Year 2000 Computing Challenge: Delivery of Key Benefits Hinges on States'
Achieving Compliance (Testimony, 06/23/1999, GAO/T-AIMD/GGD-99-221).

Just as the federal government faces significant Year 2000 risks, state
and local governments also face this challenge. If the Year 2000 problem
is not properly addressed, many vital government functions could be
jeopardized. For example, food stamps and other benefit payments could
be stopped, signal timing patterns could malfunction at highway
intersections, and parole eligibility determinations could be adversely
affected. This testimony discusses the Year 2000 challenge facing state
and local governments and the Year 2000 Compliance Assistance Act (H.R.
1599), which would allow state and local governments to buy information
technology through the federal government to address the Year 2000
problem. GAO (1) highlights the reported Year 2000 readiness of state
and local governments and the steps taken by the President's Council on
Year 2000 Conversion, (2) discusses the readiness and federal activities
associated with state-run federal programs, and (3) offers observations
on H.R. 1599.

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

 REPORTNUM:  T-AIMD/GGD-99-221
     TITLE:  Year 2000 Computing Challenge: Delivery of Key Benefits
	     Hinges on States' Achieving Compliance
      DATE:  06/23/1999
   SUBJECT:  State-administered programs
	     Systems conversions
	     Y2K
	     Computer software verification and validation
	     Strategic information systems planning
	     Information resources management
	     Federal/state relations
IDENTIFIER:  Y2K

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a299221T GAO United States General Accounting Office

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

For Release on Delivery Expected at 10 a. m. Wednesday, June 23,
1999

YEAR 2000 COMPUTING CHALLENGE Delivery of Key Benefits Hinges on
States' Achieving Compliance Statement of Joel C. Willemssen
Director, Civil Agencies Information Systems Accounting and
Information Management Division

GAO/ T- AIMD/ GGD- 99- 221

Page 1 GAO/ T- AIMD/ GGD- 99- 221

Mr. Chairman and Members of the Subcommittee: Thank you for
inviting us to participate in today's hearing on the Year 2000
challenge facing state and local governments and on H. R. 1599, a
bill that would authorize state and local governments to purchase
information technology through the federal government to address
the Year 2000

problem. Just as the federal government faces significant Year
2000 risks, so too do state and local governments. If the Year
2000 problem is not properly addressed, for example, (1) food
stamps and other types of payments may not be made or could be
made for incorrect amounts, (2) date- dependent signal timing
patterns could be incorrectly

implemented at highway intersections, with safety severely
compromised, and (3) prisoner release or parole eligibility
determinations may be adversely affected. As requested, today I
will (1) highlight the reported Year 2000 readiness of state and
local governments and actions taken by the President's Council on
Year 2000 Conversion 1 in this area, (2) discuss the readiness and
federal activities associated with state- administered federal
programs, and (3) offer our observations on H. R. 1599, the Year
2000 Compliance

Assistance Act. Year 2000 Risks of State and Local Governments

Available information on the Year 2000 readiness of state and
local governments indicates that much work remains. The successful
completion of the Year 2000 efforts of these governments is
essential, since

they perform critical functions in areas such as public safety and
benefits payments. According to information on state Year 2000
activities reported to the

National Association of State Information Resource Executives as
of 1 The President tasked the Chair of the President's Council on
Year 2000 Conversion with (1) overseeing the activities of
agencies, (2) acting as chief spokesperson in national and
international forums, (3) providing policy coordination of
executive branch activities with state, local, and tribal

governments, and (4) promoting appropriate federal roles with
respect to private- sector activities.

Let t er

Page 2 GAO/ T- AIMD/ GGD- 99- 221

June 17, 1999, 2 states 3 reported having thousands of mission-
critical systems. 4 With respect to completing the implementation
phase for these systems,  5 states 5 reported that they had
completed between 25 and 49 percent,

 13 states 6 reported completing between 50 and 74 percent, and
30 states 7 reported completing 75 percent or more. 8 All of the
states responding to the National Association of State

Information Resource Executives survey reported that they are
actively engaged in internal and external contingency planning and
that they had established target dates for the completion of these
plans; 14 (28 percent) reported the deadline as October 1999 or
later.

