Department of the Interior: Year 2000 Computing Crisis Presents Risk of
Disruption to Key Operations (Testimony, 04/22/98, GAO/T-AIMD-98-149).

GAO discussed where the federal government stands in its efforts to
lessen Year 2000 risks and GAO's preliminary observations on Year 2000
activities at the Department of the Interior.

GAO noted that: (1) the federal government is extremely vulnerable to
the Year 2000 issue due to its widespread dependence on computer
systems; (2) its reviews of federal agency Year 2000 programs have found
uneven progress, and its reports contain numerous recommendations, which
the agencies have almost universally agreed to implement; (3) one of the
largest, and largely unknown, risks relates to the global nature of the
Year 2000 problem; (4) with electronic dependence and massive exchange
of data comes increasing risk that uncorrected Year 2000 problems in
other countries will adversely affect the United States; (5) setting
priorities for Year 2000 conversion is essential, with the focus being
on systems most critical to health and safety, financial well being,
national security, or the economy; (6) agencies must start business
continuity and contingency planning now to safeguard their ability to
deliver a minimum acceptable level of services in the event of Year
2000-induced failures; (7) agencies must have strategies for
independently verifying the status of their Year 2000 efforts; (8) no
nationwide assessment, including the private and public sectors, has
been undertaken of Year 2000 risks and readiness; (9) Interior estimates
that correcting its 95 mission-critical systems will cost $17.3 million;
(10) Interior is also assessing its communications systems and embedded
chip technologies to determine whether they will be affected by the
century change; and (11) Interior's Year 2000 coordinator does not have
the ability to verify the accuracy of reported information on the
bureaus' and offices' mission-critical systems.

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

 REPORTNUM:  T-AIMD-98-149
     TITLE:  Department of the Interior: Year 2000 Computing Crisis 
             Presents Risk of Disruption to Key Operations
      DATE:  04/22/98
   SUBJECT:  Land management
             Public lands
             Water resources development
             Embedded computer systems
             Systems conversions
             Strategic information systems planning
             Computer software verification and validation
             Information systems
             Information resources management
             Computer software
IDENTIFIER:  Dept. of the Interior Year 2000 Project
             BLM Case Recordation System
             BLM Mining Claim Recordation System
             BLM Automated Land and Minerals Record System
             GAO High Risk Program
             
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Cover
================================================================ COVER


Before the Committee on Resources,
House of Representatives

For Release on Delivery
Expected at
11 a.m.
Wednesday,
April 22, 1998

DEPARTMENT OF THE INTERIOR - YEAR
2000 COMPUTING CRISIS PRESENTS
RISK OF DISRUPTION TO KEY
OPERATIONS

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

GAO/T-AIMD-98-149

GAO/AIMD-98-149T


(511458)


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

  ALMRS -
  BLM -
  DFAS -
  DLA -
  DOD -
  FAA -
  LSSC -
  NRC -
  OMB -
  SEC -
  SSG -
  VBA -
  Y2K -

============================================================ Chapter 0

Mr.  Chairman and Members of the Committee: 

We are pleased to be here today to discuss the computing challenges
that the upcoming change of century poses to virtually all major
organizations, public and private, including the Department of the
Interior.  As the world's most advanced and most dependent user of
information technology, the United States possesses close to half of
all computer capacity and 60 percent of Internet assets.\1 As a
result, the coming century change presents a particularly sweeping
and urgent challenge for entities in the United States.\2

For this reason, we have designated the Year 2000 computing problem
as a high-risk area\3

for the federal government, and have published guidance\4 to help
organizations successfully address the issue.  Since early 1997 we
have issued over 30 products detailing specific findings and
recommendations related to the Year 2000 readiness of a wide range of
federal agencies.\5

The common theme of these reports has been that serious
vulnerabilities remain in addressing the federal government's Year
2000 readiness.  Much more action is needed to ensure that federal
agencies satisfactorily mitigate Year 2000 risks to avoid
debilitating consequences.  Vital economic sectors of the nation are
also vulnerable.  These include state and local governments;
telecommunications; banking and finance; health, safety, and
emergency services; transportation; utilities; and manufacturing and
small business. 

