Year 2000 Computing Crisis: Status of Efforts To Deal With Personnel
Issues (Letter Report, 10/22/98, GAO/AIMD/GGD-99-14).

Pursuant to a congressional request, GAO reviewed workforce issues
associated with the year 2000 computing crisis, focusing on: (1) the
nature and extent of year 2000 personnel issues being reported by
federal agencies; and (2) what is being done by the government to
address reported federal personnel shortages related to the year 2000
problem.

GAO noted that: (1) about half of the 24 large agencies and a quarter of
the 41 small agencies and independent entities reporting to the Office
of Management and Budget (OMB) expressed concerns that the personnel
needed to resolve the year 2000 problem would not be available; (2)
generally, these concerns fall into the categories of difficulty in
finding and keeping qualified government personnel, and difficulty in
obtaining contractors; (3) while a significant number of agencies are
raising these concerns, their comments are largely anecdotal and a
comprehensive analytical assessment of the issue has not yet been made;
(4) as a result, the full extent and severity of the year 2000 workforce
issue across the government is not known; (5) the President's Council on
Year 2000 Conversion, the Chief Information Officers (CIO) Council, and
the Office of Personnel Management (OPM) have various initiatives
underway to address reported year 2000 personnel issues; (6) for
example, OPM has recently developed additional human resources
management aids to assist agencies in dealing with year 2000 workforce
issues; (7) while such initiatives have provided agencies with important
options to help address reported year 2000 personnel problems, it is not
yet clear that recent actions have enabled agencies to successfully
resolve all perceived personnel issues; (8) accordingly, it is essential
that OMB, as part of its monitoring responsibilities for the
government's year 2000 program, continue to solicit from agencies
whether they have any remaining year 2000 personnel problems and to help
provide specific assistance to individual agencies; and (9) moreover,
OMB should work with the CIO Council to expedite evaluations of the full
extent and scope of information technology personnel issues to help
formulate effective solutions.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  AIMD/GGD-99-14
     TITLE:  Year 2000 Computing Crisis: Status of Efforts To Deal With 
             Personnel Issues
      DATE:  10/22/98
   SUBJECT:  Computer software verification and validation
             Information resources management
             Systems conversions
             Strategic information systems planning
             Federal employees
             Personnel management
             Human resources utilization
             Interagency relations
             Data integrity
IDENTIFIER:  Y2K
             
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Cover
================================================================ COVER


Report to the Chairman, Committee on Banking and Financial Services,
House of Representatives

October 1998

YEAR 2000 COMPUTING CRISIS -
STATUS OF EFFORTS TO DEAL WITH
PERSONNEL ISSUES

GAO/AIMD/GGD-99-14

Year 2000 Personnel Issues

(511252)


Abbreviations
=============================================================== ABBREV

  CIO - Chief Information Officer
  GS - General Schedule
  OMB - Office of Management and Budget
  OPM - Office of Personnel Management

Letter
=============================================================== LETTER


B-280543

October 22, 1998

The Honorable James J.  Leach
Chairman
Committee on Banking and Financial Services
House of Representatives

Dear Mr.  Chairman: 

With close to half the world's total computer capacity and 60 percent
of its Internet assets, the United States is the most advanced and
most dependent user of information technology.\1 Should these
information systems--which perform functions and services critical to
our nation--suffer disruption, a widespread crisis could result. 
Accordingly, the upcoming change of century is a sweeping and urgent
challenge for public- and private-sector organizations.  Correcting
this problem will be labor-intensive and time-consuming--and must be
done while systems continue to operate.  However, many departments
and agencies\2 are expressing concern that the critical information
technology personnel needed to correct the Year 2000 problem are not
available. 

Given the criticality of the Year 2000 problem and the importance of
having adequate resources to solve the problem, you asked us to
assist in assessing workforce issues associated with the Year 2000. 
Our objectives were to (1) determine the nature and extent of Year
2000 personnel issues being reported by federal agencies and (2)
identify what is being done by the government to address reported
federal personnel shortages related to the Year 2000 problem. 
Appendix I contains our scope and methodology. 


--------------------
\1 Critical Foundations:  Protecting America's Infrastructures
(President's Commission on Critical Infrastructure Protection,
October 1997). 

\2 Departments and agencies will be referred to collectively as
agencies throughout this letter. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

About half of the 24 large agencies and a quarter of the 41 small
agencies and independent entities reporting to the Office of
Management and Budget (OMB) expressed concerns that the personnel
needed to resolve the Year 2000 problem would not be available. 
Generally, these concerns fall into the categories of difficulty in
finding and keeping qualified government personnel, and difficulty in
obtaining contractors.  While a significant number of agencies are
raising these concerns, their comments are largely anecdotal and a
comprehensive analytical assessment of the issue has not yet been
made.  As a result, the full extent and severity of the Year 2000
workforce issue across the government is not known. 

The President's Council on Year 2000 Conversion, the Chief
Information Officers (CIO) Council, and the Office of Personnel
Management (OPM) have various initiatives underway to address
reported Year 2000 personnel issues.  For example, OPM has recently
developed additional human resources management aids, such as waivers
allowing agencies to rehire federal retirees without the usual
offsets, to assist agencies in dealing with Year 2000 workforce
issues. 

