners, which can delay their sharing of information and developing 
optimum solutions together. Finally, once you fix a system you have the 
added effort to keep it fixed because when you fix something else it 
may impact the system you fixed first.
    I am not here to assure you that we will complete our Y2K program 
on time despite our best efforts with our most capable people. We will 
do everything humanly possible to organize, manage, and deliver 
solutions for each of the 113 systems at Sea-Tac, and to have 
contingency plans in place for their possible failure. In some cases we 
are cannibalizing our own offices, pulling some of our best people away 
from other projects that badly need them. But the problem is worldwide 
and industry-wide, involving airlines, airports, and air traffic 
control systems. What we know about other airports is that for the most 
part they have started their programs later than we have, and are 
planning to spend fewer resources.
    I will end with a few suggestions for ways Congress could help 
solve this crisis. First, lead by example. The time for study is past. 
We urgently need to produce an emergency plan for the country which 
prioritizes sectors of the economy, identifies key resources that need 
to be redirected from the least important to the most important, and 
pass legislation which accomplishes this. To do that, you may have to 
defer other urgent national issues while you devote time and resources 
to Y2K.
    Also, consider some sort of emergency funding mechanisms to assist 
entities such as airports that serve the national interest to replace 
diverted operating and capital funds that have been depleted by Y2K. 
Some funds should also be used to make sure all the compliance data 
that we, and other airports, create as we deal with this problem is 
immediately available to all other airports that are trying to catch up 
with Y2K. That way they won't have to ``re-invent the wheel.''
    From 9-year olds doing their homework on the net, to the counting 
of ballots that put us all in office * * * every day technology is 
becoming more and more integrated with the daily lives of Americans. 
That is why the Y2K problem has the potential to create so much 
economic, political and personal crisis. That is also why we need you 
to lead the country by aggressively organizing a national Y2K program, 
and providing critical resources and funding. If you start now you can 
do it * * * and the Port of Seattle stands ready to help.
                                 ______
                                 

           Responses of Paige Miller to Question Submitted by

                            Chairman Bennett

    Question. Ms. Miller (Sea Tac Airport), you indicate in your 
testimony that \2/3\ of your systems are either Y2K non-compliant or 
have unknown compliance. In the remaining time period before Y2K, what 
triage or priority process have you established for resolving the most 
critical Y2K issues?
    Answer. We have classified all systems as either:
                Safety Critical
                Mission Critical or
                Non Critical
    We have scheduled all project work on systems so that the safety 
critical systems will be completed first, followed by the mission 
critical and finally the non critical. In addition, we are working on 
unknown systems prior to working on known compliant systems.
    Question. What type of contingency Plan are you contemplating to 
address those segments of the Y2K program that are not completed?
    Answer. We will develop a complete readiness plan which includes 
specific work-arounds or replacement functions for all systems in the 
event their remediation either is not completed, or is completed but 
fails to work as planned.
    Question. Would you describe the normal daily interactions that are 
Y2K affected between Sea Tac, your customer airlines and the Federal 
Aviation Administration?
    Answer. All normal daily interactions between airline, air port and 
FAA staff which does not involve handwriting or face to face dialog are 
potentially Y2K impaired. For example, flight scheduling, gate 
scheduling, security incidents, sign changes, PA announcements, baggage 
system mishaps, automatic doors, fire alarms, underground trains, food 
services, cash handling, etc., are all potentially affected.
    Question. What direct effect to you expect on passengers during the 
Y2K transition period?
    Answer. We expect that there will be some delays and inconvenience 
in the first few days of the new year as manual work-arounds are put in 
place for any system failures. As these are resolved, the system should 
return to normal fairly quickly. There may be somewhat higher fares as 
airlines try to recover some of the costs of any system slowdowns.
    Question. It is the Committee's understanding that there are 
funding issues that impact airport Y2K efforts which vary depending on 
airport ownership. Public owned airports with a primary airline hub are 
in the best shape Y2K funding-wise. However, those that are locally 
owned have funding issues resulting in Y2K efforts that are lagging 
behind. Thus, funding available through TEA21 is much more critical to 
them. How does an airport apply for Y2K funds from TEA21?
    Answer. We are not familiar with TEA21--therefore I cannot respond 
to this question.
    Question. Senior executive involvement in industry seminars and 
lectures on the business challenges faced by airports has been 
virtually non-existent. This fact becomes even more troubling in light 
of the results, or lack thereof, reported by the Committee Staffs Y2K 
transportation readiness survey. Fully 60 percent of the airports did 
not respond at all. Investigation by the Committee indicates that the 
upper-level management of the nations airports are not seriously enough 
engaged in the Y2K problem. Please comment on the assertion that 
airport executive management is not sufficiently engaged in the Y2K 
problem? What do you think can be done to foster greater involvement 
and commitment on the part of airport authority executives?
    Answer. We are obviously very engaged in the Y2K problem and our 
program director is spending a significant amount of time sharing our 
methods and results with other airports. There have been a number of 
recent industry meetings involving airports and Y2K, and one is 
scheduled in Dallas on December 7th and 8th. We are working with 
industry association leadership to develop a high level program plan 
that will quickly reach out to support airports that have gotten a late 
start on their Y2K programs. Public visibility of the ATA and ACI 
efforts to date will also help.
                               __________

                  Prepared Statement of Scott Skillman

    I am pleased to have the opportunity to address this committee 
regarding the pervasive Year 2000 problem and how it affects our 
company and our industry. I was asked to address four topics in my 
statement to The United States Senate's Special Committee On The Year 
2000 Technology Problem.
 the first topic is: ``the impact of the year 2000 problem on crowley 
  maritime corporation and the maritime shipping industry in general''
    Let me give you some brief background on Crowley Maritime 
Corporation to give you some perspective on our company. Crowley 
Maritime Corporation was founded in 1892 and is primarily a family and 
employee-owned company engaged in marine transportation and related 
services. The Company has revenues of approximately $1.2 billion and 
has two primary operating subsidiaries, Crowley American Transport, 
Inc. and Crowley Marine Services, Inc. Crowley American Transport, Inc. 
provides containerized liner cargo services between North America, 
Central America, South America and the Caribbean. Crowley American 
Transport, Inc. has 121 offices and port locations while serving 35 
ports with 36 ships and 13 ocean going RO/RO (roll-on/roll-off) barges 
towed by tugboats. Crowley Marine Services, Inc. provides worldwide 
contract and specialized marine transportation services. Crowley Marine 
Services, Inc. maintains a diverse fleet of 200 tugboats and barges and 
additional specialized equipment, including containers, oil tankers, 
tank farms, tractors, heavy-lift cranes, and all-terrain vehicles.
    In general, the international maritime industry has some unique 
issues relating to the documentation of imports and exports of cargo 
and associated governmental regulations for customs duties, 
international banking using negotiable bills of lading and the 
documentation of shipping manifests. This process has traditionally 
been very paper intensive and is required in order to move our 
customers' cargo into and out of each country. As with many major 
shipping lines, Crowley has taken great strides in being able to 
deliver this documentation electronically in many of the countries 
serviced. The industry has also made strides with EDI (electronic data 
interchange) with customers and other parties involved in the booking 
and documentation of cargo. U.S. Customs and many foreign customs 
organizations require data in an electronic form. There is a concern 
that the governmental organizations required to clear a vessel in and 
out of port, including, customs, immigration, naval or coast guard 
services and/or taxing authorities may not be able to perform their 
duties properly, causing bottlenecks, delays, port congestion and 
reduced commerce. You should be aware that many of the ports we use are 
not the modern highly automated facilities we see pictured in Europe or 
Asia, since our focus is on Latin America. We do not necessarily have 
the same problems as others in our industry. In the case of the Y2k 
problem, less technology in the operations is a plus.
    Another area with Y2k issues for the U.S. maritime industry is the 
electronic filing of tariffs with the Federal Maritime Commission, who 
subsequently make the tariffs available to the public. In the event 
that this process is affected by the Y2k bug, we do not have a clear 
indication as to whether the industry will be able to modify our 
tariffs.
    A third industry issue is the tracking of the fleet of containers, 
chassis and trailers and consequently our customer's cargo. Crowley has 
more than 65,000 containers, trailers and chassis in our fleet and it 
is imperative that we track the location of the equipment and its cargo 
anywhere in the world. Like others in the industry, Crowley has made 
great strides in electronically tracking this equipment and input is 
made on a real time basis in most of our locations worldwide. 
Electrical power and telecommunications problems could severely reduce 
our ability to provide this important function.
    A final Y2k issue dealing with the international maritime trade is 
that many port facilities, public utilities and telephone companies are 
owned by the governments of the countries in question. We as individual 
consumers do not feel we have adequate leverage with these 
organizations, but they are very essential to our ability to conduct 
business in an efficient manner in each of the countries in our service 
areas.
    As it relates to Crowley Maritime Corporation, and we assume with 
other shipping lines, we have the usual Y2k issues with our computer 
applications, computer equipment and the software we purchased, leased 
or licensed from third parties. In addition, we have issues with our 
voice and data communications equipment and the telecommunications 
industry both domestic and foreign, including satellite 
telecommunications.
    The operating equipment on our vessels contains some Y2k issues 
with so called ``embedded chips'' and their associated programming. At 
this time, we have determined that there are issues with the navigation 
and communications equipment on some of our vessels. We are still 
awaiting information from the manufacturers of our engineering 
monitoring systems and, in the case of several vessels, some components 
in the steering system. Navigation systems on our vessels heavily rely 
on the Global Positioning Satellite system and we are still obtaining 
feedback from the manufacturers of our equipment as to whether it is or 
is not Y2k compliant. There is a date rollover issue for the Global 
Positioning Satellite system which will occur on August 21, 1999. It 
should be noted that many of our ships are chartered (leased) from 
third parties, who also operate the vessels for us. In these cases we 
are obtaining Y2k warranties in the charter (lease) agreements if we 
expect to still be using the vessel at the end of the century. 
Presently there is no certification process to verify if any ships in 
the world-wide fleet are Y2k compliant.
    As it relates to the operating equipment on terminal facilities, we 
checked our scales, cranes, refrigeration equipment, forklifts and 
other yard equipment. We have not found significant Y2k issues with the 
equipment. We do not own container cranes, however, but we understand 
that some of these cranes could be affected by embedded chip issues. 
The more modern and automated a terminal is, the greater its potential 
for Y2k issues. We use third-party operated terminal facilities in the 
United States and in 40 countries in Latin America and the Caribbean 
and we are checking with all of these parties as to their preparedness 
for the Year 2000.
    Finally, we are investigating critical business partners we have in 
the United States and internationally. These include intermodal 
transportation providers, public utilities, fuel and lubricant 
distributors and refiners, banks, telecommunications providers, various 
governmental agencies, third-party general agents and customers.
     the second topic is: a brief description of crowley maritime 
          corporation's approach for dealing with the problem
    Recognizing the potential impact of the Y2K problem, Crowley's 
Board of Directors and Executive Management Team established a world-
wide company project. This project is headed by an executive steering 
committee composed of the Chairman and CEO and other senior officers of 
the Corporation. The project executive sponsor is the Senior Vice 
President and Chief Information Officer, which is myself. The steering 
committee is updated regularly and the Board of Directors is updated at 
each meeting. The project director, team managers and team leaders 
represent senior management from all critical operational and 
administrative functions within Crowley. The core project team is 
composed of more than 100 senior personnel selected for their expertise 
and knowledge of their particular areas and who will be devoting some 
or all of their time to deal with the Y2K problem until it is resolved. 
Our information technology, land operations, marine operations, freight 
services, international operations, purchasing, administration, finance 
and legal departments all around the globe are all working as a part of 
this team to resolve our Y2K issues. Crowley also has engaged expert 
consultants to advise and assist in this massive program and may engage 
more such experts as needed. Crowley has committed the staffing and 
financial resources necessary to ensure that the project will be 
completed within the remaining time frame. It is important to note that 
the success of our program to date is the result of the Company's 
realization that this is a business continuation issue and not an 
information technology department issue.
    For almost 2 years before the start of the full Y2K project team, 
the Company was working to identify and correct any Y2K problems with 
its computer code and is continuing those efforts. In order to correct 
its existing code, Crowley, like many other businesses, has chosen to 
use an approach known as ``windowing.'' In addition, the Company is in 
the process of replacing some older applications with new, compliant 
code. We have already completed our remediation work on mainframe 
applications and are currently in the process of testing the software, 
a process that will be completed in the first quarter 1999. We will 
complete the PC applications and new mainframe applications in early 
1999.
    Extensive inventories were compiled of mission critical devices 
containing embedded computer chips and software in our office 
facilities, operating facilities, operating equipment and vessels 
world-wide. We are now in the process of contacting distributors and 
manufacturers for all of these devices to determine the Year 2000 
compliance of each piece of equipment. We are also taking action to 
correct the problems we are currently aware of. Based on the results of 
this process, we will take the necessary action to bring all items into 
compliance by the end of the first quarter 1999.
    We have also compiled a list of our mission critical business 
partners around the world, including customers, suppliers, vendors, 
regulatory agencies and so on. We have nearly completed our initial 
contacts with these parties to make sure that they, too, are handling 
any Y2K problems they may have and that their interactions with Crowley 
will not impair our ability to provide uninterrupted service as we move 
into the next Century. We expect to monitor these situations throughout 
1998 and 1999. We will adjust our operations and our contingency plans 
based our business partners' Y2k readiness.
    In order to control the potential for new non-Y2k compliant 
software and equipment to be introduced into our Company, Crowley has 
developed strict purchasing and contracting guidelines and contract 
language requiring Y2k warranties for the equipment and software we are 
acquiring, where appropriate. The company is also focusing on our 
change control process in our information services area to include all 
devices, connectivity and software in the process.
    Although it is Crowley's intent to be fully compliant well in 
advance of January 1, 2000, appropriate contingency plans are being 
developed and in place to deal with unexpected problems that impact the 
operations of Crowley, including those due to non-compliance or 
difficulties with partners. Over the next year and one half, we will 
refine and expand our company-wide business recovery contingency plan. 
Due to the uncertainties that exist relative to the public utilities 
and basic public services around the world, we expect this contingency 
planning process to be especially burdensome.
    Crowley has established a Y2k Communications Manager and assigned 
staff to this team in order to be responsive to our customer's 
inquiries regarding our readiness, a process which is resulting in an 
ever increasing flow of correspondence and phone calls and recently, 
requests for ``site audits.'' We have established a web page dealing 
with our Y2K Project on our website at www.crowley.com. The web page 
will provide an easy way to follow the progress of Crowley's Y2K 
Project and to stay abreast of Crowley Y2K developments. We are 
encouraging our customers to check Crowley's website for Crowley news 
and information.
    A general feeling we have, based on our informal contacts, IT 
research groups and from attending maritime Y2k conferences and 
seminars, is that Crowley's program is as good or better than others in 
our industry and we are ahead of many companies in our industry in 
terms of our progress to date.
 the third topic is: crowley's view on the general preparedness of the 
maritime shipping industry to maintain continuous uninterrupted service 
                    despite the century date change
    At this time we are not aware of any maritime industry organization 
which has provided a forum to discuss the preparedness of the industry. 
As a consequence, most of our information is based on informal 
contacts, articles and web sites.
    The U.S. Coast Guard has sponsored and actively participated in 
several maritime industry Y2k conferences and seminars and have shared 
their program extensively. The Coast Guard is currently organizing a 
Maritime Y2k Conference in October for the West Coast United States.
    The UK P&I (Protection & Indemnity) Insurance Club and other 
parties recently sponsored a series of worldwide Maritime oriented Y2k 
seminars and they have offered free software to help setup a Year 2000 
Project. In addition, they have sponsored a website (www.ship2000.com) 
where maritime equipment manufacturers can post the Y2k status of their 
products. At this point, this site has been slow to catch on with 
manufacturers.
    For the third party operated U.S. ports we use, most port operators 
we spoke with have a Y2k program in place and have expressed confidence 
in their ability to achieve compliance, although public utility 
concerns are prevalent.
    As it relates to our offshore locations as to port and governmental 
preparedness in Latin America and the Caribbean I can offer the 
following insight. Overall, there is enough information in the media 
about the problem to create awareness of the problem. Most of the 
suppliers we contacted have heard about the Y2k problem. Large 
companies, mostly multinationals, are addressing the problem. Small 
companies based in the Latin American countries are approaching the 
problem as if it were just an Information Technology issue, thus 
potentially impacting others. The best offshore responses are coming 
from banks. The public sector is a different story, however, and it 
represents a major concern in some countries. The main reasons are:
  --Being very large and decentralized institutions, there are several 
        departments handling pieces of functions. Therefore, one 
        department handles the payroll software; another one the 
        billing; another the operations, and it is very hard to 
        coordinate their efforts as a single committee. We have 
        received responses just for pieces of the operation, and not as 
        a single institution.
  --Efforts have started very late. Many responses indicate that they 
        are still in the planning phase.
  --From a software point of view, they have limited resources and are 
        limited by the budget of the government. Many of the programs 
        have been developed and modified during many years without 
        proper documentation. A Y2K fix will take a long time.
    Government institutions managing ports are not a major concern for 
our Latin American operation, since most of their functions are 
providing laborers and/or using equipment with no date function. The 
main problem will be reflected in billing software.
    Customs in most countries is still a question. System shutdowns due 
to power outages, software failures or other reasons will force the use 
of alternate manual procedures which may cause delays but will not 
completely stop the operations.
    A review of power and communications companies have not yielded any 
conclusive responses as to whether they will be able to operate in 
2000. They tell us they are working on the problem and expect to be 
ready early or mid next year, but we have no details.
    At the present time, many Government-controlled companies are in a 
process of privatization, which could either help or hinder the 
solution of the problems.
    Again, I would like to emphasize that we are operating in Latin 
America and the Caribbean. Europe, the Middle East and Asian trade 
routes will have additional issues.
 the fourth topic is: actions crowley believes the congress or others 
 should take to speed up year 2000 remediation efforts and reduce the 
                      risks of year 2000 failures
    The largest obstacle we currently see is that the legal environment 
relating to this issue is so unsettled that it is obstructing the 
ability of consumers of products with Y2k issues from obtaining clear 
and timely information from makers of products. We perceive the lack of 
specific information provided by some manufacturers as an indication of 
their concern regarding their potential liability should they disclose 
problems regarding their products. In addition, the process is made 
more tedious in many respects because of a desire of companies to 
provide a clear trail of their due diligence efforts so that they are 
prepared in the event of litigation.
    The uncertainties regarding the availability of public utilities 
and telecommunications on January 1, 2000 and thereafter are 
significant. The acquisition of backup power generation capabilities, 
redundant telecommunications equipment and so on will be uneconomical 
for most companies. Industry information should be much more precise so 
we can plan for rational and cost-effective alternative approaches.
    We feel it would be helpful if the maritime industry could form 
action teams to share data on maritime related equipment and electronic 
processes in order to use the leverage of the industry to ensure all 
equipment, and processes are properly tested and, where appropriate 
warranted.
    We would like clear disclosure by the foreign governments as to the 
plans and status of the Y2k programs by all of the various agencies 
which could affect international trade. We should jointly address 
alternate ways to continue to operate, if need be.
    I would like to thank the Committee for the opportunity to share 
this information with you and I hope that you are successful in your 
mission to help us all minimize the Year 2000 problem's impact on the 
global economy.
                                 ______
                                 

