Year 2000 Computing Crisis: Defense Has Made Progress, But Additional
Management Controls Are Needed (Testimony, 03/02/99, GAO/T-AIMD-99-101).

The Defense Department (DOD) has recently taken steps to strengthen
management of its Year 2000 program by providing the controls and
guidance needed to fix and test systems. It has also appropriately
shifted its focus to core business readiness and operational risks
through (1) planning for the performance of end-to-end tests of key
functional area business processes, (2) executing a series of simulated
Year 2000 operational exercises, and (3) conducting system integration
tests at the military service level. In addition, the Deputy Secretary
has become actively involved in directing and monitoring Year 2000
efforts. However, DOD still faces two significant challenges and a
fast-approaching deadline. First, DOD must still catch up and complete
remediation and testing of mission critical systems. Second, it needs to
be reasonably confident that key processes will continue to work on a
day-to-day basis and key operational missions essential to national
defense can be successfully accomplished. Consequently, DOD needs to
take steps to improve its visibility over the status of key business
processes. The information is critical to identify those areas where DOD
faces the greatest risk of failure and critical to providing the
necessary data for preparing overall business continuity plans.

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

 REPORTNUM:  T-AIMD-99-101
     TITLE:  Year 2000 Computing Crisis: Defense Has Made Progress, But 
             Additional Management Controls Are Needed
      DATE:  03/02/99
   SUBJECT:  Information resources management
             Information systems
             Systems conversions
             Computer software verification and validation
             Strategic information systems planning
             Y2K
             Computer software
             Internal controls
             Embedded computer systems
IDENTIFIER:  Y2K
             DOD Year 2000 Program
             
Year 2000 Computing Crisis: Defense Has Made Progress, But Additional
Management Controls Are Needed (Testimony, 03/02/99, GAO/T-AIMD-99-101).

The Defense Department (DOD) has recently taken steps to strengthen
management of its Year 2000 program by providing the controls and
guidance needed to fix and test systems. It has also appropriately
shifted its focus to core business readiness and operational risks
through (1) planning for the performance of end-to-end tests of key
functional area business processes, (2) executing a series of simulated
Year 2000 operational exercises, and (3) conducting system integration
tests at the military service level. In addition, the Deputy Secretary
has become actively involved in directing and monitoring Year 2000
efforts. However, DOD still faces two significant challenges and a
fast-approaching deadline. First, DOD must still catch up and complete
remediation and testing of mission critical systems. Second, it needs to
be reasonably confident that key processes will continue to work on a
day-to-day basis and key operational missions essential to national
defense can be successfully accomplished. Consequently, DOD needs to
take steps to improve its visibility over the status of key business
processes. The information is critical to identify those areas where DOD
faces the greatest risk of failure and critical to providing the
necessary data for preparing overall business continuity plans.

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

 REPORTNUM:  T-AIMD-99-101
     TITLE:  Year 2000 Computing Crisis: Defense Has Made Progress, But 
             Additional Management Controls Are Needed
      DATE:  03/02/99
   SUBJECT:  Information resources management
             Information systems
             Systems conversions
             Computer software verification and validation
             Strategic information systems planning
             Y2K
             Computer software
             Internal controls
             Embedded computer systems
IDENTIFIER:  Y2K
             DOD Year 2000 Program
             
Year 2000 Computing Crisis: Defense Has Made Progress, But Additional
Management Controls Are Needed (Testimony, 03/02/99, GAO/T-AIMD-99-101).

The Defense Department (DOD) has recently taken steps to strengthen
management of its Year 2000 program by providing the controls and
guidance needed to fix and test systems. It has also appropriately
shifted its focus to core business readiness and operational risks
through (1) planning for the performance of end-to-end tests of key
functional area business processes, (2) executing a series of simulated
Year 2000 operational exercises, and (3) conducting system integration
tests at the military service level. In addition, the Deputy Secretary
has become actively involved in directing and monitoring Year 2000
efforts. However, DOD still faces two significant challenges and a
fast-approaching deadline. First, DOD must still catch up and complete
remediation and testing of mission critical systems. Second, it needs to
be reasonably confident that key processes will continue to work on a
day-to-day basis and key operational missions essential to national
defense can be successfully accomplished. Consequently, DOD needs to
take steps to improve its visibility over the status of key business
processes. The information is critical to identify those areas where DOD
faces the greatest risk of failure and critical to providing the
necessary data for preparing overall business continuity plans.

