[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]




 
 OVERSIGHT OF THE YEAR 2000 TECHNOLOGY PROBLEM: LESSONS TO BE LEARNED 
                    FROM STATE AND LOCAL EXPERIENCES

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

                                HEARINGS

                               before the

                 SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,
                      INFORMATION, AND TECHNOLOGY

                                 of the

                              COMMITTEE ON
                           GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             FIRST SESSION

                               __________

                         JULY 7, 8, AND 9, 1999

                               __________

                           Serial No. 106-47

                               __________

       Printed for the use of the Committee on Government Reform


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

                                 ______

                    U.S. GOVERNMENT PRINTING OFFICE
60-939 CC                   WASHINGTON : 1999




                     COMMITTEE ON GOVERNMENT REFORM

                     DAN BURTON, Indiana, Chairman
BENJAMIN A. GILMAN, New York         HENRY A. WAXMAN, California
CONSTANCE A. MORELLA, Maryland       TOM LANTOS, California
CHRISTOPHER SHAYS, Connecticut       ROBERT E. WISE, Jr., West Virginia
ILEANA ROS-LEHTINEN, Florida         MAJOR R. OWENS, New York
JOHN M. McHUGH, New York             EDOLPHUS TOWNS, New York
STEPHEN HORN, California             PAUL E. KANJORSKI, Pennsylvania
JOHN L. MICA, Florida                PATSY T. MINK, Hawaii
THOMAS M. DAVIS, Virginia            CAROLYN B. MALONEY, New York
DAVID M. McINTOSH, Indiana           ELEANOR HOLMES NORTON, Washington, 
MARK E. SOUDER, Indiana                  DC
JOE SCARBOROUGH, Florida             CHAKA FATTAH, Pennsylvania
STEVEN C. LaTOURETTE, Ohio           ELIJAH E. CUMMINGS, Maryland
MARSHALL ``MARK'' SANFORD, South     DENNIS J. KUCINICH, Ohio
    Carolina                         ROD R. BLAGOJEVICH, Illinois
BOB BARR, Georgia                    DANNY K. DAVIS, Illinois
DAN MILLER, Florida                  JOHN F. TIERNEY, Massachusetts
ASA HUTCHINSON, Arkansas             JIM TURNER, Texas
LEE TERRY, Nebraska                  THOMAS H. ALLEN, Maine
JUDY BIGGERT, Illinois               HAROLD E. FORD, Jr., Tennessee
GREG WALDEN, Oregon                  JANICE D. SCHAKOWSKY, Illinois
DOUG OSE, California                             ------
PAUL RYAN, Wisconsin                 BERNARD SANDERS, Vermont 
HELEN CHENOWETH, Idaho                   (Independent)
DAVID VITTER, Louisiana


                      Kevin Binger, Staff Director
                 Daniel R. Moll, Deputy Staff Director
           David A. Kass, Deputy Counsel and Parliamentarian
                      Carla J. Martin, Chief Clerk
                 Phil Schiliro, Minority Staff Director
                                 ------                                

   Subcommittee on Government Management, Information, and Technology

                   STEPHEN HORN, California, Chairman
JUDY BIGGERT, Illinois               JIM TURNER, Texas
THOMAS M. DAVIS, Virginia            PAUL E. KANJORSKI, Pennsylvania
GREG WALDEN, Oregon                  MAJOR R. OWENS, New York
DOUG OSE, California                 PATSY T. MINK, Hawaii
PAUL RYAN, Wisconsin                 CAROLYN B. MALONEY, New York

                               Ex Officio

DAN BURTON, Indiana                  HENRY A. WAXMAN, California
          J. Russell George, Staff Director and Chief Counsel
                   Matt Ryan, Senior Policy Director
                          Grant Newman, Clerk




                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    July 7, 1999.................................................     1
    July 8, 1999.................................................   125
    July 9, 1999.................................................   317
Statement of:
    Ho, Alan D., Y2K corporate manager, Commonwealth Edison; Dale 
      Jensen, director, Y2K customer communications, Ameritech; 
      Craig Whyte, director, regional community relations, NICOR 
      Gas; Philip Pagano, executive director, METRA; Gary Mielak, 
      vice president and chief technical officer, Edward Hospital   210
    Kettlewell, Larry, information resource manager for Federal 
      and State affairs, Kansas Department of Administration.....    52
    Lobeck, Al, news director, WIBW Radio, Kansas Broadcasters...   110
    McKenzie, Shawn, Southwestern Bell...........................    80
    Moser, Joy, Adjutant General's Department, Public Affairs 
      Office.....................................................    64
    Park, Bud, year 2000 project office manager, Western 
      Resources..................................................    75
    Roosen, Jim, Y2K program manager, Detroit Edison; Raymond 
      Lozano, manager of Statewide community relations, Michigan 
      Consolidated Gas, accompanied by Tom Motsinger, director, 
      information and technology management; James Johnson, vice 
      president of computing and information technology, Wayne 
      State University; Don Potter, Southeast Michigan Health and 
      Hospital Council; and Dan McDougall, director, southeast 
      Michigan information center, United Way....................   448
    Rubeck, Anne, director, communication technology, Kansas 
      Hospital Association.......................................    98
    Splichal, Edwin, chairman, Y2K task force Kansas Bankers 
      Association................................................   102
    Sullivan, Morey, information resource manager, Kansas 
      Department of Administration...............................    48
    Surdu, George, director, technical services organization, 
      Ford Motor Co.; Don Costantino, director, corporate year 
      2000 program, General Motors Corp.; Roger Buck, 
      DaimlerChrysler Corp.; and John Parker, vice president, 
      information services, Northwest Airlines, Inc..............   413
    Swift, Clint, director of bank technology, Bank 
      Administration Institute; Delores Croft, seniors policy 
      advisor, Illinois Attorney General's Office; Leonard 
      Harris, president, Chatham Food Center; Ron Clark, 
      treasurer, Illinois Ayers Oil Co.; Monty Johnson, 
      communications coordinator, CITGO Gas; Mike Skarr, 
      president and CEO, Naperville area Chamber of Commerce; and 
      Ed Paulson, author of Year 2000 Crisis Survival in 10 
      Minutes, professional engineer, financial expert...........   258
    White, Jeff, director, budget research and information 
      technology, city of Topeka.................................    58
    Willemssen, Joel, Director, Civil Agencies Information 
      Systems, General Accounting Office.........................     9
    Willemssen, Joel C., Director, Civil Agencies Information 
      Systems, General Accounting Office; George Boersma, 
      director, management and budget, State of Michigan; Captain 
      Ed Buikema, deputy State director of emergency management, 
      Michigan State Police; Arun Gulati, deputy director, 
      Department of Information Processing, Wayne County, MI; and 
      Kathleen Leavey, deputy director, Detroit Water and 
      Sewerage Department........................................   324
    Willemssen, Joel C., Director, Civil Agencies Information 
      Systems, General Accounting Office; Mary Reynolds, chief 
      technology officer, Illinois Governor's Office; Don 
      Carlsen, director of information systems, Department for 
      the city of Naperville; Tom Mefferd, coordinator, DuPage 
      County Office of Emergency Management; and Robert Martin, 
      manager of water operations, DuPage Water Commission.......   135
Letters, statements, etc., submitted for the record by:
    Biggert, Hon. Judy, a Representative in Congress from the 
      State of Illinois, prepared statement of...................   133
    Boersma, George, director, management and budget, State of 
      Michigan, prepared statement of............................   366
    Buck, Roger, DaimlerChrysler Corp., prepared statement of....   429
    Buikema, Captain Ed, deputy State director of emergency 
      management, Michigan State Police, prepared statement of...   373
    Carlsen, Don, director of information systems, Department for 
      the city of Naperville, prepared statement of..............   181
    Clark, Ron, treasurer, Illinois Ayers Oil Co., prepared 
      statement of...............................................   277
    Costantino, Don, director, corporate year 2000 program, 
      General Motors Corp., prepared statement of................   421
    Gulati, Arun, deputy director, Department of Information 
      Processing, Wayne County, MI, prepared statement of........   379
    Harris, Leonard, president, Chatham Food Center, prepared 
      statement of...............................................   266
    Ho, Alan D., Y2K corporate manager, Commonwealth Edison, 
      prepared statement of......................................   212
    Horn, Hon. Stephen, a Representative in Congress from the 
      State of California, prepared statements of.......... 6, 129, 321
    Jensen, Dale, director, Y2K customer communications, 
      Ameritech, prepared statement of...........................   233
    Johnson, James, vice president of computing and information 
      technology, Wayne State University:
        Letter dated August 9, 1999..............................   506
        Prepared statement of....................................   473
    Johnson, Monty, communications coordinator, CITGO Gas, 
      prepared statement of......................................   287
    Kettlewell, Larry, information resource manager for Federal 
      and State affairs, Kansas Department of Administration, 
      prepared statement of......................................    54
    Leavey, Kathleen, deputy director, Detroit Water and Sewerage 
      Department, prepared statement of..........................   386
    Lobeck, Al, news director, WIBW Radio, Kansas Broadcaster, 
      prepared statement of......................................   112
    Lozano, Raymond, manager of Statewide community relations, 
      Michigan Consolidated Gas, prepared statement of...........   464
    Martin, Robert, manager of water operations, DuPage Water 
      Commission, prepared statement of..........................   198
    McDougall, Dan, director, southeast Michigan information 
      center, United Way, prepared statement of..................   498
    McKenzie, Shawn, Southwestern Bell, prepared statement of....    82
    Mefferd, Tom, coordinator, DuPage County Office of Emergency 
      Management, prepared statement of..........................   186
    Mielak, Gary, vice president and chief technical officer, 
      Edward Hospital, prepared statement of.....................   241
    Moser, Joy, Adjutant General's Department, Public Affairs 
      Office, prepared statement of..............................    66
    Pagano, Philip, executive director, METRA, prepared statement 
      of.........................................................   249
    Park, Bud, year 2000 project office manager, Western 
      Resources, prepared statement of...........................    77
    Parker, John, vice president, information services, Northwest 
      Airlines, Inc., prepared statement of......................   434
    Paulson, Ed, author of Year 2000 Crisis Survival in 10 
      Minutes, professional engineer, financial expert, prepared 
      statement of...............................................   303
    Potter, Don, Southeast Michigan Health and Hospital Council, 
      prepared statement of......................................   482
    Reynolds, Mary, chief technology officer, Illinois Governor's 
      Office, prepared statement of..............................   177
    Roosen, Jim, Y2K program manager, Detroit Edison, prepared 
      statement of...............................................   452
    Rubeck, Anne, director, communication technology, Kansas 
      Hospital Association, prepared statement of................   100
    Ryan, Jim, Attorney General, Illinois, prepared statement of.   273
    Skarr, Mike, president and CEO, Naperville area Chamber of 
      Commerce, information concerning local resources...........   298
    Splichal, Edwin, chairman, Y2K task force Kansas Bankers 
      Association, prepared statement of.........................   104
    Sullivan, Morey, information resource manager, Kansas 
      Department of Administration, prepared statement of........    50
    Surdu, George, director, technical services organization, 
      Ford Motor Co., prepared statement of......................   416
    Swift, Clint, director of bank technology, Bank 
      Administration Institute, prepared statement of............   261
    White, Jeff, director, budget research and information 
      technology, city of Topeka, prepared statement of..........    61
    Willemssen, Joel, Director, Civil Agencies Information 
      Systems, General Accounting Office, prepared stateme 11, 137, 326


 OVERSIGHT OF THE YEAR 2000 TECHNOLOGY PROBLEM: LESSONS TO BE LEARNED 
                    FROM STATE AND LOCAL EXPERIENCES

                              ----------                              


                        WEDNESDAY, JULY 7, 1999

                  House of Representatives,
Subcommittee on Government Management, Information, 
                                    and Technology,
                            Committee on Government Reform,
                                                        Topeka, KS.
    The subcommittee met, pursuant to notice, at 1 p.m., at the 
Kansas State Capitol, 300 SW 10th Street, Old Supreme Court 
Room, Topeka, KS, Hon. Jim Ryun presiding.
    Present: Representatives Horn and Ryun.
    Staff present: Subcommittee on Government Management, 
Information, and Technology: J. Russell George, staff director 
and chief counsel; Matt Ryan, senior policy director; and Grant 
Newman, clerk. Representative Ryun's Office: Michele Butler, 
chief of staff; Mark Kelly, legislative director; and Jay 
Rinehart, press secretary.
    Mr. Ryun. Thank you all very much for coming today. I think 
your presence indicates that there is a great deal of interest 
in the subject. Today will be a time when we can discuss and 
determine some of those potential problems, as well as some of 
the solutions that have been arrived at.
    Let me do a couple of business things. First of all, and 
this is not a business thing, I want to introduce some people 
who are here today. I want to begin with my wife Anne who is in 
the corner. Say hello to everyone.
    [Applause.]
    Mr. Ryan. I would like to introduce you to my staff that 
are here today as well, Michele Butler who has worked 
tirelessly on this. Michele is over here, she's my chief of 
staff in Kansas. We also have Mark Kelly up in front, Mark 
Kelly is my legislative director. Jay Rineheart is here, he is 
working with the press, he is my press person, they are all 
here to help you. If there are any questions, feel free to talk 
with them.
    I also want to introduce to you a good friend of mine and 
colleague who has been very instrumental in helping bring 
greater identification to the Y2K issue. In Washington we often 
turn to Chairman Horn and say, ``How are we doing?'' And so 
today you will have that opportunity. He is chairman of the 
House Subcommittee on Government Management, Information, and 
Technology. He is also the chairman of the House of 
Representatives Task Force for the Year 2000. He has designated 
the year 2000 problem as his top priority, as I think it should 
be. He is an expert in Congress on this problem and in fact 
this morning, if some of you had the privilege of listening to 
WIBW with Jim Case, we went over some of the issues and some of 
what was happening. He will be here today to answer some of 
your questions, along with the panelists. And as we begin, I 
would like to turn to Chairman Horn and have you welcome him as 
well. Thank you very much.
    [Applause.]
    Mr. Horn. Thank you very much, Jim. Jim does a terrific job 
in Washington, he sits on three committees, which is one more 
than I sit on, so he has got a lot of things going for Kansas. 
And this is an international problem as well as a national 
problem. We are delighted to be in Topeka, it's a wonderful 
city. I have been here about five times before because I have 
some good friends living here starting with my junior year in 
college.
    This hearing of the House Subcommittee on Government 
Management, Information, and Technology is not only going to be 
in Kansas on this particular trip, we are going to Illinois 
tomorrow and Detroit, MI the next day. We did this last year 
and went to Louisiana and Texas and New York, you name it. We 
haven't missed too many cities in some kind of a hearing. We 
are an investigative committee and under the rules of the House 
and the Committee on Governmental Affairs in the Senate, as 
they call it. We do swear in all witnesses. So Mr. Ryun who is 
acting chair will swear in each panel as it comes that they 
will tell the whole truth and nothing but the truth to this 
particular investigation.
    The year 2000 computer problem affects just about every 
aspect of Federal, State, and local government operations. 
Furthermore, it affects private sector organizations and could 
impact the lives of most of us. From Social Security to 
utilities to local emergency management, these are all 
important issues. The so-called year 2000 computer bug or the 
millennium bug, whatever you want to call it, has certainly 
been a large management and technological challenge, but it is 
mostly a management challenge. There is no silver bullet to 
solve it. Everybody knew that in the 1960's when they said, 
wait a minute, we have got this huge computer that would fill 
this whole chamber; your personal computer today has more 
capacity than those computers in a chamber this large. They 
said, hey, why don't we just put in '67 instead of 1967, and we 
went to the two digit year to save space in the memory. Of 
course they knew that when the year 2000 came, it would be 00 
and the computer wouldn't know if it was 1900 or 2000. And many 
started working on this years ago, the Federal Government has 
been lagging except for the Social Security Administration 
which started on its own with no Presidential prodding, be it 
Republican or Democrat, and they started in 1989 and they are 
100 percent compliant. And the only other one that we have 
looked at recently on programming areas is the weather service. 
And I know that must be good news to Kansas with your 
tremendous agricultural resources and farmers getting up at 4 
a.m., and 5 a.m., wanting to know what the weather is going to 
be. So they are in good shape. And then we have the various 
report cards. We have noted that the critical mission systems 
in particular agencies are coming along, but it doesn't mean 
that some of the problematic areas of that agency have all of 
the pieces together. And in our future reporting to the Nation 
on this, both the Senate committee and our own committee will 
stress that point, it doesn't do much good to have a lot of the 
agency's computing operations corrected, but it's a program 
that deals with the people and has to put out checks, has to do 
analysis in order to do something else, and so we are going to 
look at that over the next few months and we will be in various 
parts of the country to do that.
    Back in April 1996 this subcommittee was the first to bring 
the question up in Congress. The Senate finally got around to 
it in early 1998 and we urged the President to do a number of 
things, one is to get a person in charge, which really wasn't 
happening. And No. 2 is to use the bully pulpit, as Theodore 
Roosevelt said, and talk to the people about this so that they 
don't panic, because we know from every witness that we have 
ever had that the longer delay occurs, the more costly labor 
and human resources would be to get the problem solved.
    Current estimates show that the Federal Government will 
spend nearly $9 billion by the end of this fiscal year to 
remedy the executive branch computers. The legislative branch 
is on its own and so is the Supreme Court. But that's a drop in 
the bucket compared to the extensive executive branch. And we 
will probably get to $10 billion. But our estimates early on in 
1996 was that it would be $30 billion, so in that sense, if 
that sticks, we are doing one-third of what all of the experts 
said, and we will do it right by January 1, 2000.
    Recently, the President's Office of Management and Budget 
identified 43 essential Federal programs, I mentioned Social 
Security and I mentioned the weather, well there are two more 
we are looking at very closely, and that's Medicare which 
affects at least 43 million people, and the Air Traffic Control 
system. I told the Administrator of the FAA that I will be 
taking my every other week flight from Dulles International 
Airport to Los Angeles International Airport on January 1st 
just to see what happens. She will go from Washington to La 
Guardia, which is 45 minutes to my 5 hours. And I told her not 
to mess around with the controllers before we both board the 
plane. So with those 43 programs, 10 of which are federally 
funded State run programs, and we will hear a lot of good 
testimony today on that, Medicaid, food stamps, unemployment 
insurance, child support enforcement, several of these State 
run programs are not scheduled to be ready for the year 2000 
until December, leaving little, if any, time to fix unforeseen 
problems.
    The data exchanges, which is a major thing we are looking 
at, and the interdependencies between computers in the field 
and computers in the Federal Government and State government 
and your local government, they exist at all levels and 
throughout the private sector. And a single failure in the 
chain of the information could have severe repercussions if 
they don't get all of those interrelations straightened out. 
For example, let me briefly illustrate how the U.S.' Social 
Security program uses computers. The Social Security 
Administration maintains data containing pertinent Social 
Security payment information for eligible citizens. When the 
payments are made, Social Security sends the payment data every 
month to the Department of the Treasury's Financial Management 
Service. This service then cuts the Federal check which is then 
electronically deposited directly into the person's bank 
account at a local financial institution. Three organizations 
move and manipulate data to make these payments happen; each 
uses its own network of computers. If a payment is mailed to an 
individual's home, the U.S. Postal Service then plays a key 
role in the delivery of that check.
    The bottom line is that if any one of these entities fails, 
from the Federal Government to the local bank or the Postal 
Service, a deserving individual will not receive a payment in 
time. And there are 435 Members from the States, 5 Members from 
the territories and 100 U.S. Senators who all know that they 
would have lines outside their district office. And 
Representative Ryun is right across the street in the 
Mercantile building, very accessible, and we don't want to see 
that happen. So we all have a vested interest in making sure it 
doesn't happen. But it takes thousands of people to get this 
job done.
    If you multiply the clients, the millions of people who 
receive those benefits, you know the magnitude of it, one check 
a month and 43 million people are affected by that. The other 
is Social Security, 50 million people, they also have 
disability checks that go out.
    But for computers to work we need power, energy. One of the 
most essential questions we are asking in the year 2000 
challenge is, ``Will the lights stay on?'' We will have 
representatives from the power industry talking to us about 
that in this area. Without electricity our modern society would 
be relegated back to the proverbial ``Stone Age.''
    From a personal standpoint I realize that when confronted 
with a personal emergency, I can call ``911'' for assistance 
and feel confident that the phone will be answered promptly and 
that a competent authority will respond rapidly. Year 2000 
computer problems present other potentially serious threats at 
local levels, from the potential interruption of a citizen's 
call for police assistance to delays in a State's ability to 
request emergency or disaster assistance from the Federal 
Government.
    Congressman Ryun is unquestionably the greatest American 
miler of all time. He raced as fast as he could toward a 
measurable and foreseeable goal--1 mile and a finish line. Our 
Nation's race to solve the year 2000 problem requires the same 
preparation, determination, and stamina as that of Congressman 
Ryun. And this is what we have tried to note to the 
administration, it doesn't matter whether they are Democrats or 
Republicans, frankly the President has not had the tools until 
this last year to really deal with this matter effectively.
    And we know, as I said earlier, there are 177 days to go to 
January 1st and the clock is ticking and can't be moved and the 
testimony we receive today here in Topeka will help our 
understanding of the full exent of the year 2000 computer 
problem.
    I would like to mention a few procedural things in this 
hearing before I turn it over to Congressman Ryun to preside. 
We are going to be passing cards out, for those of you who have 
questions, please write out the question. That will enable us 
to get more questions that we can ask either Mr. Ryun or 
myself. So some of our staff will be going along on both sides, 
just put your hand up, they will give you a card and then if 
there are five cards with the same question, the staff will get 
it down to one question and that way we can meet most of your 
needs. And then we have to run for a plane to Chicago. Mr. Ryun 
stays here with his constituents.
    The testimony we think will be very welcome and helpful 
here. So that's the cards. And then after Mr. Ryun swears in 
the witnesses, or if he wants me to swear them in, the 
witnesses who are already panel one before us, and when he 
introduces them, the transcript they have sent us, the 
presentation is excellent that each one of them has written, 
that immediately goes in the hearing record when their name is 
introduced. And then we will have them speak from the heart for 
5 minutes and boil that down in oral testimony. We have all 
read your presentations, that's what's going in the hearing 
record. But in order for everybody to get into a dialog, 
especially panel one, with both of us, that's the best way to 
do it we've found from a lot of experience in that.
    We then will go into recess to our next hearing in Illinois 
from here. So I'm delighted now to turn it over to Mr. Ryun to 
preside and chair the meeting and we will follow his direction 
from now on out.
    [The prepared statement of Hon. Stephen Horn follows:]
    [GRAPHIC] [TIFF OMITTED] T0939.001
    
    [GRAPHIC] [TIFF OMITTED] T0939.002
    
    Mr. Ryun. Mr. Chairman, thank you very much. Again, I want 
to welcome everyone. I want to say thank you to the panelists 
for coming. I don't think any of us fully know what will happen 
at the end of the year and the purpose in today's forum is to 
provide information to all of you that are listening.
    What I have done is organized two panels. The first panel 
is going to give the government's perspective on the status and 
compliance of the government with the Y2K challenge. Let me 
introduce who's on the panel. First of all, Joel Willemssen, 
who is the Director of Civil Agencies Information Systems at 
the General Accounting Office. It's the Federal Government 
office that oversees the effectiveness of government programs 
and its agencies. The GAO's chief source of concern for Y2K 
problems is the readiness of State and local governments. Joel 
is the GAO's Director for Civil Agencies Information Systems, 
he has testified before Congress many times about the status of 
the Y2K preparations. I know you look forward to hearing from 
him and I look forward to hearing your testimony Joel.
    Next we have Morey Sullivan, information resource manager 
for the Kansas Department of Administration. Governor Graves 
has been active in pursuing Y2K compliance since 1996. The 
department of Administration Division of Information Systems 
and Communications is the designated organization for 
coordinating and reporting on the State's year 2000 efforts. 
Mr. Sullivan is the information manager for the State, he will 
be educating us on the State's activity and the level of 
preparedness for this next year.
    Seated next to him in the middle is Larry Kettlewell, the 
year 2000 Federal and local interface manager of the Kansas 
Department of Administration. Larry advises the State's chief 
information technology officer on the status of Federal and 
State interfaces. And he also serves as project manager for the 
State and local interface testing program. He will be 
discussing how the State of Kansas deals with the Federal 
Government on this issue.
    Next to him is Jeff White. Jeff is director of budget 
research and information technology for the city of Topeka. The 
city started addressing this particular issue back in January 
1998, focusing primarily on water, sewers, and public safety 
issues. Jeff has been working hard on the city's compliance 
since the beginning of the year and we will look forward to his 
testimony as well.
    The last panelist is Joy Moser. She is public affairs 
officer for the State Adjutant General's Office. The Kansas 
Division of Emergency Management has provided timely 
information to help people with managing Y2K. The Adjutant 
General has sent out several different mailings, one of which 
is the Year 2000 Survival Test, another is the Executive 
Survival Guide for the Year 2000 and the Year 2000 Workbook 
Book. She will be our final panelist and we look forward to 
your testimony and remarks.
    Mr. Chairman, would you like to swear everyone in?
    Mr. Horn. Certainly. Would you stand and raise your right 
hands, please.
    [Witnesses sworn.]
    Mr. Horn. The clerk will note that all five witnesses have 
affirmed.
    Mr. Ryun. We will begin with the first panelist.

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

    Mr. Willemssen. Thank you, Congressman Ryun, Mr. Chairman, 
thank you for inviting the GAO to testify today. As requested, 
I will briefly summarize our statement on the Y2K readiness of 
Federal Government, State, and local governments and key 
economic sectors.
    Regarding the Federal Government, the most recent reports 
indicate continued progress in fixing, testing, and 
implementing mission-critical systems. Nevertheless, numerous 
critical systems must still be made compliant and must undergo 
independent verification and validation. Our own reviews of 
selected agencies have shown an uneven progress and remaining 
risk in addressing Y2K. And that points again to the 
criticality of business continuity and contingency planning.
    As we look beyond individual systems and individual 
agencies, the Federal Government's future actions will also 
need to be increasingly focused on making sure that its high 
priority programs are compliant. In line with this, OMB has 
identified 43 high impact programs such as Medicare and Social 
Security. As you know, Mr. Chairman, we are currently reviewing 
those programs for you. At this point it's very clear that much 
additional work is needed on almost all of these programs to 
make sure that they are ready in time by the turn of the 
century.
    Available information on the Y2K readiness of State and 
local governments also indicates that additional work remains. 
For example, according to recent information on States reported 
to the National Association of State Information Resource 
Executives about 18 States have completed implementing less 
than 75 percent of their mission-critical systems. State audit 
organizations have also identified significant Y2K concerns in 
areas such as testing, embedded systems and contingency 
planning.
    Recent reports have also highlighted Y2K issues at the 
local government level. For example, a March 1999 National 
League of Cities poll of over 400 representatives found that 
almost 70 stated that they would finish 75 percent or less of 
their systems by January 1, 2000.
    Another area of risk is represented by the Federal Human 
Services programs which are administered by the States such as 
Medicaid, food stamps, unemployment insurance, and child 
support enforcement. Of the 43 high impact programs identified 
by OMB, 10 of those are the State administered programs.
    OMB reported data on the systems supporting these programs 
show that numerous States are not planning to be ready until 
close to the end of the year. Specifically, a large number of 
State systems are not due to be compliant until the last 
quarter of 1999. This is based on data that has not yet been 
independently verified.
    If we look at the risks beyond those faced by the Federal 
Government and the State and local governments, Y2K also poses 
a serious challenge to the public infrastructure, key economic 
structures and to other countries. We have made a number of 
recommendations to John Koskinen who is the chairman of the 
President's Y2K Conversion Council. And the Council has made 
strides in obtaining needed readiness information in these 
areas. Nevertheless, there is a good deal of variance among 
these critical sectors, and, accordingly, there is going to be 
over the next 6 months a need for continuing emphasis to make 
sure that the information on the readiness of these sectors is 
provided to the citizens of the country so that we can have a 
better understanding of where our risks are and the public can 
therefore be best positioned with that information.
    That concludes the summary of my statement. After the panel 
is through, I will be pleased to address any questions you may 
have.
    [The prepared statement of Mr. Willemssen follows:]
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  STATEMENT OF MOREY SULLIVAN, INFORMATION RESOURCE MANAGER, 
              KANSAS DEPARTMENT OF ADMINISTRATION

    Mr. Sullivan. Thank you Congressman Ryun and Congressman 
Horn and thank you for the invitation to show and share how we 
in State government are progressing toward our year 2000 
efforts.
    The Department of Administration first started serious year 
2000 discussion in 1995. Knowing that a great deal of work 
would have to be done, we out-sourced some of that work, 
proposals were made by several nationally respected information 
technology firms. The successful bidder in our case was 
Computer Technology Associates or CTA from Bethesda, MD. A 
contract was put in place in December 1996. Since that time 
hundreds of applications have been assessed, they have been 
repaired and they have been tested. To date over 16 million 
lines of mainframe COBOL code have been remediated. We have 
identified 662 mission-critical applications that exist across 
Kansas State government. These are software applications that 
are critical to the running of the day to day operations of 
State government.
    Knowing that State government and local units of government 
have common goals, Don Heiman, chief information technology 
officer, our boss, of the executive branch instituted a project 
called Outreach to the New Millennium in the fall of 1998. This 
program took nationally known speakers and IT professionals on 
the road across Kansas to share with local units of government 
successful strategies for dealing with year 2000 computer 
problems. Materials covering the remediation disciplines were 
printed and shared with each person who attended the Outreach 
summit. And I have copies of all these books that we have 
printed and will be glad to share them with you. Because of 
this program we feel that State government and local units are 
now better prepared to deal with Y2K concerns.
    Currently the State government is approximately 95 percent 
complete toward our goal of full compliance. To date the State 
government has expended over 171,000 staff hours, we have got 
about 17,000 hours left. Although we are close to being 
finished, there are still lots of things to do. We are in the 
middle of Y2K auditing at the present time. We are in the 
middle of contingency planning in case some of those 
applications we have talked about don't respond the way we want 
it to when we roll over on December 31st.
    Year 2000 has taught us in the IT community many things. 
Among them is we are more interdependent now upon one another 
than we have ever been. Just because your computer systems are 
year 2000 compliant, you should not feel safe, because we have 
linked our computers in so many ways, we must also be 
interested in our neighbors' Y2K compliance. State and Federal 
Government are much the same way. There are myriad links that 
exist between the two entities. Links that manifest in Kansas 
receiving funding from the Federal Government for literally 
dozens of programs. This funding then finds its way to 
thousands of Kansans across the State. Not an unimportant 
issue. Our Y2K efforts have included
tracking the Federal interfaces for just such compliancy. The 
gentleman who has guided us in this effort is Larry Kettlewell, 
seated to my left, and Larry will now report on Federal 
interfaces and share with you some other 2000 issues.
    [The prepared statement of Mr. Sullivan follows:]
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STATEMENT OF LARRY KETTLEWELL, INFORMATION RESOURCE MANAGER FOR 
 FEDERAL AND STATE AFFAIRS, KANSAS DEPARTMENT OF ADMINISTRATION

    Mr. Kettlewell. Thank you, Morey. Good afternoon, Mr. 
Chairman, Congressman Horn, we are glad to have you back in 
Kansas.
    I'm very pleased to be part of the panel here today to give 
a status report on the efforts by the State of Kansas with 
respect to the year 2000 problem as it relates to our Federal 
and local interface.
    A word for a moment about the Division of Information 
Systems and Communications [DISC], as it is known around here. 
Just so that people inside the Beltway don't think that we are 
a small time operation, we have a $167 million budget. We are 
on the level of about a Fortune 300 information technology 
organization. We have 1,500 workers and manage 18,000 
intelligent devices throughout the State. With that, Morey 
touched a little bit upon not what we derive over all from this 
information technology architecture. And very important to that 
is what we get from the Federal Government. The State of Kansas 
right now receives over $1.8 billion in Federal funds, 
principally through automated processes known as interfaces or 
data exchange. Kansas has 138 of these interfaces disbursed 
amongst 14 Federal agencies. The year 2000 readiness of these 
interfaces obviously is very important in moving that $1.8 
billion back to the State.
    I'm very happy to report that as of this morning, and I 
would like to make a correction for the record, from the 
State's end we are now 93.8 percent complete in terms of our 
compliance with Federal interface. As of early May, Kansas was 
second nationally in its overall Federal interface readiness. 
We no longer have available to us statistics on our status vis-
a-vis other States. That said, I believe this figure gives our 
citizens some measure of how well we are doing.
    Despite what some in Washington are saying about the Fed 
being 92 to 94 percent compliant, I would like to point out 
that that is an overall sort of figure. The Federal agencies 
that we deal with here in the State and their relevant 
interfaces right now have only about 72 percent compliance 
rate. This was, again, as of this morning and as reported on 
the GSA Federal Website.
    This brings me to raise a couple of issues in keeping with 
Congressman Ryun's call for ``straight talk.'' That 72 percent 
figure mentioned may be even lower. The figures that we have 
received from the Federal end have always been without 
reporting on critical programs from the Health Care Financing 
Administration [HCFA]. Mr. Willemssen touched briefly on 
Medicare and Medicaid problems, this is exactly what we are 
talking about here. This continues to be a very serious concern 
to us.
    On June 2nd we were told by the President's Year 2000 
Conversion commission that HCFA is ``ready to go.'' Further, 
there is the thought about certain end-to-end testing on the 
top 10 programs from the Office of Management and Budget, and 
that they should commence with this end-to-end testing 
forthwith. Despite the assertions and assurances of HCFA's 
readiness in the Medicare and Medicaid programs, we remain 
skeptical.
    Part of that skepticism is in part related to testimony by 
one of our witnesses today, Joel Willemssen, from the General 
Accounting Office. In testimony before Congressman Horn's 
subcommittee on April 27th Mr. Willemssen presented a statement 
broadly aimed at the ``Readiness of Medicare and the Health 
Care Sector.'' A great deal of that testimony, by the way, was 
relating to HCFA and its readiness. While that statement was 
made in April, it is clear that the current environment 
surrounding HCFA's mission-critical systems does not allow it 
to be ``ready to go'' now to test end-to-end. I'm sure, Mr. 
Chairmen, both of you have seen this report, it is very, very 
sobering.
    The second aspect of this is the Payment Management System. 
Congressman Horn, you have already alluded to the fact in 
earlier testimony in your committee, this system moves $165 
billion worth of money back and forth between the Federal 
Government and the States, yet it is not year 2000 ready. We 
are ready out here to move money. We are confident that the 
Department of Revenue, Office of the Treasury, Division of 
Accounts and Reports, they have all gone through rigorous 
testing, we are ready to receive that money from this end. The 
concern, however, is that we are going to be treading water 
here outside the beltway and there is not going to be much left 
to give us.
    Finally, let me just note here a couple of real reasons why 
we are here today. First, absent the work done by you, 
Congressman Horn, to bring this issue to the public attention, 
and even to the attention of some managers in Washington, we 
probably wouldn't be here today discussing this issue.
    Second, as I understand from my years in Washington, there 
is nothing like member-to-member contact to get things done in 
Washington. Congressman Ryun has been very positive in 
continuing to reach out and inform people on this issue as you 
have done here today. We thank you both.
    [The prepared statement of Mr. Kettlewell follows:]
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    STATEMENT OF JEFF WHITE, DIRECTOR, BUDGET RESEARCH AND 
             INFORMATION TECHNOLOGY, CITY OF TOPEKA

    Mr. White. I feel like small potatoes here today when Mr. 
Kettlewell talked about the size of his organization. Let me 
give you a little bit of scale, as well, about the city of 
Topeka. We have 1,350 employees, $135 million total annual 
budget for all city operations. We serve about 25 sites around 
the city in different city facilities. Again, I'm thankful 
today that I'm me and not Mr. Kettlewell as we look at the 
scope of this Y2K issue.
    I'm going to give you today primarily the information 
technology perspective because that's my primary scope. But 
because information technology touches every corner of our 
organization, I hope to give you a bigger picture view as well.
    We did begin in earnest with our Y2K preparedness effort in 
January 1998. Everybody is working hard on this and it's 
touched every facet of the organization. We have a full-time 
information technology staff of about 14 people, so we have 
relied on really a team approach to ensure Y2K preparedness and 
have many Y2K experts in every one of our operating 
departments.
    We found ourselves in the situation of taking primarily a 
replacement strategy. We coupled our Y2K preparedness with a 
new information infrastructure. It certainly has been a cause 
of concern for our governing body in terms of the cost, but we 
have been able to achieve some improvements in our information 
infrastructure as we have addressed Y2K.
    I'm really glad that Morey Sullivan is here today so I can 
thank him again for the efforts that the State of Kansas has 
made on their outreach efforts to local governments in terms of 
Y2K preparedness. The information they have provided has been 
an excellent road map for us to follow and we have used that 
every day as we move toward Y2K preparedness. So thanks again, 
Morey.
    We are using the State Model for Compliance which involves 
assessment, application, mission-critical applications, 
remediating those that have problems, testing, and auditing our 
fixes and, of course, providing for business continuity through 
contingency planning. Also looking at tiers of mission-critical 
applications, those that are absolutely critical we can't do 
without and we can't work around them, if they don't work, we 
are dead in the water. Those that have to work without fail, 
but if they do fail, we can provide or work around. And those 
that if they don't work, we can live without it, there are work 
arounds available. So if the automatic coffee makers don't 
happen to come on at the right time, that's not a big deal for 
us.
    As of today, assessment is complete, although we are 
continuing to keep our eyes open, as organizations change and 
we go through time, we have to be continually cognizant of 
additions that may create new Y2K problems that we have not 
taken a look at.
    Our remediation efforts are almost complete as well. We 
have a few software replacements that are scheduled in the late 
summer to early fall, the majority of those are not mission-
critical or at least mission-critical in the sense that we 
don't have work arounds.
    I feel very positive that we have very few mission-critical 
applications that are home growns. Mr. Sullivan talked about 
all of the lines of code they had to rewrite, we simply don't 
find ourselves in that situation, we do not have a lot of in-
house code redevelopment that we have had to do. That's a 
double-edged sword. We don't have to go through the effort of 
171,000 staff hours to recode those lines. The other is the 
fact that we rely very heavily on statements by our vendors 
that when they say they are Y2K compliant, that they really 
are. Again, we are using the testing protocol and such provided 
by the State, as well as some interesting things like a test 
lab where we can take our AS/400 or our legacy system, payroll 
and finance, and actually, rather than taking the city on line 
go to a testing environment, run those, and make sure they run 
correctly.
    Testing has commenced and will continue through the Y2K 
turnover. And contingency planning has also commenced and will 
continue through Y2K. In our mind we look at Y2K in a lot of 
cases the same as any other disaster, man-made or naturally 
that might occur, and we have contingency plans already in 
place. Ice storms, tornadoes, whatever might hit, and a lot of 
those same rules apply as we look at Y2K. So I think we have 
got a head start as to contingency planning effort.
    What's left? Continuing to work with the vendors, as I 
mentioned, is critical for us. Clean management, making sure 
that the fixes we make stay fixed. And that's an issue with the 
State as well. Public information is something I don't think we 
have done a terribly good job at and we need to do more as we 
get closer to the century turnover. And then interdependency on 
other organizations, those links are also in place. We have to 
make sure our neighbors are Y2K compliant as well.
    People are mostly interested in the critical systems that 
we talked about; water, wastewater, and public safety. Water, 
we are ready to go. Contingency plans are mostly in place. We 
are going to deal with full stocks of chemicals at the 
turnover. And, again, we have contingency planning in place 
already for floods or power outages or those type of things. 
Most of the operations of the water plant are 
electromechanical. That means we can operate them manually. And 
we have folks trained that know how to operate those manually, 
which is important as well.
    Wastewater is almost the same deal. Again, a contingency 
plan is in place. Public safety, although the county here runs 
our 911 operation, we are obviously a big partner with them and 
they are ready to go with 911. Southwestern Bell has been an 
excellent partner with us to make sure that that's the case.
    Our biggest concern is lack of power, that really drives 
everything. We have worked closely with Western Resources to 
make sure that we will have power. And we do have standby 
emergency generation capabilities if we need them.
    A couple of other concerns are civil unrest. What happens 
if people get a little weird in this Y2K turnover. The police 
and fire folks are taking a look at that and making sure we are 
staffed up and ready to go. And hoarding behavior is a concern 
as well. If everybody, for instance, goes to the bank and 
withdraws $5,000 in cash on New Year's Eve, the criminals are 
going to love it. And so we want to be sure that the public 
information is out there to make sure that people have taken 
appropriate precautions. It's winter,
it's January, the power may go out due to an ice storm, folks 
ought to have a few days supply of food on hand and they ought 
to have blankets and warm bedding and just take the general 
precautions for any kind of emergency.
    [The prepared statement of Mr. White follows:]
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 STATEMENT OF JOY MOSER, ADJUTANT GENERAL'S DEPARTMENT, PUBLIC 
                         AFFAIRS OFFICE

