Year 2000 Computing Crisis: Challenges Still Facing the U.S. Postal
Service (Testimony, 02/23/99, GAO/T-AIMD-99-86).

Pursuant to a congressional request, GAO discussed the Postal Service's
(USPS) conversion strategy for preparing for the year 2000 crisis,
focusing on: (1) year 2000 planning documents and their year 2000
guidance; and (2) internal development standards.

GAO noted that: (1) for USPS to ensure continuity of operations after
the century date change, it must assess, remediate, and validate several
interlocking components of its operating and support infrastructure; (2)
USPS has 152 severe and critical business systems that it must assess,
correct, and verify to ensure year 2000 compliance; (3) USPS also owns
349 important business systems--systems for which workarounds exist and
whose failure will result in an inconvenience, but not significantly
impact core business activities; (4) in addition to business systems,
USPS relies on a broad range of equipment to sort, deliver, and process
mail; (5) USPS has estimated that it has over 100,000 pieces of hardware
and software to assess and correct when necessary, including mainframe
computers, personal computers, networks, and operating systems; (6) USPS
systems interface with computer systems belonging to federal, state, and
local governments and hundreds of private businesses; (7) because of
these interdependencies, postal systems are also vulnerable to failure
caused by incorrectly formatted data provided by other systems that are
noncompliant; (8) while USPS' progress in renovating its systems has
picked up in recent months, USPS has lagged behind the Office of
Management and Budget (OMB) and GAO's recommended milestones for
assessment, renovation, and validation; (9) as of the OMB validation
deadline of January 1999, only 27 percent of its mission-critical
systems had been validated; (10) in December 1998, USPS reorganized its
program management to better reflect year 2000 efforts in terms of its
business operations; (11) this new management approach offers the USPS
an improved opportunity for linking business processes to year 2000
problems and solutions; (12) even with a stronger management structure
now in place, there are substantial challenges still facing USPS; and
(13) if they are not addressed adequately, these challenges will
threaten the USPS' ability to deliver the mail--on time--next January.

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

 REPORTNUM:  T-AIMD-99-86
     TITLE:  Year 2000 Computing Crisis: Challenges Still Facing the 
             U.S. Postal Service
      DATE:  02/23/99
   SUBJECT:  Y2K
             Computer software verification and validation
             Systems conversions
             Strategic information systems planning
             Information resources management
             Computer software
             Data integrity
             Systems compatibility
IDENTIFIER:  Y2K
             
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covers.book GAO United States General Accounting Office

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

Postal Service, 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,

February 23, 1999 YEAR 2000 COMPUTING CRISIS

Challenges Still Facing the U. S. Postal Service

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




GAO/T-AIMD-99-86

  GAO/T-AIMD-99-86

Page 1 GAO/T-AIMD-99-86

Ms. Chairwoman, Mr. Chairmen, and Members of the Subcommittees:
Thank you for inviting me to participate in today's hearing on the
challenges facing the U. S. Postal Service in addressing the Year
2000 problem. 1 Although the Postal Service's main mission is to
provide postal services to all communities, the processes it must
employ to meet that mission make it among the most complex of the
public entities we have

examined. The service employs nearly one- third of the federal
civilian workforce and provides delivery services for 650 million
pieces of mail a day to over 130 million households and
businesses. Its national network encompasses 174 processing and
distribution centers, hundreds of smaller facilities, 34 air mail
centers, 21 bulk mail centers, and nearly 38,000 local post
offices, stations, and branches. Moreover, information technology
is

integral to every facet of postal operations-- from sorting,
processing, and distributing the mail to dealing with customers,
accounting for and managing cash flows, communicating with
business partners and other government agencies, and modernizing
its facilities.

Clearly, the service faces a mammoth task in fixing not only its
nationwide business systems and related interfaces but the systems
and equipment residing in its facilities. The service has been
working hard to address its Year 2000 problem and has recently
revamped its management approach, which, if successfully
implemented, can provide significant support and oversight to its
Year 2000 efforts. However, the service has been running somewhat
behind the Office of Management and Budget's (OMB) schedule for
system renovation and still must address major issues to complete
system and mail processing equipment correction and testing,
ensure the

readiness of hundreds of local facilities, and determine the
ability of key suppliers and interface partners to be Year 2000
ready. Further, the service needs to complete the simulation
testing of its business process areas as well as complete the
development and testing of its business continuity and contingency
plans. These challenges are further exacerbated by the fact that
the service anticipates a surge in workload beginning in September

due to the holiday business rush, which typically requires greater
management attention.

1 The Year 2000 problem is rooted in the way dates are recorded
and computed in automated information systems. For the past
several decades, systems have typically used two digits to
represent the year, such as 97 representing 1997, in order to
conserve on electronic data storage and reduce operating costs.
With this two- digit format, however, the year 2000 is
indistinguishable from 1900, or 2001 from 1901. As a result of
this ambiguity, system or application programs that use dates to
perform calculations, comparisons, or sorting may generate
incorrect results.