While such initiatives have provided agencies with important options
to help address reported Year 2000 personnel problems, it is not yet
clear that recent actions have enabled agencies to successfully
resolve all perceived personnel issues.  Accordingly, it is essential
that OMB, as part of its monitoring responsibilities for the
government's Year 2000 program, continue to solicit from agencies
whether they have any remaining Year 2000 personnel problems and to
help provide specific assistance to individual agencies.  Moreover,
OMB should work with the CIO Council to expedite evaluations of the
full extent and scope of information technology personnel issues to
help formulate effective solutions. 


   BACKGROUND
------------------------------------------------------------ Letter :2

On January 1, 2000, computer systems worldwide could malfunction or
produce inaccurate information simply because the century has
changed.  Unless corrected, such failures could have a costly,
widespread impact.  The problem is rooted in how dates are recorded
and computed.  For the past several decades, systems have typically
used two digits to represent the year--such as "97" for 1997--to save
electronic storage space and reduce operating costs.  In such a
format, however, 2000 is indistinguishable from 1900.  Software and
systems experts nationwide are concerned that this ambiguity could
cause systems to malfunction in unforeseen ways, or to fail
completely. 

As we reported to you and testified to Congress earlier this year,
the public faces a risk that critical services could be severely
disrupted by the Year 2000 computing crisis.\3 Financial transactions
could be delayed, airline flights grounded, and national defense
affected.  Also, the many interdependencies that exist among
governments and within key economic sectors could cause the failure
of a single system to have adverse repercussions across the nation
and internationally.  While managers in the government and the
private sector are taking many actions to mitigate these risks, a
significant amount of work remains, and time frames are unrelenting. 

One key concern in addressing the Year 2000 problem is the
availability of trained information technology personnel.  We
reported in April 1998, that while various agencies stated that they
or their contractors had problems in obtaining or retaining
information technology personnel, no governmentwide strategy existed
to address recruiting and retaining the personnel with the
appropriate skills for Year 2000-related work.\4 We recommended that
the Chairman of the President's Council on Year 2000 Conversion
develop a personnel strategy which includes (1) determining the need
for various information specialists, (2) identifying any
administrative or statutory changes that would be required to waive
reemployment penalties for former federal employees, and (3)
identifying ways to retain key Year 2000 staff in agencies through
the turn of the century.\5

We reemphasized the need for such a strategy in a June 1998
testimony.\6

Within the executive branch, several executive councils and agencies
are responsible for the human resources aspect of the Year 2000
effort.  These councils and agencies, and their respective Year 2000
responsibilities are described below: 

  -- The President's Council on Year 2000 Conversion is chaired by an
     Assistant to the President and is comprised of one
     representative from each of the executive departments and from
     other federal agencies as determined by the chair.  The chair of
     the Conversion Council is tasked with the following Year 2000
     roles:  (1) overseeing federal agencies' Year 2000 activities,
     (2) acting as chief spokesperson in national and international
     forums, (3) providing policy coordination of executive branch
     activities with state, local, and tribal governments, and (4)
     promoting appropriate federal roles with respect to private
     sector activities. 

To date, the Conversion Council has established several working
groups to address Year 2000 concerns.  One of these is the Workforce
Issues working group, which began meeting in May 1998.  The working
group is chaired by the Deputy Secretary of the Department of Labor,
and includes officials from the Departments of Labor, Education,
Housing and Urban Development, Commerce, Defense, as well as OPM and
the Small Business Administration.  The group's main objective is to
determine what the federal government can do to help meet the
country's needs for technically skilled personnel to address the Year
2000 problem, with special attention to small businesses, local
governments, and organizations in rural areas. 

  -- The CIO Council is comprised of CIOs and Deputy CIOs from 30
     federal departments and agencies, representatives from OMB, and
     the chairs of the Government Information Technology Services
     Board and Information Technology Resources Board.  It is the
     principal interagency forum for improving the design,
     modernization, use, sharing, and performance of information
     technology resources.  The Council's role includes:  (1)
     developing recommendations for information technology management
     policy, procedures, and standards, (2) identifying opportunities
     to share information resources, and (3) assessing and addressing
     the needs of the federal government for an information
     technology workforce.  One of the committees reporting to the
     CIO Council, the Education and Training Committee, is charged
     with addressing issues in hiring, training, and maintaining an
     effective federal information technology workforce. 

  -- OMB is responsible for overseeing federal agencies' responses to
     the Year 2000 problem.  In early 1997, OMB issued a broad Year
     2000 strategy for the federal government and required that 24
     major agencies submit quarterly reports on their Year 2000
     progress.\7 On January 20, 1998, OMB added new quarterly
     reporting requirements, specifically asking agencies to provide
     a narrative description of progress, including a description of
     any problems affecting progress and, in particular, any problems
     in acquiring or retaining skilled personnel.  In March and April
     1998, OMB requested that an additional 31 small agencies report
     their progress to OMB by April 30, 1998, and another 10 small
     agencies and other entities, such as the Tennessee Valley
     Authority and the United States Postal Service, report by May
     15, 1998.  Most recently, in July 1998, OMB revised its earlier
     reporting requirements and asked that nine small and independent
     agencies begin providing quarterly reports on progress in
     addressing difficulties relating to the Year 2000 problem. 

