[House Report 104-857]
[From the U.S. Government Publishing Office]



                                                 Union Calendar No. 464

104th Congress, 2nd Session -  -  -  -  -  -  -  - House Report 104-857

 
 YEAR 2000 COMPUTER SOFTWARE CONVERSION: SUMMARY OF OVERSIGHT FINDINGS 
                          AND RECOMMENDATIONS

                               __________

                            SIXTEENTH REPORT

                                 by the

                        COMMITTEE ON GOVERNMENT
                          REFORM AND OVERSIGHT


                                     


                                     

 September 27, 1996.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed


              COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT

     WILLIAM F. CLINGER, Jr., 
      Pennsylvania, Chairman
CARDISS COLLINS, Illinois            BENJAMIN A. GILMAN, New York
HENRY A. WAXMAN, California          DAN BURTON, Indiana
TOM LANTOS, California               J. DENNIS HASTERT, Illinois
ROBERT E. WISE, Jr., West Virginia   CONSTANCE A. MORELLA, Maryland
MAJOR R. OWENS, New York             CHRISTOPHER SHAYS, Connecticut
EDOLPHUS TOWNS, New York             STEVEN SCHIFF, New Mexico
JOHN M. SPRATT, Jr., South Carolina  ILEANA ROS-LEHTINEN, Florida
LOUISE McINTOSH SLAUGHTER, New York  WILLIAM H. ZELIFF, Jr., New 
PAUL E. KANJORSKI, Pennsylvania      Hampshire
GARY A. CONDIT, California           JOHN M. McHUGH, New York
COLLIN C. PETERSON, Minnesota        STEPHEN HORN, California
KAREN L. THURMAN, Florida            JOHN L. MICA, Florida
CAROLYN B. MALONEY, New York         PETER BLUTE, Massachusetts
THOMAS M. BARRETT, Wisconsin         THOMAS M. DAVIS, Virginia
BARBARA-ROSE COLLINS, Michigan       DAVID M. McINTOSH, Indiana
ELEANOR HOLMES NORTON, District of ColumbiaTATE, Washington
JAMES P. MORAN, Virginia             DICK CHRYSLER, Michigan
GENE GREEN, Texas                    GIL GUTKNECHT, Minnesota
CARRIE P. MEEK, Florida              MARK E. SOUDER, Indiana
CHAKA FATTAH, Pennsylvania           WILLIAM J. MARTINI, New Jersey
BILL BREWSTER, Oklahoma              JOE SCARBOROUGH, Florida
TIM HOLDEN, Pennsylvania             JOHN B. SHADEGG, Arizona
ELIJAH CUMMINGS, Maryland            MICHAEL PATRICK FLANAGAN, Illinois
            ------                   CHARLES F. BASS, New Hampshire
BERNARD SANDERS, Vermont (Independent)TEVEN C. LaTOURETTE, Ohio
                                     MARSHALL ``MARK'' SANFORD, South 
                                     Carolina
                                     ROBERT L. EHRLICH, Jr., Maryland
                                     SCOTT L. KLUG, Wisconsin

  James L. Clarke, Staff Director
  Kevin M. Sabo, General Counsel
     Judith McCoy, Chief Clerk
Bud Myers, Minority Staff Director
                                 ______

   Subcommittee on Government Management, Information, and Technology

STEPHEN HORN, California, Chairman
CAROLYN B. MALONEY, New York         MICHAEL PATRICK FLANAGAN, Illinois
MAJOR R. OWENS, New York             PETER BLUTE, Massachusetts
JOHN M. SPRATT, Jr., South Carolina  THOMAS M. DAVIS, Virginia
PAUL E. KANJORSKI, Pennsylvania      RANDY TATE, Washington
COLLIN PETERSON, Minnesota           JOE SCARBOROUGH, Florida
TIM HOLDEN, Pennsylvania             CHARLES F. BASS, New Hampshire
                                     SCOTT KLUG, Wisconsin

                               Ex Officio

CARDISS COLLINS, Illinois            WILLIAM F. CLINGER, Jr., 
                                     Pennsylvania
J. Russell George, Staff Director/
              Counsel
      Mark Uncapher, Counsel
   Susan Marshall, Procurement 
            Specialist
     David McMillen, Minority 
        Professional Staff


                         LETTER OF TRANSMITTAL

                              ----------                              

                                  House of Representatives,
                                Washington, DC, September 27, 1996.
Hon. Newt Gingrich,
Speaker of the House of Representatives,
Washington, DC.
    Dear Mr. Speaker: By direction of the Committee on 
Government Reform and Oversight, I submit herewith the 
committee's sixteenth report to the 104th Congress.
                                 William F. Clinger, Jr., Chairman.

