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




       STATE OF THE STATES: WILL Y2K DISRUPT ESSENTIAL SERVICES?

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

                             JOINT HEARING

                               before the

                 SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,
                      INFORMATION, AND TECHNOLOGY

                                 of the

                     COMMITTEE ON GOVERNMENT REFORM

                                and the

                       SUBCOMMITTEE ON TECHNOLOGY

                                 of the

                          COMMITTEE ON SCIENCE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             FIRST SESSION

                               __________

                            OCTOBER 6, 1999

                               __________

                     Committee on Government Reform

                           Serial No. 106-56

                          Committee on Science

                           Serial No. 106-56

                               __________

   Printed for the use of the Committee on Government Reform and the 
                          Committee on Science


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

                                 ______

                    U.S. GOVERNMENT PRINTING OFFICE
61-232 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-HAGE, 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
    Bonnie Heald, Communications Director/Professional Staff Member
                          Chip Ahlswede, Clerk
                    Trey Henderson, Minority Counsel

                          COMMITTEE ON SCIENCE

       HON. F. JAMES SENSENBRENNER, Jr., (R-Wisconsin), Chairman
SHERWOOD L. BOEHLERT, New York       RALPH M. HALL, Texas, RMM**
LAMAR SMITH, Texas                   BART GORDON, Tennessee
CONSTANCE A. MORELLA, Maryland       JERRY F. COSTELLO, Illinois
CURT WELDON, Pennsylvania            JAMES A. BARCIA, Michigan
DANA ROHRABACHER, California         EDDIE BERNICE JOHNSON, Texas
JOE BARTON, Texas                    LYNN C. WOOLSEY, California
KEN CALVERT, California              LYNN N. RIVERS, Michigan
NICK SMITH, Michigan                 ZOE LOFGREN, California
ROSCOE G. BARTLETT, Maryland         MICHAEL F. DOYLE, Pennsylvania
VERNON J. EHLERS, Michigan*          SHEILA JACKSON-LEE, Texas
DAVE WELDON, Florida                 DEBBIE STABENOW, Michigan
GIL GUTKNECHT, Minnesota             BOB ETHERIDGE, North Carolina
THOMAS W. EWING, Illinois            NICK LAMPSON, Texas
CHRIS CANNON, Utah                   JOHN B. LARSON, Connecticut
KEVIN BRADY, Texas                   MARK UDALL, Colorado
MERRILL COOK, Utah                   DAVID WU, Oregon
GEORGE R. NETHERCUTT, Jr.,           ANTHONY D. WEINER, New York
    Washington                       MICHAEL E. CAPUANO, Massachusetts
FRANK D. LUCAS, Oklahoma             BRIAN BAIRD, Washington
MARK GREEN, Wisconsin                JOSEPH M. HOEFFEL, Pennsylvania
STEVEN T. KUYKENDALL, California     DENNIS MOORE, Kansas
GARY G. MILLER, California           VACANCY
JUDY BIGGERT, Illinois
MARSHALL ``MARK'' SANFORD, South 
    Carolina
JACK METCALF, Washington


                       Subcommittee on Technology

               CONSTANCE A. MORELLA, Maryland, Chairwoman
CURT WELDON, Pennsylvania            JAMES A. BARCIA, Michigan**
ROSCOE G. BARTLETT, Maryland         LYNN N. RIVERS, Michigan
GIL GUTKNECHT, Minnesota*            DEBBIE STABENOW, Michigan
THOMAS W. EWING, Illinois            MARK UDALL, Colorado
CHRIS CANNON, Utah                   DAVID WU, Oregon
KEVIN BRADY, Texas                   ANTHONY D. WEINER, New York
MERRILL COOK, Utah                   MICHAEL E. CAPUANO, Massachusetts
MARK GREEN, Wisconsin                BART GORDON, Tennessee
STEVEN T. KUYKENDALL, California     BRIAN BAIRD, Washington
GARY G. MILLER, California

                               Ex Officio

F. JAMES SENSENBRENNER, Jr.,         RALPH M. HALL, Texas+
    Wisconsin+




                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on October 6, 1999..................................     1
Statement of:
    Benzen, Mike, president, National Association of State 
      Information Resource Executives............................   129
    Callahan, John, Chief Information Officer, Department of 
      Health and Human Services..................................    94
    Hugler, Edward, Deputy Assistant Secretary for Information 
      Technology and Acting Deputy Assistant Secretary for 
      Administration and Management, U.S. Department of Labor....   118
    Spotila, John, Administrator, Office of Information and 
      Regulatory Affairs, Office of Management and Budget........    85
    Watkins, Shirley R., Under Secretary for Food, Nutrition, and 
      Consumer Services, U.S. Department of Agriculture..........   106
    Willemssen, Joel, Director, Civil Agencies Information 
      Systems, U.S. General Accounting Office....................    10
Letters, statements, etc., submitted for the record by:
    Benzen, Mike, president, National Association of State 
      Information Resource Executives, prepared statement of.....   130
    Biggert, Hon. Judy, a Representative in Congress from the 
      State of Illinois, prepared statement of...................   193
    Callahan, John, Chief Information Officer, Department of 
      Health and Human Services:
        Inserts for the record........................... 177, 183, 187
        Prepared statement of....................................    97
    Horn, Hon. Stephen, a Representative in Congress from the 
      State of California, prepared statement of.................     3
    Hugler, Edward, Deputy Assistant Secretary for Information 
      Technology and Acting Deputy Assistant Secretary for 
      Administration and Management, U.S. Department of Labor, 
      prepared statement of......................................   120
    Morella, Hon. Constance A., a Representative in Congress from 
      the State of Maryland, prepared statement of...............     6
    Spotila, John, Administrator, Office of Information and 
      Regulatory Affairs, Office of Management and Budget, 
      prepared statement of......................................    88
    Watkins, Shirley R., Under Secretary for Food, Nutrition, and 
      Consumer Services, U.S. Department of Agriculture:
        Nutrition program information systems chart..............   108
        Prepared statement of....................................   110
    Willemssen, Joel, Director, Civil Agencies Information 
      Systems, U.S. General Accounting Office, prepared statement 
      of.........................................................    12

 
       STATE OF THE STATES: WILL Y2K DISRUPT ESSENTIAL SERVICES?

