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



 
                Y2K: A THREAT TO U.S. INTERESTS ABROAD?

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

                                HEARING

                               BEFORE THE

                              COMMITTEE ON
                        INTERNATIONAL RELATIONS
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             FIRST SESSION

                               __________

                       THURSDAY, OCTOBER 21, 1999

                               __________

                           Serial No. 106-92

                               __________

    Printed for the use of the Committee on International Relations






                    U.S. GOVERNMENT PRINTING OFFICE
63-868 CC                   WASHINGTON : 2000          





                  COMMITTEE ON INTERNATIONAL RELATIONS

                 BENJAMIN A. GILMAN, New York, Chairman
WILLIAM F. GOODLING, Pennsylvania    SAM GEJDENSON, Connecticut
JAMES A. LEACH, Iowa                 TOM LANTOS, California
HENRY J. HYDE, Illinois              HOWARD L. BERMAN, California
DOUG BEREUTER, Nebraska              GARY L. ACKERMAN, New York
CHRISTOPHER H. SMITH, New Jersey     ENI F.H. FALEOMAVAEGA, American 
DAN BURTON, Indiana                      Samoa
ELTON GALLEGLY, California           MATTHEW G. MARTINEZ, California
ILEANA ROS-LEHTINEN, Florida         DONALD M. PAYNE, New Jersey
CASS BALLENGER, North Carolina       ROBERT MENENDEZ, New Jersey
DANA ROHRABACHER, California         SHERROD BROWN, Ohio
DONALD A. MANZULLO, Illinois         CYNTHIA A. McKINNEY, Georgia
EDWARD R. ROYCE, California          ALCEE L. HASTINGS, Florida
PETER T. KING, New York              PAT DANNER, Missouri
STEVE CHABOT, Ohio                   EARL F. HILLIARD, Alabama
MARSHALL ``MARK'' SANFORD, South     BRAD SHERMAN, California
    Carolina                         ROBERT WEXLER, Florida
MATT SALMON, Arizona                 STEVEN R. ROTHMAN, New Jersey
AMO HOUGHTON, New York               JIM DAVIS, Florida
TOM CAMPBELL, California             EARL POMEROY, North Dakota
JOHN M. McHUGH, New York             WILLIAM D. DELAHUNT, Massachusetts
KEVIN BRADY, Texas                   GREGORY W. MEEKS, New York
RICHARD BURR, North Carolina         BARBARA LEE, California
PAUL E. GILLMOR, Ohio                JOSEPH CROWLEY, New York
GEORGE RADANOVICH, California        JOSEPH M. HOEFFEL, Pennsylvania
JOHN COOKSEY, Louisiana
THOMAS G. TANCREDO, Colorado
                    Richard J. Garon, Chief of Staff
          Kathleen Bertelsen Moazed, Democratic Chief of Staff
                        Ronald C. Crump, Counsel
                    Marilyn C. Owen, Staff Associate




                            C O N T E N T S

                              ----------                              

                               WITNESSES

                                                                   Page

Richard C. Nygard, Chief Information Officer, U.S. Agency for 
  International Development......................................     3
John O'Keefe, Special Representative for the Year 2000, United 
  States Department of State.....................................     5
Lawrence K. Gershwin, National Intelligence Officer for Science 
  and Technology, Central Intelligence Agency....................     7
The Honorable Jacquelyn L. Williams-Bridgers, Inspector General, 
  United States Department of State..............................    13
Theodore Alves, Director, Assistant Inspector General for Audits, 
  U.S. Agency for International Development......................    16
Linda D. Koontz, Associate Director, Accounting and Information 
  Management Division, U.S. General Accounting Office............    17

                                APPENDIX

Prepared statements:
The Honorable Benjamin A. Gilman, a Representative in Congress 
  from New York and Chairman, Committee on International 
  Relations......................................................    32
Richard C. Nygard, U.S. Agency for International Development.....    34
John O'Keefe, United States Department of State..................    39
Lawrence K. Gershwin, Central Intelligence Agency................    47
The Honorable Jacquelyn L. Williams-Bridgers, U.S. Department of 
  State..........................................................    57
Theodore Alves, U.S. Agency for International Development........    70
Linda D. Koontz, U.S. General Accounting Office..................    88

Additional material:

Public Announcement, Y2K Worldwide Notice dated January 29, 1999, 
  from the Office of the Spokesman, U.S. Department of State.....   109
Public Announcement, Y2K Worldwide Notice dated July 26, 1999, 
  from the Office of the Spokesman, U.S. Department of State.....   111
Y2K Sections of Consular Information Sheets (U.S. Department of 
  State).........................................................   113
Y2K Post Reporting Times (U.S. Department of State)..............   137


                Y2K: A THREAT TO U.S. INTERESTS ABROAD?

                              ----------                             

                       House of Representatives,

      Committee on International Relations,
                                   Washington, D.C.
    The Committee met, pursuant to notice, at 10:07 a.m. In 
Room 2172, Rayburn House Office Building, Hon. Benjamin A. 
Gilman (Chairman of the Committee) Presiding.
    Chairman Gilman. The Committee on International Relations 
will come to order.
    Our Committee on International Relations has engaged in a 
comprehensive oversight of a number of issues affecting the 
foreign interests of our Nation and on the Administration's 
policies that identify and advance those interests.
    In so doing, we have a further fiduciary duty to make 
certain that the agencies charged with protecting and advancing 
our interests are themselves in the position to do so 
effectively. In meeting our oversight responsibility in that 
regard, I have asked the U.S. General Accounting Office to do a 
study of the readiness of our Department of State and our 
Agency for International Development to meet any Y2K challenges 
when the year 2000 begins.
    GAO was specifically requested to study three things: The 
first was whether the State Department, through its leadership 
of the President's Year 2000 Council International Relations 
Working Group, has an adequate strategy in place to assess and 
address international year 2000 risks.
    Second, we wanted GAO to ascertain whether the State 
Department has an adequate strategy in place to ensure the 
safety of Americans overseas who may face risks from year 2000 
failures.
    Last, we need to answer the question of whether our U.S. 
Agency for International Development has taken the necessary 
appropriate steps to address with foreign nations whether year 
2000 risks associated with information technology projects and 
systems that USAID has funded.
    We are here today to hear not only their report, but just 
as importantly, to ascertain on the record the Administration's 
position and views as to its readiness for problems that may 
come its way because of the Y2K phenomenon. The Administration 
will now be on the record as to its readiness.
    It is important that we press for this status report and an 
accounting for any state of unreadiness by either State or 
USAID.
    Now I will invite Mr. Gejdenson, our Ranking Minority 
Member, to present any opening remarks that he may have.
    [The prepared statement of Chairman Gilman appears in the 
appendix.]
    Mr. Gejdenson. Thank you, Mr. Chairman. I commend you for 
holding these hearings. Clearly we are going to be dealing with 
Y2K issues long after January 1st, particularly for Americans 
overseas and for American national security. We may have more 
work to be done on the Y2K issue in other countries than we do 
here at home. I have seen the reports that State and USAID are 
well on their way to dealing with the Y2K issues and commend 
both of these organizations for their efforts here.
    What concerns me is whether American officials overseas 
will be in a position to help Americans who may find themselves 
in some kind of jeopardy. Whether a medical device fails 
overseas, whether countries overseas have failures in their 
cash machines, their phone systems, will American embassies 
have the personnel in place and the inclination to provide 
assistance to Americans who are in trouble.
    Of course, we are concerned about nuclear power plants and 
military systems, ballistic missiles and weapons of mass 
destruction in other countries. I think one of the things we 
have to make sure we focus on is that American expertise and 
Western European expertise is available, especially, to 
countries of the former Soviet Union and some of the less 
developed countries to help these countries deal with potential 
disasters. I am hopeful that the witnesses today will give us 
some assurances in these areas, but particularly again that we 
will have a system in place when an American citizen shows up 
at an embassy, that the American embassy will be able to help 
them, whether it is a medical or financial emergency where the 
systems have not yet been adapted to deal with the Y2K crisis.
    My son is now in Bolivia, and his girlfriend is in New 
York. She happens to live in a part of New York that has an 
area code that Bolivia still does not recognize. Now, he has 
been there for 3 months, and she can call him but he cannot 
call her. That is not exactly an international crisis, but if 
we have somebody with a medical emergency in a country where a 
Y2K problem has affected the ability to communicate, that could 
be something that we must be able to deal with.
    So I hope we hear from the witnesses today on those 
matters.
    Thank you very much.
    Chairman Gilman. Thank you, Mr. Gejdenson. This morning we 
have two panels of three witnesses each. The first panel 
consists of Mr. John O'Keefe, Special Representative for Year 
2000, United States Department of State; Mr. Richard Nygard, 
Chief Information Office for the U.S. Agency for International 
Development; and Lawrence Gershwin, National Intelligence 
Officer for Science and Technology, Central Intelligence 
Agency.
    The second panel consists of Ms. Jacquelyn Williams-
Bridgers, Inspector General of the Department of State; Mr. 
Theodore Alves, Assistant Inspector General for Audits, United 
States Agency for International Development; and Ms. Linda 
Koontz, Associate Director, Accounting and Information 
Management Division at the U.S. General Accounting Office.
    Chairman Gilman. We welcome all of our witnesses. Mr. 
Nygard, you may open, but before we begin, you may put your 
full statement in the record and summarize. Without objection 
your full statement will be made a part of the record. Mr. 
Nygard.
    Mr. Nygard. Thank you, Mr. Chairman. I appreciate the 
opportunity to appear before you this morning to describe the 
response of USAID's to potential Y2K disruptions that may 
affect our agency's systems, our programs, and the countries in 
which we operate. As you suggested, I have submitted a written 
statement for the record and will summarize it here.
    Chairman Gilman. Without objection.

