Year 2000 Computing Crisis: Testing and Other Challenges Confronting
Federal Agencies (Testimony, 06/22/98, GAO/T-AIMD-98-218).

The federal government is extremely vulnerable to Year 2000 problems
because of its widespread dependence on computer systems to process
financial transactions, deliver vital services, maintain national
security, and carry out its operations. This challenge is made even more
difficult by the age and poor documentation of some of the government's
existing systems and its lackluster record in modernizing them. As of
May 1998, federal agencies reported that only about 40 percent of their
mission-critical computers systems were capable of dealing with the date
change that will occur in the year 2000. Unless progress improves
dramatically, a substantial number of mission-critical systems will not
be Year 2000 compliant in time. This testimony (1) discusses the Year
2000 risks facing the government; (2) highlights GAO's major concerns
about the government's progress in fixing its computer systems; and (3)
introduces guidance on Year 2000 testing, which GAO has developed to
help agencies with the most extensive and expensive part of remediation.

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

 REPORTNUM:  T-AIMD-98-218
     TITLE:  Year 2000 Computing Crisis: Testing and Other Challenges 
             Confronting Federal Agencies
      DATE:  06/22/98
   SUBJECT:  Y2K
             Risk management
             Systems conversions
             Strategic information systems planning
             Computer software verification and validation
             Computer software
             Information resources management
             Systems compatibility
             Embedded computer systems
             Interagency relations

             
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Cover
================================================================ COVER


Before the Subcommittee on Government Management, Information and
Technology, Committee on Government Reform and Oversight, House of
Representatives

For Release on Delivery
Expected at
1 p.m.
Monday,
June 22, 1998

YEAR 2000 COMPUTING CRISIS -
TESTING AND OTHER CHALLENGES
CONFRONTING FEDERAL AGENCIES

Statement of Dr.  Rona B.  Stillman
Chief Scientist for Computers and Telecommunications
Accounting and Information Management Division

GAO/T-AIMD-98-218

GAO/AIMD-98-218t


(511463)


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

  COTS -
  DFAS -
  DLA -
  DOD -
  FAA -
  IRS -
  LSSC -
  NRC -
  OMB -
  SEC -
  SSG -
  USDA -
  VBA -

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

Mr.  Chairman and Members of the Subcommittee: 

Thank you for inviting me to participate in today's hearing on the
Year 2000 problem.  As you know, the federal government is extremely
vulnerable to Year 2000 problems due to its widespread dependence on
computer systems to process financial transactions, deliver vital
public services, maintain national security, and carry out its
operations.  This challenge is made more difficult by the age and
poor documentation of some of the government's existing systems and
its lackluster track record in modernizing systems to deliver
expected improvements and meet promised deadlines.  Today, I will
briefly discuss the Year 2000 risks facing the government; highlight
our major concerns with the government's progress in fixing its
systems; and introduce our guidance on Year 2000 testing, which is
designed to assist agencies in the most extensive and expensive part
of remediation. 


   RISK OF YEAR 2000 DISRUPTION TO
   GOVERNMENT SERVICES IS HIGH
---------------------------------------------------------- Chapter 0:1

Addressing the Year 2000 problem in time will be a tremendous
challenge for the federal government.  Many of the federal
government's computer systems were originally designed and developed
20 to 25 years ago, are poorly documented, and use a wide variety of
computer languages, many of which are obsolete.  Some applications
include thousands, tens of thousands, or even millions of lines of
code, each of which must be examined for date-format problems. 

To complicate matters, agencies must also consider the computer
systems belonging to federal, state, and local governments; the
private sector; foreign countries; and international organizations
that interface with their systems.  For example, agencies that
administer key federal benefits payment programs, such as the
Department of Veterans Affairs, exchange data with the Department of
the Treasury, which, in turn, interfaces with various financial
institutions to ensure that benefits checks are issued.  Department
of Defense (DOD) systems interface with thousands of systems
belonging to foreign military sales customers, private contractors,
other federal agencies, and international entities such as the North
Atlantic Treaty Organization.  Taxpayers can pay their taxes through
data exchanges between the taxpayer, financial institutions, the
Federal Reserve System, and the Department of the Treasury's
Financial Management Service and the Internal Revenue Service. 
Because of these and thousands of other interdependencies, government
systems are also vulnerable to failure caused by incorrectly
formatted data provided by other systems that are noncompliant. 