Page 2 GAO/T-AIMD-99-86

It is critical that these challenges be adequately addressed
before next January 1. In many respects, the Postal Service
provides critical services that are as ubiquitous as
telecommunications or electrical power. A Year 2000- based
disruption in mail delivery would have a serious impact across

every sector of the American economy. Further, reliance on the
Postal Service is part of the contingency plans for many
organizations that require a backup process to electronically
delivered transactions and services.

Our testimony is based on our review of the service's conversion
strategy and other Year 2000 planning documents and the service's
Year 2000 guidance and internal development standards as well as
our discussions with U. S. Postal Service officials responsible
for overseeing the Year 2000 effort. We compared the service's
efforts to criteria detailed in our Year

2000 Assessment Guide, 2 Business Continuity and Contingency
Planning Guide, 3 and Testing Guide. 4 This guidance offers a
structured and disciplined approach to managing the risk of
potential Year 2000- induced

disruptions to operations. We conducted our work in cooperation
with the service's Inspector General and in accordance with
generally accepted government auditing standards from September
1998 through February 1999.

Postal Service Relies Extensively on Automated Systems

For the Postal Service to ensure continuity of operations after
the century date change, it must assess, remediate, and validate
several interlocking components of its operating and support
infrastructure. These include severe and critical (mission-
critical) business systems that provide

essential support for postal operations; important business
systems that are necessary for continued operations but where
failure would not have an immediate, significant impact on
business continuity; mail processing equipment; facilities and
other infrastructure support activities; and vendors who provide
essential goods and services to the Postal Service. 2 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. 3 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.

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

Page 3 GAO/T-AIMD-99-86

 The service has 152 severe and critical business systems that it
must assess, correct, and verify to ensure Year 2000 compliance.
These include the Postal Metering System, Money Order System, Mail
Distribution Requirements System, Air Contracting Support System,
Vehicle Tracking and Performance System, as well as critical
financial

management systems. Many of these systems have no workarounds and
their failure would significantly disrupt postal operations. The
service has reported that it has finished renovation work on 106
of its 152 severe and critical business information systems, and
it expects to implement all but 11 systems by OMB's target March
31, 1999, deadline. Ten of the 11 remaining systems are expected
to be done by July 1999 and the 11th by mid- November 1999.  The
service also owns 349 important business systems systems for which
workarounds exist and whose failure will result in an

inconvenience, but not significantly affect core business
activities. These include the Worker Compensation Information
System, the Resource Management System, the Customer Satisfaction
Measurement System, the Consumer Affairs Tracking System, and the
Relocation Payment System. The service reports that 215 of these
systems have been renovated with most of these scheduled for
completion this quarter. Unlike the severe and critical systems,
the important

systems are not required to undergo independent validation and
verification to provide additional assurances of Year 2000
compliance. However, a number of these systems will go through
such a process upon the request of business process owners.  In
addition to business systems, the service relies on a broad range
of

equipment to sort, deliver, and process mail. This equipment
includes small parcel and bundle sorter equipment, flat mail
sorters and optical character readers, and priority mail and bulk
mail processing equipment. The service has 43 types of equipment
that are deployed in various locations across the country. It
reports, as of December 31, that 37 types had been renovated and
the remainder are on schedule for remediation by August 1999.  The
service has estimated that it has over 100,000 pieces of hardware
and software to assess and correct when necessary, including

mainframe computers, personal computers, networks, and operating
systems. It also must assess and fix a wide range of
infrastructurerelated assets installed in hundreds of its
facilities and tens of thousands of post offices. This includes
building access control systems, safety systems, air conditioning
and heating systems, as well as elevators. The service is still in
the process of assessing this equipment.

Page 4 GAO/T-AIMD-99-86

 Service systems interface with computer systems belonging to
federal, state, and local governments and hundreds of private
businesses. Because of these interdependencies, postal systems are
also vulnerable to failure caused by incorrectly formatted data
provided by other systems that are noncompliant. According to the
service, about 1,600 external interfaces have been identified to
date. Of that number, over 800 are considered to be severe and
critical. The service is in the process of contacting each
external interface partner to assess the work

that needs to be done with these interfaces.  The service is
heavily dependent on almost 600 key vendors and

suppliers (such as airlines and railroads) that provide goods and
services necessary to mail delivery. If key supplier systems are
not Year 2000 compliant in time, postal operations could be
severely disrupted. In late 1998, the service surveyed critical
suppliers as to their Year 2000

readiness. Sixty percent of the suppliers responded. Of these,
only 31 percent affirmed that they would be Year 2000 compliant in
time.  The service, like most organizations, depends on public
infrastructure

systems, such as those that provide power, water, transportation,
and voice and data telecommunications. Given the scope and
intricate nature of the service's national network, even localized
disruptions in

infrastructure- related services could seriously affect postal
business operations. While the Postal Service's progress in
renovating its systems has picked up in recent months, the service
has lagged behind OMB- and GAOrecommended milestones for
assessment, 5 renovation, 6 and validation. 7 For example, the
service reported that as of the OMB renovation deadline of
September 1998, about 22 percent of its mission- critical systems
had not been corrected. As of the OMB validation deadline of
January 1999, only