STATEMENT OF RICHARD C. NYGARD, CHIEF INFORMATION OFFICER, U.S. 
              AGENCY FOR INTERNATIONAL DEVELOPMENT

    Mr. Nygard. I will cover three main topics: The condition 
of our internal information systems, the steps we are taking to 
ensure our programs and operations will continue into 2000, and 
third, the work we are doing to prepare for possible 
humanitarian assistance early next year.
    First, on our internal systems, we have a total of seven 
mission-critical systems, two of which have been replaced. Of 
the remaining five, four have been repaired and implemented. 
The fifth system, USAID's New Management System (NMS), is on 
schedule for completion at the end of this month. We are 
continuing to test the Y2K readiness of our other noncritical 
agency systems. In repairing and testing our systems, USAID's 
prime systems contractor has used sophisticated techniques for 
detailed measurement of Y2K progress and comprehensive testing.
    USAID is also working with our Inspector General and our 
prime systems contractor to expand and improve technical 
discipline throughout our information systems management. One 
important effort in this area is documenting the results of Y2K 
testing. We realize the importance not only of conducting the 
tests but also assuring that written records permit independent 
verification that the testing was done. We have made 
significant progress and will continue to seek improvements in 
this area.
    Second, on business continuity planning, USAID is carrying 
out three forms of such planning. First, formal planning for 
our critical internal business systems; third, program 
assessments to assure that ongoing USAID activities will 
continue after January 1st; and 3rd, external coordination with 
the Department of State's contingency planning at each 
overseas' post. Business continuity planning for our mission-
critical systems focuses on critical financial functions: 
payments, obligations, and funds control.
    Starting last fall, USAID staff, supported by contractors, 
analyzed financial processes and ranked the importance of each 
process. Next, detailed work-around techniques for the business 
processes were identified. Manual procedures and local 
spreadsheet applications were developed to facilitate interim 
operations if disruption to normal operations occurs.
    As of October 15th, all 44 of our overseas missions that 
perform accounting functions for USAID reported that their 
rehearsals of Y2K contingency plans for core financial 
functions are complete and reported as successful by the 
mission controllers. All reported no notable startup errors 
when fiscal 2000 operations were commenced in early October. 
Documentation of these rehearsals is still in process.
    Second, while USAID cannot assure that each of the 
countries where we operate won't be affected by Y2K 
disruptions, we have taken significant actions to assure 
program continuity after January 1st. Five percent of the 
fiscal 1999 development assistance and child survival funding 
for each of our regional bureaus was set aside to be used as 
necessary for Y2K Program repairs. Before the funds could be 
used for purposes other than Y2K, the bureau assistant 
administrators had to affirm that all prudent steps had been 
taken to make programs Y2K compliant.
    The USAID Administrator met with each regional assistant 
administrator twice this year to discuss Y2K compliance and the 
continuity of mission and program operations. Heads of all 
bureaus indicated that necessary steps had been taken by the 
end of fiscal 1999 to assure continuity of program operations.
    A number of actions were also taken to assist missions and 
programs in assuring program continuity. These included: 
performing independent Y2K assessments on critical 
infrastructure and government systems in 50 countries; training 
program and host country managers on Y2K methodologies; making 
available contingency planning consulting and workshops for 
embassies, missions, and host countries; cooperating with other 
donors such as the World Bank; participating in governmentwide 
international groups addressing the Y2K problem; and developing 
a Y2K management tool kit, which I have a copy of here, to help 
system managers, government planners, business owners, and 
community readiness leaders in the developing world. I will be 
prepared to talk about that more in the question session if 
there is a desire to do so.
    Externally, we are working with the Department of State's 
Y2K Committee under the authority of the chief of mission at 
each overseas post. Embassy Y2K Committees with the 
participation of USAID mission staff continuously evaluate host 
nation Y2K readiness. To provide additional support of mission 
program and host country Y2K issues, we have established Y2K 
resource centers in Washington, Russia, Ukraine and Egypt and 
have developed business continuity and contingency plans at 
individual missions in Europe.
    The third category is humanitarian assistance. I will 
summarize that briefly. We have taken a number of actions to 
ensure that we will be able to respond after the first of the 
year should the situation require it. We sent out a worldwide 
guidance cable. We have improved our communications systems 
internally. We have worked with our humanitarian assistance 
partners, PVO's and others, to ensure that they are Y2K 
compliant. We will keep our operations center open 24 hours a 
day, 7 days a week at the beginning of January. We are making 
sure that strategically located stockpiles of food, blankets, 
and emergency supplies are at capacity levels; and we are 
working closely with the Department of State and the Department 
of Defense in preparing for activities that may happen early 
next year.
    We are concerned that the potential need for Y2K-related 
humanitarian aid coming on top of Kosovo, Central America, and 
the ongoing African crisis may exceed the capacity of USAID and 
other donors. We will do everything possible, but out resources 
are limited.
    In closing, Mr. Chairman, let me repeat that we at USAID, 
working with our colleagues at the Department of State and 
other Federal agencies and partners, have made major progress 
in assuring that our people and our programs won't be seriously 
affected by Y2K. I cannot guarantee that there will be no 
disruptions because of the conditions in the countries where we 
operate, but I believe that the actions we and others have 
taken will provide the safety of our people and the continuity 
of our programs.
    Chairman Gilman. Thank you.
    [The prepared statement of Mr. Nygard appears in the 
appendix.]
    Chairman Gilman. Our next witness is John O'Keefe, Special 
Representative for the Year 2000 from the United States 
Department of State. Mr. O'Keefe, you may summarize as you deem 
appropriate.
    Mr. O'Keefe. Thank you, Mr. Chairman. As you suggest, I 
will summarize from the full testimony and submit that full 
testimony for the record.
    Chairman Gilman. Without objection.

STATEMENT OF JOHN O'KEEFE, SPECIAL REPRESENTATIVE FOR THE YEAR 
            2000, UNITED STATES DEPARTMENT OF STATE

    Mr. O'Keefe. Those working on the Y2K problem are 
confronted with limited resources, limited time, imperfect 
information, and uncertainty regarding the scope and duration 
of its potential effects. Despite these difficulties, the State 
Department has used its existing infrastructure and experience 
in crisis management and diplomacy to prepare for the potential 
impact of Y2K problems overseas.
    We have not done this alone, however. Work on the 
international aspects of the Y2K problem has truly been an 
interagency and multilateral cooperative effort as well as a 
public and private sector partnership.
    As reflected in the State Department's Y2K preparations, 
one of our highest priorities is ensuring the safety of 
Americans living and traveling abroad, including our own 
employees. We have done this by focusing our Y2K efforts in 
three key areas.
    First, we have worked to make sure that our mission-
critical systems all over the world are themselves Y2K 
compliant so that we can continue to provide critical services 
to Americans overseas and domestically. The Department has 
fully remediated and implemented 100 percent of its mission-
critical systems deployed both domestically and 
internationally.
    Second, we have been coordinating closely with our missions 
abroad to assure their continued safe operation despite any 
potential Y2K-related disruptions in the host country 
infrastructure. We have taken similar backup precautions for 
our domestic facilities.
    Third, we have conducted a dialogue and continue to 
cooperate with other countries to encourage their efforts to 
prepare for Y2K.
    The Department is in the process of exercising its 
remediated systems to ensure that our business processes are 
maintained in the event of any Y2K failures.
    In addition to systems readiness, our posts have taken 
numerous steps to assure that their core functions including 
the protection of American citizens, can continue 
uninterrupted. We have used existing emergency plans as a base 
and modified them to reflect some of the unique challenges 
posed by Y2K. Preparations overseas have followed a multiphased 
approach. In February 1999, all posts received a contingency 
planning tool kit to assist in their planning for the rollover. 
Then in May 1999, all chiefs of mission certified post 
readiness for the transition to the Year 2000 and identified 
resources required to ensure operational readiness. Based on 
this information, the Department prepared a request and 
received some funding for generators and fuel in addition to 
the funds for systems remediation.
    The final critical element in the post contingency planning 
strategy is the contingency plan validation process. Using a 
web-based tool organized by post business processes, posts are 
consolidating previous tool kit responses, preexisting 
emergency planning, and guidance from the department into a 
standardized format for a Y2K contingency plan. By October 
27th, posts will complete the contingency plan validation 
process.
    Preparation for our domestic facilities has been equally 
thorough. The Department has inventoried operating equipment in 
all of our buildings, 23,000 items from elevators to pumps, 
lights, fans, and valves and verified reliability with 
manufacturers, with GSA, and our own experts. Our preparation 
to ensure the safety of Americans overseas who may face risks 
from Year 2000 failures has been extensive. Our efforts have 
focused on providing information to the public, being open 
about our preparation, and ensuring backups for key consular 
services.
    The January, 1999 announcement to the public alerted 
traveling Americans to the Y2K phenomenon in general. It was 
followed in July with guidance for personal preparedness in 
areas such as health-related issues and noted the inability of 
our missions to directly provide food, water, and shelter to 
the millions of Americans abroad.
    [The information referred to appears in the appendix.]
    On September 14th, the Department issued updated consular 
information sheets for every country in the world. I am pleased 
to provide you a summary of our country by country Y2K consular 
information sheet. Each sheet contains a section assessing 
potential for disruptions, remediation efforts, and possible 
impact in a specific country. So our citizens are informed of 
potential risks.
    [The information referred to appears in the appendix.]
    Mr. O'Keefe. At the end of October, we are anticipating 
issuing strengthened consular information sheets for a small 
number of countries which have not made the anticipated 
progress on their remediation efforts. Furthermore, if any 
authorized departure decisions are made for nonemergency 
personnel at posts, the U.S. public will be notified in the 
form of a travel warning immediately.
    Finally, if serious disruptions occur, we will prioritize 
consular services to American citizens, focusing in particular 
on evacuations, if necessary, medical emergencies, welfare and 
whereabouts inquiries, and deaths. We have coordinated with 
other agencies regarding emergency services for Americans 
abroad during the rollover period.
    Since time is up, I will just summarize the fact that the 
Department has successfully tested our reporting plan. This was 
the most comprehensive worldwide Y2K reporting exercise within 
the U.S. Government and that in the international sphere, which 
you noted in your opening remarks. The interagency working 
group on international matters is cochaired by the Department 
of State and the Department of Defense, and we have been 
meeting regularly since February 1999. It serves both to 
exchange information and to develop policy.
    Our Members have been involved in a number of international 
initiatives to mitigate the potential effects on Y2K on 
aviation safety, ports and maritime, nuclear power plants, 
small- and medium-sized businesses and operational readiness of 
our military forces abroad.
    Mr. Chairman, this concludes my testimony. Thank you for 
the opportunity to speak to the Committee today. I will be 
happy to answer any questions the Members may have.
    Chairman Gilman. Thank you, Mr. O'Keefe.
    [The prepared statement of Mr. O'Keefe appears in the 
appendix.]
    Chairman Gilman. We now proceed to Lawrence Gershwin, 
National Intelligence Officer for Science and Technology at our 
Central Intelligence Agency.
    Mr. Gershwin. Thank you. Mr. Chairman and Members of the 
Committee, I am pleased to have the opportunity today to 
provide the Committee with the intelligence community's latest 
assessment of the status of foreign preparedness for Y2K. I 
will submit my full statement for the record, and I will 
summarize the rest of it now.
    Chairman Gilman. Without objection.