The federal government also depends on the telecommunications
infrastructure to deliver a wide range of services.  For example, the
route of an electronic Medicare payment may traverse several
networks--those operated by the Department of Health and Human
Services, the Department of the Treasury's computer systems and
networks, and the Federal Reserve's Fedwire electronic funds transfer
system.  Seamless connectivity among a wide range of networks and
carriers is essential nationally and internationally and a Year
2000-induced telecommunications failure could cause major
disruptions. 

In addition, the year 2000 could cause problems for the many
facilities used by the federal government that were built or
renovated within the last 20 years and contain embedded computer
systems to control, monitor, or assist in operations.  For example,
building security systems, elevators, and air conditioning and
heating equipment could malfunction or cease to operate. 

Agencies cannot afford to neglect any of these issues.  If they do,
the impact of Year 2000 failures could be widespread, costly, and
potentially disruptive to vital government operations worldwide.  For
example: 

  -- flights could be grounded or delayed and airline safety could be
     degraded;

  -- the military services could find it extremely difficult to
     efficiently and effectively equip and sustain their forces
     around the world;

  -- Internal Revenue Service tax systems could be unable to process
     returns, thereby jeopardizing revenue collection and delaying
     refunds;

  -- the Social Security Administration process to provide benefits
     to disabled persons could be disrupted; and

  -- payments to veterans with service-connected disabilities could
     be erroneous or severely delayed. 


   KEY YEAR 2000 ISSUES ARE NOT
   BEING ADEQUATELY ADDRESSED
---------------------------------------------------------- Chapter 0:2

Because of the urgent nature of the Year 2000 problem and the
potentially devastating impact it can have on critical government
operations, we designated the problem as a high-risk area for the
federal government in February 1997.\1 Since that time, we have
issued over 40 reports and testimony statements detailing specific
findings and recommendations related to the Year 2000 readiness of a
wide range of federal agencies.\2

We have also issued guidance to help organizations successfully
address the issue.\3

Overall, the government's 24 major departments and agencies are
making slow progress in fixing their systems.  In May 1997, the
Office of Management and Budget (OMB) reported that about 21 percent
of the mission-critical systems (1,598 of 7,649) for these
departments and agencies were Year 2000 compliant.\4 A year later, in
May 1998, these departments and agencies reported that 2,914 of the
7,336 mission-critical systems in their current inventories, or about
40 percent, were compliant.  Unless progress improves dramatically, a
substantial number of mission-critical systems will not be compliant
on time. 

In addition to slow progress in fixing systems, many agencies were
not adequately acting on critical steps to establish priorities,
solidify data exchange agreements, and develop contingency plans. 
Likewise, more attention needs to be devoted to (1) ensuring the
government has a complete and accurate picture of Year 2000 progress,
(2) setting national priorities, (3) ensuring that the government's
critical core business processes are adequately tested, (4)
recruiting and retaining information technology personnel with the
appropriate skills for Year 2000-related work, and (5) assessing the
nation's Year 2000 risks, including those posed by key economic
sectors.  I would like to highlight some of these vulnerabilities and
our recommendations made in April 1998 for addressing them.\5

  -- First, governmentwide priorities in fixing systems have yet to
     be established.  There has not been a concerted effort to set
     governmentwide priorities based on such criteria as the
     potential for adverse health and safety effects, adverse
     financial effects on American citizens, detrimental effects on
     national security, and adverse economic consequences. 
     Furthermore, while individual agencies have been identifying
     mission-critical systems, this has not always been done based on
     a determination of the agency's most critical operations.  For
     example, as noted by the Defense Science Board, Defense has no
     means of distinguishing between the priority of a
     video-conferencing system and a logistics system, both of which
     were identified as mission-critical.  If priorities are not
     clearly set, the government may well end up wasting limited time
     and resources in fixing systems that have little bearing on the
     most vital government operations. 