    Ms. Moser. Thank you, Congressman. The Adjutant General's 
Department is the emergency response agency in Kansas and it 
has been dealing with disasters for many years. The difference 
that we have here is that Y2K we know when it is expected. With 
a tornado or snowstorm or flood, there is little to no warning. 
With Y2K, December 31st is certainly a crucial time. And, 
therefore, we are working to prepare ourselves and to provide 
preparation for the public.
    Preparedness is what we do in the Adjutant General's 
Department. It has the Division of Emergency Management whose 
mission is to prepare for and coordinate the response and 
recovery activities in the event of a disaster. It also has the 
Kansas National Guard whose State mission is to provide 
emergency response when called upon to assist the citizenry. So 
both the groups in our department are working hard to be ready 
for a response in case it's needed on December 31st or in the 
days that are following.
    There are three areas that we are addressing. First of all, 
what we are doing prior to December 31st; the plans that we 
have in place for December 31st and January 1st; and then what 
we think the public ought to do to prepare themselves to help 
themselves.
    The Division of Emergency Management and the Kansas 
National Guard are planning and training to respond if there is 
an infrastructure failure due to Y2K related problems. We are 
preparing by doing the same kinds of things that we do for 
snowstorms, ice storms, floods and tornadoes. So it's that type 
of thing.
    For instance, in a thunderstorm or a snowstorm, or flood, 
or tornado, you might have power outages and you also might 
have telephone communication losses. Those are things that we 
are also planning for with Y2K. We know that we need to look at 
getting water, making water available, making sure that there 
is food, and that there is warmth and shelter during the winter 
months. And that's the kind of thing that we deal with 
regularly when we respond to snow or ice storms and tornadoes 
and flooding. The Division of Emergency Management coordinates 
State and volunteer agencies efforts to provide relief as 
indicated in their operations plan. We want the public to know 
that we are in fact doing that for Y2K. It's just a different 
type of disaster or emergency that we need to plan for.
    Internally, the Kansas National Guard is testing equipment 
to make sure they are ready and it will be functioning at 
midnight on December 31st. All level logistics systems in the 
State have been upgraded. So those computer systems are working 
and they can fulfill the tasks of supply and service, should 
that be needed. Also, in May, a communications exercise was 
held with high frequency radios and we communicated with the 
Pentagon in Washington, DC. And we are a communication node so, 
we communicated with the seven States that are in our area. So 
we will be able to communicate if there is a disaster for Y2K. 
We also have inception for another communications exercise. At 
this time we are going to go to the armories within the State 
and we will be communicating with each one of the armories. We 
will have people available so that if there is a need on 
December 31st we can help the citizenry.
    Prior to December 31st, State agencies will also be 
coordinating public service information so that we can provide 
informational preparation to the citizenry. A campaign is 
expected to begin in September, and will continue through 
December 31st. We believe this is beneficial to the public 
because it will help the public to understand the steps that we 
are taking to respond in case of an emergency. It will also 
provide them with the information to help them help themselves.
    On the 31st, we intend to have people in our Emergency 
Operations Center here in Topeka to communicate with the media 
about what is going on. We expect also to have personnel in the 
Division of Emergency Management that will respond to requests 
that we may get. And we also will have a Kansas National Guard 
military operation center in effect here in Topeka. That center 
will be open at 6 p.m. on December 31st and it will go through 
the night, through January 1st, and will end at midnight on 
January 1st. And then we will have people at the battalion 
headquarters that will also be able to communicate and help.
    The third area that are we were talking about was to help 
people help themselves. And some of the things that we are 
talking about there is backup heat sources such as fireplace, 
blankets, extra batteries if the power goes out, bottled water, 
extra food supplies, all of these are things that we suggest 
you use for any other disaster. And we will continue to provide 
that information. Thank you.
    [The prepared statement of Ms. Moser follows:]
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    Mr. Ryun. I want to thank all of our panelists. We are 
going to go to some questions. I know we have some questions 
that are being generated on the cards. There are cards that are 
still being handed out. If you would like to write a question, 
one thing that I have to respect is the fact that the chairman 
has a plane to catch, so we will have maybe another 15 minutes 
roughly of questions and then we will move to the second panel. 
But I actually would like to begin with Mr. Sullivan. And one 
of the concerns that we have is a continuing readiness aspect 
of compliance with Y2K issues as we enter into the millennium. 
You had said earlier that you're 95 percent ready, you're still 
about 5 percent before you can be completed. Can you identify 
what that 5 percent is? You said also that it will take 
probably another 17,000 hours roughly to finish what has to be 
done. Is there sufficient time?
    Mr. Sullivan. Yes, there is. Much of what remains to be 
done is testing continuity planning. We have looked at 
primarily all of our COBOL codes, we have assessed everything, 
we have repaired most everything. There are a few applications 
out there in the State government that have received a little 
attention, but not as much as what there needs to be. So in 
answer to your question, yes, there is sufficient time to get 
there because that 17,000 hours is spread across State 
government and across the many thousands of employees that we 
have. So that is not a problem. We just need to continue to 
complete our auditing.
    Mr. Ryun. Chairman Horn, any questions?
    Mr. Horn. Let me read some from the audience because we 
know the panelists have to leave for other engagements, we know 
you are all busy people. But one of them is this: ``During this 
period of correcting Y2K problems is the entire information 
network of government agencies becoming vulnerable to computer 
hackers? What security is there?''
    Mr. Willemssen, do you know the answer to that? Let's have 
the power of the GAO and its thousands of reports hone in on 
this question.
    Mr. Willemssen. I think that's an excellent question. One 
issue that we have previously addressed as Y2K is being 
addressed and as systems are increasingly opened up to make the 
fixes and also bringing in other parties to help make the fixes 
and test those fixes, there is enhanced risk from a security 
perspective. And we have previously testified that managers, 
therefore, must be very attuned to that security risk when 
going about their Y2K programs.
    And therefore, I think it is an excellent issue. One that 
information security is the next Y2K, as we see it. It's 
increasing in scope and severity and an issue that the Federal 
Government I know will have to increasingly begin to focus on.
    Mr. Horn. I think you will all enjoy the second question, 
we are in the middle of some of this, ``Why can't we as the 
people just decide to change the date similar to daylight 
savings time so the problem is solved? We all agree and then 
later change it back.''
    At first appearance you might think there is something 
wrong with that question, but I'm planning to hold a hearing on 
one of my colleagues' bills, Mr. Linder of Georgia, that will 
move the January 1st date to Monday if it isn't there now, and 
that will give them the whole weekend to be working on it 
should something go wrong. In order to get this good idea 
explored, we also have to get the Subcommittee on the Civil 
Service, which is part of the Government Reform Committee, and 
I don't know how many other hands want to get into it or don't 
want to get into it.
    But you tell us, Mr. Willemssen, has some thought been 
given to this and what has the discussion been about?
    Mr. Willemssen. There has been discussion about making 
January 3rd, which is a Monday, an additional holiday. Based on 
information we know, however, from the standpoint of several 
agencies they already have very detailed plans in place, 
assuming that is not a holiday, and, therefore, to make a 
change at this relatively late date could potentially for those 
organizations cause more problems than solutions. So we need to 
be very careful about doing that. Especially some of the 
leading agencies such as the Social Security Administration, 
they have their time table down to the minute on exactly what 
they are going to be doing every minute through the roll over 
period. And upsetting that apple cart at this point could 
introduce more risk than solve.
    Mr. Horn. If we get that hearing, we will make sure you're 
there.
    Mr. Ryun. I know this morning as we were talking on Jim 
Cates' show you expressed great confidence in the ability to 
fly on January 1 after you said that a few moments ago. Part of 
what I think the question is going to be dealing with is the 
understanding, if you will, that part of what this issue 
relates to is the labor intensive having to go back and change 
little chips in different places. You expressed great 
confidence that your flight would leave Washington and land in 
L.A. In fact, you have expressed greater confidence in that 
than the elevators in Canada would work for you, I think you 
had some difficulty there.
    So I think part of what we are dealing with is that a lot 
of places where the light needs to shine with regard to the Y2K 
issue and we have begun the process of making the changes in 
some of those areas.
    Mr. Horn. Along that line, one of the things, and maybe you 
would like to respond to it, having to go through this tedious 
operation in order to make up and adapt and all of that, I hope 
a lot of you have said, ``Hey, do we really need this system? 
Let's get rid of that.'' How much of that really was part of 
what you did and you just got rid of it because it isn't 
working?
    Mr. White. We have used this opportunity to do a lot of 
standardization on types of software we use, desktop on PC's. 
And we have used a lot of old stuff our AS/400 systems and 
found out that people weren't really using them and if they 
were, there were easier ways to do it.
    Mr. Sullivan. We found that to be true in the State 
government as well.
    Mr. Kettlewell. I'll just comment on that. One of the 
things about this is that the United States being so 
information technology driven, if you will, this has been an 
excellent opportunity for all of industry to stop the train, 
assess what they have done and for all intents and purposes. 
Like with, for instance, the city of Topeka has done, edit what 
they have got, throw away the old programs that are not 
standard and so old they are no longer efficient. And we have 
done that in the State, we have a program like that we have 
gone through and pitched a lot of programs. So there is a 
degree of standardization and modernization.
    Mr. Horn. Ms. Moser, did the Adjutant General do some of 
that? Did you get rid of some of that stuff?
    Ms. Moser. We got rid of some of our old junk, yes, sure.
    Mr. Horn. Was that the COBOL? That's a language of the 
1960's. And, believe me, people that retired and were experts 
in COBOL, the Civil Service Commission, now called the Office 
of Personnel Management for Federal employees, is getting them 
out of retirement, they can keep the $100,000 contract, to 
solve the COBOL problem, and keep their pension. So it's a good 
deal for people that mastered COBOL. I remember making a 
program out of one, only one, in the 1960's.
    But that's a language that is all over the Federal 
Government, I don't know about the State governments. Do a lot 
of yours use COBOL?
    Mr. Kettlewell. Most of them do, yes.
    Ms. Moser. We went to mainframe last year. So we should be 
OK.
    Mr. Horn. That's great. One question here is: ``Will the 
Congress watch the President over Christmas? We have heard the 
President will declare martial law while the Congress is on 
vacation.'' There is nothing to that, folks. The courts of the 
United States are open and the Congress is open. We are very 
careful, not just under this President, any of the last 
Presidents. If there is a need for us to get into session, 
that's the way the adjournment resolution is written by both 
the Senate and the House. The Speaker of the House can call the 
House together, the Majority Leader of the Senate can call the 
Senate together. So there no chance of that. But these rumors 
hop around all of the time.
    ``Please make a statement about security of bank accounts 
and balances, availability of cash, availability of fresh food 
supplies, state of police, fire, military, medical.'' Well, we 
have got good people here in the Adjutant General's Office to 
deal with that and we have got Mr. Willemssen on broad 
international as well as National review. So the security of 
bank accounts and balances, the Federal Reserve I think has 
done a terrific job, Mr. Greenspan, 2 or 3 years ago when I 
talked to him when we started in on our operations, he 
appointed Board of Governors member Kelly to be in charge of 
this. And most of the banks of the United States you don't have 
to worry about. Some of the State banks you might have to 
through your own regulatory authority in Kansas. I don't know 
where you are on that. Maybe some of the officials in the State 
of Kansas like Mr. Kettlewell knows that question on the banks.
    Mr. Kettlewell. In a broad way I do, yes. The Kansas Corp. 
Commission really is a controlling factor in that. That said, 
about 3 weeks ago I was down in Hillsboro, KS addressing about 
150 citizens. At the time we had the regional FDIC examiner 
come in from Memphis, TN and he told me that of the I believe 
it was around 10,000 or so banks, there are only about 10 or 15 
that are doomed for failure, and those banks are going to be 
taken over. It is one of the most heavily regulated industries, 
so that the failure rate there--the bottom line is you need to 
keep your money in the bank, don't put it under the mattress, 
don't hide it in the silo, don't hide it in the barn, keep it 
in the bank.
    Mr. Horn. I think we will ask panel two's group because 
there are some talents there, bankers and others. On the fresh 
food supply, I think it's prudent, and I think Mr. Ryun agrees 
with me on that, just to be reasonable about it. You don't need 
all of the food for a year, but you might need 1 or 2 weeks, 
vegetables--now, remember, your refrigerator might go out if 
there is a power failure. So you have got all those things that 
could happen.
    But when you come from California as I have, where you have 
got fires, earthquakes, floods, I have got the biggest flood 
project in the Nation in my district. For example, 500,000 
people are affected by it and we are trying to get it done in 
the next year and a half so that the levees won't overflow. And 
you know what that's like in Kansas and Iowa and Illinois, to 
say the least. I think somebody said this morning, I think it 
was, that quoted one of the newsmen, was it, when Cates talked 
to us and said there would be a shortage of toilet paper. This 
is on something 10 years ago, and indeed the next day all of 
the toilet paper disappeared from the grocery stores.
    So little things like that you might just use common sense 
on. I don't think it's something to panic about. A lot of 
people are going to make money on books they write on Y2K. I've 
got a long shelf of them. I have just packed them to send to 
the National Archives. Maybe the next millennium they can pull 
that box out and see what happens. But I'm not going to collect 
them anymore. But you will have all of the little papers that 
you see in the grocery lines for a couple of bucks they want to 
scare the living daylights out of you. And some people fall for 
that stuff, we don't exactly--in some areas--have a very 
literate constituency to work with on this. But even sometimes 
people get a panic there might be some reason behind it and we 
in government need to do the best we can to avoid that 
situation to keep our heads calm to solve the problem, not just 
talk about it.
    Any comments, Mr. Willemssen, on the food supply, the fresh 
food supply to be exact, availability of cash? Mr. Greenspan 
has ordered an extra amount of Federal Reserve notes to be in 
the bank so if there is a run on them, they have plenty of 
money. And it was said, and you're right, to take it and put it 
in your pocket at home is where the burglars will head. They 
also watch television. If you're smart, you will leave it in 
the bank and let them hold the responsibility for it.
    Mr. Ryun. I have one final question. I know we are just 
about out of time. I want to ask Mr. Kettlewell very quickly 
about an issue I know is very important to a lot of our seniors 
out here. You said earlier that HCFA is not--that the 
administration keeps saying that they are ready, but they 
really aren't ready in your opinion. What can we do to make 
that correction? What sort of contingency plans are there for 
our seniors that are out there?
    Mr. Kettlewell. Well, a couple of thoughts on that, 
Congressman Ryun. First of all, you're going to have to have a 
contingency backup plan, obviously. As I heard one 
representative from HCFA testify in front of Congressman Horn's 
subcommittee last fall and their contingency plan at that point 
was manually processing claims. Now, they process 20 billion 
claims in a year. I don't know how many temp workers they are 
going to be able to bring in and process those claims and that 
amount of money. So I don't know what the good solution is in 
terms of their business continuity. What I do know is that some 
way or another Health and Human Services in Washington, DC has 
to provide better information with respect to its status on 
Medicare and Medicaid. People in Washington have to be singing 
off the same song sheet or they have to have one spokesman to 
tell what the real story is, because there is just a tremendous 
amount of confusion out there right now. From one person we get 
one story.
    As I say, as I quoted in my statement, but if I listen to 
your committee and listen to the GAO, and I again go back to 
that testimony of Mr. Willemssen, they are not going to be able 
to perform. There is not a really good short answer to your 
question. I think right now they are besieged, they are in a 
very difficult situation in HCFA. How they are going to solve 
that problem perhaps is add more resources to it, maybe stop 
coming out here and auditing the State agencies, for instance. 
We have already been through a State Aging audit, we passed 
with flying colors, both from HCFA and the Administration on 
Children and Families.
    So I think really what they need is they need to focus back 
in Washington and less focus out here in the States, because I 
think the States by and large are doing a lot better job in 
managing their systems than what's going on in Washington.
    Mr. Horn. We did have the problem a year ago where Social 
Security, which has led the pack since 1989, found that they 
forgot to include their State supported operations.
    Mr. Kettlewell. Yes. We found that out in March, sir.
    Mr. Horn. And those have been fixed.
    Mr. Kettlewell. Yes, they have.
    Mr. Horn. Joel, do you have anything to say on HCFA? HCFA 
means the Health Care Financing Administration.
    Mr. Willemssen. It does administer Medicare and helps the 
States administer Medicaid. Just to provide a broader context 
to this, unfortunately HCFA got an extremely late start on Y2K 
for Medicare. Second, they have an extremely complicated set of 
computer systems and data exchanges, much of which is not under 
their direct control. You combine those factors with the 
limited amount of time available and also their relatively poor 
track record in managing information technology, and that's why 
they are in the risk status they are currently in.
    I'm a little more optimistic now with the Health Care 
Financing Administration than I would have been last fall, in 
part because the leadership of the Administrator, she's done 
what she can in the limited time remaining. She also has put a 
primary emphasis on contingency planning and they have done 
some good work in that area. Those plans now include options 
beyond just manual processing of claims. Some of those options 
cannot be publicly disclosed because they give a security 
perspective that we talked about before. But it's possible 
there will be some disruptions in Medicare. Again, I feel more 
confident, though, that they have gotten their act together on 
contingency plans. So to the extent those disruptions occur, 
they have backups in place to address them.
    Mr. Horn. Thank you. I want to ask Mr. White, here's a 
question for you. ``What is the city of Topeka doing as a 
contingency plan for emergency services such as police, fire 
and hospital, the 911 and so forth?'' That seems to be a 
nationwide problem.
    Mr. White. Absolutely. Really good question. Again, we have 
contingency plans already in place for any kind of disaster and 
certainly work very closely with the Adjutant General's office 
and with Shawnee County who runs our 911 system. They have 
secondary backup plans for running 911. And certainly, as she 
mentioned, this is a potential disaster that we can prepare 
for.
    So the police chief and the fire chief are coordinating 
very closely with the other emergency providers to ensure that 
if we have a police emergency, we will have a police car there. 
If we have a fire, we will have a fire truck there. If you need 
an ambulance, ambulance service will be available. If you have 
any concerns, questions, emergencies, you can call 911, 
somebody knowledgeable will pick up and dispatch the 
appropriate folks to you.
    Mr. Horn. In other words, you have a real human being there 
at that center.
    Mr. White. We have about nine of them at any given time.
    Mr. Horn. I take it, because this has nothing to do with 
the millennium, but it's something we have had to deal with for 
years, and that is the relationships of surrounding fire 
departments, police, law enforcement agencies, and do you have 
enough frequencies for them to communicate with each other?
    Mr. White. I'm not involved with the radio issues. The 
Adjutant General's office might be able to speak better to 
that. I would imagine that's one of those things they are 
looking quite closely at.
    Ms. Moser. Certainly we are looking to communicate within 
our own system and then we will communicate out to the local 
level. So I think that we could make that connection.
    Mr. Horn. When I was a university president 10 years ago, 
the county of Los Angeles went into an extensive emergency 
situation, we have 81 cities in that county, 10 million people, 
and we have about probably 15 universities with their own 
police force and jurisdiction for several miles around, but we 
didn't have the frequencies, they were all sitting in New York 
on the east coast and we had to work it out. We couldn't 
communicate with each other. When you have got that many 
people, 81 cities, it's pretty tough. So they are slowly 
working that one out and they have had 10 years to do that 
because we knew we had real problems.
    Ms. Moser. That is always a problem is whether or not the 
frequencies are the ones you can communicate across. But we are 
working on that and I think that we will be able to do that.
    Mr. Horn. Here's a very well written one. It says, ``Coal 
is used to power a majority of our Kansas electric utilities. 
From all of that I have read, the railroads absolutely will not 
be ready. How will we keep our electricity up and going if they 
cannot get coal?''
    Any comments from State government, Mr. Kettlewell?
    Mr. Kettlewell. I defer to my colleague from Western 
Resources on that, but basically, from my conversations with 
them before, they have weighed in extensive amounts of coal, 
even if the railroad ceased to run, so that reserve supplies 
for coal for coal fired utilities would be available. But, 
again, I defer to my colleague from Western Resources.
    Mr. Horn. Here's a question for Topeka, it's on the water. 
And I might say this is the best water I have tasted in a long 
time, so you have got a good water department, it's very 
marvelous. I have been getting all I can get. We have to get 
bottled water in Washington. The Corps of Engineers did a 
wonderful job in 1859 with the distribution system. But the 
city of Washington has not replaced much since 1859. And when 
the metal starts to glow when we were having x rays, we went to 
bottled water. That's what they say happened to the Rose 
Republic, for those who want to talk about it. That's about it. 
We will pursue some with the next panel. We need to move to 
panel two, Mr. Chairman. I think we have got a good round on 
that.
    Mr. Ryun. Thank you all very much for coming. I appreciate 
it.
    [Applause.]
    [Witnesses sworn.]
    Mr. Ryun. The second panel is going to be dealing more with 
industry. For those of you who would like to participate, there 
will be some staffers around the edges who will have cards, if 
you would like to write out questions and submit them, we will 
ask those questions as we proceed.
    Let me begin by introducing the first panelist, it's Bud 
Park. Bud is the year 2000 project office manager for Western 
Resources who provides power to homes and businesses. The KPL 
division is a Kansas Gas and Electric subsidiary that provides 
electricity to over 614,000 retail and 75 wholesale customers 
in more than 500 Kansas communities. It is a member of the 
three power tools, coal, nuclear, natural gas, oil, diesel 
fuel, these units generate a net capacity of nearly 5,300 
megawatts.

   STATEMENT OF BUD PARK, YEAR 2000 PROJECT OFFICE MANAGER, 
                       WESTERN RESOURCES

    Mr. Park. Chairman Horn, Congressman Ryun, distinguished 
guests and ladies and gentlemen, good afternoon. I thank you 
for this opportunity to speak with you today.
    Mr. Ryun. Mr. Park, let me interrupt you just a moment. If 
you would like to submit your comments and just speak off the 
record, you can add those to the record and we will be happy to 
include them.
    Mr. Horn. Automatically we put the full comments in the 
record when the chairman calls your name. In order to get 
through the day, we would like you to take 5 minutes and 
express yourself on it and then we will go to the next witness. 
And that gives us more of an opportunity to have a dialog on 
your panel, as well as the members here today.
    Mr. Park. Certainly, I'll be happy to. Basically we come 
here to tell you the message that as of last week Western 
Resources is now year 2000 ready.
    We started our project over 3 years ago, I think that's a 
little earlier. I think we had a jump on a lot of companies. 
And so we have had plenty of time to address the year 2000 
issue. We have done what has become the de facto standard year 
2000 program, including all of the steps that you have probably 
heard many times before. And we concluded the project last week 
on June 30th with the dispatch of a letter to the North 
American Electric Reliability Council who, as you know, has 
been doing an assessment since last year of the nationwide 
power grid. That letter essentially told NERC that Western 
Resources had concluded its assessment, remediation and testing 
of all of our NERC critical systems, software and hardware that 
contain embedded chips and we have tested them all and our 
testing shows that we expect to be able to provide service to 
our customers after January 1st, 2000 just like we do now.
    We have established extensive contingency plans as part of 
our program. We have also put into place clean management 
procedures to ensure that all readiness work that we have done 
to date doesn't get undone by some well-meaning programmer who 
makes a change that might not be compliant with the year 2000 
roll over before January 1st.
    So the bottom line is we expect to keep the lights on. Our 
testing has shown that we believe that will be true. We will 
participate in a drill that NERC is hosting on September 9th. 
We expect that the results of that nationwide drill will help 
prove what we have come here to say, that we expect no service 
interruptions.
    [The prepared statement of Mr. Park follows:]
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    Mr. Ryun. Thank you very much. We will go to our next 
panelist here. Fortune Magazine has described Southwestern Bell 
as the most admired telecommunications company in the world. 
Shawn McKenzie is here to give us his testimony. Southwestern 
Bell is the largest or the biggest local telephone provider in 
Kansas, it provides service to 1.4 million customers. We are 
pleased to have you here.

         STATEMENT OF SHAWN McKENZIE, SOUTHWESTERN BELL

    Mr. McKenzie. Thank you, Congressman Ryun, thank you, 
Chairman. I appreciate you giving me the opportunity to do 
this, especially since I'm sure much of what I'm saying and 
what other panelists are saying today you have heard before. I 
really appreciate the opportunity to address the constituents 
that are here today. I'm going to be talking from a set of 
about 15 slides that are in the packet. I'm holding this up 
with the back to you so that the folks behind me can see what 
I'm talking about.
    I wish I had more time to talk, not necessarily because I 
have a lot to say, but because my preacher is here today, Dr. 
Jim Congdon is over here in the bright shirt. Every Sunday 
morning he gets 30 minutes of my time and I thought it would 
just be fair if I get 30 minutes of his time.
    [Applause.]
    Mr. McKenzie. I apologize for any levity with which I 
address this, but as I mentioned to Matt before we started, we 
see the light at the end of the tunnel now and we have a little 
levity that we didn't have just 3 years ago when we started 
this process.
    Dr. Congdon made a comment in his sermon a couple months 
ago when he was talking about potential Y2K problems that the 
telephone system may fail on January 1st, 2000 and I was about 
the third row and under my breath I said ``not a chance,'' 
apparently it was a little too loud and he noted that I had 
said that and I became part of the sermon for the following 
week. What I want to do now is just substantiate what I said 
that morning and what I repeat now. Southwestern Bell's 
telephone network in Kansas and in the other States served by 
SBC communication companies, which includes Pacific Bell, 
Nevada Bell, Cellular One, Southern New England Telephone and 
many, many, many wireless companies will be ready January 1st.
    There is a potential for problems. The biggest problem we 
have a potential for is the same one outlined concerning the 
toilet paper. If everybody on January 1st picks up the phone at 
the same time, I guarantee you it will not work. I guarantee 
you that if everyone got up tomorrow morning and picked up the 
phone at the same time, it will not work. Much like the 
Nation's highways are not designed for every car to be on them 
at the same time, nor are the Nation's telephone networks 
designed for everybody to be on them at the same time.
    SBC Communications is a large company, 37 million access 
line telephone customers are what we serve in seven different 
States. We have had a lot of resources since 1996 devoted to 
solving the problems with our systems. We've spent over $190 
million, we are doing 3,000 hours of work a day on this issue. 
We have rewritten 340 million lines of software already to have 
this problem taken care of. We are about 98 percent ready to 
go.
    On January 1st our system will be ready, but we are not 
going forward as if everything will be OK. We are also making 
our own contingency plans just in case things don't go OK. I 
think Western Resources will be ready January 1st as Bud just 
described, but just in case there is some glitch, we have our 
generators ready to go to provide our own power.
    So we suggest to our customers that if they want to be as 
ready as they can and make sure their phones work that day, 
that they have a telephone available to them that's not 
dependent on commercial power, because our system on January 
1st will not be dependent on commercial power and you will be 
able to use your phone even if commercial power fails.
    We are going to be ready to move forward. We have groups of 
employees that are going to be staffed in addition to the 
normal work hours that day to respond to any problems that may 
come up that we had not foreseen. So if something doesn't come 
up that we don't foresee right now, come January 1st everything 
will be working. And rather than work my way through the rest 
of these slides, I'll yield time and answer questions later. 
Thank you.
    [The prepared statement of Mr. McKenzie follows:]
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    Mr. Ryun. Our next panelist is Anne Rubeck, who is the 
director of Communications Technology for the Kansas Hospital 
Association, of which there are 143 hospitals that are part of 
this organization. And I'm particularly interested in her 
testimony with regard to readiness for critical areas in rural 
areas, because I know that I have a great deal of rural people 
that are very concerned about what's going to be available. We 
certainly look forward to your testimony.

 STATEMENT OF ANNE RUBECK, DIRECTOR, COMMUNICATION TECHNOLOGY, 
                  KANSAS HOSPITAL ASSOCIATION

    Ms. Rubeck. Thank you, Congressman Ryun. We do appreciate 
the opportunity to speak with you about hospitals and the Y2K 
issue.
    Hospitals and other health care organizations really face a 
unique challenge in dealing with year 2000 issues. Not only 
must their business and financial systems be ready for the date 
change, but be ready to work with various insurance companies, 
as well as the Federal Government. But advanced medical devices 
must also be compliant so as not to jeopardize patient safety. 
Hospitals recognize the tremendous amount of trust placed in 
them to safeguard the health and well-being of those for whom 
they care. Hospitals concern is first and foremost for the 
patients that they serve.
    Kansas hospitals have been working diligently on the Y2K 
issue for quite some time. The Kansas Hospital Association for 
whom I work has provided voluminous amounts of information and 
educational programs to its members regarding identifying and 
possibly replacing affected equipment, creating and 
implementing Y2K readiness plans, creating awareness and 
information materials for use with their communities in the 
preparation of contingency plans. We have also contracted with 
the Georgia Hospital Association to provide access for Kansas 
hospitals to their ongoing Y2K educational series via 
teleconference. Hospitals are very well aware of this issue and 
we should make sure that they are.
    The KHA has also participated and cooperated with the three 
surveys that have been conducted by the Docking Institute of 
Public Affairs which is part of Fort Hays State University. The 
final report on the second survey was published in December 
1998. The third survey is currently in progress. The December 
1998 report states that hospitals reported the highest level of 
preparation in many aspects of delivery of services.
    Hospitals are also involved in contingency planning as well 
as continuing to identify and work with vendors of medical 
equipment. Some of the biggest challenges that hospitals face 
is that each entity is unique in and of itself in the kind of 
systems that they run, and in many cases the kind of equipment 
that they use. So there is not going to be one solution that 
every hospital can use. Each hospital has to come up with its 
own way of dealing with the problem and its own way of being 
ready.
    But just to show that hospitals are on top of the issue, 
the American Hospital Association has also conducted a survey 
of the Nation's hospitals which indicates that they are hard at 
work to ensure patient safety and a smooth transition of 
business affairs at the end of this year. The survey shows that 
90.4 percent of hospitals report that they are predicting 
compliance of their medical devices or expect no adverse 
effect. It is very important to note that if a medical device 
is noncompliant, that does not necessarily mean it will be 
nonfunctional. Many times the date chips inside a piece of 
medical equipment will possibly create paperwork type errors as 
opposed to anything that would have anything to do with patient 
safety. Obviously this isn't true for 100 percent of medical 
devices, but noncompliance does not necessarily mean 
nonfunctionality. And hospitals have prepared for those kind of 
situations in their contingency planning. The vast majority of 
hospitals, 94.2 percent, report that their information systems 
are either currently Y2K compliant or are moving toward total 
compliance without major difficulties. This is the business 
end, so they have two major areas that they have to follow.
    As everyone knows, I think, the Y2K event is completely 
unprecedented and therefore presents a tremendous challenge for 
anyone who has to deal with technological devices. Hospitals 
are doing everything they can to be as ready for the event as 
possible, as well as making the detailed contingency plans I 
mentioned before. We will continue to work unceasingly through 
January 1st and beyond to ensure that patient care and safety 
are protected. And that concludes my comments.
    [The prepared statement of Ms. Rubeck follows:]
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    Mr. Ryun. Thank you very much. The next panelist we have 
been watching what's been going on in banking for some time and 
I hope I'm saying your name correctly, Ed Splichal. Mr. 
Splichal is with the Kansas Bankers Association with 
approximately 400 members throughout the State of Kansas, total 
assets of $34 billion. As we have heard before, you have done a 
lot to get prepared for Y2K and we are looking forward to your 
testimony.

 STATEMENT OF EDWIN SPLICHAL, CHAIRMAN, Y2K TASK FORCE KANSAS 
                      BANKERS ASSOCIATION

    Mr. Splichal. Thank you Mr. Chairman and Congressman Ryun, 
I appreciate this opportunity to appear before you to discuss 
Y2K and its impact on the banking industry here in Kansas. I'm 
serving currently as the president-elect of the Kansas Bankers 
Association and am chairman of the Association's Y2K Task 
Force. The KBA represents 99 percent of the 400 plus banks 
presently doing business in Kansas. Our banks have been working 
diligently for many months in preparation for the century date 
change. Untold hours and millions of dollars have been expended 
by these banks to make certain that banking operations 
throughout the State will make a smooth transition into the new 
year.
    One of the major reasons why the preparedness has gone so 
well has been the leadership role assumed by the various 
regulatory agencies. I firmly believe the banking industry here 
in Kansas and throughout the Nation would not be as well 
prepared if it had not been for the well-planned procedures 
that the Federal and State regulatory agencies required the 
banks to complete by June 30th of this year.
    By requiring banks to complete each phase of the Y2K 
preparedness procedures by a time certain, it kept the banks on 
top of the situation and avoided hurried, last-minute attempts 
to be ready for business on January 1st, 2000. These procedures 
included identification of possible problems, correction of 
problems, testing of all date sensitive procedures, development 
of business resumption contingency plans, and, finally, 
verification. Banks are well aware of the serious consequences 
Y2K noncompliance can have not only on their customers, but 
also on the future viability of their banks and their 
communities.
    I'm happy to report that as of this date the technical 
phases have gone well for Kansas banks. During the final months 
of this year our banks will also be placing a major focus on 
their customer awareness plans.
    It is this phase where the Y2K Task Force of the KBA has 
been most involved. The Task Force, composed of nine bankers 
from various regions of the State, has established six main 
goals to accomplish before the end of the year.
    They include: (1) providing materials that Kansas banks 
could use to in keeping their customers informed about Y2K 
issues; (2) working with the regulatory agencies to exchange 
pertinent information on technical, liquidity, and customer 
awareness issues; (3) meeting with newspaper, radio, and 
television personnel to discuss Y2K; (4) meeting with public 
officials to seek their assistance in keeping the public 
accurately informed about Y2K; (5) sharing pertinent 
information on Y2K with all member banks in the State through 
mailings and articles in the Association magazine; and, 
finally, (6) implementing a statewide radio and newspaper 
campaign that emphasizes the Y2K readiness of Kansas banks.
    To implement one of the goals the Task Force held a meeting 
with representatives from the FDIC, OCC, Federal Reserve and 
the State Banking Department in March. This proved to be a very 
valuable meeting for the exchange of information on what the 
regulatory agencies and the banks had done to that point. We 
plan to meet with the same regulators again in early September.
    We have also worked to involve public officials in the Y2K 
awareness campaign. Representatives of the Federal Reserve and 
the FDIC plan to appear at a press conference with the Kansas 
Attorney General, Carla Stovall, here in Topeka tomorrow. At 
that press conference the Attorney General will discuss the 
need for Kansas citizens to not be misled by Y2K rumors and 
their need to be aware of possible scams that may be 
perpetrated based on those rumors. I would once again emphasize 
how pleased we have been with the cooperative attitude 
displayed by the regulatory agencies and public officials in 
working with us on these issues.
    In the articles I have written for our Association magazine 
I have tried to stress the need for banks in each county to 
work together in developing their customer awareness plans, 
organizing community informational meetings, and initiating 
discussions with the local media. I have also emphasized that 
banks must also develop a strong customer awareness program so 
that all customers will understand what the banks have done to 
make sure all systems will function smoothly as the new year 
begins. The response that we have had to the customer awareness 
packet prepared for us by the KBA Task Force would indicate 
that banks are taking this responsibility very seriously and 
will continue to do so for the next 6 months.
    We have also discussed with the banks the need to have 
sufficient liquidity at the end of the year in case it's 
needed. The Federal Reserve has been very helpful in working 
through these details since Kansas is a large State and many of 
our community banks are located in areas many miles from urban 
centers. This is an area of the Y2K preparation process that 
our Task Force will continue to monitor closely in the coming 
months.
    We appreciate the efforts in Congress to try to bring some 
common sense to the area of Y2K litigation. We have no 
objection to legal action against any corporation that has 
failed to properly prepare for the date change. But there 
should be limitations that would diminish the possibility for 
frivolous litigation relating to Y2K problems. Without such 
legislation there is a very significant risk that litigation 
may be even more costly than the technical preparedness for Y2K 
has been.
    We are well aware there is no margin for complacency in and 
bankers in this State plan to continue testing our systems, 
working with our customers and staying in close contact with 
our regulators to make sure it will be business as usual when 
the year 2000 dawns.
    [The prepared statement of Mr. Splichal follows:]
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    Mr. Ryun. Our last panelist is Al Lobeck from WIBW, he 
represents the Kansas Association of Broadcasters which 
represents 90 percent of all the TV and radio stations in the 
State, it includes 22 TV stations and 140 radio stations. He 
also represents Jim Cates, who this morning was gracious enough 
and throughout the week to make people aware of this time 
today. I appreciate your support and am looking forward to your 
comments.

   STATEMENT OF AL LOBECK, NEWS DIRECTOR, WIBW RADIO, KANSAS 
                          BROADCASTERS

    Mr. Lobeck. Thank you very much. We go from the KBA to the 
KAB.
    The Kansas Association of Broadcasters has prepared a 
handout that's in the packet that you have that goes into quite 
a bit of detail illustrating not only what Kansas broadcasters, 
but nationally broadcasters are doing and what the Federal 
Communications Commission has advised to be done.
    As one Kansas Association of Broadcasters board member 
said, Y2K is like a tornado warning for which we have months to 
prepare. Like a tornado, Y2K could be very serious, or it might 
not be serious at all. No one will know until the time is here. 
As in any disaster, preparation is the key to minimizing the 
impact of a potential Y2K disaster.
    Broadcasters throughout the State and the Nation are 
working diligently to prepare for any possible problems that 
might occur. And, for example, the Kansas Association of 
Broadcasters at their annual convention, which will be in 
September, are having several panels to discuss fine tuning any 
plans that are out there.
    A bit of background about our particular operation so that 
you can understand the impact that our stations could have for 
communication in the community and to show you what we have 
done to prepare ourselves. WIBW the AM station is the 14th most 
powerful signal in the United States, it has the 14th largest 
coverage area. We broadcast farm news in the mornings, regular 
news and sports and talk programming such as you commented on. 
Our FM station is Topeka's most listened to radio station, 97 
Country, and broadcast news and weather as needed at times.
    Our five person news staff also operates the Kansas 
Information Network which is a news organization that 
broadcasts via satellite to about 40 stations throughout the 
State of Kansas. So we have the ability to communicate 
statewide on a regular basis, and we do.
    We also originate the Kansas Agricultural Network which has 
about 40 stations that also broadcast agricultural news on a 
daily basis.
    We are also a key entry point for the emergency broadcast 
system which, as you well know, is designed to notify the 
public here as well as statewide almost instantaneously of any 
kind of emergency. And we are also the emergency notification 
station for the Wolf Creek power plant, so if there is a 
problem there, they call us and we broadcast it.
    I want to give you that background so you can understand 
that we do take the coverage of news and providing news to the 
public very seriously. As a result, for years we have had the 
capability to be able to broadcast completely without the 
benefit of telephone lines or electricity from the public 
utilities. We have emergency power generators at both of our 
transmitter sites for the AM and FM as well as at our studios. 
So we don't anticipate that there will be any interruption of 
any kind for our broadcasting and would be ready to do anything 
that would be necessary to communicate to the general public.
    I would point out that the Federal Communications 
Commission has made a couple of comments that I would like to 
read from this particular sheet. And according to their 
assessment, they said the public should continue to have access 
to critical broadcast news, emergency information, and 
entertainment services on January 1, 2000. Individual Y2K 
related disruptions should be isolated and because virtually 
all listeners and viewers have several free over the air 
broadcast servers available, service outages that may occur 
likely will leave affected viewers and listeners with several 
alternative broadcast stations.
    They also point out some hints which I thought were rather 
interesting and I wanted to mention them here in case someone 
doesn't get a copy of that. The Federal Communications 
Commission suggests that you consider having a battery powered 
radio or television set available with sufficient supply of 
batteries. If a station suffers technical difficulties, tune to 
another station in your area for information. If you use your 
VCR tuner to change stations on your TV set, be sure you know 
how to bypass the VCR in case it has technical problems.
    And, finally, they suggest you have a television antenna 
handy in case there would be a disruption of cable TV.
    [The prepared statement of Mr. Lobeck follows:]
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    Mr. Ryun. Thank you for your comments. We are looking 
forward to some questions. I would like to begin with Mr. Park, 
if I may.
    As I have traveled and as we have all tried to evaluate all 
of what's going on with regard to readiness for Y2K and the new 
millennium. There seems to be a single threat that ties all 
this together and that comes back to the electricity. What 
assurances can you give us that everything is going to work, 
that the lights will be on whether we have a holiday January 
1st or not? Have you had an entire systems check, so to speak, 
or how have you proceeded in that regard.
    And then kind of a part (b) if I may, it was actually asked 
during the first panel questions with regard to rail cars, 
whether you have enough rail cars to get coal to your plant to 
provide sufficient energy.
    Mr. Park. That's a mouthful. I'll try to address all of 
those. First of all, as far as assurances that there will be no 
power outages, of course I can't do that because I can't give 
you assurance that the next thunderstorm that comes through 
wouldn't cause a power outage. What I can assure you is that we 
have tested all of the critical systems necessary for us to 
provide power. We have simulated moving those systems into the 
21st century. We have tested the critical dates many of the 
people are unaware of. Everybody knows January 1st is the date 
that we seem to be concerned with, but there are about 14 other 
dates that we have also tested that we feel could cause 
problems if a computer chip misbehaves.
    Mr. Horn. For the sake of the record, could you maybe 
identify some of those dates that have already passed, so they 
will understand that.
    Mr. Park. Of the dates that have passed, January 1st, 1999, 
because any program that does a year forward look would be 
looking forward to January 1st, 2000. So we passed January 1st, 
1999 without a problem. September 9th, 1998 would also be the 
same one year look forward for September 9, 1999 which deals 
with the 9/9/99 situation. July 1st was the beginning of the 
fiscal year for many organizations, and that is essentially 
2000 in the fiscal year. That date is now relatively in the 
past.
    So we have done this testing. The results of our testing 
shows no issues that would cause power to have any outage that 
wasn't connected with an ice storm, a thunderstorm, lightning 
strike, an errant driver hitting a utility policy and knocking 
wires down. Those kind of outages could still occur, certainly. 
But we don't expect system-wide outages.
    I would like to address this rail service question that was 
asked of the earlier panel. I don't know where the person who 
asked the question got his information, but that is 180 degrees 
opposite from the information we have from the railroad. The 
assurances we have from them is that they have done similar 
remediations of their systems, they don't expect interruptions 
to rail service. Because we cannot control the rail service, 
however, one of our contingency plans is to stockpile coal. 
Three of our power plants are coal fired and we have on a 
normal basis anywhere from 30 to 45 days of coal stockpiled. So 
even if there is a brief interruption of a few days to even a 
few weeks in the rail service, which we don't expect, but if it 
happens we will be ready for it with coal on hand.
    Mr. Horn. I'm just picking up also some of the things from 
the previous panel. ``How can you have unknown ready dates for 
key programs in Federal Government . . .'', and Mr. Willemssen 
we will have you come back and bring your chair, we always 
include Mr. Willemssen with the second panel because he brings 
the national and international perspective to this, ``. . . on 
various dates for key programs? Does this mean anticipated 
failure of those systems on January 1, 2000?'' No, I don't 
believe they do. I will leave it to Mr. Willemssen.
    Mr. Willemssen. I think some of the dates that were talked 
about earlier, some of the key dates that Federal agencies are 
testing for also. In addition, obviously the 2/28, 2/29, 3/1 
roll over next year. So many of those dates are also being 
tested for.
    Mr. Horn. A question for Western Resources. ``How much have 
you spent on Y2K to date?''
    Mr. Park. Chairman Horn, we have spent approximately $6.5 
million on our efforts, and our total budget we are estimating 
is right at $7 million.
    Mr. Horn. For Western Resources also, ``What are you doing 
to combat terrorism via hacking?''
    Mr. Park. We have systems in place to prevent that. I would 
prefer not discussing them publicly because that would defeat 
the purpose of some of the protective measures that we have put 
in place. We do have measures put in place to protect our 
computer systems, though.
    Mr. Ryun. Mr. Chairman, may I interrupt for a question 
along the lines of what you're talking about?
    Mr. Horn. Sure.
    Mr. Ryun. Following the line of thinking with Mr. Park on 
the cost involved. The Federal Government has at this point 
spent roughly $9 billion.
    Mr. Horn. Right, by the end of this fiscal year.
    Mr. Ryun. How many billions of dollars will the private 
sector have spent?
    Mr. Horn. Well, the original estimate of the computer 
consultants, they were one of our witnesses when we started in 
on this in April 1996, they said this is a $600 billion 
worldwide problem. Since we are half of the computers in the 
world we are $300 billion and the rest of the world was $300 
billion. And I asked what do you think the executive branch 
will cost us, they said it will be about $30 billion. And 
within about 5 months I said my instincts looking at this is 
that it will be around $10 billion. Right now I'm closer than 
the experts are. That's simply a hunch. It turned out that way. 
But they are going to spend about $9 billion through this 
fiscal year, and that's 3 months, October, November, and 
December, prior to January 1st.
    So let me ask you on Western Resources, how many plants do 
you have that you have to worry about? Did you go plant by 
plant?
    Mr. Park. Yes. We have seven power plants that we went 
through all of the systems, and each of them were tested.
    Mr. Horn. And each of them are now in conformity?
    Mr. Park. Yes.
    Mr. Horn. As part of the grading of the Federal Government 
progress we recently evaluated readiness of 43 essential 
Federal programs, I'm just reading that inclusion to a number 
of questions. For some programs like food safety inspection, 
public housing, we remarked that the program readiness was 
unknown because we needed more data as to when the computer 
systems and contingency plans would be ready. Social security 
has had an A from us in every corner. Social Security also gets 
an A on the program money going out. They not only started it, 
but they stuck with it. It took them really 10 or 11 years.
    And so the other I mentioned was the weather system, they 
have got a fancier name now, but it's still the weather system 
as far as I'm concerned, it means the farmers will find out 
when a storm is coming in Kansas. And we have obviously a whole 
series of things such as Medicaid and Medicare that we aren't 
convinced yet that they have got this thing working right up to 
January and in compliance before January 1st, I think they 
will.
    Federal Aviation is another one. I've held four hearings on 
that this last year and the Aviation Committee of the House has 
held another hearing and so it goes. But we think that will be 
in good shape based on the current administrator and what she's 
doing. So I think we can fly. As I have said to many, she and I 
are both flying that night. I'm going to Los Angeles, she's 
going to New York. I hope the plays are good and I hope Los 
Angeles' weather will be good because it will be snowing at 
Dulles or getting ready for it to snow on January 1st. My wife 
thinks I'm crazy, but that's OK, that isn't a new thought. I 
just thought I should give my faith over to the air 
controllers. And I have told the Administrator not to mess with 
them before we get on board.
    Southwestern Bell, ``Just last week there was a software 
problem that created a temporary 3 hour phone outage. 
Supposedly this was not Y2K related. And realizing there can be 
problems at any time, when will the contingency plan be 
implemented, 1 hour, 2 hours, 3 hours, etc.?'' Do you have any 
estimate on that?
    You're absolutely right. When President Kennedy was 
assassinated everybody picked up the phone in Washington and 
everything came to a standstill, and that can happen any day as 
people wonder about their friends and relatives and so forth.
    Mr. McKenzie. Our network has been improved since the 
Kennedy assassination so that when everyone does pick up their 
phone, there are essential lines that are maintained such as 
pathways between emergency agencies, so it won't be as serious 
of a problem as it was back then. Contingency plans for us kick 
in instantly once we realize there is a problem. We have dealt 
with disasters since the beginning of telecommunications, we 
know how to deal with disasters.
    The problem last week, and I'm glad it came up because it 
was not Y2K related. A very good technician of ours made an 
error when making a software upgrade. And he instantly knew he 
made an error, we ended up rebooting the system to make it work 
right. The system never completely failed, it just moved slow. 
We are now working with the provider of that piece of equipment 
so that we also have a fail safe should another technician 
sometime in the future make that error. I have been in this 
business 20 years and I know one technician for sure in Topeka, 
KS that will never make it again.
    Mr. Horn. Isn't the Internet designed to solve that problem 
if there was a catastrophe to get around the obstacles? To what 
degree are there plans to use the Internet? That's why it was 
started, it was for National Security.
    Mr. McKenzie. I was told it was to collect taxes.
    Mr. Horn. You have just given us an idea. Frankly, they 
would try to tax the air if they could.
    Mr. McKenzie. With the exception of very few, most people 
access the Internet via Southwestern Bell. So the contingency 
plans we have in place for local telephone voice calling is the 
same that we have in place for data communication.
    Mr. Horn. But I just wondered, you haven't really tried the 
Internet at this point to see if that would be helpful?
    Mr. McKenzie. I do not have a specific contingency plan 
that depends on the Internet to answer your question directly, 
no.
    Mr. Horn. I just wondered if anybody has given thought to 
that. I probably should ask the Vice-President, apparently he 
invented it. He would take that in good spirit.
    ``If hospitals can't get their bills out correctly over the 
systems they have now, how can they truly assure us, convince 
us, that things will go smoothly?''
    What's the answer to that, Ms. Rubeck?
    Ms. Rubeck. Well, as I said before, each hospital has to 
deal with its own unique situation. Billing errors are not 
unique to the health care industry, as I myself can attest, and 
errors do occur. Because humans are entering the data, errors 
do occur. What I can assure you is that first and foremost the 
very first line of attack that hospitals took was inventorying 
every piece of medical equipment in their hospitals and 
contacting vendors, finding out by serial number about 
compliance, yes or no. If it's no, it's replaced.
    So patient safety has always been the very first and 
foremost concern and was the first thing addressed. The 
business issues, the business side of it, is also being 
addressed. And while I can't say that no errors are ever going 
to occur, because errors occur now, and, like I said, it's not 
unique to our industry, I know from working with the 
information systems people in Kansas hospitals that those 
systems are also being addressed in detail.
    Part of our concern and something that was expressed in the 
earlier panel is the interfaces that we have to make with 
various insurance companies, including HCFA for Medicare and 
Medicaid claims. If HCFA isn't ready, hospitals will be 
affected very adversely or they could be. We also like to make 
the assurance that regardless of whether that system is up and 
whether our hospitals are able to communicate with HCFA. That's 
a separate issue from patient care. Patients will continue to 
be cared for regardless of what paper snarls we have to 
untangle.
    Mr. Horn. Last year when we were in Cleveland we had 
excellent testimony as to what they had examined in terms of 
emergency room particular equipment. There is a Website 
nationally where all hospitals can plug in their particular 
thing, whether it be x ray or whatever, MRI. And I take it 
you're all using that same thing to save energy, because if you 
put the model number, manufacturer, it's all there. If it isn't 
there, you make a new entry.
    Ms. Rubeck. Right. It is a fee based service. We have made 
that available to our hospitals at an extremely reasonable cost 
because especially many of our rural hospitals, aren't able to 
pay thousands and thousands of dollars to find this.
    But there is a service on the Internet where you can any 
time of day, 24 hours a day, 7 days a week you can find a piece 
of equipment by serial number and get the manufacturer's 
statement of compliance or noncompliance.
    Mr. Horn. The Nuclear Energy Regulatory Commission told us 
that they were monitoring about 10 percent of the reactors. We 
questioned that and we still haven't heard from them in 
writing. We wanted 100 percent. They said orally that, ``Well, 
we have different types of reactors than the French do and 
thank heavens than the Soviets do.'' So they are not worried as 
much as some people are. We don't have that many reactors in 
this country, rather than only 10 percent of them. So I don't 
know if any of you can comment on that. Any of you use nuclear 
reactors to generate power? Mr. Park.
    Mr. Park. Chairman Horn, Western Resources is part owner of 
Wolf Creek Nuclear Power Plant. We are not the operating agent 
so it's the Wolf Creek Nuclear Operating Corp. that runs that 
plant. But we have worked very closely with them. And my 
counterpart at Wolf Creek, Mr. Bill Eils, and I work together 
on many occasions, share information, share readiness progress 
on both of our projects. I know that the NRC is looking at Wolf 
Creek because they have been there to do an audit, which Wolf 
Creek passed with flying colors.
    I also know that the NRC has issued a generic letter to all 
nuclear power plants that requires them to be ready and certify 
their readiness to the NRC to keep their operating license 
valid. To my knowledge Wolf Creek is fully on track to be able 
to certify to the NRC that they are ready and expect to keep 
their operating license.
    Mr. Horn. The question that gave me the information for the 
other part says that utilities themselves you have to remember 
are self-reporting. And that's of course our situation in 
looking at each Federal agency, those are all self-reporting. 
When we send the General Accounting Office they verify that, 
and the Inspector General's of the various agencies verify 
that, and they also hire outside consultants to verify that. 
And the proof in the pudding, of course, will be on January 1, 
2000 to see if the information given us in the last quarter or 
last 2 to 3 years is accurate. If it isn't accurate, they will 
have a few problems. So this nuclear regulatory review 
apparently was requested by the Department of Energy.
    And in fact the author of the question says, ``The real 
test of Y2K readiness on an industry level is set for September 
when a full dress rehearsal of December 31, 1999 will be 
simulated.'' On another question he says, ``If electricity is 
such a critical measure, why was it decided to report via a 
self reported survey and what level of oversight is provided 
directly inside the utilities themselves?'' Since we have two 
utilities here, give us your best shot as to your verification 
system if it's self reported.
    Mr. Park. It is self reported, but I think that if we were 
reporting anything grossly different from the majority of other 
utilities, the other electric utilities in the country, that 
might raise some eyebrows. The fact that that is not true would 
lend credence to the fact that what we have found through our 
remediation, and it is admittedly self reported to NRC, we are 
finding the same sorts of things that the majority of other 
utilities are finding.
    On a different note, we have had an external agency in to 
audit our year 2000 efforts, an independent auditor, Arthur 
Andersen. So it wasn't just our own eyes looking at this.
    Mr. Horn. Mr. McKenzie.
    Mr. McKenzie. I'm not familiar with our self-reporting 
requirements. I know the process we have followed within the 
company has been to find the problem, fix the problem, test the 
problem, physically use whatever has been fixed and then we 
have pretty much celebrated from that point on. There is no 
gain for us to pretend we did something we didn't do or to hide 
something that didn't work right.
    Mr. Horn. And the individual that wrote this question on 
the nuclear power industry points out that the banking industry 
is onsite regulated by various regulatory agencies that require 
outside verification of that. And apparently the Department of 
Energy really has not required that, but they have asked the 
Nuclear Regulatory Commission to take a look at it. And that is 
in part an outside agency. And presumably some of the State 
public utilities commissions have done that.
    Have you been in States where that's true, where they want 
outside verification? Say the Kansas Public Utility or if you 
go outside of Kansas, you have a number of States, I would 
think, in your area, don't you?
    Mr. Park. Actually, for electric service we deal with 
Kansas. And the Kansas Corp. Commission has inquired into our 
readiness. However, they have accepted the NRC status report, 
that's North American Electric Reliability, the organization 
that we have been reporting to on a monthly basis. The Kansas 
Corp. Commission receives that data and accepts that as our 
input to them.
    Mr. Horn. One general question for all of you. ``To what 
extent are you relying on suppliers and how can you be certain 
that those organizations and its products are year 2000 
compliant?''
    Mr. McKenzie. I'll go first. We have about 1,400 suppliers 
that provide us with about 15,000 different products, and we 
are about 96 percent compliant with them right now. They test, 
we retest and we use it to prove that it really does what the 
test says it will do. Again, we are 96 percent complete with 
that process.
    Mr. Horn. Any other comment on that?
    Ms. Rubeck. Hospitals deal with many suppliers, whether 
it's from medication to basic medical suppliers, many kinds of 
things like that. I know that the American Hospital Association 
is assisting us in making sure that supply lines will be 
operational given any number of contingencies. And like many 
other agencies here, much of hospital planning is very similar 
to disaster planning. If supply lines are down, laying extra 
supplies, power generators, that kind of thing is all part of a 
hospital's preparedness for any kind of disaster.
    So I know personally, at least anecdotally, of many 
hospitals that are contacting every single person they do 
business with to assess their Y2K compliance. I'm filling out 
four to five surveys from our own members every week wondering 
whether the Association is year 2000 compliant. Even though we 
have no connection with how they provide patient care or how 
they do any kind of billing. Every single entity that they do 
business with, they are contacting.
    Mr. Horn. Any other comments? Mr. Willemssen, any comments?
    Mr. Willemssen. No.
    Mr. Horn. Let me close out the questions with posing an 
answer, and the question is obvious. Our staff director, Mr. 
George, happened to buy the Kansas City Star today and the Ann 
Landers column is worth reading.
    It says,

    Dear Ann, please warn your readers about a scam I just 
heard about, elderly folks are particularly vulnerable. Here's 
the way it works. The con artist calls and says he or she 
represents the person's bank, he informs the person that the 
bank is having difficulty meeting requirements to be computer 
ready for Y2K. The con artist says, ``The bank needs you to 
transfer your money to a bond account structured to protect 
your money until the bank can be fully Y2K compliant.'' Then he 
asks the person to confirm his or her account number and give 
verbal authorization to transfer the funds. This is a huge 
scam, banks are almost all Y2K compliant and would never ask a 
client to confirm a bank account or its number over the 
telephone. If you give out this information, these con artists 
could get their hands on your money and you will never see it 
again.
    Please, Ann, tell your readers never to give out this kind 
of information no matter who asks, and to report such calls to 
the phone company or the State Attorney General's Office. Thank 
you for getting the word out. ----SP in Missouri.

your neighbor.