   STATEMENT OF LAWRENCE K. GERSHWIN, NATIONAL INTELLIGENCE 
OFFICER FOR SCIENCE AND TECHNOLOGY, CENTRAL INTELLIGENCE AGENCY

    Mr. Gershwin. Our assessment is essentially a snapshot of 
the current state of international preparedness for Y2K. As 
countries continue their remediation, testing and contingency 
planning, and as we get more information, some of our 
observations will change.
    Y2K is a particularly challenging issue for analysis 
because of the uneven understanding around the world of the 
vulnerabilities of computer hardware and software, the 
unpredictability of failures among interconnected systems, and 
the wide variation in reporting and assessments of Y2K 
preparedness worldwide.
    A quick tour around the world: Russia, Ukraine, China, and 
Indonesia are among the major countries most likely to 
experience significant Y2K-related failures. Many developing 
countries are having problems with a late start and with 
insufficient funds to carry out a strong remediation and 
testing effort. Countries in Western Europe are generally 
better prepared although we see the chance of some significant 
failures in countries such as Italy. Major economic powers such 
as Germany and Japan are making great strides in Y2K 
remediation, but even for them their late start and the 
magnitude of the effort suggests that even these countries are 
at risk of some failures.
    Canada, the United Kingdom, Australia, Singapore, and Hong 
Kong are very well prepared and have a lower chance of 
experiencing Y2K failures.
    While the United States probably will not be directly 
impacted by foreign Y2K failures, breakdowns in foreign 
infrastructure could impact our interests overseas. Disruptions 
and failures in telecommunication, electricity generation, and 
transmission and transportation pose the greatest threat 
because of their fundamental importance to all other critical 
services. Although a high priority for most countries, we 
estimate that only a few are on target in remediating and 
testing their telecommunications systems. Networks are likely 
to experience problems ranging from minor inconveniences to 
serious disruptions.
    Experts are concerned that minor failures could cascade 
causing a network to become degraded over time. We are 
concerned about the safety of Soviet-designed nuclear plants 
due both to inherent design problems and to the lack of 
detailed data on Y2K remediation and contingency plans. 
Nonetheless, we judge that the chance of a nuclear accident on 
the scale of Chernobyl is extremely low. The chance of a lower 
level nuclear incident involving a Soviet-designed nuclear 
reactor is also low; but it is, however, higher than normal 
because of the fact that the power grid could experience 
failures, auxiliary generators could be inoperable due to 
maintenance problems or a lack of sufficient fuel, and 
erroneous data could lead to operator error.
    Now we are highly confident that Y2K failures will not lead 
to the inadvertent or unauthorized launch of a ballistic 
missile by any country. We have been concerned about the 
potential for Russia to misinterpret early warning data because 
of Y2K-induced failures, especially if we were in a period of 
increased tension brought on by some international political 
crisis. However, Russia has agreed to cooperate with the United 
States on shared early warning data in order to prevent any 
misunderstandings resulting from Russian early warning 
failures.
    Public behavior in response to Y2K-generated failures will 
vary widely. In developing countries, populations have minimal 
access to Y2K-vulnerable public services, and those who do are 
accustomed to frequent breakdowns. But countries with crowded, 
urban populations could experience significant unrest if 
outages are prolonged. The reactions of urban populations in 
developed countries are harder to gauge because of widespread 
media attention and high public awareness of the issue. We 
expect that the risks of panic are higher in countries with 
lower interest in Y2K.
    We are, for example, concerned about possible Y2K-related 
interruptions in countries planning major tourist events such 
as Italy, Egypt, Brazil, and the Caribbean, should local 
infrastructures experience significant failures.
    Y2K-related malfunctions have the potential to cause or 
exacerbate humanitarian crises through prolonged outages of 
power and heat, breakdowns in urban water supplies, food 
shortages, degraded medical services, and environmental 
disasters resulting from failures in safety controls. Russia, 
Ukraine, China, Eastern Europe, India, and Indonesia are 
especially vulnerable due to their poor Y2K preparations and, 
in some cases, the difficulty of coping with breakdowns in 
critical services in the middle of winter.
    Few governments outside the West would be capable of 
managing widespread humanitarian needs. Although many have 
systems experienced in delivering medical and social services 
following natural disasters, Y2K failures present a more 
complex challenge because of the potential for multiple and 
simultaneous disasters within specific countries and around the 
world taxing the ability of international organizations to 
help.
    Y2K failures in necessary communications system and in 
needed medical and social service would compound difficulties 
in mobilizing emergency responses. We have seen, in different 
months, an increasing number of statements by countries and 
commercial enterprises that they are now prepared for Y2K. We 
expect to see more such claims as the end of the year 
approaches. While progress has certainly been made on many 
fronts, not all of these readiness claims are credible, and it 
is a challenge for us to sort out the truth. Some governments 
and commercial enterprises have an incentive to overstate the 
Y2K problem while others are likely to downplay the risks of 
Y2K failures.
    We are continuing to focus heavily on this evolving issue 
to ensure that our policymakers are as prepared as possible for 
the potential consequences for the United States and our allies 
of international Y2K failures. Thank you, Mr. Chairman.
    Chairman Gilman. Thank you Mr. Gershwin.
    [The prepared statement of Mr. Gershwin appears in the 
appendix.]
    Chairman Gilman. Our panelists have certainly given us some 
food for thought. Let me start the questioning, and this is 
directed to our State Department representative, Mr. O'Keefe. 
GAO has reported that it has not seen well-documented and 
thoroughly tested Y2K emergency plans in place for overseas 
embassies, consulates, and missions.
    Mr. O'Keefe, what assurance does the Department of State 
have that these posts can continue to perform key operation 
during the rollover, including providing services and 
information to Americans who live outside of our embassy 
confines?
    Mr. O'Keefe. Mr. Chairman, as I mentioned in my testimony, 
we have based the preparations for Y2K on existing procedures. 
As you well know, our embassies, throughout the years, have 
experienced earthquakes, civil disturbance, bombings, civil 
war, and we manage crises on a regular basis. In any particular 
year, we have 20 to 30 task forces for whatever emergencies 
that occur. So it is something that we do regularly.
    But just to provide you the kinds of assurances which I 
think you and the American public deserve, I would note, first 
of all, that we have done crisis management exercises with Y2K, 
as part of that, at over 90 embassies already this year to make 
sure that they have their emergency plans ready and take into 
account Y2K problems.
    Beyond that, as I had also mentioned, because GAO had 
pointed out that we had not well-documented the contingency 
plans and how they were going to function, we have instituted 
this validation process which embassies have to provide to us 
by the end of this month. Then by November 11th, we will have 
reviewed and provided comments back.
    Chairman Gilman. Thank you, Mr. O'Keefe. Has the Department 
distributed any extra resources to help the posts prepare for 
any possible Y2K failures?
    Mr. O'Keefe. Yes, sir, we have provided approximately $6 
million for generators. We will also be providing another 
million for fuel. So that will allow all the posts abroad to 
operate for a minimum of 15 days should the local power grid 
fail. That will in turn allow us to communicate, will allow us 
to provide those essential services to U.S. citizens and 
continue the command and control function.
    Chairman Gilman. Thank you. Mr. Nygard, with regard to 
USAID, according to the 10th quarterly report that was issued 
mid-September of this year, six of AID's seven mission-critical 
systems are Y2K compliant. When will the New Management System 
be remediated, tested independently, validated, and certified 
as Y2K compliant? Are there any contingency plans for NMS if it 
is not Y2K compliant by the turn of the century?
    Mr. Nygard. Mr. Chairman, as I indicated in my testimony, 
we are in the very final stages of testing the NMS, and we 
expect it will be fully implemented by the end of this month--
that is to say within another week and a half. We do not 
anticipate the need for contingencies, but the financial 
contingency plans that we have and that I described in some 
detail would cover the NMS as well as our other management 
systems should there be a failure. So we do not anticipate a 
problem and expect to have NMS fixed by the end of this month.
    Chairman Gilman. Thank you, Mr. Nygard. Mr. Gershwin, any 
special arrangements with your station chiefs overseas to make 
certain that communications won't be disrupted?
    Mr. Gershwin. Obviously I cannot talk about all of that in 
an open session; but, yes, our own presence overseas is being 
worked very carefully for Y2K. We are thoroughly involved with 
helping with the embassy preparations themselves.
    Chairman Gilman. Thank you. Mr. Nygard, one more question. 
Why does only one mission in AID, Cairo, have a Y2K contingency 
plan? What assurances does AID have that its overseas missions 
are ready for Y2K and can continue to perform any critical 