 Responses of Scott Skillman to Questions Submitted by Chairman Bennett

    Question. Mr. Skillman (Crowley Maritime) your statement is very 
comprehensive and candid in describing Y2K problems both within your 
industry and with external factors. Based on the extensive Y2K analysis 
conducted by your company, would you please give us your best appraisal 
of the priority ranking of potential problem areas. e.g. ship 
operational, port documentation, government links both domestic and 
foreign,--what are the triage urgencies?
    Answer. In our prioritization process, we did not force rank all 
Y2k issues before us, instead, we ranked each issue into one of 6 
priority categories based on our ability to tolerate the existence of 
an issue. Each of the tens of thousands of business partners and types 
of equipment were individually prioritized by a knowledgeable employee, 
therefore it is hard to respond as to which type of issue may be of 
greater urgency to us than another. As a general rule, all system 
issues on vessels and on-shore associated with safety were given the 
highest priority ranking. As of today, we have 139 types of equipment 
which have the highest priority to us.
    We do not anticipate that triage will be necessary in our project 
because all but a few of the most unimportant issues will be addressed 
and resolved during the project. In the event that triage is required 
on or after January 1, 2000, we will follow our same 6 priority 
categories in assigning resources.
    Question. Based on your picture of vast interconnected shipping 
operation world wide that must deal with the Y2K problem, do you have 
any suggestions for this Committee on how we might help assist the 
industry in closing the Y2K gap?
    Answer. The biggest uncontrollable issue we face is that their is 
no single organization for the worldwide marine transportation industry 
which can represent the industry to all of the many interdependencies 
we have with governmental organizations worldwide. Even if there was an 
organization, there is no worldwide forum in which to open discussions 
with all of these organizations. We are assuming that it would be very 
worthwhile to do contingency planning with these organizations where we 
would explore alternative solutions in the event of a Y2K failure of 
some variety. Any help the committee can give in this area would be 
very helpful. We do understand that the Chamber of Shipping Of America 
has met with Mr. John Koskinen at an International Trade Working Group 
meeting convened by Mr. Koskinen. Perhaps this could eventually provide 
the forum.
    Again, the committee can assist by ensuring the passage of the so 
called ``good Samaritan'' legislation relating to the release of Y2k 
information about a company's products. We believe this would give us 
easier access to information about our equipment and service suppliers.
    Question. Do you have any particular concerns with federal 
agencies, i.e. Customs for clearing freight or Coast Guard for ensuring 
safe operation in ports? Are there any specific problems this Committee 
should be aware of or actions it should take to help alleviate these 
problems?
    Answer. We have a major interest in whether or not U.S. Customs, 
the Maritime Administration (MARAD), and the U.S. Coast Guard are Y2k 
prepared. So far as we have been informed, we are not aware of specific 
issues with these agencies at this point. However, we have concerns 
regarding the counterparts of these organizations in many of the 
foreign locations we operate in.
    Question. What international concerns are confronting the maritime 
shipping industry? What should the U.S. Government be doing from your 
viewpoint to help resolve these problems?
    Answer. I refer you to my comments relating to government agencies 
in items 2 and 3 above. In addition, the worldwide requirement to have 
Y2K compliance for every vessel as part of the ISM standards and 
registration process would also ensure that all vessels, regardless of 
national origin, is safe for navigation and operation in the waterways 
of the world.
    Question. Would you please explain briefly to the Committee what 
would be included in a contingency plan for your company so we might 
have an understanding of what it entails?
    Answer. We see contingency planning at multiple levels. First we 
see some short term operating plans for the state of our vessels, 
operating equipment and data processing equipment at the millennium 
rollover. Second, we will need specific contingency plans for each 
facility in the event of the loss of telecommunications or electrical 
power. Third, we need specific contingency plans for critical suppliers 
and for critical equipment who fail. Finally, we need to review our 
business processes associated with the flow of cargo from start to 
final destination to determine what alternative processes we need to 
have ready, in the event of unexpected failures in our processes. This 
contingency plan needs to consider problems occurring with data 
processing, telecommunications, business partners, facilities, vessels 
and/or major equipment.
    Question. FAA and ATA have developed a partnership of which a 
primary objective is the compilation of common systems used at 
airports, both domestic and foreign, to facilitate Y2K work and 
information sharing. It would seem that a similar approach would be 
useful to the Maritime shipping industry. Are there many common systems 
used at maritime port authorities? If yes, who is developing the list 
of common systems?
    Answer. In our trading sphere, the only electronic data that is 
regularly exchanged in many ports is the shipping manifests and customs 
declarations and similar paperwork required by customs. We are not 
aware of any other common data. Perhaps in the trade lanes to Europe or 
Asia, more sophisticated common systems exist. As noted in item #2 
above, we believe the Chamber Of Shipping Of America is interested in 
participating in such a venture, if the worldwide forum could be 
arranged.
                               __________

               Prepared Statement of Senator Gordon Smith

    Thank you Mr. Chairman. I appreciate your leadership in preparing 
for today's hearing on the transportation sector.
    I would like to thank all the distinguished witnesses before us 
today for taking time to testify and to help us address the challenges 
facing the transportation industry as we enter the year 2000. I am 
pleased to see the range of government and industry representation 
before us including the Department of Transportation, the Federal 
Aviation Administration and representatives from the airline, rail, 
maritime, trucking and transit industries.
    With only 478 days remaining until the first day of the new 
millennium, our society is finally beginning to realize that Y2K is not 
just a computer geek's problem, but one that will affect all of us.
    It's extremely difficult to even imagine how we would survive 
without safe and efficient transportation. Today's diverse 
transportation system not only moves large masses of people to and from 
work, school, and leisure activities, but also is the most critical 
element for delivery of our nation's daily flow of goods and services.
    I would like to express a few of my concerns today regarding the 
rail industry which is of particular concern to my state of Oregon. I'm 
pleased to see Union Pacific testifying here today. With operations in 
23 states, it represents the largest railroad in the country. Union 
Pacific should be able to offer some great insight into the potential 
problems facing the rail industry. Having recently dealt with the 
difficult process of combining Union Pacific's lines with Southern 
Pacific's lines, it knows first hand what types of problems could be 
around the corner for the rest of the transportation industry.
    I'm hopeful that we can learn from Union Pacific's experiences in 
addressing the millennium bug as well as from the experiences of the 
rest of you testifying before us today. If we can avoid traffic delays, 
loss of non-delivery of goods, disruption of flight service, and 
guarantee the continued safe transport of our passengers, then we can 
assure our nation that problems are being anticipated in order to keep 
the U.S. running smoothly despite the Y2K bug. My hope is that our 
international friends are also on track with addressing these potential 
problems.
    Thank you Mr. Chairman. I look forward to learning more about the 
specific Y2K challenges our entire transportation industry is facing 
and the specific steps it is taking to meet them.
                               __________