    Dear Missouri, some scam artists are so smooth and sound so 
convincing that the average person would suspect nothing. Your 
admonition never to give an account number or approval for 
transferring funds over the phone should be carefully heeded. 
Thank you for the heads up.

    So, you know, scum are scum and the scum are the ones that 
are now working the Y2K problem. So that's a pretty sad state 
of affairs.
    Mr. Chairman, I'm going to thank the staff who participated 
in this. J. Russell George, the staff director and chief 
counsel seated down there. Matthew Ryan is the senior policy 
director for the year 2000 hearing. Patricia Jones in the 
middle down there is the American Political Science 
Association. Grant Newman is the clerk for the subcommittee, 
and we have the three interns in Washington did a lot of work 
on this, Lauren Lufton, John Phillips and Justin Schlueter.
    And from Congressman Jim Ryun's office, they have been very 
helpful. I must say Kansas has the nicest people I have run 
into in a long time. Mr. George is from New York, so he's not 
used to that kind of treatment. But I kid him a lot. We go up 
there and we can't find the subway, we went into the mayor, he 
said, we know where it is.
    Anyhow, Michele Butler, chief of staff, we thank her very 
much. And Amy Glaze, the constituent service representative, 
Ron Cheevers the department of administration here in the 
Governor's area, and the court reporter Sandy Rider. Thank you 
for the help.
    And, Mr. Chairman, I am yielding back to you, we are going 
to recess to the Illinois hearing and then the Michigan 
hearing, so this is a continuing body here like the U.S. 
Senate.
    Mr. Ryun. Mr. Chairman, first of all, let me say thank you 
very much for coming to Topeka. I know I can speak for all of 
us that we have been greatly informed, we have learned a lot, 
there are still questions to ask, but I also know that as a 
result of your presence and the panelists and the information 
that they have provided, you have helped accomplish three of 
the things that I had hoped to do.
    I might mention that my coach Bob Timmons is here, he's the 
one who taught me at a very young age it's always worthwhile to 
have a goal and purpose. I actually had three purposes for this 
time today. One was to dispel the rumors, to be able to provide 
answers. Another was to provide information, to let those that 
were listening and also the subcommittee to be able to glean 
information from this part of the country. And also the third 
part was to ask and answer questions. And it's been very 
interactive.
    I know we did something today, actually the first time, 
that is passed out little cards so that there would be 
interaction from you, the constituents having an opportunity to 
ask questions.
    So on behalf of all of Kansas I would like to thank you and 
the subcommittee for coming and thank all of you for coming 
today. And let's just say that if there are other questions or 
other concerns that you have, the office of the Second District 
does stand open ready and willing to help you.
    And I guess it's mine to say that we are now in recess. 
Thank you very much.
    [Whereupon, the subcommittee was recessed subject to the 
call of the chair.]


 OVERSIGHT OF THE YEAR 2000 TECHNOLOGY PROBLEM: LESSONS TO BE LEARNED 
                    FROM STATE AND LOCAL EXPERIENCES

                              ----------                              


                         THURSDAY, JULY 8, 1999

                  House of Representatives,
Subcommittee on Government Management, Information, 
                                    and Technology,
                            Committee on Government Reform,
                                                    Naperville, IL.
    The subcommittee met, pursuant to notice, at 9:10 a.m., at 
Naperville City Hall, Naperville, IL, Hon. Stephen Horn 
(chairman of the subcommittee) presiding.
    Present: Representatives Horn and Biggert.
    Staff present: J. Russell George, staff director and chief 
counsel; Matthew Ryan, senior policy director; Grant Newman, 
clerk; Patricia Jones, American Political Science Association 
congressional fellow; Bonnie Heald, director of communications; 
Kristin Wolgemuth, legislative director; Kathy Lydon, district 
chief of staff; John Hoffman, district director; and Yadira 
Rosas, staff assistant.
    Mr. Horn. The hearing of the House Subcommittee on 
Government Management, Information, and Technology will come to 
order. I would like to welcome and thank your representative, 
Congresswoman Judy Biggert, who is the vice chairman of this 
committee in Washington, for being such a gracious host as the 
subcommittee meets in her hometown here of Naperville. It's a 
beautiful area, as we told your distinguished mayor, George 
Pradel, and we are most grateful for all the courtesies that 
have been given to the subcommittee in making these 
arrangements with both Congresswoman Biggert's staff and the 
mayor's and city's staff. It's a lovely area you're in.
    The year 2000 computing program affects just about every 
aspect of Federal, State, and local government operations. 
Furthermore, it affects private sector organizations and could 
impact the lives of most individuals.
    From Social Security to utilities to local emergency 
management, the year 2000 computer bug has certainly been a 
large management and technological challenge for all of us. No 
single organization, city, State, even country can solve the 
problem alone.
    The problem, of course, dates back to the mid-1960's, when 
you had computers that would fill a room this size, and right 
now your personal computer contains more storage than they had 
in the sixties. So somebody had the bright idea, look, we use a 
lot of dates, why are we punching in 1967, why don't we just 
put in '67; and we moved from a 4-digit year to a 2-digit year.
    And they knew at the time that as you got to the year 2000, 
you'd have some trouble. In other words, January 1, 2000, on 
the computer, it's 00. The 20 is not there. So the computer 
thinks it's 1900 and you're back to the days of McKinley. Might 
not be too bad, but there it is. And they said, Oh, well, we're 
Americans, we'll solve that. Technology will solve it. 
Technology has not solved it.
    In the estimates we had in our very first hearing on this 
in April 1996 when we started this in the Congress was that it 
was a $600 billion worldwide problem and since America has half 
the computers, it is a $300 billion American problem. And I 
asked at that time, what would it cost to remedy and adapt the 
Federal Government's computers, and the Gardner Group estimate 
was $30 billion. As the year went on and I held more hearings, 
I thought they were a little high and turns out I'm right and 
they're wrong, but they get a lot of money as consultants and 
we don't; that is, the fact that we are spending $9 billion in 
Federal money to get their computers adapted in the executive 
branch between now and the end of the fiscal year on September 
30th. It might well get to $10 billion before we're done. But 
again, there's no simple solution to this, but hard work of 
going through the various codes and all of this.
    Current estimates show the Federal Government will spend 
going on, as I say, $9 to $10 billion. The President's Office 
of Management and Budget has identified 43 essential Federal 
programs such as Social Security, Medicare, the Nation's air 
traffic control system. Each day these programs provide 
critical services to millions of Americans. Of these 43 
programs, 10 are federally funded State-run programs, including 
Medicaid, food stamps, unemployment insurance, and child 
support enforcement. Several of these State-run programs are 
not scheduled to be ready for the year 2000 until December, 
leaving little if any time to fix unforeseen problems.
    Data exchanges and interdependencies exist at all levels of 
government and throughout the private sector. A single failure 
in the chain of information could have severe repercussions. 
For example, let me briefly illustrate how the U.S. Social 
Security program uses computers. The Social Security 
Administration was the first to deal with this problem. No 
President told them to do it. They just did it and it's the 
best run agency, without question, in Washington. It was in the 
sixties, and it is in the nineties. And so they started on 
adapting their tapes where they had millions of code that had 
to be checked. They are fully in compliance now with the year 
2000 and there shouldn't be any problem.
    But they provide the data to the financial management 
service of the Department of the Treasury that actually cuts 
the 43 million checks for one part of Social Security and 50 
million checks a month in another part. Turned out the 
financial management service in the Department of Treasury was 
having real trouble, and over the last few months, by focusing 
on them, they've pulled out of that and they now cut the checks 
and electronically deposit it in your bank account. And there 
are a number of other organizations that are related to that.
    So what we're talking about here is a very interactive, 
interrelated system and many of the Federal agencies, when we 
said what's your contingency plan, they said our contingency 
plan is the post office. In other words, if we can't work the 
code and we can't get the electronic deposits, we'll just mail 
it to them. Well, that didn't quite work. We had the post 
office before us and the post office had no contingency plan if 
they dropped down. So those are the kind of things that you run 
into.
    The bottom line is if any of these entities fail, from the 
Federal Government to the local bank or the Postal Service, a 
deserving individual will not receive the payment. Now multiply 
the situation by millions of people that receive Social 
Security benefits. There's 43 million in one program, 50 
million in the other, and you can appreciate the magnitude of 
just one aspect of the year 2000 issue.
    Fortunately, the Social Security Administration has been 
working on the problem. As I say, it's in good shape. But the 
computers to work, we need power, and that's one of the 
questions we asked everywhere we go.
    We are holding six of these field hearings this summer. We 
started in Topeka yesterday, recessed to Naperville and will 
recess to Detroit and then we will be back in Washington for 
the opening of the session again.
    So electric power is key here because thousands of plants, 
if that power due to either a malfunctioning microchip or 
whatever it is, is not delivered, we will just have people laid 
off and everything else. But I don't think that's going to 
happen if we all do what we have to do and we're going to be 
glad to hear it from the companies that relate to the power, 
whether it's coal or hydro or wind or solar, nuclear; whatever 
it is, we're asking that question.
    So we want the lights to stay on. From a personal 
standpoint, I realize when confronted with a personal 
emergency, I can call assistance 911 and feel confident the 
phone will be answered appropriately and a competent authority 
will respond rapidly.
    Well, in some areas we're having a problem on that. 
Sometimes there aren't enough frequencies for law enforcement 
areas. When we went through emergency planning in Los Angeles 
County, it would have been 10 years ago at this time, we 
realized most of the frequencies were in New England and the 
East. We needed them in the West. We have 81 cities in the 
county of Los Angeles which has 10 million people and when you 
need all those police departments and sheriffs' offices to 
merge, you have real problems in coordination, be it an 
earthquake, a fire, a flood, whatever.
    And Illinois is used to floods and other things, just as 
we're used to all of them and we don't have tornadoes that the 
South seems to have. Although we did have a roof torn off in my 
hometown last year, which had never happened in 100 years. One 
thing for sure, there are only about 176 days till January 1, 
2000. The clock is ticking and, accordingly, the testimony we 
receive today is very important and we thank the witnesses for 
coming.
    Let me explain some of the procedure. Mrs. Biggert will 
preside at this session as the vice chairman of the 
subcommittee. I'm simply here to ask a few questions now and 
then. She will swear in the witnesses. This is an investigating 
committee of the House of Representatives so all of the 
witnesses, when that panel comes up, if you would stand before 
we start, raise your right hands, and Mrs. Biggert will 
administer the oath. Then we will go down the line, based on 
the agenda, and one by one we will hear the testimony.
    And we have your written presentations. They will 
automatically go in the record when she calls your name, and 
then we'd like you to spend 5 minutes, not more than that, to 
give us sort of a summary orally. We don't want you to read 
your statement. If that happens we'll be here till midnight, 
and we can't because we've got to be in Detroit. So 5 minutes 
will be when the gong comes.
    Mr. Ryan, the counsel to the subcommittee, among others 
here, will put up the 1-minute marker so you know you've got 1 
minute to go to finish that particular round. The reason we do 
this is we want a dialog to occur after you make your key 
points. We want the panel to interact with itself. We want Mrs. 
Biggert and myself to interact with you, and we are also asking 
the audience for questions.
    We will be passing out cards, and if you have a question 
particularly of this panel, please, if you know what the 
subject is, just enter the type of area, and say here's the 
question; it will be picked up; we will eliminate the 
duplicates because seven people will have the same question; 
and put it to them after the panel is done with its 
presentations and then that will get the audience into it. It 
will get Mrs. Biggert and I into it, and our own staff has 
already given us, I don't know how many questions, which we do 
just as we go through the testimony. So we hope that way we do 
get all the issues on the table.
    And now it is my great pleasure to turn it over to the vice 
chairman of the subcommittee who's conducting the rest of the 
hearing. Thank heavens.
    [The prepared statement of Hon. Stephen Horn follows:]
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    Mrs. Biggert. Thank you, Mr. Chairman. Welcome to the 13th 
Congressional District of Illinois. I'd like to say, with as 
much modesty as possible, that you are in one of the most 
vibrant and exciting parts of the country right here in 
Naperville, IL. I'd also like to thank Mayor Pradel and the 
city council and the city of Naperville for allowing us to 
conduct the hearing here today. It is a wonderful facility and 
we really appreciate being able to hold the hearing here. Let 
me thank all of you for coming here today.
    The purpose of our hearing today, which we have entitled 
are you Y2K OK, is to help people understand what they should 
expect from the millennium bug and how they can prepare. I 
think our panelists today will help to answer the questions 
that many of us have.
    The media is full of stories about the Y2K bug. I'm told a 
disaster movie is on the way. One of my younger staff members 
even informs me that it was the basis of an episode on 
``Beverly Hills 90210'', obviously I can't--that doesn't roll 
off my tongue, so I haven't watched it. I suspect also that 
programmers who dropped the two digits from their computer 
codes had no idea that they were actually developing plot lines 
for Hollywood. But the Y2K bug is not simply a creation of the 
media. It is real and it is coming.
    A recent poll showed that more than two-thirds of Americans 
believe that they will experience at least minor problems 
related to the bug. I think they are right to be at least a 
little concerned. There should be some disruptions in services. 
There may be some shortages. I believe that we should prepare 
for this as we do for a big snowstorm. This is Chicago land and 
there may be no serious Y2K problems, in which case you'll be 
ready for the next snowstorm which inevitably will come 
probably in January or February, right after the turnover.
    So what does it mean to prepare commonsense things? I think 
we should have extra food and water on hand. Make sure your 
car's gas tank is half full. If you take prescription 
medicines, to have at least a week's supply. And I think the 
panelists will come up with a whole list of things and advice.
    Since I don't expect America to suddenly become a set for a 
disaster movie or even anything close, in many ways our Nation 
is prepared for the Y2K bug but in other ways we are not. As 
the vice chairman of the subcommittee, I can say that there has 
been a lot of progress in the Federal Government, largely 
because of Chairman Horn's efforts to raise awareness of this 
issue.
    But it troubles me, for example, that the Air Traffic 
Control System is not yet prepared and we have not been given a 
date when it will be prepared. Does that mean that the planes 
are going to be falling out of the sky on December 31st? 
Absolutely not. But I can tell you that I might not be in the 
air that day. I don't travel during snowstorms if I can avoid 
them and I don't plan to travel as the clock ticks over. But if 
progress continues to be made, and I think it will, there may 
only be some small glitches. But as a former Girl Scout, I am 
taking to heart the advice of ``be prepared.''
    So I look forward to hearing from the panelists today and 
what we should be doing and what we don't have to do because 
the year 2000, January 1st, should be a time of celebration. It 
is the turn of the century so we want to make sure that we can 
enjoy the rollover and not have to worry about these glitches.
    I think I'll swear in the panelists and then introduce 
them. If you could all stand, please.
    [Witnesses sworn.]
    Mrs. Biggert. Today we'll have three panels and then we'll 
have questions after the first panel. Speaking first today will 
be Joel Willemssen. He's from the General Accounting Office in 
Washington. With the way that the weather has been in 
Washington, I suspect that he's probably glad to be out of 
Washington for a few days since they've had weather over 100 
degrees. And Joel has testified before our committee many 
times, and his agency is really the watchdog of what the 
Federal agencies are doing. So we look forward to his 
testimony.
    Mary Reynolds is the chief technological officer for the 
Office of Governor Ryan in the State of Illinois and is an old 
friend. I'm happy to see her. I miss being down in Springfield 
and seeing all my old friends.
    Don Carlsen is the information systems director of the city 
of Naperville and will be talking about the city services that 
are being affected. And this is his hometown, and I know we'll 
hear good things from him.
    Tom Mefferd is the coordinator for DuPage County Office of 
Emergency Management, and we're in the heart of DuPage County, 
so thank you for coming, Tom.
    Robert Martin is the manager of water operations for the 
DuPage Water Commission, and the water commission provides 
service to 700,000 residents, so he's got a big job to ensure 
that that water will be ready for us on the rollover.
    So thank you all, and we'll begin with Joel Willemssen. 
Thank you.
    [The prepared statement of Hon. Judy Biggert follows:]
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  STATEMENTS OF JOEL C. WILLEMSSEN, DIRECTOR, CIVIL AGENCIES 
INFORMATION SYSTEMS, GENERAL ACCOUNTING OFFICE; MARY REYNOLDS, 
   CHIEF TECHNOLOGY OFFICER, ILLINOIS GOVERNOR'S OFFICE; DON 
 CARLSEN, DIRECTOR OF INFORMATION SYSTEMS, DEPARTMENT FOR THE 
  CITY OF NAPERVILLE; TOM MEFFERD, COORDINATOR, DuPAGE COUNTY 
 OFFICE OF EMERGENCY MANAGEMENT; AND ROBERT MARTIN, MANAGER OF 
           WATER OPERATIONS, DuPAGE WATER COMMISSION

    Mr. Willemssen. Thank you, Vice Chair Biggert, Chairman 
Horn. Thank you for inviting GAO to testify today.
    As requested, I'll briefly summarize our statement on the 
Y2K readiness of the Federal Government, State and local 
governments and key economic sectors.
    Regarding the Federal Government, the most recent reports 
indicate continued progress in fixing, testing, and 
implementing mission-critical systems. Nevertheless, numerous 
critical systems must still be made compliant and must undergo 
independent verification and validation. Our own reviews of 
selected agencies have shown uneven progress and remaining 
risks in addressing Y2K and therefore point to the importance 
of business continuity and contingency planning.
    If we look beyond individual systems and individual 
agencies, the Federal Government's future actions will need to 
be increasingly focused on making sure that its highest 
priority programs are compliant. In line with this, the Office 
of Management and Budget has identified 43 high-impact programs 
such as Medicare and Social Security and, as you know, Mr. 
Chairman, we're currently reviewing those programs for you to 
determine the executive branch's progress. But what I can tell 
you at this point, it is very clear that much additional work 
is needed to make all these programs compliant by the turn of 
the century.
    Available information on the Y2K readiness of State and 
local governments also indicates that, overall, much work 
remains. For example, according to recent information on States 
reported to the National Association of State Information 
Resource Executives, about 18 States had completed implementing 
less than 75 percent of their mission-critical systems.
    State audit organizations have also identified significant 
Y2K concerns in areas such as testing, embedded systems, and 
contingency planning. Recent reports have also highlighted Y2K 
issues at the local government level. For example, March 1999, 
the National League of Cities' poll of over 400 representatives 
found that almost 70 stated that they would finish 75 percent 
or less of their systems by January 1, 2000.
    Another area of risk is represented by Federal Human 
Services programs administered by States; programs such as 
Medicaid, food stamps, unemployment insurance and child support 
enforcement. Of the 43 high-impact priority areas I mentioned 
earlier, 10 of these are State-administered Federal programs.
    OMB reported data on the system supporting these programs 
shows that numerous States aren't planning to be ready until 
close to the end of the year. Specifically, a large number of 
State systems are not due to be compliant until the last 
quarter of 1999. Further, this is based on data that has not 
yet been independently verified.
    Beyond the risks faced by our governments, Y2K also poses a 
serious challenge to the public infrastructure and key economic 
sectors in other countries. We've made a number of 
recommendations to John Koskinen and the chair of the 
President's Y2K Conversion Council, and the council has made 
strides in obtaining needed readiness information in key 
sectors. Again, nevertheless, there's a great deal of work 
remaining in the less than 6 months we have until the turn of 
the century.
    Accordingly, there still needs to be a great deal of 
emphasis on those areas to make sure that they're ready in 
time.
    That concludes the summary of my statement and after the 
panel is done, I would be pleased to address any questions you 
may have. Thanks again.
    [The prepared statement of Mr. Willemssen follows:]
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    Mrs. Biggert. Thank you. Ms. Reynolds.
    Ms. Reynolds. Thank you very much. Congressman Horn, 
welcome to Illinois. And Congresswoman Biggert, it is great to 
see you again. Thank you for inviting me to share where the 
State of Illinois is in its preparation for Y2K.
    Governor Ryan has made Y2K a priority in his administration 
and has taken very aggressive steps to make sure that every 
agency of State government has in fact done all of the 
reasonable steps to become Y2K ready. In the first weeks of his 
administration, Governor Ryan created the Illinois Technology 
Office. Included in my duties as the head of that organization, 
I oversee the Y2K efforts of State government.
    This spring we've designed and implemented a new monthly 
reporting system by State agencies that adopts a unique 
approach to definitions and public reporting. I am not aware of 
any other State in the Nation that is publicly reporting the 
amount and depth of information Illinois is providing in regard 
to the Y2K readiness of State agencies.
    While many organizations have chosen to remediate computer 
systems, our focus has been to ensure that the functions of 
government are Y2K ready and operational. We ask each agency to 
report the functions and services that it is required to 
perform and then list each of those systems or components that 
support the function.
    Agencies are asked about the detailed readiness of all the 
components to support those functions of government. The 
supporting components include all types of computer systems: 
Mid-range, PCs, desktop, mainframes as well as the electronic 
data interfaces, embedded systems, and supplier customer 
dependency chains.
    We do not consider a system as Y2K ready until all the 
supporting systems and components that support that are in fact 
ready. That is a very difficult definition to meet.
    Within the monthly report, we ask each agency to rank the 
tiers by functions. Programs, services, or functions included 
in tier 1 could not be interrupted for more than 24 hours 
without endangering the public health, welfare, or safety of 
the citizens of Illinois or seriously impacting the State's 
revenue streams. Tier 2 functions are those that cannot be 
interrupted for more than a week, and tier 3 functions are 
everything else.
    A new monthly report will be released next week, but 
according to our latest report as of May 31st, State agencies 
have completed 85 percent of the effort to be Y2K ready.
    Our current focus among the agencies is now on contingency 
planning. We're doing this on two levels statewide. The 
Illinois Emergency Management Organization is coordinating our 
statewide consequence management plan while the individual 
agencies are preparing contingency plans for their own 
functions of government. Overall, I'm coordinating these plans 
to make sure we integrate the functions of government and are 
able to employ the resources where they are needed.
    Governor Ryan is also emphasizing the need for State 
government to work with other levels of government as well as 
the private sector to prepare for Y2K. Over the past several 
months we've worked closely with Federal agencies as well as 
local governments and private industries to coordinate efforts 
and assist each other in preparations.
    Overall, under Governor Ryan's leadership, the State of 
Illinois is doing everything it reasonably can to prepare for 
Y2K. We must now make sure that citizens are aware of our 
efforts and take a reasonable approach to their own 
preparations. Later this summer and fall, we'll be conducting 
community forums throughout Illinois at many of our community 
colleges. We'll also be distributing literature and pursuing 
public awareness campaigns, and we will continue to update our 
new enhanced Y2K Web page to make sure the latest information 
is also available electronically.
    We believe the best way to relieve and ease public concern 
and apprehension over Y2K is by communicating openly and 
frequently about the status of our Y2K efforts. We appreciate 
your attention to this matter and at the appropriate time I'll 
be happy to answer any questions.
    Mrs. Biggert. Thank you very much.
    [The prepared statement of Ms. Reynolds follows:]
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    Mrs. Biggert. Next is Mr. Carlsen.
    Mr. Carlsen. Congressman Horn, Congresswoman Biggert, thank 
you for allowing me to testify today. I think the city welcomes 
this kind of a hearing because we have really done a lot of 
work in this area and really feel confident that we're working 
toward compliance.
    To date, the city, the computer systems in the city, are 96 
percent compliant. We expect to be 100 percent compliant by 
September. I think the State has adopted some great compliance 
guidelines that I think we may look into as well. There's some 
really nice definitions as far as the linkages between the 
systems. It's something we're going to look at.
    The systems that we're looking at that we feel that 
citizens need to know more about that may be affected in our 
area really come under four main areas. Those would be the 911 
system, the utilities, mainly electric and wastewater.
    We own the electric utility in Naperville, which is not 
common in Illinois. It may be more common in California, Texas, 
those types of places, but we buy power wholesale from ComEd so 
we have some linkages there: Traffic signals and heat for 
residents, which really fall under Nicor, and natural gas as 
well as ComEd.
    As far as the 911 system goes, the city does operate a 
public safety answering point in the police department, and we 
have conducted rigorous tests on the software, hardware, and 
phone interfaces, radio interfaces with those systems, and to 
date they have all proven to be compliant, and we have done 
some upgrading of those systems to make--some of them were not 
compliant originally. We have made them compliant at this time. 
Really a lot of work went into that. We actually had to travel 
to some test sites to do some work and really did a lot of work 
with our software vendor in that area.
    Within the utility arena, as I mentioned, the city owns and 
operates the electric distribution, water distribution, 
wastewater collection, and reclamation systems. We've tested a 
lot of our computerized and embedded systems within those 
plants and we are close to compliance on a number of those 
systems.
    Like many cities, we receive electricity and water from 
outside source. I mentioned ComEd, DuPage Water Commission, and 
we're pleased to note that both ComEd and DuPage Water 
Commission have worked closely with us to assure us of 
compliance and we're really--we're happy that they've done a 
lot of work in that area.
    Traffic signals present an interesting concern for 
residents not only in Naperville but a lot of different 
communities. The city is responsible for 118 signals within our 
jurisdiction. All of our signals have been tested, and we have 
found no problems with any of our systems. There is an issue 
with electricity if they do go out. The contingency plan is to 
use the full-length stop signs which would obviously cause a 
little bit of trouble in traffic but hopefully it wouldn't be a 
longstanding problem.
    As far as heat goes, living in the Chicago area we're 
obviously concerned that the weather may be bad, that there may 
be some problems with heating, with electricity or natural gas 
and, as I mentioned, we're working with Nicor and with ComEd to 
make sure that's not a problem.
    As far as contingency planning goes, we met actually 
yesterday, with all the department directors, representatives 
from different departments, to discuss contingency planning, 
and what we've really done is moved from the focus on computer 
systems to the focus on public safety, those types of areas. 
And that is being headed by our Emergency Management Agency, 
and I think within the next couple of months we'll have some 
contingency plans set so we can handle any kind of public 
safety situations, those types of things that may occur.
    In conclusion, I'd like to say we're cautiously optimistic 
that there will only be minor interruptions and no show-
stoppers relative to Y2K within the city of Naperville. As 
Congresswoman Biggert stated, we're adopting the statement 
philosophy. We're urging residents prepare as they would for a 
snowstorm. Our biggest problem that we feel may be out there 
may be the overreaction to any problems that occur on or around 
the new year.
    I look forward to answering any questions. Thank you.
    Mrs. Biggert. Thank you very much.
    [The prepared statement of Mr. Carlsen follows:]
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    Mrs. Biggert. Mr. Mefferd.
    Mr. Mefferd. Thank you, Vice Chairman Biggert, Chairman 
Horn. I would like to address real quickly the issues relative 
to DuPage County's preparedness as we look at the overall 
picture. One of the things that we need to look at is DuPage 
County's response in two fronts.
    First of all, internally, DuPage County is a facility much 
like everybody else's facility in big business. What we've 
tried to do is look internally at our computer systems. We've 
looked at our life safety systems. As of the end of June, we 
had been advised by our Management Information Department that 
we are 99.4 percent complete in upgrading for our computer 
systems and should reach 100 percent compliance by the end of 
July.
    Relative to our life safety systems, we've looked at things 
such as our ability to generate backup power if that was 
necessary. Heat and cooling capabilities for the county jail, 
for example, the convalescent centers and our other facilities, 
and we feel we are in good shape relative to those issues.
    Externally there are three major areas we looked at from 
the county's perspective. One of the biggest issues that we 
addressed externally was the issue of utility reliability. I'm 
not going to address that in great detail as you'll hear from 
them, not only with Mr. Martin directly following myself, but 
in the second panel. But with the assurances we have received, 
we feel pretty comfortable that utility reliability will be 
there, which allows us to move on to other areas.
    Second, as we looked at external issues, we looked at the 
issue of emergency communications, 911, our emergency radio 
transmitter sites around the county, that we've been assured 
that those systems are in good working shape. There's been a 
significant amount of work done with the countywide computer-
aided dispatch system to ensure that it, in fact, is reliable. 
There's been some hardware changes made in that area which 
assures that it will be up and running.
    Also, the issue of traffic control is something we looked 
at. The county has looked at five of its different type of 
controller systems which are common to all of our 100-plus 
intersections that we control. Every one of those five 
different types of controllers that the county uses has been 
tested by allowing the clock and the system to run from 10 
minutes prior to midnight to 10 minutes after midnight into the 
year 2000. There's not been one glitch in any one of those 
traffic control devices, and that information has been shared 
with all of our municipalities to ensure the reliability of 
their systems which are using the same type of controllers.
    As we move on to the area of public safety, and that's 
really where I want to focus today, a lot of questions 
routinely get asked around the country as we talk about 
emergency planning. Will do DuPage County develop a specific 
Y2K emergency planning? The answer to that question is no. The 
reason for that is that DuPage County, like every other county 
in the State of Illinois as well as around the country, is 
required by the State law as well as by the Federal Emergency 
Management Association to maintain an all hazard emergency 
plan. That plan must address everything from tornadoes and 
floods to utility failures or any type of other incident.
    The county emergency operations plan 2 years ago was 
reformatted, if you will, to be in concert with the Federal 
response plan. Specifically with the thought of the fact that 
if we have a disaster of large proportion that would be large 
enough to implement our entire emergency plan, it would 
definitely be big enough to bring in the Federal Government. 
And we wanted to ensure that we were all signing off of the 
same sheet of music, if you will. So our emergency plan that is 
currently in place is currently undergoing a revision at this 
time to make sure that it is compliant. That is required, by 
the way, by State and Federal requirements on a biannual basis. 
That will be completed by October 1st.
    Under that system, not only DuPage County but all of our 
municipalities operate under something called the Incident 
Management System or IMS. Under that system, there is one 
technical lead agency that assumes responsibility for any type 
of hazard that may occur, again whether it is a tornado or a 
flood or a civil disturbance or, in this case, the Y2K issue.
    As we have looked at our primary threats relative to Y2K, 
the major areas of concern as we look at this issue are law-
enforcement-related, so we have addressed that. The sheriff's 
office as well as local law enforcement are the technical lead 
in dealing with the Y2K-related problems that we anticipate. 
This Y2K response not only involves the sheriff's office but 
will involve a variety of other areas, such as the Department 
of Human Services and others.
    The County Emergency Operating Center, located in Wheaton, 
will be staffed prior to December 31st and through the rollover 
of the millennium, to make sure the county is available and is 
prepared to deal with any type of emergency.
    Let me real quickly close with two other areas that we feel 
are important. One is the importance of community preparedness, 
individual family preparedness. We realize, as you've 
indicated, Vice Chairman Biggert, that every person has a 
responsibility in this issue, not just government, and we are 
urging through a program called the Family Disaster 
Preparedness Program that individuals develop emergency plans 
on their own, that they have emergency supplies that will be 
available not only for a rollover in a Y2K scenario but any 
type of major emergency or disaster.
    Also, public information. We're working very hard at the 
county level to make sure every public information officer that 
represents any level of government within the county has the 
same information, has up-to-date information so that as they 
receive informational requests, we can address them.
    To close, let me bring up one very important point to 
ponder. We need to remember that the rollover will occur on 
January 1st. January 1st, 1999 saw this county as well as much 
of northern Illinois suffer through a major blizzard, a 
blizzard that was so large that the President of the United 
States declared us a Federal emer-
gency area. We need to remember that Y2K does not create 
snowstorms. And if in fact, as you've indicated before, we 
prepare for a snowstorm because again this is occurring in the 
middle of winter, then we ought to be prepared for Y2K.
    Mrs. Biggert. Thank you very much.
    [The prepared statement of Mr. Mefferd follows:]
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    Mrs. Biggert. And now Mr. Martin.
    Mr. Martin. Thank you. Just on a little bit of a 
background. The DuPage Water Commission purchases water from 
the city of Chi- cago for resale to utilities in DuPage County. 
The commission has water purchase agreements with 25 municipal 
utilities, Argonne National Laboratory, and one private utility 
with six service areas. It is estimated that the commission's 
utility customers provide service to approximately 700,000 
people.
    The commission has been working on the year 2000 compliance 
issue for close to 2 years. The two main information systems 
that the commission has are a supervisory control and data 
acquisition, known as a SCADA system, and a local area network. 
The SCADA system is the instrumentation that the commission 
uses to monitor and control water operations. The local area 
network serves as the administrative system used for word 
processing, payroll, account- ing, purchasing, and preventative 
maintenance.
    The commission has contacted its hardware and software ven- 
dors, and with our testing we feel that our hardware and 
software is year 2000 compliant.
    The commission's operations rely heavily on the Chicago 
Water Department, Commonwealth Edison and Northern Illinois 
Gas. The commission has sent Y2K compliance letters to these 
support- ing utilities, and the following are the responses 
received from these utilities.
    The Chicago Water Department has retained a consulting firm 
to work with city staff to evaluate the issue. Fortunately, the 
Jardine Water Purification Plant which is the plant that treats 
our water is in the process of installing a SCADA system and it 
would appear that their water treatment equipment is not 
vulnerable to Y2K.
    Commonwealth Edison has responded to the commission's in- 
quiry stating that their goal is to finish a companywide year 
2000 compliance by the third quarter of 1999. In addition, 
Common- wealth Edison's Y2K program Website indicates that 
January 1, 2000 falls on a weekend when electrical demand is 
relatively low and ComEd expects and plans to have excess 
generating capacity available at that time.
    Northern Illinois Gas has indicated that they have the 
necessary contingency plans.
    The commission is performing the necessary activities to 
mini- mize service disruptions due to Y2K problems. The one 
significant concern for the commission is if there were minor 
electrical outages at midnight on January 1, 2000. In this 
event the commission would not be able to close the discharge 
valves at the 74 delivery points to prevent the distribution 
system pressure from dropping below the Illinois Environmental 
Protection Agency required mini- mum pressure of 20 pounds per 
square inch. If the distribution sys- tem pressure did drop 
below 20 psi, it would be necessary to issue a countywide boil 
order. To reduce this possibility, the customer utilities have 
been directed to have all their reservoirs and storage 
facilities filled by 11:45 p.m. on December 31st. At this time 
the outlet valves on the connection points will be closed. The 
commis- sion will continue pumping at a reduced rate during 
this period. If there is no interruption in electrical service 
by 12:30 a.m. on Janu- ary 1st, water service will resume. This 
temporary interruption in service should have no effect on 
water users because of the requirement for the customer 
utilities to maintain 2 times average day storage. The water 
usage during winter months is generally 90 percent of average 
water usages.
    If you have any questions, I would be glad to answer them.
    Mrs. Biggert. Thank you very much.
    [The prepared statement of Mr. Martin follows:]
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    Mrs. Biggert. That brings us to the questions from the 
subcommittee and then we will--if you have questions and have 
not turned them in yet for this panel, can you pass them over 
and somebody will pick them up.
    First of all, I'll ask a couple of questions. Mr. Mefferd, 
you mentioned about the traffic signs and how many there are. 
Is it a contingency plan--let's assume the traffic lights all 
went out. Is it a contingency plan to have all of those lights, 
or do they already have the type of stop signs that drop down 
so that you could have a stop sign there or what would happen?
    Mr. Mefferd. The plan is on the county intersections that 
those stop signs would be installed.
    Mrs. Biggert. But they have not been now?
    Mr. Mefferd. That is the plan for later this year.
    Mrs. Biggert. That would be beneficial not only for Y2K but 
for----
    Mr. Mefferd. Absolutely; any power outage that occurs.
    Mrs. Biggert. Saturday, I attended a cardboard boat regatta 
and I thought it was just little cardboard boats that they 
raced across this lake, but it turned out that they would have 
as many as 10 people in these boats and the first--one of the 
first boats was named Y2K Bug, and I have to say it was the 
first boat that sank. So I hope we have sunk the bug and taken 
care of all of our problems. But it was a nice bright yellow 
boat, but it didn't make it even out of the starting box, as I 
recall. I think maybe we have solved all the problems.
    Ms. Reynolds, what are you doing, in the message at the 
public forums, are you recommending that people take 
precautionary steps?
    Ms. Reynolds. The public forums are really intended to get 
a sense of what's going on around the State so we have asked 
the community colleges around the State of Illinois to in fact 
host their community leaders and we will bring a State team in 
then to help moderate, to provide information, and to really 
organize and structure the events. But our message really is to 
what the State is doing, and then to find out how the 
communities are in fact preparing, and it really involves a 
panel such as you've organized today.
    But it also is, I think, incredibly important to make sure 
that the public knows how their own community leaders are 
preparing and then to offer suggestions as we would again with 
any winter storm. This is in the middle of winter. It is 
Illinois. Just make sure you are taking precautions as you 
would for the spring tornado season as well.
    So it really isn't a message of make sure you've got your 
basement full of food. It really is a message of take 
reasonable approaches to your own preparations, but we want to 
make sure that you know where your local governments are. It is 
also a way for us to assess where we need some State resources 
or some State attention in regional areas of the State or in 
specific communities that may need additional help.
    Mrs. Biggert. Thank you.
    Mr. Carlsen, what are you doing to communicate your message 
to the residents?
    Mr. Carlsen. We've started what our community relations 
people have termed a 3-pronged approach on using newsletters 
that are sent out to all residents. We've already sent one out. 
We have a copy of the original newsletter that was sent out as 
one of the handouts. Our Website is really a big focus. 
Naperville has a lot of people who have computers or have 
access to the Web, and that's where we've pointed them.
    Newspaper articles through the press. They've been really 
good with us as far as talking to us about what's going on and 
there's been a lot of really good articles done that way. I 
think those are the three main areas that we've used but we 
also communicate at each council meeting through an FYI device 
to the council to let them know where it is at and also that 
those agendas are available to the public as well.
    Mrs. Biggert. Do you have a budget for what's been spent on 
the Y2K?
    Mr. Carlsen. Yeah, we do. We've spent about $600,000 to 
date. That's actually kind of low for a city our size, but the 
reason that is, is because a lot of our normal replacement 
programs have funded a lot of the replacement of computers that 
would not have been compliant but they weren't done for 
compliance sake. So $600,000 was spent strictly as a result of 
things that were not compliant.
    Mrs. Biggert. Thank you.
    Mr. Martin, have you recommended contingency planning for 
municipalities in case there is an interruption in your 
services?
    Mr. Martin. We have not. We don't feel there will be a 
problem and if there is, as I've indicated, a minor electrical 
problem because of the 2 times average day storage that they're 
required to have, that problem should be resolved before the 
water is used up in storage.
    Mrs. Biggert. So you are really putting your percentage at 
100 percent that there's not going to be----
    Mr. Martin. Yes.
    Mrs. Biggert. Good. Positive thinking.
    Mr. Willemssen, you have kind of the overview of the whole 
situation and have done so much with the Federal agencies. Do 
you think that maybe just people here would like to know if you 
think that all the Federal agencies will be compliant by our 
next deadline? As you know, Mr. Horn gives pretty tough report 
cards to the agencies, and I think that's based on your work.
    Mr. Willemssen. I would say overall I'm much more 
optimistic today on where Federal agencies stand compared to a 
year ago and much more optimistic compared to 2 years ago, in 
large part because of the oversight done by Chairman Horn and 
his subcommittee. There has been much more urgency on the part 
of top Federal leaders to address Y2K that, frankly, we didn't 
see 2 years ago. I can remember hearing in July 1997 with the 
Office of Management and Budget indicating that they didn't 
think this was a major issue. Shortly thereafter they changed 
their tune and so has senior Federal leadership, so I'm more 
optimistic today than I was at that time.
    Nevertheless, as I mentioned earlier, there are some major 
risk areas among Federal programs that have to be addressed. As 
Chairman Horn indicated in his most recent grading session of 
the 43 high-impact programs, the data supplied to the 
subcommittee only indicated that 2 were ready and 41 were not, 
and it is July 1999. So there is still a lot of work to be 
done, and I don't think Federal agencies can rest easy until it 
is done.
    Mrs. Biggert. Thank you. Those are my questions.
    Chairman Horn.
    Mr. Horn. I'm going to ask a couple for the panel in 
general, and just if anybody is willing to respond to this. If 
you had to do this over again, what have you learned that you 
should have done first after you've gone through this 
exercise--not that we'll go through it again, maybe? I would 
like to get your wisdom after you've dealt with this for months 
or even years. Any thoughts? Let's just go right down the line.
    Mr. Willemssen. I'll offer a couple of comments. I think if 
we're starting over again, one thing we've learned is where the 
emphasis needs to be. While systems are important and we have 
to address the computer systems and address the 2-digit problem 
for the year in those systems, we probably should have earlier 
on had more of an emphasis on providing programs, functions, 
and services to the public. Because the bottom line to the 
public is they don't really care if the system works. What they 
care about is that they get their benefit or their service that 
is expected. That kind of emphasis, at least from a Federal 
agency perspective, didn't occur until this year so that was a 
little late.
    Second, I think the other thing that's been learned is when 
many went into this Y2K issue early on, they thought of it 
primarily as a mainframe problem and as they started peeling 
the onion, they found out it was much bigger than that. There 
was little discussion a few years ago about drinking water and 
wastewater, little discussion on telecommunications, electric 
utilities. It was predominantly talking about old IBM 
mainframes and COBOL. As more work was done on Y2K, we quickly 
understood that it was a much broader problem in scope and 
that's something that I think if we could have done that 
earlier would have been beneficial.
    Ms. Reynolds. My only regret is not having started on this 
earlier. We only took office 6 months ago, so I wish we would 
have been in office last year to be able to address this a 
little earlier. But at this point I really have no regrets. We 
have done exactly what he suggested of taking a functional 
approach to government and services.
    I didn't feel like I honestly could have gone to the 
Governor and said three critical systems may not be compliant, 
Governor. He would have said, ``What does that mean? I want to 
make sure the services of State government can in fact be 
delivered. Period.'' So that's what our approach has been. I 
really have no regrets to this point.
    Mr. Horn. Mr. Carlsen.
    Mr. Carlsen. I would echo that sentiment. We started in 
1997 and involved about 20 or 30 employees over the term of 
what we've done. I think we didn't take a functional approach 
at the beginning. I think that might be something I would say 
that I wish we would have done and we've done more of that now. 
I think that's because we focused on systems. That's what we're 
trained to do. When we moved on those things and got some of 
those things out of the way, we were able to move on and start 
taking a higher level approach as far as functionality. That 
would have been nice to start that way.
    Mr. Horn. Mr. Mefferd.
    Mr. Mefferd. I think in the same light, one of things we're 
fortunate about in this county is we have a good working 
relationship between the county government and our 
municipalities. One of the real benefits we have reaped from 
this, and I can't say we want to go back and do it over again, 
but we have opened some doors relative to closer cooperation 
not only with the government agencies but more with the private 
agencies, and we've found ways to better coordinate and better 
cooperate not only for this emergency but others.
    And I guess we can always say if we had more time to do 
more of it, we could come up with a perfect world. I think the 
more time we are in preparation for any disaster or a major 
emergency event, the better off we can be prepared and better 
ensured of public safety. That's our ultimate goal.
    Mr. Horn. Mr. Martin.
    Mr. Martin. We have with our water system a pretty 
sophisticated instrumentation system, but we've always taken 
the approach that at some time the system might not operate. So 
we've always tried to prepare ourselves with contingency plans 
in the event that we don't have a working control system and so 
we really had--it was just modifying our systems for the year 
2000, but we had already come up with contingency plans and we 
just modified them.
    We're a newer agency so we have the advantage there in that 
we were able to include this in the original design but we 
really haven't--I don't think there would be anything that we 
would really do differently.
    Mr. Horn. Ms. Reynolds, since you are the chief technology 
officer for the State of Illinois, let me ask you to what 
degree has the various Federal programs that the State 
administered and Federal agencies been in touch with you and 
are the interconnections being made that have to be made once 
they give you the money you administer it? What's happening on 
that front?
    Ms. Reynolds. We have had several teams of Federal auditors 
in Illinois that I have met with as a State perspective, and 
then they have been going over individual agencies' programs. 
Just this week I have spent another day with a second team from 
HCFA to go over, in fact, the Medicaid programs with our 
Department of Public Aid and our Department of Human Services. 
So they have been very thorough and they have been very 
supportive of our efforts and there's been a nice coordination.
    About a month ago I spent a day with the FEMA regional 
meeting of 6 States and that was a very productive day as well, 
and they had all the Federal agencies represented there as 
well. And about 2 months ago I was invited by the Chicago 
Federal Executive Board, which is a conglomerate of all the 
Federal agencies in this region, to work with them on Y2K 
efforts. So there's been extremely good cooperation both among 
the Federal agencies and the State government as well as, I 
might add, the city and municipal governments.
    The one in particular that I'm working with on a weekly or 
monthly basis is the city of Chicago. And we are working with 
them very closely and I would echo really this has been--Y2K is 
an opportunity to strengthen those types of relationships. And 
it's also been a great opportunity to get a better sense of 
inventory, I think, than certainly government and probably 
private industry has ever had in terms of technology. So I 
really look at it as an opportunity to work with the Federal 
agencies on a day-to-day basis in the future beyond January, 
hopefully.
    Mr. Horn. I think that's very well said. You are absolutely 
right. If nothing else comes out of this and we get improved 
Federal, State, and local cooperation, I think it's been an 
exercise worth having done.
    Let me ask you, what is the major mistake that you think 
people have made in this area and you'd try to remedy that 
again? So you don't have to confess yourself, but just from 
what you hear and see in terms of other governmental entities 
and other States. You are all parts of States' associations.
    Ms. Reynolds. The biggest mistake, I think, is people 
aren't communicating the full ramification of both their 
efforts or their remediation plans, and I think the general 
public is just scared. I mean, they're generally skeptical of 
the government ``I'm from government, I'm here, you can trust 
me'' kind of attitude. So I think people are generally 
skeptical and they want to see details.
    Whether they use that detail I think is immaterial. It is 
important to me that we communicate very openly about where 
we're at. I've told the agencies I don't want you to lie. If 
the truth is bad, I want to know the truth. It doesn't matter 
to me whether you'll be done December 31st or July 1st. To me, 
I want to know the truth in where you're at. Because I think 
that's critical to how the public reacts to that preparation. 
So I think the biggest mistake people have made is not 
communicating the full truth or the full story.
    My other sense is that people haven't taken it seriously in 
all areas or all levels of government or public utilities. I 
think the larger facilities and the larger companies and the 
larger municipalities have certainly done an admiral job of 
addressing the issue. But I think there are some smaller 
communities, smaller companies, smaller businesses, that have 
in fact not taken it seriously and may not have the staff or 
the resources to do much about it, and those are probably the 
links in the chain that I'm most concerned about.
    Mr. Horn. That's well said. Does anybody have another point 
they'd like to make before I get into the audience questions?
    Let me start on the audience questions, and it comes at a 
very good time. Mr. Martin, you are the manager of water 
operations for DuPage County Water Commission. The first 
question here is, Will the toilets flush? This is by, 
obviously, a practical person in the audience here who is in 
touch with reality.
    Mr. Martin. Yes, they should. I know one of the concerns 
that people have with the fact that we're going to stop 
providing service to our municipal customers, but they have 
again--and that's the reason you have water storage is so you 
can operate during interruptions in electrical power service.
    I don't anticipate anything going wrong with the water 
system because we've been told by the electric utility that we 
should have electrical service. Things can happen and that's 
why we maintain the 2 times average day storage so we can 
survive periods of time without electricity. So I think you can 
flush your toilets.
    Mr. Horn. Well, that's helpful. I take it the water I'm 
drinking is under your commission's jurisdiction?
    Mr. Martin. Yes. Isn't it good?
    Mr. Horn. I must say, it is a great pleasure for all of us 
to get out of Washington where we have to use bottled water. 
And yesterday in Topeka, and now Naperville, we've got great 
water. I keep drinking it all the time. But back there we have 
wonderful reservoirs and everything that the Corps of Engineers 
built in 1859, but the city of Washington hasn't upgraded our 
distribution system since 1859. And we decided, I guess when x 
rays started showing metal in our bodies, that we would get 
private water, although the L.A. Times series says there isn't 
much difference. I envy you with decent water out in the 
hinterlands, so keep it coming.
    Mr. Willemssen of GAO, maybe you can explain to an 
individual in the audience, What's the difference between Y2K 
OK, Y2K ready, and Y2K compliant?
    Mr. Willemssen. Those terms have been thrown around loosely 
by many different organizations and you really have to rip away 
the detail behind the definitions to clearly understand what 
they are. I think, for example, the State of Illinois testified 
that their definition of compliance includes making sure that 
all the exchanges have been thoroughly addressed. Other 
organizations do not do that before deeming their systems 
compliant. Other organizations just simply look at the 
application code and once that's fixed, they view their system 
as compliant, irrespective of whether the supporting hardware 
and operating system are compliant.
    So I think it is a valid question. It is one of the issues 
that in the guides that we initially put out in draft form in 
February 1997, we said an organization, one of the first things 
you need to decide is defining what you mean by Y2K compliant 
and making that definition clear to all, because there 
continues to be a wide variety of definitions used by differing 
organizations.
    Mr. Horn. The next one I think is also directed at you. 
Since there's a vast quantity of items that are imported along 
with the crude oil and some foods, how will Y2K affect these 
supplies after January 1, 2000, the foreign countries being 
much further behind and transport being suspect?
    Well, you are absolutely right on both refinery and oil and 
other liquid resources. There are problems with microchips on a 
lot of the tankers, and there's also a lot of them on the 
pipelines. Let's take Russia, for example. Mrs. Biggert 
mentioned the snows in January here. Russia provides most of 
the natural gas for eastern Europe and parts of central Europe, 
and if their pipelines go down because of malfunctions due to 
the particular microchips they have in either diverting it in 
certain pipes and in certain methods and the particular 
refinery ships, they will have some real problems in central 
Europe in freezing at that point in the year. Now, this was 
what happens afterwards. Hopefully things will get back to 
normal afterwards.
    Mr. Willemssen.
    Mr. Willemssen. I think that's a very valid issue, one that 
we've done some work on, and one that we've made some 
suggestions to John Koskinen, the chairman of the President's 
Y2K Council. In particular, the oil issue was one of concern to 
us.
    Because of the many unknowns surrounding other countries' 
readiness on their oil production and distribution system and 
because of our heavy reliance on imported oil, we had 
recommended to one of the working groups of Mr. Koskinen that 
they put together some credible national-level risk assessments 
and develop national-level scenarios and contingency plans in 
the event that there was a disruption with oil imports, and put 
those contingency plans together so that they can be ready if 
that disruption occurred. They agreed with those suggestions. 
They are in the process of putting together those contingency 
plans so that in the event the disruption occurs, that there 
will be some backup plans in place.
    Mr. Horn. Next question is directed to county officials and 
some local officials. It says: I called the DuPage emergency 
group and the Kane County to request a representative to speak 
to a local government group. Both said they weren't getting 
involved till the end of August. Why?
    Mr. Mefferd. I think we have in fact been speaking on a 
regular basis to various groups. I'm not aware of any specific 
request that came in. I would be more than happy to respond to 
that.
    Mr. Horn. We'll point that anonymous person and push them 
in the direction of Mr. Mefferd. I think we all agree that the 
sooner we get information out, the less rumor and panic and the 
rest of that nonsense, and people wanting to make a living on 
misery, writing books; and now you mentioned the movie that I 
guess is starting in ``Melrose Place'' or something, Beverly 
Hills--what's the difference? OK.
    Mr. Willemssen, State contingency programs at National and 
State levels must go on through testing. I understand testing 
is considered 60 percent of the work. If so, we're in trouble. 
What do you think on that?
    Mr. Willemssen. I think there is reason for concern on some 
of those State administered Federal programs, especially where 
we see completion dates targeted for the fourth quarter of 
1999. And what we've seen to date, at least Federal agencies, 
is very typically underestimation of the amount of testing 
that's required. And cutting that a little finer, it's the 
amount of effort involved in resolving the problems that result 
from the testing. So when we see those fourth quarter 1999 
completion dates, it is cutting it very tight.
    And in some cases the fail date is not January 1, 2000. In 
some cases it will be October 1, 1999. In the case of State 
unemployment insurance agencies, we had a fail date of early 
January 1999 and four States and territories actually didn't 
have their systems done in time and had to implement a 
contingency plan. So I think there is a reason for concern in 
that area.
    Mr. Horn. The last question from the audience--the others 
will go over to panel 2 where they're more pertinent. Ms. 
Reynolds states that Illinois provides more information on Y2K 
compliance than any other State. Where does this information 
go? I haven't seen much.
    And no matter how many times we always can say something in 
any agency, Congress, executive branch, States, we don't reach 
everybody; and one person wisely said, When you are tired of 
saying it about the 100th time, that's just when you begin 
sinking through. So what's the State of Illinois doing to do 
this? And when bills are sent out by city, county utilities, I 
would think that's one good way to get the message out.
    Ms. Reynolds. I hadn't thought about it till now. Property 
tax notices are due all over the State right now. We probably 
should have sent it out with the property tax notices.
    In terms of public information, we've certainly put out 
press releases this spring and the beginning of the monthly 
reports, once we got the report redone and enhanced in the way 
that I have suggested. But it is all available. The monthly 
reports are download-able on our Website which is 
www.state.il.us/y2k. It is available off the State home page. 
It is also available in printed format through our office, the 
Governor's office. We'd be glad to supply that to anybody who 
requested it.
    It's also been made available to the media throughout the 
State and there simply has not been a lot of coverage on it. My 
suspicion is this fall when people begin to get back to school 
and focus on the end of the year, I think there will be more 
public attention to the matter, but we have in fact tried to 
provide it. It is a fairly lengthy report in terms of our 
monthly report. This summer we'll be doing a pamphlet and we'll 
be providing more, smaller packets of information available to 
people in terms of a very public way statewide.
    Mr. Horn. Your suggestion on the schools is fine. How about 
the libraries throughout the State?
    Ms. Reynolds. Anybody can get access to the Internet and 
access to the home page through their libraries. That is one 
way to access the Web page, certainly. The libraries, in terms 
of their preparation--is that your question?
    Mr. Horn. Yes. People ought to know--I think you were wise 
if we could have gotten it on that property tax. That's a good 
idea.
    Ms. Reynolds. I just thought of it right now. People 
probably wouldn't have been appreciative of State information 
in their tax bills. That's not always one of their favorite 
pieces of mail they receive. But at any rate, we will try it 
this fall and try through public service announcements and 
through other avenues. Our intention is to try to get 
information out through numerous avenues this fall.
    Mr. Horn. I think you've got to remember that most of the 
citizenry do not know how to work a computer. Not everybody is 
going to get into the Worldwide Web so we've got to reach them 
another way.
    Thank you very much. Appreciate it.
    Mrs. Biggert. I would like to thank the entire panel. I 
think that your testimony and your comments were very helpful 
to us, and we really appreciate your taking time out of your 
busy schedules to come. So I will excuse this panel and we will 
call the second panel up. Thank you very much.
    If you'd all like to stand, I'll administer the oath.
    [Witnesses sworn.]
    Mrs. Biggert. I think for this panel I'll introduce you one 
at a time so that the audience will be able to have a better 
background as you start.
    Our first panelist of the second panel is Alan Ho from 
Commonwealth Edison. He's going to review how Commonwealth 
Edison is becoming or is Y2K compliant. Thank you very much.