  -- OPM, the federal government's human resources agency, provides
     federal agencies with personnel services and policy leadership
     including staffing tools, guidance on labor-management
     relations, preparation of government's future leaders,
     compensation policy development, and programs to improve
     workforce performance.  OPM is responsible for helping agencies
     to equip themselves with the systems they need to manage their
     human resources effectively, and in light of the Year 2000
     problem, is providing tools that agencies may use to help
     recruit and retain information technology professionals. 


--------------------
\3 Year 2000 Computing Crisis:  Strong Leadership and Effective
Public/Private Cooperation Needed to Avoid Major Disruptions
(GAO/T-AIMD-98-101, March 18, 1998); Year 2000 Computing Crisis: 
Strong Leadership Needed to Avoid Disruption of Essential Services
(GAO/T-AIMD-98-117, March 24, 1998); and Year 2000 Computing Crisis: 
Potential for Widespread Disruption Calls for Strong Leadership and
Partnerships (GAO/AIMD-98-85, April 30, 1998). 

\4 GAO/AIMD-98-85, April 30, 1998. 

\5 Shortly after a draft of our report was given to the Chairman for
comment, OPM issued a memorandum stating that the Year 2000 was an
"unusual circumstance" which would allow OPM to grant agencies
waivers, allowing them to rehire former federal personnel to work on
Year 2000 conversion efforts temporarily without a reduction in the
employee's salary or annuity. 

\6 Year 2000 Computing Crisis:  Actions Must Be Taken Now to Address
Slow Pace of Federal Progress (GAO-T-AIMD-98-205, June 10, 1998). 

\7 Although 25 major agencies report to OMB, we are only reporting on
24.  The Central Intelligence Agency's reports are classified, and so
are not included in this summary. 


   CONCERNS EXIST ABOUT THE
   AVAILABILITY OF INFORMATION
   TECHNOLOGY PERSONNEL
------------------------------------------------------------ Letter :3

Of the 24 large agencies reporting to OMB, 13 are expressing concerns
about the availability of information technology personnel.\8 Also,
10 of the 41 small agencies and independent entities expressed these
concerns.\9 These organizations' concerns generally fall into the
categories of difficulty in recruiting and retaining internal staff
and in obtaining contractor support.  Appendix II identifies the
organizations reporting workforce issues and summarizes them.  It
also identifies the organizations with no reported concerns. 


--------------------
\8 Four of these agencies, the Department of Agriculture, the
Department of Commerce, the Department of Labor, and the Department
of the Treasury did not state these concerns in their August reports
to OMB, but told us of them in subsequent discussions. 

\9 Three of these entities, the Farm Credit Administration, the
Federal Deposit Insurance Corporation, and the Neighborhood
Reinvestment Corporation did not state these concerns in their
reports to OMB, but told us of them in subsequent discussions. 


      AGENCIES REPORTING
      DIFFICULTY IN FINDING AND
      KEEPING NEEDED PERSONNEL
---------------------------------------------------------- Letter :3.1

Both large and small agencies and entities reported that retaining
key information technology staff and recruiting new staff were among
their greatest concerns in addressing the Year 2000 problem. 
Agencies indicated that they had lost skilled information technology
employees through retirements and through increased recruitment by
the private sector.  For example, in May 1998, the Department of
Agriculture reported that several of its agencies expressed
particular concern that the loss of staff would affect their ability
to meet Year 2000 deadlines.  Specifically, the Farm Services Agency
reported that it lost 28 (7 percent) of its 403 information
technology staff in the first 6 months of fiscal year 1998. 

Agencies have also reported that recruiting replacements for
information technology personnel is difficult.  The Department of
Veterans Affairs noted that recruiting is very competitive for Year
2000 professionals in some geographic areas, and stated the concern
that with lucrative finders fees being advertised, government
employees may leave for the private sector.  Also, the National
Credit Union Administration reported that it had experienced
difficulties in hiring senior Year 2000 program officials. 

Among the various types of information technology workers needed,
computer programmers are reported to be in the shortest supply.  For
example, in February 1998, the Justice Department reported that it
had difficulty hiring and retaining skilled COBOL\10 programmers.  In
August, the Department reported that it continues to encounter these
problems.  As another example, in its February, May, and August
reports, the Environmental Protection Agency stated that it
experienced problems finding PL/I\11 programmers. 


--------------------
\10 COBOL (Common Business Oriented Language) is a common programming
language for business applications that was introduced in the 1960s. 

\11 PL/I (Programming Language 1) is a programming language that was
introduced in the 1960s. 


      AGENCIES REPORTING
      DIFFICULTY IN OBTAINING
      CONTRACTOR SUPPORT
---------------------------------------------------------- Letter :3.2

Recruiting and retaining qualified contract personnel is another
issue frequently mentioned by agencies reporting staffing problems. 
Once again, the specific type of information technology worker most
often mentioned as being in short supply is programmers.  For
example, the Department of Justice reported in February, May, and
again in August that it is continuing to encounter problems in
obtaining contractor support with the necessary programming skills. 

Agencies' concerns also include the high turnover rate of contractor
staff and the time it takes to recruit contractor staff.  For
example, the State Department indicated in May 1998 that the
recruitment cycle for replacing contract systems programmers took
more time than in past years despite the use of professional
recruitment services by the contract vendors. 