                              ----------                              


                       WEDNESDAY, OCTOBER 6, 1999

        House of Representatives, Subcommittee on 
            Government Management, Information, and 
            Technology, Committee on Government Reform, 
            joint with the Subcommittee on Technology, 
            Committee on Science,
                                                    Washington, DC.
    The subcommittees met, pursuant to notice, at 10 a.m., in 
room 2154, Rayburn House Office Building, Hon. Stephen Horn 
(chairman of the Subcommittee on Government Management, 
Information, and Technology) presiding.
    Present from the Subcommittee on Government Management, 
Information, and Technology: Representatives Horn, Biggert, 
Ose, and Turner.
    Present from the Subcommittee on Technology: 
Representatives Morella, Bartlett, Baird, Gutknecht, Wu, 
Barcia, and
    Staff present from the Subcommittee on Government 
Management, Information, and Technology: J. Russell George, 
staff director and chief counsel; Matt Ryan, senior policy 
director; Bonnie Heald, communications director and 
professional staff member; Chip Ahlswede, clerk; P.J. Caceres 
and Deborah Oppenheim, interns; Trey Henderson, minority 
counsel; and Jean Gosa, minority staff assistant.
    Staff present from the Subcommittee on Technology: Jeff 
Grove, staff director; Ben Wu, counsel; Joe Sullivan, staff 
assistant; Michael Quear, professional staff member; and Marty 
Ralston, staff assistant.
    Mr. Horn. The joint hearing of the House Subcommittee on 
Government Management, Information, and Technology, and the 
House Subcommittee on Technology will come to order.
    These programs, which include Medicaid, temporary 
assistance for needy families, food stamps, child support 
enforcement, serve millions of Americans each day.
    This spring, the President's Office of Management and 
Budget identified 43 ``high impact,'' or essential Federal 
programs. Of these 43 programs, 10 are administered by State 
and local governments.
    In August, we found that only seven of these will be 
completely ready for the new year until December. That is 
simply not acceptable. Millions of American lives will be 
harshly disrupted if these vital programs fail. It is time to 
start naming names. We must know now whether States such as 
Alabama, Oklahoma, and California, among others, are ready. 
Will they be able to provide essential services without a 
severe degradation of services because of potential Y2K 
failures?
    The Office of Management and Budget has charged three 
Federal departments with ensuring that these State-run programs 
are ready. Representatives from these departments are with us 
today.
    The Department of Health and Human Services is responsible 
for six State-run programs, including Medicaid, the health care 
safety net for 33 million of the Nation's most vulnerable 
citizens; its children, its elderly, and its poor. This 
department is also responsible for the Nation's welfare 
program, called temporary assistance for needy families. The 
$16.5 billion program shores up families who have fallen on 
hard times through the loss of a job or an illness and helps 
them return to the work force.
    The Department of Health and Human Services supplements 
these two major programs with its programs for child care, 
child support enforcement, child welfare, and low-income home 
energy assistance. Will States be able to deliver these 
services after the clock ticks past midnight on January 1st? 
That is what we will be asking our panel.
    The Department of Agriculture is responsible for three 
State-run food programs--child nutrition, food stamps, and 
special supplemental nutrition program for women, infants, and 
children [WIC]. In the year 2000, the child nutrition program 
will serve more than 27 million lunches a day.
    Could a State's year 2000 failures result in some of these 
lunches not being served to the school children who need them? 
Could such failures prevent families from obtaining the food 
stamps they dependent on? Or deprive nourishment from the women 
and their very young or unborn children? We need to know the 
answers to those questions.
    The Department of Labor is responsible for only one State-
run program, unemployment insurance. In the year 2000, an 
estimated 8 million people for one reason or another will lose 
their jobs and rely on this program to supplement their 
incomes. Could year 2000 failures degrade States' abilities to 
pay this benefit?
    Together, these State-run programs affect millions of 
people and cost the Federal Government in excess of $125 
billion a year. Today, we want to provide an accurate portrayal 
of the States' year 2000 readiness. In just 86 days we will 
witness the dawn of the new millennium. The American public 
deserves to know which States are ready and which, if any, are 
at risk of failure.
    I welcome today the panel of expert witnesses, and look 
forward to their testimony.
    [The prepared statement of Hon. Stephen Horn follows:]
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    Mr. Horn. I will now turn to my colleague, the co-chairman 
for this hearing, Mrs. Morella, the gentlewoman from Maryland, 
the Chair of the House Subcommittee on Technology.
    Mrs. Morella.
    Mrs. Morella. Thank you, Mr. Chairman. Mr. Chairman, in the 
past 3\1/2\ years that our two subcommittees have been engaged 
in the review of the year 2000 computer problem, we have pushed 
for a greater Federal Y2K focus in correcting the millennium 
bug. Since we first began our oversight hearings, we have seen 
vast progress from our Federal agencies, in most instances. Y2K 
was finally mandated as an agency-wide priority and management 
leadership was required where previously there was none.
    While we have been comforted by the actions of the great 
majority of Federal agencies, unfortunately, just as you said, 
with 86 days remaining before the January 1, 2000 deadline, 
there is still much to be concerned about. For example, as of 
this past August, only 7 of the 43 essential Federal programs, 
or a mere 16 percent, are Y2K ready in a timely manner. This is 
troublesome because these 43 essential programs, referred to by 
the Office of Management and Budget as ``high impact 
programs,'' collectively affect the lives of virtually every 
single American.
    It appears as if the main reason for such a low level of 
Y2K readiness is that key supply chain partners, including 
State and local governments and the private sector, are simply 
not yet ready. And especially troubling is the fact that of the 
43 ``high impact'' Federal programs, not one of the 10 
essential programs administered by the States was Y2K 
completed. These include such important Federal programs as 
food stamps, food safety inspections, child nutrition, child 
support enforcement, temporary assistance for needy families, 
child welfare, and Medicaid.
    No agency can take pride in their Y2K efforts, however 
remarkable their progress over the past 3\1/2\ years, if the 
delivery of one of their essential Federal programs is 
impaired. Even for those Federal agencies that have received a 
high Y2K grade by Congress, it is a hollow victory if they do 
not have effective interoperability with key program partners 
such as the 50 States.
    Today we are going to hear from representatives of the 
three Federal agencies that oversee the 10 State-administered 
programs. I am looking forward to hearing their testimony, as 
well as the General Accounting Office, and the National 
Association of State Information Resources Executives. I look 
forward to hearing from our distinguished panel, a number who 
have been here before, certainly GAO. I was on a program, Mr. 
Chairman, with Mr. Hugler just the other evening on this Y2K, 
and Labor Department has an excellent booklet that he will 
probably refer to.
    We want to hear from our distinguished panelists so that we 
can move expeditiously to confidently reassure the American 
people that our Federal Government will not be subject to 
catastrophic Y2K glitches and will be able to proceed with all 
essential programs, especially the 10 that are State-
administered. Thank you, Mr. Chairman.
    [The prepared statement of Hon. Constance A. Morella 
follows:]
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    Mr. Horn. Thank you.
    I now yield for an opening statement to the gentleman from 
Texas, Mr. Turner, a distinguished member of the Subcommittee 
on Government Management, Information, and Technology.
    Mr. Turner.
    Mr. Turner. Thank you, Mr. Chairman. I want to commend you 
and Mrs. Morella for our continuing joint efforts of the 
Government Management, Information, and Technology Subcommittee 
and the Technology Subcommittee of the Science Committee in 
trying to continue to beat the drum to encourage all of our 
Federal agencies and their partners to be Y2K ready.
    As was noted, many of our essential or so-called ``high 
impact'' Federal programs rely on partners, both in the public 
sector through State and local governments and in the private 
sector. And not having direct control over them, we can only 
continue to urge them to join with our Federal agencies in 
continuing to be prepared for January 1st.
    It is interesting, as Mrs. Morella noted, that as of August 
13th, there were only 7 of the 43 programs deemed by OMB to be 
``high impact'' that were ready for January 1st. Of course, the 
chairman's latest Y2K report card which was issued earlier this 
month indicated that the status of the programs in question had 
not changed. So the failure to become compliant is due in large 
part to the fact that there are many public and private sector 
partners who must also be prepared for Y2K.
    Our hearing today is simply to focus upon the progress that 
the States have made in becoming Y2K compliant, and to hear 
from our Federal agencies regarding that partnership and that 
joint effort. It is good to see all of our witnesses here 
today, and we thank you for your participation.
    Mr. Horn. I now yield time for an opening statement to Dr. 
Roscoe Bartlett, distinguished member from Maryland, and a 
member of the Science Subcommittee on Technology.
    Dr. Bartlett.
    Mr. Bartlett. Thank you very much. The question that I get 
asked most by constituents is what is going to happen in the 
Y2K. This Sunday I am speaking at a church. They want to know 
what they ought to be doing in preparation for Y2K. My usual 
response to all these people is that I just do not have the 
foggiest idea what is going to happen; I hear a lot of 
different things.
    So I am here to be edified today. And I hope I will be able 
to speak with more certainty when I am asked that question in 
the future. Thank you very much.
    Mr. Horn. Thank you.
    I now will yield time for an opening statement to Mr. Baird 
of the State of Washington. Welcome.
    Mr. Baird. Thank you, Dr. Horn. I hope at some point you 
will address the question of whether our voting machines in the 
House are Y2K compatible on the off chance that we stay here 
that long this session. But I hope that will not be necessary.
    Mr. Horn. Thank you. That is under the jurisdiction of Mr. 
Thomas and the Committee on House Administration. [Laughter.]
    We all know that we have got little red cards, little green 
cards, and little orange cards. So, if we can write, we can 
vote. But it is a good thought.
    As most of you know who have testified here, we have a 
routine we go through, which is, No. 1, when we introduce you, 
and we do in the order in which you are on the agenda, your 
full testimony is immediately put in the hearing record, and 
then we would sort of like you to summarize it, hopefully in 
about 5 minutes, and that will leave us more time for a dialog 
of you among the panel as well as those here on the rostrum and 
the panel. And then since we are an investigating subcommittee 
of the House Committee on Government Reform, we do swear in all 
witnesses.
    So if you will stand and raise your right hands, and your 
subordinates that you brought with you that might give you 
something, please have them stand. So we have eight backing up 
the witnesses of six. That is almost like the Pentagon.
    Do you swear the testimony you are about to give this 
subcommittee is the truth, the whole truth, nothing but the 
truth?
    [Witnesses respond in the affirmative.]
    Mr. Horn. I see those lips moving. The clerk will note they 
have all taken the oath.
    We will start with the person we usually start with on our 
hearings of the Government Management, Information, and 
Technology Subcommittee and that is Joel Willemssen, the 
Director, Civil Agencies Information Systems, U.S. General 
Accounting Office, part of the legislative branch and people we 
depend on in terms of the marvelous job they do not simply in 
financial audits, but in programmatic audits. Thank you, Mr. 
Willemssen, for coming.

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

    Mr. Willemssen. Thank you, Mr. Chairman, Chairwoman 
Morella, members of the subcommittees. Thank you for inviting 
GAO to testify today. As requested, I will briefly summarize 
our statement.
    Of the 43 ``high impact'' governmentwide Y2K priorities 
identified by OMB, 10 are State-administered Federal programs. 
OMB reported data on the systems supporting these programs show 
that numerous States are not planning to be ready until the 
last quarter of 1999. However, because the information in the 
OMB report was not verified, even some of that information may 
not be accurate or up to date. For example, in five cases 
programs listed as compliant by OMB in its June report now have 
estimated compliance dates of October 1999, or later, in the 
report issued in September.
    In addition, the reported compliance dates for some States 
are problematic because schedule delays or unexpected issues 
could still arise. Reported schedule delays have now occurred 
in 8 of the 10 programs since OMB's report in June. For 
example, OMB's June report showed that three States had 
estimated compliance in the last quarter of 1999 for food 
stamps, while the most recent OMB report indicates that 7 
States now have estimated last quarter compliance dates.
    The three Federal departments responsible for oversight of 
these 10 State-administered programs have taken different 
approaches in assessing Y2K readiness of the States. For 
example, Agriculture's approach includes actions such as having 
its regional offices obtain State certifications of compliance. 
At HHS, contractors have performed onsite reviews at all 
States. In another approach, the Department of Labor is 
requiring States to submit independent verification and 
validation reports after declaring their systems compliant.
    These Federal approaches yielded very beneficial 
information to helping to target the needed actions by States, 
while also pointing out some of the remaining risks. For 
example, USDA is collecting information from States on Y2K 
readiness and business continuity and contingency plans. 
However, much work remains. For example, last month USDA 
officials told us that only two States had submitted suitable 
contingency plans.
    At HCFA, a contractor has now completed a second round of 
State visits. Despite this effort, several States are still 
considered to be at high risk within the Medicaid area. 
Specifically, four State eligibility systems were still 
considered high risk, while five State systems responsible for 
Medicaid payments were high risk. These risk ratings also 
indicate that the information in OMB's report may have 
overstated the compliance status of some of the States. For 
examples, systems cited as compliant by two States were 
considered to be at high risk by HCFA.
    For the other five HHS State-administered programs, HHS' 
Administration for Children and Families [ACF] has modelled its 
assessment approach after that of HCFA's. However, because ACF 
started later than HCFA, it is not as far along. Specifically, 
while an ACF contractor has completed onsite reviews of all 
States, only 19 draft reports have been provided to those 
States.
    At the Department of Labor, its contractor has reviewed 
States' independent verification and validation reports of 
unemployment insurance systems and rated them from low to high 
probability of Y2K compliance. The contractor's review found 20 
States' benefit systems to have a low probability of 
compliance. Given the results of those reviews, the information 
in last month's OMB report appears to overstate the readiness 
of States because, of the 39 State unemployment insurance 
programs cited in OMB's report as compliant, Labor's contractor 
had rated 15 States as having low probability of compliance.
    That completes a summary of my statement. After the panel 
is finished, I would be pleased to address any questions. Thank 
you.
    [The prepared statement of Mr. Willemssen follows:]
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    Mr. Horn. Thank you very much for that most helpful 
statement. I am sure we will have a lot of questions, because 
we know your team has been working hard at this.
    Our next witness is Mr. John Spotila, the Administrator of 
the Office of Information and Regulatory Affairs, at the 
President's Office of Management and Budget. Pleased to have 
you here.