State audit organizations have also identified significant Year
2000 concerns. In January 1999, the National State Auditors
Association reported on the results of its mid- 1998 survey of
Year2000 compliance among states. 9 This report stated that for
the 12 state audit organizations

that provided Year 2000- related reports, concerns had been raised
in areas such as planning, testing, embedded systems, business
continuity and contingency planning, and the adequacy of resources
to address the problem.

2 Individual states submit periodic updates to the National
Association of State Information Resource Executives. For the June
17 report, over half of the states submitted their data in May and
June 1999. The oldest data were provided on March 4 and the most
recent data on June 16. All but three states responded to the
survey.

3 In the context of the National Association of State Information
Resource Executives survey, the term states includes the District
of Columbia, Guam, and Puerto Rico. 4 The National Association of
State Information Resource Executives defined mission- critical
systems as those that a state had identified as priorities for
prompt remediation. 5 Three states reported on their mission-
critical systems, one state reported on its processes, and one
reported on its functions. 6 Eleven states reported on their
mission- critical systems, one reported on all systems, and one
reported on projects. 7 Twenty- five states reported on their
mission- critical systems, two states reported on their
applications, one reported on its priority business activities,
one reported on its critical compliance units, and

one reported on all systems. 8 Of the states that responded to the
survey, two did not respond to this question. 9 Year 2000: State
Compliance Efforts (National State Auditors Association, January
1999). Let t er

Page 3 GAO/ T- AIMD/ GGD- 99- 221

We identified additional products by 14 state- level audit
organizations and Guam that discussed the Year 2000 problem and
that had been issued since October 1, 1998. Several of these
state- level audit organizations noted that progress had been
made. However, the audit organizations also expressed concerns
that were consistent with those reported by the National State
Auditors Association. For example:

 In December 1998 the Vermont State Auditor reported 10 that the
state Chief Information Officer did not have a comprehensive
control list of the state's information technology systems.
Accordingly, the audit office stated that, even if all mission-
critical state systems were checked, these systems could be
endangered by information technology components

that had not been checked or by linkages with the state's external
electronic partners.  In April 1999, New York's Division of
Management Audit and State

Financial Services reported that state agencies did not adequately
control the critical process of testing remediated systems. 11
Further, most agencies were in the early stages of addressing
potential problems related to data exchanges and embedded systems
and none had completed substantive work on contingency planning.
The New York audit office subsequently issued seven reports on 13
of the state's mission- critical and high- priority systems that
included concerns about contingency planning and testing.

 In February 1999, the California State Auditor reported 12 that
key agencies responsible for emergency services, corrections, and
water resources, among other areas, had not fully addressed
embedded technology- related threats. Regarding emergency
services, the California report stated that if remediation of the
embedded technology in its networks were not completed, the Office
of Emergency Services might have to rely on cumbersome manual
processes, significantly

increasing response time to disasters. 10 Vermont State Auditor's
Report on State Government's Year 2000 Preparedness (Y2K
Compliance) for the Period Ending November 1, 1998 (Office of the
State Auditor, December 31, 1998). 11 New York's Preparation for
the Year 2000: A Second Look (Office of the State Comptroller,
Division of Management Audit and State Financial Services, Report
98- S- 21, April 5, 1999).

12 Year 2000 Computer Problem: The State's Agencies Are
Progressing Toward Compliance but Key Steps Remain Incomplete
(California State Auditor, February 18, 1999).

Page 4 GAO/ T- AIMD/ GGD- 99- 221

 In March 1999, Oregon's Audits Division reported 13 that 11 of
the 12 state agencies reviewed did not have business continuity
plans addressing potential Year 2000 problems for their core
business functions.