  -- Second, contingency planning across the government has been
     inadequate.  In their May 1998 quarterly reports to OMB, only
     four agencies reported that they had drafted contingency plans
     for their core business processes.  Without such plans, when
     unpredicted failures occur, agencies will not have well-defined
     responses and may not have enough time to develop and test
     alternatives.  Federal agencies depend on data provided by their
     business partners as well as services provided by the public
     infrastructure (e.g., power, water, transportation, and voice
     and data telecommunications).  One weak link anywhere in the
     chain of critical dependencies can cause major disruptions to
     business operations.  Given these interdependencies, it is
     imperative that contingency plans be developed for all critical
     core business processes and supporting systems, regardless of
     whether these systems are owned by the agency. 

  -- Third, OMB's assessment of the current status of federal Year
     2000 progress is predominantly based on agency reports that have
     not been consistently reviewed or verified.  Without independent
     reviews, OMB and the President's Council on Year 2000 Conversion
     have little assurance that they are receiving accurate
     information.  In fact, we have found cases in which agencies'
     systems compliance status reported to OMB has been inaccurate. 
     For example, the DOD Inspector General estimated that almost
     three quarters of DOD's mission-critical systems reported as
     compliant in November 1997 had not been certified as compliant
     by DOD components.\6 In May 1998, the Department of Agriculture
     reported 15 systems as compliant, even though these were
     replacement systems that were still under development or were
     planned to be developed.\7 (The department plans to remove these
     systems from compliant status in its next quarterly report.)

  -- Fourth, end-to-end testing responsibilities have not yet been
     defined.  To ensure that their mission-critical systems can
     reliably exchange data with other systems and that they are
     protected from errors that can be introduced by external
     systems, agencies must perform end-to-end testing for their
     critical core business processes.  The purpose of end-to-end
     testing is to verify that a defined set of interrelated systems,
     which collectively support an organizational core business area
     or function, work as intended in an operational environment.  In
     the case of the year 2000, many systems in the end-to-end chain
     will have been modified or replaced.  As a result, the scope and
     complexity of testing--and its importance--is dramatically
     increased, as is the difficulty of isolating, identifying, and
     correcting problems.  Consequently, agencies must work early and
     continually with their data exchange partners to plan and
     execute effective end-to-end tests.  So far, lead agencies have
     not been designated to take responsibility for ensuring that
     end-to-end testing of processes and supporting systems is
     performed across boundaries, and that independent verification
     and validation of such testing is ensured. 

In our April 1998 report on governmentwide Year 2000 progress, we
made a number of recommendations to the Chairman of the President's
Council on Year 2000 Conversion aimed at addressing these problems. 
These included

  -- establishing governmentwide priorities and ensuring that
     agencies set their own agencywide priorities,

  -- developing a comprehensive picture of the nation's Year 2000
     readiness,

  -- requiring agencies to develop contingency plans for all critical
     core business processes,

  -- requiring agencies to develop an independent verification
     strategy to involve inspector general or other independent
     organizations in reviewing Year 2000 progress, and

  -- designating lead agencies responsible for ensuring end-to-end
     operational testing of processes and supporting systems is
     performed. 

We are encouraged by actions the Council is taking in response to
some of our recommendations.  For example, OMB and the Chief
Information Officers Council adopted our draft guide providing
information on business continuity and contingency planning issues
common to most large enterprises as a model for federal agencies.\8

However, as we recently testified before this Subcommittee, some
actions have not been initiated--principally with respect to setting
national priorities, independent verification, and end-to-end
testing. 


--------------------
\1 High-Risk Series:  Information Management and Technology
(GAO/HR-97-9, February 1997). 

\2 A list of publications is included as an attachment to this
statement. 