STATEMENT OF JOHN SPOTILA, ADMINISTRATOR, OFFICE OF INFORMATION 
    AND REGULATORY AFFAIRS, OFFICE OF MANAGEMENT AND BUDGET

    Mr. Spotila. Good morning, Chairman Horn, Chairwoman 
Morella, and members of the subcommittees. I am pleased to 
appear before you to discuss the Federal Government's progress 
on the year 2000 problem. I want to begin by thanking you and 
all of the members of the subcommittees for your continuing 
interest in the Y2K problem and its potential impact on our 
country. It is doubtful that we would be as well prepared for 
the year 2000 problem as we are if it were not for your 
efforts.
    Today I will address briefly our progress in the Federal 
arena and our plans for the remaining 86 days as we transition 
into the year 2000.
    As you know, we have been working on this problem on a 
Government-wide basis for almost 4 years. Based on the monthly 
reports that OMB received from the agencies in September, 98 
percent of the mission critical systems are now compliant. This 
progress is a tribute to the skillful, dedicated, and hard work 
of thousands of Federal employees and contractors. While much 
remains to be done, we expect all of the Government's mission 
critical systems will be Y2K compliant before January 1, 2000.
    This is an important part of our work on the Y2K challenge. 
But we also need to ensure that the programs supported by these 
systems will be ready for the new year. Accordingly, OMB has 
asked the agencies to take the lead in working with State, 
tribal, and local governments, and with contractors, banks, and 
others to confirm that Federal programs will work. They are 
helping to develop business continuity and contingency plans, 
and share key information on readiness with partner 
organizations and with the public.
    We have also identified 43 ``high impact'' federally 
supported programs that are critical to the health, safety, and 
well-being of individual Americans. We took a look at the 
Federal Government from the individual's point of view to 
determine what programs have the most direct and immediate 
impact. Our goal is simple: to ensure the delivery of 
uninterrupted services to the people who depend upon those 
services and to reassure them that they can depend on those 
services. Overall, progress has been good. Of the 43 programs, 
12 have completed all end-to-end testing. We expect 19 others 
to complete testing this month, 4 to complete it in November, 
and the remaining 8 in December.
    Like you, we are concerned about the programs that will not 
be ready until December. This does not leave much of a margin 
for error. The task is not easy. One of the eight programs, the 
Indian Health Service, involves work with a large number of 
sovereign tribes. The other seven programs are State-run. In 
these cases, the Departments of Health and Human Services, 
Agriculture, and Labor must work with all 50 States and, 
depending on the program, with several territories. We care 
about the people affected and will not consider the task 
complete until all of the States, territories, and tribal areas 
are ready.
    We have been measuring progress in these programs as we 
move toward their completion dates. In this regard, OMB asked 
Federal agencies to tell us on a State-by-State basis when each 
of these programs will be compliant. We then gave that 
information to the National Association of State Information 
Resource Executives for comment, and asked the three Federal 
agencies to work with it to resolve any discrepancies.
    We have reported the anticipated completion dates by State 
and territory in our June and September reports to the 
Congress. This information provides a better view of the status 
of these programs and the progress being made. It also helps 
identify States or territories that may be encountering 
problems so that Federal agencies can focus resources where 
they are most needed.
    The Departments of Health and Human Services, Agriculture, 
and Labor will be testifying later this morning and will 
discuss their specific efforts with regard to these programs. I 
would acknowledge again, though, that you and other Members of 
Congress have played an important role in ensuring that both 
the States and the Federal agencies devote appropriate 
attention and work to these programs. We appreciate all that 
you have done.
    Before closing, I would add an update on our progress in 
business continuity and contingency planning.
    Although we expect all Federal mission critical systems to 
be ready by January 1, 2000, it is still important that every 
agency, no matter how well prepared, have a business continuity 
and contingency plan [BCCP] in place. Sound BCCPs are an 
important component of agency progress. To ensure quality and 
consistency, OMB has directed the agencies to use the General 
Accounting Office's guidance on this subject in preparing their 
plans. Many agencies also are working closely with their 
Inspectors General and expert contractors in the development 
and testing of these plans. OMB has reviewed initial agency 
BCCPs and has been providing feedback and guidance to these 
agencies on an individual basis.
    One characteristic of the year 2000 problem is that we have 
a specific day when any problems are likely to occur. Even 
after all of our other preparation, we can focus on being ready 
to respond on day one. In this regard, we have been working 
with the General Accounting Office and the agencies to develop 
guidance that will help agencies take advantage of this 
opportunity. We will ask agencies to provide us their updated 
business continuity and contingency plans by October 15th, 
including their day one plans, and we will be reviewing those 
submissions.
    Day one planning will allow agencies to take advantage of 
the fact that the year will change 17 hours earlier in New 
Zealand than in Washington. We can learn from problems 
encountered elsewhere in the world and take mitigating actions. 
Agencies can use the roll-over weekend to check their buildings 
for security and heating and to have technicians verify that 
all other systems are working. They can check with their 
partners in program delivery, including the States, to assess 
whether they are having problems and to begin providing 
appropriate assistance. All of these steps will help minimize 
any adverse impact from the Y2K problem.
    In conclusion, we are very focused on the tasks remaining. 
During the 86 days before the year 2000, we are concentrating 
on three priorities: completing work on remaining mission 
critical systems and on other Federal systems; completing end-
to-end testing with the States and other key partners, placing 
special emphasis on ensuring the readiness of programs that 
have a direct and immediate impact on public health, safety, 
and well-being; and completing and testing business continuity 
and contingency plans, particularly day one plans, to mitigate 
the impact of any failures due to the year 2000 problem.
    Thank you for the opportunity to share information with you 
on our progress. We know that there is still a great deal to be 
done and we are hard at work. I would be pleased to answer any 
questions you may have after the conclusion of the testimony.
    [The prepared statement of Mr. Spotila follows:]
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    Mr. Horn. Thank you very much for your presentation.
    The next witness is the Honorable John Callahan, Chief 
Information Officer, Department of Health and Human Services. 
Welcome again to this committee.

    STATEMENT OF JOHN CALLAHAN, CHIEF INFORMATION OFFICER, 
            DEPARTMENT OF HEALTH AND HUMAN SERVICES

    Mr. Callahan. Thank you very much, Chairman Horn, Co-
Chairman Morella, and other distinguished members of both 
subcommittees. We want to thank you for holding this oversight 
hearing on the Y2k status of ``high impact'' federally financed 
State-administered programs. Your oversight has been very, very 
beneficial, not only to the departments but I think to the 
State governments as well.
    HHS is responsible for several of the ``high impact'' 
programs under the direction of the Administration on Children 
and Families and the Health Care Financing Administration. 
First, I would note that all of HHS' mission critical systems, 
including the ones that service these programs, are Y2K 
compliant. There is one mission critical system, the Indian 
Health Service Resource and Patient Management System, which is 
Y2K compliant although we are in final negotiations with 16 
tribes to ensure that they become Y2K compliant. But since they 
are sovereign nations, those negotiations are complex, to say 
the least.
    We have listed and tested all of our data exchanges with 
States on the ``high impact'' programs that you are concerned 
about and they are Y2K compliant as well. Consequently, we are 
confident that from our end we will be able to make grant 
payments and child support enforcement matches for all of the 
programs under consideration. Additionally, we have fielded and 
are fielding contingency plans and day one operating plans for 
these programs which will be coordinated with the ICC, which is 
under the direction of John Koskinen, the President's Special 
Counsel on Y2K matters.
    Now let me give you a brief assessment of the Y2K readiness 
of ``high impact'' Health and Human Services programs under the 
Department's jurisdiction.
    We are now just finishing the first round of technical 
assistance on human service programs--TANF, child support 
enforcement, child welfare, child care, and low-income home 
energy assistance--that are the responsibility of the 
Administration for Children and Families. Our technical 
assistance reports in the HCFA case are being shared, first, 
with State program officials who are on the line providing 
these services, Governors, individual State chief information 
officers, NGA, and NASIRE.
    At this time, we have adjudged that some of the ACF 
programs in the following States are at considerable risk of 
Y2K failure because of both the remediation or testing of 
systems is not complete, or behind schedule, or because the 
contingency planning process is deficient. These are the States 
of Alabama, Delaware, District of Columbia, Georgia, 
Mississippi, New Hampshire, and South Carolina.
    Having said that, we believe that State Y2K preparedness 
progress has been considerable. State officials in all States 
are using these assessments provided by ACF and their 
contractors to their best advantage. ACF is continuing to stand 
ready to provide further detailed technical assistance to 
States that need further help in correcting their Y2K problems 
that they are encountering. We are confident that Governors, 
State program officials, and State CIOs will continue to get on 
top of the Y2K problem.
    Turning to Medicaid and the State children's health 
insurance program. HHS has provided extensive technical 
assistance for nearly a year and a-half now. Two rounds of 
State technical assistance visits have been completed, and a 
third round of State visits is now being conducted. States that 
are adjudged to be at considerable risk with regard to their 
eligibility or financial systems on the Y2K preparedness front 
at this point are Massachusetts, New Hampshire, Alabama, North 
Carolina, New Mexico, and Alaska. States that should be make 
substantial improvements in their contingency and business 
continuity planning include New Hampshire, Rhode Island, 
Vermont, New York, Delaware, West Virginia, Ohio, New Mexico, 
Oklahoma, and Colorado. However, as in the case with ACF, 
States are making almost daily improvements on these fronts as 
well, progress that we will report to the subcommittee as soon 
as we are able to.
    Let me provide you with two examples of how our Federal 
efforts have assisted States. In Maine, in late January, HCFA 
made its first State site visit to Maine. Maine was hoping that 
a new system would be implemented before the end of the year 
and they were trying to decide whether to fix their old system 
or put their resources into implementing the Y2K compliant 
systems. Maine, like many States at the time, viewed the Y2K 
problem too narrowly as a systems problem.
    The HCFA review called the State's attention to a number of 
issues where better direction was needed. Immediately, the 
Maine commissioner of human resources took the HCFA findings 
and developed a detailed strategy and put the department 
commissioner for programs in charge of the Y2K effort. 
Contractor support was obtained, and the State was able to 
remediate and test the old system and develop a new business 
continuity plan. When HCFA came back 4 months later, Maine had 
gone from high risk to low risk.
    Similarly, in North Dakota, HCFA made a first State visit 
and the State was judged to be at risk because of inadequate 
contingency planning. HCFA sent a team of experts to North 
Dakota to work with State staff, and they are now adjudged to 
be low risk on the contingency planning front.
    I would like to conclude my testimony on a positive note. 
As we all know, we only have a limited time left, but HHS has 
provided, on a very cooperative basis, Y2K technical assistance 
to make sure that State-administered federally financed 
programs will be millennium compliant. The technical assistance 
has been offered and received in a spirit of identifying and 
seeking to fix Y2K problems in these areas. State governments 
run these programs, they recognize that they have primary 
responsibility for fixing the Y2K problem in these areas. The 
Federal Government cannot assume any direct administrative 
responsibility for these programs, but we can offer the best 
and most cooperative technical assistance possible to the 
States in this area. We have mounted a strong technical 
assistance effort with regard to all these ``high impact'' 
programs, and we will continue to provide that right down to 
last hour. So we believe that we are making progress, but, as 
this committee knows, we need to make more progress, and we 
will.
    That concludes my testimony. I would be happy to answer any 
questions.
    [The prepared statement of Mr. Callahan follows:]
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    Mr. Horn. Thank you very much. That is helpful and we will 
get back to that.
    The Honorable Shirley Watkins, who is the Under Secretary 
for Food, Nutrition, and Consumer Services in the Department of 
Agriculture. Welcome.