Also, several agencies noted problems with increasing contract labor
wage rates.  These agencies reported that they are having to increase
the hourly rate they pay for contractor staff because contractors are
increasing their own staff salaries.  For example, the Department of
Agriculture indicated that its agencies are experiencing contracting
delays as vendors find it increasingly difficult to bring on more
contract employees without substantial increases in contract dollars. 
In addition, the Federal Deposit Insurance Corporation reported that
some of its contractors are losing personnel to higher salaries with
other contractors.  When replacing these personnel, the contractors
are increasing their hourly rates. 

Four agencies reported delays on six system development efforts
because of problems they had encountered in obtaining contractors to
address the Year 2000 problem.  For example, the State Department
reported that the loss of key contractor personnel had delayed the
completion of one of its mission critical systems, the Management,
Policy and Planning Information System, by 3 months.  The Department
of Commerce also reported that its Patent and Trademark Office
experienced a 3-month delay on one of its mission-critical system
development efforts, the Classified Search and Image Retrieval
system, when the contractor was unable to place qualified staff on
the task.  The task order was terminated with that contractor, a new
task order was awarded to another contractor, and work is now
proceeding. 


      FULL EXTENT AND SEVERITY OF
      YEAR 2000 WORKFORCE ISSUE IS
      UNCLEAR
---------------------------------------------------------- Letter :3.3

Although a significant number of agencies are reporting concerns with
the availability of qualified Year 2000 staff, it is not possible to
determine the full extent or severity of personnel shortages from
these concerns because they are often anecdotal.  For example, one
department notes that one of its agencies "has had difficulty" hiring
a particular type of programmer, while another reports that it is
encountering "some problems" hiring personnel.  Also, only six
mission critical systems were reported to have "experienced delays"
in reaching Year 2000 compliance because of personnel issues. 
Without more detailed information on the nature and extent of
personnel issues, it is difficult to determine how to best address
it. 


   EXECUTIVE COUNCILS AND OPM HAVE
   BEGUN TO RESPOND TO REPORTED
   YEAR 2000 PERSONNEL ISSUES
------------------------------------------------------------ Letter :4

OPM, the Conversion Council, and the CIO Council have various
initiatives underway to address Year 2000 personnel issues:  OPM has
provided tools to assist agencies in dealing with Year 2000 workforce
issues; the Conversion Council is identifying solutions to personnel
shortages in both the government and the private sector; and the CIO
Council has initiated a broad study of information technology
workforce issues in the government and private sector. 


      OPM PROVIDES AIDS TO
      AGENCIES TO HELP IN
      OBTAINING NEEDED PERSONNEL
---------------------------------------------------------- Letter :4.1

Agencies currently have a number of aids they can use to help recruit
and retain needed personnel.  Some have been available for years. 
Others are new.  These aids are summarized below: 

Recruitment and relocation bonuses:  Federal agencies have the
authority to make a lump-sum payment of up to 25 percent of basic pay
to a newly appointed employee, or to an employee who must relocate in
cases in which the agency determines that the position would
otherwise be difficult to fill.  In return for this lump-sum payment,
the employee must sign a service agreement with the agency to
complete a specified period of employment. 

Superior qualifications appointments:  Agencies have the authority to
set pay for new appointments or reappointments of individuals to
General Schedule (GS) positions above step 1 of the grade\12 on the
basis of the candidate's superior qualifications or the agency's
special need. 

Pay at highest previous rate:  Upon reemployment, transfer,
reassignment, promotion, or change in type of appointment, agencies
can set an employee's basic pay by taking into account the employee's
previous pay rate while employed in another civilian federal position
(with certain exceptions). 

Temporary and term appointments:  Agencies can use temporary
appointments in the competitive service for positions not expected to
last longer than 1 year, but which can be extended for 1 additional
year.  Agencies can use term appointments when positions are expected
to last longer than 1 year but not more than 4 years. 

Retention allowances for individual employees:  Agencies have the
authority to make continuing payments of up to 25 percent of basic
pay if the agency determines that (1) the unusually high or unique
qualifications of the employee or the agency's special need for the
employee's services makes it essential to retain the employee and (2)
the employee would be likely to leave federal service in the absence
of a retention allowance.  Retention allowances must be paid in
accordance with the agency's previously established retention
allowance plan and must be reviewed and certified annually. 

Performance and incentive awards:  Agencies can provide employees a
lump-sum cash award on the basis of a fully successful or better
rating of record or in recognition of accomplishments that contribute
to the improvement of government operations.  Awards based on the
rating of record can be up to 10 percent of salary, or up to 20
percent for exceptional performance, provided the award does not
exceed $10,000 per employee.  With OPM review and approval, agencies
can grant awards over $10,000, up to $25,000.  Any award that would
grant over $25,000 to an individual employee must be reviewed by OPM
for submission to the President for approval. 

Quality step increases:  Agencies have the authority to increase an
employee's pay by providing an additional step increase to an
employee who has received the highest rating of record available in
the agency's performance appraisal program. 

Training and education costs reimbursement:  Agencies can pay or
reimburse an employee for all or part of the necessary expenses for
training and education, including the costs for college tuition. 
Agencies may require service agreements for training of long duration
or of high cost. 

Advance payments for new appointees:  Agencies may advance a new hire
up to two paychecks so that a new employee can meet living and other
expenses. 