\3 Year 2000 Computing Crisis:  An Assessment Guide
(GAO/AIMD-10.1.14, September 1997), which includes the key tasks
needed to complete each phase of a Year 2000 program (awareness,
assessment, renovation, validation, and implementation), and Year
2000 Computing Crisis:  Business Continuity and Contingency Planning
(GAO/AIMD-10.1.19, Exposure Draft, March 1998), which describes the
tasks needed to ensure the continuity of agency operations. 

\4 The Social Security Administration's (SSA) mission-critical
systems were not included in these totals because SSA did not report
in May 1997 on a system basis.  Rather, SSA reported at that time,
and again in August 1997, on portions of systems that were compliant. 
For example, SSA reported on the status of 20,000-plus modules rather
than 200-plus systems. 

\5 Year 2000 Computing Crisis:  Potential for Widespread Disruption
Calls for Strong Leadership and Partnerships (GAO/AIMD-98-85, April
30, 1998). 

\6 Year 2000 Certification of Mission-Critical DOD Information
Technology Systems (DOD Office of the Inspector General, Report No. 
98-147, June 5, 1998). 

\7 Year 2000 Computing Crisis:  USDA Faces Tremendous Challenges in
Ensuring That Vital Public Services Are Not Disrupted
(GAO/T-AIMD-98-167, May 14, 1998). 

\8 GAO/AIMD-10.1.19, Exposure Draft, March 1998. 


   GAO GUIDANCE ON YEAR 2000
   TESTING
---------------------------------------------------------- Chapter 0:3

One of the more alarming problems we have come across in our Year
2000 reviews is that some agencies are not adequately prepared for
testing their systems for Year 2000 compliance.  For example, in
April 1998, we reported that DOD did not have a testing strategy that
specifies uniform criteria and processes that its components should
use in testing their systems.  The Army, Navy, and Air Force had not
assessed their test needs or test facility requirements.\9 In May
1998, we reported that the Department of Agriculture's Chief
Information Officer had not provided test guidance to the
department's component agencies, and 8 of 10 component agencies
included in our review lacked testing strategies.\10

The fact that these agencies are not prepared now for effective
testing raises serious concern.  Complete and thorough Year 2000
testing is essential to provide reasonable assurance that new or
modified systems process dates correctly and will not jeopardize an
organization's ability to perform core business operations after the
millennium.  Moreover, since the Year 2000 computing problem is so
pervasive, potentially affecting an organization's systems software,
applications software, databases, hardware, firmware and embedded
processors, telecommunications, and external interfaces, the
requisite testing is extensive and expensive.  Leading organizations
estimate that testing will require at least 50 percent of an entity's
total Year 2000 program time. 

To address this problem, we are issuing today a new installment of
our Year 2000 guidance which addresses the need to plan and conduct
Year 2000 tests in a structured and disciplined fashion.\11 The guide
describes a step-by-step framework for managing, and a checklist for
assessing, all Year 2000 testing activities, including those
activities associated with computer systems or system components
(such as embedded processors) that are vendor supported.  This
disciplined approach and the prescribed levels of testing activities
are hallmarks of mature software and system development/acquisition
and maintenance processes. 

The guide describes the five levels of Year 2000 testing activities. 
The first level establishes the organization infrastructure key
processes needed to guide, support, and manage the next four levels
of testing activities.  For example, it addresses defining and
assigning Year 2000 test management authority and responsibility,
defining criteria for certifying a system as compliant, identifying
and allocating resources, establishing schedules, and securing test
facilities.  The next four levels provide key processes for
effectively designing, conducting, and reporting on tests of
incrementally larger system components:  software unit/module tests,
software integration tests, system acceptance tests, and end-to-end
tests.  The processes focus on testing of software and system
components that the organization is directly responsible for
developing, acquiring, or maintaining.  Key processes, however, are
also defined to address organizational responsibilities relative to
testing of vendor-supported and commercial, off-the-shelf (COTS)
products and components (including hardware, systems software,
embedded processors, telecommunications, and COTS applications). 

The test model builds upon and complements the five-phase conversion
model described in our Year 2000 readiness guide.  The five levels of
test activities span all phases of our Year 2000 conversion model,
with the preponderance of test activities occurring in the conversion
model's renovation and validation phases. 