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

 REPORTNUM:  T-AIMD-99-101
     TITLE:  Year 2000 Computing Crisis: Defense Has Made Progress, But 
             Additional Management Controls Are Needed
      DATE:  03/02/99
   SUBJECT:  Information resources management
             Information systems
             Systems conversions
             Computer software verification and validation
             Strategic information systems planning
             Y2K
             Computer software
             Internal controls
             Embedded computer systems
IDENTIFIER:  Y2K
             DOD Year 2000 Program
             
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AI99101t.book GAO

United States General Accounting Office

Testimony Before the Subcommittee on Government Management,
Information and Technology, Committee on Government

Reform, and the Subcommittee on Technology, Committee on Science,
House of Representatives

For Release on Delivery Expected at 10 a.m. Tuesday, March 2, 1999

YEAR 2000 COMPUTING CRISIS

Defense Has Made Progress, But Additional Management Controls Are
Needed

Statement of Jack L. Brock, Jr. Director, Governmentwide and
Defense Information Systems Accounting and Information Management
Division

GAO/T-AIMD-99-101

Page 1 GAO/T-AIMD-99-101

Mr. Chaiman, Ms. Chairwoman, and Members of the Subcommittees:
Thank you for inviting me to participate in today's hearing on the
Department of Defense's (DOD) efforts to confront the Year 2000
problem. This dilemma is particularly daunting for Defense for two
reasons. First, Defense's size and scope of operations,
criticality of mission, and heavy reliance on a diverse portfolio
of information technology is unparalleled in either the public or
private sector. Second, despite considerable progress in the last
3 months, Defense is still well behind schedule. This is largely
because Defense did not have the necessary oversight and
management framework for handling large-scale departmentwide
information technology projects.

Defense has recently taken steps to strengthen management of its
Year 2000 program by providing the controls and guidance needed to
fix and test systems; it also has appropriately shifted its focus
to core business readiness and operational risks through (1)
planning for the performance of end-to-end tests of key functional
area business processes, (2) executing a series of simulated Year
2000 operational exercises, and (3) conducting system integration
tests at the military service level. Additionally, the Deputy
Secretary has become actively engaged in directing and monitoring
Year 2000 efforts.

We support these actions, but the key to their success rests in
putting in place effective controls for Defense to have the timely
and reliable information to know what is going right and what is
going wrong so that corrective action can be swift and effective.
These controls, which our Year 2000 guides define, require Year
2000 program management to define the appropriate performance and
progress measures and reporting requirements and to ensure that
these requirements are met. For Defense to minimize risks in the
305 days remaining before the Year 2000 deadline, it must act
quickly and decisively to implement and enforce these controls.

Our testimony today is based on our ongoing review of Defense's
efforts to solve the Year 2000 computer systems problem, which has
spanned DOD headquarters; the Army, Navy, and Air Force; major
components, including the Defense Logistics Agency, the Defense
Finance and Accounting Service; the Defense Information Systems
Agency (DISA), the Joint Chiefs of Staff; and central design
activities. We also witnessed operational tests recently conducted
at the North American Aerospace Defense Command (NORAD). Over the
past 2 years, we have reviewed Defense's Year 2000 plans,
guidance, and directives; discussed Defense's efforts with the

Page 2 GAO/T-AIMD-99-101

Deputy Secretary, many DOD executives, and members of the Defense
Science Board; and attended DOD Year 2000 Steering Committee
meetings. We have compared DOD's efforts to criteria detailed in
our Year 2000 Assessment Guide, 1 Business Continuity and
Contingency Planning Guide , 2

and Testing Guide. 3 This guidance offers a structured and
disciplined approach to developing a Year 2000 program and
managing the risk of potential Year 2000-induced disruptions to
operations. To date, we have issued 11 products 4 and provided
numerous briefings to Department officials and the Congress on
this important issue.