                 Prepared Statement of Robin C. Stevens

                              introduction
    Mr. Chairman, Members of the Committee, my name is Robin C. 
Stevens, Deputy Chief Financial Officer of the MTA and Chief, Year 2000 
Compliance. On behalf of the New York State Metropolitan Transportation 
Authority (MTA), I am pleased to participate in your hearing on the 
Year 2000 problem.
    The MTA clearly shares your concern and appreciates your interest 
in understanding the problem and its impact on mass transit services.
    Before I speak about the Y2K issues that face the MTA and how we 
are dealing with them, I believe it would be helpful to set the stage 
by telling you a bit about our organization.
    We are the largest transit service provider in the western 
hemisphere, serving a 14 million person, 4,000 square mile service area 
that covers two states, 14 counties and dozens of cities.
    While we are widely recognized for operating the MTA New York City 
Transit (NYCT) bus and subway system, we also operate the nation's two 
largest commuter railroads, MTA Long Island Rail Road (LIRR) and MTA 
Metro North Railroad (MNR) which serve New York City's eastern and 
northern suburban counties, as well as two counties in Connecticut, and 
MTA Long Island Bus (LIB) which provides intermodal connections to the 
LIRR and NYCT subways.
    We are also the steward of Robert Moses' legendary Triborough 
Bridge and Tunnel Authority, now MTA Bridges & Tunnels, operating 9 
bridge and tunnel facilities whose toll revenues from 800,000 cars a 
day, help support the operation of our transit systems.
    All told, the MTA carries over a quarter of all transit riders in 
the country--6 million people a day--many of whom use more than one of 
our modes in their daily journey.
    The MTA's annual operating budget is approximately $5.5 billion and 
we are currently reinvesting in our capital infrastructure at a rate of 
approximately $2.2 billion a year.
    Without MTA services, congested roads would paralyze the New York 
region; another 1.3 billion gallons of imported gas would have to find 
its way to our shores each year; the L. I. Expressway would need 15 
more lanes to handle the additional traffic; the air would be a lot 
dirtier and regional commerce would grind to a halt. There is little 
question the national economy would suffer.
    It is no wonder, then, that we are very much cognizant of the 
impact we could have on the region if there were unsolved Y2K issues 
that could affect our services.
    That is why, I am happy to say to you, up front, that we are 
working, pursuant to an Executive Order by Governor George E. Pataki to 
all state agencies and authorities, to give priority to resolving Y2K 
issues. We have worked closely with the State's Year 2000 Project 
Office, sharing information and coordinating regional issues and 
contingency plans.
    The MTA's Y2K story is in some ways more complicated and in some 
ways less complicated than the story of many other transit systems 
around the country. It is complicated by the fact that because of our 
size, we have many hundreds of software applications that we deal with 
day in and day out that support our train and bus services. We also, 
however, operate a transit system, that due to the eras in which some 
of its critical operating systems were built, has many critical 
operating aspects that are very manual in nature to this day and 
therefore not directly affected by software issues.
    Nevertheless, the MTA began its comprehensive Year 2000 effort in 
early 1995, beginning with understanding the extent to which its 
mainframe computer systems would be affected by the new millennium. An 
all-agency effort was formalized with the establishment of interagency 
workgroups and agency project teams. In early 1996, we began work to 
define code to be remediated and also began to identify other midrange-
and microcomputer-based systems that needed remediation and systems 
that would be replaced rather than remediated. As we began to 
understand the size and scope of the effort, it became clear that we 
had to focus our efforts on systems that are critical to our business. 
Later in 1996, we identified other areas where we could be affected by 
the Y2K problem, including embedded chip technology and the continuity 
of goods and services we obtain from business partners/suppliers.
                project organization, costs and control
    Each of our operating agencies has its own project group led by its 
Chief Information Officer and involving staff from both technology 
departments and operating departments such as signals, power, 
maintenance of way, subways and buses. These groups report progress to 
each agency President on a monthly basis. This reporting was 
established at the direction of the MTA. In addition, MTA Headquarters 
staff oversees the efforts of the agencies, provides guidance on 
specific matters, and prepares periodic reports to the Finance 
Committee of our Board of Directors on the status of the project.
    To date we have spent approximately $25M for internal information 
technology staff involved with remediation, consultants, and hardware 
and software. These costs do not include the staff time to identify 
embedded technology and business partners or the cost of systems that 
were planned to replace non-compliant systems. We expect that costs 
could exceed $30M before we conclude the project.
    Our program includes an audit component. MTA Audit staff has 
developed a program to audit the identification, assessment and testing 
of the various segments of the Y2K effort. The program requires 
agencies to provide documented evidence of compliance and test plans 
and results.
                            computer systems
    The agencies identified approximately 357 application systems used 
in their operations. These include systems developed by central 
information technology groups, other departments and packaged software. 
To focus our efforts and assure that critical systems were remediated 
as early as possible to allow recovery time for unexpected problems, we 
divided our efforts for computer applications into critical and non-
critical categories and established a goal that work on critical 
systems would be complete by year-end 1998. Completion is defined as 
remediated, forward date tested, and operating in a current production 
environment.
    A system is critical if it affects any of the following business 
activities:
  --Train, bus and/or facility operations (Signal, power, 
        communications, event recorders, fan plants)
  --Staff availability (timekeeping, payroll)
  --Revenue collection and reporting (fare and toll collection, 
        receivables, payables, general ledger)
  --Public safety (signage, heating/cooling, ventilation). One hundred 
        and forty one systems have been identified as critical and all 
        will be completed by the end of 1998 with the exception of 6 
        systems, which will be completed by the first quarter of 1999. 
        Delays in these system conversions are generally due to 
        dependencies on suppliers providing compliant software.
                        embedded chip technology
    Computer chip technology is ubiquitous in modern society and has 
found its way into many technical systems and mechanical equipment 
including telephone systems, communications devices, personal 
computers, elevators, heating, ventilation, and cooling systems, 
security devices, and Long Island Rail Road and Metro North Railroad 
train equipment, control systems and signal systems, to name a few. 
This may be, however, one of the few times that the age of our systems 
has advantaged us. With the exception of one new technology test train, 
the entire subway fleet and subway signal system is not affected by any 
embedded technology. This is quite different from the situation that 
newer transit systems such as the Metro in Washington, D.C., and BART 
in California may face. Notwithstanding the large areas with no 
embedded chip technology, we do have such technology in our systems.
    Agency staffs involved in train, bus and facility operations have 
completed a survey of our critical physical plants and have identified 
a total of 489 devices critical to our operations. They then determine 
whether there is embedded technology, if a date function exists in the 
device, if so, whether it is compliant or not, and whether it is active 
or passive (i.e. if the date function affects the operation of the 
device or is simply for recording). This evaluation is currently in 
process and to date 35 percent of the devices has been determined to 
have either no embedded technology or date function, or to be 
compliant. All critical devices are subjected to testing where possible 
even when the vendor has advised us that the device is compliant. In 
addition, all personal computers are compliant or are scheduled for 
replacement and local area and wide area networks are either compliant 
or have a passive Year 2000 problem.
    Our goal for completion for identifying and resolving critical 
embedded chip technology, including the development of contingency 
plans where necessary, is the end of the first quarter of 1999.
                           business partners
    Agency procurement departments identified all suppliers of goods 
and services and reviewed them with operating departments to identify 
critical suppliers. A total of 1,244 suppliers have been deemed 
critical. Letters seeking compliance information have been sent to all 
critical suppliers. The initial response from critical suppliers was 
less than 25 percent, but second mailings and telephone contacts have 
brought the response rate close to 40 percent. Where firms have not 
responded or not responded adequately, management staff is contacting 
them by phone or in person to discuss compliance. MTA Headquarters 
staff prepared a suggested conversation script to help agencies obtain 
sufficient information to assess compliance.
    We have established that 320 of the critical suppliers are 
compliant or the Y2K issue will not affect us. We expect to complete 
our surveys by the end of the year and develop contingency plans by the 
end of the first quarter of 1999.
    This area is the most troublesome, since we, as many other 
entities, rely on so many companies for goods and services including 
key ones as power and telecommunications. We have no choice but to rely 
on the word of suppliers, however, in instances where a supplier is 
unique and critical to our environment, we are reviewing their Y2K 
efforts at a more detailed level.
                          contingency planning
    Contingency plans are an essential part of our business. The public 
expects services at all times and our standard contingency plans 
address both isolated failures such as elevators not operating to 
larger system-wide failures. Agencies are reviewing these plans in the 
context of Y2K and will develop any supplemental plans deemed 
advisable.
                        state/city coordination
    As I mentioned earlier, New York State Governor George E. Pataki 
issued an Executive Order for all State Agencies and Authorities giving 
priority to the Year 2000 problem. The State has a Year 2000 Project 
Office, with which we have shared information and participated in 
forums. Only yesterday, the MTA and the New York State Office for 
Technology hosted a regional meeting of state, local and ``quasi-
governmental'' agencies to discuss common regional issues and 
coordination. The goal was to discuss the development of NYC regional 
contingency plans.
    A Y2K Tri-State Planning Group was formed in July of this year in 
an effort to enable various organizations to share their knowledge and 
experience in dealing with the potential problems that could affect 
this region. The MTA and its agencies are active participants in the 
group, which also includes Federal, State and City representatives, as 
well as participants from the private sector including power and 
telecommunications utilities.
    We have also independently requested information from key State and 
City agencies about Y2K impact on critical infrastructure devices such 
as traffic signal controllers, which are all compliant, and have 
exchanged information between emergency management offices.
                               conclusion
    We believe that our extensive and comprehensive efforts to address 
the Year 2000 problem will ensure mass transit service through the 
millennium. Our early start, the involvement of senior management as 
well as teams of staff from the many disciplines that manage and 
operate the vast infrastructure necessary for mass transit, gives us 
confidence that we have thoroughly addressed the problem.
    We will provide any additional material you may require in your 
effort to reduce the risks of Year 2000 failures. Thank you.
                                 ______
                                 

   Responses of Robin C. Stevens to Questions Submitted by Chairman 
                                Bennett