 In March 1999, North Carolina's State Auditor reported 14 that
resource restrictions had limited the state's Year 2000 Project
Office's ability to verify data reported by state agencies. It is
also critical that local government systems be ready for the
change of century since critical functions involving, for example,
public safety and traffic management, are performed at the local
level. Recent reports on local governments have highlighted Year
2000 concerns. For example:  The National League of Cities
conducted a poll during its annual conference in March 1999 that
included over 400 responses. The poll found that (1) 340
respondents stated that over 75 percent of their cities' critical
systems would be Year 2000 compliant by January 1, 2000, (2) 35
stated that 51 to 75 percent would be compliant, (3) 16 stated
that 25 to 50 percent would be compliant, and (4) 16 stated that
less than 25 percent would be compliant. Moreover, 34 percent of
respondents

had contingency plans, 46 percent stated that they were in the
process of developing plans, 12 percent stated that plans would be
developed, and 8 percent said they did not intend to develop
contingency plans.  In January 1999, the United States Conference
of Mayors reported on the results of its survey of 220 cities. It
found that (1) 97 percent had citywide plans to address Year 2000
issues, (2) 22 percent had repaired or replaced less than half of
their systems, and (3) 45 percent had completed less than half of
their testing. The National Association of Counties has announced
that it plans to release later today the results of its latest
survey of 500 counties, which should provide additional
information on the readiness of local governments.

Of critical importance to the nation are services essential to the
safety and well- being of individuals across the country, namely
9- 1- 1 systems and law enforcement. For the most part,
responsibility for ensuring continuity of 13 Department of
Administrative Services Year 2000 Statewide Project Office Review
(Secretary of State, Audits Division, State of Oregon Report No.
99- 05, March 16, 1999). 14 Department of Commerce, Information
Technology Services Year 2000 Project Office (Office of the State
Auditor, State of North Carolina, March 18, 1999).

Page 5 GAO/ T- AIMD/ GGD- 99- 221

service for 9- 1- 1 calls and law enforcement resides with
thousands of state and local jurisdictions. On April 29, we
testified that not enough was known about the status of either 9-
1- 1 systems or of state and local law

enforcement activities to conclude about either's ability during
the transition to the year 2000 to meet the public safety and
well- being needs of local communities across the nation. 15 While
the federal government planned additional actions to determine the
status of these areas, we stated that the President's Council on
Year 2000 Conversion should use such

information to identify specific risks and develop appropriate
strategies and contingency plans to respond to those risks.
Recognizing the seriousness of the Year 2000 risks facing state
and local governments, the President's Council on Year 2000
Conversion has developed initiatives to address the Year 2000
readiness of state and local governments. For example:  The
Council established working groups on state and local governments
and tribal governments.  Officials from the Council participate in
monthly multistate conference

calls.  In July 1998 and March 1999, the Council partnered with
the National

Governors' Association to convene Year 2000 summits with state and
U. S. territory Year 2000 coordinators.  On May 24, the Council
announced a nationwide campaign to promote Y2K Community
Conversations to support and encourage efforts of government
officials, business leaders, and interested citizens to share
information on their progress. To support this initiative, the
Council has developed and is distributing a toolkit that provides
examples of which sectors should be represented in these events
and the issues that should

be addressed. State- Administered Federal Human Services Programs Are at Risk Among the critical functions performed by states are the administration of federal human services programs. As we reported in November 1998, many systems that support state- administered federal human services programs were at risk and much work remained to ensure that services would continue. 16 In February of this year, we testified that while some progress 15 Year 2000 Computing Challenge: Status of Emergency and State and Local Law Enforcement Systems Is Still Unknown (

GAO/T-AIMD-99-163
, April 29, 1999). 16 Year 2000 Computing Crisis: Readiness of State Automated Systems to Support Federal Welfare Programs (GAO/ AIMD- 99- 28, November 6, 1998).
be addressed. State- Administered Federal Human Services Programs
Are at Risk Among the critical functions performed by states are
the administration of federal human services programs. As we
reported in November 1998, many systems that support state-
administered federal human services programs were at risk and much
work remained to ensure that services would continue. 16 In
February of this year, we testified that while some progress 15
Year 2000 Computing Challenge: Status of Emergency and State and
Local Law Enforcement Systems Is Still Unknown (  GAO/T-AIMD-99-
163 , April 29, 1999). 16 Year 2000 Computing Crisis: Readiness of
State Automated Systems to Support Federal Welfare Programs
(GAO/AIMD-99-28, November 6, 1998).