Special salary rates:  Agencies may request a higher salary rate for
an occupation or group of occupations nationwide or in a local area
based on a finding that the government's recruitment or retention
efforts are, or would likely become, significantly handicapped
without those higher rates.  The minimum of a special rate range may
exceed the maximum of the corresponding grade by as much as 30
percent.  However, no special rate may exceed the rate for Executive
Level V (currently $110,700).  A special rate request must be
submitted to OPM by department headquarters and must be coordinated
with other federal agencies with employees in the same occupational
group and geographic area. 

Dual compensation waivers for retirees:  On March 30, 1998, OPM
issued a memorandum announcing that agencies could reemploy federal
retirees (civilian and military) to work specifically on the Year
2000 conversion without the usually required reduction in the
retiree's salary or military annuity.  With OPM's determination that
the Year 2000 computer conversion problem is an "unusual
circumstance," agencies can request delegated authority from OPM to
rehire former federal personnel (up to a maximum number of individual
exceptions approved by OPM) on a temporary basis through March 31,
2000. 

Premium pay for employees performing emergency work:  Agencies have
authority under the law and OPM regulations to make exceptions to the
biweekly limitation on premium pay (including overtime, night, and
holiday pay) when the head of an agency or his or her designee
determines that an emergency involving a direct threat to life or
property exists.  In its March memorandum, OPM also encouraged agency
heads to exercise this authority in the case of any employee who
performs emergency work to resolve a direct threat to property
(including monetary errors or cost) in connection with updating
computer systems to prevent malfunction, erroneous computations, or
other problems associated with the Year 2000.  By exercising this
authority, agencies will be able to compensate employees who perform
significant amounts of overtime work related to the Year 2000
problem, as long as the total of their basic pay and premium pay does
not exceed a certain rate.\13

Exclusions from early retirement programs:  On June 15, 1998, OPM
issued interim regulations allowing agencies, with OPM approval, to
limit the scope of voluntary early retirement offers when separating
or downgrading employees in a major reorganization, a major reduction
in force, or a major transfer of functions.  Agencies can limit their
retirement offers on the basis of (1) occupational series or level,
(2) organizational unit, (3) geographic area, (4) specific window
periods, (5) other similar nonpersonal factors, or (6) any
combination of these factors that the agency determines appropriate. 
Using this tool, agencies can exclude critical Year 2000 positions
from any voluntary early retirement program it offers. 

Retention allowances for groups or categories of employees:  On June
23, 1998, OPM issued interim regulations allowing agencies to
authorize a retention allowance of up to 10 percent of an employee's
rate of basic pay (or up to 25 percent with OPM approval) for a group
or category of employees such as computer programmers and system
engineers.  Retention allowances authorized for a category of
employees must be based on a written determination that (1) the
category of employees has unusually high or unique qualifications, or
(2) the agency has a special need for the employees' services that
makes it essential to retain the employees in that category, and (3)
it is reasonable to presume that there is a high risk that a
significant number of employees in the targeted category are likely
to leave federal service in the absence of the allowance. 


--------------------
\12 In the federal government, grades represent levels of difficulty,
responsibility, and qualifications that are sufficiently similar to
warrant their inclusion within one range of basic pay.  Each grade
includes 10 fixed rates of pay through which employees advance based
on satisfactory job performance and length of service. 

\13 An employee's total annual salary is not to exceed the rate for
GS-15, step 10. 


      CONVERSION COUNCIL IS
      IDENTIFYING SOLUTIONS TO
      WORKFORCE ISSUES
---------------------------------------------------------- Letter :4.2

The Conversion Council's Year 2000 Workforce Issues working group
began meeting in May 1998 to address some of the Year 2000 workforce
issues in both the government and private sector, focusing on three
areas:  (1) raising awareness of the Year 2000 problem, (2) helping
managers assess their particular situations, and (3) connecting
managers with solution-providers, including programmers, project
managers, and those familiar with embedded systems.  In July 1998,
the working group released a draft sector action plan which lists key
activities that the group is undertaking.  Specifically, the group

  -- established an Internet site to link information technology
     workers with the companies that need them to solve the Year 2000
     problem;\14

  -- is attempting to determine the effect of workforce issues on
     local communities by surveying community colleges; and

  -- is exploring outreach activities, such as having community
     colleges raise awareness of the Year 2000 problem within their
     communities and assist in solving the problem. 

Although some of these initiatives may benefit the government, the
working group is clearly adopting a nationwide focus and is not
solely targeting the federal workforce issue. 


--------------------
\14 This site is part of the Labor Department's electronic America's
Job Bank and America's Talent Bank (Internet databases). 


      CIO COUNCIL IS STUDYING THE
      WORKFORCE CHALLENGE
---------------------------------------------------------- Letter :4.3

In March 1998, the CIO Council tasked its Education and Training
committee with crafting recommendations and legislation by May 1998
to help agencies recruit and retain information technology personnel. 
However, the committee found that in order to develop
recommendations, it first needed more information about the problem. 

In May, the committee formed five focus teams to study the federal
information technology workforce challenge.  The focus teams will
address the following areas:  (1) national workforce strategies, (2)
federal workforce planning, (3) recruitment, (4) retention, and (5)
executive development.  Each team will present its findings at a
forum of CIO Council Members, Human Resource Council members, and OPM
personnel currently planned for November 1998.  The committee expects
to prepare a final conference report to the CIO Council after the
November 1998 forum. 

According to the Co-Chair of the Committee, part of the study will be
focused specifically on the Year 2000 personnel issue and determining
the extent and scope of the personnel problems that exist for the
Year 2000 problem. 