  STATEMENT OF SHIRLEY R. WATKINS, UNDER SECRETARY FOR FOOD, 
     NUTRITION, AND CONSUMER SERVICES, U.S. DEPARTMENT OF 
                          AGRICULTURE

    Ms. Watkins. Thank you, Mr. Chairman, Chairwoman Morella, 
and the distinguished members of the committees. I am delighted 
to be able to join you this morning and share with you the 
progress that we have made in the nutrition assistance programs 
at USDA that are State-administered. Those programs are going 
to be Y2K ready, and we will be working aggressively with the 
States and will increase our efforts as we need to do so.
    Food and Nutrition Service's primary goal has been to work 
with our State partners to assure that there are no 
interruptions in the Nation's nutrition assistance programs 
that provide food to children and to working, needy families. 
This is consistent with our goal to ensure that no people in 
this country go hungry. These nutrition assistance programs 
consist of the food stamp program, the supplementary nutrition 
program for women, infants, and children, and the child 
nutrition program, which includes school breakfast, school 
lunch, and after school snacks.
    FNS works with the partners in the States and the 
territories in monitoring and providing oversight of these 
critical programs. State agencies and territories are 
responsible for providing the delivery of services for the 
nutrition programs to the various customers across the Nation.
    The Food and Nutrition Service started preparing for the 
millennium by communicating to the 50 States, Guam, the Virgin 
Islands, Puerto Rico, and the District of Columbia the 
importance of Y2K preparedness for the food stamp, WIC, and for 
the school nutrition programs. FNS, in January 1998 requested 
Y2K progress in three critical areas: software, hardware, and 
telecommunications compliance.
    We also have sent several memoranda to the States, both 
individually from FNS and jointly with the Department of Health 
and Human Services regarding the significance of Y2K. Both FNS 
and HHS also provided expedited approval of funding for Y2K 
activities. We began obtaining status reports and updates from 
each of the States, and we requested such information on a 
quarterly basis at that point. That was to be submitted to the 
seven regional offices around the country. Secretary Dan 
Glickman, early in 1998, sent letters to every Governor 
requesting their leadership to assure Y2K compliance by June 
1999.
    We have participated in several national meetings involving 
all of the Federal and State partners and some of local 
partners to discuss Y2K and its impact on State and local 
systems. Each of our regional offices has performed site visits 
to the various State offices in order to perform Y2K compliance 
checks. In addition, FNS requested that the States report Y2K 
compliance and submit to us a certifying letter that their 
systems were Y2K complaint. The agency also requested that 
those States that were not able to report that they would be 
Y2K compliant by March 1999 submit a contingency plan which 
would assure the continued delivery of nutrition assistance to 
all of our recipients.
    In April of this year, FNS acquired the services of Science 
Applications International Corp. [SAIC] to assist in the 
oversight and evaluation of State program compliance. We 
reviewed and analyzed the information that was gathered from 
the State agencies regarding the software, hardware, and 
telecommunications compliance to determine which States SAIC 
should review.
    Thus far, SAIC has visited over 20 agencies in the States 
to review their compliance activities, such as planning, test 
procedures, test results, regression analysis, and 
implementation and contingency plans. SAIC has worked very 
closely with our headquarters office as well as the regional 
staff in monitoring the State Y2K program activities.
    Well, what is our current status at FNS? As of September 
30, the vast majority of the State agencies have notified us 
that they are Y2K compliant. FNS was designated by OMB as a 
``high impact'' program because of the services that we provide 
to the large numbers of customers around this country. I would 
like to insert for the record a table outlining the progress by 
program as of September 25th, showing the month in which the 
State agencies report they will achieve Y2K compliance.
    Mrs. Morella [presiding]. Without objection, so ordered. It 
will be included in the record.
    [The information referred to follows:]
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    Ms. Watkins. Thank you. We are concerned with a couple of 
States, and we have noted that.
    But to ensure the continued successful operations of the 
Nation's nutrition assistance programs into the year 2000, FNS 
has requested a certification letter from each State agency 
that operates the food stamp program and the WIC program. State 
agencies that cannot certify Y2K readiness have been asked to 
submit a business continuity/contingency plan. Through 
September 1999, FNS has received certification letters or 
contingency plans for these programs. For the food stamp 
program we have received 23 letters of certification from 
States, 19 States have submitted contingency plans, and 8 
States have submitted both. For the WIC program, 37 States have 
submitted certification letters, 21 States have submitted 
contingency plans, and 9 States have submitted both.
    With electronic benefit transfer, the District of Columbia 
and 40 States now deliver food stamp benefits through EBT. 
These systems are delivering benefits to nearly two-thirds of 
all food stamp recipients, with 31 States and the District of 
Columbia operating State-wide EBT systems. We are working 
aggressively with the States. We have met with the EBT 
processors, the retailers, the third party processors, and 
financial networks to assure that the food stamp benefits 
through EBT will be accessible to our clients on January 1, 
2000. We have received assurances from the major food retailers 
that food will be available. Our third party processors have 
indicated to us in early July that all of those programs are 
Y2K ready.
    Mrs. Morella. I am going to ask you if you can wind up.
    Ms. Watkins. Sure. What are our next steps? We are making 
preparations to ensure that all of these programs will be 
compliant. We do have some State agencies that have indicated 
that they will not be ready until December. Those include 
Georgia and Maryland for either WIC and child nutrition. We 
will be working with those agencies aggressively to assure that 
they are ready. Today, Secretary of Agriculture Dan Glickman is 
sending a letter to every Governor reemphasizing the importance 
of Y2K compliance to ensure that no families go hungry, and 
that letter will also let them know where they are currently in 
the process.
    In conclusion, Congresswoman Morella, USDA's vision for its 
Food and Nutrition Service is to lead America in ending hunger 
and improving nutrition and health. To not provide food to 
needy families and children as a result of Y2K would undercut 
that vision. We want to make certain that all of our families 
are going to be served and all children will be served.
    That concludes my prepared remarks. At the conclusion of 
the panel, I will be glad to answer any questions that you may 
have about these programs.
    [The prepared statement of Ms. Watkins follows:]
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    Mrs. Morella. Thank you very much, Secretary Watkins. I am 
particularly interested, as Mr. Bartlett is, in getting more 
compliance from Maryland.
    We are going to recess this panel because we do have a 
vote. Mr. Horn will be back probably very quickly and then we 
will reconvene in about 10 minutes. Thank you.
    [Recess.]
    Mr. Horn. The subcommittee will come to order.
    Our next presenter is Edward Hugler, the Deputy Assistant 
Secretary for Information Technology, and Acting Deputy 
Assistant Secretary for Administration and Management, U.S. 
Department of Labor. Welcome.

  STATEMENT OF EDWARD HUGLER, DEPUTY ASSISTANT SECRETARY FOR 
 INFORMATION TECHNOLOGY AND ACTING DEPUTY ASSISTANT SECRETARY 
  FOR ADMINISTRATION AND MANAGEMENT, U.S. DEPARTMENT OF LABOR

    Mr. Hugler. Thank you, Chairman Horn, and members of the 
subcommittee. I appreciate the opportunity, like the rest of 
the panel, to discuss the readiness of the Department of 
Labor's programs, specifically, the Federal and State-run 
unemployment insurance program.
    As you know, the unemployment insurance program operates 
through 53 State employment security agencies [SESAs]. The 
Department of Labor oversees this nationwide program which is 
administered by the 50 States, Puerto Rico, the Virgin Islands, 
and the District of Columbia. It is a $20 billion program, 
serving some 8 million workers annually. As such, the UI 
program is, indeed, and ``high impact'' program with very 
direct and immediate impact on the lives of individuals in 
need.
    To carry out the Secretary of Labor's commitment to ensure 
the uninterrupted delivery of these and other core Department 
of Labor services, we have taken a very strong leadership role 
in assisting our 53 SESA partners. Since 1996, the Department 
has provided ongoing guidance and hands-on technical 
assistance. Specifically, our Employment and Training 
Administration unemployment insurance staff have worked 
extensively with the SESAs to carry out the very same year 2000 
readiness regiment used across the Department of Labor for our 
own systems as well as other Federal agencies. That began with 
the system of remediation or replacement, followed by 
independent verification and validation, which is, in effect, a 
double-check audit of that work, followed then by end-to-end 
testing to see that we accomplished what we set out to do, and 
then, finally, business continuity and contingency planning so 
that if any automated system is in fact disrupted by something 
unforeseen, program services can still be delivered.
    In support of these rigorous preparations, the SESAs have 
received more than $250 million to date, and we appreciate the 
support of Congress in making those funds available to our SESA 
partners.
    I believe we have solid results to show for these efforts. 
At the beginning of this year, the unemployment insurance 
program was one of the very first to have to adapt to the 
century date change. This is because the eligibility 
computations for workers filing claims at the start of 1999 
began to include, for the first time, projections into the year 
2000. The unemployment insurance program's 53 SESAs were 
prepared and they cleared this hurdle without incident.
    Since then a tremendous amount of work has been done to 
ensure that all aspects of the unemployment insurance program 
are equally ready at the end of this year, and that we can 
repeat our earlier success. I should explain that the 
unemployment insurance programs are composed of three principal 
systems: the benefit payment system, which is really where the 
rubber meets the road; the tax system, which provides the 
revenue for the benefit payments; and the wage record systems. 
Right now, the benefit payment systems in 50 of the 53 SESAs 
are year 2000 compliant and have been successfully implemented; 
46 SESAs also have all three of their primary systems compliant 
and on line.
    In the time remaining, we are stepping up our monitoring 
and assistance to the SESAs focusing on those with work still 
to do. Yesterday, the Secretary of Labor sent letters to the 
Governors of three States, Iowa, Maine, and New Jersey, 
alerting them to the issues that require their attention.
    In the District of Columbia, which is behind all other 
SESAs at this time, the Department is providing extensive and 
direct assistance, utilizing nearly $2 million in recently 
released emergency funds. As part of this effort, the 
Department is working with the District to install a first of 
its kind, stand alone, personal computer-based system that can 
actually substitute for any State's benefit payment system. It 
is called, appropriately, the Automated Contingency System. It 
was developed by the Department in cooperation with the State 
of Maryland specifically for the unemployment insurance program 
to protect against any unforeseen year 2000 disruptions. The 
system can be customized to the unique laws of any SESA, and 
thereafter it will process claims, calculate benefits, and 
issue payments to eligible claimants, while the main system is 
brought on line.
    Right now we are installing this ingenious solution in the 
District of Columbia to back up our efforts to complete the 
installation and testing of compliant systems before the end of 
the year. We expect to have the Automated Contingency System 
operational in the District of Columbia next month. We have 
also demonstrated the ACS, Automated Contingency System, to 
other SESAs interested in utilizing it as part of their 
contingency planning.
    These are some of the highlights of what we have been able 
to accomplish in our UI program and that staff working with our 
53 SESA partners. I would be very pleased to expand on any of 
these topics and answer any questions you may have. One other 
thing I would like to do is revisit what I think is a 
misunderstanding of some of our management information that was 
referred to in Mr. Willemssen's testimony which I think could 
inadvertently cast some doubt on the readiness of our SESA 
systems. We are confident that the unemployment insurance 
program will be there for workers who may need it on and after 
the century date change. Thank you, Mr. Chairman.
    [The prepared statement of Mr. Hugler follows:]
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    Mr. Horn. Thank you very much. That was a very thorough 
statement.
    Mike Benzen is president of the National Association of 
State Information Resource Executives. Tell me a little bit 
about the group and who all is in there.