    Question 1. How might one approach contingency planning for Y2K for 
a massive public transportation system?
    Answer. We have adopted a five step process that can be used by 
other large public transportation systems:
  --First identify the business activities that are critical to the 
        organization and focus efforts in these areas before addressing 
        less essential activities.
                  The MTA identified four critical activities--train, 
                bus and facility operations (equipment availability, 
                signals, power, communications, heating/cooling); staff 
                availability (scheduling, timekeeping, payroll); 
                revenue collection and reporting (fare and toll 
                collection, receivables, payables, general ledger); and 
                public safety (emergency response, signage, 
                ventilation). We concluded that avoiding Y2K problems 
                in these areas will enable us to continue providing 
                safe, reliable, uninterrupted mass transit and roadway 
                services to the public into the next millennium.
  --Determine the extent to which critical business activities are 
        dependent upon computer systems, embedded technology and goods/
        services from outside suppliers. As with business activities, 
        determine which systems, technology and goods/services are 
        critical and focus efforts on these first.
                  The type of contingency plan associated with systems, 
                technology or goods/services will differ significantly. 
                For example, the plan for systems may include 
                introduction of manual procedures or writing of 
                temporary computer programs. The plan for goods/
                services, on the other hand, may include finding 
                alternative suppliers or, as a last choice, increasing 
                inventories.
  --Develop Y2K contingency plans in the context of existing 
        operational contingency plans.
                  The nature of our business and our long history have 
                resulted in the MTA's operating agencies already having 
                contingency plans in key operating areas. We concluded 
                that supplementing existing plans to reflect specific 
                Y2K considerations will be less disruptive to our 
                operations and more efficient to develop than creating 
                separate plans for potential Y2K problems.
  --Only develop contingency plans where the potential for disruption 
        of essential transportation services continues to exist.
                  The MTA initially considered developing Y2K 
                contingency plans for all essential services. Since 
                development of contingency plans will require staff 
                already engaged in Y2K preparedness efforts, we chose 
                not to risk these efforts by diverting our limited 
                resources to areas where we do not anticipate problems.
  --Allow sufficient time to develop and implement contingency plans.
                  If there are business processes that deal with future 
                dates, they may have to be Y2K-ready well in advance of 
                1/1/2000. A number of the computer applications 
                supporting our capital program, for example, deal with 
                project schedules up to five years out so we have 
                already had to make program changes in order to handle 
                dates properly. Some of the items we purchase, as 
                another example, have such long lead times that orders 
                must be placed well before the need date.
                  Where necessary, the MTA will have contingency plans 
                in place by first quarter 1999 to avoid possible 
                disruption of essential services arising from Y2K 
                problems. Since at this point we may not have completed 
                certification testing of some critical embedded 
                technology or determined if each key supplier is Y2K-
                ready, we may develop a few plans that ultimately are 
                not required in the interest of assuring uninterrupted 
                service.
    Question 2. To what extent have you developed specific plans with 
your counterparts within your region to jointly deal with Y2K problems?
    Answer. We are working closely with outside governmental and public 
interest groups on this issue. In early September, for example, the MTA 
and NYS' Office for Technology jointly hosted the first meeting of 
state and local agencies and public authorities to discuss common 
regional issues and to determine the most effective way of coordinating 
Y2K activities. A primary goal is to develop an integrated contingency 
plan for the New York City area.
    A new group, known as the Y2K Tri-State Network, has met three 
times since July as a forum in which various public and private 
organizations can share their knowledge and experiences in dealing with 
potential problems that could affect our region. The Regional Plan 
Association also recently launched a Y2K initiative to address the need 
for information sharing, contingency planning and public education. The 
MTA and its agencies are active participants in both groups, which 
include federal, state and city representatives as well as private 
sector participants representing power and telecommunications 
utilities.
    We have also independently requested information from key state and 
city agencies about the compliance of critical infrastructure elements 
on which we are dependent, as well as exchanged information with 
various emergency management offices.
    Question 3A. When did you begin your initial efforts to determine 
Y2K compliance status of your critical business partners?
    Answer. Early 1997.
    Question 3B. Of the 750 non-respondents, are any of them utilities?
    Answer. No.
    Question 3C. Have non-respondents indicated why they are not 
responsive?
    Answer. Yes. Any of the following four reasons are given:
  --Concerns about legal liability resulting from an incorrect 
        response.
  --There are simply too many inquiries to respond to.
  --The company is no longer in business.
  --The person to whom the inquiry was addressed is no longer with the 
        company.
    Question 3D. Could you characterize the types of critical suppliers 
represented by the 180 respondents that you have ``not'' established as 
being compliant?
    Answer. No. The data at this point do not indicate that suppliers 
of certain types of goods or services are more likely to be non-
compliant than others. The suppliers for whom compliance has not been 
established are as varied, for example, as telecommunications equipment 
suppliers, fuel oil companies, electrical equipment repair services and 
highway paving contractors.
    Question 3E. What types of contingencies are you developing for 
them?
    Answer. For suppliers whose Y2K preparedness remains an issue, we 
will either find alternative suppliers or, as a last resort, 
temporarily increase inventories prior to 1/1/2000.
    Question 4. Have you experienced any cases where vendor certified 
devices have failed your testing?
    Answer 4. Yes. While we don't expect to complete our testing until 
first quarter 1999, we have experienced one such case to date. A test 
conducted by NYC Transit on one product, event recorders, failed. The 
manufacturer responded quickly and within one month replaced all the 
devices with compliant ones.
    Question 5. What six application systems have supplier dependencies 
that will cause their completion dates to slip to first quarter 1999? 
What are the dependencies?
    Answer. The applications, the affected agencies and the 
dependencies are as follows:
  --MTA NYC Transit's On-line Transit Information System--Application 
        is compliant but PC on which it runs requires replacement.
  --MTA Metro-North Railroad's HR/Payroll System--Compliant version of 
        installed package was not available from vendor until mid-1998. 
        Additional time required to test new version and to modify 
        interfaces with other systems.
  --MTA Metro-North Railroad's Crew Management System--Additional time 
        required by vendor to make requested modifications to new 
        package.
  --MTA Long Island Bus' General Ledger System--New version of 
        installed package required by implementation of Y2K-compliant 
        mainframe operating system. Completion date dictated by 
        internal staff availability and other Y2K project priorities.
  --MTA Long Island Bus' Accounts Payable System--New version of 
        installed package required by implementation of Y2K-compliant 
        mainframe operating system. Completion date dictated by 
        internal staff availability and other Y2K project priorities.
  --MTA Long Island Bus' Fixed Route Scheduling System--Additional time 
        required by vendor to customize new package.
    Question 6A. How are you inventorying and addressing data exchanges 
in the context of your Y2K program?
    Answer. Like any large organization, the MTA has systems that 
exchange data electronically within the MTA as well as with outside 
companies. Our overall methodology for achieving Y2K compliance of 
computer systems, from the identification phase through implementation, 
addresses both applications that exchange data and those that do not. 
Additional steps are required by our methodology if a system has data 
exchange capabilities. I did not make this distinction in my remarks.
    Question 6B. How is scheduling and testing of data exchanges 
integrated into your program?
    Answer. Scheduling and testing of these systems is guided by our 
standard methodology for achieving Y2K compliance of all computer 
systems.
                                 ______
                                 

       Excerpt From Year 2000/Millennium Project--September 1998

                           executive summary
    This is the fourth of IST&P's semi-annual reports to the Finance 
Committee on MTA-wide activities related to the Year 2000/Millennium 
(Y2K) initiative. We have also prepared presentations and reports for 
the MTA's Permanent Citizens Advisory Committee and testified before 
the U.S. Senate Special Committee on the Year 2000 Technology Problem.
    Year 2000 is a business continuation issue, not just an information 
technology issue. In this context, the MTA is aggressively addressing 
and resolving the numerous technical and business issues raised by Year 
2000. As a result of the progress that has been made to date and the 
on-going efforts described in this report, we are confident that the 
MTA will continue to provide safe, reliable, uninterrupted mass transit 
and roadway services to the public into the next millennium.
Scope and goals
    The MTA's efforts to assure business continuity into the next 
millennium are concentrated in three areas--computerized business 
systems, devices with embedded chip technology and vendors/suppliers.
    The February report noted that ``the MTA is positioned to achieve 
the majority of its overall Year 2000 project goals:
  --converting critical applications by the end of 1998;
  --converting the other applications during 1999; and
  --upgrading the technology infrastructure as necessary to achieve 
        Year 2000 compliance.''
    This is unchanged.
    While the MTA would prefer that all critical devices containing 
embedded chip technology and all critical business partners be Y2K-
compliant by the end of 1998, this is not achievable since some 
companies do not intend to offer compliant products or achieve internal 
compliance until next year. Consequently the MTA's goals in these areas 
are to achieve the following:
  --identify all critical embedded technology and business partners. 
        This has been done.
  --determine their level of compliance. This is in progress and will 
        be completed by year-end 1998.
  --complete testing of selected devices with embedded technology. The 
        remainder will be tested by the first quarter 1999.
  --prepare an internal contingency plan when a critical vendor's 
        compliance schedule jeopardizes essential MTA service(s). This 
        will be completed by the first quarter 1999; many will be done 
        by year-end 1998.
    To assure that the MTA is properly focusing its efforts, we more 
clearly defined the criteria for a ``critical'' application, device, 
good or service. Something is now considered critical if it materially 
affects any of the following business activities:
  --train, bus and/or facility operations (signals, power, 
        communications, train scheduling, event recorders, heating/
        cooling)
  --staff availability (crew scheduling, timekeeping, payroll)
  --revenue collection and reporting (fare and toll collection, 
        receivables, payables, general ledger)
  --public safety (emergency response, signage, ventilation)
Business systems
    This is the first and largest of the three areas addressed by the 
Y2K initiative. Activity here encompasses conversion of existing non-
compliant systems and development of new systems that eliminates the 
need for additional conversions. Work is essentially complete in this 
area and we anticipate no problems.
    Achieving Y2K compliance requires the modification of more than 300 
systems on a variety of computing platforms as well as the development 
of more than 40 new systems. It includes systems with a combined total 
of approximately 52 million lines of program code. The applications 
support a broad spectrum of business functions including equipment and 
crew scheduling, MetroCard, material management, fleet maintenance, 
payroll, general ledger and capital program management.
    All critical applications residing on the mainframe are now subject 
to an additional level of testing, called ``forward date testing'' 
(simulation of a computing environment with calendar dates beyond 12/
31/99), prior to production. The computing environments for both 
mainframe and mid-range computers in the Data Center will be completely 
Y2K-compliant by June 1999. Most of the hardware and operating system 
software already is compliant. Recommendations made by an independent 
consultant and supported by Lockheed Martin will help assure that MTA's 
Y2K mainframe testing and production needs are met. Expanded 
information regarding the implications of Y2K on the Data Center is 
contained in the NYC Transit section of the report since NYC Transit 
manages the Lockheed Martin relationship.
    Conversion of non-Y2K compliant systems and development of new ones 
was well underway by 1996 and the goal was established that work on 
critical systems would be complete by year-end 1998. Modification of 
the 127 critical systems is basically completed and 60 have already 
been redeployed to production. An additional 63 will be in production 
by year-end; many have already been converted and only require forward 
date testing. Work on the remaining four systems will be completed in 
first quarter 1999.
    Seven of the 19 critical systems that were to be replaced have 
already been implemented and six others will be in production by year-
end. The remaining six new systems will be implemented in first quarter 
1999.
    Almost 55 percent of the non-critical system conversions have also 
been completed, as have more than 20 percent of the non-critical 
replacement systems. Activity in this area will continue to increase as 
work on the remaining critical systems is completed.
Embedded technology
    This area addresses the technical systems and mechanical equipment 
in which computer chip technology is an integral part of their 
operation. Such devices are found throughout the MTA in places that 
include telephone systems, communications controllers, personal 
computers, radios (police, bus and train operations), E-ZPass, 
elevators, heating/ventilation/cooling systems, security devices, and 
the LIRR and Metro-North's train equipment, control systems and signal 
systems. Because of the age of our equipment and the nature of our 
operations, the MTA generally does not have many devices with date or 
calendar functions. Where we do, most of the technology is used for 
time recording and reporting and does not affect functions essential to 
our operations. For example, on-board event recorders may report the 
year incorrectly after 1999 but their basic function, gathering 
incident data, will have valid timelines. Based on what has been found 
so far, we do not expect any significant problems with embedded 
technology.
    Agencies began work on embedded technology in mid-1996 and set a 
goal of determining the Y2K compliance of all critical devices and 
preparing test plans for verifying compliance by year-end 1998. 
Contingency plans are to be developed by the end of first quarter 1999 
where device compliance remains an issue.
    Agencies have identified all critical technical systems and 
mechanical equipment, and to date have determined that 172 or 54 
percent of the 321 devices have either no embedded technology or date 
function or are said to be compliant by the manufacturer. All critical 
devices are subjected to testing where possible even when the vendor 
has stated that the device is compliant. A technical consultant will be 
engaged to develop and conduct test programs and to work with 
manufacturers in establishing alternative certification approaches 
where testing cannot be performed.
    It has already been determined that with the exception of 
diagnostic equipment on the new technology test train, the entire 
subway fleet and subway signal system are not affected by any embedded 
technology; that no exposures have yet been identified to jeopardize 
operation of the bus fleets; that LIRR's fleet or power system are not 
at risk because of embedded technology; and that Metro-North's signal, 
train control system, rolling stock and radio systems are compliant.
    Much has been accomplished in this area and significant activity 
will continue over the next three months--the remaining compliance 
assessments will be completed; certification tests will be conducted on 
additional critical devices and test plans developed for the remaining 
ones; and contingency plans will continue to be prepared where business 
continuity is deemed at risk.
Business partners
    We began work to ascertain the Y2K status of vendors and suppliers 
after we had started work on embedded technology. The goal was to 
determine the Y2K-preparedness of all critical suppliers by year-end 
1998 and to have contingency plans developed where readiness remained 
an issue by the end of first quarter 1999. By developing projections 
about overall supplier preparedness, knowing that suppliers will 
actively attempt to work around their own compliance issues and 
formulating contingency plans where necessary, we have concluded that 
the availability of essential goods and services will not be 
interrupted.
    Agency procurement departments have reviewed all suppliers of goods 
and services with operating departments to identify critical suppliers. 
A total of 1,181 suppliers have been deemed critical including 
providers of diesel fuel, wheels, sand and salt, brake shoes and legal 
printing services. Letters seeking compliance information have been 
sent to all critical suppliers. While the initial number of responses 
was low due to different mailing schedules among the agencies and to 
suppliers' concerns about potential legal liability, second mailings 
and telephone contacts have substantially improved response levels. 
Where firms have not responded or not responded adequately, management 
staff is contacting them by phone or in person to discuss preparedness. 
MTA Headquarters staff prepared a suggested conversation script to help 
agencies obtain sufficient information. When responses to these late 
and follow-up mailings are tallied and factoring in our experience so 
far, we expect to see by year-end 1998 65 percent -70 percent of 
critical suppliers reporting that they are now compliant or will be in 
sufficient time to avoid business disruption.
    The area of business partners is the most troublesome since the MTA 
depends on so many companies including key ones like electrical 
utilities and telecommunications suppliers. There is little choice but 
to rely on their word, although in cases where a supplier is unique and 
critical to operations the supplier's efforts are reviewed in more 
detail.
Agency reports and appendix
    More detailed information regarding specific agency progress in the 
areas of computerized business systems, devices with embedded chip 
technology and vendors/suppliers is contained in the following reports. 
Statistical information that summarizes the progress of all agencies in 
the three major areas is contained in tables in the Appendix.
Issues
    There are two issues to bring to the Committee's attention, 
although no Committee action is required at this time.
    The assessment and certification of critical embedded technology 
that cannot be tested needs to be addressed. The LIRR has developed an 
all-agency RFP to procure a technical consultant to assist in the 
effort and a contract award is anticipated in October.
    Exposure to potential legal liability is limiting the clarity of 
responses from vendors and suppliers about their Y2K preparedness. 
License warranties and service agreements with them are being reviewed 
by MTA procurement and legal departments. Contingency plans will be 
developed by first quarter 1999 in cases where preparedness remains 
uncertain; many plans will be in place by year-end 1998.
Cost
    In its February report to the Committee, IST&P projected the cost 
of the Year 2000 initiative to be approximately $24.0M. The current 
projection is $31.4M consisting of costs for internal staff ($9.4M) and 
consultants ($10.7M), new hardware and software required to achieve 
compliance ($8.2M) and a contingency for unanticipated expenditures 
($3.1M).
    This increase of $7.4M from the February projection consists of:
  --$0.8M, due to inclusion for the first time of internal staff costs 
        for activities related to embedded technology, business 
        partners, user testing of non-compliant and replacement systems 
        and oversight.
  --$6.6M, due to revised cost projections at NYCT (+$5.0M for upgrades 
        to Department of Subways' fiber optic network), LIRR (+$0.5M 
        for the embedded technology consultant and +$0.5M to replace 
        embedded technology) and Metro-North (+$0.6M revision to 
        internal staff costs for application conversions).
Regional coordination
    In addition to individual agency programs, the MTA has been working 
closely with outside governmental and public interest groups to address 
Y2K issues affecting the metropolitan region and to discuss regional 
contingency plans.
    In early September the MTA and NYS's Office for Technology jointly 
hosted the first meeting of state and local agencies and public 
authorities to discuss common regional issues and to determine the most 
effective way of coordinating activities. A primary goal is to develop 
an integrated contingency plan for the New York City area.
    A new group, known as the Y2K Tri-State Network, has met three 
times since July as a forum in which various public and private 
organizations can share their knowledge and experiences in dealing with 
potential problems that could affect this region. The Regional Plan 
Association also recently launched a Y2K initiative to address the need 
for information sharing, contingency planning and public education. The 
MTA and its agencies are active participants in both groups, which 
include federal, state and city representatives as well as private 
sector participants representing power and telecommunications 
utilities.
    The MTA has also independently requested information from key state 
and city agencies about the compliance of critical infrastructure 
elements on which it is dependent, as well as exchanged information 
with various emergency management offices.
Project organization and control
    An effective management and oversight structure has been put in 
place for this initiative with agency Presidents and senior staff 
reviewing progress within their organization each month and with MTA 
Headquarters IST&P and Audit Services staffs independently assessing 
performance at various project milestones.
    As reported previously to the Committee, each agency has its own 
project team led by its Chief Information Officer and involving staff 
from both technology departments and business units such as signals, 
power, maintenance of way, facilities, subways and buses. These groups 
report progress to each agency President on a monthly basis. In 
addition, MTAHQ staff oversees the efforts of the agencies, provides 
guidance on specific matters and prepares periodic reports such as this 
for the Committee on the status of the project.
    The Y2K initiative includes an audit component. MTA's Audit 
Services has developed and issued a two-phase program to review the 
various segments of the Y2K effort. Phase I addresses identification 
and analysis activities; Phase II addresses testing and implementation. 
The program requires agencies to provide documented evidence of project 
plans, test results and compliance.
    Phase I has been conducted for LIRR and it is now being completed 
for NYCT, MNR, Bridges & Tunnels and LI Bus. Audits of MTAHQ and 
Manhattan Data Center (Lockheed Martin's Y2K activities) will be 
initiated during the last quarter of 1998. Phase II will be initiated 
during the first quarter of 1999.
Next three months
    During fourth quarter 1998, the MTA and the agencies plan to 
accomplish the following significant activities:
  --Convert all but four of the remaining critical non-compliant 
        systems and implement all but six of the remaining critical 
        replacement systems, raising the completion rates to over 95 
        percent and to almost 70 percent, respectively.
  --Review critical business components by compiling an all-agency 
        checklist of the various systems indicating review, compliance/
        non-compliance and contingency plan status.
  --Continue to address remaining non-critical systems, technology and 
        business partners.
                               __________