                                     


                            C O N T E N T S

                               __________
                                                                   Page
 I. Summary...........................................................1
        A. Background............................................     1
        B. Jurisdiction..........................................     2
II. Findings..........................................................2
        A. Proceedings of the subcommittee.......................     2
        B. Oversight activities of the subcommittee..............     5
        C. Committee findings....................................     9
III.Recommendations..................................................13

IV. Appendix.........................................................14
  

                                                 Union Calendar No. 464
104th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 2nd Session                                                    104-857
_______________________________________________________________________


 YEAR 2000 COMPUTER SOFTWARE CONVERSION: SUMMARY OF OVERSIGHT FINDINGS 
                          AND RECOMMENDATIONS

                                _______
                                

 September 27, 1996.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

_______________________________________________________________________


  Mr. Clinger, from the Committee on Government Reform and Oversight, 
                        submitted the following

                            SIXTEENTH REPORT

    On September 24, 1996, the Committee on Government Reform 
and Oversight approved and adopted a report entitled ``Year 
2000 Computer Software Conversion: Summary of Oversight 
Findings and Recommendations.'' The chairman was directed to 
transmit a copy to the Speaker of the House.

                               I. Summary

                             A. Background

    After midnight, December 31, 1999, computer systems 
throughout the world are at risk of failing. Computers may 
confuse the year 2000 with the year 1900 on January 1, 2000, 
and go backward in time instead of forward when the new century 
begins. The severity of the problem was raised when Congress 
was told that if businesses and governments continue to ignore 
this issue, disruption of routine business operations and the 
inability of the Federal Government to deliver services to the 
American public could result.
    According to a Congressional Research Service memorandum 
dated April 12, 1996, ``Many people initially doubted the 
seriousness of this problem, assuming that a technical fix will 
be developed. Others suspect that the software services 
industry may be attempting to overstate the problem to sell 
their products and services. Most agencies and businesses, 
however, have come to believe that the problem is real, that it 
will cost billions of dollars to fix, and that it must be fixed 
by January 1, 2000, to avoid a flood of erroneous automatic 
transactions.'' The memorandum further suggests that it may 
already be too late to correct the problem in all of the 
Nation's computers, and that large corporations and Government 
agencies should focus on only their highest priority 
systems.\1\
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    \1\ Richard Nunno, Analyst in Information Technology, Science 
Policy Research Division, Year 2000 Computer Problem, Congressional 
Research Service, April 12, 1996, p. CRS-2.
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    The Committee on Government Reform and Oversight is deeply 
concerned that many Federal Government departments and agencies 
are not moving with necessary dispatch to address the year 2000 
computer problem. Without greater urgency, those agencies risk 
being unable to provide services or perform functions that they 
are charged by law with performing. Senior agency management 
must take aggressive action if these problems are to be 
avoided.