Finally, the guide incorporates guidance and recommendations of
standards bodies, such as the National Institute of Standards and
Technology and the Institute of Electrical and Electronic Engineers
on Year 2000 testing practices and draws on the work of leading
information technology organizations including the Software
Engineering Institute, Software Quality Engineering, Software
Productivity Consortium, and the United Kingdom's Central Computer
and Telecommunications Agency. 


--------------------
\9 Defense Computers:  Year 2000 Computer Problems Threaten DOD
Operations (GAO/AIMD-98-72, April 30, 1998). 

\10 GAO/T-AIMD-98-167, May 14, 1998. 

\11 Year 2000 Computing Crisis:  A Testing Guide (GAO/AIMD-10.1.21,
Exposure Draft, June 1998). 


-------------------------------------------------------- Chapter 0:3.1

In conclusion, if effectively implemented, our guide should help
federal agencies successfully negotiate the complexities involved
with the Year 2000 testing process.  However, the success of the
government's Year 2000 remediation efforts ultimately hinges on
setting governmentwide priorities; ensuring that agencies set
priorities and develop contingency plans consistent with these
priorities; developing an accurate picture of remediation progress;
designating lead agencies for end-to-end testing efforts; and
addressing other critical issues, such as recruiting and retaining
qualified information technology personnel. 

Mr.  Chairman, this concludes my statement.  Mr.  Joel Willemssen,
GAO's Issue Area Director for Civil Agencies Information Systems and
our focal point for Year 2000 work, has accompanied me today.  We
will be happy to answer any questions you or Members of the
Subcommittee may have. 


LIST OF GAO PRODUCTS THAT ADDRESS
THE YEAR 2000 PROBLEM
============================================================ Chapter 1

Year 2000 Computing Crisis:  Telecommunications Readiness Critical,
Yet Overall Status Largely Unknown (GAO/T-AIMD-98-212, June 16,
1998). 

GAO Views on Year 2000 Testing Metrics (GAO/AIMD-98-217R, June 16,
1998). 

IRS' Year 2000 Efforts:  Business Continuity Planning Needed for
Potential Year 2000 System Failures (GAO/GGD-98-138, June 15, 1998). 

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

Defense Computers:  Army Needs to Greatly Strengthen Its Year 2000
Program (GAO/AIMD-98-53, May 29, 1998). 

Year 2000 Computing Crisis:  USDA Faces Tremendous Challenges in
Ensuring That Vital Public Services Are Not Disrupted
(GAO/T-AIMD-98-167, May 14, 1998). 

Securities Pricing:  Actions Needed for Conversion to Decimals
(GAO/T-GGD-98-121, May 8, 1998). 

Year 2000 Computing Crisis:  Continuing Risks of Disruption to Social
Security, Medicare, and Treasury Programs (GAO/T-AIMD-98-161, May 7,
1998). 

IRS' Year 2000 Efforts:  Status and Risks (GAO/T-GGD-98-123, May 7,
1998). 

Air Traffic Control:  FAA Plans to Replace Its Host Computer System
Because Future Availability Cannot Be Assured (GAO/AIMD-98-138R, May
1, 1998). 

Year 2000 Computing Crisis:  Potential For Widespread Disruption
Calls For Strong Leadership and Partnerships (GAO/AIMD-98-85, April
30, 1998). 

Defense Computers:  Year 2000 Computer Problems Threaten DOD
Operations (GAO/AIMD-98-72, April 30, 1998). 

Department of the Interior:  Year 2000 Computing Crisis Presents Risk
of Disruption to Key Operations (GAO/T-AIMD-98-149, April 22, 1998). 

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

Tax Administration:  IRS' Fiscal Year 1999 Budget Request and Fiscal
Year 1998 Filing Season (GAO/T-GGD/AIMD-98-114, March 31, 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:  Federal Regulatory Efforts to Ensure
Financial Institution Systems Are Year 2000 Compliant
(GAO/T-AIMD-98-116, 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 Computer 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. ***