While actions by government and industry are underway throughout the
nation, the recent creation of the President's Council on Year 2000
Conversion represents an opportunity to orchestrate the leadership
and public/private partnerships essential to confronting the
unprecedented challenges we face.  My testimony today will briefly
outline where the federal government stands in its efforts to lessen
Year 2000 risks.  I will then present our preliminary observations on
Year 2000 activities at the Department of the Interior. 


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

\2 For the past several decades, automated information systems have
typically represented the year using two digits rather than four in
order to conserve electronic data storage space and reduce operating
costs.  In this format, however, 2000 is indistinguishable from 1900
because both are represented only as 00.  As a result, if not
modified, computer systems or applications that use dates or perform
date- or time-sensitive calculations may generate incorrect results
beyond 1999. 

\3 High-Risk Series:  Information Management and Technology
(GAO/HR-97-9, February 1997). 

\4 Year 2000 Computing Crisis:  An Assessment Guide
(GAO/AIMD-10.1.14, September 1997) and Year 2000 Computing Crisis: 
Business Continuity and Contingency Planning (GAO/AIMD-10.1.19,
Exposure Draft, March 1998). 

\5 A listing of our publications is included at the end of this
statement. 


   RISK OF YEAR 2000 DISRUPTIONS
   REQUIRES LEADERSHIP
---------------------------------------------------------- Chapter 0:1

The public faces the risk that critical services could be severely
disrupted by the Year 2000 computing crisis.  Financial transactions
could be delayed, airline flights grounded, and national defense
affected.  The many interdependencies that exist among the levels of
governments and within key economic sectors of our nation could cause
a single failure to have wide-ranging repercussions.  While managers
in the government and the private sector are acting to mitigate these
risks, a significant amount of work remains. 

The federal government is extremely vulnerable to the Year 2000 issue
due to its widespread dependence on computer systems to process
financial transactions, deliver vital public services, and carry out
its operations.  This challenge is made more difficult by the age and
poor documentation of many of the government's existing systems and
its lackluster track record in modernizing systems to deliver
expected improvements and meet promised deadlines. 

Year 2000-related problems have already occurred.  For example, an
automated Defense Logistics Agency system erroneously deactivated
90,000 inventoried items as the result of an incorrect date
calculation.  According to the agency, if the problem had not been
corrected (which took 400 work hours), the impact would have
seriously hampered its mission to deliver materiel in a timely
manner.\6

Our reviews of federal agency Year 2000 programs have found uneven
progress, and our reports contain numerous recommendations, which the
agencies have almost universally agreed to implement.  Among them are
the need to establish priorities, solidify data exchange agreements,
and develop contingency plans. 

One of the largest, and largely unknown, risks relates to the global
nature of the problem.  With the advent of electronic communication
and international commerce, the United States and the rest of the
world have become critically dependent on computers.  However, with
this electronic dependence and massive exchanging of data comes
increasing risk that uncorrected Year 2000 problems in other
countries will adversely affect the United States.  And there are
indications of Year 2000 readiness problems internationally.  In
September 1997, the Gartner Group, a private research firm
acknowledged for its expertise in Year 2000 computing issues,
surveyed 2,400 companies in 17 countries and concluded that "[t]hirty
percent of all companies have not started dealing with the year 2000
problem."\7


--------------------
\6 Defense Computers:  Issues Confronting DLA in Addressing Year 2000
Problems (GAO/AIMD-97-106, August 12, 1997). 

\7 Year 2000-World Status (Gartner Group, Document #M-100-037,
November 25, 1997). 


      ADDITIONAL ACTIONS CAN BE
      TAKEN TO REDUCE NATION'S
      YEAR 2000 RISKS
-------------------------------------------------------- Chapter 0:1.1

As 2000 approaches, the scope of the risks that the century change
could bring has become more clear, and the federal government's
actions have intensified.  This past February, an executive order was
issued establishing the President's Council on Year 2000 Conversion. 
The Council Chair is to oversee federal agency Year 2000 efforts as
well as be the spokesman in national and international forums,
coordinate with state and local governments, promote appropriate
federal roles with respect to private-sector activities, and report
to the President on a quarterly basis. 

As we testified last month,\8 there are a number of actions we
believe the Council must take to avert this crisis.  We plan to issue
a report later this month detailing our specific recommendations. 
The following summarizes a few of the key areas in which we will be
recommending action. 