                            B. Jurisdiction

    The Committee on Government Reform and Oversight (the 
``committee'') has primary legislative and oversight 
jurisdiction with respect to the ``overall economy, efficiency 
and management of Government operations and activities, 
including Federal procurement.'' It also has primary oversight 
responsibility to ``review and study, on a continuing basis, 
the operation of Government activities at all levels with a 
view to determining their economy and efficiency.'' \2\ In 
addition to its other oversight responsibilities:
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    \2\ Rules of the House of Representatives, 104th Congress, X, 
1(g)(6) and (12) and X, 2(b)(2).
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        [T]he Committee on Government Reform and Oversight may 
        at any time conduct investigations of any matter 
        without regard to the provisions . . . conferring 
        jurisdiction over such matter upon another standing 
        committee. The committee's findings and recommendations 
        in any such investigation shall be made available to 
        the other standing committee or committees having 
        jurisdiction over the matter involved. . . .\3\
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    \3\ Rules of the House of Representatives, 104th Congress, X, 
4(c)(2).
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    Pursuant to this authority, the Subcommittee on Government 
Management, Information, and Technology (the ``subcommittee'') 
convened an oversight hearing on April 16, 1996 to examine 
whether January 1, 2000, is the date for a potential computer 
disaster \4\. Currently, computers which use two-digit date 
fields will fail to recognize the entry of the next millennium 
on January 1, 2000. If left unchanged, a global computer virus 
could result. The subcommittee reviewed Federal agency 
management of this potentially disastrous computer problem.
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    \4\ The decision to record two-digit date fields as ``66'' rather 
than ``1966'' was a way to save very limited storage space on 
computers. Many believed at the time that there would be difficulty in 
the year 2000, but they assumed that any systems already in operation 
would be replaced by the year 2000. At this point no magic bullet has 
appeared to solve this problem.
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    The subcommittee's jurisdiction centers on the Federal 
Government's operations. Consequently, although the year 2000 
problem affects both public and private organizations, the 
subcommittee has focused its attention on the preparedness of 
Federal Government departments and agencies.