 STATEMENT OF MIKE BENZEN, PRESIDENT, NATIONAL ASSOCIATION OF 
             STATE INFORMATION RESOURCE EXECUTIVES

    Mr. Benzen. Mr. Chairman, members of the committee, I would 
be happy to. NASIRE represents the State government CIOs. In 
that capacity, we do need to understand, first, NASIRE does not 
control what individual States do, it is a coalition of States, 
if you will, and of State CIOs.
    We began working on Y2K in terms of workshops, awareness 
programs 4 years ago. We think we have been very successful 
with it. But it is very difficult to characterize progress of 
50 individual States. I would note that while certainly there 
are problems, and they have been well-documented at this 
table--I have five colleagues sitting here commenting about the 
States; I think I am the one now defending the States and it is 
hard to circle the wagons when you have only one wagon--but, 
nonetheless, we think that the progress of the States has been 
exceptional. If you look at the overall progress in terms of 40 
States or 47 States, we are now dealing with a few. We 
certainly recognize that this is a serious issue. Those States 
need to do whatever has to be done to be ready on time. But we 
think, overall, the progress has been exceptional.
    I think I would also mention this, and it is hard for the 
States to acknowledge this I think, we have partnered with the 
Federal Government, they have acted in partnership, the people 
at this table, and in a cooperative effort we have gotten out 
of an adversarial relationship and have gotten into cooperative 
agreements. I would hope that this would be something that we 
would see go on after the turn of the century and after Y2K, 
because I think this has been very beneficial and I believe 
both NGA and NASIRE feel the same way about that.
    And with that, I will close and take questions.
    [The prepared statement of Mr. Benzen follows:]
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    Mr. Horn. Thank you very much. I think we are inclined to 
take your advice on that series of hearings in the future. So, 
thank you for raising it.
    Let me start with Mr. Callahan, because HHS is a tremendous 
impact on the States and the people, Health and Human Services. 
I appreciate you publicizing in your written statement and your 
oral comments that several programs have a high risk of Y2K 
failures. Those States included, as I remember and wrote some 
of them down, Alabama, Colorado, Delaware, the District of 
Columbia, Georgia, Mississippi, New Hampshire, Rhode Island, 
South Carolina, Vermont, West Virginia. I might have missed a 
few. But which of those State-run programs are of the greatest 
concern to HHS?
    Mr. Callahan. Well, I think, Mr. Chairman, the fact that we 
have enumerated those States as having problems in two areas. 
One is the continued remediation schedules for Y2K, and then 
the development of sound business continuity plans. I do not 
know whether we would discriminate among those States as to 
saying one has a more serious problem than another. But I think 
the point here is that we will provide, and are providing, 
direct technical assistance from both HCFA and ACF to help them 
remediate these problems as quickly as possible.
    I would echo Mr. Benzen's comments here. We entered into 
this technical assistance problem not ``to fix the blame,'' but 
to fix the problem. We do feel that in many, many cases, you 
may get a listing today and it may change 3 days from now, a 
week from now, whatever. And that is our effort here, is to do 
the two things that you are concerned about, which is the 
remediation and the certification of Y2K compliance, and 
second, have a sound business continuity plan so that even if 
there is some system failure, services can be provided.
    Mr. Horn. Have any of those States that we named, and I 
might have missed a few, have any of them undertaken--well, the 
remediation, has that been done at all with all of them or just 
a few?
    Mr. Callahan. Oftentimes they are in the process of doing 
the remediation, we just do not feel that their remediation 
based on the contractor assistance has progressed far enough at 
the time we take the snapshot. Again, all these reports, as you 
know, are snapshots and the snapshot can change today, 
tomorrow, et cetera. So the effort is to identify the problem 
and fix it as soon as possible. We will continue to provide the 
subcommittee as much as we can with direct reports on that. But 
I might add that when we do these reports, when the contractor 
goes in and does these reports, whether it is for ACF or HCFA, 
they provide immediate interaction with the program officials 
so that everyone comes to as much of an agreement as possible 
about the things that are problems and that need to be 
corrected. We are hopeful that they will continue down the path 
of making these corrections.
    I will say, if I could, that a number of the States that 
have good business continuity plans, I think we are sharing 
those with other States so that they can benefit from the work 
of their neighbors or other States that they are compatible 
with. It is pretty clear that in many States they are moving to 
things like presumptive eligibility after year 2000 should a 
system fail. They are also in many cases moving to preprint 
checks for January and February so that they are looking at 
their eligibility rolls and would have checks available. So I 
do think a number of States are making positive efforts in this 
regard. Our job is to work with the States that are not quite 
as far along and help them down the road.
    Mr. Horn. Did any of them try testing for the January 1, 
2000 date to see the extent of the problem they might have?
    [The information referred to follows:]
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    Mr. Callahan. Some of them have and have been successful. A 
number of them have not really gone as far as we would like in 
that regard. But we will provide as much as we can of that 
detailed information to the subcommittee.
    Mr. Horn. OK. In your written statement, there were 19 
States and territories that have been high or medium risks 
associated with Medicaid mission critical systems. I guess the 
question would be, what can be done to mitigate potential 
Medicaid Y2K failures in those States? Do you just feel they 
are the same as any other program, or some programs are much 
more difficult and with a much greater impact on people than 
some of the others?
    Mr. Callahan. The one thing that occurs in Medicaid that is 
somewhat similar to the problem that we have alluded to in the 
area of Medicare that we are directly responsible for, and this 
is the issue of making sure that the providers that provide 
these services, whether it is Medicaid or Medicare, are Y2K 
compliant. I think it is fair to say that in testimony before 
this subcommittee and elsewhere there has been a little bit of 
disappointment that a lot of the medical providers may not have 
taken this problem seriously enough. So the States will face 
very much similar problems that we face in the Federal 
Government about urging the providers to get on with it and be 
able to transmit their claims, for example, on a Y2K basis. 
HCFA, as you know, recently HCFA has provided a Y2K ``jump 
start kit'' which is available to any provider that would seek 
it. But, again, some providers, either because of the press of 
business, or hoping against hope I guess, are not coming to the 
fore. That will be a bit of a problem.
    Mr. Horn. How about the Department of Agriculture, 
Secretary Watkins, where are we there with the particular 
States? I have got this chart that you have shown on nutrition 
programs. As I read it, the big problems would be the October 
compliance, the November compliance, and the December 
compliance. It looks like the December compliance is Georgia 
and Maryland primarily with the red markings. Can you give us 
any enlightenment on where your worries are, with what States?
    Ms. Watkins. The worries primarily, Mr. Chairman, are with 
those two States that you identified that have stated they will 
be compliant in December. The concern in Georgia is with the 
WIC program. We do have the contractor in there this week 
working with Georgia so that they can work on a backup system 
so they will be ready to deliver services for our WIC clients. 
And the Maryland program is with our school nutrition programs. 
They had a system that they were working on and had a failure 
in that system. So they do have a manual system in place. That 
will not disrupt any of the school nutrition meal services, and 
it will not disrupt the payment, because payments would be made 
mid-February for January. So that is not as critical for us, 
but we will continue to work with them to get their systems 
complaint.
    Mr. Horn. How about the Department of Labor, Mr. Hugler, 
where are they with some of the States, and which are the ones 
that you think you might the most trouble with?
    Mr. Hugler. Mr. Chairman, right now, if we add up all the 
systems that we want to see be fully ready for the year 2000, 
there would be 159 component parts of all the respective SESAs. 
There are 11 systems that have not yet been made year 2000 
compliant. Breaking that down a little bit further. Three of 
those are benefit payment systems, and they really, again, are 
where the rubber meets the road, where the benefit payments 
will be made, and they are at the top of our list.
    Mr. Horn. What are the States that are in that category?
    Mr. Hugler. Yes, sir. The States of concern right now would 
have to begin with the District of Columbia. They are, as I 
mentioned earlier, further behind than any other SESA. I think 
the good news there is that we are going to install, as I 
mentioned earlier, the automated system that will actually take 
over and independently run their benefit systems. We are going 
to do that and have that done by November.
    Mr. Horn. Are you designing the software for that?
    Mr. Hugler. The Department of Labor, in conjunction with 
the State of Maryland, came up with a software system that can 
be adapted to any SESA. So the work being done in the District 
right now is to configure that program to the unique laws of 
the District of Columbia so that it can do that work in 
accordance with the local laws. That is the work being done 
right now in the District of Columbia.
    Mr. Horn. Has the Department of Labor done software for any 
of the States on any of its programs?
    Mr. Hugler. We have not done this type of thing before, if 
that is your question. We have offered the Automated 
Contingency System and demonstrated it for all of the SESAs and 
will make it available to anyone who would want to make it part 
of their contingency plan.
    Mr. Horn. The reason I am asking the question is I think it 
is an outstanding idea. I remember proposing it about twenty 
years ago on a couple of departments, saying, look, why are we 
reinventing the wheel everywhere. If you have got a compatible 
software for the States to administer it in relation to yours, 
that ought to be the way it was done. So I congratulate you. I 
am glad somebody in this town is doing that.
    Mr. Hugler. And the commendation goes to the unemployment 
insurance staff and working with the State of Maryland and the 
SESAs.
    Very quickly, other States. California has a benefit 