 STATEMENTS OF ALAN D. HO, Y2K CORPORATE MANAGER, COMMONWEALTH 
  EDISON; DALE JENSEN, DIRECTOR, Y2K CUSTOMER COMMUNICATIONS, 
AMERITECH; CRAIG WHYTE, DIRECTOR, REGIONAL COMMUNITY RELATIONS, 
 NICOR GAS; PHILIP PAGANO, EXECUTIVE DIRECTOR, METRA; AND GARY 
  MIELAK, VICE PRESIDENT AND CHIEF TECHNICAL OFFICER, EDWARD 
                            HOSPITAL

    Mr. Ho. Good morning. Thank you for the opportunity to 
testify here today. I had testified last September and stated a 
few things. I would just like to go back to that, just to 
provide some continuity.
    We at Unicom and ComEd recognize the important role that we 
play in this whole Y2K issue, and indeed last September I 
stated that if we are unsuccessful in our readiness efforts, 
why then the readiness efforts on the part of others would 
really go unnoticed. I'm glad and pleased to state today that 
as of June 30th, Unicom and the ComEd company is Y2K ready.
    And so what do I mean when I say that? That includes all 
Unicom companies, ComEd's nuclear stations, ComEd's fossil 
generating systems, our transmission and distribution system, 
our enterprise wide mainframe computer systems and 
applications. It includes our distributed computer operations, 
our local area and wide area networks, our office facilities, 
and our supply chain.
    Some of the activities that we've undertaken this year to 
increase the certainty of our readiness and strengthen our 
readiness include independent verification and validation 
activities where we've hired third-party reviewers to come in 
and review our management process as well as dig into the 
computer code that's been renovated and remediated as well as 
the embedded systems work.
    We've also had peer reviews by other utilities come in and 
review our work and we've reciprocated by going to those other 
locations as well to provide lessons learned and share 
information.
    Another activity we undertook this year to further 
demonstrate our readiness is performed numerous integration 
tests. This year alone we've performed over 90 integration 
tests on our electric operating system. That includes our 
generating stations as well as our transmission distribution 
system and our computer systems. These are date rollover tests 
that we've conducted with dates including this year, the year 
2000, and into the year 2001. Again, these tests are tests that 
were performed on our actual systems, not computer simulations, 
actual tests at our plants and our facilities.
    Third, the fact that we are today Y2K ready, we need to 
maintain a vigilant position. We have instituted a Y2K 
moratorium starting on July 1st to manage the risk and maintain 
our readiness. We've implemented a clean management program and 
a program that requires senior officer approval to make any 
changes to our computer systems and our embedded systems. So 
there's very tight control. Because we've worked so hard to 
make our systems Y2K ready, we want to keep it that way through 
the rollover period.
    Last, we have prepared numerous contingency plans and have 
developed what I call an operating plan, which I will use to 
run our Y2K command center on New Year's Eve. Basically, it 
will be our playbook that will guide us through the various 
scenarios that we've developed. And between now and then, we 
will be practicing monthly exercising and practicing getting 
ready for our September nationwide drill that will be 
coordinated through NERC, and there's also a drill that we're 
helping with the NRC in October, all in preparation for New 
Year's Eve.
    Last, I would like to offer a practical tip for our 3.4 
million customers. I would just ask that our customers keep to 
their normal electrical usage pattern. The reason for that is 
having a predictable load pattern will allow us to avoid any 
additional challenge that may come up on New Year's Eve.
    I would be glad to answer any questions that you might 
have. Thank you.
    Mrs. Biggert. Thank you very much for your testimony.
    [The prepared statement of Mr. Ho follows:]
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    Mrs. Biggert. And now we have Dale Jensen, Ameritech 
director, year 2000 customer communications. Thank you.
    Mr. Jensen. Good morning, Vice Chair Biggert, Chairman 
Horn. Thank you for inviting me to present testimony on 
Ameritech's activities to address year 2000 issues within our 
company. In the interest of time, I propose to direct my 
testimony to the following five areas: The scope of our 
initiatives; the identification and status of key areas of the 
initiative; additional readiness activities underway at 
Ameritech; our participation in industry year 2000 readiness 
activities; and some tips for consumers, courtesy of the 
Federal Communications Commission.
    We began our year 2000 initiative at Ameritech in 1996. 
Throughout our efforts, our overriding goal has been to make 
the year 2000 event transparent to our customers by working to 
ensure that the products and services we provide avoid material 
problems associated with the year 2000.
    Our year 2000 initiative includes reviewing more than 2,500 
products and services; remediating an IS portfolio of 
approximately 1,000 applications; upgrading 1,400 host and 
remote switches; analyzing and preparing thousands of desktop 
and office components; and preparing the access and security 
systems, heating and cooling plants, alarms and elevators in 
over 12,000 buildings and equipment vaults.
    A major component of Ameritech's year 2000 initiative is 
ensuring that we address and resolve any year 2000 issues 
within three critical areas of our business.
    The first area was our network infrastructure; which 
includes our local exchange, cellular paging, advance data 
services, video and long distance networks.
    The second area is our information services infrastructure, 
which includes the information services hardware; applications, 
and operating systems that enable us to conduct the day-to-day 
operations of our business.
    And the third area was our operating infrastructure; which 
includes items such as real estate properties that we occupy as 
well as employee support tools such as desktop personal 
computers.
    Having broadly defined the critical areas of our 
initiative, I would like now to discuss the status of each of 
those areas as of March 31, 1999. While I recognize that this 
hearing is taking place in July 1999, at Ameritech we report 
our results to our customers on a quarterly basis, and we're 
still in the process of compiling our data for the second 
quarter of 1999. We expect to post those results on our 
Internet Website in mid-July.
    For Ameritech's network infrastructure, as of March 31st, 
all identified mission-critical network components of 
Ameritech's local telecommunications services, dedicated voice 
and data transport services are year 2000 ready. Similarly, as 
of March 31st, all identified mission-critical network 
components for Ameritech cellular, paging, and long distance 
service networks are year 2000 ready.
    Corrective activities are also far along for our cable 
television service infrastructure and those mission-critical 
network components are expected to be made year 2000 ready well 
in advance of the turn of the century.
    As of March 31st, Ameritech had completed its year 2000 
remediation activity on all of the mission-critical information 
services systems and applications in its IS infrastructure, and 
they are now year 2000 ready.
    And, finally, as of March 31st our operating infrastructure 
was over 95 percent year 2000 ready.
    As I mentioned, at Ameritech we've made significant 
progress to address and resolve the year 2000 issue, and we 
believe that we'll have all Ameritech systems essential to 
maintain customer service completely year 2000 ready well 
before the turn of the century, perhaps even as early as July 
31st.
    In addition, although we are confident that we have taken 
appropriate steps to assure that we do not encounter year 2000 
issues within our company, we are also developing business 
recovery and continuity plans designed to quickly address and 
resolve any significant potential problems that may arise.
    In addition to internal company activities focused on 
addressing year 2000 within Ameritech, we were also 
participants in several industry forums that focused on 
addressing and resolving year 2000 issues within the 
telecommunications industry. As a member of the Telco Year 2000 
Forum, a nationwide group of the largest telecommunications 
companies, Ameritech participated in intra-network tests 
covering voice, high-speed data and 911 emergency services. 
Almost 2,000 tests produced only 6 anomalies, a 99.9 percent 
success rate, and each anomaly was corrected.
    Before I conclude, I would like to share several consumer 
tips that were published by the FCC in its recently released 
Y2K communications sector report wire line telecommunications 
sector. In that report the FCC suggests some tips for 
consumers, including try to place some important telephone 
calls, particularly those overseas, before or after New Year's 
Day; minimize phone use on New Year's Day. Heightened traffic 
volume could overtax the network. And have at least a phone 
available that doesn't rely on electric power to operate. 
Cordless phones normally do not work without a separate power 
source.
    I would like to conclude my testimony just by saying, as 
the subcommittee has recognized, the year 2000 issue represents 
a significant challenge to Ameritech's business and residential 
customers as well as to the government. As had been noticed, it 
is a worldwide concern which has been declared by many industry 
experts as the largest single project many companies will have 
to face. Resolving the issue requires strong project 
management, timely and informative communication, and 
cooperation across industry boundaries. At Ameritech, we're 
confident that we've addressed those challenges. I thank you 
for the opportunity to share these thoughts with you today.
    Mrs. Biggert. Thank you very much.
    [The prepared statement of Mr. Jensen follows:]
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    Mrs. Biggert. Next is Craig Whyte from Nicor Gas. He says 
that gas service will not be interrupted.
    Mr. Whyte. Yes, you will have gas. Of course. Thank you 
again, Congresswoman Biggert and Congressman Horn.
    On behalf of Nicor, we're very pleased to be here. We've 
been working on this project since 1996. We've had a committee 
established of 40 people and have made tremendous progress. As 
Alan mentioned, we believe we're Y2K ready as well. However, 
we'll continue to do testing throughout the end of the year.
    In order to make my testimony more concise--which I'm sure 
you appreciate--as well as informative, we've put it on a 
video, and the video will be made part of the testimony when 
we're done. So in lieu of any more time, I think we'll just 
roll the video and if time permits, I'll wrap up afterwards.
    Mrs. Biggert. That will be included in the testimony, 
without objection.
    Mr. Whyte. Additional copies will also be made if needed.
    [Videotape played.]
    Mr. Whyte. We've made that tape available to all of the 
local municipalities that we currently service, over 400. A 
majority of them have used it on their cable access channel to 
put the word out. We've also distributed it to all of the local 
television, newspapers, and so forth. So the word is out there. 
We started our presentations early in January. We've been very 
successful with local and civic organizations and so forth. 
With that, I would be happy to answer any questions you might 
have.
    Mrs. Biggert. Thank you very much. That was a different 
type of testimony than we're used to.
    Mr. Whyte. It's a lot easier for me, that's for sure.
    Mrs. Biggert. Next we have Gary Mielak, vice president and 
chief executive officer at Edward Hospital.
    Mr. Mielak. Thank you, Vice Chairwoman Biggert and Chairman 
Horn.
    In 1992, Edward Hospital launched an orchestrated attack on 
the millennium bug. As the community's health care provider, we 
have invested more than $4\1/4\ million on the project. We have 
also invested labor that's equivalent to four full-time 
employees. As a result of this 7 year Y2K project, Edward has 
made provisions to enter the new year with adequate power, 
supplies, staffing, communications and fuel, along with Y2K 
compliant medical devices.
    Edward Hospital has deep roots in Naperville, having served 
as the community's health care provider for decades. Edward 
Hospital today is a medical center providing a broad spectrum 
of health care services to Naperville and a widening area of 
surrounding communities.
    Like other hospitals, Edward maintains a posture of 
readiness for emergencies and disaster response. Because of 
this orientation, Edward is among those at the head of the 
pack. According to a Chicago based consulting firm, Edward is 
among the Nation's top 25 percent of hospitals in Y2K 
preparedness. The bottom line for us is anything with the 
potential to affect our patient's health and welfare is a high 
priority.
    Let's look at the Y2K problem in the context of health care 
delivery. While Edward and other hospitals have a history of 
emergency readiness, the Y2K bug is a unique animal for us. In 
the worst case scenario, many of the interdependent services 
could be cut at one time, requiring hospitals to survive on 
emergency backup systems and processes which were really never 
meant to sustain a hospital for an extended period of time. 
Failure in the chain of major utilities supply distribution, 
communications, and financial services would cripple a 
hospital's ability to serve its community, and this is a 
serious threat.
    Y2K presents an incredibly complex planning job and 
challenge for the hospitals. The sheer number of areas that 
must be addressed is vast. The issues involve interdependency 
among patients, doctors, suppliers, payors, and agencies.
    In addition to care delivery and office management issues, 
we're also dealing with potential supply chain problems beyond 
our control. For example, manufacturers and vendors are not 
always aware of their products' Y2K readiness because some of 
the components come from yet another supply chain. However, 
many areas remain that we can affect and minimize the impact of 
Y2K.
    And here are some of the things that Edward has done: 
First, medical monitoring equipment with microprocessors and 
embedded chips. These are devices that are critical to life 
support in a lot of cases. These include infusion pumps, 
glucose monitors, ventilators, dialysis machines, heart 
machines, defibrillators and others. So far, of the date 
sensitive equipment that is high priority, we have found that 
less than 3 percent of the devices have required repair or 
replacement.
    Next, the hospital has emergency power from its routine 
backup generators as well as a large extra generator leased for 
additional power during this period of time that will sustain 
us during any kind of an emergency. Information systems, of 
course, affect everything from patient scheduling to clinical 
records and inventory management.
    To date, close to 100 percent of the computer software and 
hardware products the hospital uses are compliant. A new 
control computer for the heating and ventilating system had to 
be replaced because it was not complaint. The hospital has made 
provisions for bulk delivery of water and fuel oil, for heating 
and electricity generation, as necessary. And Edward will keep 
an additional 7 day patient food supply on hand during critical 
Y2K periods.
    Security systems have been checked and made compliant. 
Elevators will operate. The telephone system is being tested, 
as we speak today, for compliance at the manufacturer's site. A 
radio station is working with the hospital to provide emergency 
communications for calling in staff. A network of CB radio 
users will be formed for communication if necessary.
    Internal and external communications to the staff and 
public are an integral part of the preparation. We will 
continue to inform the public about what we are going to do in 
case of an emergency. Planning is underway to ensure 
appropriate staffing levels. Interhospital planning has just 
begun and we're working with our colleagues to make sure plans 
and ideas are shared.
    In conclusion, behind all of the devices, processes, and 
plans are
people. Our health care professionals' ingenuity, integrity, 
and pride in providing quality health care will drive us all 
regarding Y2K preparedness. Thank you for the opportunity to 
make our presentation today.
    Mrs. Biggert. Thank you very much for being here.
    [The prepared statement of Mr. Mielak follows:]
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    Mrs. Biggert. Now, Mr. Pagano.
    Mr. Pagano. Thank you for inviting us here today. For the 
benefit of those not familiar with Metra, let me start with a 
brief summary of what we do. You'll quickly see why we took 
this very seriously and aggressive approach to the Y2K 
readiness situation.
    In terms of ridership, Metra is the second largest commuter 
rail system in the United States. Last year we carried 77 
million people, which was our highest ridership since 1984. 
This year we are ahead of that mark and intend to set another 
record.
    In terms of our network, however, we are the largest 
commuter rail system in the United States. We operate over 11 
lines, have 500 route miles, have 130 locomotives, 900 
passenger cars. We service an area the size of Connecticut and 
carry nearly 300,000 passengers weekly.
    Finally, we operate this network with a great deal of 
reliability and it is recognized as the leading commuter rail 
agency in the United States.
    If some computer glitch forced those riders out into 
Chicago's expessway system, we'd have instant regional 
gridlock. I'm happy to say that we don't think that will 
happen. We've been working on the Y2K compliance since 1996. We 
have found no Y2K problems in our computers, facilities, or 
equipment that would cause a disruption to our computer rail 
service.
    Looking for possible Y2K bugs, we first focused on large 
mainframe legacy financial administrative systems. We then 
broadened our focus to include all areas of computer use and 
established an internal Y2K task force.
    That group surveyed and assessed support computers and 
embedded computers in equipment and facilities. They also 
evaluated the readiness of key suppliers, service providers, 
and other railroads that interact with Metra.
    For all areas of computer use, we employed a methodology of 
awareness, inventory, assessment, testing, and implementation. 
During the assessment phase, we measured each computer system 
for Y2K processing issues and classified each as mission-
critical or not. We gave remediation priority to systems that 
are mission-critical to safety reliability of train operations, 
revenue collection, and compliance with government regulations.
    Throughout this process, Metra's Board of Directors, senior 
management and auditors, along with the Federal Transit 
Administration and the Federal Railroad Administration, have 
received regular reports. Specific areas of investigation 
include mainframe and administrative computer systems, 
locomotive and passenger cars, track and signalstations, so on 
and so forth.
    Of course, we can't guarantee that nothing will fail or 
that our service is totally immune to disruption from a third-
party problem. We are prepared to respond to any such situation 
with the same dedicated manner as during other unexpected or 
winter-related disruptions to service. We rely on established 
procedures within our operating rules and contingency plans for 
power losses or problems caused by bad weather. We also rely on 
federally required manual backup systems and procedures for 
components or equipment failures.
    We're confident that we won't have to do this. As I said 
earlier, we really don't see any Y2K problems. So far, to date, 
we have spent about $750,000, and again we have found very few 
of our systems that had to be tinkered with or modified. With 
that, we'll answer any of your questions.
    Mrs. Biggert. Thank you very much.
    [The prepared statement of Mr. Pagano follows:]
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    Mrs. Biggert. That concludes the testimony for this panel, 
so I think I'll ask Chairman Horn to ask questions.
    Mr. Horn. Let me ask you generally the same question I 
asked the last panel. And that is if you had to do it over 
again, what have you learned that you should have done first? 
Let's just go down the row with Mr. Ho.
    Mr. Ho. There isn't much I think that we would do 
different. I do believe there is significant value gained now 
on a go-forward basis beyond these Y2K rollover dates, and that 
comes from the additional configuration of control that we have 
over our computer systems. We have inventoried everything. We 
have also retired non-standard applications, so we've taken an 
opportunity to standardize work so that--standardized 
applications as well as systems. And so that has value both 
internally and across our supply chain.
    Mr. Horn. The next gentleman, Mr. Jensen.
    Mr. Jensen. I would agree with Alan. I think at Ameritech, 
we have a strong program in place. I don't--in retrospect, I 
don't think we would have done anything different. Certainly, 
probably everyone would have started earlier but--and I suspect 
in the future if we run into a situation like this, we probably 
will start earlier.
    But overall inventory, the benefits are numerous going 
forward from an inventory control, supplier management and 
supplier relationship and so I don't think we would have 
changed very much, if anything, in our program.
    Mr. Horn. Mr. Whyte, Nicor Gas.
    Mr. Whyte. I would have to agree with the comments made. We 
started in 1996, which is really a 4-year tenure, which gives 
us a lot of time to prepare. We started our informational 
process up early, which has been very beneficial. So I really 
can't say that we would have changed anything drastic.
    Mr. Horn. Mr. Pagano, Metra.
    Mr. Pagano. I think what we learned was, as a benefit, we 
had many of the people that had put in the systems for us on 
staff so that they were able to quickly make an assessment. I 
think in the future what we've learned is that there needs to 
be more documentation of procedures so that recordkeeping is 
there in case you don't have the old heads around to followup.
    Mr. Horn. Mr. Gary Mielak, the vice president and chief 
technical officer for the Edward Hospital.
    Mr. Mielak. I think the two issues that we learned more 
about than anything going through this process was that 
interaction with our professional colleagues, other hospitals 
and agencies. I wish we would have had more time to do that, 
because everybody was so busy focusing on their own areas of 
expertise within their own facilities and hospitals that people 
just didn't have time to look around. Even having started in 
1992, we only found the time recently to start looking outward 
from our facility.
    Mr. Horn. Did you start in 1992?
    Mr. Mielak. We started in 1992.
    Mr. Horn. I congratulate you, because you were 6 years 
ahead of the executive branch of the Federal Government, and it 
took us 3 years to prod them into doing anything, and they 
didn't do it until 1998.
    Mr. Mielak. Thank you.
    Some of the supply chain concentration also is another 
thing that I think that we could have spent and should spend 
more time on between now and the end of the year. But it is 
very difficult for a lot of the suppliers to even know their 
situation for us to appropriately interact with them.
    Mr. Horn. Perhaps you can answer the question that was 
filed with the first panel, but we really didn't have an expert 
on this: What is the situation with the drug manufacturers? As 
a pharmacist in the community, says the writer, a common 
question is, How much of a supply should I keep in store and on 
hand that's extra? What we have been told is a 90-day period we 
ought to prepare for.
    Can any of you comment on a contingency plan regarding the 
situation?
    Well, I guess, Mr. Mielak, you have the same problem they 
face?
    Mr. Mielak. I think we probably do. However, hospitals, of 
course, having always an emergency preparedness plan, even for 
pharmaceuticals and other items that patients use, we really do 
keep several days' and sometimes a week or more worth of 
supplies on hand, and one can usually tell from your inventory 
turnover how fast that supply will deplete in each one of the 
drugs. It is not our intention to hoard supplies or to bring 
weeks' worth of supplies in, but to be prudent about what we 
think maybe an inventory shortage might be, and work with our 
suppliers to have an adequate supply on hand for a week or so.
    Mr. Horn. OK. Do we have any more questions here from the 
audience?
    With concern in it being a leap year--I guess it means 
about a leap year and turning--I really--staff is going to have 
to put it into English I can read. I can't read it.
    Mrs. Biggert. I'll read it. With concern with it being a 
leap year and the turn of the century, will there be any 
problems on February 29th? Will this affect us?
    Mr. Horn. I guess I'll answer that first. The leap day, 
February 28th, 29th, and March 1st have been dates that have 
been included in our overall test program so our electric 
systems and our computer systems can handle that date in the 
year 2000 and beyond.
    Mr. Mielak. There are several applications also in the 
hospital area where we have started testing software a few 
months ago for date changes that might be applicable all the 
way until the year 2004. So there are several dates along the 
way that I know in our applications we have to be mindful of.
    Mr. Horn. Next question is, Where and when can a citizen 
obtain the summary of this hearing?
    The hearing transcripts will be printed shortly, but the 
testimony that the members before you have given in three 
panels--we have two panels so far--they will be put on our 
Website and the Website is www.house.gov/reform/gmit. It stands 
for Government Management, Information, and Technology. So 
right now they can put this testimony on when they get back 
tomorrow.
    Mr. Ho of Consolidated Edison, what are the ComEd staffing 
plans for December 31st to ensure delivery of power and as a 
contingency if the power fails?
    Mr. Ho. We have normal staffing every day around the clock. 
For New Year's Eve and for the other rollover dates, we have 
planned additional staffing to be at the ready. So we will be 
in a ready posture, with staff physically located throughout 
our northern Illinois territory so as to monitor the system as 
well as respond, should there be any outage occurrences, 
whether Y2K related or otherwise. And so we look to have a 
rapid response to any occurrence.
    Mr. Horn. Mr. Whyte of Nicor--gas is supplied through a 
network of pipelines with gas moved along by pumps operated by 
turbines and generators. Is there a problem if electrical power 
is disrupted?
    Mr. Whyte. We currently have 8 major pipelines coming into 
our area, all independently operated. To have all 8 of those 
pipelines go down, I think, would be very remote. But should 
that happen, it is important to know that a majority of the 
natural gas industry is run on mechanical, by nature, so most 
of the valves can be overridden. If not overridden, they can 
certainly be hand-manipulated open or shut. That night we will 
also have a full staff on, as well as people at these locations 
should the power fail. We do have generators to rate our own 
electricity, so to speak, if we need to. And should that fail, 
for whatever reason, we have a manual override. Should that 
fail, we physically can put someone out there and crank open 
valves if necessary.
    Mr. Horn. Mr. Mielak, representing the Edward Hospital, and 
you partially answered the pharmaceutical question, but another 
one along that line puts a little different wrinkle on it. As a 
major percentage of prescription medicines are imported, what 
contingencies are being made to ensure adequate availability? 
It should be noted that insurance only allows monthly 
purchases. Is that correct? Or do you have a pharmacy in the 
hospital?
    Mr. Mielak. We have an internal pharmacy at the hospital 
and there are the Naperville pharmacies who are independent of 
the hospital. I really don't have an exact answer to that 
question. It is very difficult for me to look out into that 
supply chain and make comments on it.
    Mr. Horn. Well, I would think the Pharmaceutical 
Association for the State of Illinois would be working on that 
problem and since every pharmacist probably pays dues to that 
agency, get them to work if they haven't answered that 
question.
    Now, on the utilities in general, with respect to the 
utilities, do you rely on what they tell you, or do you audit 
their statements? What type of independent verification efforts 
has each utility undertaken?
    In other words, we face the same problem with the Federal 
Government. We ask the inspector generals in each agency that 
are really one step apart--they don't report to the Secretary. 
They're independent people, and the General Accounting Office 
that Mr. Willemssen represents and is here, they're part of the 
legislative branch. To look at the financial and programmatic 
aspect of the executive branch, and so they're asking the same 
now of utilities. Have you gotten outside independent 
verification, or is this simply your own people verifying it 
and should we trust them?
    Mr. Ho. We've had several levels of independent review. 
We've had third-party consultants come in, assess our 
management process as well as the coger-mediation embedded 
systems renovation work and those reports have been given to 
the senior officers of the corporation as well as our Board of 
Directors.
    Second, the NRC has come in, the Nuclear Regulatory 
Commission has come in and audited our Braidwood Station and 
indeed our entire nuclear fleet, our corporate IS, our supply 
chain activities, and given us high praise in their January 
report. They've since followed up and reviewed our contingency 
planning activities and there will be a report coming out later 
this month.
    We've also had peer reviews where we've had other utilities 
come and look at our process, look at our results, and we've 
shared and exchanged resources and information to that point. 
So we think there's a very solid basis for the results that 
we've achieved and reported.
    Mr. Horn. Was that the Nuclear Regulatory Commission, the 
Federal Commission?
    Mr. Ho. Yes.
    Mr. Horn. How many different facilities of yours did they 
look at? Just one?
    Mr. Ho. They looked at all of our nuclear facilities. There 
was a very strong focus at our Braidwood Nuclear Station. They 
asked to look at the results across our nuclear fleet.
    Mr. Horn. So the answer would be they have looked at every 
single facility in your company's jurisdiction that has nuclear 
reactors?
    Mr. Ho. That's correct.
    Mr. Horn. I'm glad to hear it because when they started 
out, they said we're only going to audit 10 percent, and we 
argued with them on that and we said we wanted to see 100 
percent. They've never given us an answer to our letter on why 
they were doing just 10 percent. So at least in your situation, 
you got 100 percent audit from them.
    Mr. Ho. That's right.
    Mr. Horn. Thank you very much on that.
    Mr. Willemssen is still here, I'm sure. There's a chair 
right down here at the end, Joel. From the audience, despite 
all the optimism stated by your committee--I guess he's 
referring to us--the consensus in the technical computer world 
is that no one really knows what really will happen. A worst-
case situation may be a lack of power and utilities for several 
months. Are you even considering a worst-case situation?
    Mr. Willemssen. I think even in those Federal agencies who 
are far ahead of the game, such as the Social Security 
Administration, they have also been on the forefront of doing 
business continuity and contingency planning, recognizing that 
they, along with other organizations, cannot provide an 
absolute guarantee that there won't be some Y2K problems at the 
turn of the century or at other critical dates. And therefore 
they have put a lot of emphasis on contingency plans to have 
them available in the event of disruptions and have them 
available to trigger at appropriate points in time.
    I think a scenario that was laid out in the question of 
widespread electric power disruption over a couple months, I 
don't think any reasonable organizations have thought that far 
out in terms of worst-case scenario. Worst-case scenarios for 
the contingency plans that I've reviewed, and I have reviewed 
several, do not go beyond a few weeks in terms of electric 
power outage. Frankly, if we did have that situation, and we 
don't have any evidence to suggest that would be the case, we 
would be looking at an entirely different scenario than the one 
we've talked about today.
    Mr. Horn. Thank you very much for that.
    Mrs. Biggert. Thank you, Chairman Horn. I have just two 
more questions from the audience. The first one is addressed to 
Mr. Ho. Can Commonwealth Edison isolate themselves from the 
power grid to continue to service their customers if the power 
grid is in trouble?
    Mr. Ho. The simple answer to that is yes, but the Eastern 
Interconnection in the grid, as everyone refers to it, is 
really designed to be a robust system and reliable because 
everyone shares in that pool. And so our plans are not to 
island or isolate ourselves should there be a problem. The real 
benefit to the grid is that ComEd can help support, and the 
surrounding utilities can support one another should there be a 
stability problem on the system. And so we look to not 
implement a sort of islanding or isolation-type of approach. 
The grid is very robust and we look to maintain that.
    Mrs. Biggert. Thank you.
    And then the last question is for all of you. Should 
glitches occur in service, how will they be communicated to the 
public? Will there be additional staff on board to handle these 
calls? And third, will we call the same service numbers that we 
currently call or will hotlines be set up? I think we can start 
with Mr. Ho and just go down the line.
    Mr. Ho. On New Year's Eve, we will start our staffing of 
our command center early in the morning, 6 o'clock New Year's 
Eve morning, and we'll have an eye on the globe. We will be 
providing press releases and system status reports three times 
throughout that business day. By 8 o'clock that evening, we 
will be fully manned at our command center, at which time we 
will start hourly system status reports. Those status reports 
will go out across the normal channels through our account 
managers for those commercial industrial customers, through our 
public affairs directors, to the various municipalities, such 
as here in Naperville. We'll have media briefing and, in fact, 
media will be with us at our command center.
    So we look to have constant reporting and increased 
frequency of reporting as the day goes on. So there will be 
additional staff, like I said, across our territory; and our 
communications staff will certainly be right in the thick of it 
with us.
    Mr. Jensen. Like Alan, Ameritech will also have a command 
center in place and we'll be undergoing many of the same 
activities and preparation.
    I think that what I would like to address here is on the 
other side of the coin: What would we ask our customers to do 
in the event that they encounter a problem? And we're asking 
customers to do the same thing that they do today; call the 
same trouble reporting number, follow the same procedures. We 
don't want to confuse the issue by putting anything different 
in place. We expect, just like probably Alan and everyone else, 
to have additional staffing on hand to take care of any 
additional calls that we may get. So keep it simple is kind of 
our watch word. Our customers just call the same number that 
they would call today if they encounter a problem.
    Mrs. Biggert. Thank you.
    Mr. Whyte.
    Mr. Whyte. Real briefly, the service numbers they call 
right now will certainly be the same numbers they will use 
then. As far as staffing, it'll definitely be beefed up. I know 
I will be there, as well as all of our representatives, they 
will be there. We'll have our labor staff available.
    As far as communications are concerned, we are in the 
process now of developing a list of all key contacts through 
all of our municipalities that we serve so that on that night, 
should they have any issues or questions, they'll know who to 
call as well as when we have updates throughout the day and 
night, we have someone to contact as well.
    Mrs. Biggert. Mr. Pagano.
    Mr. Pagano. Yes, they'll be using the same hotline phone 
numbers. We'll have additional staff there to take care of any 
problems.
    Mrs. Biggert. Thank you.
    Mr. Mielak. Assuming normal communications, telephone, 
pagers, cell phones stay in operation, we don't have any 
problems in those areas. All of our normal service lines will 
be open, and there will be staff there to answer any telephone 
calls or concerns by patients in the communities or others 
looking for information.
    Should that not be the case, our fallback readiness 
position, of course, in an emergency is always to go to the 
radio systems that the emergency folks have both in Naperville 
and the hospital. Ambulance services are all equipped with 
these standby emergency systems. Of course, we can't get out 
and talk to the general public about what's going on under 
those conditions, but we certainly can try to get out to the 
radio station and get out the word otherwise through some means 
that we have yet to talk about.
    Mrs. Biggert. Thank you.
    Mr. Willemssen. The Federal Government right now is in the 
process of setting up a command center that will be led by 
retired General Peter Kind, and they're putting their 
procedures together right now. They intend to get contacts and 
links set up with all the major Federal agencies and also with 
States so that the reporting process will occur as the rollover 
happens. In addition, they will be monitoring the activities 
through the State Department of all other countries. As you 
know, obviously we have a tremendous built-in advantage in our 
country. We will have lead time to see what happens in other 
countries as the clock switches there before it does in our 
country.
    Mrs. Biggert. Thank you. Again, this is all part of being 
prepared, and I hope that none of these hotlines have to be 
called or none of these phone numbers--they won't be busy if 
somebody does call, because there won't be the problems. But I 
think as long as everybody is ready and have those contingency 
plans, that things will go smoothly.
    So I thank you all on this panel for coming. I think it's 
been very enlightening. And to hear what our utilities are 
doing, what our hospitals, transportation, is all very 
important to all the citizens of this area and to the State and 
to the country. So thank you very much for coming.
    We'll then call up the next panel.
    Mr. Skarr, if you want to come up and join the panel. We 
will have to do a little switching of mics, but I think there's 
almost room.
    If you all want to stand.
    [Witnesses sworn.]
    Mrs. Biggert. Thank you again. This is the third panel of 
the hearing this morning, and I think again I will start by 
just introducing you as each of you speak and if you can limit 
that to 5 minutes, particularly since we have a larger panel 
this time, it would be appreciated.
    The first member of the panel is Clint Swift who is 
director of Banking Technology, the Bank Administration 
Institute of Chicago. Thank you very much for coming, Mr. 
Swift. You may proceed.