                              II. Findings

                   A. Proceedings of the Subcommittee

    On April 16, 1996, Subcommittee Chairman Stephen Horn 
convened a hearing of the Subcommittee on Government 
Management, Information, and Technology to collect the facts on 
the steps Federal agencies are taking to prevent a possible 
computer disaster. Among the questions he raised were whether 
agencies are taking the necessary actions to identify where the 
problem lies and whether they are providing the necessary human 
and capital resources to correct the problem.
    In her opening statement, the subcommittee's ranking 
minority member, Representative Maloney noted: ``The cost of 
failure is high--systems that deliver services to individuals 
will not work, and those services will not be delivered. Checks 
will not arrive on time. Planes will be grounded, and ports 
will be closed.''
    As noted by subcommittee member Representative Tom Davis 
(R-VA), ``think for a moment how dates play a part in each one 
of our lives and how the failure of a computer system or 
computer scanner to recognize and understand a date can affect 
us. Our driver's license may prematurely expire and the Social 
Security Administration may recognize 25-year-olds as 75-year-
olds, without conversion that is needed for the year 2000.'' 
\5\ And as pointed out by Representative Peter Blute, ``this is 
a very important issue--an economic issue for the entire 
country.'' \6\
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    \5\ Opening statement of Representative Tom Davis before a hearing 
of the Subcommittee on Government Management, Information, and 
Technology, House Committee on Government Reform and Oversight, Is 
January 1, 2000 the Date for a Potential Computer Disaster? April 16, 
1996.
    \6\ Statement of Representative Peter Blute before a hearing of the 
Subcommittee on Government Management, Information, and Technology, 
House Committee on Government Reform and Oversight, Is January 1, 2000 
the Date for a Potential Computer Disaster? April 16, 1996.
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    A number of examples were received by the subcommittee of 
incidences that could occur if industry and government continue 
to ignore this issue. In fact everything from unexpected 
expiration of drivers' licenses to the erroneous dates for 
final mortgage payments could occur if two-digit date fields 
remain unable to recognize the year 2000. Knowing this 
information technology project has a fixed date for completion, 
January 1, 2000, Subcommittee Chairman Horn asked hearing 
witness, Kevin Schick of the Gartner Group, the estimated cost 
of fixing this problem. Mr. Schick provided recent estimates as 
high as $600 billion worldwide, half of which would be in the 
United States and $30 billion for the Federal Government. In 
accordance with Congress' responsibility to better understand 
what steps Federal agencies are taking to ensure a 
minimalization of risk and cost to the American taxpayer, 
Subcommittee Chairman Horn then queried Schick of his knowledge 
regarding the administration's and, in particular, the Office 
of Management and Budget's current efforts to convey the 
urgency of this problem. Mr. Schick responded ``there is no 
sense of urgency . . . We [the Gartner Group] are not 
interested in creating a sensational story here about the year 
2000. We don't want to panic. That does nobody any good . . . 
Yet, if [Federal agencies] are not already well into this 
project by October of 1997, [the Federal Government] will be 
doing a disservice to the very constituents that depend on [it] 
to prevent something like this from happening to them. . . .'' 
\7\
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    \7\ Oral testimony of Kevin Schick, research director, The Gartner 
Group, before a hearing of the Subcommittee on Government Management, 
Information, and Technology, Committee on Government Reform and 
Oversight, Is January 1, 2000 the Date for a Potential Computer 
Disaster? April 16, 1996.
---------------------------------------------------------------------------
    To further understand the impact of this issue on the 
Nation's businesses and State and local governments, 
Representative Constance Morella, chairwoman of the 
Subcommittee on Technology of the Committee on Science, called 
for a joint hearing with the Subcommittee on Government 
Management, Information, and Technology, to review the impact 
on personal computers, State governments and Federal agencies. 
During the hearing held on September 10, 1996, Larry Olson, 
Deputy Secretary for Information Technology for the 
Commonwealth of Pennsylvania, presented Pennsylvania's plan of 
action. As noted by Olson, the key to success of the plan is 
senior level support. Mr. Olson pointed out that during his 
first year as Governor of Pennsylvania, Tom Ridge quickly 
recognized the dramatic implications of the year 2000 date 
field problem. Subsequently the Governor took quick action to 
ensure that Pennsylvania businesses and governments will be 
prepared before January 1, 2000.\8\
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    \8\ Statement of Larry Olson, Deputy Secretary for Information 
Technology, Commonwealth of Pennsylvania, before the Subcommittee on 
Government Management, Information, and Technology, Committee on 
Government Reform and Oversight, Subcommittee on Technology, Committee 
on Science, September 10, 1996.
---------------------------------------------------------------------------
    At the September session Harris Miller, president, 
Information Technology Association of America, presented an 
outline of how the year 2000 situation presents three problems 
for personal computer users in homes and businesses across the 
country: (1) the BIO's chip of individual machines; \9\ (2) the 
operating system that generally comes bundled with new 
computers; and (3) the commercial software purchased for those 
machines. Most equipment manufacturers in the past 18 months 
have modified their products. Operating system software is also 
an issue. Operating systems in personal computers in most cases 
can have their operating systems ``fixed'' through a simple 
procedure using the computer's mouse. Commercial software 
products may or may not be year 2000 compliant. An issue of 
great concern for personal computer users is the increasing 
interconnectedness with other systems. In order to ensure that 
computer systems are operational in the year 2000, most systems 
will need modification.
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    \9\ The BIO's chip instructs the basic input/output system of a 
computer.
---------------------------------------------------------------------------
    Mr. Miller testified further that personal computer users 
as well as mainframe information technology managers need to be 
aware of this issue and take appropriate corrective steps.\10\
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    \10\ Oral statement of Harris Miller, president, Information 
Technology Association of America, before Subcommittee on Government 
Management, Information, and Technology, Committee on Government Reform 
and Oversight, Subcommittee on Technology, Committee on Science, 
Solving the Year 2000 Computer Problem, September 10, 1996.
---------------------------------------------------------------------------
    In her testimony Sally Katzen, Administrator, Office of 
Information and Regulatory Affairs, Office of Management and 
Budget, provided an outline of the Clinton administration's 
current strategy for solving the problem: (1) raise the 
awareness of the most senior managers in Federal agencies to 
the dimensions of the problem; (2) promote the sharing of both 
management and technical expertise; and (3) remove barriers 
that may slow down or impede technicians fixing systems.\11\
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    \11\ Statement of Sally Katzen, Administrator, Office of 
Information and Regulatory Affairs, Office of Management and Budget, 
before the Subcommittee on Government Management, Information, and 
Technology, Committee on Government Reform and Oversight, Subcommittee 
on Technology, Committee on Science, Solving the Year 2000 Computer 
Problem, September 10, 1996, p. 3.
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              B. Oversight Activities of the Subcommittee