  -- Because departments and agencies have taken longer than
     recommended to assess the readiness of their systems, it is
     unlikely that they will be able to renovate and fully test all
     mission-critical systems by January 1, 2000.  Consequently,
     setting priorities is essential, with the focus being on systems
     most critical to our health and safety, financial well being,
     national security, or the economy. 

  -- Agencies must start business continuity and contingency planning
     now to safeguard their ability to deliver a minimum acceptable
     level of services in the event of Year 2000-induced failures. 
     Last month, we issued an exposure draft of a guide providing
     information on business continuity and contingency planning
     issues common to most large enterprises.\9 Agencies developing
     such plans only for systems currently behind schedule, however,
     are not addressing the need to ensure business continuity in the
     event of unforeseen failures.  Further, such plans should not be
     limited to the risks posed by the Year 2000-induced failures of
     internal information systems, but must include the potential
     Year 2000 failures of others, including business partners and
     infrastructure service providers. 

  -- The Office of Management and Budget's (OMB) assessment of the
     current status of federal Year 2000 progress is predominantly
     based on agency reports that have not been consistently verified
     or independently reviewed.  Without such independent reviews,
     OMB and the President's Council on Year 2000 Conversion have
     little assurance that they are receiving accurate information. 
     Accordingly, agencies must have independent verification
     strategies involving inspectors general or other independent
     organizations. 

  -- As a nation, we do not know where we stand with regard to Year
     2000 risks and readiness.  No nationwide assessment--including
     the private and public sectors--has been undertaken to gauge
     this.  In partnership with the private sector and state and
     local governments, the President's Council could orchestrate
     such an assessment. 


--------------------
\8 Year 2000 Computing Crisis:  Strong Leadership and Effective
Public/Private Cooperation Needed to Avoid Major Disruptions
(GAO/T-AIMD-98-101, March 18, 1998). 

\9 GAO/AIMD-10.1.19, Exposure Draft, March 1998. 


   OBSERVATIONS ON INTERIOR'S YEAR
   2000 APPROACH
---------------------------------------------------------- Chapter 0:2

Ensuring that information systems are made Year 2000 compliant is an
enormous, difficult, and time-consuming challenge for a large
organization such as the Department of the Interior.  Interior's
systems support a wide range of programs; unless they can function
into the next century, the department is at risk of being unable to
effectively or efficiently carry out its critical missions. 

As the nation's principal conservation agency, Interior has
responsibility for managing most of our nationally owned public lands
and natural resources, protecting our fish and wildlife, and
preserving the environmental and cultural values of our national
parks and historic places.  The department's core business processes
could fail--in whole or in part--if supporting information systems
are not made Year 2000 compliant in time.  These include systems that

  -- account for and disburse mineral royalties of about $300 million
     each month,

  -- support the management of the nation's lands and mineral
     resources,

  -- account for and maintain records on over $2.5 billion of
     American Indian trust fund assets, and

  -- detect and analyze ground motion and provide early warnings of
     earthquakes. 

A detailed example of this kind of risk can be seen in recent work we
performed for the House Committee on Appropriations, Subcommittee on
Interior and Related Agencies, where we concluded that recent and
potential future delays in the Bureau of Land Management's (BLM)
Automated Land and Mineral Record System (ALMRS) introduce the risk
that BLM will lose information systems support for some core business
processes.  Two systems that ALMRS is scheduled to replace, the Case
Recordation System and the Mining Claim Recordation System, are
currently not Year 2000 compliant.  BLM uses these two systems to
create and manage land and mineral case files.  They capture and
provide information on case type, customer, authorizations, and legal
descriptions.  Without these systems, BLM cannot create and record
new cases, such as mining claims, or update case information. 

Delays in implementing ALMRS introduce the risk that BLM will be
forced to continue using these two systems beyond 2000.  To mitigate
this risk, BLM has begun planning to ensure that these two systems
can run in 2000 and beyond, if necessary.  BLM has not yet, however,
completed its assessment to determine what specific actions are
needed to accomplish this, nor has it developed a contingency plan to
ensure the continuity of core business processes in the event that
ALMRS is not fully deployed by 2000.  In a draft report to be
released soon, we are recommending that BLM assess the systems to be
replaced by ALMRS to determine what actions are needed to ensure
their continued use after January 1, 2000, and develop a contingency
plan should ALMRS not be fully and successfully deployed in time. 