Likewise, auditors for the Department of Defense have been
assessing Year 2000 progress at the military services, Defense
agencies, and other DOD organizations. Some 142 products have been
issued by the Inspector General and other DOD auditors. Recently,
in December 1998, the Inspector General released a report
summarizing the results of combined Year 2000 audit and inspection
coverage of the Department. 5

Background Our Year 2000 guidance defines structures and processes
for effectively managing a Year 2000 program, including (1)
establishing central

accountability and authority for Year 2000 efforts, (2) addressing
system conversion in the context of core business missions, (3)
developing institutional plans and guidance governing conversion,
testing, and contingency planning, and (4) defining requirements
for progress reporting. These controls are needed because the risk
of Year 2000 failure extends well beyond an organization's
internal information systems. For example, Defense depends on
information and data provided by thousands of business
partnersincluding other federal agencies, international
organizations, allies, and private sector contractors. Moreover,
it depends on services provided by the public
infrastructureincluding power, water,

1 Year 2000 Computing Crisis: An Assessment Guide (GAO/AIMD-
10.1.14). Published as an exposure draft in February 1997 and
finalized in September 1997.

2 Year 2000 Computing Crisis: Business Continuity and Contingency
Planning (GAO/AIMD-10.1.19). Published as an exposure draft in
March 1998 and finalized in August 1998.

3 Year 2000 Computing Crisis: A Testing Guide (GAO/AIMD-10.1.21).
Published as an exposure draft in June 1998 and finalized in
November 1998.

4 See attachment for a list of GAO products on Defense's Year 2000
program.

5 Summary of DOD Year 2000 ConversionAudit and Inspection Results
(Report No. 99-059, December 24, 1998), Office of the Inspector
General, Department of Defense.

Page 3 GAO/T-AIMD-99-101

transportation, and voice and data telecommunications. Defense
also owns hundreds of thousands of potentially vulnerable
infrastructure devices that may fall outside of the control of an
individual unit. These include, for example, building and base
security systems, street lights at military installations,
elevators, and medical equipment.

Last April, we reported 6 that Defense operations were threatened
by slow progress in fixing its mission-critical systems and
mitigating Year 2000 risk. We also reported that Defense did not
establish strong management mechanisms, such as a Year 2000
Program Office and a full-time Year 2000 executive and processes
for validating information on component progress. In addition, it
was not addressing conversion efforts within the context of
business areas. Furthermore, Defense did not initially develop a
detailed Year 2000 plan or guidance on developing interface
agreements, testing systems, and reporting on progress. Instead,
Defense delegated responsibility for addressing the problem to its
components. Our reviews of individual component Year 2000 efforts
showed that, in turn, the components delegated this responsibility
to subcomponents and likewise neglected to implement strong
management controls.

Our recommendations to Defense focused on supporting remediation
efforts with adequate centralized program management and
oversight. For example, we recommended that DOD establish a strong
department-level program office, led by an executive whose full-
time job was to effectively manage and oversee Year 2000 efforts.
This office should, as a minimum, have sufficient authority to
enforce good management practices, direct resources to specific
problem areas, and ensure the validity of data being reported by
components on such things as progress, contingency planning, and
testing.

In view of the Department's status, the Office of Management and
Budget (OMB) designated Defense as a Tier One agency in May 1998,
indicating that it was making insufficient progress in remediating
its systems. Defense itself designated the Year 2000 effort as one
of its most significant internal management control problems for
fiscal year 1998.

The lack of progress in effectively dealing with the Year 2000
problem was largely rooted in the fundamental weaknesses in
managing information

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

Page 4 GAO/T-AIMD-99-101

technology that have plagued Defense for years. Since 1995, when
we first designated Defense's management of information technology
as a high-risk federal program, 7 we have continually reported
that Defense did not have controls and processes for (1) ensuring
that the costs and risks of multimillion dollar projects are
justified, (2) monitoring progress and performance, and (3)
stopping projects shown to be cost ineffective or technically
flawed. 8 Perhaps the biggest impediment to successful IT projects
has been Defense's organizational environment, which has resisted
departmentwide efforts to standardize business processes and
information systems and to increase oversight and visibility over
information resources.