 STATEMENTS OF CLINT SWIFT, DIRECTOR OF BANK TECHNOLOGY, BANK 
    ADMINISTRATION INSTITUTE; DELORES CROFT, SENIORS POLICY 
 ADVISOR, ILLINOIS ATTORNEY GENERAL'S OFFICE; LEONARD HARRIS, 
PRESIDENT, CHATHAM FOOD CENTER; RON CLARK, TREASURER, ILLINOIS 
AYERS OIL CO.; MONTY JOHNSON, COMMUNICATIONS COORDINATOR, CITGO 
GAS; MIKE SKARR, PRESIDENT AND CEO, NAPERVILLE AREA CHAMBER OF 
 COMMERCE; AND ED PAULSON, AUTHOR OF YEAR 2000 CRISIS SURVIVAL 
     IN 10 MINUTES, PROFESSIONAL ENGINEER, FINANCIAL EXPERT

    Mr. Swift. Mr. Chairman and Madam Vice Chairman, thank you 
for providing a public forum on the year 2000. Just a week ago, 
the banking industry passed the last of the major federally 
mandated milestones for year 2000. The bankers are intensely 
aware that the challenge has shifted from a technological one 
to a psychological one. It is crucially important that people 
understand the lengths to which banks have gone to ensure that 
it will be business as usual before, during, and after January 
1, 2000.
    As one independent observer after another has told you, the 
reality is that financial services are in good shape. Banks, 
thrifts, credit unions will be spending much of the next 6 
months ensuring that the key energy, telecommunications, and 
other providers they rely on are ready as well.
    I can state this for the record. First, your bank will be 
ready for the century date change. Many of them are ready now. 
The rollover is going to be a non-event for almost all bank 
customers. Your bank is the safest place for your money. Your 
money is insured there up to $100,000, but there are at least 
two other significant issues. Your bank will have accurate 
records of your accounts and you'll be able to get the cash you 
need when you need it.
    How can I say these things? First, for the last 2 years 
I've been working day to day with 50 of the Nation's largest 
banks. Institutions that represent about two-thirds of this 
Nation's banking assets. I know personally the quality of their 
planning, their systems inventories, their code repairs and 
their testing. These institutions have verified that the 
systems that support checking, savings, certificates of 
deposits, loans, and other products and services, process dates 
accurately before, during, and after January 1, 2000. Now 
they're monitoring Y2K progress at the suppliers and service 
providers they rely on.
    Second, banking is a highly regulated industry. As part of 
Y2K preparation, Federal examiners have visited each bank in 
this Nation at least three times. At the end of May, more than 
98 percent of the Nation's 10,000 federally insured depository 
institutions had received the highest ranking. During the next 
6 months I can promise you that the handful that didn't can 
look forward to a very personal relationship with your 
examiners.
    To ensure that banks have plenty of cash for anyone who 
needs it, the Federal Reserve has accelerated printing of 
nearly $50 billion in currency, and they're placing that at 100 
locations, closer to banks than their own Federal vaults are.
    In this highly interconnective world, nobody with any sense 
is going to give you a guarantee that there will be no 
disruptions at the century date change. For all but a handful 
of Americans, the lights are going to come on. By the time you 
get the phone to your ear, there is going to be a dial tone. 
Where outages do occur, research and testing across industries 
say they will be localized and of short duration.
    In case one of those limited local outages occurs in DuPage 
or Kane Counties, let me also observe that banks, thrifts, 
credit unions have always been among the first to reopen after 
a hurricane, tornado, or other natural disaster. Why? Because 
they're practiced masters at contingency plans. Banks have 
always been required to keep multiple backup records of your 
transactions in case of power outages or computer problems, and 
fresh backups are made every day. Banks have now supplemented 
their existing contingency plans with special preparations to 
cover the glitches that may occur due to the year 2000 date 
change.
    Before I close, I want to address the notion that people 
need to withdraw a month's worth of cash to get through the 
rollover period. I live in the next town north of here, 
Wheaton, with my wife and son. Based on what I know about 
banking, I'm going to withdraw the same amount of cash that I 
would for any other holiday weekend. I know that if I need 
more, I'll be able to get it from an ATM or from a teller. In 
the meantime I know I'm not going to be contributing to a 
sudden shortage that could keep my neighbors from getting the 
cash that they need.
    And keeping large amounts of cash outside the bank is not 
just unnecessary, it is dangerous. Local law enforcement 
officials are some of the most outspoken opponents of stashing 
months of cash around your house. Theft is a very real threat. 
At a recent White House Community Conversation I attended, a 
police chief said that 90 percent of thefts in his jurisdiction 
involved people close to the victims, such as family or so-
called friends.
    You can have confidence in the year 2000 preparations of 
your
bank. It is going to be business as usual at the bank today, 
tomorrow, during the year 2000, and after.
    If you have questions about the details of bank readiness, 
I would be pleased to try to address them.
    Mrs. Biggert. Thank you very much for your testimony.
    [The prepared statement of Mr. Swift follows:]
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    Mrs. Biggert. Next we have Leonard Harris, president, 
Chatham Food Center. You may proceed.
    Mr. Harris. Good morning, Vice Chairman Biggert and 
Chairman Horn. Thank you for the invitation.
    What I hope to do today is three things: Introduce you to 
FMI and what we do as an association; tell you about what we're 
doing to give you some assurances that we will be ready for the 
Y2K; and to voice our concerns.
    Food Market Institute has 21,000 members. They do $220 
billion in sales, and we represent more than half of the 
supermarket sales in the United States. We represent national 
chains, local chains, and independent operators. I'm happy to 
say as a member of FMI, as a single store operator in the city 
of Chicago, that I have been closely intertwined with what's 
going on with the technology group, which means stores big and 
small are involved and being communicated to about what's going 
on in the industry.
    What we have done; 2 years ago we issued a year 2000 white 
paper for the purpose of helping members understand the broad 
scope of the problem and to develop comprehensive solutions. 
The first of this year we set up an electronic share group with 
an Internet-based discussion platform for the purpose of 
members being able to access the Internet, and not only leave 
questions on the Internet to be answered but also to see the 
answers from other members who have had questions and have had 
their answers left on the Internet.
    FMI and the Grocery Manufacturers of America have produced 
a joint Y2K business contingency plan framework and they've 
held three joint Y2K contingency planning forums. FMI is 
working with the Y2K Food Sector Working Group of the USDA and 
the President's Council on Year 2000 Conversion and 
Communications Industry Readiness.
    There's a lot of talk in the industry about reduction of 
inventory levels. At one point in time, the average inventory 
in the pipeline was 120 days. The industry has cut that 
inventory level down to 60 days and its store level down to 2 
weeks. We believe that will be more than sufficient inventory 
to deal with any contingency. We issue a quarterly newsletter 
and we've had seminars discussing the issue at our major 
convention each year in Chicago.
    Our concerns are with those industries that are outside of 
our industry, primarily utilities and the government's food 
assistance program, the EBT program. Certainly there have been 
breakdowns in that program on an ongoing basis, and we're 
concerned that not only the system be running properly January 
1, but also that there be no new revisions or conversions of 
that system before the first of the year.
    Certainly I'm happy to be present here. I have been 
reassured, listening to the conversations and testimony from 
our utility groups and our transportation groups, and I will be 
happy to report back to our chairman and our president that 
this committee is doing an excellent job and we just hope that 
you stay on top of this. Thank you.
    Mrs. Biggert. Thank you very much.
    [The prepared statement of Mr. Harris follows:]
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    Mrs. Biggert. Delores Croft, seniors policy advisor, Office 
of Attorney General Jim Ryan. Thank you for coming in. You may 
proceed.
    Ms. Croft. Good morning, Chairman Horn and Vice Chair 
Biggert. By now you are familiar with the term Y2K. I will 
attempt to give you a different perspective on how others will 
use Y2K as a means of exploiting you.
    Fraud is a big business in America, taking in about $100 
billion a year according to the U.S. Office of Consumer 
Affairs. Law enforcement officials believe that seniors are the 
targeted customers. The FBI estimates that approximately 10 
percent of the Nation's 140,000 telemarketing firms are 
fraudulent and nearly 80 percent of the crooked companies 
target seniors.
    Y2K provides another opportunity for unscrupulous 
individuals and companies to scam the seniors. This is a time 
that con artists will choose to prey on the elderly. They will 
attempt to cash in on fears about the year 2000. Beware of 
people telling you where to hide your money. Some hiding places 
being recommended to seniors are wrap your money in aluminum 
foil and place it in the freezer, wrap it in dirty laundry and 
hide it in the laundry. Stuff the money in your spare tire in 
the trunk of your car. Remember, the same people that tell you 
where to hide it will be the very ones to return and to rob 
you.
    One senior stated to me that she was told, ``Your money is 
safe in the house of the Lord.'' Beware of these statements 
where you are told that you should remove your money from the 
bank and place it elsewhere.
    Be especially weary of phone solicitors. Many times they 
will call and want you to verify certain personal information. 
They may ask for your bank account number, stating that they're 
calling from the bank. They may ask you to tell them the last 
purchase that you charged on your credit card. And because your 
cards are supposedly insured, they may ask you to verify 
exactly how many cards you have and at some point during the 
conversation, they may ask you for your card number. Beware.
    Social Security numbers also provide a means for the con 
artist to claim a new identity--yours. Beware. Con artists prey 
on seniors all year, not just during the Y2K period. Remember, 
don't make purchases for your home or auto from unfamiliar 
companies. Take your time before making a decision, consult 
others that you trust such as family members or friends. Be 
suspicious when a salesman or telemarketer tells you that you 
must make the purchase so that there will be ample opportunity 
for it to be in place before the new year.
    What can you do to be prepared? You should prepare for an 
emergency that might arise from a Y2K problem as you would 
prepare for any other emergency situation. Just keep in mind 
that con artists materialize during emergency situations. 
Before allowing any stranger into your home, ask for a picture 
identification first. If in doubt, call the company or agency 
they work for. This includes employees from the gas company, 
the light company, and the telephone company. You should not 
have any difficulty verifying your local policeman or fireman 
because they should be in a marked car or truck. However, if in 
doubt call the agency first. If you have any questions, do not 
hesitate to call the Attorney General Jim Ryan's Senior Citizen 
Hotline at 1-800-243-5377.
    And Illinois Attorney General Jim Ryan would like to thank 
you for inviting the office to give testimony on this important 
issue.
    [The prepared statement of Mr. Ryan follows:]
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    Mr. Horn. I congratulate you on that statement. Yesterday 
in Topeka, another distinguished resident of Chicago, IL who 
happens to have her column in the Kansas City paper--and that's 
Ann Landers--she had a great column yesterday on just the point 
of the senior citizen fraud by the Y2K bit. They're phoning up 
saying that we're from the bank, of course; we're checking; we 
want to move your money from accounts into the bond accounts so 
they can't be hurting you in any way, and all this nonsense. So 
you've got a lot of scum out there that are going to take 
advantage of senior citizens throughout America.
    Thank you for making the point. Ann Landers closed her 
column with saying call your State Attorney General's office.
    Ms. Croft. Good. We'll be there to answer.
    Mrs. Biggert. Thank you for your testimony.
    Next we have Ron Clark, treasurer, Illinois Ayers Oil Co., 
representing the National Association of Convenience Stores. 
You may proceed.
    Mr. Clark. Vice Chair Biggert and Chairman Horn, thank you 
for inviting us here today. Our company in west central 
Illinois operates 27 convenience stores, doing business as 
Ayerco Convenience Centers. All of our stores sell convenience 
goods and 25 of our stores sell gasoline.
    We are happy to be able to provide this testimony on how 
Illinois Ayers Oil Co. and the convenience store and petroleum 
marketing industry have responded to the year 2000 challenge.
    I appear before you representing NACS as you stated, an 
international trade association representing over 2,100 retail 
members operating approximately 65,000 convenience stores 
nationwide. Convenience stores sell 55 percent of all U.S. 
gasoline. Approximately 2,700 convenience stores are operating 
within the State of Illinois.
    Illinois Ayers began assessing its software and hardware 
for Y2K compliance in spring of 1998, followed by the upgrade 
of non-compliance stores, including the installation of new 
systems and training store employees on those systems. Overall 
we've budgeted approximately $350,000 for equipment alone, such 
as the new personal computers and point-of-sale terminals.
    Probably the biggest area of concern for Illinois Ayers was 
the supply of gasoline and convenience goods to our retail 
sites. In contacting each of our 12 fuel suppliers, we found 
that most were either in the midst of, or had already 
completed, their Y2K readiness. We use one grocery supplier for 
our entire chain, and they have assured us that they are 
compliant and we should not experience any disruption in 
deliveries. At this time our Y2K readiness is approximately 85 
percent complete.
    The central point Illinois Ayers and NACS wish to make is 
that unless they are without electricity for extended periods 
of time, the vast majority of convenience stores should adhere 
to their normal operating hours on January 1, 2000. NACS has 
provided industry retailers with information and resources to 
assist them in achieving Y2K compliance, and through NACS our 
industry is represented on the President's Council on the Year 
2000 Conversion as part of both the Oil and Gas Sector Working 
Group and the Food Supply Working Group.
    According to the results of the NACS year 2000 survey 
released just this week, these efforts are bearing fruit. The 
survey found that 95 percent of store owners and petroleum 
marketers planned to be Y2K ready by November 30, 1999. By 
November, also, 94 percent of the respondents plan to have a 
contingency plan in place; that is, a plan of action for 
dealing with uncertain operational events caused by the Y2K 
problems.
    Sixty-five percent of respondents have been gathering 
equipment compliance documentation from business partners, 
while 20 percent have been conducting joint contingency 
planning. The NACS survey also found that the majority of 
industry operators, 72 percent, are concerned about the 
possibility of consumer overreaction to Y2K in the manner of 
hoarding food, gasoline and/or money. This finding will become 
more important as we near the close of 1999. Retailers are 
deservedly skittish about consumer reaction during the last few 
weeks of 1999 and into the year 2000. Consumer reaction is the 
wild card in all of our industry Y2K efforts.
    While the aforementioned responsible efforts and survey 
results should help allay any consumer concern, we're also well 
aware that a minority of consumers will remain concerned. For 
that small minority, NACS urges that they act responsibly.
    Specifically regarding gasoline, we suggest that concerned 
consumers make sure to keep their gasoline tanks at least half 
full starting in early December. As for the storing of extra 
gasoline, NACS urges extreme caution. Consumers should contact 
their local fire department for more information on the rules 
and regulations governing gasoline handling and storage. If 
consumers do not overreact, we do not expect either gasoline 
rationing or shortages. We also urge all consumers to seek 
information from responsible parties. The President's Council 
on Year 2000 Conversion can be reached via phone at 1-888-
USA4Y2K or via the Internet at www.y2k.gov.
    In addition, the Council's Oil and Gas Sector Working Group 
and Food Supply Working Group have Web pages offering 
responsible information on our industry's Y2K readiness as well 
as consumer information. Through such meetings and hearings as 
this, as well as retail industry and public education efforts, 
consumers should begin to feel more confident. NACS and 
Illinois Ayers stand ready and willing to assist as our means 
dictate in any efforts to ensure that consumers know that the 
convenience store and petroleum marketing industry is preparing 
for Y2K.
    Again, I thank you for inviting me to appear today. I would 
be pleased to answer any questions.
    Mrs. Biggert. Thank you very much.
    [The prepared statement of Mr. Clark follows:]
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    Mrs. Biggert. Next is Monty Johnson from Citgo, 
representing the American Petroleum Institute.
    Mr. Johnson. Thank you. First of all, I want to thank Mr. 
Horn and Mrs. Biggert for the opportunity to be here today. I 
am particularly pleased to be in Naperville. I had a chance to 
walk around your beautiful city last night, and I plan to come 
back.
    With the help of staff, I'm going to step through a quick 
slide presentation. I'm here really in my role as chairman of 
the Public Information Group of the American Petroleum 
Institute's Y2K Task Force.
    Explain the role of the task force: It is approximately 50 
of the major oil companies that began in 1997 meeting every 6 
to 8 weeks to share information, do benchmarking studies, set 
up committees on key areas of the Y2K issue and share 
information with both the government and the public.
    Some of the things that we've accomplished so far: We have 
a very comprehensive Website where we share information not 
only among the member companies but also with the public. We've 
established a data base of readiness information on equipment 
that's common throughout our industry. We've interfaced 
considerably with other industry organizations.
    Mr. Clark's presentation was a good lead-in because NACS is 
one of the areas that we coordinate with very closely.
    We've established a contingency plan framework that all of 
our member companies are following, just so we have some 
consistency in exchanging information among ourselves. We've 
set up an effort to meet with all our supply chain partners 
because many of us in the petroleum industry deal with the same 
suppliers and vendors, so rather than 50 of us contacting a 
pump supplier, for instance, we can contact them once and get 
the information and share it among our members.
    We've also set up standards for testing embedded systems. 
We're very involved currently on assessing the readiness of 
some of the international supply areas.
    Mr. Horn, you mentioned Russia. A number of our member 
companies operate around the world. So our companies have a 
very personal interest in assuring the readiness of the 
infrastructure of those companies to support their operations. 
And our task force is also the focal point for the government 
for the oil industry.
    The next slide talks about our role as the focal point of 
the industry to the President's Council. The President's 
Council has been mentioned several times today but the API Y2K 
task force is the focal point for the oil and gas industry. The 
other segments of that task force are shown there and our 
reports are given quarterly to FERC as we report the findings 
of surveys that we've done quarterly to assist the readiness of 
the overall industry.
    Next slide shows members of the task force, which shows it 
is a pretty broad representation of all the major segments of 
the oil and gas industry.
    Gas Processors Association: We had gas utility reporting on 
their readiness efforts a little earlier.
    The Petroleum Marketers Association of America: We don't 
have NACS directly in our reporting relationship, but we're 
certainly sharing information and coordinating a lot of effort, 
since many of our member companies market our products through 
convenience stores.
    The current focus of our activities: We have ongoing 
working groups, and this is representatives from our member 
companies that are focusing on the specific areas of embedded 
systems, retail automation, all the dispensing equipment, 
point-of-sale equipment at our retail operations.
    Supply chain, both the vendors and suppliers that provide 
services and equipment to our companies as well as our 
customers downstream. We believe a disruption anywhere in that 
supply chain could have a severe impact on our ability to 
operate, so we're concerned with not only what's upstream of us 
but also what's downstream.
    International issues as they relate to our domestic 
operations: Contingency planning is a big focus currently. And 
public information is the reason I'm here today.
    We do benchmarking studies every 6 to 7 weeks among our 
member companies, and this has been a tremendous help to us in 
sharing information and helping us all find out if we have 
common problems. We can come up with solutions that we can 
share among our members. We feel like this has saved us a 
tremendous amount of time and effort that we each would have 
had to do individually had we not had this information sharing 
operation.
    Hot issues for this year. Managing public perception: A 
number of people have mentioned today that public reaction to 
the Y2K issue is probably a bigger concern than some of the 
technology issues, and that's very much our belief.
    Cross industry reliance: We're very active in sharing 
information with both the electric utilities and the 
telecommunications industry since those are where we feel our 
greatest vulnerabilities are, and we have a very high 
confidence that those facilities will be in operation.
    Contingency planning is our big focus, and international 
vulnerability as it relates to our ability to supply products 
and have gasoline at the pump when you need it.
    In summary, our oil and gas companies are focusing on our 
operations to be reliably able to have the gasoline there when 
you want it. Our efforts are very comprehensive, all the way 
from planning the effort to resolving the problem. All of our 
companies are currently in either their remediation or 
contingency planning stages and very near resolution, and we 
feel we're well on the way to Y2K readiness.
    And with that, I'll focus your attention on a news release, 
copies of which are outside, and you have a copy for the 
record.
    These are the results of a survey of 1,250 oil and gas 
companies that are task force conducted. The results were 
reported on June 28th after they were presented to FERC and 
this shows that of these 1,250 companies, 95 percent of them 
showed that they are going to be Y2K ready by September of this 
year, and the results
of this survey represent 93 percent of the domestic oil and gas 
demand in the country. So it is a very high representation of 
the industry and their ability to provide services.
    With that, I'll be prepared to answer questions.
    Mrs. Biggert. Thank you very much.
    [The prepared statement of Mr. Johnson follows:]
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    Mrs. Biggert. I think I'll skip over Mr. Paulson, our 
author, for just a moment and go to Mike Skarr who is the 
president and CEO of the Naperville Area Chamber of Commerce to 
talk about businesses, and then we'll come back to you.
    Mr. Skarr. Thank you, first of all, for your flexibility in 
listening to a few comments I've got. I will be very brief 
today. First of all, let me thank Congress for the recent 
passage of legislation dealing with the potential liability 
issues of the Y2K issue. We lobbied very hard that legislation 
be passed. We think it brings a sense of sanity, hopefully a 
sense of sanity into a world of the future that most of us 
don't know very much about. So we're very appreciative of that.
    For those of you who don't know, the Naperville Area 
Chamber of Commerce is an organization of 1,600 members. We're 
one of the largest Chambers in the State of Illinois. We have 
some of the large businesses, many who testified here today are 
members, down to many small home-based businesses.
    We have a very active technology committee that's been in 
operation for over 3 years and I think ties in to many of the 
comments that have been made today.
    Much of the testimony that's been presented today really 
focused on government or infrastructure services, and while I 
found that all very informative, I'm glad I did come. The 
reality is that the private sector, in my opinion, has an even 
greater interest in this whole area.
    Using stockpiled food and using stockpiled water implies to 
me that businesses have been forced to shut down. Production 
stops, services stop, and most importantly paychecks stop. The 
possible economic consequences of that scenario, in my opinion, 
are disastrous.
    We have been discussing the issue at the Naperville Area 
Chamber of Commerce for quite some time. There isn't a month 
that doesn't go by that we either don't hold a seminar or 
training session or include articles in our newsletter relative 
to the Y2K issue. I would point out, though, that America's 
success to a great extent rests on the shoulders of small 
business. Our organization reflects the composition of business 
in America. Y2K to a great extent is going to rest on the 
shoulders of small business rather than big business, 
ultimately to us in local communities.
    As a result of that challenge, we have assembled resources 
for use by our members. Local resources or local solution 
providers are really the key issue in the Y2K case as far as 
we're concerned. Washington will not be solving the problems of 
many of our local businesses here in our community; fellow 
business members will.
    I will leave copies of the local resources we have 
assembled here in our local community.
    [The information referred to follows:]
    [GRAPHIC] [TIFF OMITTED] T0939.204
    
    Mr. Skarr. I also encourage, as you listen to other 
testimony, encourage other business organizations to focus on 
developing local resources that local businesses, particularly 
smaller businesses, can use to become Y2K compliant and Y2K 
ready.
    Last, I would congratulate you on the forum you've created 
today. It is reassuring to know that our government is in fact 
working on our behalf, and I thank you for the opportunity to 
be here today.
    Mrs. Biggert. Thank you very much, Mr. Skarr, for those 
kind words.
    Now, last but not least, is our last panelist, Ed Paulson, 
who is the author of the book, Year 2000 Crisis Survival.
    Mr. Paulson. Thank you for the invitation to address the 
committee this morning. I appreciate it. As you said, my name 
is Ed Paulson. I'm a local native Chicagoan and also a local 
western suburban resident. I'm the author of 12 business and/or 
technology books, including the recent book from McMillan on 
Y2K and specifically a consumer-oriented guide.
    I'm also a registered Texas professional engineer and I 
have been in high technology now for longer than my nephew has 
been alive, but well over 20 years.
    What I would like to do is, I have studied this problem, 
kind of cursory, for 15 years; but I would like to take what 
I've learned over the last 2 years of really intensively 
following this Y2K problem.
    The good news is I think that the Y2K situation improves 
every day. A lot of it is due to the work of the committee, 
such as this one, the Senate committee chaired by Senator 
Bennett and Senator Dodd, and also John Koskinen and his 
committee. I think that the public awareness brought from these 
committees and bringing people in from the different industries 
to address what they are doing, I think everything works better 
with a deadline, and I think the committees have worked real 
well to move the United States forward.
    And the good news is the United States is further ahead 
than anybody else in the rest of the world. There's some bad 
news associated with that, too, which I'll address in a moment.
    Another good news item that I've seen is that the embedded 
controller problem is a smaller item today than it was 
originally assumed to be early on. I think that's good news. Is 
it still a problem? Yes. But is it as big a problem as everyone 
was afraid it was? I think the answer to that is now no. I'm 
hearing numbers of 2 to 3 percent as opposed to a 95-plus 
percent problem, which is good news for anybody.
    My major domestic concern is that if people do not prepare 
for Y2K eventualities, that they may at the last minute start 
to panic. I go back to my situation of trying to buy a snow 
blower last January here in Chicago. I would call, and 15 
minutes later, four snow blowers would have gone out of the 
local Menard store.
    I had this flash when I was going through that situation 
last January. I had this flash in my head of what would it be 
like January 1st, 2000, if all of a sudden the power did go out 
for whatever reason, and the gas did go out for whatever 
reason, and people now go to their local grocery store to buy 
food and they find out everyone else has had the same idea and 
the shelves are barren.
    All of a sudden now, I think people can start to kick in a 
whole new level of concern, and that concerned me. So that's 
why I'm out talking to people, saying please take this problem 
seriously. It is not going to be the end of the world. We're 
not going to have Mad Max Beyond Thunderdome happening in 
January, but we are going to have, I think, a possibility of a 
problem arising. And I think if people prepare for that, we'll 
be better served going into the new year. I'll talk a little 
bit more about that in a moment.
    The other uncertainty I have and concern I have is 
international, and that I think the United States is well ahead 
of the rest of the world, but that means everyone else is 
behind us. I think that presents problems from both an economic 
perspective in that if I need a part for a car and that part is 
in Korea and I need to get that part for domestic production, 
what's the possibility of me getting that part in?
    The second one is a humanitarian issue, and that it is cold 
in Siberia, and if those people don't have food, water, and/or 
services, I think the United States and the other more ready 
countries may have the humanitarian position put in where we're 
having to assist these other countries. And I would suggest 
contingency planing in those areas. It may indeed be going on 
and I don't know about it, but I think that's an area that the 
more prepared countries are going to have to deal with.
    Here at home, I think folks can take a look around their 
house to see what the susceptible devices are. The ones that 
are most susceptible are the ones that have day, date, and year 
associated with them. Your VCR, if you are one of the few 
people who can actually program one and you do take advantage 
of that, if--there is a good chance that it may or may not have 
a Y2K problem. It is worth it to check it out.
    Home computer absolutely should be checked out, including 
the applications on it. Believe it or not, your camera may be 
because it puts a little day and date on it. It may have a 
problem in that the year 2000 is a leap year, but a lot of 
people didn't know that when they were creating the programs so 
there are possibilities of problems in that area, and also 
watches could be a problem.
    Devices, though, that are on a 24-hour timer or devices 
that are event driven, do not have that kind of exposure. So 
your car, stove, refrigerator, microwave, TVs, those kinds of 
things will not typically have problems unless they have a day 
or date associated with them.
    So I would suggest that people prepare for sporadic 
outages. Why? Because the problem is simply so complex. 85 to 
95 percent of bugs can be caught in advance of putting them 
into production. That's basically a software industry standard. 
That means 5 to 15 percent are not caught. Because of that, 
when you started adding those 5 to 15 percents together through 
large networks, there's a higher than likely possibility of 
something going wrong. Not to the end of all utilities as we 
know them, but I think sporadic outages.
    I'm concerned, too, that if people don't take individual 
responsibility, that--if they try to rely on the local services 
of FEMA and/or the local community services, that they're going 
to be in a position where they're going to be disappointed. 
Because those folks are going to be busy taking care of other 
problems.
    On the top of page 3, you'll see a preparation matrix which 
I won't go through in detail, other than there's two down here 
at the bottom that you'll see if the public is not prepared and 
there are no Y2K problems, we're just flat lucky; and if there 
are Y2K problems and the public is not prepared, we could have 
panic and trouble, and that's my major concern.
    So the minimum preparation steps that I suggest people 
take: I suggest people stockpile up between 2 and 4 weeks' of 
food. Not a year's worth of freeze-dried raisins, but 2 to 4 
weeks of food.
    I don't think there's need for razor wire around your house 
either. Please make sure you have a means of opening the cans. 
Don't wait till December to do this. Gradually stockpile the 
food over the course of the year so you do not put a major 
drain on the distribution channels we talked about. Make sure 
you have a way of safely cooking that food over a period of 
time that you need to.
    Have a full tank of gas going into December 31st. Keep all 
of your financial records for the last 6 months of 1999, and 
specifically for December, because if there are problems with 
the financial industry, which I do not expect--I agree that 
industry is probably as prepared as anybody--but if there are, 
if you have paper backup, it is a good idea.
    Leave your money in the bank. It is FDIC-insured and way 
safer there than in your mattress or buried in the backyard. I 
would suggest you also verify the readiness of your mutual 
funds and also how they're assessing the securities in which 
they have specifically invested. Hold them responsible for 
doing the management activities that you are paying them to do 
with your fees.
    Have a little extra money on hand. I encourage you not to 
have it in cash, because the less-than-honorable people in our 
society would love that. But I suggest having them in the form 
of travelers checks. If you are traveling internationally, I 
encourage you to check with the country specifically. The State 
Department is going to make an announcement later this year, I 
believe it is in September, about what countries they feel are 
the most ready, and I think if you are planning to go to a 
country that the State Department has got concerns about, I 
would be concerned about it. Also Y2K travel insurance should 
be considered.
    Medication: If you have medication that you are required to 
take, talk to your doctor and pharmacist to find out if indeed 
if there is a problem, how are you going to get that critical 
medication? And, finally, prepare yourself by reading more 
about the problem through books like mine or other books that 
are on the market.
    I suggest people treat Y2K like an extended storm. They 
prepare just like they're expecting a 2-week ice storm or 
hurricane to hit, without the massive damage of a hurricane. 
And just make the proper preparation for their own local 
household.
    We can and will recover from Y2K as a technology problem, 
but recovering from the damage caused by a Y2K panicked public 
will
have farther reaching, longer term consequences that are best 
avoided by education and moderate preparation.
    I thank you for the invitation to present, and I'll answer 
any questions.
    Mrs. Biggert. Thank you very much.
    [The prepared statement of Mr. Paulson follows:]
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    Mrs. Biggert. I appreciate all of your testimony.
    First question. Mr. Johnson, since we already have enough 
batteries with enough capacity to move our cars, trucks, 
planes, and trains--although I have seen a new car they're 
developing, or new truck, so that might be on its way but it 
won't be ready by January 1st, I guess--we really need our oil 
and gas products. And the oil and gas industries have relied 
on--the United States has a great dependency on foreign 
countries to augment our own supply. And in the last 3 months, 
our country has seen prices go from recent all-time low to 
high--higher than expected. So don't you have concerns that the 
foreign countries will not be ready for the year 2000, and what 
alternatives have you for the shipping industry and how about 
the prices? Do you expect those to go up because of this 
problem?
    Mr.  Johnson. First of all, price is very much a function 
of worldwide supply and demand, and demand for petroleum 
products anywhere in the world is going to have an impact on 
what we pay at the pump here in this country.
    As far as our supplies coming from foreign suppliers, the 
three major sources of the foreign crude that comes into this 
country are Venezuela, Saudi Arabia, and Mexico, and all three 
of those entities have representatives on our API Y2K task 
force.
    So we do have very current firsthand information about 
their readiness. We have high confidence that those three 
suppliers are at the same level of readiness as the domestic 
companies. So, as far as there being a disruption in those 
supplies, we didn't believe that is very likely.
    Now, what the prices will do later in the year, it is 
anybody's guess. I mean, once again there are economic 
political factors around the world that are going to affect 
supply and demand, and I don't have a crystal ball to predict 
where that may be by the end of the year.
    Mrs. Biggert. Thank you. Mr. Paulson, you talked about the 
problem internationally with some of the foreign countries, 
too; and I think that we have had some real concerns, 
particularly about Russia and being ready. I know that there 
was a recent meeting of the United Nations discussing this 
problem, and 173 countries attended that meeting and there were 
very mixed reactions as to who was really compliant or whether 
they've really begun or not.
    It is my understanding that Yeltsin has just sent out a 
letter to his cabinet, or his government, suggesting that they 
start to look at the Y2K problem. This gives me great cause for 
concern that if a country of that size and with those power 
plants is beginning to look at Y2K--when really you are 
starting in 1996 which still was the average time--was not way 
ahead, whether these countries will be ready?
    Mr. Paulson. I would share your concern completely, because 
when you look at the caliber of people who sit on the panels 
presenting to the committees and you realize the money and 
talent and resource that we've been putting behind us in the 
United States for 3 to 5 years in some instances, and these 
companies are still now just getting ready--for somebody who's 
planning to do this in 6 months, for a country, to me that just 
would be a huge cause for concern. I would share your concern 
on that completely.
    Mrs. Biggert. Thank you.
    And then, Ms. Croft, I thank you for that testimony really 
to let people know that there are the scam artists that are out 
there. And this is one forum to do that. But what else is Jim 
Ryan's office doing to ensure that the public knows about 
what's happening, what's been happening in the neighborhoods?
    Ms. Croft. We have an outreach department that is staffed 
by people that do nothing except go out and give consumer 
education to different organizations and groups, as they 
request. And we just feel that the most important thing is to 
educate the public; and if they're educated, then they can be 
aware of the problems that may possibly exist.
    Mrs. Biggert. Do you target different areas or is this just 
what the organization----
    Ms. Croft. We're statewide. We go all over.
    Mrs. Biggert. Thank you.
    Mr. Clark, have you begun to see people starting to put 
goods aside, or is this something that you wouldn't know about 
if it is done on a gradual basis?
    Mr. Clark. We wouldn't really have a way of knowing that. 
We track our sales, naturally, by month to month and we have 
not seen a large increase in sales. Naturally, we like to see 
increases, but we have not seen enough of an increase to say 
that it has anything to do with the Y2K problem at all.
    Mrs. Biggert. At one of our hearings it was stated that you 
cannot buy a generator now, that they are all gone. Some people 
must be feeling concerned and going out and following 
suggestions. I don't advise buying a generator because I don't 
think that we'll need it, but I think there are people that are 
planning to have it.
    Mr. Clark. I feel there's going to be a certain number of 
people that will be concerned no matter how much information we 
throw at them. But I think that our industry is going to be 
prepared. If all else fails, we started with a hand system, we 
can go back to a hand system, and barring any electrical 
outages, people should be able to come to our units and get gas 
and other things that they need.
    Mrs. Biggert. Thank you.
    And, Mr. Harris, kind of the same question about whether 
you are seeing people starting to put aside goods but also when 
you stock your stores, and this is done by inventory that I 
would assume is by computer; so that you really need to ensure 
that your computers are working in order to be able to get the 
inventory in.
    Mr. Harris. Correct. Everything nowadays is done by 
electronic data transfer. So we've checked with our wholesaler 
to make sure they were compliant and that our systems are 
working properly. As to the question of hoarding, I would think 
that most of the hoarding would be done in staples and in 
perishables, and so it is far too early at this point in time 
to tell.
    All the information that I have would suggest that the 
consumer may keep an extra week's supply. Most customers shop 
twice a month anyway. My customers probably shop a little more 
often than that, feeling that they get fresher merchandise by 
shopping two or three times a week. But my feeling is, 
especially after being here and listening to the testimony 
today, is that any shortages or problems with Y2K would be 
short term. So I would suggest at most 1 week's supply. As I've 
already stated, in the pipeline we have 120 days supply so I 
don't see any major concerns.
    Mrs. Biggert. Thank you. I'll yield to the chairman, Mr. 
Horn.
    Mr. Horn. Thank you very much. We will go through some of 
the questions that have been handed in by members of the 
audience to the staff of the subcommittee. And let's just start 
with what are the preparations that all the panelists are 
making in their own homes regarding toilet flushing, food, 
water, heat, and medicine, credit cards, cash, and stock 
accounts? Anybody want to say what they are doing on this? 
Let's go down the line. The author, and then on down.
    Mr. Paulson. I've pretty much written what I'm going to do. 
I think it is prudent. As I said, I don't expect that there's 
going to be a major disruption for months and/or years on hand, 
but I think a few weeks is prudent and that's what I'm doing.
    I'm basically stockpiling every time I go to a store. I've 
set aside an area in my basement, a cool area. Every time I go 
to the store, I buy a couple extra cans and/or non-perishable 
items that I can just keep on hand as a contingency. And then I 
make sure that expiration dates are after March 2000 and 
basically accumulate that.
    Also water. Some people are doing a form of bottled water 
and every time they go, they buy an extra 5-gallon bottle of 
water and they save up 10 or 15 of these. Worst case, if it 
doesn't turn out to be a major disaster, you just eat the food 
in February or March; but if it does turn out to be a problem, 
I'll feel better to have it on hand.
    Mr. Horn. You can have a neighborhood picnic on February 
1st or so.
    Mr. Johnson. I'm not taking any extraordinary measures at 
my office. I live 2 blocks from my office. It is a holiday 
weekend. I'll be working. We're going to staff 24 hours for the 
day before New Year's Day and the day after. If I've got to 
walk to work, I've done that before. It is a holiday weekend. 
It is New Year's Day. I hope to watch the Rose Bowl, watch Dick 
Clark drop that new Waterford ball at Times Square and pretty 
much have a holiday weekend just like I normally would.
    Mr. Horn. Mr. Clark.
    Mr. Clark. To date, I have not done any extra preparations. 
I'm an optimist and I feel fairly certain that in Quincy, IL 
we're going to be operating business as usual throughout the 
city. So I'm not anticipating at this point.
    Mr. Horn. Ms. Croft.
    Ms. Croft. Well, my family tells me that I hoard food all 
the time so I don't think I really need to buy any additional 
food. I do have bottled water at home. I plan on having a full 
gas tank in my car. I will have probably a couple of dollars in 
the house, no more than I would have if it were any other 
holiday, and I think that's the basis. I don't really take 
medication, so that lets that out.
    Mr. Horn. Mr. Harris.
    Mr. Harris. I intend to have a week's supply of food at 
home, and we have bottled water at home, so we usually have a 
couple extra jugs which is about a 3-week supply, and have a 
full tank of gas and that will be the extent of my contingency 
plan.
    Mr. Horn. Mr. Swift.
    Mr. Swift. I've got a colleague who likes to sign his e-
mail, ``Hope for the best, prepare for the worst.'' but that is 
not a way I think that businesses and rational people ought to 
prepare. You have to temper the impact with the likelihood of 
it actually happening.
    I've already stated, and I believe after listening to some 
of the people we've heard here today, for 2 years, that any 
shortages are going to be local and brief. I've already said 
that I think cash is a non-issue. I'm not going to have any 
extra. We are a family that drinks bottled water. We will have 
some of that on hand, and I would like nothing better to see my 
family eat its way through what's in the pantry.
    Mr. Horn. Mr. Skarr.
    Mr. Skarr. I really don't intend to do anything except 
maybe stockpile red wine, because if any of these come true, 
the red wine will provide me more comfort than anything else 
will.
    Mr. Horn. Question 2 from the audience is: If you receive a 
phone call from someone conducting a survey about a product, 
company, or political situation, should you answer the 
questions over the telephone?
    I don't know if any of us are capable on some of it. If 
they claim they're in a political situation, most of us that 
run for office do participate sometimes in surveys, and we'd 
certainly like honest information when we do a random sample of 
the home.
    But, gentlemen, and Ms. Croft, if you have any thoughts let 
us know. Actually, it was directed to you, Ms. Croft, since you 
mentioned some of the scams going on.
    Ms. Croft. If it is merely a survey and if they want to 
answer the questions, I think it is fine. The first time they 
act like they want to sell something, if they're not 
interested, I would just simply say I am not interested and 
hang up immediately.
    Mr. Horn. Right. That's a technique I used. Sometimes their 
automatic dialer comes back to you, and especially people with 
phones not in the book. You get sort of irked more with the 
product than anything else when you find a call coming in, 
especially at dinner time.
    Mr. Johnson, a member of the audience says, how would you 
evaluate international Y2K readiness for delivery to the United 
States? Do we have any more thoughts on that one?
    Mr. Johnson. Well, other than what I mentioned about our 
three biggest sources of imports, our committee has really 
struggled on how to report what our member companies know about 
the countries in which they do business. Most of that is 
because those companies are there at the invitation or at the 
whim of the local or the State owned oil companies, so they're 
very reluctant to be critical of those facilities. However, the 
three countries where we do get our biggest sources of imported 
crude, we have firsthand information about their level of 
readiness and a high level of confidence that they will be 
ready.
    Mr. Horn. The additional part of the question then--I guess 
I can answer that, Mr. Willemssen--is what is the overall 
percentage of international readiness? It is a very difficult 
situation to assess.
    Some capitalist-countries, democracy in Europe, when I 
talked to some of their leaders for the last year or so, 
they've said, ``Oh, well, you know, these things work out--and 
blah, blah, blah.'' I thought, brother, are you in for a 
surprise on January 1st. Some of those smaller countries will 
be, and they have the money to deal with it.
    The countries that really have a problem, of course, are 
the developing nations in Africa, in southern Asia, some in the 
Middle East and so forth. They have a real problem in this 
area.
    So we've had the Central Intelligence Agency look at a lot 
of it and it is pretty gloomy if you've got to interact with 
them.
    And of course a lot of our international business, you are 
talking about interaction in particular countries. We did 
suggest back in 1997 to the Secretary General of the U.N. that 
he needed to educate his members; and he appointed a very able 
Ambassador from Pakistan to do that. And last fall, December 
actually, we had the first conference of the 120 nations 
represented in New York on this. And just 2 weeks ago, I think 
it was 173 nations that came to New York.
    So it isn't too late, but they're in the last stretch for 
most people. And the World Bank is trying to fund some of the 
developing nations to get this solved.
    I don't know. Mr. Willemssen, you know a lot about it. If 
you want to add anything, feel free.
    Mr. Willemssen. I think you summed it very well, Mr. 
Chairman.
    Mr. Horn. We go to question 4: Can you suggest some 
Websites for the year 2000? And that's for Mr. Paulson, the 
author. Mr. Paulson, how about it? What Websites should the 
average citizen ought to tap into. We read ours 2 hours ago or 
so.
    Mr. Paulson. There are so many Websites on the Internet 
related to this. One of the hardest challenges I had in writing 
this book is finding information I trusted. There's a 
difference between finding Websites with information and 
finding Websites with valid information that doesn't have 
somebody trying to drum home a point. I've got one that I've 
put on my own Website, which is--I won't try to sell you 
blankets or sleeping bags or, as I said, raisins or bottled 
water. It is strictly for people's use to go to the Website. It 
is www.edpaulson.com, and there's a year 2000 link, and on 
there they'll find divisions for different areas--finance, 
government--and that will then take in other links.
    So I'm hoping what people will do is use that as a resource 
to get to the other specialized locations, like the Board of 
Governors Website for the Federal Reserve. It is a hard one to 
find unless you know how to find it, but there you can find 
really credible information about what the finance industry is 
doing, right directly from the Federal Reserve's own 
statements. And there are others.
    Mr. Horn. That is a great service and I thank you for 
offering that. The vice chairman has a question for you.
    Mrs. Biggert. Not really a question. I just wanted to add, 
in the information that we have out there, we do have some of 
the Websites for general sites, and then government sites, and 
it is a sheet I believe that's out on the table.
    Also, how to get testing tools and software patch sites so 
you can check out your software. Again, you always take it with 
what you find there, but at least it is a way to start and get 
into the Internet on this issue.
    Mr. Paulson. There's another site that I found that I've 
come to discover lately that I really like. It is 
www.y2ktoday.com. It is been out for a while, but I've been 
going to it regularly and checking it out. I actually like that 
site a lot. That's another alternate site I would recommend to 
people and that will take them to other locations.
    Mrs. Biggert. That's on this list also, as is yours.
    Mr. Horn. I'm glad you mentioned it because I was going to 
praise you for it. This is the best list I have seen any Member 
of the House do, and your representative has done it and it is 
on the table out there. It is Y2K Readiness Guide to U.S. 
Representative Judy Biggert, 13th District of Illinois.
    [Note.--See prepared statement of Judy Biggert.]
    Mr. Horn. And that's very useful information I think for 
all of you, and you don't have to scribble notes in the 
audience or anything else.
    I'm going to ask one last question of this panel, which 
I've asked every panel. Now that you are into this, what have 
you learned that, if you ever had to go through it again, ought 
to be No. 1? Let's start with Mr. Skarr up there.
    Mr. Skarr. I think particularly for small business, because 
I'm not sure we're home free yet relative to small business, it 
is creating greater awareness. And even hearings like this 
probably should have been done earlier on just to build a sense 
of national awareness of the importance of this. So just plain 
old public awareness and business awareness is probably the 
issue that we needed to start a little bit earlier in my 
opinion.
    Mr. Horn. Mr. Swift.
    Mr. Swift. Four things come to mind. One, like everybody 
else, I wish we started earlier because a large portion of this 
work could have been accomplished as part of routine 
enhancements or upgrades to hardware and software.
    No. 2, I wish that the lines of business in all our major 
organizations had accepted the reality that this is not just a 
technology issue but it is one that threatens whole businesses.
    Three, directors and officers, I think they needed in some 
cases to have stepped up to their responsibilities earlier. If 
you asked the Federal examiners, What is the common 
characteristic of banks that have not performed satisfactorily? 
They will tell you it is not a matter that they do not have the 
money to throw at this or something; it is that their directors 
and officers have not asserted themselves aggressively in the 
process and have the project leaders reporting to them, and on 
a scheduled timetable. And then, finally----
    Mr. Horn. I completely agree with you on that. I've 
preached that now for 3 or 4 years, and I think they got very 
bad advice from some of their general counsels, which sort of 
was, Hey, chief, if you don't say anything, they can't do 
anything to you in court.
    Well, that's just utter baloney. You should have done 
what--both the government organizations and private sector and 
nonprofits--they should have said, ``Hey, we're going to do 
everything we can now and if some idiot wants to sue us,'' 
which a few are out there waiting now that they don't have all 
that tobacco money and the tort bar, ``that we should do the 
best we can,'' and when you do the best you can, nobody is 
going to be able to touch you very much. And I think you are 
right on the target there.
    Mr. Swift. You just stated my fourth point which is 
communications. I think you are going to find this summer and 
through the fall, banks will be much more ready to state the 
readiness of their organizations.
    Mr. Horn. Ms. Croft.
    Ms. Croft. I think that communication and consumer 
education and hearings such as this to make the public aware of 
what is available to them and what they should be cautious of. 
I think those are the most important issues. From the beginning 
of Jim Ryan's term, he has been very instrumental in making the 
public aware of the problems that possibly exist and giving 
them a forum in which to call for information if they're in 
doubt.
    Mr. Horn. Mr. Clark, any thoughts of what we should do 
first, next time around?
    Mr. Clark. I would have to echo the thoughts of others, is 
that we probably would have been better off starting a little 
earlier. But all in all, it helped us get a better handle on 
our inventory of equipment and so forth, but just timeliness 
would have, had we started earlier, would have been better.
    Mr. Horn. Mr. Johnson.
    Mr.  Johnson. I think once you mentioned about breaking 
down the barriers of sharing information. I think the Y2K 
Readiness Act that was enacted last fall got a lot of the 
attorneys off of our backs and allowed us to speak more freely 
about what our readiness plans were. It has done a tremendous 
amount in our industry to help us share information among 
ourselves, and I think the lingering benefit of this exercise 
is that we have broken down barriers, and I think the 
technology and the advancements we've made are going to extend 
way beyond what we're gaining just as a Y2K issue.
    Mr. Horn. Thank you. I agree with you completely on getting 
everybody off everybody else's neck and it's really been 
encouraging to see very bitter rival firms working together and 
sharing information because they've got a common interest.
    Mr. Johnson. And we're interdependent.
    Mr. Horn. Yes, exactly.
    Now we have Mr. Paulson. Any more thoughts on that?
    Mr. Paulson. The only comment I would have is from my 
perspective is I wish I had gone public, proactively public 
earlier with this, trying to raise the awareness with some of 
the other people who were the early evangelists on public 
awareness on this topic.
    I think the other thing I would have probably promoted is 
to have business start to treat this as a new beginning, not an 
end. I think a lot of the business has been reactive to this, 
like they're being attacked. And the context of how they did 
the work was, I think, initially almost antagonistic. Where now 
what I'm starting to see, that as my colleagues in the 
information technology industry are going through this, they're 
saying, ``You know what, we've really cleaned up a lot of our 
systems.'' And a lot of them are treating this like we're 
really going into 2000 on a brand-new, stable, solid technology 
footing. It is kind of like cleaning house.
    Some of the technology in this industry are now treating it 
that way, and instead of treating it like a bad thing, they're 
treating it like a good thing. I wish I had seen that earlier, 
to be able to push this.
    Mr. Horn. When we question government agencies, we say, 
``Now, did you learn something in the process of getting rid of 
some of the systems or buying them, rather than having to do 
the expense and--when that isn't going to take you too far with 
the next generation?'' You should be wanting the new 
generation.
    The Federal Government is very far behind the private 
industry in a lot of things, computing power that they have, 
and they don't have this. They had to bring people out of 
retirement to do COBOL. Well, most people thought COBOL hasn't 
been used for 30 years, but it has been and it is. And those 
people in COBOL who didn't retire from the Office of Personnel 
Management said, Hey, you can keep your pension check every 
month. God bless you on the $100,000 contract you are getting. 
People wonder where did this come from. I think those are all 
useful thoughts. I will try to use these when I'm trying to 
justify the Office of Management, because the Office of 
Management and Budget simply doesn't give a hoot about 
management problems, they're so overwhelmed with the budget 
problems.
    So hopefully we will get something done on that front. I 
thank you for all your one-liners.
    I want to thank you, Judy, for the great hospitality your 
staff has offered us and for your being here. You do an 
excellent job in Washington. I'm glad to see your constituents 
are here to see what you are doing. You sent one fine lady to 
Washington, DC, and I will tell you and her predecessor, who is 
also a great Member, we appreciated that.
    I do want to thank the staff, both your district office 
that has helped us on these arrangements, Kristin Wolgemuth, 
the legislative director; Chris Close, legislative aide; John 
Hoffman, your district director; Yadira Rosas, staff assistant; 
and intern, Peter Rayor. And then your chief of staff, Kathy 
Lydon, and Caroline Stillman, an intern.
    And then for us--put your hand up--Russell George. You are 
in the audience. He's the staff director of the Subcommittee on 
Government Management, Information, and Technology--a little 
shy, you can see, sitting in the audience--and chief counsel. 
Matthew Ryan who is to the chair's left and your right, senior 
policy director. He brings a great deal of experience to this 
situation. And then we have Patricia Jones. Where is she here--
oh, she's on her way to the airport--American Political Science 
Association congressional fellow. Grant Newman, our clerk. 
There he is, back in the audience. And Laura Lufton, intern; 
John Philips, intern; Justin Schlueter, intern; and during the 
summer we have a lot of free labor. That's why we have so many 
interns.
    And our court reporter today is Laurie Harris. Thank you, 
Laurie. It is great to get the transcripts from you. They're 
very helpful.
    And I want to thank the Chair, and if she has any closing 
statements she'd like to make, please make them.
    Mrs. Biggert. Thank you very much, Chairman Horn, and thank 
you so much for coming. I know it is quite a distance from 
California and we really appreciate it. I think the field 
hearings, where the members of the public really have an 
opportunity to hear about what we're doing in Washington, is a 
reminder this the Government Reform Committee's Subcommittee on 
Government Management, Information, and Technology and our 
chairman has led the way in really examining the Y2K bug; and I 
have to say that I think that that boat is almost sunk, that we 
really are on our way to solving the problems of Y2K.
    And I want not to leave you with anything that would cause 
anybody to panic. Because I think that's why we're having these 
hearings, why people are proceeding the way that they are. So, 
that we will be able to celebrate the year 2000 rather than to 
have to worry about the glitches because it is--the year 2000 
is going to be--the new millennium is going to be a wonderful 
time. And we want to be able to celebrate it rather than to be 
out in the forest by a fire.
    So this is going to happen, I think. I really thank you for 
all that you have done over the years, and I'm very privileged 
to be on this committee and to have the opportunity since 
January to participate in these discussions. And I think that 
we've all learned a lot today, at least I have, I hope that 
everyone has, in what we should do, what responsibility we as 
citizens should take to be prepared for the year 2000.
    I thank you very much and I again thank Mayor Pradel for 
the opportunity to be here in the great city of Naperville and 
to hold this hearing here. Thank you very much.
    Mr. Horn. I want to give you a little advice from a person 
who is a bank vice president. I think he's right on the mark. 
He said: ``I would like to remind everyone that the bank 
records for the end of December, particularly the last 3 days, 
2 days, may not be available till January 4 and 5. Data 
processors and printing will be overloaded to get the 
statements out so please be patient, for they will be accurate 
and available.'' And I think that's good advice.
    And with that, we go into recess until we pick up this 
hearing tomorrow in Detroit. And with that, we're in recess.
    [Whereupon, at 12:20 p.m., the subcommittee was recessed.]