    Alarmed by what the subcommittee had learned at its April 
16 hearing, Subcommittee Chairman Stephen Horn and Ranking 
Minority Member Carolyn Maloney sent a joint congressional 
oversight letter. The letter was addressed to the heads of each 
executive department and 10 additional agencies. The letter, 
dated April 29, 1996, asked 13 detailed questions intended to 
ascertain the status of each agency's software conversion 
preparation for the year 2000.\12\
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    \12\ Letter from Representative Stephen Horn and Representative 
Carolyn Maloney to 24 departments and agencies, April 29, 1996 (letters 
on file with the subcommittee). It is attached as an appendix to the 
report.
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    The agencies receiving the letter were selected by the 
subcommittee because each would be required under the 
Information Technology Management Reform Act to appoint chief 
information officers.\13\
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    \13\ National Defense Authorization Act for fiscal year 1997; 
Division E; Public Law 104-106.
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    The overall response the subcommittee received was 
discouraging. Only 9 of the 24 departments and agencies 
responded that they had a plan for addressing the problem. Five 
of them had not even designated an official within the 
organization to be responsible for the problem. Seventeen of 
the departments and agencies lacked any cost estimates for 
addressing the problem. Even those with partial cost estimates 
could only provide projections for a limited part of their 
agency.\14\
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    \14\ Refer to appendix (on file with the subcommittee).
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    Four agencies surveyed did have superior records, compared 
with the others. The Social Security Administration began its 
year 2000 initiatives in 1989. Although it should be observed 
that their efforts are not yet near completion. The Agency for 
International Development wrote the subcommittee that a 
``system migration'' to newer technology had addressed the 
problem. Both the Office of Personnel Management and the Small 
Business Administration also had more advanced year 2000 
efforts. However, none of these four agencies is a Cabinet 
department. Each organization has a more focused information 
technology mission than other agencies.\15\
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    \15\ Each of the four also has some comparability to the private 
sector financial services industry which also moved faster than other 
private industries in addressing the problem.
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    Several Cabinet departments, with diverse subagencies and 
bureaus, reported to the subcommittee that they only had 
limited year 2000 projects underway. Efforts at the Departments 
of Energy and Transportation were so underdeveloped that both 
could not answer any of the 13 questions posed by the April 29 
oversight letter. Many agencies with direct responsibilities 
for furnishing services to the public, such as the Departments 
of Labor, Veterans Affairs and the Federal Emergency Management 
Agency, had only minimal year 2000 initiatives underway.
    Subcommittee Chairman Horn, Ranking Member Maloney and 
other members of the subcommittee released their conclusions 
based on the agency responses at a July 30, 1996 press 
conference. To underscore their conclusions, each of the 24 
departments and agencies received letter grades based on the 
subcommittee's assessment of their relative performance. Four 
were given ``A's'' and four agencies were given ``F's.'' Ten 
agencies were given ``D's,'' none of which had any plan in 
place for addressing the problem, or available cost estimates. 
The decision to give each agency a grade was intended to 
emphasize the responsibility that individual departments and 
agencies have for their own performance.
    [The information referred to follows:]
    
    
    Other major findings resulting from the April 29 oversight 
letter which were presented at the July 30, 1996 press 
conference with Representatives Horn, Maloney and other members 
of the subcommittee include:
     Major departments are in the initial planning 
stages of this effort, even though, agencies need to have their 
systems inventoried and fixed by 1998, in order to provide 
sufficient time to test and ensure complete accuracy. This 
means, in the next year and a half departments and agencies 
must complete their plans, inventory and fix millions of lines 
of code, while simultaneously meeting agency needs.
     Even those agencies considered leaders in this 
effort, such as the Social Security Administration and the 
Department of Defense are not close to completing the inventory 
and solution stages of the conversion process.
    According to the information received, only six agencies 
have cost estimates on the monetary resources needed to address 
the problem. These agencies include, the Department of 
Agriculture, the Department of Education, the Department of 
Health and Human Services, the Office of Personnel Management, 
the Small Business Administration, and the Department of State. 
In fact, the Department of Health and Human Resources, has cost 
estimates for only two divisions, amounting to $125 million and 
the Department of Agriculture has cost estimates for only one 
division, amounting to $5.6 million. The total estimate for 
these six agencies and their departments is $298 million.\16\
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    \16\ Letter from Representative Stephen Horn and Representative 
Carolyn Maloney to the Honorable Donna Shalala, Department of Health 
and Human Resources, April 29, 1996 (on file with the subcommittee). 
Letter from Representative Stephen Horn and Representative Carolyn 
Maloney to the Honorable Dan Glickman, Secretary, Department of 
Agriculture, April 29, 1996 (on file with the subcommittee). Letter 
from Representative Stephen Horn and Representative Carolyn Maloney to 
the Honorable Richard W. Riley, Secretary, Department of Education, 
April 29, 1996 (on file with the subcommittee). Letter from 
Representative Stephen Horn and Representative Carolyn Maloney to the 
Honorable James B. King, Director, Office of Personnel Management, 
April 29, 1996 (on file with the subcommittee). Letter from 
Representative Stephen Horn and Representative Carolyn Maloney to the 
Honorable Philip Lader, Administrator, Small Business Administration, 
April 29, 1996 (on file with the subcommittee). Letter from 
Representative Stephen Horn and Representative Carolyn Maloney to the 
Honorable Christopher Warren, Secretary, Department of State, April 29, 
1996, (on file with the subcommittee).
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     The Department of Defense has not yet completed 
its inventory of the computer software code which needs to be 
converted.
     The cost estimate to fix the 358 million estimated 
lines of code to be reviewed is between $1.02 and $8.52 per 
line. This means the cost to review and fix Department of 
Defense's systems could range somewhere between $358 million 
and $3 billion.\17\
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    \17\ Tom Backman, MITRE Corporation, MITRE Assessment on the 
Effects of Two-Digit Years for the Year 2000, January 10, 1996.
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     NASA, one of the most innovative, advanced and 
computer dependent agencies in the Federal Government, has not 
prepared a plan to solve the problem and does not anticipate 
having a plan completed until March 1997. With this schedule, 
the agency will have less than a year to inventory, and fix 
systems.