assistance operations?
    Mr. Nygard. Mr. Chairman, while Cairo is the only mission 
that has a formally documented contingency plan, we do have 
contingency plans in all of our overseas operations. The levels 
of these have varied based on the size and complexity of the 
programs. As you know Egypt is our largest mission and our 
largest program. We have also done very detailed contingency 
plans in most of Eastern Europe and the former Soviet Union. 
For our other missions in Africa, Asia, and Latin America, 
similar kinds of contingency plans have been done, but not 
documented and not done in the detail that Cairo has been done.
    Chairman Gilman. Thank you, Mr. Nygard. Mr. Hastings.
    Mr. Hastings. Thank you, Mr. Chairman. In a country like 
Pakistan that is recently in turmoil, has nuclear facilities, 
and we have, at least up to a certain point, had interaction 
with them, what, if anything, are we able to do or are we 
doing, taking into consideration that kind of government that 
is in a state of flux?
    Mr. O'Keefe. Mr. Hastings, we do obviously continue to have 
diplomatic relations with Pakistan; we do have our Ambassador 
there. One of our goals is stability. We do have certain legal 
restrictions because of the nuclear testing that both Pakistan 
and India conducted, so we cannot provide direct assistance to 
those governments. However, we can, through diplomatic means, 
continue the dialogue on the issue of safety and security of 
those weapons that they do have.
    Mr. Hastings. Let me ask you two quick questions. What are 
the United States Government's greatest concerns for American 
citizens, both tourists and those living abroad? How successful 
have you been in convincing foreign governments of the 
seriousness of the Y2K problem? How closely have they worked 
with us, and which countries have done best and which have been 
the least responsive?
    Mr. O'Keefe. Sir, I would say that when you take a look 
across the spectrum of potential problems that, first of all, 
electric power grids tend to be a little more sensitive; and if 
you are in a cold country, that presents a little more problem. 
But for U.S. citizens abroad, probably the most difficult 
sector to get into and to fix is the medical sector. Because of 
that, we have instructed our embassies to consult doctors, 
hospitals, ambulance services, and local authorities regarding 
their contingency plans. We have an outreach strategy to the 
American public to tell them that if you have a medical 
condition, especially if you rely on electrical medical 
devices, you should be very careful about where you are going 
to travel.
    With regard to heightening awareness of other countries, as 
I said at the beginning, it certainly is not a lone wolf 
effort. We have worked with the President's Council in Year 
2000, with the U.N. through the G8, through APEC, through OAS, 
all of these international organizations to heighten awareness. 
It really has been quite a difference from the time I started 
on this about this time last year to right now. There is not 
only more awareness but there has been a lot more remediation 
and certainly a lot more contingency planning. In terms of 
worst and best, I wouldn't want to characterize one way or 
another.
    Mr. Hastings. Mr. Gershwin, regarding nuclear power plants, 
even if Y2K does not cause them to fail and pose a danger, some 
of us are concerned about the synergistic effect of Y2K 
disruptions to emergency response infrastructures that would 
have to deal with a nuclear plant accident. Many states that 
have the old Soviet-designed reactors don't have the best 
safety culture or emergency plans in the best of times. Is 
there a risk? If there is a problem with a plant, that problem 
could become magnified by Y2K disruptions of emergency 
responders. Do countries like Ukraine have enough backup 
generators and fuel necessary for the remediation that I keep 
hearing about.
    Mr. Gershwin. The issue that you raise is clearly the issue 
of the day for that part of the Y2K problem. We, both the U.S. 
Government and international bodies, have been very active in 
the former Soviet Union and in a variety of countries, working 
with the operators of nuclear reactors on surveying their Y2K 
preparedness, surveying the adequacy of their backup, the 
adequacy of fuel and so on.
    The issue has gotten a great deal of attention this year, 
and there has been a very good response, in fact, from both the 
Russians and some of the other countries that have these 
reactors. The Department of Energy has been active, as well as 
the International Atomic Energy Agency. A great deal of 
attention is being paid to it. The problem is that these are 
necessarily very complex facilities that they operate in order 
to provide power. So, yes, as I indicated in my statement, 
there is concern about this. We don't think the chances are 
very high that anything very serious will take place. But there 
is somewhat greater risk just because of the interaction with 
the Y2K problem, particularly if power goes off and they have 
to start dealing with contingencies for which there hasn't been 
enough time to prepare.
    Mr. Hastings. One very brief question, and maybe some of 
you can give me a followup and not bother to respond right now; 
but when the rollover occurs, some of us are wondering when do 
we consider that there will be quietus? Assuming everything 
goes well all over the world, when will it stop? I will get 
that answer from you subsequently.
    My bigger question for government is, have we prioritized 
in a coordinated manner specific areas of specific countries 
that, if they went down, would adversely affect United States 
interests? Toward that end, Mr. O'Keefe, I heard you mention 
task forces. Are they being regionalized such that they are 
positioned to move where the problem may exist, and are there 
plans to anticipate where the greatest problems might exist?
    Mr. O'Keefe. Mr. Hastings, we have done this process of 
identifying countries where there was a fairly high potential 
for failure and also U.S. interests which could be affected by 
those failures, and this has been a process which has been 
ongoing since February.
    Yes, we have. I can, in broad terms, say that areas where 
we do have U.S. forces stationed are obviously very key to our 
national interest and our security. Areas where we have a lot 
of U.S. citizens residing, they also are places where we are 
very concerned.
    With regard to task forces, we have a rollover task force; 
and in that task force, we have regional representatives from 
each area of the world. In addition, we have the functional 
groups political, military bureau, the consular affairs bureau, 
and some that usually don't join in, like our financial 
management and planning to make sure that we can keep 
functioning in terms of payment and that sort of thing.
    The way it would work would be if, in fact, we have a 
crisis point. Let's say our reporting would start at 7 a.m., 
December 31st from Fuji and New Zealand. As it rolls through, 
if we see a crisis point at that time, we will have the 
regional representative, and we would bring in more people. We 
would also coordinate very closely with the Department of 
Defense. Because, as this issue develops, I think that we are 
going to have a problem of resources. We would want to make 
sure that we rope everyone in, FEMA, Defense, domestic 
agencies.
    Mr. Hastings. Thank you, Mr. Chairman. I am going to go 
vote.
    Chairman Gilman. Thank you, Judge Hastings. We will 
probably try to continue. We have asked one of our Members to 
go over now and we will continue with our hearing. I want to 
thank our panelists for being here with us this morning and 
giving us important information with regard to our preparations 
for the Y2K. The panel is dismissed, and we thank you again for 
your patience.
    We will now proceed to panel No. 2. The second panel, as I 
indicated earlier, consists of Ms. Jacquelyn Williams-Bridgers, 
Inspector General, Department of State; Theodore Alves, 
Assistant Inspector General for Audits for U.S. Agency for 
International Development; and Ms. Linda Koontz, Associate 
Director, Accounting and Information Management Division of the 
United States General Accounting Office.
    If our panelists would be kind enough to take their places 
at the witness table, we will proceed. I welcome our panelists 
and again remind them that they may put their full statement in 
the record and summarize as they deem appropriate.
    I will have to temporarily put the panel in recess until 
Mr. Burr returns; he is on his way back, so if you would just 
stand by, thank you.
    [Recess.]
    Mr. Burr. [presiding] The hearing will come back to order. 
At this time I think we have called up the second panel, and I 
apologize for votes and hopefully that will be the last 
interruption that we will have. I am sorry that I did not have 
an opportunity to ask questions of the first panel, so I will 
try to use those that were appropriate and maybe ask the second 
panel double questions. Let me at this time welcome the 
Honorable Jacquelyn Williams-Bridgers, Inspector General, 
United States Department of State; Mr. Theodore Alves, Director 
Assistant Inspector General for Audits United States Agency for 
International Development; Ms. Linda Koontz, Associate Director 
Accounting and Information Management Division United States 
General Accounting Office.
    Mr. Burr. Welcome to all three of you. We will start with 
Ms. Williams-Bridgers. You are recognized for an opening 
statement.
    Ms. Williams-Bridgers. Thank you very much, Mr. Burr, for 
the opportunity to testify before this Committee on the results 
of our most recent analysis of global Y2K preparedness. My 
statement will address the OIG's oversight of Y2K remediation 
efforts by countries that host our embassies and consulates and 
by the U.S. Department of State.
    With the permission of the Chair, I will provide a summary 
of my statement and request that the full statement be made a 
part of the record.
    Mr. Burr. All full statements will be.

