[Congressional Record Volume 143, Number 130 (Thursday, September 25, 1997)]
[Senate]
[Page S9981]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




  THE GARTNER GROUP, THE NEW YORK FEDERAL RESERVE BANK, AND DEUTSCHE 
    MORGAN GRENFELL AGREE: POTENTIAL FOR A ``MILD GLOBAL RECESSIO''

  Mr. MOYNIHAN. Mr. President, we learn today in the New York 
Times that an alarming number of companies and governments are failing 
to cope with the impending year 2000 computer crisis.
  A study by the respected Gartner Group, which specializes on 
information technology, indicates that fully ``30 percent of companies 
worldwide had not started addressing the year 2000 problem,'' and that 
of those ``88 percent were smaller companies.'' This is most troubling 
news. Failure to comply could lead, in the opinion of William J. 
McDonough, the president of the New York Federal Reserve Bank, to a 
global recession.
  Analysts are also predicting that many companies will go out of 
business when their computer systems fail at the turn of the century. 
Again I quote the Times article: ``Edward Yardeni, the chief economist 
at Deutsche Morgan Grenfell, issued a report last week saying that 
there is a 35-percent chance that the millennium bug will cause `at 
least a mild global recession' in 2000.''
  My first day bill, S. 22, would establish an independent commission, 
more like a task force, to ensure that the Federal Government will be 
compliant, and to ensure that awareness and compliance will be raised 
in the private sector.
  I ask that the article from today's Times, ``Many Reported Unready To 
Face Year 2000 Bug,'' be printed in the Record.
  The article follows:

               [From the New York Times, Sept. 25, 1997]

              Many Reported Unready To Face Year 2000 Bug

                        (By Laurence Zuckerman)

       A new study shows that a large proportion of businesses and 
     government agencies around the world are not properly 
     preparing for the effect that the year 2000 will have on 
     their computer systems, increasing the possibility of 
     potentially serious disruptions as the end of the century 
     approaches.
       The study by the Gartner Group, an adviser on information 
     technology, found that 30 percent of companies worldwide had 
     not started addressing the year 2000 problem, or the 
     millennium bug, as it is often called. Of these, 88 percent 
     were smaller companies with fewer than 2,000 employees.
       ``We are going to see a very large number of small 
     companies in very serious trouble,'' said Matthew Hotle, an 
     analyst at Gartner, which is based in Stamford, Conn. ``They 
     are not going to finish in time.''
       The research also showed that large institutions, like 
     universities and hospitals, and Government agencies, were far 
     behind in their efforts. ``We were expecting that some 
     agencies would have at least made up some ground over the 
     last six to nine months,'' Mr. Hotle added, ``but they are 
     way behind.''
       The study, which is scheduled to be issued next month at an 
     annual Gartner Group symposium, comes at a time when concern 
     is rising about the potential impact of the millennium bug. 
     Last week, Representative Steve Horn of California, the 
     Republican chairman of the House subcommittee that oversees 
     information technology issues, graded the preparation efforts 
     of 24 Government agencies. Eleven received either D's or F's, 
     including the National Aeronautics and Space Administration, 
     the Department of Energy, the Nuclear Regulatory Commission 
     and the Department of Transportation.
       In addition, some prominent economists and William J. 
     McDonough, the president of the New York Federal Reserve 
     Bank, have warned that failure to cope with the 2000 problem 
     properly could cause a global recession.
       The millennium bug dates back to the dawn of the computer 
     age, when computer memory was so scarce that programmers 
     abbreviated the year as two digits. A computer that read 
     ``97'' as a date assumed it meant 1997. After the turn of the 
     century, those same programs, unless corrected, will read 
     ``00'' as 1900, disrupting everything from the calculation of 
     interest rates to the shelf life of breakfast cereal. Because 
     the two-digit dates appear in different forms in different 
     software, finding and correcting each program is extremely 
     time consuming and labor intensive.
       The Gartner Group has said in the past that fixing existing 
     computer software will cost between $300 billion and $600 
     billion, an estimate that has not been increased as a result 
     of the study. Mr. Hotle said that other estimates, including 
     the costs of new hardware, business interruptions and 
     potential litigation, could push the figure over $1 trillion.
       The study surveyed 2,300 companies, institutions and 
     government agencies in 17 countries. Each was given a rating 
     based on their progress. The results show that most large 
     companies are already well along in their efforts to cope 
     with the millennium bug, led by the financial services 
     industry. Though only 52 percent of companies with more than 
     20,000 employees were considered well positioned, the figure 
     was nearly 80 percent in the United States.
       The problem is that many large companies are becoming 
     increasingly dependent on smaller suppliers that may not be 
     as well prepared. For example, if a crucial parts supplier 
     cannot deliver to a big auto maker, it will not matter that 
     the auto company is year-2000 compliant.
       ``You are going to see some major slowdowns because of 
     these small companies,'' said Lou Marcoccio, research 
     director of Gartner's year 2000 practice.
       Some analysts have also predicted that a number of 
     companies, already teetering on the edge, will go out of 
     business when their computer systems fail as a result of the 
     bug. Edward Yardeni, the chief economist at Deutsche Morgan 
     Grenfell, issued a report last week saying that there is a 35 
     percent chance that the millennium bug will cause ``at least 
     a mild global recession'' in 2000.
       While the Federal Government has come under criticism in 
     Congress, the Gartner study found that the United States is 
     far ahead of other countries. Last week, the Office of 
     Management and Budget sent a report to Congress predicting 
     that the cost of fixing the Government's computers would be 
     $3.8 billion.

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