Actions Taken to Address Weaknesses Have Enhanced DOD's Year 2000
Progress

Since our April 1998 report, Defense has implemented our
recommendations and taken additional actions to address the Year
2000 dilemma. Moreover, it has engaged top managers in the
initiative. For example, Defense:

 Established a department-level Year 2000 Program Office headed by
a full-time executive with a current staff of more than 50.
Improved its information systems inventory to better track
components'

progress.  Increased the frequency of Year 2000 Steering Committee
meetings.

This committee, headed by the Deputy Secretary of Defense, who is
an active participant, is charged with reviewing the progress of
Defense components, providing guidance, and making decisions on
Year 2000 issues that have not been resolved at lower levels. When
we reported on DOD's Year 2000 effort in April 1998, the committee
was not meeting regularly.

7 High-Risk Series: An Overview (GAO/HR-95-1, February 1995).

8 For example, in 1996 we reported that one functional area began,
and later abandoned, a substantially flawed effort to develop a
standard suite of information systems for materiel management
after spending over $700 million without strong oversight. Our
reports also found that some functional areas did not account for
various categories of significant costs when making their systems
decisions or adequately consider alternatives to developing
systems in-house. See, Defense IRM: Poor Implementation of
Management Controls Has Put Migration Strategy at Risk (GAO/AIMD-
98-5, October 20, 1997); DOD Accounting Systems: Efforts to
Improve System for Navy Need Overall Structure (GAO/AMD-96-99,
September 30, 1996); Defense IRM: Critical Risks Facing New
Materiel Management Strategy (GAO/AIMD-96-109, September 6, 1996);
Defense Transportation: Migration Systems Selected Without
Adequate Analysis (GAO/AIMD-96-81, August 29, 1996); and Defense
Management: Selection of Depot Maintenance Standard System Not
Based on Sufficient Analyses (GAO/AIMD-95-110, July 13, 1995).

Page 5 GAO/T-AIMD-99-101

 Required that fiscal year 1999 information technology funding be
contingent on components (1) ensuring the accuracy of the Year
2000 database, (2) completing interface agreements, (3) specifying
Year 2000 requirements in contracts, and (4) developing test
agreements with Defense computer centers. This was done through a
series of memoranda issued by the Secretary of Defense; the Deputy
Secretary of Defense; the Assistant Secretary of Defense for
Command, Control, Communications, and Intelligence; and the
Comptroller in August and September 1998.  Increased its outreach
efforts with state and local governments, as well

as the international security sector. While still behind in
meeting governmentwide target deadlines, Defense reports that it
is now making much better progress in fixing and testing its
systems. In its February Year 2000 quarterly status report to OMB,
Defense reported that of its 2,387 mission-critical systems

 1,670 systems, or 70 percent, were compliant,  225 systems were
going to be replaced or retired,  8 systems were being assessed,
96 systems were being fixed,  226 systems were being tested, and
162 systems were being implemented.

Although Defense reports that the number of compliant systems has
risen from about 50 percent to 70 percent since its November 1998
quarterly status report to OMB, its remediation efforts are still
at significant risk. The number of systems that have fallen behind
schedule, for example, doubled from 65 to 172, and the number not
expected to meet OMB's target March 31, 1999, completion date
almost tripled from 54 to 156.

Furthermore, Defense is behind in terms of renovating its
facilities and installations. Defense's February 1999 quarterly
status report to OMB showed that only 269 of 638, or 42 percent,
of Defense's installations had completed necessary Year 2000
corrections. While an additional 317 facilities are to be
completed by March 31, 1999, 47 more are not expected to be done
until June 30, 1999, and 5 not until September 30, 1999. According
to Defense, there are another 600-plus buildings used by Defense,
but controlled by the General Services Administration, that are
considered at risk because the lessor has not provided Year 2000
status information. In addition, Defense does not yet have good
data on the

Page 6 GAO/T-AIMD-99-101

readiness of its overseas installations, which are dependent on
other nations for power, fuel, water, and other important
services.