                         C. Committee Findings

    The committee finds the following:

1. The year 2000 problem results from the unanticipated consequences of 
        data processing decisions made decades ago

    The two-digit year date field in many computer systems 
perform various functions, such as calculating the age of U.S. 
citizens, sorting information by date, or comparing multiple 
dates. When computer technology was developed 20 years ago disk 
storage was very expensive.\18\ During this time, many computer 
programmers never considered an alternative format, because of 
the cost and the idea that these programs would not last 10 
years let alone through the year 2000. Systems which have been 
in place for nearly 30 years have been enhanced through 
advanced technology development but continue to be programmed 
for the 20th century. During the development of computer 
technology many experts within the Federal Government and the 
private sector believed that the rapidity with which technology 
advanced could always yield a ``silver bullet'' solution to any 
technical difficulty. Others believed that the software 
services industry was overstating the problem in order to sell 
their product solutions. It has been noted that while 
correcting the date field is technically simple, the process of 
inventorying, correcting, testing and integrating software and 
hardware among all interactive systems (both among and between 
industry and Government) is a very complex management task.
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    \18\ Oral testimony of Kevin Schick, research director, The Gartner 
Group, before a hearing of the Subcommittee on Government Management, 
Information, and Technology, House Committee on Government Reform and 
Oversight, ``Is January 1, 2000 the Date for Computer Disaster?'' April 
16, 1996, p. 8.
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2. Senior management involvement is required to address the year 2000 
        problem

    According to the various witnesses who appeared before the 
subcommittee, the key to success is support from senior level 
management to fix systems accordingly. Witnesses revealed the 
fact that many information technology experts have been aware 
of this issue, in some instances for a decade, but have been 
unable to take corrective action because the issue has been 
perceived as irrelevant to the success of agencies' missions. 
According to private sector witness, Michael Tiernan, it was 
only after senior level management realized the potential 
economic impact of this issue did they move quickly to develop 
a plan to resolve the problem.\19\
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    \19\ Michael B. Tiernan, chairman, Year 2000 Subcommittee, Data 
Management Division of Wall Street, Securities Industry Association, 
testimony before the Subcommittee on Government Management, 
Information, and Technology, April 16, 1996, p. 79.
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    Within the Federal sector an interagency committee has been 
established to raise awareness of the daunting task facing 
Federal information technology managers. The ``Interagency 
Committee on the Year 2000'' has taken several actions 
including requiring vendor software listed in future 
procurement schedules to be year 2000 compliant.\20\
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    \20\ Richard Nunno, Analyst in Information Technology, Science 
Policy Research Division, Year 2000 Computer Problem, Congressional 
Research Service, p. CRS-3.
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3. The year 2000 deadline cannot be extended; no schedule slips are 
        possible