 OVERSIGHT OF THE YEAR 2000 TECHNOLOGY PROBLEM: LESSONS TO BE LEARNED 
                    FROM STATE AND LOCAL EXPERIENCES

                              ----------                              


                          FRIDAY, JULY 9, 1999

                  House of Representatives,
Subcommittee on Government Management, Information, 
                                    and Technology,
                            Committee on Government Reform,
                                                       Detroit, MI.
    The subcommittee met, pursuant to notice, at 9:06 a.m., in 
the Wayne County Commission Chambers, 600 Randolph Street, 
Detroit, MI, Hon. Stephen Horn (chairman of the subcommittee) 
presiding.
    Present: Representatives Horn and Knollenberg.
    Staff present: J. Russell George, staff director and chief 
counsel; Matthew Ryan, senior policy director; and Grant 
Newman, clerk.
    Mr. Horn. In the interest of the time of the witnesses and 
also we have a few people that will be coming in, I believe Mr. 
Conyers, your Representative from this area, will be possibly 
here; Mr. Knollenberg, who is in the suburbs, he is driving in 
now, but I do not want to hold everybody up.
    So let me thank first Commissioner George Cushingberry for 
helping us to arrange this beautiful historic building here and 
this particular Commission room. I studied General Wayne over 
the years when I was writing a book on President Washington's 
first administration and the Congress' first, so he was a great 
figure in American history and it is a great name. So thank 
you, Mr. Cushingberry, we appreciate the help.
    Let me just outline some of this--I am Stephen Horn, a 
Member of Congress from Long Beach, CA and chairman of the 
House Government Reform Committee's Subcommittee on Government 
Management, Information, and Technology. This is an 
investigating committee, so we have a practice here of swearing 
in all the witnesses that testify before us.
    Our main concern is of course the year 2000 computer 
problem, which affects about every aspect of Federal, State and 
local operations. Further, it affects private sector 
organizations and could impact the lives of many individuals in 
our Nation. From Social Security to utilities to local 
emergency management, the year 2000 computer bug has certainly 
been a large management and technological challenge for all of 
us. No single organization, city, State or even country can 
solve the year 2000 problem alone.
    The problem, of course, dates back to the mid-1960's when I 
think most of you, if you are around my age--and most of you 
are not, but those that are, you will remember a whole room 
this size would be filled with mainframe computers. They had 
very little memory capacity and I guess maybe nationally 
programmers all over said, ``Gee, why are we putting in 19 when 
we are putting in 1967, let us just put 67?'' and we gained a 
lot of memory in that. And of course that whole room could be 
reflected now in your personal computer in terms of memory. But 
they knew when they hit the year 2000, that the 00 would be a 
problem and the computer would think it is 1900, not 
necessarily 2000. And so they said oh well, do not worry about 
it, American technology, we will always solve that problem. The 
fact is, there is no silver bullet, they did not solve the 
problem. I do not know how many people have even tried, but it 
is a long, laborious situation where they go through the codes 
and they are bringing COBOL people out of retirement, in the 
case of the Federal Government, which is good for those who had 
to study COBOL. I only did a program in it once, so it is way 
in my past.
    The problem that we face is really a management problem, it 
is not a techie problem. And the ones that have succeeded in 
this have been individuals that have organized properly and 
gone through this what I called earlier a laborious matter.
    More than 3 years ago, in April and June 1996, this 
subcommittee held the first congressional hearing on the year 
2000 problem. Since that time, we have held almost 30 hearings, 
issued eight report cards to monitor the status of the Federal 
Government's year 2000 computer solutions. Current estimates 
show the Federal Government will spend by the end of this 
fiscal year on September 30, about $9 billion to fix its 
computer systems. I have often said the figure will probably 
reach $10 billion, and we have a few months to go after 
September 30th.
    Recently, the President's Office of Management and Budget 
identified 43 essential Federal programs, such as Social 
Security, Medicare and the Nation's air traffic control system. 
Each day these programs provide critical services to millions 
of Americans. Of these 43 programs, 10 are federally funded, 
State-run programs, including Medicaid, food stamps, 
unemployment insurance, child support enforcement. Several of 
these State-run programs are not scheduled to be ready for the 
year 2000 until December, leaving little, if any, time to fix 
unforeseen problems.
    Data exchanges and interdependencies exist at all levels of 
government and throughout the private sector. A single failure 
in the chain of information could have severe repercussions.
    For example, let me briefly illustrate how the U.S. Social 
Security program uses computers. And Social Security has always 
received an ``A'' on our report cards. They faced up to this 
way back in 1989. The Department of Transportation could have 
if they had listened to the woman programmer that had laid it 
all out for them, but they knew better. So they are getting 
``F's'' and ``D's'' usually in the last eight report cards. And 
of course, in that agency is the FAA, the Federal Aviation 
Administration. But Social Security is a prime example of how 
to get the job done well. When the payments are made, however, 
Social Security sends the payment data to the Department of the 
Treasury's Financial Management Service. The Service then cuts 
the Federal check for about $43 million in one program and $50 
million in the other, which is then electronically deposited 
directly into the person's bank account at a local financial 
institution. There organizations move and manipulate data to 
make these payments; each uses its own network of computers. If 
a payment is mailed to an individual's home, the U.S. Postal 
Service then plays a key role.
    And many of the agencies in the Federal Government have 
said to us when we have asked where is your contingency plan, 
they said, ``Oh, we will use the post office.'' In other words, 
mail the check, do not electronically deposit it. The humorous 
thing about that is when we held a joint hearing with the 
Postal Service Subcommittee of our full committee, the post 
office did not have a contingency plan. So we will see what 
happens.
    The bottom line is if any one of these entities fails from 
the Federal Government to the local bank or Postal Service, a 
deserving individual will not receive a payment. Now multiply 
this situation by millions of people that receive the Social 
Security benefits and also remembering there are 435 Members of 
Congress, there are 5 from the territories and commonwealths 
and there are 100 U.S. Senators. And you can believe it, if 
grandma does not get her check, there will be a long line out 
of our district offices. So we are trying to avoid that 
situation.
    But for the computers to work, we need, of course, power. 
One of the most essential questions concerning the year 2000 
challenge is will the lights stay on? Without electricity, our 
modern society will be relegated back to the proverbial stone 
age.
    I see our colleague from the suburbs of Detroit has made it 
through the rain, Mr. Knollenberg.
    Mr. Knollenberg. Good morning, how are you?
    Mr. Horn. Joe, it is great seeing you. Joe is one of the 
most powerful guys in my class, being on the Appropriations 
Committee. So he can do a lot of good for the State of Michigan 
and the country, and he does. So we are glad to have you with 
us. Come on up here, Joe, you can sit here.
    Mr. Knollenberg. I can sit in the big chair.
    Mr. Horn. No, I got rid of the big chair, but you can sit 
in a chair that you do not have to go backward on or something.
    We are reminded of the Speaker's chair in the House, sort 
of as a catapult into the wall.
    One of the most essential questions on the year 2000 
challenge is will the lights stay on? Without electricity, our 
modern society would be relegated back to the proverbial stone 
age. I wonder how automobile plants would continue to 
manufacture cars without power, even if only for a short time.
    From a personal standpoint, I realize that when confronted 
with a personal emergency, I can call 911 for assistance and 
feel confident the phone will be answered promptly, that a 
competent authority will respond rapidly. Year 2000 computer 
problems present other potentially serious threats at local 
levels--and we will cover some of those today--from the 
potential interruption of a citizen's call for fire or police 
to the delays in the State's ability to request emergency or 
disaster assistance from the Federal Government.
    One thing is for sure, there are only 175 days left until 
January 1, 2000. The clock is ticking, you cannot change the 
date. Accordingly, the testimony we receive today will be very 
helpful into our understanding of the full extent of the year 
2000 problem.
    I would ask my colleague, Mr. Knollenberg, do you want to 
make any opening statement here?
    [The prepared statement of Hon. Stephen Horn follows:]
    [GRAPHIC] [TIFF OMITTED] T0939.210
    
    [GRAPHIC] [TIFF OMITTED] T0939.211
    
    Mr. Knollenberg. Mr. Horn, I will be very brief.
    Steve is very kind to introduce me as a person of influence 
because I am on the Appropriations Committee. That means I 
write the checks and obviously sometimes that is not so easy 
because I also sit on the Budget Committee and I have to style 
the budget to get to the point where we can write the checks, 
but nonetheless everybody likes me because I am the check 
writer. But I hope you understand that everybody likes to talk 
to me about whatever is on their mind.
    I, very briefly, will just add this. Steve Horn has been a 
leader on this issue from the very, very beginning. And with 
his leadership, the Federal agencies are closer to compliance. 
And I think he has already told you, they are not there either, 
and you hear stories about, for example, the FAA air traffic 
control is not yet prepared to deal with the day January 1, 
2000.
    I think that he may have already talked to you about the 
point that we have reached here is that the House did pass 
overwhelmingly the Y2K litigation reform, 404 to 24. I think 
you might have mentioned also that the Senate did likewise on 
the very same day, July 1st. So we are moving forward, but as 
Steve Horn says, the clock is ticking, there is 175 days now 
and the end, while it is not near, the end of the time that it 
takes to actually bring about architecting the right kind of 
program that leaves us frankly on top of things and not behind 
the eight ball is rapidly approaching.
    So I am going to conclude with those remarks. I am just 
delighted to be here with Steve and look forward to the 
testimony of the panel and obviously to the point of perhaps 
asking a question or two.
    Thank you.
    Mr. Horn. Thank you very much. We appreciate you coming. 
When Members are home in the District, it is awful nice of them 
to break away from that and get their wisdom on some of these 
questions.
    Let me just note our procedures here. We have panel one 
before us and there will be panels two and three. And the way 
we work is we swear in all witnesses, as I mentioned earlier, 
and when we introduce you--and we introduce you in the system 
laid out on the agenda--your full statement is automatically 
put in the record. We do not want you to read your statement, 
we have had a chance of those that we do have, to read them, 
and we would like you to sort of summarize it in 5 minutes. And 
the reason for that is we can then get into a dialog between 
members of the panel and between ourselves and the panel. And 
we get a lot more from that than hearing statements we already 
have.
    So if you could just summarize it in 5 minutes, we will--
counsel for us will hold up a 1-minute sort of marker, so that 
you will know you have 1 minute to wind it up. He is keeping 
the time.
    We also have another routine on these field hearings in the 
States. We started in Topeka 2 days ago, and were in the 
Chicago area yesterday and Detroit will end it. And we found it 
very useful that we pass out cards for those in the audience, 
and if there is a question you would like us to raise with the 
panel, we are glad to do that. And we found we have been able 
to get a tremendous amount of information out of that because a 
lot of people in the audiences often have some real questions 
from their industry standpoint or the governmental standpoint.
    So, if the panel will stand and raise your right hands, we 
will swear you in.
    [Witnesses sworn.]
    Mr. Horn. Thank you. The clerk will note that all five 
witnesses affirmed the oath. And we will begin with a witness 
that has probably had about 100,000 miles of travel with us 
over the last couple of years, and that is Joel C. Willemssen, 
the Director for Civil Agencies Information Systems of the 
General Accounting Office. The General Accounting Office is 
part of the legislative branch of government under the Budget 
and Accounting Act of 1921. It is Congress' right arm, 
originally for fiscal review, in the traditional accounting 
office role. But in the post-war period, for programmatic 
review. And they do an outstanding job on doing that and doing 
special studies for the Appropriations Committee, the 
Government Reform Committee, this subcommittee, so forth.
    So Mr. Willemssen has one of the most overall bits of 
knowledge on this problem. So Joel, go ahead.

  STATEMENTS OF JOEL C. WILLEMSSEN, DIRECTOR, CIVIL AGENCIES 
INFORMATION SYSTEMS, GENERAL ACCOUNTING OFFICE; GEORGE BOERSMA, 
DIRECTOR, MANAGEMENT AND BUDGET, STATE OF MICHIGAN; CAPTAIN ED 
    BUIKEMA, DEPUTY STATE DIRECTOR OF EMERGENCY MANAGEMENT, 
MICHIGAN STATE POLICE; ARUN GULATI, DEPUTY DIRECTOR, DEPARTMENT 
   OF INFORMATION PROCESSING, WAYNE COUNTY, MI; AND KATHLEEN 
 LEAVEY, DEPUTY DIRECTOR, DETROIT WATER AND SEWERAGE DEPARTMENT

    Mr. Willemssen. Thank you, Mr. Chairman, Congressman, thank 
you for inviting GAO to testify today. As requested, I will 
briefly summarize our statement on the Y2K readiness of the 
Federal Government, State and local governments, and key 
economic sectors.
    Regarding the Federal Government, the most recent reports 
indicate continued progress in fixing, testing, and 
implementing mission critical systems. Nevertheless, numerous 
critical systems must still be made compliant and must undergo 
independent verification and validation. Our own reviews of 
selected agencies have shown uneven progress and remaining 
risks in addressing Y2K, and therefore point to the importance 
of business continuity and contingency planning.
    If we look beyond individual agencies and individual 
systems, the Federal Government's future actions will need to 
be increasingly focused on making sure that its high priority 
programs are compliant. In line with this, OMB has identified 
43 high impact programs such as Medicare and Social Security. 
And as you know, Mr. Chairman, we are currently reviewing for 
you the executive branch's progress in addressing those 
programs. However, at this point, it is very clear that much 
additional work is needed to make all those programs ready for 
the turn of the century.
    Available information on the Y2K readiness of State and 
local governments indicates that much work remains. For 
example, according to recent information on States reported to 
the National Association of State Information Resources 
Executives, about 18 States had completed implementing less 
than 75 percent of their mission critical systems. State audit 
organizations have also identified significant Y2K concerns in 
areas such as testing, embedded systems, and contingency 
planning.
    Recent reports have also highlighted Y2K issues at the 
local government level. For example, a March 1999 National 
League of Cities poll of over 400 representatives found that 
almost 70 stated they would finish 75 percent or less of their 
systems by January 1, 2000.
    Another area of risk is represented by Federal human 
services programs administered by States, programs such as 
Medicaid and food stamps. Of the 43 high impact priorities that 
I mentioned earlier 10 of these are State-administered Federal 
programs. The available OMB reported data on the systems 
supporting these programs show that numerous States are not 
planning to be ready until close to the end of the year. 
Specifically, a large number of State systems are not due to be 
compliant until the last quarter of 1999. And further, that is 
based on data that has not been independently verified.
    If we look at the risks beyond those facing our governments 
and the risks that Y2K poses to our infrastructure, key 
economic sectors and to other countries, we have made a number 
of recommendations to the chairman of the President's Y2K 
Conversion Council, John Koskinen, and the Council has made 
some major strides in addressing these areas. Nevertheless, 
there is a good deal of variance on the Y2K readiness among 
these various sectors. Accordingly, there will be a need for 
continuing emphasis, which will be critical to fully address 
those areas in the less than 6 months that remains.
    That concludes a summary of my statement and I will be 
pleased to address any questions that you may have.
    Thank you.
    Mr. Horn. Thank you very much for that. We will move 
through the various witnesses and then we will open it up to 
questions.
    Mr. George Boersma, the director of management and budget 
for the State of Michigan is our next witness. Welcome.
    [The prepared statement of Mr. Willemssen follows:]
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    Mr. Boersma. Thank you. I appreciate the opportunity to be 
here today to talk about the State of Michigan and what we have 
done to provide Y2K readiness for State government services.
    When the State started this program in earnest in the 
middle of 1996, we wanted to make sure that the year 2000 
project addressed issues such as correcting date problems to 
prevent any material impact to government services to our 
citizens. We wanted to make sure it was cost-effective. And we 
also wanted to go and make sure that we took something away 
from this as opposed to just fixing the problem, we were able 
to use something down the road.
    We have gone and we have been able to look at the executive 
branch of State government in a lot of different areas as it 
relates to application software, systems software, hardware, 
telecommunications, physical plant as well as the State vendors 
that we have--that we deal with, to make sure that they are Y2K 
compliant as well.
    We spent a lot of time in the 1996-1997 area to do 
discovery and assessment. In 1997 and 1998, we spent a lot of 
time fixing the problem and 1999 is a year that we are making 
sure that the problems that have been fixed are in fact 
correct, so that we can go and do business as usual in the year 
2000.
    I am happy to report that of the 672 critical applications 
within State government, that 99 percent are compliant and back 
in operation. There are five applications that still need to be 
compliant and they will be done around the end of--the schedule 
right now is the end of August and they will all be completed.
    So we have spent a lot of time and effort to make sure that 
all of our systems are up and running. We are spending 1999 to 
make sure--as I said earlier, we are working on closing the 
remaining open systems that we have. We are making sure that 
our infrastructure is ready with additional testing. We are 
working on all of our embedded technology in all of our areas, 
whether it be in our hospitals or prisons, et cetera, to ensure 
that all of those particular chips have been tested and are 
compliant.
    We have a supplier compliance data base listing close to 
7,000 items that we have on the Internet for not only the State 
to use but also for letting others use as well, to see what 
issues are compliant.
    In addition to the regular testing that we have done on our 
very critical applications, we have done what is called end-to-
end testing, to make absolutely sure that these critical 
applications are in fact compliant. And to date, we have had 
very, very little problems in doing that end-to-end testing.
    We have had independent consultants come in to do an 
independent verification and validation of all of our processes 
within all of our agencies, and we have gotten an approval with 
our agencies on the way we have handled this entire operation.
    I should also point out that many of the Federal agencies 
have had auditors come in to check all of our applications and 
at this point in time, again, we have received a clean bill of 
health on all of those particular applications that they have 
audited.
    We are spending a lot of time in the awareness and 
communications area, both within government, but also outside 
of government and Captain Ed Buikema will talk more about that 
in his presentation.
    We are spending a considerable amount of time now on 
business continuity and contingency planning. We have 
identified some 82 essential functions that we believe are 
essential--that need to be basically provided within the zero 
to 5 day category. So we are in the process of completing 
contingency plans on all of those essential functions right 
now. We have the first drafts in and we are reviewing those at 
this time and they look--right now, they look very good.
    The other thing we are doing is we are calling it zero day 
planning. Basically we have identified some key dates, October 
1st, which is the State's fiscal year, as well as the end of 
the year, whereby we are basically looking at best practices as 
to what we should do, each agency should do, on those 
particular dates to make sure that come January 3rd, that the 
State government can work as normal. And so we are working in 
that regard as well.
    We have prepared a tool kit that is in the packet that I 
have submitted to you, which has been sent to all the local 
governments and school districts for their review, so that they 
can go and look at what the State has done. And this is a 
guideline that they can use to do that. We also have gone and, 
as I said, prepared various types of awareness sessions 
throughout the State.
    I would be happy to answer any additional questions later.
    Mr. Horn. Well, thank you. That is a very interesting 
proposal that you have been through and that has been 
successful.
    Our third witness on this panel is Captain Ed Buikema, the 
deputy State director of emergency management for the Michigan 
State Police. Welcome.
    [The prepared statement of Mr. Boersma follows:]
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    Mr. Buikema. Thank you, Mr. Chairman, and good morning; 
good morning, Congressman Knollenberg. I appreciate the 
opportunity to be here this morning testifying before your 
committee.
    By statute, the director of the Michigan State Police is 
the director of emergency management within our State. But the 
legislature created the Emergency Management Division to manage 
the day-to-day activities within the State and local 
jurisdictions pertaining to emergency management.
    Our responsibility is to coordinate State government 
response to emergencies and disasters of all kinds. Now as we 
face the Y2K issue, we figured--we determined that the issue of 
information was absolutely critical, that we could get our arms 
around what to expect, what level of planning had taken place 
and what kind of guidance and information we could provide, 
especially to local units of government in preparing for Y2K.
    So we embarked on a series of infrastructure round tables 
where we would bring folks in and ask them some very direct 
questions as to where were they in their preparedness 
activities for Y2K, what kind of problems could we expect and 
what kind of guidance could we provide to local government in 
terms of emergency planning. We have held infrastructure round 
tables, which is what we are calling them, with electric 
utilities, for both the big electric utilities as well as with 
the rural electric cooperatives and the munici- pal power 
providers, with natural gas providers, chemical manufac- 
turers, transportation, telecommunications, water and waste 
water, as well as with the Michigan Hospital Association, and 
we are planning a round table with 911 providers at the end of 
the month.
    During each of these round tables, we would have a 
transcriber present, who would transcribe the proceedings. We 
then passed them out extensively to local government, we put 
them on our Website, with the intention again of providing the 
best and most recent information about those elements of the 
critical infrastructure to local government, to provide them a 
basis for putting together plans for Y2K.
    A companion effort in that regard was providing guidance to 
local government as to how to proceed with planning for this 
Y2K issue. We produced a couple of documents similar to what 
has been done in other States. First of all, we put together an 
assessment tool which has been provided widely to local 
jurisdictions in the State of Michigan to again help them 
assess their risks and vulnerabilities. And then we developed a 
contingency planning guide as well that has been widely 
distributed to help them put together contingency plans for 
their jurisdictions as they look at the Y2K issue. Again, both 
of those documents have been placed on our Website and have 
been widely distributed throughout the State.
    The State of Michigan then on June 2nd, conducted an 
exercise for State agencies and there were about 125 persons 
present at that exercise, and we asked a lot of the what-if 
questions and worked our way through those in the form of a 
table top. We are in the process of developing an after-action 
report for that exercise, which should be completed very soon.
    In terms of training and outreach to both State government, 
but specifically to local government, there has been a lot of 
activity in our State this year. We have a structure in our 
State where we have district personnel and we have encouraged 
them, as well as the local emergency managers that exist all 
over the State, to conduct town meetings within their 
jurisdictions or conferences or forums or seminars. And from 
our staff, we have provided support to those folks, and at last 
count, we have appeared at over 100 of those local 
presentations around the State of Michigan.
    More recently, we put on three large Y2K symposiums 
throughout the State and we brought in a number of State agency 
representatives to describe where their agencies were in terms 
of Y2K preparedness, as well as our partners from the utilities 
as well, to again describe where they were. And we received 
pretty good media coverage as well, describing that entire 
effort.
    For the end of the year, again as with most States, the 
State Emergency Operations Center here in Michigan will be 
activated. We will be asking for information from local units 
of government on a timely basis; specifically, on January 1st, 
to tell us what, if anything, has occurred in their 
jurisdiction. We expect to put together a joint public 
information center where we are partnering with a variety of 
State agencies as well as with our utilities, making sure we 
can receive information in from local jurisdictions and provide 
guidance and direction as well to the media as well as to our 
citizens throughout the turnover.
    We recognize that this is a unique situation for us, as you 
mentioned, the Y2K date is non-negotiable. But we also 
recognize that it provides a real opportunity for us to 
strengthen the relationships in the emergency management field 
and we expect to reap the benefits of those relationships well 
beyond the turnover.
    So with that, that gives you an overview of some of the 
activities that have been taking place in our State and I would 
be happy to answer any questions later on. Thank you.
    Mr. Horn. Well, that is very helpful and I think we will 
probably have a lot of questions because that point you made in 
ending, particularly, on the relationships that are established 
in the long run is what is really helpful here out of this.
    Our next presenter is Mr. Arun Gulati, the deputy director, 
Department of Information Processing for Wayne County, MI. Glad 
to have you here.
    [The prepared statement of Captain Buikema follows:]
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    Mr. Gulati. Good morning and thank you for giving us the 
opportunity this morning to share the information with you in 
regard to the actions the county has taken to ensure to our 
stakeholders that our services will not be impacted because of 
the Y2K issues.
    Realizing the importance of having management involved as 
well as the number of days left to address the Y2K issue, last 
year the county formed a management team which includes the 
directors of all departments and representation from the 
legislative branch as well as the judicial branch. The 
executive team also includes representation of elected offices 
as well as agencies.
    The goal through this management team is to ensure that we 
have the necessary team to make the necessary decisions to move 
forward in a manner so that we can quickly make the decisions 
and correct the Y2K issues.
    The Y2K program is being directed by Ms. Carol Steffani, 
she is the director of information processing. Our program 
follows a detailed charter and we have all the information 
relating to the charter on the Internet to share with our 
public. The county program includes three areas--technical, 
legal and the contingency planning.
    The technical area is to ensure that we have identified all 
the areas and taken the necessary steps to ensure that 
components will work as we move into Y2K.
    The legal is to ensure this team that we are minimizing the 
liability by taking the necessary steps to do that by 
communicating to our vendors as well as suppliers as well as 
our other partners.
    Contingency planning is to define that we must have backup 
plans to ensure that all critical systems will operate as we 
move into Y2K.
    The county has adopted the GAO standard which includes 
different phases--awareness, inventory and assessment, 
conversion/remediation, test, and implement and certification. 
Though these are different phases, they are being run to ensure 
this team that not only we remediate, but after we remediate, 
we go back and test to ensure this team if the remediation was 
not correct, we can go back and forth to ensure that it is 
functioning as we designed it to.
    The county has completed the inventory and assessment of 
all the information technology components and also completed 
the remediation of the system running on the mainframe. Though 
some of the systems will not be implemented in production until 
later in this quarter, we expect to complete the remediation of 
the mainframe applications as well as the network by the end of 
September.
    In order to ensure that all technical components are Y2K 
compliant, we are also going in and remediating approximately 
3,200 PCs and we have provided the necessary tools to our users 
as well as the departments to ensure this team that they run 
the necessary check, that not only the applications are Y2K 
compliant, but also the data on those applications.
    The county is also examining 70-plus facilities. These 
facilities include jails, airport, some of the key buildings 
within the county.
    In order to manage all the projects that we have, we have a 
Y2K program office which is presently tracking over 250 
projects and out of those 250, there are 42 that are mission-
critical. And that is producing the necessary reports for the 
management team.
    Through some of the testing we have done, we have found 
that some of the applications that the vendors informed us were 
Y2K ready, when we plug in all the dates that are related to 
the Y2K, they are not ready and some of the vendors have gone 
back and they are going to bring in the necessary changes to 
ensure that those products are Y2K ready.
    The key dates for the county to be ready for the Y2K are 
June 30th, that is the date to be ready and have all the 
contingency plans for the airport. The airport must complete 
compliance documentation of all critical systems and put 
written contingency plans in place. That is the key date and 
yes, we have completed that.
    July 16th is a date when we are going to bring the 
management team together for a table top emergency preparedness 
exercise.
    September 30th is the date to complete the remediation and 
also the testing.
    Wayne County has also adopted a formal emergency readiness 
plan which specifically defines the steps that we will take to 
ensure this team that we have prepared for the Y2K.
    Contingency plans are being prepared as we speak, and yes, 
we will have the contingency plan for all mission-critical 
systems.
    Realizing the complexity that we face with the Y2K, we are 
also looking at developing the transition plan into the last 
quarter of this year. This transition plan will assure that as 
we gather and learn new information, we have the team together 
to manage the risks for going into the year 2000.
    In conclusion, yes, we will be ready for the Y2K. But 
again, we have realized over the last 2 or 3 years now that not 
only our computers, but the operation of all computers that may 
be of the citizens, of the State or the Fed, must function 
properly in order to be ready for the Y2K.
    And we very much appreciate your having this forum to share 
this information and giving us the chance to learn about others 
also. That is the overview of my testimony and I will be here 
to answer any questions later on.
    Mr. Horn. Thank you. We appreciate that.
    Our last presenter on this panel is Kathleen Leavey, the 
deputy director of the Detroit Water and Sewerage Department.
    [The prepared statement of Mr. Gulati follows:]
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    Ms. Leavey. Good morning, Congressman Horn and Congressman 
Knollenberg. I appreciate the opportunity to be here this 
morning to advise you on the status of our Y2K readiness.
    I can tell you that we are confident that we have 
identified and are in the process of remediating all of our 
mission-critical systems and processes so that we can fulfill 
our mission of providing water and sewer service on January 1, 
2000.
    Because we are an environmental agency and because we are 
charged with public health and safety responsibilities, we have 
followed the EPA guide on the process that should be followed 
for the readiness on Y2K. That includes the same steps that are 
in the GAO, but they are a little bit different. We do have 
awareness, assessment, correction/remediation, contingency 
planning, testing and implementation.
    We are working on all of these areas simultaneously. I am 
the department's Y2K coordinator, I have a team that is 
comprised of both consultants and employees who have been 
working on this process for the last 3 years. We have gone 
through the department, we too have a lot of facilities, and 
most of our facilities are active process service facilities. 
We have a concern, obviously, that we be able to turn on our 
tap on January 1st and get water, et cetera.
    We have been meeting with all of the other utilities in 
southeastern Michigan to ensure that we are all on target for 
January 1st. The electric industry, Michigan Consolidated, 
Ameritech, ourselves and any other utility services have had a 
round table that we have been working in for the last year. Our 
purpose is to assist each other and to know what each other's 
contingency plans are, so we are all on the same line on 
December 31st. I can tell you in meeting with the other 
utilities that we are confident that they are doing everything 
possible to be ready, as are we, on January 1st.
    We also have been participating and working with the State 
emergency planning. There also is a regional planning center 
that is an emergency center that is going to be set up, an 
operations center in I think it is Northfield, for the State. 
We are going to participate in that. We also have a city of 
Detroit Emergency Center which we will participate in, but we 
also will have our own emergency operations setup.
    At this point we have, for the last 16 years, done table 
top exercises and contingency planning, again because of the 
nature of our business. We have worked closely with the 
University of Michigan and they are developing and we have 
already done one Y2k table top. We will do others and probably 
later on in the year, we will involve our customers in that as 
well.
    We have a service area that is approximately 1,000 square 
miles. We serve 126 communities with water, we serve 76 
communities with wastewater services. We have formed a customer 
task force on Y2K because we want to be able to keep the lines 
of communications open with our customers. They are an integral 
part of our contingency communication plan and they will be 
involved in assisting in either manning or operating processes 
in the various areas where they are located.
    We, as I said, are doing everything we think is necessary. 
Our contingency plans are not real complicated. We are 
intending to invest a great deal of money to provide backup 
service at stations and facilities that we have identified as 
critical. Those generators are being manufactured as we speak 
and installed and tested as we progress through the year. In 
order not to waste any money on that, we have very involved 
plans for their use after the rollover date.
    But that is our primary contingency plan. However, as I 
indicated, we have been doing table top emergency exercises for 
over 16 years. We are treating the Y2K rollover as if it were 
an emergency, because essentially, if our services stop, we 
want to find alternative ways to provide service to our 
customers. We do have a redundant system; that is, most of our 
large water plants, all of our large water plants and our 
customers have service, water service coming from two different 
directions. So if it is shut off in one direction, we have the 
ability to feed from another. We have water plants located as 
far north as Port Huron and as far south as Allen Park, we have 
a total of five. Most of the water plants predate the computer 
in 2001, so we do not have to worry really about embedded chips 
there. They have never been operated by computers, they have a 
life span that exceeds most computers and they will be 
operating fine and they have been tested.
    On the wastewater side, we have some newer computerized 
processes and those we have been remediating for at least 3 to 
5 years.
    We, again, feel very confident that we will be on target on 
January 1. What we have tried to do is to get information to 
our customers and that is our biggest concern at this point. We 
do not want people panicking, but we do want people to be 
prepared in the event that something other than Y2K happens.
    As the State Police Chief mentioned, this is an opportunity 
for all of us to bone up on our emergency operations. We pulled 
out a booklet that we have had for about 15 years and are using 
that as one of the things that we distribute to our customers, 
what to do if you are concerned about a water emergency, what 
are you going to do if you are concerned about the rollover 
time, December 31. So we are giving advice in those regards in 
both water and wastewater service areas.
    So our next area we are going to tackle is trying to find a 
way to make sure our employees are comfortable when they come 
to work that night, and that is making sure their families are 
in a place that is safe and sound and they can feel confident 
and comfortable that their families are OK.
    That concludes my testimony, I will be here for questions 
obviously. Thank you.
    [The prepared statement of Ms. Leavey follows:]
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    Mr. Horn. Thank you. Let us now open it up for questions. I 
would like Mr. Knollenberg to begin the questioning and we will 
sort of alternate maybe every 5 minutes and we will get the 
questions from the audience and then we will get a dialog among 
yourselves. So Mr. Knollenberg.
    Mr. Knollenberg. Thank you, Mr. Chairman. And thank you for 
your testimony.
    Let me start with Ms. Leavey, regarding the water 
situation, you seem to feel comfortable that things are in 
relatively decent shape. There is about 200,000 public water 
systems regulated under, as you know, the Safe Drinking Water 
Act that serves some 240 million people. The balance of the 
population is serviced of course from private wells.
    Can the Detroit Water and Sewerage Department ensure that 
there are no violations associated with the Safe Drinking Water 
Act?
    Ms. Leavey. Yes, we can do that now, we expect to be able 
to do that on January 1st. We have never had a problem with 
that, our water source is very clean, the Detroit River and 
Lake Huron are very good sources for our customers.
    Mr. Knollenberg. And the redundancies you spoke of, you 
feel pretty comfortable about those functioning as backups in 
the event there are failures?
    Ms. Leavey. Yes, we do. We think that if there is any kind 
of failure in the electric grid, that it will probably be 
isolated, but we are looking at a normal situation when the 
power goes down, how do we respond. Normally we have a 3-day 
turnaround, 1 day turnaround. We can have the same thing happen 
if a water line breaks like it did in Auburn Hills, where we 
have people without water service for several days.
    So we do not expect Y2K to shut us down. We really do not 
expect to be shut down by Edison or any of the other utilities. 
Our biggest concern is that it is the winter time, in the city 
of Detroit, that is the time where we have more breaks than 
anything else, and we are concerned that people, if anything 
happens, will say ah-ha, Y2K. And that is not what is going to 
happen.
    Mr. Knollenberg. It becomes a whipping boy, I take it, for 
everything.
    Ms. Leavey. Oh, sure.
    Mr. Knollenberg. If I could, Mr. Chairman, one other 
question I would like to direct. This could be to any of the 
panel members, but it has to do with emergency management and I 
think Captain Buikema, you are probably the person that this 
could go to.
    As I travel throughout this part of the State and my 
district and beyond, I have become acquainted with the 
inconsistency of the 911 systems that are in place and some 
rely on older telecommunications, some are certainly--and the 
best computer equipment is available in some cases. Have you 
done an assessment that looks at testing these various computer 
systems associated with both the police force and the fire 
department in the State of Michigan?
    Mr. Buikema. Well, we are planning, as I mentioned, to do a 
round table with--we have invited I think something like 50 
911s to attend at the end of the month on July 30th. And we 
expect to have an extensive dialog with them about that very 
issue at that time.
    Up to this point, we have reached out to 911 directors and 
911 centers, both--we have encouraged the local emergency 
management coordinators to have a dialog with those folks to 
ask the questions that you just asked as well as the State 
police post commanders--and there are some 64-65 State police 
posts in the State of Michigan--to also have a dialog with our 
911 providers.
    We hear anecdotal information concerning various pieces of 
equipment, some of which have been installed as recently as 
last year, that are not Y2K compliant, and we are hearing 
stories that the typical public safety answering points, PSAPs 
is what they are called, are having to spend anywhere from 
$20,000 to $40,000 to bring them up to be Y2K compliant.
    But we do not have a good assessment overall on that, which 
is why we want to hold that round table at the end of the 
month, to get our hands around it a little bit better.
    Mr. Knollenberg. Would you say that that is something in 
your discussions with members from other States that is a 
problem that they have as well?
    Mr. Buikema. Yes, just this past Wednesday, I participated 
in a public safety round table in Washington, DC, with John 
Koskinen. And there were representatives from around the 
country there and the issue of 911s was one of the areas of 
uncertainty, let me put it that way. I think it is just 
unknown--there were statistics, there are estimates I guess 
that there are something like 7,000 911 centers in the United 
States. Assessments have been done in some fashion, but only 
less than half of them have returned their surveys back. So 
there are still a lot of unknowns concerning them and Michigan 
is no different than any of those other States.
    Mr. Knollenberg. Thank you. Mr. Chairman.
    Mr. Horn. I was very interested in the water and sewerage 
particularly. Did you read about the Los Angeles situation? 
That was not a really Y2K situation, but tell me what you have 
learned from that and are you testing along the line they were? 
That was what, a 300 million sewage----
    Ms. Leavey. Gallons of sewage, yeah.
    Mr. Horn [continuing]. Spilled, yeah.
    Ms. Leavey. It was our understanding--and yes, we are aware 
of it certainly, it gave everybody a heads up. It was our 
understanding that they were in fact doing a Y2K test on some 
of their machinery and discharged accidentally. We certainly 
have no intent of discharging intentionally or accidentally but 
we are aware now that we have to test those portions of the 
system as well. However, we already have been looking at those 
in terms of assessment and inventory, checking with the 
manufacturers, et cetera, doing the normal process to determine 
if they are Y2K compliant. We are pretty confident that they 
are.
    Mr. Horn. Well, that is good news, because I think that is 
one of the things that would really disrupt a community, not 
just the water, but what the use of the water is.
    Ms. Leavey. Well, yeah. We do have a concern about that, 
but our greater concern is individual--well, we have two 
concerns, the water consumption, public health. We also have a 
concern about public health in regard to any backups into 
people's basements. If there is a very large storm and there 
are any power shutdowns related to the transmission system for 
either water or for wastewater, then to protect public health, 
we may discharge into the Detroit River. But it is our 
expectation that at that time of year, we would not experience 
anything like that. But we have met with the State Department 
of Environmental Quality. In an emergency situation, we would 
always opt for that as opposed to storing it in people's 
basements.
    Mr. Horn. One question that I am always interested in is 
since you have gone through this situation of planning and 
adapting and remediating and so forth, I ask the whole panel, 
what have you learned that if you had to go through this 
situation again, what would you want to do first that maybe you 
did not do in this, because we have all been working our way 
along trying to solve the problem, or at least remediate it.
    Let us start with the first presenter here and that is--we 
will wait on Mr. Willemssen a minute. Mr. Boersma, what do you 
think from the State level you would have done differently?
    Mr. Boersma. I started as the CIO of the State in July 1996 
and that was the No. 1 priority that we dealt with. So I think 
that from that perspective, we certainly had to initially in 
the first year, year and a half, we had to make up some time. 
And so we really pushed forward, because the goal--knowing that 
a lot of IT projects, whether it be public or private sector, 
do not get done on time, we wanted to make sure that we were 
not in that situation because, as you said earlier, the date is 
not going to change.
    So we made it a goal that the majority of our critical 
applications had to be remediated, tested and back into service 
by the end of this past year. We were successful in doing 
almost all of those with the exception of a few. So that was a 
very critical thing. Obviously I think everybody would say one 
of the key issues is to start earlier on this so that there was 
more time to go and do this. But we have--as a State, we have 
learned a lot with Y2K and that is the fact that we did this 
centrally so we took best practices, even though all of our 
agencies were involved in this. We took best practices of the 
agencies and really made it a team effort and we put over a 
million hours of effort into this and we had very good 
reporting, so we knew application by application exactly where 
we were from an effort perspective. It took a lot of upfront 
time and effort by the agencies to put all this information 
together, but it proved to be very successful.
    Because as you do, we have given all our agencies score 
cards as well, and I can tell you, the ones that were in the 
red, we had various meetings with them and their goal was to 
get out of the red very quickly and that proved to be very 
beneficial for us.
    Mr. Horn. Well, I am glad to hear that. A number of Cabinet 
officers have told me in Washington that our report card has 
given them a good excuse to beat the bureaucracy to get the job 
done. So, they do not like the ``F's'' and ``D's'' and ``C's,'' 
but it has worked out, some of them are now at the ``B's'' and 
the ``A's,'' which was the whole aim of the thing.
    Let me ask Mr. Buikema, what have you learned that you 
would like to have done differently?
    Mr. Buikema. I probably would echo what George Boersma just 
said, in terms of getting started earlier. I think the process 
that we are following getting information from the critical 
infrastructure, promoting awareness, developing guidance, that 
is a sound process, working closely with the Federal agencies, 
specifically FEMA on this issue, as well as with local agencies 
and State departments. But I wish we could have gotten started 
earlier like everybody else did.
    But I think we are building on what exists for all hazards, 
as most States or all States are. There is an existing 
emergency management structure in the United States that has 
all hazard emergency operations plans that are flexible enough 
to respond to most hazards. The Y2K issue of course has some 
unique circumstances to it, which is why we are promoting 
contingency planning.
    And in summary, I guess we could have gotten started a 
little bit earlier on that aspect.
    Mr. Horn. Mr. Gulati, now that you have been through it, 
what would you have done first next time around?
    Mr. Gulati. I guess if we had more time, that would have 
definitely helped. And also in an ongoing operation of 
anything, I think we need to take in account that when the 
programmers developed applications back in the 1960's, they 
only thought that they were developing for only the next 5 
years. We need to look at it that yes, we are making something 
for a much longer period of time.
    And another challenge we ran into is the inventory aspect, 
of what all do we have. I think the county adopting a mechanism 
so that on an ongoing basis we know what we have, so that if a 
need arises, to come up with a plan to address whatever, you 
have the necessary information there to be able to make the 
management decisions on that.
    Mr. Horn. Well, thank you. Ms. Leavey, what would you do 
differently?
    Ms. Leavey. I would definitely start earlier, for sure.
    Mr. Horn. When did you start?
    Ms. Leavey. We started in 1996, but really I do not think 
at the start, anybody had a sense of the volume of what we 
would have to do.
    I think another thing that we would do is begin educating 
the public a lot earlier, getting our Websites up and running 
earlier.
    Mr. Horn. Let me just go back down the line on the date 
when you started.
    Mr. Gulati, when was that?
    Mr. Gulati. We started back in 1996.
    Mr. Horn. In 1996. And Captain, when did you start?
    Mr. Buikema. We really did not start on Y2K until last 
fall.
    Mr. Horn. Well, you are about like the executive branch of 
the Federal Government on that one.
    How about it, when did the State of Michigan start on this?
    Mr. Boersma. We had new applications that we had installed 
in the early 1990's that we made sure they were Y2K compliant, 
but we really did not start in earnest on this until mid-1996.
    Mr. Horn. Federal Government did not really in earnest 
start on this until April 1998, despite 2 years of prodding 
this subcommittee had given them. But they finally faced up to 
it.
    Mr. Willemssen, what would you like to ask or comment after 
what you have heard?
    Mr. Willemssen. Just a couple of points I would like to 
emphasize of what I heard from the other witnesses. One is that 
it is especially important from here on out that the 
organizations make sure that they do have independent 
verification and validation of their efforts. Another set of 
eyes to let top management of the organizations know that the 
testing and remediation has gone as expected. It is usually the 
case that some things have been overlooked or some things have 
been missed and therefore, an independent verification and 
validation agent can be especially useful in focusing on that.
    And second, I think it is also very important for the 
organizations to look beyond the boundaries of their own 
organization. It is one thing to say that they are Y2K 
compliant, but unfortunately because of the high level of 
connectivity and the reliance on other organizations in our 
computerized world, they also need to make sure that they 
understand the compliance status of the other organizations 
they interact with. So that will be increasingly important over 
the next several months.
    Thanks.
    Mr. Horn. Thank you. I want to ask Commissioner 
Cushingberry if he has any questions he would like to ask the 
panel, since he, like Mr. Knollenberg and I, are down there at 
the grassroots and we get a lot of questions from a lot of 
people and they wonder how they are doing.
    Mr. Cushingberry. Mr. Chairman, for the record, I serve as 
a member of the Information Tech Committee of the National 
Association of County Commissioners, so I am pleased to be here 
to testify on our behalf. We are meeting with the Allied 
Council in St. Louis, MO, where all the county commissioners 
across the country get together. We are pleased that your 
committee has had such leadership. We are participating as part 
of the Information Task Force through the National Association 
of County Commissioners. My distinguished colleague, 
Commissioner Cavanaugh of the east side of Detroit, is also on 
what is known as the Research Technology Committee and we are 
trying to work with the major universities across the country 
to see to it that we get the better theoretical methodologies 
included in our future plans.
    [Inaudible comments.]
    Mr. Horn. Well, thank you. If I had to sit here making 
decisions every week, I would day dream and just look at the 
architecture. So how do you focus around here with this type of 
beauty. Thank you again.
    Mr. Knollenberg, any further questions?
    Mr. Knollenberg. I am satisfied, Mr. Chairman, thank you.
    Mr. Horn. Mr. Willemssen and I are on the same track, 
because I was going to get on verification and I think he is 
very right. Sometimes we have internal verification but 
sometimes you need external verification.
    So we thank this panel.
    We did not have any questions from the audience that the 
staff picked up. But hopefully there are other things, as we go 
ahead this morning, feel free to write the questions and we 
will put it to the panel.
    But thank you very much, those on panel one, you have given 
us some good testimony and we appreciate it.
    So panel two will come forward. We have Mr. Surdu, Mr. 
Costantino, Mr. Buck, Mr. Parker.
    Gentlemen, if you would stand and we will administer the 
oath.
    [Witnesses sworn.]
    Mr. Horn. The clerk will note all four witnesses took the 
oath. And we will begin with George Surdu, the director of 
technical services organization of the Ford Motor Co. We are 
delighted to have all of you automobile people here. It is key 
to the country. Please proceed. And as you heard earlier, if 
you could summarize the testimony in 5 minutes or so, that 
gives us more time for interaction because we do have your fine 
statements.

   STATEMENTS OF GEORGE SURDU, DIRECTOR, TECHNICAL SERVICES 
    ORGANIZATION, FORD MOTOR CO.; DON COSTANTINO, DIRECTOR, 
CORPORATE YEAR 2000 PROGRAM, GENERAL MOTORS CORP.; ROGER BUCK, 
   DAIMLER-CHRYSLER CORP.; AND JOHN PARKER, VICE PRESIDENT, 
         INFORMATION SERVICES, NORTHWEST AIRLINES, INC.