                   Prepared Statement of Joyce Wrenn

    Good Morning, Chairman Bennett and members of the Committee. My 
name is Joyce Wrenn. I am Vice President of Information Technologies 
for Union Pacific Railroad.
    Thank you for the opportunity to speak to you about one of the most 
critical issues facing businesses today--Year 2000 compliance, and 
Union Pacific Railroad's efforts in that regard. Attached to my 
testimony is a statement from the Association of American Railroads 
(AAR) which discusses the efforts of the industry as a whole.
    Union Pacific is the largest railroad in the country, operating 
36,000 miles of track in 23 states. More than 50,000 employees on our 
railroad use computer technology every day and in almost every facet of 
their job to make sure that the goods entrusted to us are transported 
safely and according to plan.
    Year 2000 (Y2k) has implications in all areas of our business, both 
commercially and operationally, and for our business partners as well. 
Our senior management places the highest priority on ensuring that 
Union Pacific Railroad is Y2k compliant prior to the next century. We 
are committed to making January 1, 2000 ``just another day.'' Our top 
level executives monitor progress toward this goal through monthly and 
quarterly reports on Y2k issues. In addition, an executive level 
oversight position has been established to assure success in this 
effort. The following information includes an overview and a detailed 
status report on the Union Pacific Railroad's Y2k project.
                                overview
    The Y2k compliance project at Union Pacific Railroad is focused in 
five critical areas and includes software (internally developed and 
purchased), hardware and embedded chips inside equipment and machinery. 
The Railroad's enterprise-wide project encompasses computer systems and 
equipment in two data centers and a telecommunications network with 
thousands of personal computers, 3,270 terminals, radios, telephones 
connected with land lines, microwave, fiber optics and satellite links 
for data and voice communications spread over 23 states. Equipment 
containing embedded computer chips include locomotives, automated train 
switching systems, computer aided train dispatching systems, signaling 
systems, computerized fueling stations, weigh-in-motion scales, cranes, 
lifts, PBX systems and computerized monitoring systems throughout the 
company. In addition to the equipment described above, we are dependent 
on 72 million lines of code in mainframe systems, over 100 newer 
client/server applications with 8 million lines of code, and millions 
of daily EDI transactions with customers, vendors and other railroads 
plus services from hundreds of service providers. Fortunately, work 
began early on our Y2k project by starting the research in 1994 and 
completing an impact analysis of our mainframe COBOL systems in 1995. 
The Y2k project began in earnest in 1996 and has been a number one 
priority ever since.
    Union Pacific decided the best way to approach this complex 
enterprise-wide project was to divide it into five sub-projects:
  --Mainframe Systems
  --Client Server Systems
  --User Department Developed Systems
  --Vendor Supplied Software, Hardware & Embedded Systems
  --Electronic Commerce and EDI Systems
    All sub-projects have completed inventory and assessment phases, 
and have detailed project plans in place. Renovation, testing, and 
implementation is well underway, and many areas are scheduled to be 
completed in 1998. In addition to the importance of the five sub-
projects listed above, addressing project management issues is vital to 
the success of the project. These include establishing disciplined 
project management, providing effective internal and external 
communications, performing contingency planning, creating documentation 
and minimizing risk. A description of project management issues, recent 
Y2k events, and the five sub-projects follows.
                           project management
    Building on Union Pacific's foundation of concurrent planning and 
project management methodology, a Y2k enterprise approach to project 
management was developed. The Y2k management processes include 
committed executive management sponsorship, deliberate project 
planning, robust measurements, regular project updates and an 
adequately staffed Project Management Office (PMO) with experienced 
personnel.
    To provide the necessary management support, project managers are 
assigned to each of the five sub-projects. For the Mainframe Systems, 
additional project managers are responsible for the COBOL systems, the 
Transportation Control System (TCS), and the FOCUS Systems. 
Departmental coordinators are assigned from each department to 
coordinate their part of the project. For every sub-project, business 
experts and technical systems experts are vital to the success of the 
project and completing the tasks on time. Formal project review 
meetings are held several times each month. In addition, the project 
managers meet informally with each of the various teams and 
individuals.
              communications plan and measurements system
    An effective communications plan and measurement system was 
established early in the project. The communication plan is coordinated 
with our employee communications group, public relations, our 
attorneys, marketing and the purchasing department. The communication 
plan includes letters, surveys and follow-up telephone calls to our 
suppliers, blanket communications to our customers and completing the 
surveys customers send to us concerning our Y2k project. These plans 
include a Y2k Hotline number, Y2k E-mail address, and also internal 
communications with employees and management.
    The measurement system proved to be an indispensable piece of the 
communications plan. The metrics provide summarized progress reports 
for executive management and detailed reports for the groups working on 
the project. Information from these monthly and weekly progress reports 
is communicated regularly to all the employees through printed 
newsletters, Lotus Notes and our internal Web Site. Everyone on the 
team and all the people assisting the team know the current status of 
each project.
                         current project status
1. Mainframe systems
    Software developed for enterprise-wide mainframe systems are 
essential to the business. In 1995, Union Pacific began the research, 
evaluated the market and vendors, and completed a pilot project to 
begin to address the Year 2000 issue, and in 1996, we completed the 
inventory of thousands of programs. Currently, nearly 80 percent of 
these systems have been converted, tested, implemented, and certified 
Y2k compliant by August 1998, and the rest are on plan to be completed 
by December 1998.
2. Client server systems
    Union Pacific has over 100 enterprise client server systems in 
production or under development. In 1998, a full-time project team was 
established to assist the application project managers in testing these 
systems and data feeds to and from mainframe systems that may be using 
two-digit years. Currently, over 30 percent of these systems are 
completed, and all critical client server systems are on plan to be 
certified Y2k compliant in 1998, and the non-critical systems early in 
1999.
3. User department developed systems
    This category includes mainframe and PC-based systems developed by 
internal user departments. Headed by a coordinator within each area, 
departments have currently completed over 70 percent of their systems, 
and the remainder are on plan to be completed in 1998.
4. Vendor supplied software, hardware & embedded systems
    The Y2k work is not limited to the company's internal systems. 
Union Pacific continues to contact vendors, governmental agencies, 
financial institutions, and even competitors to verify that they are 
prepared. The scope of this project includes vendor-supplied software, 
desktop, mainframe and server hardware, as well as databases and 
operating systems.
    Union Pacific is working with connecting short line and regional 
railroads via our involvement in various AAR committees. In cooperation 
with the AAR, Union Pacific is sharing information on the compliance 
and testing of safety critical components common to the industry. Union 
Pacific has committed to help fund the development of a shared Web site 
for this purpose, and access to this information should be available in 
the 3rd quarter of 1998.
    We are also asking essential suppliers to inform us of the Y2k 
status of their internal systems. Our vendors must ensure that their 
internal systems are compliant so that they will continue to provide 
products and services to the Railroad beyond the year 1999. In 1998, we 
have to date identified 335 highly critical companies and our Supply 
Department currently has responses from over 90 percent of our critical 
suppliers indicating they have a solid Y2k project plan.
    Each department is responsible for the equipment and software they 
purchase, maintain and/or manage. Each department head is personally 
involved and has completed their inventory and determined which 
components are critical. Currently, departments are assessing Y2k 
compliance of their critical items and following up with their critical 
vendors. The Y2k Project Management Office is monitoring performance 
against the project plan.
    To assure safety and Y2k compliance, selected critical software, 
hardware, and embedded systems are being tested by Union Pacific, even 
if it has been certified by the vendor.
5. Electronic commerce and EDI cystems
    Union Pacific's electronic commerce and EDI systems Y2k project 
covers all the electronic exchanges of information with customers, 
vendors, other railroads and banks.
    The railroad industry has agreed on a Y2k EDI transaction standard 
that will be implemented in late 1998. This standard requires a 4-digit 
year. Union Pacific is taking a very active role with the AAR in 
testing the new standards with other railroads and trading partners. 
Since many companies will continue to use 2-digit years, Union Pacific 
will be able to support older versions of EDI transactions and 
interpret the 2-digit year to the appropriate century for our internal 
applications.
                          contingency planning
    Despite our best efforts, we recognize that total coverage of all 
Y2K internal and external problems is unlikely. Therefore, another area 
of focus is Y2k contingency planning. We will complete this plan in 
1998 and adjust as needed in 1999. Currently, we plan to have a Y2k 
command center staffed 24 hours a day in the fourth quarter of 1999 and 
continuing into early 2000 for any problems that might occur due to the 
Y2k. The staff will be comprised of technical experts to fix or advise 
what to fix if systems fail, and knowledgeable representatives from 
each business unit. Although we have planned for January 1, 2000 to be 
just like any other day, contingency plans will be ready to implement 
just in case.
                             documentation
    We are carefully documenting all our work to provide repeatable and 
demonstrable processes. We are documenting and storing internal and 
external correspondence and E-mail; all the project plans; test plans, 
test results and test data, progress and status reports, responses to 
our surveys and notes from telephone conversations with our key 
vendors.
                             recent events
    On July 21, 1998 Union Pacific's Y2k Project received an 
exceptionally good rating from Electronic Data Systems (EDS) after it 
completed an independent audit of Union Pacific Railroad's Y2k 
Readiness for a large automobile manufacturer. Some of their comments 
follow:

          ``The Y2k project is number 1 priority with the Union Pacific 
        Corp. * * * The project and Y2k preparedness have the full 
        support of the highest levels of the Corporation.''
          ``Union Pacific has demonstrated full commitment and 
        exceptional processes and documentation to assure Y2k 
        compliance.''
          ``Assessors reviewed management reports, schedules, project 
        plans, and detailed documentation, both printed and on-line, 
        and found them to be exceptional.''
          ``Union Pacific has done a very detailed analysis of their 
        suppliers and components and is well on track to contact and 
        evaluate all critical suppliers and components by year end 
        1998.''
          ``Union Pacific has plans to implement manual systems in case 
        unforeseen situations develop which may impact support of their 
        customer base.''
          ``An exceptional Y2k Readiness project is in place. Union 
        Pacific can and should be proud.''