program that has one piece, an imaging program, that needs to 
be fixed. That will get done we believe, and they have a very 
good contingency plan for it if it does not. That is due in at 
the end of this month. Puerto Rico will implement all three of 
their primary systems over this upcoming weekend. So that 
should take care of the remainder. So I think we are in good 
shape on that score.
    Mr. Horn. I see my time is about up. So let me ask the 
whole panel here, in your opinion, which States run the risk of 
experiencing the most year 2000 related failures, and in what 
program areas?
    Mr. Willemssen, do you want to answer that one?
    Mr. Willemssen. I will answer it in two ways, Mr. Chairman. 
First of all, it is very difficult to generalize on States for 
all these 10 programs. When we look at any specific State, 
there are within those States differences among the programs. I 
think some of the States and some of the programs have been 
highlighted where the most significant risks are. For example, 
in Medicaid, we would think that the two States right now with 
the highest risk would be New Mexico and New Hampshire since 
each of those has been assessed as high risk for one of its 
systems and also high risk for its business continuity and 
contingency plan. This is a double whammy that has to be 
avoided.
    I would generally concur with the comments that have been 
made about the specific programs and the evidence we have seen 
in terms of where the risks are for those specific States.
    Mr. Horn. If we can get the question in, we have got time 
to answer it. I made the mark.
    Mr. Spotila. Mr. Chairman, I would agree with the comments 
that Joel has just made and the other panel members. We, 
obviously, reported based on information supplied by the 
agencies having the more current, up-to-date specific 
knowledge. But I think what we have heard today is pretty 
accurate.
    Mr. Horn. Does anybody want to add to that?
    Mr. Callahan.
    Mr. Callahan. Again, I would concur, especially to the 
extent where a State is behind on its basic remediation and its 
business continuity planning, that is a State where additional 
technical assistance from our side and State effort from their 
side has to occur.
    Mr. Horn. Ms. Watkins.
    Ms. Watkins. I would agree with Mr. Callahan. We will have 
to work with those States that look like they may fall behind. 
And we will continue to work with Maryland with Georgia and 
those two program areas, as we work with Oklahoma, Arkansas, 
Illinois, and Alabama where we have some program areas of 
concern. We will work with everyone right up to the last minute 
where there may be some problems. We would be particularly 
concerned about those people who have November and December 
dates.
    Mr. Horn. Do you want to add anything for the Department of 
Labor?
    Mr. Hugler. Mr. Chairman, the only jurisdiction with which 
we have concern about being at high risk is the District of 
Columbia. We are taking extraordinary efforts to work with them 
right now to solve that problem.
    Mr. Horn. Anything you can----
    Mr. Benzen. Well, only this. Obviously, anyone that is 
planning on finishing in November, December, there is great 
cause for concern. I think I would have to agree with that.
    Mr. Horn. Yes. Thank you.
    I am going to yield to the gentleman from Washington on 
behalf of the minority. Mr. Baird, you have got 7 minutes.
    Mr. Baird. Thank you, Mr. Chairman. I very much appreciate 
the work you folks are doing on this. I get asked about it 
almost every town meeting, and, like the speaker earlier said, 
this is a difficult problem.
    I was intrigued by Mr. Hugler's comments. Is that 
pronunciation correct?
    Mr. Hugler. Yes, sir.
    Mr. Baird. About the contingency plan with a PC-based 
backup system. I am interested, are other agencies using a 
similar model as a contingency plan either at the State or at 
the Federal level? I will sort of open that up to whoever. If 
anybody is, it makes sense to me.
    Mr. Callahan. I do not believe we are. But certainly based 
on the comments today, we would immediately converse with the 
Department of Labor to see what benefits it would have. We are, 
as I mentioned earlier, providing assistance to providers both 
in Medicare and Medicaid, if they request it.
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    Mr. Hugler. We would be happy to share anything we have 
learned.
    Mr. Baird. It makes a lot of sense to me. I would hope that 
somewhere someone has a hard copy so that if Mrs. Jones comes 
in and her checks are late and she needs to feed the kids, 
somebody can look on a hard copy and see if somebody owes her a 
check or not. I hope we have got some kind of backup.
    Let us suppose a system crashes in a State agency that 
administers one of these programs. Do we have a sense from 
previous test experience what sort of timeframe does the State 
have in how long it will take to bring the system back up and 
get it up and running again?
    Mr. Benzen. That depends entirely on what crashed. I can 
speak to my own State easier than I can the other 49. 
Medicaid--finished, done, back in production, year 2000 
compliant. Stuck it into the test partition past year 2000 and 
it did crash. It took almost twenty minutes to get it back up 
and running again. The piece of this that you do need to 
understand, if these systems have been remediated, and some of 
these systems are 200,000 hours worth of labor to fix, once 
they are done, if you do find something that is going to crash 
on January 1st, it is very unlikely you are going to have to 
come back and spend another 200,000 hours to fix it again. It 
is typically going to be something much more minor. So, in 
terms of a surprise crash, what you are going to see--now, if 
people do not meet these December dates, it is not going to 
crash, they are not going to be able to turn it on because they 
know it is not going to work--but if you see a crash, chances 
are real good that you are going to get it up and running real 
fast.
    Mr. Baird. If there were multiple crashes at the same time, 
it would follow that the skilled folks who can correct such a 
crash would be in high demand. It would seem almost analogous 
to a power outage where we have got people putting up lines in 
different places. Do we have a national readiness force, or do 
the States have in place readiness forces of people on call who 
can work on these issues?
    Mr. Benzen. I am not seeing that kind of preparation. 
Again, we know what needs to be done. What is being talked 
about at this table I believe is we have an estimate that it is 
going to take X thousands of hours and they have not completed 
that number of hours. But in terms of, gee, we thought we had 
it fixed and then all of a sudden it just crashed, I am not 
looking to see that kind of problem. I would be amazed if that 
happens.
    Mr. Spotila. One thing I would add to that, though, is that 
when I testified about the importance of business continuity 
and contingency plans and day one plans, that is precisely the 
potential problem that those plans are directed at and that is 
why we are giving such emphasis to it.
    Mr. Baird. Excellent. That is good to hear.
    One final question. I have been reading about the concern 
people have about trap doors being written into the software 
from private business, particularly banking and other financial 
concerns. Do we have concerns about that at the Federal level, 
someone writes a trap door and suddenly gets 40,000 social 
security checks?
    Mr. Spotila. I think the truth is we do have a concern 
about this. It is difficult to assess the extent of the risk. 
We work closely with the National Security Council, with 
Richard Clarke, the President's advisor in this area, and we 
have had discussions with them. It is something that we are 
watching closely. We do not have specific threats identified 
that we can go after and start working on now, but we are 
certainly watching it.
    Mr. Baird. Is there a discussion underway of how to monitor 
that, how we would look for it?
    Mr. Spotila. We are certainly trying to monitor it 
internally in terms of the Federal Government and there is a 
lot of discussion about how to do that. With respect to the 
private sector, we have ongoing discussions, particularly with 
key industry groups, about how to do that monitoring and how to 
get information from them so that we can respond. We can try to 
supply you with more information on that, if you like. But, in 
general, it is something we are sensitive to. We are going to 
need an awful lot of cooperation from the private sector if we 
are going to be able to work together on this.
    Mr. Callahan. I might add, if I could. I am sure that both 
for our agency and for other agencies, we are also standing up 
all our computer security people in this year 2000 process so 
that they can do what they normally do, which is look for 
intrusion, detection, et cetera, and we are working with the 
Department of Commerce, the Carnegie Mellon operation and other 
relevant agencies. We will fully stand up our security people 
along with Y2K people.
    Mr. Baird. Thank you very much. Thank you, Mr. Chairman.
    Mr. Horn. Thank you. Appreciate that line of questioning.
    I now yield to the gentleman from Maryland, Dr. Roscoe 
Bartlett.
    Mr. Bartlett. Thank you very much.
    Mr. Callahan, can you please update us on the Y2K readiness 
of HHS' big, $165 billion payment management system and where 
that is?
    Mr. Callahan. Yes. The payment management system is Y2K 
compliant. It has been certified as Y2K compliant by IV&V, and 
we have done some end-to-end testing as well in that regard. 
So, in essence, the payment management system that makes these 
grants, particularly in the ACF areas, will be available and 
ready to pay States their allotments.
    I might add, what happens is the States generally draw down 
their money on a day-to-day basis. They might get a quarterly 
apportionment for any number of grant payments, but they draw 
it down from us on a day-to-day basis to make sure there is no 
interest payments that they would owe us. But we are ready to 
go on that.
    Mr. Bartlett. Assessment presumes I gather the readiness of 
the infrastructure? There are lots of electronic fund 
transfers, not much operates without electricity today. What 
sort of assessments do you make of the availability of the 
infrastructure, and what contingency plans do you have if it is 
not there?
    Mr. Callahan. This is power primarily?
    Mr. Bartlett. Power and electronic, phone lines and so 
forth.
    Mr. Callahan. We have had continuing discussions with the 
power suppliers and the telephone suppliers in the area and we 
feel that those discussions have been very positive. I will 
supply for the record our detailed information on that, but I 
believe we have also identified hot sites to move from our 
current area in Rockville if, in fact, it is not serviceable.
    [The information referred to follows:]
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    Mr. Bartlett. Several months ago I attended a hearing of 
our Technology Subcommittee with the power representatives. In 
effect, what they told us was that they would not be ready 
because they have hundreds of thousands of embedded chips in 