    Mr. Surdu. I would first like to thank the subcommittee for 
affording Ford Motor Co. the opportunity to provide an update 
on the year 2000 program. As you just mentioned, I am the 
director of technical services and the global year 2000 program 
manager for Ford Motor Co. I have been in that position since 
the inception of our program in 1996.
    In 1996, Ford Motor Co. initiated a formal program to 
address this year 2000 challenge. We established a senior level 
steering committee that has been headed up by our chief 
financial officer, our vice president of quality and process 
leadership and our chief information officer. A global year 
2000 program office was created and a robust program management 
process was put in place to guide compliance actions across all 
the potential impact areas.
    I believe we did a very innovative thing within Ford Motor 
Co. in that we really sliced the business across technology 
lines. So we began taking a look at all the major impact areas, 
which include business computer systems. Ford Motor Co. has 
about 300 million lines of code, about 2,700 systems, and about 
a third of those have been deemed mission critical.
    In addition, we have looked at our technical 
infrastructure, our plant floor equipment, our product 
development test equipment, our suppliers, dealers and 
affiliates, end-user computing which includes all of the 
spreadsheets and the access databases, those kinds of things 
that our business partners create on a year-to-year basis to 
support the business, our building infrastructure, and of 
course, our vehicle components.
    In addition, we have continued to monitor the compliance 
actions of other impact areas as we move forward on the 
programs, such as our transportation carriers, our medical 
equipment suppliers and in fact customs offices around the 
globe.
    The sophistication of this program has been recognized by 
the Information Technology Association of America, with 
certification that Ford's program meets the challenging Y2K 
best practices standards.
    We established stretch objectives back in 1996 across all 
of these major impact areas, and to have all of those impact 
areas compliant by the middle of this year. We are going to be 
fundamentally there in all those areas, we are going to use the 
summer shutdown period to complete some of the remediation 
work, but I would like to give you some data to give you a 
sense of where we are at across the program.
    As of this report, 98 percent of all of our critical 
systems are compliant, 97 percent of all systems are compliant, 
that is all 2,700 systems. They have been remediated, tested 
and are now back in service.
    In addition, an enterprise test plan has been established 
for all of our key business processes, with completion of that 
enterprise testing by September.
    On the plant floor side, for the 167 plants and warehouse 
facilities around the globe, we presently have 99 percent of 
all the equipment has been remediated. We have got a handful of 
equipment that we are waiting again until the shutdown period 
to make sure that all of that is working properly.
    In conjunction with the Automotive Industry Action Group, 
and I think you will hear from my team mates here today a 
little bit more about that, we have been involved with the 
AIAG, the Automotive Industry Action Group, and other 
organizations similar to that around the globe, the VDA in 
Europe, as an example. We have been participating in a global 
supplier readiness program for our production and what we call 
our non-production suppliers and that includes our utilities, 
of course some of the folks that have already provided feedback 
this morning.
    As of this report, 80 percent of these suppliers are 
responding that they are ready. That is as of June, with 100 
percent to be ready by the end of the year. About 10 percent of 
our suppliers have not responded and we have additional actions 
underway to validate the status of these suppliers and any 
suppliers that are not anticipating being ready by September.
    We have a very similar program that we have put in place 
for our affiliates and today 89 percent are ready, with 100 
percent ready by the end of the year.
    Compliance in some of the other impact areas that I would 
mention very quickly, 86 percent of all of our critical product 
development test equipment are compliant and back in service; 
93 percent of all of our end-user using technology is 
compliant; 95 percent of all of our technical infrastructure is 
compliant; 83 percent of our end dealership systems and 93 
percent of all of our physical properties and infrastructures. 
And finally, 100 percent of all of our vehicle components are 
compliant and have continued to be compliant since we began 
evaluating that back in 1996.
    As previously stated in our most recent SEC filing, Ford is 
anticipating spending about $375 million to complete the 
program. When it actually formally commenced, we absorbed our 
funding initially within our own process leadership 
organization when we kicked this program off, but this $375 
million began about mid-1997 and is going to carry us through 
about the middle of 2000. This outlay accounts for about 10 
percent of our total infrastructure costs.
    We are very, very confident in our readiness as well as 
that of our affiliates, dealers and suppliers. However, the 
inter-dependence of the entire supply chain--and you heard a 
little bit about that this morning--does represent the greatest 
risk to Ford. In particular, an extended infrastructure 
failure; that is, electric, gas or water, would make it 
difficult for us to operate our manufacturing operations. 
Accordingly, during the fourth quarter of last year, we began 
to develop contingency plans. Most of those plans are now 
complete, we are going to validate those plans by September. In 
addition, we have created what we have called a global response 
center, we actually launched that July 1st, and that center is 
collecting information and will act as an information 
clearinghouse for the most current status available as we enter 
the new millennium.
    Finally, I should mention that we have notified a small 
number of our employees that we intend to have onsite or on 
call over the holiday period, to coordinate any unexpected 
glitches that may be experienced.
    Finally, and it was mentioned again earlier, we have 
engaged an outside organization to do independent verification 
and validation. Even though all of our critical systems were 
compliant, those--a third of the inventory that I mentioned 
were all compliant by the end of last year. We have been doing 
enterprise testing and now we have an independent organization 
that is reviewing all of those critical systems to make sure 
that we have not missed anything.
    So with that, that is a summary of my prepared statement 
and I would be happy to answer any questions when the time 
comes.
    Mr. Horn. Well, thank you, that is very helpful 
information.
    Next is Don Costantino, director of corporate year 2000 
program for the General Motors Corp.
    [The prepared statement of Mr. Surdu follows:]
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    Mr. Costantino. Good morning, Congressman Knollenberg and 
Representative Horn.
    Mr. Horn. Thank you for being here.
    Mr. Costantino. I am happy to be here today to represent 
General Motors.
    We too have a very formal program inside of General Motors. 
It is headed up by our vice president and chief information 
officer. We report directly to both the Board of Directors and 
our Automotive Strategy Board, which is our lead group, on a 
regular basis.
    Getting into some of the specifics of our program, we have 
approximately 6,100 application type systems--things like 
financial systems, scheduling systems, et cetera--comprising 
probably a billion and a half lines of code. At the present 
time, we are well over 99 percent complete, we have less than a 
handful of those left to be done. They have all been 
inventoried, they have all been assessed, they have all been 
remediated and put back into service.
    From the systems and component area where we talk about the 
plant floors, we talk about engineering work stations, 
computers, et cetera, we have over 1.4 million of these devices 
which we had to inventory and assess. We are currently in a 
position now of well over 99 percent of those complete and they 
will be finalized during the month of August during the plant 
shutdown period. So we will be basically complete with the 
remediation and testing of all of our applications and 
infrastructure globally.
    We have moved into a very serious readiness testing phase. 
This is a phase in which we basically test all of our systems, 
either singularly or connected, since most of our functions 
connect, of course, across different departments. These are 
done in a setting of a future clock, with future data, so that 
basically they are all being tested, in an environment that 
duplicates the year 2000. We are probably going to run about 
3,000 of these tests either individually or in conjunction with 
other systems in an integrated fashion. At this point in time, 
we are probably about 90 percent complete with that testing.
    We have also put in place what we call a live production 
test in all of our assembly and manufacturing plants. We have 
run over 100 of these so far, and this is actually building 
cars or parts in the plant with future clock, future data. So 
we have basically put our assembly plants into the year 2000, 
run the product and then turn the clock back to bring it back 
into the current timeframe.
    As with, I am sure, everybody else on this panel, we are 
also doing independent verification of our systems with an 
outside firm. Although in our case, we also use EDS obviously 
that did most of the remediation of our applications work.
    From a supplier standpoint, this has always been a very 
critical area of our program. We obviously participated with 
the Automotive Industry Action Group [AIAG], in the self-
assessment survey but we went I think quite a bit farther than 
that. We have had teams in place globally for at least the last 
2\1/2\ years. We have done onsite visits with trained assessors 
at over 3,500 suppliers. We have held workshops across the 
globe that have brought in another 3,000 suppliers and 
basically feel at this point in time we have an excellent 
understanding of our supplier base and it's readiness. We have 
narrowed this down now to several hundred suppliers that we 
believe still need some additional attention, which is less 
than 10 percent of our supply base. And we are in the process 
now of further evaluating them to determine what type of 
contingency plans we will have to put in place if in fact they 
are unable to be ready for the year 2000.
    In conjunction with that, we have also looked at logistic 
suppliers worldwide, and obviously we are looking at both 
indirect and direct. We have also just in the last 3 months 
spent a great deal of time internationally looking at the 
infrastructure in various countries focusing on utilities. We 
are fairly satisfied that the United States is in pretty good 
shape, but since we have operations worldwide and suppliers 
worldwide, in order for us to better understand what type of 
contingency plan we would have to develop, we needed an 
understanding of the overseas utilities environment and that is 
basically now complete and we are now applying that against our 
supplier base to determine what type of contingency plan we 
will have to put in place.
    Contingency planning, as mentioned by George, is ongoing 
now in all areas and will be complete and basically be in the 
test phase starting in September; although in most cases, the 
contingency planning is actually a reflection of our normal 
planning that we would have for any type of a disaster 
recovery.
    Command centers are being put in place, one in Detroit and 
the rest of them globally. They will be integrated throughout 
the month of December and January to assure that we can respond 
properly to any issues if we do have them, although at this 
time we do not anticipate anything of a real material impact, 
but probably more like a minor shutdown. We have informed, as 
George has at Ford, our employees, a number of them that they 
will not get vacation, they will be working and the EDS 
organization has put all people on notice throughout their 
company, from the month beginning the middle of December 
through the middle of January, so we will have our technical 
resources in place if we need them.
    Finally, from an expenditure standpoint, GM, is at the 
current time estimating that we will spend about $540 to $600 
million. About $190 million of that will go to EDS, our primary 
supplier of services.
    Thank you.
    Mr. Horn. Well, thank you, we appreciate the testimony.
    Next is Roger Buck of the DaimlerChrysler Corp.
    [The prepared statement of Mr. Costantino follows:]
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    Mr. Buck. Thank you, Representative Horn and Knollenberg 
for asking me to be here today. Before I begin, I need to cover 
a topic on this non-receipt of Federal funds. We are filling it 
out currently and will have it to your office shortly.
    We take this issue at DaimlerChrysler of Y2K very 
seriously. We have project teams in both Stuttgart and Auburn 
Hills and we are coordinating our efforts. These efforts began, 
of course, when we were separate companies, Daimler-Benz and 
Chrysler.
    Each team is responsible for developing a comprehensive 
compliance program to assess potential problems within 
DaimlerChrysler and its key suppliers, implement and verify 
remediation action and devise contingency plans. Each team has 
allocated resources based on our internal assessments to 
address the issue, and the potential impact to our company, 
both its operations and financial conditions.
    The teams both report to the Board of Management of 
DaimlerChrysler AG which is our parent company.
    We believe we will achieve our goal of substantially 
completing Y2K remediation at our facilities around the globe 
by September 30th of this year. This includes addressing the 
problems of Y2K with our business computer systems, our shop 
floor devices, our sales and service activities and PCs for 
each of our business units. Critical business computer systems 
were 99 percent remediated at the end of 1998. This has allowed 
us to perform additional integration testing using CPUs rolled 
forward into the year 2000. The upgrading of critical shop 
floor equipment will be completed this summer with our shutdown 
period. There are several items that needed 1 to 2 weeks to 
actually fix. We cannot find a single failure in any of our 
vehicles when the clock rolls over to January 2000.
    In addition, the European Airbus consortium has issued a 
report indicating that date sensitive embedded chips in Airbus 
products will not be materially adversely affected by the Y2K 
problem. Our automotive dealer's business systems in all the 
major markets are Y2K ready. Even our employees are wrapping up 
their efforts to make sure their desktop PCs are ready for Y2K.
    DaimlerChrysler's largest Y2K business risk continues to be 
our suppliers. We participate in some automotive industry trade 
associations, both in North America and globally, the AIAG here 
in North America and the VDA in Europe. Each group has 
developed a common approach to the compliance along with its 
members, which includes seminars for first, second, third tier 
suppliers and confirming compliance through either 
questionnaires or reviews. We have sent questionnaires and done 
reviews and about 85 percent of our suppliers have said they 
will complete their remediation by June 30th of this year. We 
also offer remediation assistance to suppliers who we believe 
have not made adequate progress and we are also reviewing 
suppliers on a selective basis for compliance. We are now 
asking each of our key suppliers to provide a statement of 
readiness to confirm that they have achieved their expected 
compliance. Suppliers that are not compliant by September 30 
will be reviewed, and if appropriate, asked to establish 
contingency plans to ensure an uninterrupted supply of parts 
for DaimlerChrysler.
    As part of DaimlerChrysler's Y2K efforts, each of its sites 
is required to prepare a Y2K rollover plan. This rollover plan 
will assess the readiness of key infrastructure items, 
including process equipment, business computer system 
availability, building facility readiness which includes such 
things as electricity, gas, water, sewage, heat, fire alarms, 
emergency services, securities and phones, and community 
readiness--police, fire, emergency management services, 
hospitals, et cetera. Each site will report their status to a 
central location on Saturday, January 1st and Sunday, January 
2nd.
    We do not have a crystal ball to tell us where the world 
might have missed Y2K problems. Disruptions to basic critical 
infrastructures like electricity, gas, water, sewer, 
telephones, et cetera will make it virtually impossible to 
operate plants. We believe, however, DaimlerChrysler has taken 
every possible step to ensure that internal Y2K problems have 
been eliminated in all material respects and external risks 
have been significantly reduced. We fully expect all 
DaimlerChrysler facilities to operate normally on Monday, 
January 3, 2000.
    I will be available for questions.
    Mr. Horn. Thank you very much. After Mr. Parker, we will.
    John Parker is the vice president, information services, 
Northwest Airlines. I take it we should all fly Northwest now 
since you have the highest paid flight attendants in the United 
States and the world. [Laughter.]
    Congratulations. You are one of my favorite airlines.
    [The prepared statement of Mr. Buck follows:]
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    [GRAPHIC] [TIFF OMITTED] T0939.296
    
    Mr. Parker. Thank you for inviting me to appear before this 
committee to give you an update on Northwest Airlines' Y2K 
readiness. I would like to begin by assuring the committee that 
Northwest Airlines expects to offer its passenger and cargo 
customers a full, regular and normal schedule of services as we 
begin the new century. As always, we will make any adjustments 
necessary to ensure the safety and integrity of our operations 
and the convenience and comfort of our passengers. Ensuring 
safe operations is the No. 1 priority of our airline and the 
basis on which we have built our Y2K program.
    Northwest recognizes the importance and magnitude of making 
the necessary changes required for operating successfully in 
the 21st century and is working both internally and with 
external entities worldwide to ensure a smooth transition to 
the Y2K.
    I will give you a brief overview of how we at Northwest 
have approached the Y2K challenge, our collaboration within the 
airline industry, the current status of our program and what we 
expect to do for the remainder of 1999.
    Northwest's effort on the Y2K transition program began in 
January 1996. We currently employ a full time staff of 26 who 
are dedicated to leading more than 200 Northwest people on Y2K 
related activities. Our estimated costs for Y2K related 
activities is somewhere between $45 and $55 million and we have 
currently spent over $30 million to date.
    Our objectives are clearly defined and focused to ensure 
that Northwest's computers and computer-related systems will 
function properly on January 1, 2000 and beyond; to assess the 
Y2K compliance of the external organizations on which we rely; 
to develop workable contingency plans which will enable 
Northwest to maintain safe, reliable air transport of 
passengers and cargo.
    To effectively address the Y2K issues, Northwest adopted 
the methodology prescribed by the General Accounting Office's 
Guide on the Y2K Computing Crisis. The phases that we followed 
were awareness, assessment, renovation, validation and 
implementation, as outlined in this document and it has served 
us very well in dealing with the complex and interdependent 
nature of the problem in the airline industry. In a similar 
way, we followed the GAO's Business Continuity and Contingency 
Planning guidelines which were published last year. 
Additionally, we have an assessment and evaluation of all 
supporting documentation and compliance to these guidelines 
that is subject to independent verification by the Northwest 
Audit and Security Department.
    Within this context, we have identified 531 internal 
systems which are approximately half of all of our systems, 
which required conversion or replacement to be Y2K compliant. 
In addition, all of our business areas were tasked with 
identifying and assessing their critical components and 
suppliers for Y2K compliance; again, which followed the 
guidelines.
    Assessment of domestic and international airport and air 
traffic control systems readiness has been undertaken with a 
cooperatively and jointly funded effort with the Air Transport 
Association and the International Air Transport Association, 
and other trade groups. Member airlines, in addition to their 
own Y2K programs have invested $44.5 million in the Y2K 
programs of these associations.
    Northwest has worked closely with Boeing and Airbus to 
assess and test our fleet of more than 400 aircraft and our 
fleet of 20 flight simulators which must be identical to our 
actual aircraft to be suitable for training and certification 
of pilots.
    To assess the readiness of the worldwide infrastructure 
systems, Northwest initiated a collaboration with the Gartner 
Group that is being used by many airlines.
    And finally, we have established a cross department 
steering committee which was charged with identifying and 
developing contingency plans for processes considered essential 
for maintaining the airlines' normal operations and where the 
potential for failure is high.
    At present, Northwest has completed approximately 98 
percent of its application remediation and completed testing of 
more than 90 percent of our high priority applications. The 
remaining renovation and testing is on target to be completed 
within the third quarter of 1999.
    Minor modifications have also been made to bring 
Northwest's aircraft fleet into Y2K compliance. It is important 
to note that no Y2K safety of flight issues have ever been 
documented within Northwest's aircraft fleet.
    Northwest's reservation systems were successfully renovated 
and capable of booking and selling tickets through all of our 
distribution channels, including our Internet site. Since 
February 4 of 1999, and to date we have--more than 75 of 
Northwest's major internal systems have successfully passed 
their initial failure dates.
    I would also like to highlight two industry reports that 
give a snapshot of the industry. The ATA reported to the 
President's Council on Year 2000 Conversion on July 1, 1999, 
that United States and Canadian airlines are 95 percent 
finished with their Y2K remediation efforts. The Nation's 
airports are on schedule with their own Y2K efforts and the FAA 
has met its June 30, 1999 completion date for Y2K remediation. 
And that final independent verification by outside contractors 
and government agencies is pending.
    An additional status report was presented to the 
International Civil Aviation Organization, ICAO, to the United 
Nations National Y2K Coordinators Meeting on June 23rd. It 
reports substantial progress in all critical areas of air 
transport and in the development of contingency plans for all 
contracting States of ICAO.
    Mr. Chairman, what I have been discussing to this point has 
shown how Northwest Airlines and the aviation industry are 
addressing Y2K readiness. For the remainder of 1999, Northwest 
will shift its primary focus into what we are calling 
transition management. This consists of executing contingency 
plans as necessary, developing alternative flight schedule 
scenarios as required and dealing with events as they actually 
occur through the transition.
    As the year progresses and more information becomes 
available on the status and readiness of our destinations, 
Northwest will make and announce changes to our flight 
schedule. And you can rest assured, Mr. Chairman, that should 
any adjustments to Northwest's schedules be deemed necessary, 
those changes will be promptly communicated to the traveling 
public.
    Northwest will continue to be actively engaged with 
industry activities to complete remediation and to reassure the 
public that they can plan to travel during the transition 
period with full confidence and that the same standards for 
safety, which have been the hallmark of the airline industry, 
have been rigorously applied to our Y2K remediation work.
    In conclusion, I want to again assure you and the committee 
that Northwest Airlines is on track with its Y2K program, that 
we are working closely with our industry associations to 
complete readiness and contingency planning activities and that 
we expect to have normal operations at the start of year 2000.
    I will be glad to take any questions.
    [The prepared statement of Mr. Parker follows:]
    [GRAPHIC] [TIFF OMITTED] T0939.297
    
    [GRAPHIC] [TIFF OMITTED] T0939.298
    
    [GRAPHIC] [TIFF OMITTED] T0939.299
    
    Mr. Horn. Thank you very much. We will now go to questions. 
Mr. Knollenberg.
    Mr. Knollenberg. Thank you, gentlemen, for the testimony. I 
am particularly pleased that we have the big three--I guess it 
is the big three still--in the audience--getting bigger, each 
one.
    And it is no surprise, Chairman Horn, that they would be 
here. They do not call this MoTown for nothing, it is motor 
town, it is vehicle town. And with no apologies to anybody and 
certainly now we have multi-national connections and obviously 
all three of you represent those multi-national connections. So 
I am delighted you are here.
    I have heard from each of you about how close you are to 
compliance and what you have got in place to get there before 
D-day. About these suppliers, for example, you have hundreds, 
thousands of them, and you have them in foreign countries. When 
it comes to the percentage of those--and I think, Mr. Surdu, 
you mentioned was it 10 percent have not responded? How 
critical are those 10 percent and what percentage of the 
criticality of the automobiles that are being made depend on 
their contribution? Is that something that we could focus on 
for a moment? And if there is a problem there and they do not 
respond, do you have backup suppliers?
    Mr. Surdu. First of all, the 10 percent is an overall 
number at this point. That number is, I believe--and I would 
have to verify it--less than 2 percent in terms of our critical 
suppliers. For those that have not formally responded through 
the AIAG process, we have had onsite visits to validate where 
they are at, so in terms of all of our critical suppliers, we 
are very, very confident on where they are at. The other 
suppliers, as I mentioned, that have not responded to date, we 
are taking a look at them, we have got other actions in terms 
of additional onsite visits very similar to what Mr. Costantino 
mentioned from General Motor's plan, and we need to validate, 
you know, their state of readiness, not assuming that they are 
in bad shape. But if you take a look at the percentages, the 
percentages for failure are consistent for us around the globe. 
So as we take a look at the state of readiness of our suppliers 
in North America versus other parts of the globe, the numbers 
are fairly consistent.
    In terms of our business contingency planning, of course, 
that has come into play. We have been mapping that, we do have 
alternative sources if need be, but we have no plans on doing 
that. We feel very, very strongly about the relationship we 
have with our supply base and what impact they would have on 
our facilities are all a function of our contingency plans.
    Mr. Knollenberg. Could I pose the same question to Mr. 
Costantino and of course Mr. Buck. Mr. Costantino, if you 
would.
    Mr. Costantino. With respect to the supplier base, I would 
say right now that out of our critical suppliers--we have 
obviously got thousands of suppliers, many of which would not 
really impact us if they did not operate on that date. When you 
get down to the absolutely critical number, you are probably 
down in the 3,000 to 4,000 range. We have probably got, I am 
going to say, 400 to 600 of them that we are watching closely 
right now that we have probably not only had site visits but 
actually have put people out there to help them remediate.
    Mr. Knollenberg. Let me pose this question, are most of the 
suppliers who have not responded or who are dragging their 
feet, are they in North America or are they overseas?
    Mr. Costantino. I would say right now that the majority of 
the ones that we are currently working on are not in the United 
States, they are basically outside, off shore. And our teams 
overseas are now working with them. Anyone on that list has 
been visited, everyone on that list will have a contingency 
plan put together, including, if need be, our going in to 
provide technical assistance if in fact there is no alternative 
to ensure the supply chain.
    Mr. Knollenberg. Mr. Buck.
    Mr. Buck. Yes, our about 15 percent that we are trying to 
wrap up with, we are meeting personally face to face with them. 
They are having to come into Auburn Hills and meet with our 
buyers. Basically by the end of this quarter, if we cannot be 
satisfied that they are ready, then we will have a contingency 
plan with them, which could go as far as banking parts. That is 
how we are assessing that situation.
    Mr. Knollenberg. Thank you.
    Let me go to the question about--I think it was Mr. Parker 
who mentioned the Gartner Group who is addressing or working 
with several airlines to address your problems. Was there a 
single group, for example, with the automotive companies, that 
you sought help from to contribute to eliminating or 
alleviating your problems, or did you do it internally?
    Mr. Buck. We worked together at the Automotive Industry 
Action Group since February 1997 and they are having a common 
problem with our suppliers, so our suppliers would not have to 
do a GM way or a Ford way or a Chrysler way, now 
DaimlerChrysler way of determining what they needed to do. And 
the first thing we did was put together joint sessions. We 
invited our top 5,000 suppliers between us to a session, a half 
day session. We invited the chief executive officers in May 
1997. We brought them in and said, you know, you probably know 
you have got this problem with your computer systems, but you 
also have a problem on your shop floor. We went through and 
showed them that our plans----
    Mr. Knollenberg. When you say we, you mean all three of 
you?
    Mr. Buck. It was a joint program. And actually we used our 
audit firms of Deloitte & Touche and Coopers to put this 
program together. We have a common year 2000 Office for our 
suppliers, actually several other auto companies have joined 
that also. We offered it to the world. And we have been sharing 
information. Basically we talk all the time, ``Gee, did you 
know that when we did this, this happened at one of our 
sites?'' That has really made us take action in making sure 
that we had the problem handled.
    Mr. Knollenberg. So you have worked in a fairly unique 
fashion then, as I see it.
    Mr. Surdu. Consistent with the Automotive Industry Action 
Group practices, it is really an opportunity for companies like 
Ford, GM and DaimlerChrysler to get together on common issues, 
and certainly this was a common issue for us.
    Mr. Knollenberg. Here is a common issue as well, the big 
three, as you are seated there, have over the years and 
recently produced automobiles that have a great deal of 
amenities, one of which is the on-board computer. I understand 
some of these computers are used for the purpose of fuel 
injection and navigation. What can you tell me about--have you 
communicated to the consumers, to the customers, just what the 
potential problems might be if there are any? Have you 
reassured them that there will not be problems? Are you doing 
that now?
    Mr. Surdu. Let me begin and we will--I think you will 
probably hear very similar programs.
    But first of all, we have communicated to our entire 
population, we have responded to every inquiry, several 
thousand inquiries in terms of the readiness not only of Ford 
Motor Co. but of its vehicles, both past and present. And we 
have sent communications out through our dealer body as an 
example. So there have been very many different mechanisms that 
we have communicated our readiness and our status. And in 
particular your question about vehicles, the interesting thing 
about the technology that is in the vehicles is that the chips 
themselves are not like the chips you find on a PC. They do not 
have a system date, they do not carry that kind of 
functionality. And so there is no date-related functions in the 
chips themselves. We verified that through our chip 
manufacturers, our subassembly manufacturers, we have done 
internal testing. We have even gone so far as to do a global 
all-employee message or inquiry as to any past or present 
thoughts that our entire work force might have in terms of our 
vehicles and researched all of those. And all of those findings 
came out zero.
    You could theoretically put some functionality from a 
software standpoint into your vehicle that might be date-
related, but if you think about the functionality in the 
vehicles themselves, and certainly in particular in our 
vehicles, we do not care about the date. If I am looking for 
maintenance, and the example I like to give our customers is 
that if you park your Ford vehicle in the garage for 6 months, 
you do not want the on-board computer to say that it is time 
for maintenance. We care about things like engine cycles, we do 
have counters which get reset every time the vehicle is 
started. So there are no date-related functions that care about 
the year, that affect either the safety or the performance of 
our cars.
    Mr. Costantino. From our perspective, we are doing the same 
thing, we have a great deal of communication through the 
Internet even to try to assure all of our customers, current, 
future, that we have found no problems in past or current 
vehicles and we have done the same level of extensive testing 
on those vehicles. I think our focus has been even more on the 
dealerships to ensure that they clearly understand this and 
ensure that they are ready because, quite frankly, they are the 
face to the public and we want them to be fully operational 
come the transition period as well.
    Mr. Knollenberg. Mr. Buck.
    Mr. Buck. For DaimlerChrysler, it is the same situation. In 
our vehicles, we have not found anything that would impair or 
affect in any way running that vehicle. And we have 
communicated it through the means mentioned. Also, I believe 
all three of our companies have a statement that is on the 
National Transportation Safety Board site that also says the 
same thing. So it is out on the Internet available to the 
public.
    Mr. Knollenberg. I think Y2K may have hit me already, I 
have a car that has an on-board computer and it tells me I need 
an oil change, the dealer says it does not need an oil change. 
I will work that out but I think it may be the fact that 
somebody did not reset it or some such. So I am not going to 
blame that on Y2K yet.
    Mr. Parker, just in regard to--and I will close with this 
question--with regard to the airlines, you just heard the 
automotive people are working together to share information and 
I remember your saying again that Gartner has worked with 
several airlines. Is there any communication between the 
various airlines on this matter, that may go beyond Gartner or 
maybe in addition or worked in with Gartner?
    Mr. Parker. Yes, it is very substantial. When I was 
referring to the Air Transport Association and the 
International Air Transport Association, there are upward of 
120 airlines that are working to share information about--if I 
can drawn an analogy to the supplier network in the automotive 
industry--we share airspace control and airport control 
functions around the world and so we have been very active from 
the very beginning sharing information, finding out the state 
of the programs of the different agencies that control those 
and share that. That is the majority of where our cooperative 
effort has been focused.
    Mr. Knollenberg. Do you feel good about the year 2000, 
January 1, 2000?
    Mr. Parker. I do.
    Mr. Knollenberg. Are you going to travel?
    Mr. Parker. I would travel. I will be with my programming 
staff at our data center.
    Mr. Knollenberg. So you are going to have your critical 
employees that will be available during that timeframe, that 
December 15-January 15 timeframe?
    Mr. Parker. Yes. We have--we will have, much like you have 
heard earlier, we have canceled all of our vacations for our 
technical staff. They will be positioned either at our data 
center or at our major sites such as our major hub airports. We 
also will have our executives and other decisionmakers in a 
command center type program, similar to what you have heard 
from my colleagues, ready to make decisions and reaction to 
events as they occurred.
    Mr. Knollenberg. Is this called insurance, pretty much just 
in case.
    Mr. Parker. Yeah.
    Mr. Knollenberg. But you feel good about where you are. And 
I guess I am hearing that from all of you, but you also want to 
make sure that there is no glitch at the end and you are going 
to be available to handle customer problems.
    Mr. Parker. Yes.
    Mr. Knollenberg. Thank you very kindly for your testimony, 
gentlemen. And Mr. Chairman, thank you. Back to you.
    Mr. Horn. Thanks a lot, Joe. Good to see you.
    We appreciate having Mr. Knollenberg with us this morning. 
Since he is getting a little car advice, let me ask Mr. Surdu.
    I have been a quite happy customer of Mercuries for a long 
time, and the reason I bought my 1988 Mercury was one reason 
and that was that dashboard. And now I do not see anybody using 
it. It was terrific, you can know what the speed is with a 1 
inch numeral and I love it. A little bit of the electronics 
went out and I really do not care about that part of the 
dashboard, but what happened? Why are we back to those crazy 
needle things that you can hardly see in any car that I have 
seen?
    Mr. Surdu. You know, I wish I could answer that question. 
Being a systems professional for the company, I cannot answer 
an engineering question, but I think it has to do with customer 
needs and customer wants and customer interests. We still have, 
by the way, some of those dashboards with big dials. I can put 
you in a vehicle that has one, if you would like.
    Mr. Horn. I just wondered, do I have to buy a Lincoln or 
something to get that dashboard back? Is that the motive?
    Mr. Surdu. I will take that back with me. How is that?
    Mr. Horn. OK. But I always wondered what happened, because 
you go in, and really those dashboards with that crazy little 
needle, you cannot even see it and usually the steering wheel 
is blocking it and that wonderful dashboard of 1988, which I 
still have that car and it has worked great for 11, going on 12 
years. But I did not know if that was obsolescence or all the 
other things we hear, but it is a great board, get back to 
putting it in and I think we will all be happy.
    Let me ask you a couple of the questions I did the previous 
panel, just for the record.
    When did Northwestern start undertaking the year 2000 bit?
    Mr. Parker. We began looking at it in 1995 and funded the 
program in January 1996.
    Mr. Horn. And when did Chrysler start that?
    Mr. Buck. Both Chrysler and DaimlerChrysler began in 1995, 
both sides of the company.
    Mr. Horn. I see. So even though you had not merged at that 
point, why your brains were thinking along that line?
    Mr. Buck. Yes.
    Mr. Horn. Well that is great. How about General Motors?
    Mr. Costantino. I would say in earnest, 1996.
    Mr. Horn. And how about Ford?
    Mr. Surdu. June 1996.
    Mr. Horn. In June 1996?
    Mr. Surdu. Right.
    Mr. Horn. Because your leadership under Mr. Peterson was a 
very international oriented leadership that did a lot for Ford 
and I just wondered if you would be ahead of that or not, based 
on that international executive experience you had there.
    Mr. Surdu. Well, we seem to think that we certainly have 
this well under control. You know, you asked the question 
earlier on in terms of what would we do differently, obviously 
I would parrot back ``more time''.
    Mr. Horn. Yeah.
    Mr. Surdu. But certainly we have learned a lot from this 
program, there is a lot of positive that has come out of this 
for us. We understand more than we ever did before the 
technologies that we have in place on a global basis. And if I 
would say we would like to start earlier, it would be to take 
advantage of the things that we now know in terms of some of 
the things that we are moving forward with. So it has been a 
very worthwhile, at the end of the day, experience for us, one 
I would not like to do too often, but certainly it has been of 
real value to us.
    Mr. Horn. Well, you raise an interesting point. What about 
your foreign competitors in those days, both Europe and Asia, 
were they into this earlier than you or after you, or what?
    Mr. Surdu. Well, I certainly cannot speak for our 
competition. I can tell you what--and we have kept very, very 
close to organizations like the Gartner Group and Forrester and 
others and our own internal, if you will, intelligence in terms 
of where the globe is in this Y2K issue. And generally 
speaking, we agree with all the documentation that Europe has 
been behind North America, in particular, and other parts of 
the Far East and South America are working very hard to catch 
up.
    We, within Ford Motor Co., when we initiated the program in 
1996, it was a full global program, so we put a full court 
press on for us internally and began working, as the panel here 
has indicated, from the big three, with our supply base very, 
very early on a global basis. But I cannot speak for the other 
automotives.
    Mr. Horn. One of the interesting things is when you look at 
the global picture, it is mostly in developing countries that 
the problem exists. And as you know, the United Nations held 
two conferences on this, and they had a great turnout at the 
last one just 2 weeks ago, I think 173 countries were 
represented, whereas the one in the preceding period had been 
about 120 countries. So the message is getting through, but as 
you look at the globe, it is the developing countries that 
frankly do not have the money to do some of this, and the World 
Bank, I gather, is trying to help them on that. But some of you 
have plants in these developing countries. Is that a different 
situation when you are surrounded by people who have not really 
corrected the tapes and all yet and would that affect you or 
are there any interactions between your plants and the 
surrounding economy? I mean, does it make a difference when you 
are in those developing countries?
    Mr. Costantino. Oh, the answer is, I think, it does. But I 
think we are treating each one of those as we would the United 
States. In all of our operations, we put the Y2K teams in 
place. The supply base, I think for all of us, is really global 
in nature. So in many cases, those suppliers that are actually 
supplying a Brazilian operation could very well be supplying a 
North America operation as well. So I think the desire to 
basically ensure those suppliers are ready is there for not 
only the international, but also domestic.
    I think the piece that we have added is to really take a 
hard look at the utility situation in those countries, because 
we may find ourselves where a supplier is ready, but our 
intelligence tells us that the chances for outages of 2 or 3 
days is imminent and therefore, you need to do something from a 
contingency standpoint to protect your supply chain and also 
that supplier. And that is an effort that is going on right 
now.
    Mr. Horn. You heard your colleague from Ford say time would 
have been helpful on this. What was your experience, if you had 
to do it again now, what is it that you wish you had done?
    Mr. Costantino. One thing I wish we had done is kept a 
better inventory. It took a lot of effort, way more than I 
think people thought it would take, to really get an 
understanding of all of the plant floor equipment, et cetera. 
And now that we have this information, I hope that we maintain 
it so if we ever needed it again, we could move more quickly.
    Mr. Horn. Was that in relation to the codes in particular 
processes?
    Mr. Costantino. It is everything. I mean just simply 
knowing where you have 1.4 million devices and how to get to 
them all took an awful lot of effort and I think the Gartner 
Group has under-estimated in some cases the front end of the 
work that had to be done.
    In addition, for General Motors, we had the complication of 
being kind of diverse and therefore, we do not have singular 
systems in many cases, which made the job even more difficult. 
Again, opportunities in the future though to take advantage of 
what we have learned.
    I am not sure on the time, I think we are where we need to 
be right now and I think it is the right time. The concern I 
have is one I was reading last year, people saying they are 
ready for Y2K. Then they must have an industry that is making 
no changes because one of the most difficult things we will all 
face in the next 6 months is managing change, because the world 
around us, the computers, the things they want to change fast, 
the systems want to change fast, the plant floor wants to 
change fast. If you go and think you are done a year and a half 
ago, you are not done, because I doubt you could shut down 
change. So I think we are kind of in a good position there 
because we know the changes have to come but we want to try to 
manage them.
    Mr. Horn. Well, on that matter, as you went through this 
process for the year 2000, were you able to get rid, able to 
combine some of your systems that you had to look at and rather 
than just adapting them, getting rid of them?
    Mr. Costantino. I am not sure this is good or bad news, but 
we eliminated probably between 3,500 and 4,000 systems already.
    Mr. Horn. Yeah, well it makes a lot of sense.
    Mr. Costantino. Oh, yes.
    Mr. Horn. How about DaimlerChrysler?
    Mr. Buck. Just to change the question slightly. Instead of 
what have I learned, what would I do different; what have I 
learned that is going to make me do something different in the 
future. When we ran what we call time machine tests of our 
manufacturing plants, we found a bug that would have shut our 
plants down for one shift. And so we are now looking at, you 
know, what if this had occurred, what could we have done on 
January 1st and 2nd so we would have caught this in time and 
not shut our plants down. We are seriously right now looking at 
operating a plant Saturday night, January 1st, a third shift 
operation, running for 4 hours, then running all the systems 
behind that as though it was a normal work day, giving us a day 
to fix any bugs that we have missed.
    You know, we all run tests, but the real world where you 
are going through a telecommunications company that is in the 
year 2000 and you are going to suppliers who are bringing in 
just in time material, and you are doing everything, so that we 
have some reaction time so that on Monday, the 3rd, we would 
have a higher degree of certainty that we are ready.
    Mr. Horn. Mr. Parker, how about Northwestern, if you had to 
do it over again, what is it that stands out that you wish you 
had done first?
    Mr. Parker. Interestingly enough, I think that we allocated 
enough time to the overall effort. I think starting earlier 
would have made the whole program a little bit cheaper because 
it would have been less of an auxiliary effort and more of a 
mainstream effort. But there are probably three things I would 
have done differently. I would have liked to have educated the 
business community inside Northwest, to understand that it was 
not just an IT problem, to get them involved with business 
process changes and contingency planning and things much 
earlier in the cycle. I think we would have been much more 
aggressive about retiring older systems than--as opposed to 
fixing them, because we could use this as an opportunity to 
build for the future better than perhaps we did. And I think we 
also could have encouraged our industry associations to begin 
digging for information much sooner than we did.
    Mr. Horn. Now when Northwestern began its efforts was about 
what?
    Mr. Parker. It was in January 1996.
    Mr. Horn. Yeah, January 1996. By the way, Mr. Willemssen, 
come on up and join the panel for the last couple of questions. 
He is our worldwide expert. We have a chair for you.
    What I am interested in is what else needs to be done, if 
anything, by the Federal Government on the awareness side and 
what do you wish had been done by the Federal Government in 
that respect--not that it is doing your work, but what could it 
have done to be helpful. They finally got around to it. I think 
they are doing a pretty good job now and it is happening, but 
it took years to get them to face the music. They ignored it--
well, they ignored everything up until, as I said, April 1998. 
That is when they finally got Mr. Koskinen in there to do the 
job.
    So anything else we could have done on our side on 
awareness, whatever?
    Mr. Parker. I think on the--from the airline industry, 
having more visibility into the program sooner, having the--
particularly the FAA and other government agency programs 
started sooner and made aware of the progress to us sooner 
would have helped. Because we had to start our programs with 
assumptions that we would have at some point run into some 
additional work because the assumptions did not hold.
    Mr. Horn. I take it on verification, some of you have used 
inside verifiers, others have used outside verifiers, on the 
fact that your codes have been adjusted and so forth. What has 
been the practice at Ford on that, did you have an outside team 
do it? I remember you mentioned a few accounting consultant 
firms.
    Mr. Surdu. We actually have addressed this in two fashions. 
Internally, we used both internal and external resources to 
assist us in the remediation testing and initial verification. 
We actually did verification work prior to testing. It turns 
out it simplifies the process to find the problems up front 
before you get into testing and it facilitates testing. So we 
used both internal and external resources for that.
    Same thing on the auditor side, our general auditor's 
office has been engaged from the very beginning on this 
program, and we have used Coopers Price Waterhouse as well.
    On the pure verification now, we are taking another pass at 
it and that is all using external resources.
    Mr. Horn. How about General Motors, somewhat similar?
    Mr. Costantino. Very similar, actually almost exactly the 
same. We have multiple testing obviously inside and again, we 
use EDS which brings in additional outside resources, although 
they are a prime supplier. But many of our critical systems 
have been going through independent verification with a totally 
outside third party.
    Mr. Horn. How about Chrysler--Daimler?
    Mr. Buck. At DaimlerChrysler, when we had finished 99 
percent of our business systems at the end of last year, we 
raised the tier or the measurement of completeness to doing 
integration testing with stand-alone main frames or stand-alone 
servers, and this sign-off with not only the IT individuals, 
but with our customers--we are involving all of our customers 
in our testing and they have to sign off on critical 
applications. We are using Deloitte & Touche to do independent 
verification.
    Mr. Horn. Mr. Parker, how about your situation in 
Northwestern?
    Mr. Parker. We follow a similar program, we do an internal 
IT testing and validation; we then go to our business units and 
have them sign off for completeness after user acceptance 
testing. We have an internal auditing department which 
validates the results and we have also used Ernst & Young as 
our external audit group. We are also using Price Waterhouse 
Coopers in our contingency planning efforts, which is an 
umbrella that sits above virtually all of the program and they 
have looked at it as well.
    Mr. Horn. For the workers you have on America's assembly 
lines and on the airlines, how have your companies trained 
employees to recognize and address possible year 2000-related 
problems? Are they sensitized to that?
    Mr. Costantino. In our case, basically we are just taking 
our normal practices which say that every single plant we have, 
for example, has procedures--and I am sure it is true for both 
gentlemen here--to handle any kind of situation such as a power 
outage or a supplier issue. I mean we deal with these things 
every day. Y2K is really almost an extension of what we do deal 
with. So we are back in there just doing two things--making 
sure everybody is following and understands those procedures 
and is prepared, and also if there is any uniqueness with 
respect to potential Y2K ones, how to deal with it. But in many 
cases, we will also have some technical teams, if we run into a 
problem that is beyond our capability, that we will then send 
out to handle any technical problems.
    Mr. Horn. How about Ford, about the same way?
    Mr. Surdu. Yeah, the one other item in response to your 
question is we have gone out with numerous all-employee 
communiques in terms of not only the year 2000 challenge but 
where the company was and what the company was doing. In 
addition to that, they have been personally engaged as a result 
of our end-user computing process. Every desktop owner, we have 
provided a tool, we have provided training on how to use the 
tool, and they actually personally go through a compliance and 
analysis and a validation phase through the things that they 
develop. So there is a rich amount of awareness within Ford 
with our employee base.
    Mr. Horn. How about DaimlerChrysler?
    Mr. Buck. In addition to the, what we call incident 
management teams at each site and what we call our PC rollout 
where everyone who has a PC has to run a program and assess 
whether they have created anything that is not compliant, we 
have put posters all over our company, both an English version 
and German version, telling the employees here are the types of 
things we found going wrong. If you know of anything that you 
think is not compliant, here is who you contact. So we have 
tried to do everything we can to get down to the employee 
level, to make sure that if there is something that we have 
missed, that they are asking the questions. And they are, they 
are asking the questions. Their interest is growing as we near 
the year 2000.
    Mr. Horn. If you have got an extra set of those posters, I 
would like it filed with the subcommittee and its chairman in 
particular, to see if my German has any relationship to my 
English.
    Mr. Buck. Sure.
    Mr. Horn. How about Northwestern?
    Mr. Parker. We have a formal communication plan that 
includes all of our constituencies. As it relates to the 
employees, what we have found with the front line employees is 
that most of what they need is a consistent way to answer 
customer questions, passenger questions. So what we have done 
is given them some documentation both in written form and on 
their systems that they can access to be able to answer those 
questions. And we have also instructed them to point our 
customers to our Website which contains kind of our formal 
communication to our customers.
    At a leadership level, we have worked with the different 
departments throughout the organization to ensure that they 
have a consistent way of communicating to the work force. And 
then from a decisionmaking standpoint, those people that are 
required to make decisions that would recognize Y2K events and 
make decisions to modify the airline plans, we have gone to a 
much more formal area and we have attached that in our command 
center approach with our existing command center and lengthened 
the time window to be able to accomplish that. So it is more of 
a formal plan than a communication plan.
    Mr. Horn. Well, thank you.
    Mr. Willemssen, what needs to be asked of this panel that I 
have not asked?
    Mr. Willemssen. The one thing that I think that I would 
like to emphasize is to extend on some of the remarks that were 
made earlier. I think it is especially important for the 
companies here to continue publicizing verified facts to the 
public. That is the best way to combat any rumor or potential 
panic down the road. I think one comment was made about making 
sure that the dealerships, since they are the face to the 
customer, have that information in hand. I think that is 
especially important, because as we roll into the fall, there 
are going to be a lot more questions raised about Y2K than have 
been raised cumulatively to this point. So I think it is 
especially important that the companies continue putting the 
word out, here are the facts of the situation and here is what 
we know about our products and services and their compliance 
status.
    Mr. Horn. Yeah, I agree with you that is very important, 
because as we get closer to January 1st, you are going to have 
people selling their books, selling their solution and all the 
rest of it. And there is going to be a lot of fear mongers, 
shall we say, in those wonderful little tabloids as you go 
through the grocery store line--that kind of thing. So they 
will turn to that and we just need to head them off by, as you 
say, getting the facts out there for the public to know.
    And I think on the previous panel of public people with the 
bills they send to the citizens, they might want to put a 
little information in there about what is happening on the 
utilities and the water and the electricity and so forth. And 
we are getting to the electric panel.
    One question has come here from the audience--is there 
another one? Just one. It is for both Northwest and the General 
Accounting Office. What is the preparedness of other countries 
like Jamaica in terms of air traffic control? Northwest got any 
feelings on that?
    Mr. Parker. We do. I cannot specifically speak to Jamaica, 
but we keep a very close eye on all of that. We would agree, I 
think, with the assessment that I heard earlier that the United 
States is in better shape than the rest of the world. Europe is 
somewhat lagging behind, Asia would probably fall into that 
area and then a lot of unknowns still remain in the rest of the 
world.
    As you look at the rest of the world, there are really--
that part that is the unknowns, there are really two states of 
being. One is their systems are so old and their normal 
processes are so inconsistent, that it will just be like a 
regular day if they were to have a Y2K problem. And we know how 
to deal with that, we deal with that every day.
    The other part is where they have made some modernization 
of their systems, but we do not know how far they are going to 
be going into the remediation effort.
    Our general read on things now is that it will be safe to 
fly. Airworthiness, flight safety issues will be addressed, but 
some passenger convenience things like moving sidewalks or 
elevators or HVAC systems, heating and cooling systems, may not 
be ready and may run into some problems in the smaller 
countries.
    Mr. Horn. Mr. Willemssen.
    Mr. Willemssen. I think there is reason for concern in 
other countries in the air traffic control system, not 
necessarily because of what we know, but because of what we do 
not know. Later this fall, the State Department working with 
the Transportation Department, plans to issue travel advisories 
to the citizenry where they have real concerns about the 
systems within those countries. I think that is a reasonable 
step from a public information perspective.
    Mr. Horn. Yeah, I agree with you. I have a lot of faith in 
the American Federal Aviation Agency and the Administrator that 
runs it now. They sort of dragged their feet for awhile and 
then when she got in there, she started to clean house a 
little. So I think that is going to happen, at least in the 
American sweep, but obviously our planes are flying all over 
the world. And there are some situations where I am sure they 
are going to have to really clean up and the ICAO, 
International Civil Authority ought to be working on that right 
now with the developing countries.
    You have raised a good question. We have not particularly 
satisfied all the answers; but in terms of the U.S. situation, 
the Administrator has the power in law from Congress to ground 
any planes that are in any unsafe situation. So I think there 
is a lot of effort going on in the towers of this country, and 
by the way, at L.A. International 4 years ago, they had a few 
vacuum tubes still, and they had post-its on the windows and 
things like that. We are getting a little beyond that now 
hopefully and I long ago suggested to FAA when I was on the 
Aviation Subcommittee, why do you not go look and see what 
Lufthansa is doing and 2 years ago, I had a chance to go over 
there and look and guess what, Ratheon equipment, all over the 
tower in Berlin. The FAA, in 1993-1994 had blown $4 billion to 
try and accomplish the same thing Ratheon had already done with 
Lufthansa. So hopefully we learn from these experiences.
    All of you have given some very important testimony and we 
appreciate your doing it and we are glad to see people working 
together, because I know we passed that Good Samaritan Act so 
competitors could work together without somebody saying it is 
an antitrust violation, and I have been delighted to see all 
over this country firms that are pretty--very competitive and 
did not particularly like their colleagues, are working 
together to solve this problem. And I think that is good news 
for the American public. So thank you very much for coming.
    We will move to panel three now. Panel three is Mr. Roosen 
of Detroit Edison; Mr. Lozano of Michigan Consolidated Gas; Mr. 
Johnson of Wayne State University; Mr. Potter of the Southeast 
Michigan Health and Hospital Council and Mr. McDougall of the 
Southeast Michigan Information Center, United Way.
    OK, we have got everybody, if you would stand and raise 
your right hands.
    [Witnesses sworn.]
    Mr. Horn. The clerk will note six witnesses affirmed the 
oath. We will begin with Mr. Jim Roosen, the Y2K program 
manager for Detroit Edison. Glad to have you here.