  STATEMENT OF THE HONORABLE JACQUELYN L. WILLIAMS-BRIDGERS, 
 INSPECTOR GENERAL, UNITED STATES DEPARTMENT OF STATE AND THE 
                BROADCASTING BROAD OF GOVERNORS

    Ms. Williams-Bridgers. Thank you. Over the past year, our 
work has revealed some key themes. Industrialized countries are 
well ahead of the developing world in their readiness to meet 
the Y2K challenge. Developing countries are generally lagging 
behind and are struggling to find the financial and technical 
resources needed to solve their Y2K problems, especially in the 
telecommunications, transportation, and energy sectors. Key 
sectors in the Newly Independent States and other former 
Eastern bloc nations are a concern because of the relatively 
high probability of Y2K related failures. Our assessments have 
suggested that the global community will likely experience 
varying degrees of Y2K-related failures in key sectors such as 
energy, telecommunications, and transportation in every region 
and at every economic level.
    We are also assisting the Department in certification of 
its mission-critical systems's compliance with Y2K requirements 
by ensuring that every feasible step has been taken to prevent 
Y2K failures. We will review the adequacy of documentation for 
all mission-critical systems' certification packages which, by 
agreement with Under Secretary for Management Bonnie Cohen, 
must pass through OIG before submission for Y2K certification. 
OIG has evaluated one half of the 54 mission-critical 
certification packages prepared to date.
    In this statement, I will discuss the results of recent OIG 
visits to a number of countries to assess their Y2K readiness, 
the need to better inform the public about host country 
readiness and potential disruptions of services and, last, the 
need for a post-Y2K assessment in order to identify lessons 
learned and best practices that may be applicable to government 
agencies and private sector organizations.
    Over the past year and a half, my office has actively 
engaged with our embassies and host country government and 
industry representatives to establish venues for information 
sharing and cooperation. To give you a sense of our visits over 
the past 2 months: In Saudi Arabia, we found that the Saudi 
petroleum sector began its Y2K efforts in 1994 and has since 
completed remediation, testing and certification of its 
systems. Saudi Arabia has one of the most advanced 
telecommunications systems in the world and will reportedly be 
100 percent compliant by the end of this month.
    In Egypt, our government is strongly supporting the 
Egyptian government's Y2K Program. This effort includes nearly 
$16 million in U.S. assistance targeting, among others the 
power, telecommunications, health, water, wastewater, and civil 
aviation sectors. The Suez Canal Authority says that it will 
keep the canal clear of ships from around 11 p.m. on December 
31st through the early morning hours of January 1st. During 
this transition period, canal pilots will inspect shipboard 
navigation and other systems of transiting vessels.
    In Nigeria, infrastructure is not heavily dependent on 
computers and thus is not at a high risk of failure due to Y2K. 
Much of the emphasis on Y2K remediation in Nigeria has centered 
on the banking and petroleum sectors. The latter appears to be 
the best prepared.
    In South Africa, we learned that their efforts have focused 
on six potentially high risk areas including electricity, 
water, communications, and health services. The biggest problem 
is that Y2K-related disruptions in other African countries 
might result in an influx of refugees similar to that which 
occurs when there is political instability in the region. But 
the government is prepared to deal and monitor with such 
developments.
    While in South America we visited Brazil, which has made 
good progress in the Y2K Program in the areas of banking and 
finance, electricity, and communications. There is less 
certainty about the Y2K readiness in two key areas: Water 
sewage, wastewater treatment is one; the second, small- and 
medium-sized businesses. Although these businesses are 
suffering the effects of an economic recession in Brazil they 
remain a critical link in its trade network and account for 
approximately 70 percent of the nation's economy. Yet small- 
and medium-sized businesses have generally gotten off to a very 
late start in their Y2K efforts.
    A critical step in fully addressing the Y2K challenge over 
the next several weeks will be to get what we know about 
country readiness into the hands of U.S. citizens. The 
Department's recently issued consular information sheets serve 
as a useful tool to provide critical information to U.S. 
citizens. However, based on a review of sample information 
sheets my office has concerns about their adequacy. Some of the 
information sheets are too vague, contain too much boilerplate 
language, and do not fully capture the scope and content of the 
Y2K information collected by our overseas posts.
    We recognize that in many countries information concerning 
the level of Y2K readiness is sensitive given the potential 
impact that Y2K might have on the country's economy, its 
reputation, and even its internal political stability. 
Nonetheless, so that Americans can make informed decisions 
about where they plan to be on December 31st, we recommend that 
the Department release additional information on country 
readiness as it becomes available.
    Before closing, I would like to turn to the matter of what 
happens after Y2K, assuming the worst case scenarios do not 
come to pass. By January 1st, organizations around the world 
will have spent hundreds of billions of dollars to resolve the 
Y2K problem. Given this cost and the disruption that Y2K has 
produced over the past 2 years, we have to ask ourselves what 
have we gained from this investment besides the ability to 
continue operations as usual? The other question is how can we 
avoid the next Y2K-like technology glitch?
    I would suggest that we have much to learn from the Y2K 
experience. Indeed, the collective efforts of both public and 
private sector organizations worldwide to resolve the Y2K 
problem may provide some important lessons, including best 
practices that may be applicable both to government and 
industry. My office is planning to address these issues over 
the coming year, and we would welcome any suggestions that the 
Committee might have to offer.
    In conclusion, between now and the end of the year, the 
Department faces a difficult challenge of maintaining the 
momentum that it has developed and keeping the world focused on 
the Y2K problem. While much progress has been made by a large 
part of the international community to prepare for Y2K and to 
develop contingency plans, much of this effort will be for 
naught if complacency is allowed to take hold. The Department 
has a clear role to play over the next 2 months through its 
efforts to continue to fine tune its own contingency plans, to 
collect information on host country Y2K readiness, and to 
assure the American public is adequately informed about global 
Y2K readiness.
    That concludes my summary statement, and I will await 
questions at the appropriate time.
    [The prepared statement of Ms. Williams-Bridgers appears in 
the appendix.]
    Mr. Burr. The Chair will recognize Mr. Alves.

  STATEMENT OF THEODORE ALVES, DIRECTOR, ASSISTANT INSPECTOR 
 GENERAL FOR AUDITS, U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT

    Mr. Alves. Thank you, Mr. Burr, for the opportunity to 
testify before this community about our oversight of USAID's 
efforts to address Year 2000 challenges. As you suggested, I 
will summarize my prepared testimony highlighting the most 
significant issues.
    My testimony today focuses on USAID management efforts to 
prepare business continuity and contingency plans. To 
summarize, our audits have found that after a slow start, USAID 
has made significant progress to mitigate the risks posed by 
Y2K. However, our work also shows that USAID has not prepared 
contingency plans for some important development activities. As 
a result, it faces increased risks that it could encounter 
disruptions that would limit its ability to continue providing 
humanitarian aid and development assistance. This situation 
exists primarily because USAID has not clearly assigned 
responsibility and authority for developing contingency plans.
    Before I describe our audit results, I would like to 
highlight some important USAID efforts to address the 
international implications of Y2K. These include developing 
contingency plans for its financial management operations, 
conducting detailed assessments of about 50 USAID missions, and 
creating tools to help developing countries address Y2K 
challenges.
    Regarding prior OIG audit results, we have issued several 
reports and other products that have helped USAID management 
focus its attention to Y2K issues. In July 1997, we reported 
that USAID had not implemented GAO's suggested practices for 
addressing Y2K issues. In addition to implementing several 
specific recommendations, USAID committed, at that time, to 
follow GAO's guidance in its Y2K efforts.
    In September 1998, we reported that USAID had strengthened 
its program but that it had not completed some important 
assessment phase activities. We recommended that the 
Administrator clearly assign responsibility to implement an 
effective program and that the responsible official direct 
USAID bureaus and missions to develop and test contingency 
plans. USAID agreed to implement our recommendations, but has 
yet fully done so. As a result the actions taken did not fully 
correct the problems.
    We also devoted resources to ensure that USAID considered 
the impact of Y2K problems could have on developing countries.
    Regarding contingency planning, our current work shows that 
USAID faces increased risks of encountering disruptions to its 
development assistance programs because bureaus and missions 
have not completed contingency plans. We found that USAID did 
not follow GAO's guidance for three of the four business areas 
we reviewed. Only the Office of Financial Management had 
prepared a contingency plan.
    My prepared testimony includes three examples of bureaus 
and offices that are at risk because they have not prepared 
contingency plans. Responsible officials were relying on an 
expectation that existing procedures would be adequate. One 
official told us that he did not think Y2K would create 
significant problems. Given the risks involved and USAID's 
prior commitment to complete plans, these responses were 
disappointing.
    The problem occurred primarily because USAID has not 
clarified responsibility to ensure that contingency plans are 
completed as we had previously recommended. According to a 
senior USAID official, the Administrator met with the head of 
each bureau to emphasize the importance of completing 
contingency plans and subsequently received assurance that the 
bureaus had adequate plans in place. Although this action 
partially addressed the recommendations, it did not correct the 
problem because USAID did not identify a single manager to be 
responsible and held accountable for ensuring that plans were 
completed.
    Because little time remains to prepare for Y2K disruptions, 
we believe USAID needs to focus now on completing contingency 
plans. Specifically, USAID needs to make a senior executive 
responsible and accountable and require bureaus and missions to 
prepare contingency plans for their development assistance 
program functions.
    In conclusion, Mr. Chairman, USAID has made significant 
progress addressing the Y2K challenge but needs to now focus 
its attention to developing business continuity and contingency 
plans in order to ensure that its important humanitarian and 
development assistance activities will not be disrupted.
    This concludes my remarks, and I will be pleased to answer 
any questions you or other Members of the Committee may have.
    Mr. Burr. Mr. Alves, thank you for your testimony.
    [The prepared statement of Mr. Alves appears in the 
appendix.]
    Mr. Burr. I am going to quickly go back and reread some 
testimony from the group before this. Is Mr. Nygard still in 
the room? I will assure you, from some of the things that I 
heard you say, he is going to have another opportunity to come 
back up here.
    The Chair recognizes Ms. Koontz.

 STATEMENT OF LINDA D. KOONTZ, ASSOCIATE DIRECTOR, ACCOUNTING 
 AND INFORMATION MANAGEMENT DIVISION, U.S. GENERAL ACCOUNTING 
                             OFFICE