    That concludes my testimony, and I would be happy to answer any 
questions you may have.
                                 ______
                                 

   Statement of Edward R. Hamberger, President & CEO, Association of 
                           American Railroads

    The Association of American Railroads (AAR) appreciates this 
opportunity to present its comments for the record on the impact of the 
Year 2000 problem on the railroad industry. AAR's members account for 
93 percent of the railroad industry's freight revenues, operate 77 
percent of the railroad industry's line-haul mileage, employ 91 percent 
of rail workers, and operate almost all of the nation's intercity 
passenger trains.
    All segments of the rail industry are very much aware of the 
critical importance of addressing the potential problems that could 
affect computer systems with the century change. Railroads and rail 
suppliers are actively engaged at every level in identifying and 
preventing these problems. In this testimony we will provide insight 
into the industry's experience to date in safety-critical areas and 
share the project management approach being taken.
    From a railroad perspective, Year 2000 efforts need to focus 
primarily on two critical areas: safety and service continuity.
                            focus on safety
    Our first priority is the safety of our employees, customers, and 
the public at large. Our industry has made significant strides in 
safety over the past two decades. The train accident rate has fallen by 
23 percent since 1990 and by 68 percent since 1980. Employee lost 
workday injury and illness rates are down 52 percent since 1990 and 62 
percent since 1980. Railroads will not let the Year 2000 challenge 
blemish that record of improvement.
    The rail industry's Year 2000 efforts in safety-critical areas 
address mainframe computer systems, decision support systems, and a 
variety of components supplied by vendors, including embedded devices. 
Railroads have received many inquiries about signals and highway grade 
crossing devices and have good news to deliver in response to these 
inquiries. Research and testing experience so far shows that the 
safety-critical aspects of signals and grade crossing devices do not 
employ date calculations. Because of this they are not subject to the 
sort of Year 2000 problems that affect credit cards, telephone systems, 
and older mainframe computer programs. However, the industry does not 
plan to stop the research and testing until we are assured that every 
safety-critical component and system will operate properly before, 
during, and after the century change.
                service continuity & project management
    Service continuity is a major concern to the rail industry and our 
customers due to the tremendous amount of rail traffic which is handled 
by two or more railroads in inter-line movements (25 percent of traffic 
and 33 percent of rail freight revenue). At a recent meeting the 
Federal Railroad Administration hosted a general Year 2000 issues on 
July 20 for freight railroads, rail suppliers, commuter railroads, and 
Amtrak, eight AAR member railroads were represented and four made 
presentations on their Year 2000 activities. One key point made was 
that operations at large railroads in particular depend on information 
technology. For this reason, railroads cannot take the chance that they 
will be able to continue to operate at current levels without 
addressing the potential for Year 2000 problems.
    Having identified this critical issue, AAR member railroads 
instituted formal project management procedures. CEOs are updated 
regularly on progress. Responsibilities are clearly defined, resources 
are budgeted, and detailed plans outlined to address the various 
potential problems. Formal weekly status meetings are the norm.
    Efforts to address Year 2000-related problems have been underway at 
railroads for several years. The first stage of addressing Year 2000 
problems at most railroads was completion of an inventory of 
potentially affected systems and components. This work, by necessity, 
has been carried out inside the information system departments as well 
as in the field. This process also includes division of the inventory 
into critical and non-critical, often with several categories ranging 
from safety-critical down to ``nice to have.'' In the second stage 
railroads perform impact analysis, or preliminary testing, to determine 
which systems or components actually experience problems when presented 
with the century change or other ``special'' dates.
    Once the potential problem areas are identified the third stage 
remediation, begins. One railroad estimates that 3 to 4 percent of 
their core mainframe lines of code need remediation. AAR believes this 
is typical. Following remediation, the upgraded system or component 
needs to be tested to assure that it will perform as required before, 
during, and after the century change.
    The last stage is contingency planning. Railroads have identified 
the need to develop detailed contingency plans that can be activated if 
required.
    Within their Year 2000 Project Offices, most railroads distinguish 
between their Information Technology (IT) related work and their 
Enterprise, or business, work. Specialists are deployed in each area so 
that appropriate skills and knowledge gained from past experience can 
be applied. The IT work, particularly addressing core mainframe 
systems, began before the Enterprise area work. AAR understands that 
its members expect to complete the great majority of their IT work this 
year. The Enterprise work is also well underway, but is expected to 
stretch into 1999.
    While most Year 2000 work is performed at the individual railroads, 
there are supportive activities at the industry level. The AAR Board of 
Directors has stimulated activity and receives regular status reports, 
as do other groups with representation from railroad Chief Operating 
Officers, Chief Marketing Officers, and Chief Information Officers.
    The North American Rail Industry Year 2000 Coordination Task Force 
was formed to manage the industry level activities and includes members 
from large and small railroads, with staff support from AAR. The Task 
Force engages in cooperative efforts to support North American 
railroads working to prevent the century change from negatively 
affecting rail industry safety and service.
    Due to the nature of North American rail industry operations, more 
than one railroad must work together to handle many customer shipments. 
This is supported by extensive interaction among railroad information 
systems and has led to the development of various central information 
system applications at Railinc, AAR's information technology 
department. The Task Force has developed a plan for testing these 
systems to ensure that the separate railroad information systems 
interact appropriately when presented with situations where Year 2000 
and related date issues might arise. The Task Force expects that the 
most significant portion of the testing work will be completed in 1998.
    Further, the Task Force has agreed to leverage the knowledge gained 
at individual railroads by sharing information from Year 2000 research, 
testing, and remediation of systems and components. This information 
will be available to large and small North American railroads in a 
structured data base through a secure electronic access mechanism. 
Also, the Task Force is planning joint research and testing in selected 
areas.
    Total expenditures on Year 2000-related activities are expected to 
be in the hundreds of millions across the AAR member railroads.
                               conclusion
    AAR hopes it has conveyed the seriousness with which the rail 
industry is approaching the threat of Year 2000 problems. AAR believes 
that the rail industry's approach will enable it to continue safe, 
customer-responsive, efficient rail operations before, during, and 
after the century change.
                                 ______
                                 

  Responses of Joyce Wrenn to Questions Submitted by Chairman Bennett

    Question 1. Your recent merger with Southern Pacific and Santa Fe 
railroads has added a large operating segment to the Union Pacific 
including tracks, facilities, equipment, personnel, suppliers, and 
customers.
    (A) What kinds of Y2K problems did the merger create?
    Answer. Burlington Northern merged with the Santa Fe, but our 
merger with the Southern Pacific did not create any specific Y2K 
related problems other than scope.
    (B) Please briefly explain how the combined railroad management 
plans, analyzes and implements a Y2K program on such a vast scale 
considering the differing cultures of the acquired companies?
    Answer. The Union Pacific Year 2000 project was built on our 
foundation of concurrent planning processes that include committed 
executive management sponsorship, deliberate project planning, robust 
measurements, and regular project updates on an enterprise approach. 
For every sub-project, business experts from all critical areas are 
assigned from each department to coordinate their part of the project. 
The Year 2000 project at Union Pacific is truly managed as a business 
challenge, not a technical problem.
    Question 2. Please explain how Union Pacific tests general purpose 
embedded microprocessors that frequently include timing logic segment 
which may or may not be triggered on January 1, 2000?
    Answer. Microprocessors with timing logic segments must have a 
power source, either internal or external, that is used to set or 
adjust the date and time. While microprocessors that are using an 
internal power source have not been identified on the railroad, our 
embedded engineers do have experience resetting the internal clocks on 
these type of devices, generally by uploading a program to accomplish 
the date change. On the equipment we have seen so far, the source of 
the date/time has been easily identified, reset, and tested.
    Question 3. Are you aware of any overall assessments of the 
preparedness of the railroad industry? if not, can you hazard a guess 
as to preparedness and what some potential show stoppers might be?
    Answer. The AAR may be able to provide the best overall assessment 
of the railroad industry. So far, no railroad has identified any show 
stoppers to our knowledge.
    Question 4. You mention Contingency Planning in your formal 
statement to the Committee Ms. Wrenn. Would you briefly explain to the 
Committee what elements of railroad operations would be covered under 
such a plan? e.g. engines, fuel supplies, dispatching--just what?
    Answer. High level department coordinators have been assigned in 14 
critical business areas including the National Customer Service Center 
(NCSC), Dispatching, Facilities Management, Timekeeping, Crew 
Management, Finance, Supply, Transportation, Mechanical, Locomotive, 
Telecommunications, Data Centers, and Information Systems. Each 
functional area is creating contingency plans, or defining their 
requirements for support from other areas, in 7 major categories of 
contingency events as applicable. These 7 categories are:

  --Key Data--Integrity/Loss
  --Critical Software--IT Supported/Off the shelf
  --Critical Hardware/Equipment with embedded microprocessors
  --Communications--Internal/External, Voice/Data
  --Critical Supplies and Suppliers
  --Facilities
  --Key Personnel
                               __________

              ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

                                ------                                


         Statement of the American Trucking Associations, Inc.