It is unclear, however, that this committee will produce timely
recommendations because the final report is scheduled to be issued
after November 1998, which may be too late to address the Year 2000
workforce issues. 


      EFFECTIVENESS OF YEAR 2000
      WORKFORCE INITIATIVES NOT
      YET ASSURED
---------------------------------------------------------- Letter :4.4

While the executive councils and OPM have initiatives underway to
help resolve Year 2000 workforce issues, it is not yet known if these
efforts will effectively address federal agencies' concerns.  OPM has
developed new human resources management flexibilities, the
Conversion Council working group is identifying solutions that are
applicable to private industry, and the CIO Council is studying the
problem.  No organization, however, is working with individual
agencies to determine how significant their personnel concerns are,
and if they can be adequately resolved through existing human
resources management tools.  Given that the potential consequences of
having an inadequate workforce to tackle critical Year 2000
conversions are severe, such an endeavor seems worthwhile. 


   CONCLUSIONS
------------------------------------------------------------ Letter :5

A significant number of agencies have reported concerns about the
availability of information technology personnel needed to address
their Year 2000 problems.  Also, the executive councils and OPM have
a number of initiatives underway to address perceived personnel
shortages.  However, it is not yet known whether these efforts will
ensure an adequate supply of qualified personnel to solve the
government's Year 2000 problem. 

Various organizations have responsibilities in this arena.  While
individual agencies are in the best position to determine if current
tools adequately resolve their own Year 2000 personnel issues, OMB is
responsible for overseeing federal agencies' responses to the Year
2000 problem, and OPM has both the knowledge of existing personnel
management options and, in some cases, the authority to waive
existing rules or develop new approaches. 

The workforce issue could quickly become more complicated.  As
awareness of the criticality of the Year 2000 problem grows
throughout government and industry, there is a chance that
competition for limited skilled personnel will increase.  If this
more vigorous competition occurs, the government may find it
increasingly difficult to obtain and retain the skilled personnel
needed to correct its mission critical systems in time.  Given the
adverse consequences of any staffing shortages, it is critical that
agencies be able to quickly determine if mechanisms currently exist
to resolve personnel issues or if additional solutions are needed. 


   RECOMMENDATIONS
------------------------------------------------------------ Letter :6

Given the likelihood that critical government operations will cease
if key systems are not made Year 2000 compliant, we recommend that
the Director of the Office of Management and Budget, as part of the
agency's monitoring responsibilities for the government's Year 2000
program, determine if recent OPM initiatives have satisfactorily
addressed agencies' reported personnel problems. 

If these problems have not been addressed by existing OPM tools, the
Director of the Office of Management and Budget should designate an
OMB official who, together with OPM and the CIO Council, would
proactively and quickly help individual agencies resolve their Year
2000 workforce concerns. 

We also recommend that the Director of the Office of Management and
Budget work with the CIO Council to expedite the portions of its
ongoing study that are relevant to the Year 2000 problem, with a goal
of issuing its Year 2000-related recommendations as soon as possible. 


   AGENCY COMMENTS
------------------------------------------------------------ Letter :7

The Chairman of the President's Council on Year 2000 Conversion, as
well as officials representing the CIO Council, OMB, and OPM provided
oral comments on a draft of this report.  These officials concurred
with the report and our recommendations.  They also offered several
technical suggestions which we have incorporated as appropriate. 


---------------------------------------------------------- Letter :7.1

We are sending copies of this report to the Chairmen and Ranking
Minority Members of the Senate and House Committee on Appropriations
and the House Committee on Government Reform and Oversight; the
Ranking Minority Member of the House Committee on Banking and
Financial Services; the Co-Chairs of the House Year 2000 Task Force;
the Chairman of the President's Council on Year 2000 Conversion; the
Director of the Office of Management and Budget; and the Director of
the Office of Personnel Management.  Copies will also be made
available to others upon request.  If you have any questions about
this report, please contact us at (202) 512-6253 and (202) 512-8676,
respectively.  We can also be reached by e-mail at
[email protected] and [email protected].  Major
contributors to this report are listed in appendix III. 

Sincerely yours,

Joel C.  Willemssen
Director, Civil Agencies Information Systems
Accounting and Information Management Division

Michael Brostek
Associate Director, Federal Management
 and Workforce Issues
General Government Division


SCOPE AND METHODOLOGY
=========================================================== Appendix I

To determine the nature and extent of the Year 2000 personnel issues
being reported by federal agencies, we reviewed and analyzed the Year
2000 progress reports submitted to OMB by 24 large agencies in
February, May, and August 1998, by 40 of the 41 small agencies and
entities in April and May 1998,\1 and by 9 of those same small
agencies and entities that were requested to report in August 1998. 
In addition, when personnel issues were not specifically addressed by
these agencies in their progress reports or when the progress reports
were not submitted to OMB, we conducted telephone interviews with
agency officials to determine if the agencies were experiencing
personnel problems related to the Year 2000 problem.  Further, after
reviewing the August 1998 reports, we conducted telephone interviews
with agency officials when an agency was newly reporting it had no
personnel problems.  We did this to determine if prior concerns had
been resolved.  We did not independently assess the reliability of
the information provided by the agencies. 