    Ms. Koontz. Thank you, Mr. Burr, I appreciate the 
opportunity to participate in today's hearing on State and 
USAID's efforts to address the Year 2000 technology problem. I 
would like to summarize my statement briefly.
    We have already heard from both State and USAID on the 
positive steps they have taken to increase worldwide awareness 
of the Y2K problem, assess international preparedness, and 
inform American citizens of Year 2000 related risks. Further, 
you have heard of USAID's efforts to mitigate Year 2000 risks 
associated with USAID-funded development projects.
    Based on our review, we believe that State and USAID 
generally have reasonable strategies in place to deal with 
these issues. However, they have been much less effective in 
the area of business continuity and contingency planning, and I 
would like to spend the balance of my time focusing on this 
issue.
    Despite extensive remediation and testing of mission-
critical systems by State and USAID, there is a very real 
possibility that problems may occur in the millions of lines of 
code that were fixed or in overlooked embedded chips or 
commercial products. In addition, outside systems that exchange 
data with these agencies or infrastructure services like power 
or telecommunication may fail. These risks, coupled with the 
risk of Year 2000-related failures in foreign countries, 
mandate that these agencies develop comprehensive business 
continuity and contingency plans to ensure that core business 
processes can be continued both domestically and 
internationally. GAO has developed guidance on this topic, and 
OMB has adopted it as the standard to follow.
    As required by OMB, State developed an enterprise-wide 
business continuity and contingency plan in June, 1999. 
However, we found that State's plan does not follow the 
mission-based approach which we recommend. For example, the 
plan does not identify State's core business processes or the 
minimum acceptable level of service for these processes during 
an emergency, and it does not identify the impact of the 
failure of mission-critical systems on core business processes.
    In addition, the plan didn't indicate when or how State 
will test and evaluate its plan. As such, we do not believe 
this plan provides adequate assurance that the department is 
prepared to continue critical business functions in the face of 
Year 2000 failures. State officials told us that they plan to 
complete Department-wide contingency plan testing around mid-
November, 1999. In addition, according to State officials, they 
will be issuing a revised plan next week which they believe 
will meet all the OMB requirements. However, we have not yet 
had a chance to review this revised plan.
    Also, because of the varying conditions around the world, 
State also required that each embassy and consulate develop a 
business continuity and contingency plan. To assist, State 
developed a Y2K contingency plans tool kit in early 1999. The 
tool kit provided an appropriate and detailed methodology for 
identifying critical business processes, assessing Year 2000 
related risks, linking the many existing emergency procedures 
the embassies already to have to Year 2000 failure scenarios, 
and identifying any additional resources that would be needed.
    We reviewed the tool kit submissions prepared by ten 
embassies located in countries that were of particular interest 
to this Committee and found that all were incomplete. Although 
most of the submissions identified critical business processes 
as well as additional required resources, only two linked 
existing contingency procedures to Y2K failures or identified 
any additional procedures that would be needed. Further, there 
was no evidence that any of the plans had been tested.
    Without the kind of thorough analysis called for in State's 
tool kit, there is no assurance that embassies and consulates 
are fully prepared for Y2K failures. State officials, however, 
have been responsive to our concerns and have developed a web-
based tool that will be used to review and evaluate contingency 
plans at each post. They expect this validation to be completed 
by November 11th.
    Let me briefly turn to USAID. You have already heard from a 
representative of USAID's Office of Inspector General, who gave 
a detailed assessment of the agency's Y2K business continuity 
and contingency planning efforts. We also reviewed USAID's 
enterprise-wide business continuity and contingency plan dated 
June, 1999. We found that USAID's plan is incomplete and found 
little evidence that the GAO methodology was followed. 
Furthermore, only one mission, Cairo, has prepared a Year 2000 
contingency plan for its specific location. USAID officials 
stated that despite the absence of documented plans, some 
business continuity and contingency planning activity has been 
under way. However, they could not validate the extent to which 
the planning activity had actually occurred.
    Given the results of our and the IG's work, we are very 
concerned about USAID's ability to sustain its core business 
functions during the rollover and protect its overseas 
personnel from Year 2000-related failures.
    In conclusion, in the remaining days ahead, State and USAID 
will need to marshal their resources, strengthen their business 
continuity and contingency plan to help mitigate Year 2000 
related failures and work toward maximizing assurance that they 
can perform their core business functions and maintain their 
overseas business operations during the rollover.
    This concludes my remarks, and I am happy to answer any 
questions that you might have.
    [The prepared statement of Ms. Koontz appears in the 
appendix.]
    Mr. Burr. Thank you, Ms. Koontz. Thank you to all of our 
witnesses. I am going to turn the clock off, since it is just 
the Chairman and me. I think he has to take a phone call.
    Let me start with you, Ms. Koontz. Is it safe to say that 
any agency that is focused on compliance as a new aspect of 
what they are doing should realize that it is too late and that 
that effort could best be spent on contingency?
    Ms. Koontz. Are you talking specifically about the State 
Department or just in general?
    Mr. Burr. I am talking about in any area where they have 
not identified a problem or are currently working on a solution 
to a problem, is it not too late? Don't we need to be more 
concerned with the contingency?
    Ms. Koontz. Absolutely at this late date, we are about 2 
months away from the Year 2000. At this point, the best bet is 
to concentrate even more greatly on contingency planning.
    Mr. Burr. In your estimation as it relates to State, how 
far do we have to go before we can have contingency plans for 
all areas that we should?
    Ms. Koontz. Although we found some deficiency in both the 
enterprise-wide and embassy plans, I think that if the State 
Department follows through with what they have told us that 
they were going to do, that is to validate the embassy plans 
and draft a new enterprise-wide plan, I believe that they will 
be able to complete these efforts in time.
    Mr. Burr. Ms. Williams-Bridgers, if I understood you 
correctly, you said that the Inspector General's Office has had 
an opportunity to review one half of the mission-critical 
package.
    Ms. Williams-Bridgers. That is correct.
    Mr. Burr. What is the timeframe for the second half?
    Ms. Williams-Bridgers. We are hopeful that the Department 
will present the certification packages to us so that we can 
complete our review of those packages prior to the end of the 
year.
    Mr. Burr. So the holdup is not on the part of the Inspector 
General looking at the packages; it is on the part of State's 
supplying the package?
    Ms. Williams-Bridgers. We have reviewed all of the packages 
that have been submitted to us. We are currently reviewing one 
package right now and are awaiting the remainder of the 
certification packages from the Department.
    Mr. Burr. With every day that ticks by, if your conclusion 
of that package is a flunking grade--insufficient, with every 
day that ticks by what are our options?
    Ms. Williams-Bridgers. The grades that have been given to 
agencies in the past have been based on their implementation of 
certified Y2K compliant systems. The Department recently 
received an A grade from Congressman Horn because they have 
implemented 100 percent of their systems. They are considered 
to be Y2K compliant.
    Mr. Burr. I think there is a big distinction there that I 
want to draw. There is a big distinction between compliant and 
contingency.
    Ms. Williams-Bridgers. Correct, absolutely. There is a very 
big distinction.
    Mr. Burr. I think the focus of his efforts and the efforts 
of that Committee has been are we doing the things that we have 
identified, and do we have a game plan as to how we fix them by 
a certain date. Now let me ask you relative to contingency.
    Ms. Williams-Bridgers. OK.
    Mr. Burr. Where is your comfort level relative to 
contingency plans that exist for the functions of State and all 
the different areas?
    Ms. Williams-Bridgers. I would agree entirely with the GAO 
that contingency planning is very important at this late stage 
in the year. That is where our attention should be focused. We 
are quite hopeful that the Department will be able to prepare 
and complete all of its contingency plans and test those 
contingency plans within the next several weeks, and we will be 
continuing to monitor that.
    Mr. Burr. I have looked back in my own files, because 
earlier this year I did not feel that anybody was dealing with 
contingency, so I met with every department and I asked for 
their contingency plans on March 2nd. I wrote the Speaker, the 
Minority Leader, Congressman Bliley, and Congressman Horn, a 
memo that was sort of my overview, having met with all of the 
different agencies as to where they were specifically with 
regard to contingency plans. Hearing what you both have shared 
with me about State and looking back at what I wrote based upon 
what I was told, one might read this and believe that it was a 
fictional piece, because I actually raved about what they told 
me they were going to accomplish as it related to contingency. 
I don't get the impression you are here raving today.
    What do we need to do? What can Congress do, if anything, 
to make sure that we are prepared whether there is or is not a 
problem? It would concern me, Mr. Alves, if there is, I think 
you said, a responsible person who suggested there is not a 
problem and he is a key link to both compliance and 
contingency. I would hope that we could have some influence on 
at least his willingness to carry forth.
    But what can we do?
    Ms. Williams-Bridgers. I think the most important thing for 
the Congress is to continue to provide oversight over the 
efforts of the various agencies. The continued encouragement, 
the continued monitoring of agencies' attention to contingency 
planning. In the case of the State Department, continued 
monitoring of the types of information we get into the hands of 
U.S. citizens is most important, particularly when there is a 
balance that must be maintained between the sensitivity of 
giving out information to the public and the need for the 
public to have critical pieces of information in hand so that 
they can make informed decisions.
    Mr. Burr. I would take it that State is no different than 
every other agency. There was a time line that was established 
for everyone to be required to turn in contingency plans and 
for those to be tested. Am I correct?
    Ms. Williams-Bridgers. Yes, I believe that that is correct. 
That there was a time line for contingency planning as well.
    Mr. Burr. You have reviewed 50 percent of the mission-
critical issues. Have they already passed the time line that 
was set?
    Ms. Williams-Bridgers. Actually we are right on schedule 
with our time line expected for review of those mission-
critical systems.
    Mr. Burr. Let me go to your example that you used on the 
Suez canal, that shipping would stop and they would take the 
responsibility to review the navigational equipment on each 
vessel to make sure that from a safety standpoint, I would take 
it that they felt comfortable 6 hours later when everything 
started to move.
    Let me ask you as it relates to international waters; if 
they have that concern with the vessels that exist in the Suez 
canal, who is going to check the ones that are on the open 
water?
    Ms. Williams-Bridgers. Actually, there has been much 
attention in the international community and among 
international professional associations governing maritime 
industry and the ports and canals, and there is a similar 
strategy being employed in many of the canals that they will 
not allow ships into the canals unless they have been given 
some prior assurance by the ship owners that they are Y2K 
compliant. They don't want to create bottlenecks in the canals. 
There will be onsite inspections of many of the vessels before 
they are allowed to enter to give that added assurance.
    Mr. Burr. I also serve on the Commerce Committee, and one 
of the reasons I am a little preoccupied is that I have a Y2K 
hearing going on at the same time across the courtyard on 
medical devices. But one of the areas in which we have 