Defense's Focus Is Appropriately Shifting to Core Business Areas

While the focus of most agencies has been directed at remediating
systems, the real level of Year 2000 assurance needs to be
centered on business functions. That is, agencies must be able to
continue to provide key services and meet agency mission
objectives at an acceptable level of performance. To this end,
agencies should now be focusing on end-to-end testing of business
processes and developing business continuity plans for those
processes. Each of our Year 2000 guides define practices and
controls that are founded on first identifying core business
processes, mapping mission-critical systems to these processes,
and then performing assessment, renovation, testing, and
contingency planning within the context of these core business
areas.

Defense has appropriately shifted its focus toward ensuring the
continuity of core business processes and military operations.

 First, in an August 7, 1998, memorandum, the Secretary of Defense
directed the Commanders in Chief (CINC) to plan and execute a
series of simulated Year 2000 operational exercises. These
exercises, which were required by Defense appropriation and
authorization legislation, 9

are to assess whether Defense can still perform critical military
tasks with system clocks rolled forward to the year 2000, such as
ensuring that Defense can continue to perform a strategic early
warning mission, deploy and maneuver forces, and employ firepower.
Thirty-one such evaluations are scheduled through September 1999.
Second, Defense is requiring its principal staff assistants (PSAs)
to

ensure the continuity of key functional area business processes.
In response, the PSAs are planning to conduct end-to-end tests to
ensure that systems that collectively support core business areas
can interoperate as intended in a Year 2000 environment. In an
August 24, 1998, memorandum, the Deputy Secretary of Defense
provided overall

9 The Department of Defense Appropriations Act, 1999 (Public Law
105-262) and the Strom Thurmond National Defense Authorization Act
for Fiscal Year 1999 (Public Law No. 105-261) both required
Defense to submit a plan to the Congress by December 15, 1998, for
the execution of simulated Year 2000 exercises. Specifically,
Defense is to conduct at least 25 simulation exercises, ensure
that each of the Commanders in Chief conducts at least two of
these exercises; and ensure that all mission-critical systems that
are expected to be used in a major theater of war are tested in at
least two exercises. Defense has not yet submitted the required
plan to the Congress.

Page 7 GAO/T-AIMD-99-101

planning requirements and the expectation that all functional
plans would be completed by November 1, 1999, for five functional
areas: communications, health/medical, intelligence, logistics,
and personnel. The Department has since added weapons and finance
to those functional areas.  Third, the military services are
conducting integration testing of their

systems. The testing is intended to build upon completed system's
renovation, testing, and certification, and ultimately, to reduce
risk and ensure the ability to execute critical combat missions in
a Year 2000 environment.  Fourth, Defense directed installation
commanders to ensure that all

installations will be fully functional at the year 2000. These
installations are, of course, critical to housing both the
military and civilian workforce as well as the weaponry and
supporting activities necessary for national defense.  Fifth, the
Department has initiated regular synchronization

meetingschaired by the Deputy Assistant Secretary of Defense and
the Joint Chiefs of Staff Year 2000 Task Force Leader--to improve
and facilitate coordination of the many activities that cut across
organizational boundaries.

Because of the need for close integration between the operational
and functional evaluations, we are now reviewing the interaction
among the various tests and evaluating the adequacy of relevant
management controls. While we have not yet finished our
comprehensive evaluation of these tests and controls, we can make
several preliminary observations.