                              introduction
    The American Trucking Associations (ATA) is the national trade 
association of the trucking industry. The ATA federation represents 
over 37,000 trucking companies, with an affiliated association in every 
state, and 14 conferences representing individual segments of the 
industry. The ATA federation represents every type and class of motor 
carrier in the United States. While there are more than 37,000 trucking 
operations in the U.S., it's important to note that 70 percent (70 
percent) of the nation's trucking companies are small businesses, 
operating fewer than six trucks. The Information Technology Council 
(ITC) is a part of ATA which comprises motor carrier information 
technology (IT) professionals in addition to software and hardware 
vendors and IT service providers that specialize in technologies that 
support the trucking industry. ATA and ITC appreciate the opportunity 
to comment about the Year 2000 problem and its impact on the trucking 
segment of the transportation industry. Trucking is a highly 
competitive industry with relatively small profit margins. In order to 
become more efficient and provide better service to its customers, the 
industry fully embraces the use of mature technologies where they are 
cost-effective and make good business sense. For many motor carriers, 
the use of technology has become more than a means to obtain a 
competitive edge--it has become a necessary cost of doing business. The 
fact that ATA has taken the opportunity to submit comments to the 
Senate Special Committee underscores our concern and commitment to 
addressing this issue.
                             industry scope
    The transportation industry is very large and is a key sector of 
the economy. Americans spend more than $420 billion a year on freight 
transportation. According to U.S. Department of Transportation (DOT) 
statistics, this represents approximately five percent (5 percent) of 
the U.S. gross domestic product. The air, rail, and maritime sectors 
certainly contribute to these numbers. However, the trucking industry 
hauls the lion's share of this freight. Over 6.5 billion tons of 
freight was shipped by truck in 1996. This is about 60 percent of the 
total domestic tonnage that was shipped. According to forecasts by 
Standard & Poor's DRI, the volume of freight shipments will increase by 
21 percent (21 percent) at the rate of two percent (2 percent) per year 
by 2006, including increased shipments to Canada and Mexico, where 
trucks dominate cross-border freight movements. Moreover, 77 percent 
(77 percent) of all communities in the U.S. depend solely on products 
delivered by trucks. In 1996 over nine million people were employed 
throughout the economy in jobs that relate directly to trucking. Over 
one third of that nine million were employed as commercial truck 
drivers. These are impressive numbers, yet the trucking industry is 
only one link--albeit a very significant link--in the total supply 
chain that has many different players and trading partners. Among these 
trading partners are: shippers, brokers, freight forwarders, logistics 
services providers, and the customers that receive the freight. Motor 
carriers are an integral part of a very large, complex, and dynamic 
transportation and distribution system.
                      y2k risks to motor carriers
    Because of the size and scope of the trucking industry, and the 
great extent to which technology is employed by the industry, one can 
appreciate why motor carriers are concerned about the potential impact 
of the Year 2000 problem. Mr. Capers Jones, a Burlington, Massachusetts 
software consultant has said: ``With possibly 5 percent (5 percent) to 
more than 20 percent (20 percent) of the Year 2000 problems still 
unrepaired and remaining in software after the century ends, the 
probability of significant damages is alarmingly high.'' If only 5 
percent (5 percent) of the industry were to come to a standstill, it 
would have a significant economic impact.
    Motor carriers are very dependent upon technology. More and more, 
the information that they process is as important as the freight that 
they haul. Technology is being used extensively to provide large 
amounts of information quickly, accurately, and efficiently. Any major 
disruption in that information flow would affect service to trucking 
company customers, seriously affect the motor carrier's bottom line, 
and could cause some companies to fail. And because trucking plays a 
pivotal role in the total supply chain, the potential economic impact 
could be staggering.
    While many of the systems that support day-to-day motor carrier 
operations depend on real-time data, the trucking industry also uses 
many systems that are date sensitive and could be affected by Y2K. 
These systems are diverse and the associated risks are varied. Affected 
systems include mainframe applications and systems software, mid-range 
and client/server applications, network software, PC systems and 
application software, facilities, and telephone systems.
    Many of the motor carriers depend upon wireless and satellite 
communications systems to dispatch their fleets, keep track of their 
tractors and trailers, and provide expedited delivery of the freight on 
time to their customers. The smaller, less sophisticated companies that 
use the timed-tested methods of paper and pencil, telephone calls, and 
facsimiles to communicate, now also use affordable e-mail to interact 
with trading partners if they have at least one PC at their disposal. 
Even some of these systems are at risk.
    The same telecommunications technologies are used to collect data 
that is necessary for fleet maintenance that keeps the trucks rolling. 
Not insignificant is the increasing use of advanced technologies to 
keep drivers in touch not only with their dispatcher, but also, with 
their families--an application which has helped motor carriers improve 
drivers--quality of life and recruit and retain better, safer drivers.
    In addition to the technologies employed in operations and 
maintenance, many trucking business or back office functions use date-
sensitive computer software applications. Electronic commerce, whether 
by electronic data interchange, i.e., EDI, or on the Internet, is a way 
of doing business and is essential to the viability of the trucking 
industry. Major companies routinely send nearly 4,000 EDI messages 
daily, often to as many as 500 different trading partners. These 
messages include load tenders, shipping and pick-up notifications, 
shipment status messages, purchase orders, bills of lading, and 
invoices.
    Motor carrier accounting, finance, and payroll systems, whether 
company-operated or out-sourced, are maintained on computer systems 
that operate on date-sensitive software.
                  ata and industry remediation efforts
    ATA has been aware of this challenging Y2K issue from its early 
stages. Recognizing that there is an entire industry of consultants and 
software experts that has emerged to help with Y2K, ATA is playing its 
part in remediating the problem for motor carriers. ATA provides its 
members with information and education on the problem as Y2K relates 
specifically to the trucking industry. Throughout ATA's federation of 
conferences, councils, and state associations, there have been many 
seminars and panel discussions conducted on the issue. During its 
Annual Management Conference and Exhibition, which will be held on 
October 25-28, 1998, ATA will host a general session on integrating 
shipper and carrier technology. Shippers, technology vendors, and motor 
carriers will all share their views on Y2K and other IT issues. In 
addition, numerous articles aimed at heightening motor carriers' 
awareness of the problem have appeared in industry trade publications, 
including Transport Topics, the national newspaper of record for the 
trucking industry, and ATA newsletters that are distributed widely 
throughout the trucking industry. Moreover, ATA has partnered with both 
private and public organizations, including DOT, not only to better 
understand the extent and impact of the Y2K problem, but also, to 
identify and support viable, effective solutions.
    ATA's Information Technology Council actively participates in the 
development of American National Standards Institute (ANSI) X12 
standards which are the backbone of EDI messages that are used in 
electronic commerce throughout the trucking industry. ATA has published 
an EDI Implementation Guide that provides details essential for mapping 
data that includes references to a specific century in all date fields 
of the various business transactions. Previous reference to dates was 
accomplished by indicating only six characters, i.e., YYMMDD, or 99 12 
31 for December 31, 1999. The latest version of the ANSI standard, 
explained in the ATA Guide, incorporates the use of an eight-character 
field, CCYYMMDD, or 20 00 01 01 for January 1, 2000, which 
unambiguously identifies the correct century. ATA and ITC are 
encouraging all motor carrier EDI users to migrate to and use 
translation software based on this version.
    Based on informal surveys and discussions with IT professionals 
from a variety of the companies in the trucking industry, ATA is 
confident that the trucking industry is taking this issue seriously. 
Real work is being done to fix it. According to industry analysts, 
approximately 29 million dollars and thousands of man-hours are being 
spent by transportation companies to address this problem. Many of the 
larger companies have had on-going programs for the past several years. 
The Y2K programs vary from company to company, but generally encompass 
the following:
  --putting someone in charge
  --setting up teams
  --identifying and analyzing the problem areas
  --searching lines of code
  --rewriting affected software
  --retiring and replacing outdated applications and systems with newer 
        compliant ones
  --testing the fixes or new systems that have been installed
    In addition, motor carriers are talking with their trading partners 
and vendors to obtain assurance of their Y2K compliant systems. Engine 
manufacturers, for example, have responded that electronic engine 
components will not be affected by Y2K because key data is based on 
hours expended rather than calendar dates. The motor carriers that have 
large information technology staffs are dedicating 15 percent (15 
percent) or more of those staffs solely to remedying Y2K problems. In 
addition, many are using outside vendors to augment their teams to 
review and rewrite lines of code.
                                concerns
    Even with all this effort being expended, some issues still remain 
that essentially are outside the purview of the motor carriers to 
control. Some experts have estimated that as much as 10 percent (10 
percent) of all shipments and deliveries will be delayed on January 1, 
2000 and thereafter. The fact is no one really knows!
    On balance, the trucking industry is very aware of the problem and 
is making a significant effort at remediation. The trucking industry 
will have its house in order by January 1, 2000. ATA and ITC are 
confident that there will not be a catastrophe among motor carriers 
because of what they are doing now to deal with their problems. 
However, even though some firms might go so far as to consider Y2K as a 
non-event, one should be more realistic. KPMG Peat Marwick, LLP, a 
leading consulting firm, has warned that as of February 1998 only 23 
percent (23 percent) of federal transportation agencies' critical 
systems were Y2K compliant. It is a well-known fact that where computer 
software is concerned, history has shown that there will always be some 
glitch that will require yet another correction. It is the very nature 
of software. Software experts have said that it is naive and risky to 
assume that 100 percent (100 percent) of Year 2000 errors will be found 
and repaired, since the U.S. average for other kinds of bugs is only 
about 85 percent (85 percent) defect removal efficiency and even ``best 
in class'' results are below 99 percent (99 percent) in efficiency.
    Therefore, as diligent as the trucking and other industries are, 
there undoubtedly will be latent defects and secondary errors remaining 
after January 1, 2000. We know, for example, that levels of defect 
removal for code errors do not usually exceed 95 percent (95 percent) 
efficiency. Statistically that may be high, but is not high enough for 
Y2K when one considers the millions of lines of code that are affected. 
Test error efficiency is much higher--99 percent (99 percent)--but much 
of the testing will not occur until well into the millennium.
    ATA and ITC have a positive opinion on the outcome of the effort of 
the larger companies that are well capitalized and able to deal 
aggressively with Y2K problems. Our opinion is more guarded about the 
ability of the small and medium sized trucking companies that have 
neither the funds or the requisite expertise to handle problems of this 
magnitude. Some may still be in denial or have only begun to mount any 
effort toward dealing with the problem. It is clear that any 
government-sponsored Y2K information campaign should target these 
companies.
    As mentioned at the beginning, motor carriers are participants in a 
very complex supply chain. They have deeply layered business 
relationships and depend on many outside agencies and organizations, 
both public and private, to make the supply chain function effectively 
and efficiently. There are many systems on which they depend that must 
function in order for trucks to deliver the freight to the customer. 
Many systems, we are told, although based on advanced technologies, are 
not affected at all by the Y2K problem. However, since the function and 
operation of these systems is outside the control of the trucking 
companies, one can only trust that this analysis and assessment is 
accurate. We will continue to ask penetrating questions and hope that 
other players are as concerned and diligent in their efforts as motor 
carriers are. This remains a very large area of uncertainty for the 
trucking industry as well as for others. For example, we do not know 
how well the Federal, state, and local governments who have 
responsibility for the very infrastructure of roads, highways, and 
traffic systems that motor carriers depend upon, as well as for the 
licensing of their drivers and vehicles, are coping with this problem. 
We do not know about the reliability of the phone systems and other 
telecommunications networks that have become an integral part of the 
way motor carriers do business. And what about the energy systems, the 
oil, gas, and electric that carriers must have to run the trucks and 
operate their facilities? Moreover, we have concerns about the finance 
and banking industry that processes carriers' payrolls, cash transfers, 
and business transactions. Lastly, we have some concerns about 
increased costs which may result because of possible litigation. While 
motor carriers are end users--not the developers--of most of the 
software, trucking companies may be caught up in the web of litigation 
which could result if systems fail and delivery schedules are not met. 
Most of the trucking companies are working in the trenches, following 
the industry's leaders who have programs in place and expect to be 
fully Y2K compliant as we greet the next millennium. However, the 
trucking industry also expects that there will be date problems in 
software after the century ends, and both the public and private 
sectors of the economy must be prepared to address them--perhaps even 
well after January 1, 2000.
    Thank you again for the opportunity to comment on this important 
issue.
                               __________