STATEMENTS OF JIM ROOSEN, Y2K PROGRAM MANAGER, DETROIT EDISON; 
   RAYMOND LOZANO, MANAGER OF STATEWIDE COMMUNITY RELATIONS, 
   MICHIGAN CONSOLIDATED GAS, ACCOMPANIED BY TOM MOTSINGER, 
DIRECTOR, INFORMATION AND TECHNOLOGY MANAGEMENT; JAMES JOHNSON, 
 VICE PRESIDENT OF COMPUTING AND INFORMATION TECHNOLOGY, WAYNE 
  STATE UNIVERSITY; DON POTTER, SOUTHEAST MICHIGAN HEALTH AND 
   HOSPITAL COUNCIL; AND DAN McDOUGALL, DIRECTOR, SOUTHEAST 
            MICHIGAN INFORMATION CENTER, UNITED WAY

    Mr. Roosen. Thank you, Mr. Chairman. My name is Jim Roosen 
with Detroit Edison Co. and I am one of several Y2K program 
managers working in our program office. I had submitted some 
formal testimony and I would like to make some additional 
comments, if I may.
    Mr. Horn. Right, and you have all heard that your statement 
goes in the minute we introduce you. We would like you to 
summarize it, do not read it, 5 minutes, and then we can have 
more dialog.
    Mr. Roosen. Correct.
    The scope of Detroit Edison's Energy year 2000 Program is 
quite fast. Just for purposes of the audience and the 
committee, we serve 2.1 million customers in southeastern 
Michigan in 13 different counties and have 9 power plants and 
36,000 miles of distribution line.
    We are keenly aware of the seriousness of the year 2000 
issue and we are committed to providing a safe, reliable flow 
of electricity well into the millennium. We began working on 
our Y2K program in 1996. We, subsequent to that work in our 
Information Technology Group, we established an enterprise-wide 
year 2000 program office to oversee all of the year 2000 
activities. We have a dedicated team of five executive 
managers, who have over 125 years of utility experience and 
they have been assigned to the project. They have both IT 
experience and operating experience. We have committed over 450 
employees to the effort over the last 2\1/2\ years.
    We have a rather structured program that reports directly 
to the office of the president of DTE Energy, and we regularly 
report to the audit committee of the Board of Directors.
    Additionally, we have issued a call to action memo to all 
of our employees in July 1998, to advise them that we would--
not to arrange for vacations during the rollover, that there 
are certain needs that we will have in order to carry out our 
contingency plans and to be prepared for the unknown.
    Where are we? We are on track after 3 years of the program, 
and the intricate planning and implementation to address the 
Y2K issues.
    In summary, our inventory and assessment considered over 
140,000 individual assets and that is complete. Our compliance 
testing of those assets was completed and of those assets that 
were determined to be not ready, about 2 to 3 percent of the 
total assets, 99 percent of that equipment is ready for the 
year 2000. Everything has been remediated, we are now in the 
testing phase of that remediated code. And the final system, 
which has nothing to do with delivering electricity, but it is 
the back office, the billing systems and some of the support 
systems, will be moved into production no later than October 
1st.
    However, the systems that are necessary for the generation, 
the transmission and distribution of power are ready as of 
January 30th. In fact, we have sent letters to the North 
American Electric Reliability Council, who have been asked by 
the Department of Energy to provide oversight of the national 
grid, we have sent letters to them informing them that all of 
our facilities, all of our systems that are necessary for 
generation, transmission and distribution are in fact complete 
by the June 30th date.
    Additionally, we have sent a letter to the Nuclear 
Regulatory Commission with regard to our nuclear plant, Fermi 
2, that it is ready, has complete Y2K readiness and was 
complete by June 30th. So those have been completed.
    We are in the process now of moving from that asset phase, 
the individual assets, to what we call a business process 
approach where we look at it from an integrated standpoint 
enterprise end-to-end, to make sure that those systems when all 
hooked together will continue to provide the level of service 
to our customers that they expect and deserve. We have operated 
five of our generating units successfully into the millennium 
mode and some of them are still operating with a millennium 
year 2000 clock.
    We developed some rather detailed business continuity plans 
and they basically are extensions of our present readiness 
plans, but with the kind of Y2K twist to them. We are 
continuing to communicate and to integrate our efforts with 
others, as other witnesses have said today. We have 
participated in depth in utility consortium to exchange 
information and strategies and solutions and testing procedures 
through the Electric Power Research Institute and other 
agencies, EEI, the Edison Electric Institute, and others.
    We are in the process of assessing and have really 
completed the assessment of our key mission-critical vendors. 
There are over 1,200 mission critical vendors and we pared that 
down to 20 and have worked with each of those vendors to make 
sure that the supply chain will continue on an acceptable basis 
through the millennium.
    We have been conducting a lot of meetings with the local 
and State governments and particularly with emergency 
management organizations here in Michigan, including FEMA in 
some of the meetings, working with the State police and other 
agencies to ensure that everyone in southeastern Michigan is 
working together for infrastructure types of things like 
electricity and water.
    We did participate also in some national tests that were 
indicated to be held by the North American Electric Reliability 
Council. One was in April, and there is another one scheduled 
for September and we will be participating in that. Those tests 
are not of the grid, those are tests of communication systems 
that are necessary in the case some unknown event occurs and 
electronic communications is not available.
    Mr. Horn. Let me ask you at this point, are there any tests 
for the grid?
    Mr. Roosen. The actual electric grid itself is up and 
running and the risk of testing it while it is up and running 
is too great. Simulation tests have been conducted and we have 
high confidence, because of the lack of a lot of computer 
operation of the grid, it is basically a manual operation and 
has a lot of manual backup, that there is very low risk of any 
Y2K induced interruption of the grid.
    Mr. Horn. Based on the New York blackout, the regional 
blackout, San Francisco had a blackout in the last few months, 
what have we learned from that, anything that applies to the 
Y2K situation?
    Mr. Roosen. Those were all equipment failures. Equipment 
fails mainly due to overload. And during the heavy load periods 
during the summer, you will have equipment failures, and they 
happen every day. In fact, you could not testify today that 
there are no customers out in Detroit Edison's territory, there 
will be customers out. But we are used to that, that is our 
normal operation, and our approach is as fast a response as 
possible to restore to normal.
    The New York one is a particularly interesting one because 
they have an all underground system and they had some cable 
failures and it particularly interfered with getting them back 
because everything is under the street and it takes a long time 
to restore. Those are the only particulars I have.
    We have similar systems, although not as extensive as New 
York, but we are prepared to respond in a reasonable period of 
time. Normally a 3-day outage is what we advise our customers 
to prepare for and we have a fairly good track record of 
sticking to those 3-day outages. There are the exceptions, of 
course.
    Mr. Horn. Well, thank you, I just wanted to get that on the 
record right now.
    Mr. Roosen. Right.
    One other thing in terms of integrating our efforts, we 
have been hosting forums with our partners in gas, water, 
telecommunications, to make sure that we are all well aware of 
our remediation status or our compliancy status.
    In summary, we anticipate no widespread or sustained 
interruptions of service as a result of the turn to the new 
millennium. We cannot, of course, give 100 percent guarantee, 
like I said, even on a normal day-to-day operation like today, 
but we can give the guarantee that we will be prepared to 
respond in the manner that we have become accustomed to because 
our response systems are well tuned to this kind of an 
emergency.
    That prompt response to unusual circumstances is really our 
day-to-day job. We will be doing continuous monitoring and 
coordinating communications with all the emergency management 
organizations and we will have an emergency communications 
center manned and be participating both with the Federal and 
local government.
    Mr. Horn. Well, thank you very much, we appreciate that.
    Our next witness is Raymond Lozano, the manager of 
Statewide community relations for Michigan Consolidated Gas and 
he is accompanied by Mr. Tom Motsinger, director, information 
and technology management.
    [The prepared statement of Mr. Roosen follows:]
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    Mr. Lozano.  Mr. Chairman, good morning. Thank you for the 
opportunity to testify here.
    As mentioned, I am Ray Lozano, manager of statewide 
community relations.
    In summary, MichCon provides natural gas service to about 
1.2 million homes throughout the State in terms of factories, 
businesses and institutions throughout Michigan. On any given 
day, we deliver gas to about 4.5 million residents.
    We want to fully assure the committee today that--and all 
of our customers, that come January 1st, we are expecting that 
natural gas will continue to flow to our homes and businesses 
that we serve. Very simply, we are committed to delivering the 
gas service that we have been delivering throughout our 150-
year history.
    We have been working, in terms of replacing our business 
systems, since early 1995 and established a corporate-wide Y2K 
office in 1997 that reports to a vice president that in turn 
reports to the chairman of our parent company, MCN, and to its 
Board of Directors.
    We have, in fact, inventoried our systems and developed a 
schedule for prioritizing and assessing any concerns. We have 
identified all of our partners with whom data is shared, to 
prevent the disruption of information flows. And we have worked 
with our suppliers and established milestone to track this 
progress.
    In summary, we have focused on five mission-critical 
processes--the incoming calls from our customers, our gas 
supply, gas storage and transmission operations, gas leak and 
emergency response capability and appliance service requests. 
In fact, this effort addresses all aspects of our business, 
including our customer information systems, our communications 
equipment that includes telephone, radio and emergency systems, 
the control equipment that we employ for gas handling, storage 
and meter reading, and of course interfacing with our 
suppliers, partners and financial institutions.
    I would like to report that we are on schedule, we fully 
expect to be year 2000--that we will be ready by the end of 
September on Y2K issues, and most of our systems already are. 
Those that are not currently ready are being modified or 
replaced.
    Even though we had expected everything to be ready by the 
end of September, we developed contingency plans also and we 
have been testing these plans since last December. As with 
Edison, we are working in coordination with other utilities and 
the Michigan State Police Emergency Management Division and 
other EMD departments throughout the State. Also involved with 
the AGA and its member utility companies in terms of the DOE 
coordination of member utilities.
    Probably nowhere have we sensed more a sense of partnership 
than with our major gas suppliers and transmission pipelines. 
The cooperation that we have had from them in this effort is 
dedicated to keeping adequate supplies of gas flowing in our 
system. The safety of our customers and our employees is our 
major concern and we think with this sense of partnership, we 
have even more ensured this capability.
    Our goal, of course, is to keep gas flowing to our 
customers and continue to dispatch technicians, even if we are 
to lose all commercially provided electricity, even if every 
piece of electronic control and measurement equipment in our 
transmission and distribution system, and even if our current 
telecommunications links were to be interrupted. Right now, we 
fully expect that we will be able to maintain critical services 
even in the event of the loss of those scenarios.
    Even in the unlikely event of this kind of a system 
failure, we are prepared to operate our systems manually. In 
fact, our major gas handling systems are designed to function 
in emergency situations without electricity or computer 
controls. In this AGA combined effort that we have doing, it 
has been reported that less than one in five Americans think 
that the Y2K problem will affect their natural gas service and 
we think that is a remarkable level of confidence.
    We would like to thank you again for this opportunity to be 
here and invite any questions.
    [The prepared statement of Mr. Lozano follows:]
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    Mr. Horn.  Well, we appreciate you coming.
    Let me just ask you a question before I forget it. We have 
been worried about what is happening in eastern Europe with the 
Russian natural gas supply and a lot of that is what keeps the 
industry and the homes warm in January in particular when this 
date situation is going to occur, and the problems they have 
found in east Europe is some microchips in the refineries' 
operation, in the ships' operation if they are bringing 
anything in to a refinery and in the pipelines. And I just 
wondered, your source is really domestic United States, I take 
it, in terms of natural gas, so you do not have any of those 
worries that the Russians might be having?
    Mr. Lozano.  Right. Most of our supplies are domestic, and 
even Michigan provides a source and we have over 40 billion 
cubic feet in our own storage reserves that fully can take us 
through a normal winter.
    Mr. Horn.  How long would that last if it was run down for 
one reason or the other?
    Mr. Lozano.  I am sorry?
    Mr. Horn.  How long would that supply you have in your 
inventory right now--how many days would that give everybody in 
Michigan a chance----
    Mr. Lozano.  That normally takes us through a normal 
winter.
    Mr. Horn.  A normal what?
    Mr. Lozano.  Winter season.
    Mr. Horn.  Normal winter. So you could last with that 
inventory over a month?
    Mr. Lozano.  An extended period of months, yes.
    Mr. Horn.  When does it run out?
    Mr. Lozano.  It depends really on weather conditions and 
the usage that customers are using, but it--40 billion cubic 
feet takes us through our normal heating season which begins in 
October and runs through April.
    Mr. Horn.  So you really could do it without further 
supplies between October and April?
    Mr. Lozano.  I think we could take it through a critical 
period. I cannot say that we are not getting additional 
supplies during that time period, there are purchases on the 
spot market.
    Mr. Horn.  Well, that is interesting to know, you have a 
very long span then, just based on what is in the pipeline and 
everything else.
    Mr. Lozano.  Yes.
    Mr. Horn.  OK. Well that thought had not really reached 
Washington, DC, so it is going to reach it now. We thank you 
for that.
    Mr. James Johnson is the vice president of computing and 
information technology for Wayne State University. Glad to have 
you here.
    Mr. Johnson.  Thank you very much, Mr. Chairman, for the 
opportunity to testify today. I would also like to thank you 
for holding these hearings. I think it is very critical that we 
have an awareness of the year 2000 problem through our 
institutions and through our society.
    Wayne State University has been dealing with the year 2000 
problem for approximately 4 years. Universities are not 
notorious for being early to the game, but in this case, we 
have been fairly early to the game.
    We have gone through a metamorphosis of probably three 
stages, I would say. The first stage was awareness that we had 
a computer problem with large administrative systems. The 
second awareness was the awareness that we have embedded 
systems throughout the University running the gamut from 
building heating systems and elevators to distributed 
laboratory equipment in the medical school. I think the third 
stage of awareness has been our concern about critical 
suppliers. I would like to just mention briefly where we are in 
each of those three areas.
    We have been at the administrative game with the large 
administrative systems for registering students, handling 
financial records and handling human resource records, for 
about 3 years. We did our last test over the July 4th weekend. 
We did encounter a problem, even though we had tested 
extensively when we put the system into production; we had one 
glitch that caused us to be unable to register students for 3 
days. The lesson there is you can test all you want, but until 
you put something in actual production, there is always 
something that is going to catch you somewhere.
    In embedded systems, we have identified about 10,000 pieces 
of laboratory equipment, about 2,000 of them have date-
sensitive chips in them. We have already tested and evaluated 
1,000 of them and we are finding about 1 percent of the 
embedded chip systems have year 2K problems that are going to 
have to be remediated or overlooked, as the case may be. We 
have 9,000 personal computers throughout the campus, 90 percent 
of them are compliant.
    One area we have been surprised in as we have looked at the 
core administrative system is that a lot of our departments 
have their own spreadsheets and systems as well. We have 
identified 3,300 departmental systems and of the 3,300, 56 
percent are non-compliant, and so we are in the process of 
remediating those at this time.
    Suppliers, we are in a little different position than the 
large automakers in the sense we do not have this same level of 
clout with suppliers. And I think that that concern runs from 
utility service--we have been tested last week in that arena, 
having on successive days lost power and the lost water. We 
call that pre-year 2000 planning.
    With the suppliers, we have had a lot of difficulty getting 
them to indicate whether they were compliant or not. In some 
instances where they have said they have been compliant, they 
have not when we have tested the system. In other cases where 
they said they would become compliant, they come back to the 
table and say ah, but you have to get a new version of our 
software at a cost of $100,000 or something like that. So that 
is our concern right now is in that area.
    Last, but not least, we do expect problems and therefore, 
we have a contingency plan in place. Our employees will not 
have vacations as with most IT employees. We have also involved 
public safety in the program as well.
    We have carried out a lot of the practices that have been 
recommended by the General Accounting Office in terms of 
getting compliance throughout the University. As you well know, 
universities are very decentralized with people having 
different sources of funds and they do not always respond well 
to orders. We have had a lot of success with report cards, with 
holding individual departments responsible rather than the IT 
area responsible, by having sponsors in every department, in 
every school, and by having training and workshop programs.
    One innovative program we have put in place is a student 
awareness program, which makes our students aware of how year 
2K may affect their lives and their interactions with the 
university. I do not know of other schools that have done that.
    What has been a large help to us has been publicity, 
through efforts such as yours, which has made the campus aware 
that there is a problem. And the other thing that has been very 
helpful, are tool kits that we used, particularly from the 
Department of Education. Which was surprising.
    In closing, I would like to say there is a bright side to 
this. I think we have really sharpened our skills in dealing 
with crisis and recovery. We have really improved and enhanced 
communication between areas of the University. We have been 
forced to put new systems and processes in place sooner rather 
than later, from which we will gain benefits in efficiency down 
the road.
    That concludes my comments, thank you.
    [The prepared statement of Mr. Johnson follows:]
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    Mr. Horn.  Well, we thank you for that. Let me just ask a 
couple of questions. On the 3,300 systems at the departmental 
level, are a lot of those faculty personal computers that can 
tie into the University in one way or the other?
    Mr. Johnson.  No, those are mainly the PCs, individual 
systems. What I was talking about was essentially business 
systems such as spreadsheets in departments. We have used Focus 
as a report generator, so there are a lot of Focus programs we 
have had problems with and so on down the line.
    Mr. Horn.  You have a very fine medical school, have you 
got a hospital that goes with that?
    Mr. Johnson.  No, the hospital is separate, that is the 
Detroit Medical Center, which has the affiliation with Wayne 
State University.
    Mr. Horn.  So you do not have a problem on worrying about 
an emergency room or anything.
    Mr. Johnson.  No, I have had that in a previous 
incarnation, but fortunately not in this one.
    Mr. Horn.  And you got into another incarnation fast, huh?
    Mr. Johnson.  That is right.
    Mr. Horn.  I can understand that.
    Mr. Johnson.  Actually, before we looked at like the 
operating room and we found 320 embedded devices in there.
    Mr. Horn.  Yeah. Well, my impression is, and we will hear 
from Mr. Potter, to see if my impression is right, is that 
there has been very good cooperation in terms of a national 
Website and all that in equipment. So Don Potter, Southeast 
Michigan Health and Hospital Council, you are going to bring 
all the knowledge to us in this area.
    Mr. Potter.  I will be glad to do so, Mr. Chairman, thanks 
very much for having me here this morning and thank you for 
coming to town to gather the information that hopefully will be 
helpful to you and your colleagues in Washington as we tackle 
this challenge together.
    Mr. Horn.  It will be.
    Mr. Potter.  My hope this morning is to provide a sense of 
what our hospitals and health systems in southeast Michigan 
have done, are doing and will do to combat the dreaded 
millennium bug to ensure that their operations are 
uninterrupted come New Years Eve 1999. I would also like to 
provide thanks for what you and your colleagues in the Congress 
have done to date to ease this effort and to provide 
recommendations on what you can and should consider for future 
assistance to our hospitals as they complete their efforts on 
this major issue.
    By way of background, you should know that the hospitals 
and health systems in southeast Michigan are a relatively 
consolidated group with more than 90 percent of our 55 
hospitals as part of broader health systems, so that 
centralized talents and capabilities have assisted in 
developing consistent programs, able to deliver consistent 
results with inherent economies in the Y2K issue.
    Our hospitals are all organized as not-for-profit entities 
with community service as their primary missions. And they have 
been involved in Y2K planning from about 1997 forward, is our 
information at this stage, and feel very confident that things 
have been moving along well.
    The focus of their activities of course has had to be 
internal on the information systems they have, their medical 
equipment and devices and their facilities, with the external 
focus on suppliers and device manufacturers, insurance 
companies, certainly the Medicare program at the Federal level 
has been a concern just in terms of basic cash-flow for our 
hospitals to make payroll, and we are confident that you have 
taken care of a number of those concerns at the Federal level.
    We have heard and had some meetings locally with our 
utilities, collective activity on the part of all of our 
hospitals and health systems through our hospital council, but 
we of course have police and fire and ambulance services and 
other external publics that are important as well.
    By way of contingency plans, please know that our hospitals 
and health systems are in the business of dealing with emergent 
conditions and the unexpected on a routine basis. They are used 
to mobilizing quickly in the face of natural disasters and 
human carnage. They routinely hold drills to ensure that such 
mobilizations are successful and that no stone is left unturned 
in appropriate preparation for disasters that seldom happen. 
There is no reason to believe they will not be ready for the 
year 2000, whether or not every medical device in their 
facilities is Y2K compliant. Further, patient safety is the 
highest priority for our hospitals and health systems and their 
ultimate contingency plan is to have caregivers at the bedside 
of all patients as they do 24 hours a day, 7 days a week, 365 
days a year.
    Should a medical device turn out to be non-compliant even 
after testing, it is very likely that the ramifications will be 
limited, because it is the hospital's people who take care of 
patients, not a hospital's medical devices.
    In many ways, it is fortuitous that the Y2K millennium bug 
dilemma is focused on New Years Eve 1999. This is a time of the 
year when the hospital census is the lowest and only the 
sickest patients remain in our hospitals. All of our hospitals 
and health systems have advised our office that they are 
examining a range of options, but all have told their 
employees, as others you have heard from this morning, not to 
plan vacations for this coming holiday season, as they have in 
the past. They are planning to have staff at the bedside of 
every patient where a medical device is in use and the manpower 
pool will be significant.
    Remaining concerns that our hospitals have in becoming Y2K 
compliant include a reliance on manufacturers of products and 
the role of the FDA in assisting them. Our hospitals have 
historically and continue to rely on manufacturers for 
representation of the fitness and safety of their products. The 
FDA's Y2K guidance to manufacturers emphasizes the 
responsibility of manufacturers for their products' Y2K 
compliance and safety. The FDA has also stressed that the 
technical know-how for determining the compliance status of 
devices rests with the manufacturers.
    A challenging question that hospitals face is whether to 
undertake independent testing of their medical devices and 
equipment. And this is a decision that must be made with the 
judgment of those at each hospital and health system, based on 
whether clear and complete information on the device's Y2K 
compliance status has been obtained from the manufacturer. 
External guidance from national resources suggests that the 
testing a provider can accomplish is superficial and may 
provide false assurances about compliance in a wholly different 
set of problems.
    Although a few hospitals nationally have identified 
discrepancies between what some manufacturers have reported in 
their own tests of medical equipment, the numbers of these 
occurrences is reportedly very small and none are mission 
critical.
    The FDA has taken a leadership role nationally in working 
with the manufacturers to encourage their provision of complete 
lists of individual products that are Y2K compliant. It is 
critical that the FDA continue to monitor the reporting of 
manufacturers about these devices and equipment because they 
have the expertise, resources and authority to ensure that 
their products are safe and reliable.
    At the same time, our national association is encouraging 
the FDA to play a rumor-control role, monitoring such arenas as 
the Internet and the media to make sure that information that 
circulates about the effects of Y2K on medical devices and 
equipment is accurate and corrected when it is wrong.
    Liability matters are another concern for our hospitals. A 
dubious distinction that has haunted our hospitals and health 
systems in southeast Michigan for a number of years is that 
they pay some of the highest, if not the highest, medical 
liability insurance premiums in the country. The history and 
the culture of Detroit as the home of the auto manufacturers 
has resulted in an extremely active plaintiffs' bar and a very 
high propensity of the public to bring suit to seek redress for 
any wrong they perceive to have occurred.
    Our hospitals are not able to ultimately face the Y2K 
challenge alone, they rely on medical device manufacturers as 
well as vendors and suppliers who have ultimate influence over 
the manner in which their services are provided to the people 
they serve.
    Our hospital Y2K compliance programs have resulted in 
thousands of letters being sent to manufacturers, vendors and 
suppliers to ascertain whether their services and equipment are 
Y2K compliant. Unless the hospitals are provided the necessary 
and truthful information from these external sources, they will 
be in a position of facing uncertain circumstances, which could 
result, unfortunately, in patient harm, though that is clearly 
not a high probability.
    Nonetheless, in spite of all that is being done, problems 
could still arise and our hospitals understand and appreciate 
the desire to avoid litigation. Resources diverted from serving 
patients are resources lost to the mission of our hospitals. 
That is of utmost importance. It is therefore important that 
our hospitals remain on a level playing field when defending 
personal injury cases. They must retain all of their current 
rights to take legal action against a vendor or a manufacturer 
whose product is involved in a claim. It is our hope that 
proposals entertained by Congress to address the liability 
matter relative to Y2K issues not create a disadvantage for our 
hospitals because it is essential that if a hospital is sued by 
a patient for a Y2K-related event, explicit language must be 
included in any congressional proposal to ensure that the 
hospital has the same recourse against a vendor or a 
manufacturer that it has today. H.R. 775 recently passed by the 
House does this and we encourage you to maintain that posture.
    Our third concern is the issue of costs. Our hospitals in 
southeast Michigan have expended close to $150 million thus far 
on Y2K compliance. It appears that nearly half of those 
expenditures have been devoted to upgraded equipment, which 
will result in enhanced efficiency on their behalf. 
Nonetheless, the unplanned nature of this expenditure at a time 
when our hospitals are facing unprecedented challenges from all 
who purchase and pay for health care is presenting great 
challenges.
    With respect to the role of Congress, we would like to 
thank you and your colleagues, Mr. Chairman, for the passage of 
the good samaritan legislation that has shielded from liability 
those who would work together, and we have competing hospitals 
and health systems working together locally on this in part as 
a result.
    As I have previously alluded, we would encourage you to 
provide the FDA the resources and impetus necessary to enforce 
its requests for information from medical device manufacturers 
and to serve a rumor-control function regarding those devices. 
Further, we support a recent proposal by John Koskinen, 
chairman of the President's Council on Y2K Conversion, that 
mentioned the possibility of creating a contingency fund which 
States, in the case of Medicaid programs for example, or 
hospitals, could draw moneys needed to continue operating in 
case of Y2K disruption.
    And finally, Medpac, the congressionally developed 
oversight body for the Medicare program, has included in its 
recommendations for fiscal year 2000 funding an additional one 
half of 1 percent payment increase to hospitals to cover their 
Y2K compliance costs. We would encourage you and your 
colleagues in Congress to support that as well.
    Thank you very much for the opportunity to be here. I think 
I can convey that our hospitals and health systems have been 
aggressively working on this problem for at least 2 years and 
are feeling relatively confident about their positions today.
    [The prepared statement of Mr. Potter follows:]
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    Mr. Horn. Now the hospitals have a Website, do they not, 
where they can check out equipment against it in terms of the 
manufacturer's name, the model number and all that, so they do 
not have to be repeating this all over America?
    Mr. Potter. This is being assisted by the FDA in their 
gathering of information from the manufacturers, but also by 
the American Hospital Association as well. My information is 
that about 70 percent of that equipment is easily accessible in 
terms of information right now.
    Mr. Horn. That is very helpful.
    Our last witness on this panel is Dan McDougall, who is the 
director, southeast Michigan information center for United Way.
    Mr. McDougall. Thank you for the opportunity to speak 
today, and especially today on the last panel, because I think 
I represent an industry that is very different than the 
industries you have heard from earlier today, and that of 
course being the human services sector that provides support 
services to people in our community.
    I thought what I would do today is talk to you not so much 
about how our individual United Way is dealing with Y2K 
internally, but how the human services sector in southeast 
Michigan is dealing with the Y2K issue and kind of what we see 
as some of the possible solutions, and I will try to summarize 
my report.
    Clearly, the non-profit sector does not have the dollars 
and the resources behind it that some of the corporations that 
we have heard from today do. Our first--at United Way, our 
first attempt at addressing the issue among the smaller non-
profits in our area was to send a letter out to non-profits in 
September of last year, kind of outlining the Y2K issue and 
asking folks to start looking at it in their individual 
organizations.
    In addition to that, we worked with George Surdu from Ford 
Motor Co., who was here earlier today, to develop a Y2K 
handbook for non-profit organizations. We have heard a lot of 
people talk about the Good Samaritan Act and I keep thinking of 
that when I talk about our relationship with Ford Motor Co., 
because it is only because of Ford Motor Co. that we have been 
able to address the Y2K issue in the non-profit sector locally 
here.
    Since September though, unfortunately what we have found is 
that non-profits just are not looking at the issue serious--the 
Y2K issue seriously. And part of this has to do with the 
culture of the small non-profit community. Non-profits are 
expected to operate with budgets far less than the for-profit 
sector, and very often the funding distribution to non-profit 
organizations stipulates that money cannot be spent on capital, 
things such as computer equipment. The result is that most non-
profits are operating with computer systems that are the 
castaways from the for-profit sector. So although we love it 
when the big corporations give us their old computers, what is 
happening now is that the corporations are giving us their 
computers that are going to crash in January. [Laughter.]
    We like to take things from everybody, but unfortunately, 
this one is not helping.
    So unfortunately, we have this cyclical nature of the non-
profit sector not getting the funding to deal with the issue 
and then also non-profits just being too burdened by the day-
to-day tasks that they have to really look at the Y2K issue. It 
is just not in our culture to deal with technology very much.
    Late last year, the Nonprofit Times and Gift in Kind 
International did a national survey of the non-profit sector in 
technology, with a little bit of focus on the Y2K issue and 
what they found is that non-profit organizations with an annual 
budget of less than $1 million are the most susceptible to 
issues with respect to Y2K and that is because most of these 
organizations are dealing with this loaned equipment or donated 
equipment and they are usually processors that are 386 level or 
below. Sixty-three percent of the non-profits in that survey 
said that they have absolutely no money budgeted for technology 
or technology training, no budget at all. So they are really 
depending on Board members who give their old computers and who 
come and teach classes to their staff.
    And then also, 40 percent of the respondents in that survey 
stated that their biggest roadblock to Y2K issues was money. 
And of course we always want to focus on the equipment aspect 
of the Y2K issue for non-profits but it is also training and 
technology planning. So we are really seeing that the problem 
is more than just hardware for us.
    In terms of our local picture, in the seven-county area 
that we call southeast Michigan for the purposes of United Way, 
there are a little over 6000 registered non-profits and those 
are of the size that they are a million budget or less, which 
is the focus that we have. If we were to say that one--if we 
looked at the trends in terms of the kinds of computers that 
smaller non-profits have, replacing one computer for each 
organization would cost a little over $1.3 million and that 
does not include training and updating of software and things 
like that.
    So in our mind, it is really an issue of focusing on a 
cadre or a mosaic of services and hardware issues that non-
profits have. And so what I would like to do is talk about a 
program that we have locally that we think works, but of course 
is not big enough.
    We work with a national project called Team TECH which is a 
collaborative arrangement between IBM, United Way and the Corp. 
for National Service. We use AmeriCorps volunteers at United 
Ways throughout the country to distribute IBM hardware and also 
provide technical training and technical planning. In Detroit, 
this has made a huge impact on the ability of small non-profits 
with one and two staff members to start looking at technology 
in new ways and to address the Y2K issue in their organization. 
And so one of the things that we are looking at is because of 
the Y2K issue, we have had organizations like Ford and IBM come 
to us and want to provide us technical assistance so that we 
can help non-profits do things better. And so for us, coming 
from a culture of not using technology very much, we are seeing 
this issue as an opportunity and we would like to say that we 
would like to take the Y2K lemon and try to make some 
technology lemonade out of it for non-profits.
    So what we are looking forward to is the results of this 
hearing helping us bring together some of the other good 
samaritans in our community to help the non-profit sector.
    I will conclude my testimony there.
    [The prepared statement of Mr. McDougall follows:]
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    Mr. Horn. Well, thank you very much. Let me ask the panel 
generally a couple of questions. Let us just say when did it 
start, some of you told me and I just want to get it on the 
record. Mr. Roosen, when did you start this Y2K adaptation and 
awareness and all the rest of it?
    Mr. Roosen. 1996.
    Mr. Horn. 1996? And then when, early in 1996 or later?
    Mr. Roosen. We started, as I recall, in our Information 
Technology Department somewhere in mid-1996.
    Mr. Horn. OK, we will say June then.
    Mr. Roosen. That would be fair.
    Mr. Horn. When did the gas company find time to start on 
it?
    Mr. Lozano. We started replacing our business systems back 
in 1995, but instituted our Y2K office corporate-wide in 1997.
    Mr. Horn. 1997, 1995.
    And then how about the Wayne State University, when did you 
start?
    Mr. Johnson. We started in 1996 with awareness and we were 
budgeted in fiscal year 1997 which starts October 1st.
    Mr. Horn. And then how about the Health and Hospital 
Council, when did they start on this, roughly?
    Mr. Potter. Speaking collectively on behalf of all the 
hospitals in the region, Mr. Chairman, we are seeing late 1997 
and early 1998 for the system-wide formation of steering 
committees to actually take on the matter.
    Mr. Horn. How about the non-profits with the United Way?
    Mr. McDougall. Well, it varies from non-profit to non-
profit. Our United Way started focusing on our internal systems 
in late 1996, but we just started working with assisting other 
non-profits in middle to late 1998.
    Mr. Horn. Now that you have a lot of experience in this 
area, we can start down the line again, what do you wish you 
had done that you did not do and what would be No. 1 for you 
next time around, if we ever had this experience? Mr. Roosen, 
what do you think?
    Mr. Roosen. I think as one of the earlier witnesses said, 
the inventorying your assets and knowing what you have makes it 
a lot easier to do something with them and I would say that 
would be the one large learning if you had to do it over again.
    Mr. Horn. How about you, Mr. Lozano?
    Mr. Lozano. With me is Tom Motsinger, director of 
technology and information systems, and we had a discussion 
about this and we just echo that sentiment, that inventorying--
--
    Mr. Horn. Well, you are the expert, Mr. Motsinger, what do 
you think?
    Mr. Motsinger. That is correct, the inventory has been our 
biggest issue. As was said earlier by the auto industry, the--
you are definitely surprised by the number, the count of pieces 
of equipment and how much is out there that you really do not 
know about.
    Mr. Horn. Does that mean that sort of in the future 
everybody is going to have a going, running inventory.
    Mr. Motsinger. Ongoing.
    Mr. Horn. Yeah, ongoing. How about it, Mr. Johnson, what 
has been Wayne State's experience with----
    Mr. Johnson. Well, first, I would replace probably another 
core system rather than remediate it. I would echo what 
everyone else said; the other factor I would mention is keeping 
up to date with software because when you bring in the 
compliant software, if you are not up to date, you have got to 
bring it up to date and then go from there. And the third I 
think would be a broader national awareness. It has been pretty 
late for people to discover the year 2K problem is a much 
broader problem than an information technology problem. And it 
has only been recently that we have really been able to get the 
attention of the skeptics that there is a problem and they need 
to do something about it.
    Mr. Horn. Yeah.
    Mr. Johnson. One thing fueling that was obviously some 
Federal agencies saying you have to assure compliance for 
funding.
    Mr. Horn. We urged the President to do just that in 1997 
and he did give the speech to the National Academy of Sciences 
in the summer of 1998, I believe, and of course they were the 
last people that needed to be educated, they already knew about 
it. And I think there are three speeches that have been given, 
so the bully pulpit has not been used very much, as Theodore 
Roosevelt called the Presidency, and it is too bad. But you are 
right, general awareness.
    And what would you say on the issue that you would rather 
do first next time and you did not do it for one reason or the 
other?
    Mr. Potter. I think our inventory has turned out to be 
relatively solid, thank goodness, in our hospitals and health 
systems. The big issue that jumped up was really the cost 
issue. Health care reform did not die in Congress in 1995, it 
switched its colors and our hospitals here in Detroit have had 
5,000 layoffs in the last year just to live with the dollars 
they have. So to factor $150 million out of their patient care 
dollars has not been an easy proposition, to be spending money 
on upgrading information systems when they could be taking care 
of patients.
    So probably the surprise, at least in the short run, was 
what it did cost ultimately for them to update their systems 
and how to accommodate that in the short run.
    Mr. Horn. That is a very interesting point. In terms of 
Medicare, is there sort of an administrative base that is 
recognized as part of your cost structure?
    Mr. Potter. Yes, we are under Federal price controls and 
Medicare pays hospitals a given amount to take care of a 
patient of a given diagnosis and that amount is updated on an 
annual basis. In my testimony, I alluded that there is this 
group called MedPac that Congress appoints to make 
recommendations through the appropriations process to determine 
what should be the annual change, if any, in prices. 
Unfortunately, it is going down rather than up right now, by 
virtue of the Balanced Budget Act of 1997.
    Mr. Horn. Yeah. Well, it is interesting because you have 
had an extra expense you did not know several years before, you 
would have, because very few people did. And has there been an 
adjustment in that base?
    Mr. Potter. The recommendation has been made, but it is not 
clear to me that the appropriations process has accommodated it 
this year. There is a lot of reluctance in Congress, as you 
well know, to tamper with anything that came out of the 
Balanced Budget Act, but the Balanced Budget Act, if you may 
recall, cut Federal spending by $122 billion over 5 years and 
$116 billion of that came from Medicare, which is only 13 
percent of the budget. And 95 percent of that came from health 
care service providers, not in cuts of eligibility or benefits 
to Medicare enrollees. So it is the providers who have got the 
problem.
    Mr. Horn. You have made a good point and I will ask the 
staff to follow it up and see what is happening with the 
Appropriations Committees on this.
    Mr. Potter. I appreciate that.
    Mr. Horn. This point has not really been raised before and 
so I think that is a real contribution.
    Now let me ask those of you that represent various 
utilities, you send out sometimes monthly billings to large 
clientele. To what extent have you used some of that sheet that 
tells them what they have got to pay to educate them on the Y2K 
situation and to sort of reassure the citizenry that you are on 
top of these things, because there is a lot, as I have said 
numerous times, a lot of scare-mongers out there for their own 
delights and their own moneymaking, who will try to scare a lot 
of your customers that gee, we are not doing this, we are not 
doing that. You have got a lot of tort lawyers also that are 
sitting there salivating. And I was just curious, to what 
extent have you tried to educate your clientele, our fellow 
citizens, with this information. Mr. Roosen.
    Mr. Roosen. Well, from Detroit Edison's standpoint, there 
are really three approaches. You are right, the bill stuffer is 
one approach, but as we all know, when we are paying our bills, 
a lot of times we throw that stuff away. I know I have that 
habit.
    We have used the bill stuffer and we have done it, I 
believe, three times since last summer. Annually, we send out 
notices to our customers, we have a lot of storms in the 
spring, starting in about March, so we took advantage of the 
early storm tips to also put in a Y2K twist.
    And then we have 18 offices and we have some advice to 
customers on preparation. We have booklets that we have made 
available to them.
    And then third, we have a speakers corps and any time any--
whether it be a garden group or a church or whatever, any time 
that they ask us, we volunteer a speaker to go out and do 
something on Y2K.
    Mr. Horn. How about it, Mr. Lozano, what has been the 
approach?
    Mr. Lozano. Mr. Chairman, we have similar efforts as does 
Edison. We have had one bill stuffer that has gone out to 
customers and most of ours has been more responsive to the 
community groups and the individuals that call either through 
our public affairs offices or through the Y2K office, 
responding to individual requests for information or just 
verbal information or speaking before groups. As we are located 
throughout the State, we have been involved in multiple 
presentations throughout the entire State and usually in a 
panel type of situation involving the communication industry 
and local municipalities.
    Mr. Horn. I do not think--let us see, did the rest of you 
really have that kind of communication going on? Well, 
hospitals send bills too, but I do not know if they want it 
read on anything but the bottom line when the poor patient gets 
it. Was that not the reason we always get rolled out of a 
hospital in a wheelchair, because they show you the bill on the 
way out? [Laughter.]
    Mr. Potter. We really do have a problem, Mr. Chairman, on 
this one. I learned it just a couple of weeks ago when my 73 
year old mother-in-law told me there are two places she was not 
going to be on New Year's Eve, one was on an airplane and the 
other was in a hospital. And I asked ``Where does this come 
from that it is part of the public thinking?'' Whether she 
watches day time television or what, she at the same time asked 
me if I would like to go halves with her on a generator after 
she had purchased three cases of canned goods to put in her 
basement.
    So we have got a real problem with the general public that 
needs to be dealt with and it is something that we are kind of 
looking at collectively in our hospital council to see what we 
can do as an industry.
    Mr. Horn. Did you ever find out where she got her 
information?
    Mr. Potter. It turns out there is a--she lives in west 
Michigan and there are some very high profile kooks out there 
stirring up the pot and holding meetings and individuals are 
going, almost like the old time revivals. And there is this 
cult that has developed, of which I am afraid she is on the 
fringe, and Lord knows what it is going to take, but she wants 
to know everything I know about Y2K. And I will even give her a 
copy of my testimony today and see if that will help, but it 
has not thus far.
    Mr. Horn. When we were in Topeka the other day holding a 
hearing our staff director happened to pick up the Kansas City 
Star and Ann Landers had a column in there on the scams that 
are being worked on senior citizens with the Y2K being it. They 
phone up the senior citizen and say we are the bank and we need 
to move your money from your account to this bond account and 
all. And you know, utter baloney. But people are going to be 
hurting senior citizens just like they do on other scams. So we 
need to help head that off, and the Attorney General of each 
State needs to really be leading that front.
    Mr. Willemssen, why do you not sit in one of the 
Commissioners chairs here, it is a cushy one, better 
accommodations than you have had in most hearing rooms.
    What do you make of all this and what should we discuss to 
get it on the record?
    We are going to have to wire you for sound wherever you go.
    Mr. Willemssen. Thanks, Mr. Chairman. A couple of thoughts 
that I thought I would raise to you that may be a little bit 
unique that we had not talked about at the other field 
hearings. One having Wayne State here, you may want to inquire 
about the extent of coordination that they have had with the 
Department of Education on their data exchanges on student 
loans and student grants.
    And also with a representative from the hospital 
association, I think it is useful to point out that beyond the 
Website that the Food and Drug Administration has, they also 
plan to begin some independent efforts on a sample of critical 
care life support biomedical equipment items, to independently 
check behind the compliance certifications of the manufacturers 
and see what evidence is behind that, for those critical care 
and life support items.
    So I thought I would just raise those couple of points.
    Mr. Horn. Well, those are excellent questions. Let us deal 
with the student loan one and student grant, the Pell grants. 
We are the first Congress that ever got them paid to the 
highest mark you possibly could have in Pell grants. So I am 
curious what the Department of Education is doing in relation 
to Wayne State University.
    Mr. Johnson. They have an awareness program and they are 
one of our suppliers that assures compliance with the year 
2000. We have not tested it yet.
    Mr. Horn. Now they have intermediaries, do they not, that 
do a lot of the----
    Mr. Johnson. Yes.
    Mr. Horn. It is not directly Department of Education.
    Mr. Johnson. It is not always done directly, the transfers, 
that is right.
    Mr. Horn. And it is the same as Medicare in that sense, 
they have intermediaries between the hospitals and Medicare 
providers.
    Mr. Johnson. Right. It is a very dispersed problem.
    Mr. Horn. Yeah. So what has been your experience then on 
this situation with grants and loans, I did not quite hear 
that.
    Mr. Johnson. I am not aware of a problem of non-compliance. 
I will not confess to being infinitely wise in this area.
    Mr. Horn. Yeah, if you would ask your director of financial 
aid, it might be interesting and we will put it in the record 
at this point, if you want to write us a letter as to what the 
experience is.
    Mr. Johnson. OK, I will do that.
    Mr. Horn. That would be very helpful.
    [The information referred to follows:]
    [GRAPHIC] [TIFF OMITTED] T0939.337
    
    Mr. Horn. OK, Mr. Potter, on the Medicare/Medicaid 
intermediary, is there a problem there at all with the 
hospitals and the interactions on the computing with the State 
government and the Federal Government and its intermediaries?
    Mr. Potter. We have just solved another problem because we 
have the third intermediary----
    Mr. Horn. You want to move the mic a little closer, I 
cannot----
    Mr. Potter. I am sorry. Our hospitals in Michigan are 
dealing with the third Medicare intermediary that has been used 
for the last 5 years. So we have just worked through another 
change, it is now in Wisconsin, but the technology of the day 
has made life a lot easier and although Medicare does not pay 
enough, the dollars are flowing and there are no major concerns 
at this point.
    Mr. Horn. How about on the Food and Drug aspect of 
equipment that Mr. Willemssen mentioned?
    Mr. Potter. I appreciated that insight, that is new news to 
me and it is good news, because we do have some manufacturers 
that have been reluctant to even respond to mailings, and if 
they have, they have done so in such a manner so as to 
guarantee absolutely nothing. And the FDA's control over these 
device manufacturers is an extremely important tool to our 
hospitals because as I said in my testimony, they do not have 
the expertise to go into this machinery and remediate it and if 
you really do get to the point where you cannot do that and no 
one is responsive, then once again, you have to go buy a new 
piece of equipment, perhaps unnecessarily. So I am very glad to 
hear that.
    Mr. Horn. Yes, it is a very important point and between GAO 
and our staff, hopefully we can get that sorted out with FDA as 
to what degree is this a problem, because I think that is an 
excellent point that Mr. Willemssen has made.
    Any other thoughts, Joel?
    Mr. Willemssen. I think you summed it up very well, Mr. 
Chairman.
    Mr. Horn. Well, I want to thank each one of you. Do you 
have any comments you might want to make based on your 
colleagues' testimony?
    [No response.]
    Mr. Horn. It does not look like you do, so I want to thank 
you very much. We really appreciate it.
    And I thank all that have been involved in preparing this. 
On our own side, we have got J. Russell George, our staff 
director and chief counsel is here. He is holding up that 
Corinthian column there that I am looking at. And Matthew Ryan 
is to my left and your right. He is the senior policy director 
involved in this type of hearing. And Grant Newman, our 
faithful clerk, who has probably broken his back lugging stuff 
around this country. Where are you, Grant? There you are in the 
back, the well-dressed young man. I do not think our interns 
are here, but they helped, and that is Lauren Lufton and John 
Phillips, Justin Schleuter, they are back at the office.
    And then for Wayne County, we particularly appreciate the 
cooperation we have had from your Assistant County Executive, 
Suzanne Hall, she was an excellent witness a few weeks ago in 
Washington; and Sue Hanson, deputy director, Y2K Program 
Office; Al Montgomery, clerk of the Commissioners; and Mr. 
Cavanaugh, county commissioner, and--Mr. Chrisopher Cavanaugh. 
We really appreciate them, and we appreciate, as we said 
earlier, George Cushingberry, Jr., county commissioner, and his 
help.
    And then we had also your Wayne County manager of 
information technology for the Commission, and that is Orlando 
Gloster, and we appreciate all that he has done.
    And last but not least, because he has got the big workout 
in one of these hearings, is Bill Warren, the court reporter 
that took all this down. I still do not understand how they can 
do it that fast and listen to the next word, but that is OK, 
the transcript comes out fine and we appreciate it.
    So with that, this committee, which began in Topeka and was 
also in Naperville, IL outside of Chicago in recess, and it was 
recessed to Detroit and it is over now and so we will adjourn 
this meeting. Thank you.
    [Whereupon, at 12:14 p.m., the subcommittee was adjourned.]

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