Interior officials have stated that they recognize the importance of
ensuring that their systems are Year 2000 compliant.  The Secretary
has said that identifying and correcting Year 2000 computer problems
is a priority, and the former Chief Information Officer called this
challenge one of the most serious operational and administrative
problems the department has ever faced.  In assessing the magnitude
of the problem, the department's bureaus and offices identified 95
mission-critical systems,\10 with a total of about 18 million lines
of software code, all of which must be examined.  Interior estimates
that correcting these 95 systems will cost $17.3 million, as shown in
the following table. 



                                Table 1
                
                  Number of Interior Mission-Critical
                      Systems as of February 1998

                                   Total number of
                                  mission-critical      Estimated cost
Component organization                     systems          to correct
------------------------------  ------------------  ------------------
Bureau of Indian Affairs                        15          $5,545,000
U.S. Geological Survey                          15           2,706,000
Office of the Secretary                         11           2,503,000
National Park Service                            2           2,310,000
Minerals Management Service                      4           2,060,000
Office of Surface Mining                        16             850,000
Bureau of Land Management                       15             690,000
Bureau of Reclamation                           16             439,000
U.S. Fish and Wildlife Service                   1             246,000
======================================================================
Total                                           95         $17,349,000
----------------------------------------------------------------------
Source:  Department of the Interior.  We did not independently verify
these data. 

In addition to these systems, the department is also assessing its
communications systems and embedded computer chip technologies to
determine whether they will be affected by the coming century change. 
Embedded systems are special-purpose computers built into other
devices.  Many facilities used by the federal government that were
built or renovated within the last 20 years contain embedded computer
systems to control, monitor, or assist in operations.  If the
embedded chips used in such devices contain two-digit date fields for
year representation, the devices could malfunction.  For example,
control systems that regulate water flow and generators in our
nation's dams, which produce over 42 billion kilowatts of energy each
year, could fail. 

Interior's Year 2000 program operates in a decentralized fashion as
its bureaus and offices are responsible for identifying and assessing
their mission-critical systems, determining correction priorities,
and making their own mission-critical systems Year 2000 compliant. 
Departmental oversight is provided by Interior's Year 2000 Project
Office.  This office reports directly to the Chief Information
Officer. 

The Year 2000 Project Team consists of a Year 2000 coordinator from
the department and a representative located in each bureau or office. 
The bureaus and offices maintain information used to manage their
Year 2000 activities.  Bureau and office representatives submit
monthly milestone and status information to the coordinator, which he
analyzes and compiles manually.  The coordinator tracks major
milestones, such as systems assessments completed, Year 2000
renovations completed, and systems implemented.  The information is
forwarded to the Chief Information Officer and, each quarter, to OMB. 

According to Interior's Year 2000 coordinator, he tracks the 95
mission-critical systems and maintains status information in a word
processing table that lacks the capability for automated tracking or
analysis.  He stated that he notifies the Chief Information Officer
of any reported milestone delays, which are then discussed at
senior-level management meetings.  Table 2 shows the status of the 67
mission-critical systems that are being renovated, as reported to OMB
on February 15, 1998.  (This table does not include the other 28
mission-critical systems, which are considered already compliant or
are being replaced.)



                                Table 2
                
                 Status of 67 Mission-Critical Systems
                Being Renovated, as of February 15, 1998

                                                Validati  Implementati
                        Assessment  Renovation        on            on
----------------------  ----------  ----------  --------  ------------
Number Completed                67          32        22            19
Percentage Completed          100%         48%       33%           28%
----------------------------------------------------------------------
Source:  Department of the Interior.  We did not independently verify
these data. 

Accurate reporting is critical to ensuring that executive management
receives a reliable picture of the Year 2000 progress of component
organizations.  This is particularly important at Interior, where
much of the Year 2000 program responsibility is delegated to the
individual bureaus and offices.  Although the department relies on
its bureaus to provide monthly reports on the status of their Year
2000 renovation actions, to date it has not verified the accuracy and
reliability of the reported information. 