    According to Kevin Schick, research director, The Gartner 
Group, the crisis revolves around three considerations: time, 
cost and risk. Businesses, Federal agencies, and State and 
local governments need to understand that this is the only 
information technology project that will not allow for a 
schedule slip. Saturday, January 1, 2000 cannot be moved to 
another day or time. Federal, State and local governments may 
need to shift resources from other projects in order to work on 
year 2000 efforts.\21\ In most cases, Federal agencies are 
running out of time.
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    \21\ The State of Nebraska has imposed a new tax to pay for the 
cost of the year 2000 computer conversion.

4. The cost of addressing the year 2000 problem is expensive

    Addressing the year 2000 computer problem will be very 
expensive. Estimates received by the subcommittee run as high 
as $600 billion for systems worldwide. The cost for the Federal 
Government alone, could reach $30 billion. These estimates are 
based upon the private and public sectors developing plans to 
inventory their current programs; analyze the percentage of 
code affected by dates; implement a ``fix'' to the problem, and 
provide for testing to ensure that the changes are correct.\22\ 
All of these solutions need to be applied while successfully 
operating current information technology programs.
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    \22\ Kevin Schick, research director, The Gartner Group, testimony 
before the Subcommittee on Government Management, Information, and 
Technology, April 16, 1996, p. 16.
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    Only six agencies furnished any cost estimates on the 
monetary resources needed to solve the problem to the April 29, 
1996 oversight letter. These agencies include, the Department 
of Agriculture, the Department of Education, the Department of 
Health and Human Services, the Office of Personnel Management, 
the Small Business Administration, and the Department of State. 
In fact the Department of Health and Human Services, has cost 
estimates for only two divisions, amounting to $125 
million.\23\ The Department of Agriculture has cost estimates 
for only one division, amounting to $5.6 million. The total 
estimate for these six agencies and the remaining 22 
departments is $298 million.\24\
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    \23\ Stephen Horn, chairman, Subcommittee on Government Management, 
Information, and Technology, Ranking Member Carolyn Maloney, 
``letter'', April 29, 1996.
    \24\ Letter from Representative Stephen Horn and Representative 
Carolyn Maloney to the Honorable Donna Shalala, Department of Health 
and Human Resources, April 29, 1996 (on file with the subcommittee). 
Letter from Representative Stephen Horn and Representative Carolyn 
Maloney to the Honorable Dan Glickman, Secretary, Department of 
Agriculture, April 29, 1996 (on file with the subcommittee). Letter 
from Representative Stephen Horn and Representative Carolyn Maloney to 
the Honorable Richard W. Riley, Secretary, Department of Education, 
April 29, 1996 (on file with the subcommittee). Letter from 
Representative Stephen Horn and Representative Carolyn Maloney to the 
Honorable James B. King, Director, Office of Personnel Management, 
April 29, 1996 (on file with the subcommittee). Letter from 
Representative Stephen Horn and Representative Carolyn Maloney to the 
Honorable Philip Lader, Administrator, Small Business Administration, 
April 29, 1996 (on file with the subcommittee). Letter from 
Representative Stephen Horn and Representative Carolyn Maloney to the 
Honorable Christopher Warren, Secretary, Department of State, April 29, 
1996 (on file with the subcommittee).
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    As of this date, there are no estimates for solving the 
problem within and among the various departments and agencies.