27 percent of its mission- critical systems had been validated.
Moreover, the service has been late in undertaking important
related tasks. For example, the service's testing strategy was not
completed until November 1998 and

5 During the assessment phase, organizations determine the Year
2000 impact on the enterprise, identify core business areas and
processes, inventory systems supporting core business areas, and
prioritize their conversion or replacement. They should also
develop contingency plans and identify data exchange issues. This
lays the groundwork for the ensuing phases of the program.

6 During the renovation phase, organizations convert, replace, or
eliminate selected platforms, applications, databases, and
utilities as well as modify interfaces. 7 During the validation
phase, organizations test, verify, and validate converted or
replaced platforms, applications, databases, and utilities.

Page 5 GAO/T-AIMD-99-86

contingency plans were not begun until December 1998. Our Year
2000 Assessment Guide recommends that both of these tasks be
initiated before August 1997, toward the end of the assessment
phase.

Positive Steps Taken to Strengthen Management of Year 2000 and
Ensure Continuity of Operations

The delays in the service's Year 2000 progress were in part
attributable to the fact that the service was slow to recognize
the severe and pervasive impact of the problem and lacked
sufficient planning processes and corporatewide involvement. Until
recently, the burden of ensuring Year 2000 readiness largely
resided in a program management office under the general direction
of the Vice President of Information Systems. The program focus
was more directed at systems and processes that supported business
operations rather than on the readiness of business processes,
which typically involve a number of activities and support
mechanisms outside the systems realm.

In December 1998, the service reorganized its program management
to better reflect Year 2000 efforts in terms of its business
operations. The new organizational structure represents a matrix
approach to managing ongoing efforts. Senior vice presidents have
responsibility within their functional areas (e. g., mail
operations, finance, marketing, and national systems) to

ensure that individual business processes are decomposed and that
each process undergoes simulation testing 8 and that contingency
plans are developed for each process. The Vice President for
Information Systems still has responsibility for system
remediation across the business areas.

To better ensure that these individual business processes will
support overall operations, the Service's Chief Operating Officer
will be responsible for developing business continuity plans. The
overall management approach is managed by an executive council
under the direction of the Deputy Postmaster General. This new
management approach offers the Postal Service an improved
opportunity for linking business processes to Year 2000 problems
and solutions. We recommend this linkage in our Year 2000
guidance.

However, as with most new management models, there is little basis
for assured success without sustained follow- through to ensure
effective 8 The purpose of this testing is to verify that a
defined set of interrelated systems, which collectively support a
core business area or function, interoperate as intended in a
simulated operational environment.

Page 6 GAO/T-AIMD-99-86

implementation. Accordingly, this new approach will require close
oversight to ensure results.

Significant Challenges Still Face the Service in Months Ahead

Even with a stronger management structure now in place, there are
substantial challenges still facing the service. If they are not
addressed adequately, these challenges will threaten the Postal
Service's ability to deliver the mail on time next January.

The primary challenge, of course, is time. Because the service has
been behind schedule, it is now playing catch- up. Exacerbating
the time issue is the anticipated holiday business rush, which
typically starts in September. This surge in workload will require
service management to split its attention and resources. Second,
there are still many unknowns about the Postal Service's core
business processes. The service does not yet have complete
inventory and status information on its information technology
infrastructure, internal and external interfaces, and field
equipment and systems. Nor does the

service yet know whether the majority of its critical vendors will
be ready in time or have assurance that public infrastructure
systems, including power, water, transportation, and
telecommunications will be compliant in time. Finally, until the
simulation testing is complete and contingency plans and business
continuity plans are developed and tested, the service

will not have reasonable assurance on its readiness. These two
factors make it imperative for the service to develop a
comprehensive plan to guide existing efforts for testing,
contingency planning, quality assurance, risk and issue
management, interface

management, and certification and validation; provide a master
Year 2000 schedule; and identify priorities. They also make it
imperative for the service to ensure that attention to the problem
is sustained by the Deputy Postmaster General, the senior vice
presidents, the Chief Operating Officer, Chief Financial Officer,
Chief Management Officer, Chief Technology

Officer, and other top executives. That is, these stakeholders
should (1) ensure that the overall management plan is developed
and followed, (2) participate in making critical decisions in all
phases of the project, (3) continue to provide resources and
support for the program, and (4) ensure that all components and
business areas fully support and participate in the process.

Page 7 GAO/T-AIMD-99-86

This concludes my statement. I will be pleased to answer any
questions you or Members of the Subcommittees may have.

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