As the only staff member in Interior's Year 2000 Project Office, the
department's coordinator does not have the ability to verify the
accuracy of reported information on the bureaus' and offices'
mission-critical systems.  Therefore, the Chief Information Officer
requested that Interior's Inspector General assist in monitoring the
progress of the individual bureaus in achieving Year 2000
compliance.\11 It is important to verify because if the data are
inaccurate, it will be more difficult to identify and correct
problems promptly. 

Interior regularly exchanges data with other organizations.  In many
instances, these data are critical to the department's operations. 
In response to a recent survey we conducted, Interior reported that
40 of its 95 mission-critical systems exchange electronic data with
other federal, state, and local agencies; domestic and foreign
private sectors; and foreign governments.  Although the bureaus have
identified over 2,900 incoming and outgoing external data exchanges,
the department does not have a central inventory.  While it has asked
each bureau and office head to certify that date-sensitive data
exchanges have been identified and data exchange partners contacted
to begin resolving date-format issues, the lack of a centralized
inventory and an automated way to maintain it means that Interior
could be missing key information showing whether exchange agreements
are proceeding as scheduled.  Failure to reach such agreements raises
the risk that Interior's systems will receive noncompliant data that
can corrupt its databases. 

The risk of failure is not limited to an organization's internal
information systems, but includes the potential Year 2000 failures of
others, such as business partners.  One weak link in the chain of
critical dependencies and even the most successful Year 2000 program
will fail to protect against major disruption of business operations. 
Because of these risks, agencies must start business continuity and
contingency planning now in order to reduce the risk of Year
2000-induced business failures. 

Interior has recognized, to some degree, the critical need for
contingency planning, and has asked its bureaus and offices to
develop such plans for all mission-critical systems that are behind
schedule.  However, it has not instructed its component organizations
to develop plans to ensure the continuity of core business
operations.  As noted, agencies developing such plans only for
systems currently behind schedule are not addressing the need to
ensure business continuity in the event of unforeseen failures. 
Further, such plans should not be limited to the risks posed by Year
2000-induced failures of internal information systems. 

In conclusion, the change of century will initially present many
difficult challenges in information technology and continuity of
business operations, and has the potential to cause serious
disruption to the nation and to the Department of the Interior. 
These risks can be mitigated and disruptions minimized with proper
attention and management.  While Interior has been working to
mitigate its Year 2000 risks, further action must be taken to avoid
losing the ability to continue mission-critical business operations. 
Continued congressional oversight through hearings such as this can
help ensure that such attention continues and that appropriate
actions are taken to address this crisis. 


--------------------
\10 Interior defines mission-critical systems to be those that, when
their capabilities are degraded, the organization realizes a
resulting loss of a core capability or life or property are
threatened. 

\11 The Inspector General began reviews of the Bureau of Indian
Affairs, National Park Service, and Bureau of Reclamation in 1998;
these are the department's first attempts to verify the status of the
bureaus' and offices' Year 2000 efforts and management information. 


-------------------------------------------------------- Chapter 0:2.1

Mr.  Chairman, this concludes my statement.  I would be happy to
respond to any questions that you or other members of the Committee
may have at this time. 


GAO REPORTS AND TESTIMONY
ADDRESSING THE YEAR 2000 CRISIS
=========================================================== Appendix 1

Year 2000 Computing Crisis:  Business Continuity and Contingency
Planning (GAO/AIMD-10.1.19, Exposure Draft, March 1998). 

Year 2000 Computing Crisis:  Strong Leadership Needed to Avoid
Disruption of Essential Services (GAO/T-AIMD-98-117, March 24, 1998). 

Year 2000 Computing Crisis:  Office of Thrift Supervision's Efforts
to Ensure Thrift Systems Are Year 2000 Compliant (GAO/T-AIMD-98-102,
March 18, 1998). 

Year 2000 Computing Crisis:  Strong Leadership and Effective
Public/Private Cooperation Needed to Avoid Major Disruptions
(GAO/T-AIMD-98-101, March 18, 1998). 

Post-Hearing Questions on the Federal Deposit Insurance Corporation's
Year 2000 (Y2K) Preparedness (AIMD-98-108R, March 18, 1998). 

SEC Year 2000 Report:  Future Reports Could Provide More Detailed
Information (GAO/GGD/AIMD-98-51, March 6, 1998). 