 The initial operational evaluations have been successful. We
found the guidance provided by the Joint Chiefs of Staff for
conducting the operations to be well-developed and consistent with
our own published guidance. Exercises have already been conducted
at the North American Aerospace Defense (NORAD) Command and the
Strategic Command. We had the opportunity to observe the planning
and execution phases of NORAD's missile warning operational
evaluation. According to NORAD officials, the purpose of this
evaluation was to confirm the correct processing of responses to
airborne threats systems and not to validate every possible threat
that could occur. Based on our observations, the operational
evaluation was well-planned and executed. The Year 2000 date
rollovers worked properly, and NORAD officials were able to
recover and continue the mission when testing problems occurred.
For example, a tape drive failed at one of the sensor sites, and
fallout from one of the test missiles was incorrectly coded as a

Page 8 GAO/T-AIMD-99-101

missile launch. These anomalies, however, were immediately
detected and resolved by NORAD officials at the time of the test.
Since many systems and processes are outside the CINCs' control,
many

of the planned evaluations will require extensive support from the
functional areas, such as communications and logistics. For
example, the Strategic Command's five phase operational evaluation
program will require extensive support from DISA to plan,
schedule, and provide on- site technical support for more than 10
DISA-owned systems that make up its communications backbone. One
phase of this plan has already been delayed 2 months to await
DISA's installation of Year 2000 compatible components. Defense is
beginning to work on these kinds of dependencies through the
synchronization meetings with the PSAs and CINCs.  Our initial
reviews of the functional area readiness plans have showed

mixed results. For example, while each of the functional plans
discusses business functions, supporting systems, and testing
requirements, the plans frequently lack important details such as
test schedules, completion dates for contingency plans, or
detailed mapping of systems and support activities to business
functions.

DOD Management Needs Better Controls and Information on Business
Operations

Readiness

DOD has correctly shifted much of its emphasis on continuity of
business processes rather than the status of individual systems.
The Year 2000 Steering Committee, chaired by the Deputy Secretary
and comprised of top management representatives from each of the
services and component agencies, has been instrumental in
overcoming cultural impediments that have historically limited the
Department's ability to respond to information management issues.
10

However, to effectively manage and oversee Year 2000 programs,
managers and executive decisionmakers need reliable information
about the nature and status of Year 2000 conversion efforts from a
core business perspective. This is not available in DOD. Our Year
2000 guides recognize the importance of such information.
Accordingly, the guides provide for establishing formal reporting
mechanisms early in the Year 2000 program life cycle and using the
information reported to oversee and control program efforts.
Additionally, the guides describe the need to specify the content
and format of the reports and the reporting frequency and to

10 Defense Information Management: Continuing Implementation
Challenges Highlight the Need for Improvement (GAO/T-AIMD-99-93,
February 25, 1999).

Page 9 GAO/T-AIMD-99-101

establish management controls (e.g., the use of quality assurance
and independent verification and validation groups) to ensure that
the information being reported is reliable.

The Department's controls and reporting mechanisms are primarily
still centered around individual systems. Although the functional
areas and commands have been instructed to develop testing and
contingency plans based on business functions, the DOD Year 2000
management plan and its supporting guidance have not been updated
to reflect reporting and control mechanisms that should be in
place to reinforce this evolutionary shift in focus.

It is conceivable that each component, each command, and each
function is developing appropriate plans with an appropriate level
of control to ensure that the right thing is being done at the
right time. But there is simply no mechanism in place right now to
provide this assurance, and our initial reviews of the functional
plans suggest uneven levels of planning and execution across the
Department.

The Department clearly needs greater visibility into the status of
core business processes throughout the agency. Specifically,
within the context of each core business area the Department
should determine the

 status of each supporting information system critical to that
process, including its schedule for remediation and testing;
source and Year 2000 status of any suppliers or vendors critical
to that

process;  outside dependencies (such as electrical power) that
affect readiness;  interfaces with other processes and outside
organizations;  scope and schedule of end-to-end testing for the
process; and  scope and schedule for business continuity planning
for that process.

For any of these elements that are behind schedule, Defense needs
to know what steps will be taken to get back on schedule or what
steps will be taken to minimize the risks associated with their
delay.

Once these assessments are complete, top management can develop an
overall perspective of readiness, identify gaps or unnecessary
overlaps among individual components, reallocate resources, and
develop comprehensive business continuity plans that cut across
organizational lines.