acknowledged concern is the flow of petroleum for that period, 
because we are concerned with the computer capabilities of a 
lot of the tankers--genuine concern, do you think?
    Ms. Williams-Bridgers. Yes, I think there is a concern, and 
that is why the United States is looking particularly at those 
countries that provide a key link in our trade networks in the 
transportation of goods and services, including fuel, and the 
readiness of countries as well as the port authorities to 
handle that Y2K problem. So, yes, that is an area to which we 
would pay particularly close attention.
    Mr. Burr. Given that you have reviewed a lot of the 
mission-critical things for State and, I think, understand 
their contingency efforts, let me ask as it relates to 
international finance. There are trillions of dollars that are 
transferred on a daily basis in the international markets. How 
involved, if any, is State in the review of those systems and 
their compliant status, and is that an area that we should be 
concerned on?
    Ms. Williams-Bridgers. The State Department is not directly 
involved, of course, in the banking networks. But in the course 
of the work that we have done in our meetings that we have held 
in-country with host country officials, we have also met with 
some representatives of the banking industry. We reviewed all 
open source materials that reflect on the readiness of the 
finance sector and generally the finance sector got a very 
early start. We have some assurances that they are fairly well 
prepared to deal with the Y2K problem.
    Even in regions of the world, even in countries where other 
sectors are significantly lagging and are considered at medium 
or high-risk of failure, their finance sectors generally tend 
to reflect a relatively low-risk of failure.
    Mr. Burr. How involved is State relative to its advice, its 
response to questions by U.S. companies that might have 
interests abroad relative to the Y2K compliance of the country 
in which they might have interest?
    Ms. Williams-Bridgers. Again, in our meetings in 31 
countries over the past year, we have met with representatives 
of the American business community in many countries and found 
that there has been a good dialogue not only between the 
American business community and U.S. embassies, but also other 
English-speaking embassies in the country. We have found, in 
fact, as some best practices where the U.S. Embassy has 
developed consortiums, if you will, with representatives of the 
business community meeting with embassy representatives, to 
have discussions about what actions need to be taken, what kind 
of collaboration could occur within the business community 
between the business community and the diplomatic community.
    Mr. Burr. Is that exchange taking place in your mind?
    Ms. Williams-Bridgers. Yes it has.
    Mr. Burr. Let me read a statement to all of you and ask you 
to comment if you agree, disagree, or if you have any comment:
    ``Working with our colleagues at the Department of State 
with Federal agencies and with our partners in the United 
States and overseas, we have made major progress in working to 
assure that our people and our programs won't be adversely 
affected by Y2K''.
    That is comments by the USAID. Do you agree or disagree 
with that statement?
    Mr. Alves. The focus of our work on contingency planning 
was on USAID's ability to continue with its business functions, 
carrying out its development assistance. USAID has worked 
closely with the State Department both at headquarters and at 
missions overseas to ensure the safety of USAID's employees. 
They have been working on developing specific contingency 
plans. But the focus of those plans has been limited to safety 
of employees rather than ensuring that we can continue to 
conduct our business of providing sustainable development 
assistance.
    Ms. Williams-Bridgers. Most of our attention also has been 
focused on the Department's contingency planning for its own 
systems and delivery of services to Americans, and we have 
quite honestly in our oversight efforts not looked at the 
linkages with the USAID Programs. I would not be in a position 
to comment on the statement.
    Mr. Burr. Is it naive of me to believe that if there are 
concerns about the core functioning, which I think are concerns 
that you have raised, Mr. Alves.
    Mr. Alves. Yes, that is our concern.
    Mr. Burr. How can the services from that be expected to 
operate without adversely--how can the programs not be affected 
if we have a fundamental problem at USAID? I mean, am I 
misstating your concerns that exist there?
    Mr. Alves. No, you are not misstating our concerns. We 
believe that USAID's development assistance objectives are 
placed at risk because USAID has not focused its contingency 
planning efforts on being able to continue to provide that 
development assistance.
    Mr. Burr. This is the testimony of Mr. Nygard right before 
you, and he said that the programs won't be adversely affected 
by Y2K.
    Mr. Alves. We may disagree on the extent to which USAID's 
Programs will be affected. We have discussed the issue with 
USAID officials including Mr. Nygard, and other officials have 
made a commitment to strengthen their contingency planning to 
focus on development assistance efforts.
    Mr. Burr. Ms. Koontz?
    Ms. Koontz. I would like to add, we agree with what USAID's 
IG has done, and it is true that USAID has done a lot of work 
overseas to work with foreign governments to ensure that 
development projects that have been funded by USAID are Y2K 
compliant. However on the issue of USAID's ability to continue 
its business processes and provide critical services, it has 
not done enough planning in my view to assure us that they are 
going to be able to do that.
    Mr. Burr. Have they done enough planning to say at this 
hearing that they won't be adversely affected by the Y2K?
    Ms. Koontz. I would have to say no, based on what we have 
reviewed.
    Mr. Burr. Do they know how the Y2K issue is going to affect 
them yet?
    Ms. Koontz. I don't believe so. Part of the contingency 
planning process is to assess the risk to your programs. Until 
USAID goes through that process, I would have to say they would 
not know what the risks are to their programs at this point. So 
they need to go through the contingency planning process to 
arrive at that conclusion.
    Mr. Burr. How having not identified it yet, it is pretty 
tough to make the claim that nothing would be adversely 
affected. The State Department has a tool kit. Does USAID have 
a tool kit? Do they have anything?
    Mr. Alves. AID is using the State Department tool kit.
    Mr. Burr. They are using the same one?
    Mr. Alves. Yes they are. While we talk about focusing on 
business processes, USAID has done some work focusing on 
financial systems. I think what happened is that early in the 
contingency planning process, they ended up shortcutting the 
process of identifying their core business. Early in the 
process USAID managers have identified the ability to obligate 
money, award contracts, and make payments as their core 
business process. They then focused their attention on 
developing contingency plans for these processes without having 
looked at their development assistance activities, where they 
are actually providing the assistance. I think that is part of 
the flaw of what happened here. Responding to our audit 
findings, USAID managers have committed to pay special 
attention at this point to focusing on the development 
assistance activities.
    Mr. Burr. Let me just ask Ms. Williams-Bridgers, any 
feedback from the overseas posts relative to the tool kit, and 
have there been any significant changes made to it over time?
    Ms. Williams-Bridgers. With regard to the contingency 
plans, we are waiting to get some information back from the 
Department on this web-based tool that Mr. O'Keefe offered 
earlier today. We have not gotten feedback on the 
implementation of that tool kit. However, on our most recent 
visit to posts, we were anxious to see that contingency plans 
were being completed and tested at our posts; and they had not 
been as recently as the last couple of weeks.
    Mr. Burr. I am sure this is not a surprise to any of our 
witnesses as I am reminded daily when I call home, Christmas is 
right around the corner. I guess it is just 60 days now or 
fairly close to it, as my wife likes to remind me as we miss 
targets of when we are going to adjourn up here. Sixty days is 
a very short time with a tremendous amount to accomplish. I 
would urge each of you that you remain as vigilant as possible. 
Where this Committee, where this Congress can help to increase 
the level of intensity to make sure that if there are problems, 
that we have a plan to address them and that, therefore, the 
services and the functions of that area are affected as 
minimally as they can be, that is the objective of what we are 
after. If, on January 1st later in the morning we all wake up 
and find that we don't have a problem, I think that there will 
be a lot that we have learned. There will be money that has 
been spent to further develop technology and, more importantly, 
the human mind.
    Thomas Jefferson said, I am not an advocate of frequent 
changes in laws and constitutions, but laws and institutions 
must advance to keep pace with the progress of the human mind. 
This is really a process of our keeping pace with where the 
human mind has taken us, and I thank each of you for your 
willingness to testify.
    Does the Chairman have questions?
    Chairman Gilman. Yes, thank you very much. Thank you, Mr. 
Burr, for taking over while I was detained.
    Ms. Williams, according to GAO and OMB, the Department's 
Y2K business continuity and contingency plan is too high level 
to determine if risks have been fully addressed or are 
incomplete, and does not link State's core business processes 
to its contingency plans. What is the Department doing to 
better prepare and plan for the Y2K rollover?
    Ms. Williams-Bridgers. Mr. Chairman, we would agree with 
GAO's assessment of the lateness and the incompleteness of the 
contingency planning effort by the Department of State. We are 
hopeful that within the next 3 to 4 weeks that the Department 
will complete its worldwide contingency planning efforts and 
will begin testing contingency plans--something that we have 
not yet seen evidence of yet here or abroad.
    Chairman Gilman. Are you satisfied that they are going to 
be able to meet the problems?
    Ms. Williams-Bridgers. I am quite hopeful. Given the level 
of effort, given the very reasoned and strategic approach that 
the Department has taken to date to its Y2K efforts, I think 
the Department has realized extraordinary progress, given the 
formidable challenge that was before it in looking at Y2K 
remediation efforts at some 260 locations around the world.
    So we are quite optimistic that the Department will be able 
to accomplish all that needs to be done in order to overcome 
the Y2K challenge.
    Chairman Gilman. Inspector General, the Department issued 
consular information sheets for 172 countries in September of 
this year which included information on Y2K risks, but that 
information was fairly general in comparison to other actions. 
What is State doing to provide more detailed information that 
would allow the reader to discern differences between the 
countries, in other words, one that is generally prepared for 
Y2K from one that is somewhat prepared?
    Ms. Williams-Bridgers. We, too, were quite concerned about 
the vagueness of many of the consular information sheets that 
we saw. We just looked at samples, about 29 of the consular 
information sheets issued, because we had direct knowledge 
based on our own visits in countries in those locations.
    We do understand that the Department does intend to reissue 
or issue more updated consular information sheets within the 
coming months, and that they intend to provide more information 
than they previously did if they have evidence that there will 
be potential disruptions in country. We are hoping that the 
Department will be much more specific in the kinds of advice 
and counsel that they would give to U.S. citizens about what 
precautions they might take, given potential failures of 
certain critical services that they would come to expect.
    Chairman Gilman. With regard to that, has the State 
Department issued any travel warnings yet? Does it plan to do 
so? If so, what countries are they thinking about?
    Ms. Williams-Bridgers. They have not issued any travel 
warnings which would advise the traveling public to defer 
travel to any country. We would hope, however, given that 
certain countries will not be able to overcome potential 
failures of some of their key sectors, that the Department 
would issue such travel warnings for those countries.
    Chairman Gilman. Thank you. Mr. Alves, with regard to 
USAID, since completing its evaluations of overseas missions on 
Y2K preparedness and the status of USAID-funded development 
projects in foreign countries infrastructure vulnerabilities, 
what has USAID done to assure that the problems identified are 
going to be corrected in time?
    Mr. Alves. USAID has made a commitment to us that they will 