Year 2000 Readiness:  NRC's Proposed Approach Regarding Nuclear
Powerplants (GAO/AIMD-98-90R, March 6, 1998). 

Year 2000 Computing Crisis:  Federal Deposit Insurance Corporation's
Efforts to Ensure Bank Systems Are Year 2000 Compliant
(GAO/T-AIMD-98-73, February 10, 1998). 

Year 2000 Computing Crisis:  FAA Must Act Quickly to Prevent Systems
Failures (GAO/T-AIMD-98-63, February 4, 1998). 

FAA Computer Systems:  Limited Progress on Year 2000 Issue Increases
Risk Dramatically (GAO/AIMD-98-45, January 30, 1998). 

Defense Computers:  Air Force Needs to Strengthen Year 2000 Oversight
(GAO/AIMD-98-35, January 16, 1998). 

Year 2000 Computing Crisis:  Actions Needed to Address Credit Union
Systems' Year 2000 Problem (GAO/AIMD-98-48, January 7, 1998). 

Veterans Health Administration Facility Systems:  Some Progress Made
In Ensuring Year 2000 Compliance, But Challenges Remain
(GAO/AIMD-98-31R, November 7, 1997). 

Year 2000 Computing Crisis:  National Credit Union Administration's
Efforts to Ensure Credit Union Systems Are Year 2000 Compliant
(GAO/T-AIMD-98-20, October 22, 1997). 

Social Security Administration:  Significant Progress Made in Year
2000 Effort, But Key Risks Remain (GAO/AIMD-98-6, October 22, 1997). 

Defense Computers:  Technical Support Is Key to Naval Supply Year
2000 Success (GAO/AIMD-98-7R, October 21, 1997). 

Defense Computers:  LSSC Needs to Confront Significant Year 2000
Issues (GAO/AIMD-97-149, September 26, 1997). 

Veterans Affairs Computer Systems:  Action Underway Yet Much Work
Remains To Resolve Year 2000 Crisis (GAO/T-AIMD-97-174, September 25,
1997). 

Year 2000 Computing Crisis:  Success Depends Upon Strong Management
and Structured Approach (GAO/T-AIMD-97-173, September 25, 1997). 

Year 2000 Computing Crisis:  An Assessment Guide (GAO/AIMD-10.1.14,
September 1997). 

Defense Computers:  SSG Needs to Sustain Year 2000 Progress
(GAO/AIMD-97-120R, August 19, 1997). 

Defense Computers:  Improvements to DOD Systems Inventory Needed for
Year 2000 Effort (GAO/AIMD-97-112, August 13, 1997). 

Defense Computers:  Issues Confronting DLA in Addressing Year 2000
Problems (GAO/AIMD-97-106, August 12, 1997). 

Defense Computers:  DFAS Faces Challenges in Solving the Year 2000
Problem (GAO/AIMD-97-117, August 11, 1997). 

Year 2000 Computing Crisis:  Time is Running Out for Federal Agencies
to Prepare for the New Millennium (GAO/T-AIMD-97-129, July 10, 1997). 

Veterans Benefits Computer Systems:  Uninterrupted Delivery of
Benefits Depends on Timely Correction of Year-2000 Problems
(GAO/T-AIMD-97-114, June 26, 1997). 

Veterans Benefits Computers Systems:  Risks of VBA's Year-2000
Efforts (GAO/AIMD-97-79, May 30, 1997). 

Medicare Transaction System:  Success Depends Upon Correcting
Critical Managerial and Technical Weaknesses (GAO/AIMD-97-78, May 16,
1997). 

Medicare Transaction System:  Serious Managerial and Technical
Weaknesses Threaten Modernization (GAO/T-AIMD-97-91, May 16, 1997). 

Year 2000 Computing Crisis:  Risk of Serious Disruption to Essential
Government Functions Calls for Agency Action Now (GAO/T-AIMD-97-52,
February 27, 1997). 

Year 2000 Computing Crisis:  Strong Leadership Today Needed To
Prevent Future Disruption of Government Services (GAO/T-AIMD-97-51,
February 24, 1997). 

High-Risk Series:  Information Management and Technology
(GAO/HR-97-9, February 1997). 

*** End of document. ***