Page 10 GAO/T-AIMD-99-101

Additionally, the Department needs greater assurance that the
information being provided is consistent both in terms of content
and accuracy. To this end the Department should

 provide standard expectations for both content and reporting
requirements and performance metrics for all the above elements
and  establish control mechanisms to provide assurance that
reported

information is complete and accurate.

Defense Has Good Opportunity to Apply Year 2000 Lessons Learned to
Future Information Technology Investments

The immediate focus for Defense over the next 305 days should be
on ensuring implementing and enforcing controls that focus on
ensuring the continuity of operations into 2000. However, in the
long term, Defense has a unique opportunity to capitalize on the
valuable lessons it has learned in its Year 2000 effort and apply
them to its overall management of information technology. Doing so
can enable the Department to acquire and deploy high performing,
cost-effective systems and to avoid repeating costly mistakes. For
example:

 Defense has learned that Year 2000 efforts cannot succeed without
the involvement of top-level managers, including the Deputy
Secretary, senior information management officials, the
Comptroller, PSAs, and decisionmakers at Defense components. Best
practices 11 have shown that top executives need to be similarly
engaged in periodic assessments of major information technology
investments in order to prioritize projects and make sound funding
decisions. Such involvement is also critical to breaking down
cultural and organizational impediments that hamper Defense-wide
IT efforts.  Defense has realized that having a complete and
accurate

enterprisewide information systems inventory can facilitate
remediation, testing, and validation efforts. Maintaining a
reliable, up- to-date system inventory is also fundamental to
well-managed information technology programs since it can provide
senior managers with timely and accurate information on system
costs, schedule, and performance.  Defense has spent 3 years
identifying system interfaces and

implementing controls at the system level to prevent proliferation
of

11 Executive Guide: Improving Mission Performance Through
Strategic Information Management and Technology (GAO/AIMD-94-115,
May 1994) and Assessing Risks and Returns: A Guide for Evaluating
Federal Agencies' IT Investment Decision-making (GAO/AIMD-10.1.13,
February 1997).

Page 11 GAO/T-AIMD-99-101

Year 2000 problems between systems. This effort should help
Defense to prevent future data exchange problems in its systems
and resolve conflicts between interface partners.  Defense has
made some progress in identifying and prioritizing its

mission-critical systems and is expected to further prioritize as
operational and functional evaluations highlight the systems that
are truly critical to Defense operations. Once the Year 2000
effort is completed, Defense can use this information to further
identify and retire duplicative or unproductive systems.

Conclusions The Year 2000 program has been demanding on Defense
because of the size and scope of its operations and its heavy
reliance on information

technology, but also because it began the effort with weak and
undisciplined information technology management processes. Defense
has since made strides in meeting this challenge under the
leadership of the Deputy Secretary, garnering the involvement of
DOD-wide managers, PSAs, CINCs, and component executives; putting
controls and mechanisms in place to facilitate system renovations;
and undertaking the formidable task of conducting operational
exercises and end-to-end tests on functional processes.

However, DOD still faces two significant challenges and a fast
approaching deadline. First, the Department must still catch up
and complete remediation and testing of mission-critical systems.
Second, it must have a reasonable level of assurance that key
processes (functional areas) will continue to work on a day-to-day
basis and key operational missions necessary for national defense
can be successfully accomplished. Such assurance can only be
provided if the Department takes steps to improve its visibility
over the status of key business processes. This information is
critical to identify those areas where it faces the greatest risk
of failure and critical to providing the necessary data for
preparing overall business continuity plans.

Mr. Chairman, this concludes my statement. I will be happy to
answer any questions you or Members of the Subcommittee may have.

Lett er

Page 12 GAO/T-AIMD-99-101

Attachment

List of GAO Products That Address DOD's Year 2000 Problem Appendi
x I

Defense Computers: DOD's Plan for Execution of Simulated Year 2000
Exercises (GAO/AIMD-99-52R, January 29, 1999).

Defense Computers: Year 2000 Computer Problems Put Navy Operations
at Risk (GAO/AIMD-98-150, June 30, 1998).

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

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

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

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).

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).

(511657) Let t er

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