To identify what is being done to address personnel shortages related
to the Year 2000 problem, we evaluated the Year 2000 personnel
efforts of OPM, the Human Resources Technology Council, and the CIO
Council's Education and Training and Year 2000 Committees.  We also
reviewed the efforts of the Workforce Issues Working Group of the
President's Council on Year 2000 Conversion.  In addition, we
interviewed officials from each of these groups. 

We conducted our review from May 1998 through August 1998 in
accordance with generally accepted government auditing standards.  We
provided a draft of this report to the Chair of the President's
Council on Year 2000 Conversion, the Chair of the CIO Council, and
OPM and OMB management and incorporated their comments as
appropriate. 


--------------------
\1 OMB did not receive a report from the Federal Home Loan Mortgage
Corporation. 


AGENCIES' INFORMATION TECHNOLOGY
PERSONNEL CONCERNS
========================================================== Appendix II

Table II.1 summarizes the concerns identified by the various agencies
and other entities in their reports to OMB.  In cases where the
agencies and entities did not specifically report on personnel
issues, we interviewed agency officials to determine if the agencies
were experiencing personnel problems related to the Year 2000
problem.  Also, in cases where agencies newly reported that they had
no personnel problems in August 1998, we interviewed agency officials
to determine if prior concerns had been resolved.  We did not
independently assess the reliability of the information provided by
the agencies.  Table II.2 lists the agencies and entities that
identified no concerns with the availability of personnel to address
the Year 2000 problem. 



                               Table II.1
                
                 Agencies Reporting Personnel Problems

                                Description of in-
                                house personnel     Description of
Agency                          issue               contractor issue
------------------------------  ------------------  ------------------
Large departments and agencies (13)
----------------------------------------------------------------------
Agency for International        The agency is       A contractor hired
Development                     experiencing        to perform legacy
                                increased           system maintenance
                                attrition, and      and Year 2000
                                reported concern    compliance
                                with the short      services did not
                                supply of human     supply the key
                                resources and the   officials as
                                upward pressure on  provided in the
                                salaries of key     contract for 5
                                personnel.          weeks.

Agriculture                     The department is   Vendors are
                                encountering high   finding it
                                turnover and is     increasingly
                                finding it          difficult to bring
                                difficult to        on contract
                                compete with        employees without
                                higher salaries     substantial
                                being offered by    increases in
                                private industry.   contract dollars
                                                    and have lost
                                                    contract employees
                                                    who have left for
                                                    better paying
                                                    positions.

Commerce                        The department      A key contractor
                                reported that it    was unable to
                                continues to        provide qualified
                                experience          staff, causing
                                difficulties in     contract delays.
                                finding and hiring
                                qualified
                                information
                                technology
                                personnel.

Energy                          The department      Efforts to
                                reported that one   contract for
                                facility has        mainframe systems
                                experienced         programmers at one
                                difficulty in       facility have not
                                retaining and       been successful.
                                recruiting
                                programming
                                resources for the
                                Year 2000 effort.

Environmental                   The agency          While the agency
Protection                      experienced         has located
Agency                          problems in         contractor
                                finding             resources, the
                                programmers needed  costs are higher
                                to fix key payroll  than the agency
                                systems.            has historically
                                                    paid.

Interior                        The department
                                reported concern
                                that unforeseen
                                retirements could
                                affect its Year
                                2000 efforts.

Justice                         The department is   The department is
                                experiencing        encountering
                                difficulty          problems in
                                acquiring and       obtaining
                                retaining skilled   contractor support
                                personnel,          with necessary
                                particularly COBOL  programming
                                programmers.        skills.


Labor                           The department is   The department
                                experiencing        reported concerns
                                problems in         with the
                                acquiring and       availability of
                                retaining skilled   trained contractor
                                programmers.        staff and that the
                                                    turnover rate
                                                    tends to be high
                                                    due to current
                                                    market conditions.

National                                            The Ames Research
Aeronautics and Space                               Center, located in
Administration                                      the Silicon Valley
                                                    area, is finding
                                                    it a challenge to
                                                    hire qualified
                                                    contract
                                                    programmers.

State                           The department      The department
                                experienced high    reported that
                                turnover in         recruiting to
                                systems support     replace contract
                                personnel, and is   systems
                                now facing severe   programmers has
                                staffing            taken more time
                                shortages.          than in past years
                                                    and has resulted
                                                    in a labor rate
                                                    increase.

Transportation                                      The department
                                                    reported that one
                                                    agency's
                                                    contractors have
                                                    experienced
                                                    problems in
                                                    finding qualified
                                                    programmers.

Treasury                        The department
                                encountered an
                                increased rate of
                                attrition of its
                                information
                                systems workforce.
                                It reported that
                                skilled
                                programmers,
                                especially those
                                with skills in
                                legacy platforms,
                                are in strong
                                demand with the
                                private sector,
                                which can pay
                                significantly
                                higher salaries
                                than the
                                government.

Veterans                        The department      Contractors are
Affairs                         reported that       having difficulty
                                recruiting is very  finding and
                                intensive for Year  retaining
                                2000 professionals  personnel.
                                in some geographic
                                areas and
                                expressed the
                                concern that
                                government
                                employees may
                                leave for the
                                private sector
                                because of the
                                lucrative "finders
                                fees" being
                                advertised.


Small agencies and other entities (10)
----------------------------------------------------------------------
Farm Credit                     The agency
Administration                  reported that
                                retention and
                                recruitment could
                                become key issues
                                if key computer
                                programmers and/
                                or network
                                personnel decide
                                to leave the
                                agency.