components and it was just impossible for them to figure out 
were all those going to work. But their hope was that they 
could wire around it. Obviously, we had electricity a long time 
before we had computers. But I do not know how much ability we 
have now to wire around computer problems. Are you sanguine 
with the position that if they cannot fix these embedded chip 
problems, they will just wire around it?
    Mr. Callahan. Well, not having been privy to your 
conversation with the power executives, it is a little hard for 
me to get a context here. But we will supply for the 
subcommittee and for you the nature of our discussions with our 
power and telephone suppliers as it relates to our payment 
management system.
    Mr. Bartlett. So your assessment of readiness is then 
intra-agency assessment? You are presuming the availability of 
services?
    Mr. Callahan. At this point, as I said in conversations 
with our power and telephone suppliers vis a vis this 
particular system, we are confident that that will be 
available. But we will provide the subcommittee with that 
information.
    Mr. Bartlett. I appreciate that. Thank you very much.
    Thank you, Mr. Chairman.
    Mr. Horn. Thank you.
    I now yield to the gentleman from Minnesota, Mr. Gutknecht, 
who is a member of the Science Subcommittee on Technology.
    Mr. Gutknecht. Thank you, Mr. Chairman, and thank you to 
the people that are here today testifying.
    When we first starting having these hearings 4 years ago, 
they were very sparsely attended and most of us had no idea 
what Y2K stood for. I think we have made real progress. But 
there was something that you said, Mr. Callahan, that sort of 
just caught my ear. You said something about the problems that 
are still out there we expect to solve down the road. Part of 
the reason we have been having these hearings is to get 
periodic updates to make certain that we are making progress. I 
guess the real point here is that the road is getting shorter, 
and I know you are aware of that. We are down to T-minus 80 
days, something like that.
    Mr. Callahan. Yes. Let me, if I can, correct the record. As 
you know, and every member of the subcommittee knows, when we 
started off with this Y2K problem, one of the biggest problems 
was the Federal Government itself. Congressman Horn, with his 
report cards, sort of put the sticks to us to provide a lot of 
progress in a lot of our systems, including Medicare, for 
example, which is a very, very complex system. So I think by 
necessity the initial efforts here were on our own, on the 
Federal Government computer systems, because if they did not 
work, it did not make any difference whether the State systems 
worked or not. I think, as Mr. Spotila has mentioned on behalf 
of OMB, tremendous progress has been made with regard to that. 
So first things have to come first, which was to fix our own 
computer systems.
    Now, obviously, we have to work with the States and make 
sure that we have complimentary contingency plans, et cetera, 
to make sure that the federally financed but State-administered 
programs will run. And so that came, to some degree, after the 
first effort here. I do think a lot of progress has been made, 
and will continue to be made, even though we have to focus for 
the subcommittee on some of the States where there are 
particular problems.
    Mr. Bartlett. I certainly agree. I want to congratulate all 
of you. Compared to where we were even a year ago, I think at 
least the Federal Government is in a lot better shape than we 
would have been. And, again, I congratulate Chairman Horn and 
Chairwoman Morella because I think it has been their reports 
cards and the updates and forcing people to come to grips with 
this situation that have really helped. And, of course, the 
real purpose is so that we do not have hearings in January 
asking why did people not get their checks, why did this 
happen. Unfortunately, this town is very good at finger-
pointing and, frankly, I think most of us on this subcommittee 
and the science subcommittee as well do not want to be into 
that.
    I do want to make one other point. Ms. Watkins, you sort of 
made a reference to how the food and nutrition programs would 
work. And by what you said, it sounded to me as if there would 
be no problem getting the money out to the schools so they 
could continue to buy food for the kids. Your concern was 
information coming to the Federal Government.
    I am not trying to pin you down on this, but I do hope, and 
this is just one Member's opinion, that if there is a problem, 
we will err on the side of the people who need the benefit. OK? 
That if the bureaucracy, in other words, is not getting the 
information or the red tape from whomever, I hope that 
temporary aid for needy families, for example, will not be 
withheld because for some reason there is a glitch in our 
getting the right information. In other words, if there is a 
problem, I hope we will err on the side of making certain that 
people get the health care, get the temporary assistance, or 
get whatever that they would otherwise be entitled to. I just 
hope that is the policy, and I hope that someone here will kind 
of reassure me that that is the policy.
    Ms. Watkins. That certainly is the policy. Maybe I need to 
correct the record, because I did not want to give the 
impression that when talking about Maryland and the reports 
that would be flowing in from school districts to the State, 
that anything would delay the feeding of children or any person 
who is eligible for nutrition assistance in this country. We 
are going to work to make certain that all of the benefits that 
are deserved so all of customers will be delivered. We will be 
monitoring those contingency plans that are coming in from the 
States.
    I personally am working with our staff here in headquarters 
to go through those State plans to ensure that no person goes 
hungry in this country. That is what the Secretary of 
Agriculture wants us to do, that is what this committee wants 
us to do, and we are going to monitor it. Nobody wants to see 
any interruption in our programs. So it will not be a 
bureaucratic process and looking at some report. We certainly 
are not going to get caught up in that. That is not what you 
want us to do.
    Mr. Bartlett. I assumed that was the answer and I just 
wanted to make sure that was clear and on the record. I thank 
you all.
    I yield back, Mr. Chairman.
    Mr. Horn. Thank you.
    Let me just clean up a few things and then I will yield to 
the vice chairwoman, Mrs. Biggert.
    Mr. Spotila, I am curious about the States that OMB is 
worried about and the respective programs. What had made us 
both curious, both Mrs. Morella and I, was the waiting till 
December for a lot of this review, last minute remediation 
testing, and so forth. There seems to be a little disagreement 
here with the General Accounting Office in terms of the number 
of States, what their names are, what are the programs that OMB 
is worried about. I just want to straighten that out.
    Mr. Spotila. I think that, as we said earlier, Mr. 
Chairman, we have actually heard a pretty detailed discussion 
here by the agencies involved who are more directly connected.
    Mr. Horn. But we have a lot of other agencies that also 
have programs. We just brought them up because they are so 
gargantuan in terms of their impacts.
    Mr. Spotila. Right. As to the particular impact, Mr. 
Chairman, it would be best if we supplied you with that list. I 
do not have the individual States by program right in front of 
me. The information we have most recently is the report that we 
submitted to you. We do have some updated information that is 
coming in, but I do not have that compiled to give you this 
morning. I would be happy to try to supply you with more 
information.
    Mr. Horn. Well, what are the States you are worried about? 
Does your subordinate know that?
    Mr. Spotila. As I mentioned in my testimony, we share your 
concern for any State that is waiting until December to finish 
because the margin for error is so slim. We have heard 
references here to some States and individual programs, and we 
concur in that, Mr. Chairman.
    Mr. Horn. Does OMB want that testing done in early, middle, 
or late December? Or do you want to move it up to November?
    Mr. Spotila. I think the problem here is that the testing 
has to follow the work. The reason that the testing is late is 
that the work is not necessarily completed. Again, we are 
relying on information being supplied to us by individual 
agencies working with individual States in many of these cases. 
We are presuming that this testing is going to be done as soon 
as possible, as soon as there is something to test. So the 
problem here is that although people are hard at work on it, in 
many cases they started too late and they are behind.
    We have a concern and we are doing all that we can do to 
work with the agencies to make certain that the resources are 
there and to make certain that information is supplied. But we 
do not control the effort ultimately when we are dealing with 
States or territories or tribal areas. We cannot do it for 
them. All we can do is try to be supportive, and they have that 
primary responsibility to do their part.
    Mr. Horn. Mr. Willemssen, what are your thoughts on this?
    Mr. Willemssen. My thoughts are to, first, recognize that 
the OMB reports that have been put together over the last 
couple of quarters that have laid out the detail by State, all 
of that information is unverified. What you have heard today 
from some of the agencies who have overall responsibility for 
those 10 State-administered programs is that they have 
additional information, additional data, beyond that self-
reported information. So I think OMB, in the very near future, 
needs to take that kind of information into account when it 
highlights those States that are most at risk for those 
particular programs rather than simply going with the 
unverified information that it receives. I think the agencies 
here are now in a position to provide more of a qualitative 
assessment given their risk evaluations that have been done, so 
that the agencies and OMB can go beyond that self-reported 
information and make real assessments on where the risks are.
    Mr. Horn. What I would like, you said you would like to 
file it for the record, can you file that by Friday?
    Mr. Spotila. We will respond by Friday.
    Mr. Horn. OK. Because Columbus Day is Monday and I do not 
think much is going to happen then and that would kick it over 
to Tuesday. Let's see if we can get it up here by Friday, 
hopefully not 5. Do it at least by 4; there will be a lot of 
people running for planes.
    Do you have any comments, Mr. Benzen, on this from the 
States' standpoint?
    Mr. Benzen. No, sir, I do not.
    Mr. Horn. OK. I think that is about it on my side. I am 
yielding now to the vice chairwoman of the Subcommittee on 
Government Management, Information, and Technology, Mrs. 
Biggert of Illinois.
    Mrs. Biggert. Thank you, Mr. Chairman. If I might submit my 
opening statement for the record.
    Mr. Horn. Without objection, it will be put in the 
beginning where the opening statements appear as if read.
    [The prepared statement of Hon. Judy Biggert follows:]
    [GRAPHIC] [TIFF OMITTED] T1232.162
    