5. There is a high risk of system failure if the year 2000 computer 
        problem is not corrected

    As stated by the Congressional Research Service, it may be 
too late to correct every system in the Nation before the clock 
strikes twelve on December 31, 1999.\25\ If this is the case, 
then, businesses need to know what steps they must take in 
order to avoid disruptions in normal business operations. 
Federal, State and local governments, need to prioritize 
mission critical systems, immediately correcting those systems 
which have the greatest human impact.
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    \25\ Richard Nunno, Analyst in Information Technology, Science 
Policy Research Division, Year 2000 Computer Problem, April 12, 1996, 
p. CRS-2.
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    Federal, State and local governments, must ensure that the 
American public is not at risk of losing any currently 
available government service. Additionally, agencies, such as 
the Department of Defense, the Federal Aviation Administration, 
and the National Aeronautics and Space Administration, need to 
ensure that January 1, 2000 will not be a day when computers go 
haywire and life as we know it is severely disrupted.
    On June 7, 1996, the Congressional Research Service (CRS) 
provided both the House and Senate with a memorandum on the 
various issues complicating the year 2000 solution process. The 
CRS also identified the potential consequences resulting from a 
failure to address this problem at the Federal level. Some 
examples of the impact of system failures could include:
     Miscalculation by the Social Security 
Administration of the ages of citizens, causing payments to be 
sent to people who are not eligible for benefits while ending 
or not beginning payments to those who are eligible;
     Miscalculation by the Internal Revenue Service of 
the standard deduction on income tax returns for persons over 
age 65, causing incorrect records of revenues and payments due;
     Malfunctioning of certain Defense Department 
weapon systems;
     Erroneous flight schedules generated by the 
Federal Aviation Administration's air traffic controllers;
     State and local computer systems becoming 
corrupted with false records, causing errors in income and 
property tax records, payroll, retirement systems, motor 
vehicle registrations, utilities regulations, and a breakdown 
of some public transportation systems;
     Erroneous records by securities firms and 
insurance companies;
     False billing by telephone companies resulting in 
errors in consumers' bills or lapses in service.\26\
---------------------------------------------------------------------------
    \26\ Richard Nunno, Analyst in Information Technology, Science 
Policy Research Division, Year 2000 Computer Problem, Congressional 
Research Service, June 7, 1996.
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6. There are potential liability issues if the year 2000 computer date 
        conversion is not completed

    In the future, industry may face potential liability for 
failing to provide year 2000 compliant products or services. 
These same providers need to ensure that their databases are 
not corrupted by bad data from other sources. This issue may 
cause banks, securities firms and insurance companies to 
ascertain whether the companies they finance or insure are year 
2000 compliant before making investment decisions. 
Additionally, governments and businesses will need to protect 
themselves from purchasing noncompliant software products and 
services through the use of commercial market warranties.

7. Interconnected computer systems pose international risks

    As the leading user of computer technology the United 
States probably has more at risk, in terms of economic loss, if 
the year 2000 issue is not resolved properly. The economic 
impact on businesses both domestically and internationally 
could be dramatic, especially if our allies do not quickly take 
action to correct date dependent software. In fact, Federal 
agencies and the private sector need to emphasize the urgency 
of this problem worldwide.

                          III. Recommendations

    The year 2000 is less than 40 months away. The problem, 
although not technically complex, is managerially challenging 
and will be very time consuming for private and public sector 
organizations. Additionally, the task may be more difficult for 
the public sector, where systems which have been in use for 
decades, may lack software documentation and therefore increase 
the time it takes from the inventory phase to solution. Further 
increasing the time to solve the problem could be a lack of 
qualified personnel willing, or able, to correct the problem.
    According to estimates received by the subcommittee during 
the hearing process, the cost to fix Federal systems, is 
estimated to be at least $30 billion. After requesting budget 
information from 24 departments and agencies, Congress still 
does not have a complete picture of the cost of solving this 
problem. This lack of cost information may hinder Federal 
agency efforts to correct every system. In fact, as stated by 
the Congress Research Service memorandum dated April 12, 1996, 
``it may be too late to correct all of Nation's systems''. The 
clock is ticking and most Federal agencies, have not 
inventoried their major systems in order to detect where the 
problem lies within and among each Federal department, field 
office and division. The date for completion of this project 
cannot slip.
    The administration, particularly, the Office of Management 
and Budget must ensure that agencies convert two-digit date 
fields to recognize the year 2000 by ensuring the necessary and 
appropriate resources--including both human and capital--are 
available to senior agency managers. The Government has a 
responsibility to its constituents and we must not fail to 
ensure that Government services and public safety are available 
to all of our citizens.
    Additional specific recommendations for the Federal 
Government by the committee include:
     Agencies must prioritize mission critical systems, 
and determine the resources needed to make these systems year 
2000 compliant.
     The Office of Management and Budget should direct 
Federal agencies to begin implementation of agency year 2000 
plans by January 1, 1997.
     The Office of Management and Budget should work 
with Federal agencies to ensure appropriate funding levels are 
allocated to solving this problem.




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