Federal Communications                              The agency
Commission                                          expressed concern
                                                    about retaining
                                                    sufficient
                                                    qualified
                                                    contractors to
                                                    carry out needed
                                                    work as the demand
                                                    for Year 2000
                                                    programmers
                                                    increases.

Federal Deposit                                     The agency has
Insurance Corporation                               encountered
                                                    problems with
                                                    contractors who
                                                    are losing
                                                    personnel for
                                                    higher salaries at
                                                    other contractors.
                                                    When replacing the
                                                    contractor staff,
                                                    they are
                                                    increasing the
                                                    hourly rate.

National Archives and Records   The agency
Administration                  reported that it
                                has insufficient
                                personnel
                                resources to
                                accomplish all
                                Year 2000
                                renovation,
                                testing, and
                                implementation
                                work in-house.

National Credit                 The agency
Union Administration            experienced delays
                                in scheduling the
                                conversion of its
                                systems due to
                                competing
                                workloads. Also,
                                it has experienced
                                difficulties in
                                hiring senior Year
                                2000 program
                                officials.

Neighborhood                                        The agency has
Reinvestment                                        encountered
Corporation                                         increased
                                                    competition for
                                                    skilled Year 2000
                                                    personnel, and has
                                                    had to settle for
                                                    Year 2000
                                                    contractors with
                                                    fewer skills than
                                                    needed because the
                                                    contractors that
                                                    possessed all the
                                                    desired skills
                                                    generally cost too
                                                    much. Also, the
                                                    agency reported
                                                    that its
                                                    consultants are
                                                    paying their
                                                    staffs more to
                                                    retain them, and
                                                    these costs are
                                                    being passed on to
                                                    the agency.

Office of Administration,       The office          The office
Executive Office of the         reported that the   reported that
President                       Year 2000 program   finding contractor
                                is severely         personnel with the
                                straining the       appropriate skill
                                workload of         level to analyze
                                existing            legacy systems and
                                information         to recommend
                                systems and         alternatives
                                technology          continues to be a
                                personnel, and      problem.
                                that any diversion
                                of personnel to
                                the Year 2000
                                program creates a
                                potential support
                                problem for
                                ongoing or day-
                                to-day operations.

Peace Corps                     The corps reported
                                its concerns with
                                retaining
                                information
                                resources
                                management staff
                                and filling
                                vacancies.

Tennessee                       The agency has
Valley                          encountered
Authority                       problems matching
                                information
                                technology skill
                                sets with specific
                                Year 2000 needs
                                and has found that
                                there is a strong
                                employment market
                                for information
                                technology skills.
                                It also reported
                                that salaries have
                                increased for all
                                information
                                technology skills,
                                not just for Year
                                2000 staff.

U.S. Postal Service             The service         The service
                                reported that       reported that
                                retaining skilled   retaining skilled
                                resources needed    contractor staff
                                for remediation     continues to be a
                                and testing         challenge.
                                continues to be a
                                challenge which is
                                exacerbated by a
                                limited labor
                                pool.
----------------------------------------------------------------------


                               Table II.2
                
                    Agencies Not Reporting Personnel
                Problems in Their Latest Reports To OMB

----------------------------------------------------------------------
Large Departments and Agencies (11)

Defense

Education

Federal Emergency Management Agency

General Services Administration

Health and Human Services

Housing and Urban Development

National Science Foundation

Nuclear Regulatory Commission

Office of Personnel Management

Small Business Administration

Social Security Administration

Small Agencies and Other Entities (31)

Armed Forces Retirement Home Board

Commodities Futures Trading Commission

Consumer Product Safety Commission

Corporation for National and Community Services

Defense Nuclear Facilities Safety Board

Equal Employment Opportunity Commission

Export-Import Bank of the United States

Federal Election Commission

Federal Energy Regulatory Commission

Federal Home Loan Mortgage Corporation

Federal Housing Finance Board

Federal Reserve System

Federal Retirement Thrift Investment Board

Federal Trade Commission

John F. Kennedy Center for the Performing Arts

Legal Services Corporation

National Gallery of Art

National Labor Relations Board

National Mediation Board

National Transportation Safety Board

Overseas Private Investment Corporation

Pension Benefit Guaranty Corporation

Railroad Retirement Board

Securities and Exchange Commission

Selective Service System

Small Agencies and Other Entities, cont.

Smithsonian Institution

U.S. Arms Control and Disarmament Agency

U.S. Enrichment Corporation

U.S. Information Agency

U.S. International Trade Commission

U.S. Trade Representative, Executive Office of the President
----------------------------------------------------------------------

--------------------
\1 Four large and three small agencies did not state concerns in
their most recent reports to OMB, but told us of them in subsequent
discussions.  These agencies are not included in this list. 


MAJOR CONTRIBUTORS TO THIS REPORT
========================================================= Appendix III

ACCOUNTING AND INFORMATION
MANAGEMENT DIVISION, WASHINGTON,
D.C. 

Colleen M.  Phillips, Assistant Director

GENERAL GOVERNMENT DIVISION,
WASHINGTON, D.C. 

K.  Scott Derrick, Senior Evaluator

ATLANTA FIELD OFFICE

Glenda C.  Wright, Senior Information Systems Analyst

*** End of document. ***