    [GRAPHIC] [TIFF OMITTED] T1232.163
    
    Mrs. Biggert. I would just like to ask a couple of 
questions. First, what is going to happen on December 31, 1999, 
as it rolls over, in conjunction with these agencies and the 
States? Will the offices be open in case there are glitches? Is 
this part of the contingency planning? You obviously are not 
going to be sending out checks on January 1st. I would hope 
that people would have time to celebrate as well as to worry 
about the Y2K problems. But will there be somebody who is 
looking to see what the glitches are, if any?
    Mr. Spotila. In general, I think it is fair to say yes, 
there will be someone, not just one person, but there will 
actually be teams of people at each of these agencies. We are 
looking to the individual business contingency plans in order 
to determine specifically how agencies are approaching it. As 
we get that information, we will certainly make that available.
    Mrs. Biggert. Mr. Willemssen, in your statement you 
mentioned the lateness in the year 2000 compliance for States 
and programs, that there are nine States' child support 
enforcement programs, and then seven States' food stamp 
programs, and then four States' unemployment insurance 
programs. Can you name the States for each of these potentially 
late programs?
    Mr. Willemssen. Yes. Child support enforcement is New 
Hampshire, New Mexico, North Carolina, Utah, California, 
Oklahoma, Alabama, and Illinois, and the Virgin Islands.
    For food stamps, Illinois, New Hampshire, Ohio, Alabama, 
Oklahoma, Georgia, and the Virgin Islands.
    Unemployment insurance, the District of Columbia, 
California, Nebraska, and Vermont.
    Mrs. Biggert. Being from Illinois, I think I am sorry I 
asked.
    In your opinion, are these programs severely at risk for 
not being ready for January 1, 2000?
    Mr. Willemssen. I am most concerned about the risk status 
for those States that have late completion dates and are at 
high risk with their business continuity and contingency plans. 
As we get closer to the rollover period, the business 
continuity and contingency planning element is going to play an 
even more crucial role. To the extent that the States have 
these backup plans in place and can implement them in the event 
of disruptions, then I think we have reason to be more 
optimistic. If these kind of plans and day one strategies are 
not in place, even for those States who like are in good shape, 
then I am much more concerned.
    Mrs. Biggert. In your written statement, you also said that 
at particular risk are several States with systems that are not 
yet Y2K compliant. Can you name those States?
    Mr. Willemssen. Those States would be primarily by program. 
So if you go down the 10 programs, there is variance. I think I 
mentioned earlier, for example, Medicaid, the two States we 
would be most concerned for about would be New Mexico and New 
Hampshire. I would concur with Mr. Hugler's comments about the 
four entities that he mentioned, starting with the District of 
Columbia in the red alert status, and I believe there are three 
other entities in the yellow alert status.
    So I think we would generally concur with the comments that 
have been made today that are program specific and State 
specific. But, again with the caveat, it is still very 
difficult to generalize on a particular State because within 
that State you have different agencies running the program.
    Mrs. Biggert. Thank you. Thank you, Mr. Chairman.
    Mr. Horn. Thank you very much.
    I now yield to the gentleman from Oregon, Mr. Wu from the 
Science and Technology Subcommittee.
    Mr. Wu. Thank you, Mr. Chairman. I have only a couple of 
questions.
    With the passage of September 9, 1999, are we any more 
confident in the Y2K transition after we have gone by the 9/9/
99 date?
    Mr. Spotila. We are very conscious of the fact that January 
1 will be a key date in and of itself. And although in one 
sense it is a comfort that September 9th was not a problem, we 
are pleased with the progress, but very conscious that there is 
a lot of important work still to be done. So we have a general 
sense, particularly from the standpoint of the Federal 
agencies, that we have reached 98 percent compliance on mission 
critical systems and we have a plan for completing it. We are 
pleased with that kind of progress and the hard work that has 
gone into it, but we are not over-confident. We are still 
focused on what remains to be done.
    Mr. Wu. I am reading between the lines that you are not 
taking much comfort in passing what might have been a 
potentially minor disruption date.
    Mr. Spotila. Well, it is a good sign that we did not have a 
disruption on September 9, 1999. But it is not the end of the 
problem.
    Mr. Wu. One of my consistent concerns has been that despite 
however well or poorly we might do in the United States in the 
private sector or at the Federal level in preparing for the Y2K 
transition, foreign countries and the private sectors in 
foreign countries might not be nearly as well-prepared as the 
United States hopefully will be. The question is whether, in 
the arena that you all are addressing today with respect to 
State programs, whether there is a substantial risk basically 
of a cascade effect of problems in foreign countries cascading 
into the State preparedness arena?
    Mr. Spotila. We are obviously all concerned that not every 
country in the world has matched the progress that we have been 
able to accomplish here in the United States. We are looking at 
what interrelationships there might be and interdependencies 
there might be. On a general level, we are reasonably confident 
that there will not be the kind of cascading negative effect 
you are describing affecting U.S. citizens. So I think we have 
a good confidence level there.
    We are, speaking now in terms of the administration, we are 
sensitive to situations that vary from country to country. I 
would point out that the President's Council on Year 2000 
Conversion, headed by John Koskinen, has been very much 
involved in working on an international level to try to promote 
year 2000 compliance and assess the risks. And I might add, and 
this ties into a question that came earlier about individual 
citizens, the Council makes good, updated information available 
both on a website, http://y2k.gov, and through a toll-free 
number, which is 1-888-USA-4-Y2K. That information is something 
people can monitor as it is updated. The Council is giving out 
advisories; the State Department is giving out advisories on 
travel. So there are a variety of things happening to try to 
get information to American citizens. In general, we feel this 
is not a crisis affecting us from international Y2K compliance, 
but, again, it is a risk that is a little difficult to assess 
in some countries.
    Mr. Wu. Are there any particular systems that you might 
consider more vulnerable to problems developing in foreign 
countries? Telecommunication and aviation come to mind 
immediately. But I would like to hear from the panel about any 
particular systems that you all deem to be particularly 
sensitive.
    Mr. Spotila. My understanding is that the major industries 
have all been focusing on this, including the aviation industry 
which has worked hard to ensure that we do not have major 
problems relating to Y2K. That does not mean that a particular 
airport in a particular country might not have a problem. And 
for this, I would defer to the Council and to other updates 
that will be coming out from now until the end of the year to 
give a better assessment. So I do not think we can look so much 
by broad industry area. I think most of the major industries 
are addressing the problem, but there are going to be 
individual areas where there may be more risk.
    Mr. Wu. Thank you very much, Madam Chairwoman.
    Mrs. Morella [presiding]. Thank you, Mr. Wu.
    I apologize for having been at another hearing that I had 
to attend. I know this has been covered before, but before I 
ask you all a final question, Secretary Watkins, I was not here 
to hear what you said about what we can do to get Maryland 
moving faster in terms of compliance. And what is wrong? We 
have been in the forefront. My county of Montgomery has been 
Y2K OK for a long time and had a lot of drills. It is sad to 
think that one of the basic connects is not working at this 
point.
    Ms. Watkins. Maryland is waiting till December to be 
compliant. Congresswoman Morella, you were not here and I will 
just restate Maryland's situation. It relates to the child 
nutrition program only. Our food stamp program in Maryland is 
compliant and we have a certification letter for the food stamp 
program. And the same is true with the WIC. WIC is compliant. 
We do not have a certification letter yet, but we will get the 
certification letter from them for WIC.
    Maryland's only problem area is with the school meals 
programs and with child nutrition. That is not as critical for 
us, but we will continue to work with them. They do have a 
manual system in place. Their system crashed, but they were 
working aggressively and will continue to do so. We will 
provide them any kind of technical assistance and support that 
is needed for child nutrition. And when I say it is not as 
critical because they do not have a system in place, it only 
affects the reimbursement rate that the school districts would 
submit to the State. It is not going to impact their feeding of 
children throughout the State of Maryland. So we will work with 
them and Maryland will be OK.
    Mrs. Morella. I am glad to hear that.
    Mr. Hugler, did you have a chance to tell them about the 
booklet that you have put together?
    Mr. Hugler. I did not make any remarks about the Secretary 
of Labor's recent release of the future work report, but I 
appreciate your mentioning it. It is quite a bit of insight 
into the workplace of the future, which, really, it is upon us 
now because there is a very heavy emphasis on computer 
engineering and other related skills. But I thank you for 
mentioning it.
    Mrs. Morella. Yes. There is definitely a connection between 
Y2K remediation and work force readiness too, which has been 
one of the problems why it has been so costly, why so many 
companies and States and localities and even the Federal 
Government has had some particular problems. I often think 
Admiral Grace Hopper, who was involved with the COBOL 
beginning, I used to say she was the one who kind of designed 
it, and then someone said, ``Oh, no, I was on that committee 
and it was a committee that did it.'' I just think that it has 
posed a challenge that we have been trying to take care.
    I know that the agencies have all stated that they are 
confident that their own systems and kind of cautiously 
optimistic that the State systems will be compliant and 
interoperable. Is there a role that you see that Congress can 
and should play in these remaining 86 days? I just wondered if 
I might just go through the panel and see if you have any 
comments about that.
    Mr. Willemssen.
    Mr. Willemssen. Two comments on two different levels. One, 
I think each Member of Congress would be well served by 
inquiring about their own State, if they have not already. That 
inquiry should start at the level of the Governor in terms of 
getting information on readiness and making sure that 
information, if it has not already, has been given to the 
public so that the citizens know where the individual State is 
with respect to readiness.
    The second thing I would offer, more in the traditional 
congressional role, is I think the Congress needs to be 
postured in the early January timeframe should there be any Y2K 
events and risks that realize themselves. I think the executive 
branch has set itself up with its information coordination 
center and working through FEMA and the FEMA regions to be in a 
position to know what problems may occur. That could lend 
itself eventually to some sort of a request to the Congress to 
be ready should funding, for example, be needed for 
implementation of contingency plans. Something that we have 
testified on before that we thought was important is that OMB 
have in hand how much it would cost if contingency plans need 
to be implemented on any kind of widespread basis. I think the 
Congress needs to be at the ready in the unlikely event that 
something like that occurs.
    Mrs. Morella. I think it is a very good idea that we get 
the word out to our members to communicate with their States to 
inquire about and indicate their interest in making sure that 
the State is compliant. I am not quite sure what you mean by 
Congress being properly postured with the exception of the 
financial thing you mentioned.
    Mr. Willemssen. That is essentially what I am getting at.
    Mrs. Morella. OK. Great. Thank you. I appreciate the 
comment.
    Mr. Spotila. What I would add, Congresswoman, as John 
Koskinen indicated in his August report, one of the areas that 
concerns us is that individuals and small businesses around the 
country may, even at this late stage, not be sufficiently aware 
of the need for Y2K compliance. NFIB, for example, did a survey 
of small businesses earlier in the year and, based on what they 
were hearing from members, they predicted that there might be 
850,000 small businesses not ready for Y2K. I think that 
Members of Congress are in a unique position to communicate 
with their constituents, to continue to try to articulate this 
message and create awareness. I think that is an important 
function.
    Mrs. Morella. I think that is a very good point. I also 
wanted to thank you. In your oral statement, you also had some 
very laudatory comments about Congress and its interest and 
involvement in moving the Federal Government and State and 
local governments ahead, and I certainly appreciate that.
    Mr. Callahan.
    Mr. Callahan. Yes. I think the key emphasis, and it has 
been mentioned here by a number of people, has been the need to 
have very strong and operable business continuity plans in the 
case of some system failures. I think it is fair to say there 
may be some isolated or sporadic system failures in any number 
of areas, and, if that occurs, we have to fall back very, very 
quickly and readily to these continuity plans so the citizens 
will receive the services they need and require.
    Mrs. Morella. I hear more and more of that, people who are 
not sure of how they should react and some small businesses are 
saying we know this will pass, it will be all right. Again, 
there is a little bit of frustration about what you do about 
it. We have had a lot of different kinds of town meetings and 
given them legislative assistance in terms of encouraging 
openness and all. But I do agree that we need to inform the 
public about what needs to be done.
    Secretary Watkins.
    Ms. Watkins. Congresswoman Morella, I could not agree more 
with the panelist who have spoken before me about your 
advocating and being there to let the general public know, 
particularly those people who are on nutrition assistance 
programs and who use those benefits, and joining with Governors 
and our other State partners and with retailers around the 
country to assure people in the various communities that the 
systems are Y2K compliant and that they will receive their 
benefits. I could imagine that if you were in Montgomery 
County, with the large number of people that we have eligible 
for these programs, and you had a public event with retailers 
and the Governor and someone from Health and Human Services and 
Education, to let them know that the systems are OK and that 
they should not worry about Y2K and they are going to have 
food. If this was done around the country with the various 
Members of Congress and Governors and our State partners, who 
have done an outstanding job, I think it certainly would send 
the right signal.
    Mrs. Morella. It might be that a mailing would be more 
effective. Sometimes with these meetings you just do not get as 
many people as you would like to have show up to them. And so 
maybe something that would comfort them. I have been thinking I 
am going to give Christmas and Hanukkah gifts of baskets with a 
Y2K survival kit to hold you over for a weekend, with foods, 
and batteries, and whatever, and just let them know in advance 
not to be alarmed.
    Mr. Hugler.
    Mr. Hugler. Madam Chairwoman, I would concur with 
everything that has been said by the panel thus far in response 
to your question. I would particularly highlight the value of 
Members of Congress interacting with their respective Governors 
over the issues concerning Y2K. The public events suggestion I 
think was a very good one. The important point here is I think 
it would be beneficial if the States would hear the same 
message that they hear from the Department of Labor and other 
departments represented here about what is important. I would 
second what Mr. Callahan said, for example, about business 
continuity and contingency plans. That is something where we 
need to finish that work. As good a job as we have done and we 
know our partners have done, we still need to be prepared for 
the unforeseen and be able to continue business in the 
temporary absence of automated systems.
    Mrs. Morella. Mr. Benzen, I am sorry I did not hear your 
oral presentation, but I do have your written testimony. I 
would love to hear from you now.
    Mr. Benzen. Just very quickly. To answer your question, I 
think I would have to agree with everyone at this table. I 
think they are on target with what efforts need to be 
continued. I would point out the efforts of this committee have 
helped the States certainly in that it is an evangelizing role, 
if you will. It has called attention to the problem and it has 
gotten action. The idea of making sure the Governors know it is 
important, I think the Governors really already know what is 
important. I do not think the problems we are seeing are 
because of inactivity or because of ignorance. I think it is a 
matter of just a tremendous amount of work to do that needs to 
be done.
    Mrs. Morella. And it all starts from the top, and those who 
recognized it and started early, and it kind of pyramided out 
to touch many more people.
    We have 86 days to solve our remaining Y2K problems. The 
Y2K technology challenge has shown how closely our society is 
dependent on computers. It illustrates our interdependence also 
on each other. The Federal Government has many critical 
business partners that help carry out essential programs such 
as you have discussed, Medicaid, temporary assistance for needy 
families, food stamps, and unemployment insurance. Millions of 
lives will be severely disrupted if even one State-run program 
fails.
    States and counties need to be ready. Many have significant 
work left to do. Today, we have named several States that face 
a significant challenge in the coming months. If computer 
systems are not ready, I strongly urge State and local 
governments to develop and test practical contingency plans. 
Some have done it, some have not.
    Our society lives with minor disruptions and inconveniences 
each day, whether it is the traffic congestion or the weather. 
However, our Nation cannot afford to experience significant 
service delivery problems to our essential programs. We still 
have time to get the programs ready, but I think you all agree 
we must redouble our efforts.
    I just think this has been a great panel. I want to thank 
you all for being with us. There may be some other questions 
with regard to what is happening in some States on some of the 
programs that we have not had a chance to discuss that, with 
your agreement, we may forward to you for responses.
    I want to thank the following people. On the majority 
staff, J. Russell George, staff director and chief counsel; 
Matt Ryan, senior policy director; Bonnie Heald, communications 
director and professional staff member; Chip Ahlswede, clerk; 
P.J. Caceres, Deborah Oppenheim. On the Technology 
Subcommittee, Jeff Grove, staff director; Ben Wu, Joe Sullivan. 
On the minority staff, Trey Henderson and Jean Gosa. And the 
Subcommittee on Technology, Michael Quear, Marty Ralston. Also, 
the court reporter, Ruth Griffin.
    The meeting is now adjourned. Thank you all very much.
    [Whereupon, at 11:59 a.m., the subcommittees were 
adjourned, to reconvene at the call of their respective 
Chairs.]

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