                      Statement of CSX Corporation

    CSX Corporation (``CSX'') submits these comments in connection with 
the Committee's September 10 hearing on ``Transportation After Y2K: Can 
We Get There From Here?''
    In 1996, CSX Corporation and its subsidiaries began a comprehensive 
initiative to address and resolve the potential exposure associated 
with the functioning of its information technology systems and non-
information technology systems (including embedded technology) with 
respect to dates in the Year 2000 and beyond, commonly referred to as 
the ``Y2K Problem'' and the ``Millennium Bug''.
    CSX's remediation efforts are focused first and foremost on the 
continued safe operation its rail and other transportation systems, 
encompassing both employees' personal safety as well as the safety of 
the general public and the environments in which we operate. 
Maintaining service continuity both to our customers and with our 
vendors before, during, and after the millennium change is also a high 
priority. CSX is also taking steps it believes are necessary to insure 
the efficiency and integrity of our infrastructure and to minimize 
internal operational interruptions.
    Overall, the CSX Year 2000 initiative is currently proceeding on 
schedule with completion of all key areas expected by mid-1999. The 
company's Y2K remediation efforts are aligned into five (5) parallel 
efforts: Core Information Systems, Distributed Information Technology, 
Electronic Commerce, Non-IT (embedded) systems, and Trading Partners.
    The remediation of data center hardware and software is 
progressing, and a major portion of software and hardware products have 
been upgraded. CSX anticipates that it will have resolved the Year 2000 
issue for all mission critical applications by the end of 1998 and for 
all non-mission critical applications by June 1999. With respect to 
distributed information technology, CSX has assigned project managers 
to assess and remediate its distributed applications with a view to 
completion by early 1999.
    In the area of electronic commerce transmissions, CSX is upgrading 
its applications to Year 2000 standards as part of its regular 
application maintenance effort. Because the potential exists that not 
all of CSX's trading partners will achieve Year 2000 compliance, CSX is 
preparing to accommodate non-Year 2000 electronic commerce 
transmissions as well as Year 2000 ready transmissions.
    With respect to non-information technology systems, CSX is 
currently conducting assessments of its rail classification yards, 
shipping ports, container vessels, intermodal ramps, and office 
facilities. In July 1997, CSX and its vendor tested CSX's rail 
transportation dispatch systems for Year 2000 complications and, based 
on the results of those tests, the vendor has been making upgrades to 
the systems which are expected to be completed by the end of 1998.
    As part of its Year 2000 initiative, CSX is in communication with 
its significant suppliers, large customers and financial institutions 
to assess their Year 2000 readiness and expects to conduct interface 
tests with its external trading partners in 1999 upon completion of 
internal testing of remediated applications.
    In connection with its integration of Conrail, CSX and Norfolk 
Southern are jointly addressing the Year 2000 compliance of Conrail's 
core information technology applications and non-information technology 
embedded systems. Certain of Conrail's operations systems are being 
made Year 2000 compliant as a contingency in the event that there are 
delays in the integration or Conrail continues to operate such systems 
after the integration is completed.
    CSX has incurred total expense of $23 million to date related to 
the Year 2000 issue. The remaining cost of the Year 2000 initiative is 
presently estimated at $62 million. The remaining cost and the date on 
which the company believes it will complete the Year 2000 initiative 
are based on management's current estimates, which are derived 
utilizing numerous assumptions of future events including the continued 
availability of certain resources, and are inherently uncertain.
    CSX has made Year 2000 readiness a top priority and believes that 
its planning efforts are adequate to address its Year 2000 concerns. 
There can be no assurance, however, that CSX's efforts will be 
successful in a task of this size and complexity. CSX is currently 
assessing the consequences of its Year 2000 initiative not being 
completed on schedule or its remediation efforts not being successful. 
Upon completion of such assessment, CSX will begin contingency 
planning, including efforts to address potential disruptions in third-
party services, such as telecommunications and electricity, on which 
the CSX's systems and operations rely.
    CSX is undertaking all of the activities that it believes are 
reasonably necessary to be ready for the millennium change. The Year 
2000 poses genuine technical problems to the entire world. CSX is 
keenly aware that its own and its customers' businesses are dependent 
upon the performance and dependability of CSX's systems. CSX's top 
executives, management and technical staff are committed to bringing 
CSX Year 2000 ready sufficiently in advance of January 1, 2000 to 
permit smooth functioning of all core systems. Adequate backup plans 
will exist as a contingency, and CSX will staff and operate a Y2K 
Command Center during the transition to perform triage and react to any 
unforeseen problems. CSX has a long history of successful operation of 
its railways and other transportation systems and believes that it is 
bringing the necessary resources to bear to continue that tradition 
into the next millennium.
    Presently, there are at least four (4) measures that have been 
introduced in Congress dealing with the Y2K problem. These bills, 
collectively, provide for the free flow of information between 
companies by setting standards for when liability will attach, as well 
as providing for the suspension of antitrust laws to allow businesses 
to share information about their respective Y2K computer problems. The 
flow of information between companies and the public did not begin in 
earnest until July 29th when the Securities and Exchange Commission 
issued an interpretive release to public companies on making clear 
disclosures to shareholders about Y2K issues. Although this has shaken 
some Y2K information loose, it is still not enough. Congress can assist 
CSX and all other companies first and foremost by passing appropriate 
disclosure legislation as quickly as possible. Since the time left 
before January 1, 2000 is finite and decreasing, time is truly of the 
essence. Lastly, CSX and other companies need protection from frivolous 
litigation for Y2K failures where they can show that they made 
reasonable good faith efforts to remediate the problem.
                               __________

 Statement of Stephen Roberts, Chief Information Officer, Information 
   Technology Service Center of the National Passenger Railroad Corp.

    Mr. Chairman and Members of the Special Committee on the Year 2000 
Technology Problem, I appreciate the opportunity to be able to submit 
this testimony for the Hearing Record, discussing how Amtrak has 
prepared for the year 2000 calendar change over. My name is Stephen 
Roberts and I am the Chief Information Officer for the Information 
Technology Service Center (ITSC) at Amtrak. The ITSC is responsible for 
identifying and implementing technology changes required to Amtrak's 
systems in preparation for the year 2000.
    Amtrak's Year 2000 project is progressing according to plan with 
all of its mainframe systems on schedule for changes for the year 2000. 
The project remains within budget and is on target following the year 
2000 methodology most widely used in the industry.
    Amtrak began preparing for the year 2000 calendar change over in 
October of 1996 when it began securing funding for an assessment of its 
business systems and for a legacy system inventory. In January of 1997, 
Amtrak's Year 2000 project was fully staffed and activated. Amtrak has 
since completed the assessment of its business applications and an 
inventory of all of its legacy mainframe systems.
    In all, Amtrak has worked with three companies, specializing in 
remedying legacy business application systems for the year 2000. The 
companies have augmented Amtrak IT staff assuring the availability of 
skilled programmers to make code changes and to complete the testing of 
the year 2000-ready code. Because a high priority was placed on 
assuring the readiness of Amtrak's reservation system (ARROW), Amtrak 
contracted with specialists in reservation systems to assess ARROW's 
readiness for the year 2000. This assessment was completed in June of 
1997 and found that only 9 out of ARROW's 5,000 programs required 
changes to become ready for the year 2000 calendar. These changes have 
since been made and Amtrak has begun testing ARROW and its 
communication links to the airlines and travel agencies.
    Amtrak also places a high priority on assuring the readiness of its 
operations and safety for the year 2000 change over. As a result, 
Amtrak's Assistant Chief Engineer initiated the Communications & 
Signals Year 2000 Compliance Program. The purpose of the program is to 
evaluate every device and software process used in the day-to-day 
operations of the signal or communications system that are either 
microprocessor or computer based. Key vendors are requested to provide 
certification of equipment that contain embedded computer chips. The 
electric power companies that supply electric power to Amtrak in the 
Northeast Corridor have already been contacted requesting a 
certification of their systems' readiness for the year 2000. Responses 
are being received from the utilities attesting to active year 2000 
projects and their planned year 2000 readiness. To date, no year 2000 
equipment issues from the embedded computer chips have been identified.
    Amtrak has also hired a contractor to perform an assessment of the 
software for the Centralized Traffic Control systems (CETC). A report 
has since been issued identifying all of the programs that require year 
2000 related changes, including year 2000 changes to the operating 
systems and third party software used by CETC. All modification and 
testing of these programs are scheduled for completion by the first 
quarter of 1999. Amtrak has also contacted its supplier of 
communication software linking locomotives to the operations centers to 
verify the software's year 2000 readiness. Amtrak is presently testing 
the train communication software as a part of the year 2000 project.
    Amtrak has also contracted with IBM and IMR (Information Management 
Resources, Inc) to convert 54 application systems. Amtrak selected 
these companies through a competitive bidding process because of their 
experience and expertise in readying legacy systems for the year 2000 
calendar change over. Both companies have made excellent progress 
converting affected programs that are now being tested to validate the 
accuracy of the year 2000 program changes.
    IBM has also initiated a project that identifies the computer 
equipment and software used at Amtrak. As a result, many of the 
computer hardware and software items listed in the document have now 
been certified year 2000 ready by the vendors. IBM and Amtrak are also 
verifying this information through independent testing of the hardware 
and software components.
    Finally, Amtrak is proud to report that it is on schedule to 
convert all of its other business information systems by the year 2000. 
Amtrak has already converted its Travel Agency Processing system, and 
the programs are now ready for implementation into production. The 
success of this conversion was particularly important since this system 
served as a pilot project for validating our year 2000 conversion 
methodology. Amtrak is also in the process of upgrading its material 
management system to a year 2000 ready version. Amtrak staff have 
prepared a questionnaire for Amtrak's major material suppliers to 
ascertain their systems' readiness for the year 2000. Finally, Amtrak's 
Finance and Human Resources departments have begun soliciting bids for 
a replacement Payroll/Personnel system.
    In summary, Amtrak has a well-established year 2000 project for 
readying its application systems for the year 2000 calendar change 
over. Amtrak employees are collaborating with expert consultants on the 
year 2000 software conversion to ensure that Amtrak's application 
systems are ready for the transition to the year 2000. Additionally, 
Amtrak was pleased to attend the Federal Railroad Administration's 
(FRA) Year 2000 Railroad Industry Workshop on July 20, 1998, and Amtrak 
has been apprising the FRA of its progress.
    Finally, Amtrak's Inspector General, Assistant Chief Engineer, and 
ITSC are coordinating their year 2000 efforts through the sharing of 
information on their year 2000 conversion activities. Attached is a 
table detailing the conversion progress of Amtrak's application systems 
(Attachment A) and a chronology outlining the steps Amtrak has taken to 
ready itself for the year 2000 calendar change over (Attachment B).
    Again, thank you for the opportunity to submit this testimony.

                         ATTACHMENT A.-- APPLICATION SYSTEMS CONVERSION PROGRESS SUMMARY
----------------------------------------------------------------------------------------------------------------
             Description                      Start date                End date                 Comments
----------------------------------------------------------------------------------------------------------------
Inventory and Assessment.............  March 1997.............  September 1997.........  5 million lines of
                                                                                          code, year 2000 date
                                                                                          impact is 70%.
Mainframe computer Hardware/Systems    June 1997..............  October 1998...........  Systems and application
 Software upgrade.                                                                        testing in progress.
Pilot Project........................  October i997...........  May 1998...............  Conversion and
                                                                                          acceptance testing
                                                                                          completed.
Reservation System (ARROW)...........  October 1997...........  January 1999...........  Testing of
                                                                                          infrastructure and
                                                                                          applications in
                                                                                          progress.
Revenue Management Application         March 1998.............  December 1998..........  Project on schedule and
 Systems.                                                                                 within budget, year
                                                                                          2000 testing started.
Financial/Accounting Systems.........  March 1998.............  January 1999...........  Conversion program code
                                                                                          is proceeding on
                                                                                          schedule.
Labor Systems........................  April 1998.............  March 1999.............  Code analysis in
                                                                                          progress.
Operations & Safety..................  March 1998.............  May 1999...............  Contacting vendors,
                                                                                          embedded systems
                                                                                          testing in progress.
Business Partners....................  February 1997..........  May 1999...............  Validation/Testing of
                                                                                          systems, replacement
                                                                                          of Amtrak Materials
                                                                                          System.
Amtrak Information Network...........  September 1997.........  February 1998..........  The analysis and
                                                                                          testing of network
                                                                                          components is in
                                                                                          progress.
----------------------------------------------------------------------------------------------------------------

                       Attachment B.--Chronology

  --October 1996--Amtrak Management allocates funds for a year 2000 
        assessment and legacy system inventory.
  --January 1997--a full time director level position is appointed and 
        begins staffing the project team for the year 2000 remediation 
        project.
  --March 1997--contracted with Bedford Associates, an expert 
        reservation systems service provider, to complete the 
        assessment for ARROW, Amtrak's Reservation System. The 
        assessment and inventory was completed June 1997 and revealed 
        that out of 5,000 programs only 9 programs required 
        modifications.
  --May 1997--through the competitive bidding process Information 
        Management Resources, Inc. (IMR) is selected to complete the 
        year 2000 application assessment for the Amtrak business 
        systems. The project is completed ahead of schedule by 
        September 1997.
  --June 1997--existing mainframe computers are scheduled for an 
        upgrade to year 2000 ready computer hardware and operating 
        systems software, including related sub-systems, i.e. DB2, 
        CICS. Installation of computer hardware and systems software 
        has been completed. Testing of the operating systems software 
        with the application systems is in progress for a targeted 
        completion of October 1998.
  --September 1997--planning for the computer resources required for 
        changing and testing of the 5 million lines of application code 
        begin. The computer hardware and software is ready for 
        application remediation and testing by February 1998.
  --October 1997--Amtrak management approves two-year budget for the 
        year 2000 modifications (remediation) of the mainframe legacy 
        application systems. The project is proceeding on plan and 
        remains within budget.
  --October 1997--qualification of vendors through the competitive 
        bidding process for the year 2000 modifications of the 
        application code affected by the year 2000-date change begins.
  --October 1997--IMR is selected to make the Travel Agency Processing 
        System ready for the year 2000 date change. This application 
        was selected as a pilot project to solidify the year 2000 
        renovation processes. Renovation of 400,000 lines of code is 
        complete in May 1998. The Travel Agency Processing System is 
        ready for the year 2000-date change.
  --January 1998--Inspector General is briefed on the Year 2000 
        project.
  --February 1998--began soliciting information from various Amtrak 
        departments on their state of readiness for the year 2000 
        calendar. Action items for the affected systems have been 
        identified and progress is monitored.
  --March 1998--IMR and IBM are selected to convert the application 
        systems for the year 2000-date change. Both vendors start the 
        remediation, which is progressing according to the project 
        plans.
  --July 1998--Year 2000 Project Office centralizes coordination of all 
        Year 2000 project activities at Amtrak. Information Technology 
        (ITSC), Inspector General and Assistant Chief Engineer meet to 
        coordinate year 2000 activities to assure that safety and 
        operational concerns are remedied as required for the year 2000 
        calendar change, including embedded systems and links to 
        business partners.
  --July 1998--attended year 2000 meeting chaired by the FRA Deputy 
        Administrator. Panel discussion by representatives of class 1 
        railroads on year 2000 Awareness, Assessment, Renovation 
        Validation and Implementation.