focus their attention to completing contingency plans that 
address development assistance. We believe that time is short.
    USAID has developed, to help developing countries, 
actually, a tool kit that provides a shortcut method to develop 
contingency plans. The intent was to use this for developing 
countries, and we believe that they can use the same approach 
for themselves to be able to complete contingency plans as 
quickly as possible and, hopefully, in time to be effective.
    Chairman Gilman. The Committee is aware of the problems 
USAID has experienced during the development of the New 
Management System. Aside from Y2K, what is the status of NMS? 
When will the system be fully operational?
    Mr. Alves. We have had issued a number of reports on the 
New Management System, very critical reports, as you may 
recall. At this point, USAID has reached the conclusion that 
the New Management System needs to be replaced. It is still in 
operation. It is more stable than it was earlier so that there 
are fewer flaws, but it still needs to be replaced.
    USAID is working aggressively to replace the New Management 
System with a suite of commercial off-the-shelf systems. At the 
end of September, 1999 USAID awarded the first contract for the 
core accounting system, a commercial off-the-shelf system.
    Chairman Gilman. So they are still using the old financial 
management system?
    Mr. Alves. Yes, they are still using the New Management 
System; and, in fact, they have had to repair it so that it 
would work in Y2K.
    Chairman Gilman. According to the GAO and your office, 
AID's enterprise-wide and mission-level business continuity and 
contingency planning process needs to be greatly improved. At 
this late stage, however, what can AID do to help assure that 
it is prepared for Y2K failures here and abroad?
    Mr. Alves. As I mentioned a little earlier, USAID has 
prepared a tool kit to help developing countries to do 
contingency planning, and we believe that it can use that tool 
kit to focus attention on priority development assistance 
functions and develop contingency plans.
    Chairman Gilman. Ms. Koontz, you have reviewed the State 
Department's consular information sheets which provide data on 
how prepared foreign countries are on Y2K. What is your view of 
the information presented in those sheets? Based on the data, 
can our citizenry make informed decisions about whether they 
should be traveling or remaining in certain countries?
    Ms. Koontz. Just like State's IG, we reviewed a sample of 
the consular information sheets, and we also found them to be 
very general in nature. Certainly the information that is 
presented is not as specific as the information that is 
presented in other sections of the sheets that deal with things 
like crime and transportation.
    Further, we thought it would be difficult for a reader to 
distinguish the relative risk among countries. For example, it 
may be difficult to make a distinction between a country that 
is characterized as ``somewhat'' prepared as opposed to 
``generally'' prepared.
    Our understanding in our discussions with State is that 
they have more detailed information now than when they 
originally issued the sheets, and that they plan to update 
their web site with this information to make it more specific. 
In addition, when other information comes in, they plan to 
continue that updating process.
    Chairman Gilman. I assume that you are all part of a 
working group; is that correct? For watching over Y2K? Are you 
all part of a working group? Interagency working group?
    Ms. Williams-Bridgers. Our office is not, but the 
Department of State is part of an interagency working group. We 
have attended some of these working group--interagency working-
group sessions, though, upon invitation of State Department but 
have not been active participants in the interagency 
discussions.
    Chairman Gilman. Will you be an active participant between 
now and the end of this year?
    Ms. Williams-Bridgers. We have been actively engaged with 
our agency and have had much interaction and discussion about 
the results of the interagency working group sessions. We 
intend to continue to be actively involved with our agency's 
Y2K efforts.
    Chairman Gilman. I would hope that all of you would be part 
of that since there is so little time and so much to be done 
yet.
    I address this to the entire panel. What do you see as the 
most important thing we should be doing to bring us up to date?
    Ms. Williams-Bridgers. I would say in the international 
arena, we believe that at this point in time that most 
countries are seriously engaged in addressing the Y2K problem, 
and we take comfort in that. Given that so many countries got 
such a very late start and given that the amount of resources 
that are necessary to fully remediate their systems will not be 
available to them in the form of technical and financial 
resources, it is imperative that these countries begin to 
triage their efforts to move toward contingency planning and 
move toward testing.
    Chairman Gilman. What do you do to bring that about?
    Ms. Williams-Bridgers. I think it is imperative that 
constant consultation between the U.S. Government and host 
country governments continue.
    Chairman Gilman. Who does that consultation?
    Ms. Williams-Bridgers. The embassies have been engaged in 
those consultations with host country governments and through 
the G8 sessions and other international forums.
    Chairman Gilman. Are the embassies making that a high 
priority?
    Ms. Williams-Bridgers. Yes, they are. They have a huge 
stake in this because they rely on host country government 
infrastructure to provide mission-critical services. There are 
two other areas that we need to be particularly concerned 
about. The second is probably the most pervasive problem of 
Y2K, but that which we know the very least about are the 
embedded devices, the embedded chips, and as Mr. Burr had 
alluded to in his other Committee arena, in the health-care 
sector. We know that embedded chips prevail in a lot of the 
equipment which is Y2K dependent.
    We know that there are hundreds of millions of these 
embedded chips in power plants and nuclear reactors and 
telecommunications switches, and we know very little about the 
potential impact of those embedded devices on the failure or 
the continued operation of their systems.
    Chairman Gilman. Are we providing information to other 
countries with regard to warning them about these embedded 
chips?
    Ms. Williams-Bridgers. Yes.
    Chairman Gilman. How do we do that?
    Ms. Williams-Bridgers. We have shared information in a 
variety of different forums through some of the professional 
associations, the international maritime associations, the port 
authority, ICAO, the international civil aviation organization. 
There has been much discussion about that very problem.
    Last, I think that we have to guard against complacency; 
many people now are quite tired of hearing about Y2K. We had 
the 9/9/99 worldwide test, and that seemed to be rather 
uneventful. But I think we need to keep our guard up, as you 
suggest, Mr. Chairman, with continued engagement on our part.
    Chairman Gilman. Mr. Alves, any recommendations as the 
highest priority issue we ought to be taking up.
    Mr. Alves. USAID obviously needs to focus on contingency 
planning, but USAID also has a role to play in helping 
developing countries deal with Y2K issues, and USAID has 
developed a tool kit that is designed to help developing 
countries both remediate their systems and deal with 
emergencies and contingencies.
    Chairman Gilman. Is that widely distributed?
    Mr. Alves. It has just completed being tested, and it is 
about to be distributed. It is probably too late to help in 
remediating systems but it should be a help in contingency 
planning if it can be distributed widely enough.
    Chairman Gilman. How long will it take to distribute it 
widely?
    Mr. Alves. I think that within a couple of weeks of getting 
it out.
    Chairman Gilman. So by November, we are giving some 
contingency information.
    Mr. Alves. I am sorry?
    Chairman Gilman. By November, you are providing some 
contingency information?
    Mr. Alves. Not exactly. What the tool kit will do is 
provide a way for developing countries and organizations in 
developing countries to prepare contingency plans. So it is a 
road map to help them to be able to do it as opposed to----
    Chairman Gilman. Is that enough time?
    Mr. Alves. They are very late, but contingency planning can 
continue up until you encounter an event. So while I would not 
say that it is going to solve the problem because it is not a 
silver bullet it does provide a contribution that should help.
    Chairman Gilman. Sixty days to go, apparently. That is 
pretty short. Ms. Koontz, do you have any suggestions?
    Ms. Koontz. There are a couple of priority areas 
particularly for the State Department, and the first is for 
them to continue to make the travel information in the consular 
information sheets more specific and more useful to the 
traveling public.
    In addition, State needs to follow through on its business 
continuity and contingency planning, particularly for its 
overseas offices. The State Department has a tremendous 
advantage because there is a lot of very good guidance both 
outside the State Department and that which they have developed 
themselves that is very good, and if implemented, it should put 
them in a good position. However up to this time, 
implementation and follow through has not been what it should 
have been.
    Chairman Gilman. Who does the oversight on the 
implementation?
    Ms. Koontz. To be frank, in terms of the embassy plans, I 
believe there was very little oversight of their preparation in 
this area. The guidance was given out to the embassies, but I 
don't believe that there was sufficient review of the plans 
that were generated.
    Chairman Gilman. Is there now sufficient review?
    Ms. Koontz. I believe that what the State Department has 
told us is that they have developed a validation tool. I do not 
have all the details about that at this point in time. But 
anything that they can do at this point to look more closely at 
those plans and encourage embassies to fully assess and plan 
for the Year 2000 is what they need to do.
    Chairman Gilman. Are they preparing to do that? Is someone 
working on that?
    Ms. Koontz. They say that they are working on it.
    Chairman Gilman. Who is going to be----
    Ms. Koontz. We will continue to followup, of course.
    Chairman Gilman. Will the Inspector General be following 
up?
    Ms. Williams-Bridgers. Yes, we will, sir.
    Chairman Gilman. Thank you. Mr. Sherman.
    Mr. Sherman. Thank you, Mr. Chairman. I am told that the 
State Department has a system by which Americans abroad who are 
in trouble can seek help. Their family can wire them funds, et 
cetera.
    It occurred to me that this system and many other services 
provided by our embassies and consulates could be very 
important to persons in those countries that are not dealing 
with the Y2K problem effectively.
    But then it occurred to me that the embassy is probably not 
open on January 1st. January 2nd is going to be a Sunday, and I 
know that we do not ask our government employees who are not 
engaged in public safety and a few other emergency 
circumstances to work on the first day of the year or to work 
on a Sunday. Will American embassies and consulates in 
countries that are expected to have Y2K problems be open and 
available to American tourists and other Americans abroad or 
will there simply be a sign that says come back to us 48 hours 
after Y2K has struck?
    Ms. Williams-Bridgers. Mr. Sherman, if I might, our 
embassies will be available. They will be staffed with 
personnel who have been tasked with reporting back beginning 1 
hour after midnight and every hour for the next 24 hours.
    The list of assignments and who should be in the embassies 
has already gone out, and people have been told to cancel all 
leave plans for essential personnel so that American citizen 
services will be provided to any American in need.
    Mr. Sherman. So this is not just a matter of reporting back 
to Washington how things are going, but enough people to deal 
with what may be the largest group of Americans ever to seek 
embassy or consulate help in the absence of a political tumult 
at the same time.
    Ms. Williams-Bridgers. Absolutely.
    Mr. Sherman. Good planning. I have no further questions.
    Chairman Gilman. Thank you, Mr. Sherman. Again I thank our 
panelists for providing us your expertise and information. I 
hope you are going to stay on top of all of this as we find 
that there is a great deal more to be done. So with our 
admonition to keep on top, we thank you again. There may be 
some questions that might be submitted by some of our Members, 
and we would request that you would respond to those. With 
that, the Committee stands adjourned.
    [Whereupon, at 11:55 a.m., the Committee was adjourned.]
      
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                            A P P E N D I X

                            October 21, 1999

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