Page 6 GAO/ T- AIMD/ GGD- 99- 221

had been achieved, many states' systems were not scheduled to
become compliant until the last half of 1999. 17 Accordingly, we
concluded that given these risks, business continuity and
contingency planning was even more

important in ensuring continuity of program operations and
benefits in the event of systems failures. Subsequent to our
November 1998 report, the Office of Management and Budget (OMB)
directed federal oversight agencies to include the status of
selected state human services systems in their quarterly reports.
Specifically, in January 1999, OMB requested that the agencies
describe actions to help ensure that federally supported, state-
run programs will be able to provide services and benefits. OMB
further asked that agencies report the date when each state's
systems will be Year 2000 compliant. Tables 1 and 2 summarize the
information gathered by the Departments of Agriculture and Health
and Human Services, respectively, on the compliance status of
state- level organizations. The information indicates that a
number of states do not plan to complete their Year 2000 efforts
until

the last quarter of 1999.

Table 1: Reported State- Level Readiness for Federally Supported
Programs Department of Agriculture, May 1999

a Unknown indicates the state did not provide a date or the date
was unknown. Note: This table contains readiness information from
the 50 states, the District of Columbia, Guam, Puerto Rico, and
the Virgin Islands.

Source: Department of Agriculture.

17 Year 2000 Computing Crisis: Readiness of State Automated
Systems That Support Federal Human Services Programs (GAO/T-AIMD-
99-91, February 24, 1999). Program Compliant Apr. June JulySept.

Oct. Dec. Unknown a

Food Stamps 25 12 14 3 0 Child Nutrition 29 9 10 4 2 Women,
Infants, and Children 33 11 7 3 0

Page 7 GAO/ T- AIMD/ GGD- 99- 221

Table 2: Reported State- Level Readiness for Federally Supported
Programs Department of Health and Human Services, January 1999

a In many cases, the report indicated a date instead of whether
the state was compliant. We assumed that states reporting
completion dates in 1998 or earlier were compliant. b Unknown
indicates that according to OMB, the data reported by the states
were unclear or that no information was reported by the agency. c
N/ A indicates that the states or territories reported that the
data requested were not applicable to them. Note: This table
contains readiness information from the 50 states, the District of
Columbia, Guam, Puerto Rico, and the Virgin Islands.

Source: Progress on Year 2000 Conversion: 9th Quarterly Report
(OMB, issued on June 15, 1999).

In addition, in June 1999, OMB reported that as of March 31, 1999,
27 states' unemployment insurance systems were compliant, 11
planned to be completed between April and June 1999, 10 planned to
be completed between July and September, and 5 planned to be
completed between October and December. Agencies Are Addressing
Year 2000 Issues of State- Administered

Programs On March 26, 1999, OMB issued a memorandum to federal
agencies designating lead agencies for the government's 42 high-
impact programs. (OMB later added a 43rd high- impact program.)
About a quarter of the federal government's programs designated as
high impact by OMB are

state- administered, such as Food Stamps and Temporary Assistance
for Needy Families.

Program Compliant a Jan. Mar. Apr. June

JulySept. Oct. Dec.

Unknown b N/ A c

Child Care 24 5 5 8 2 6 4 Child Support Enforcement 15 4 13 8 8 6
0

Child Welfare 20 5 9 11 3 5 1 Low Income Housing Energy Assistance
Program 10 0 3 7 1 32 1

Medicaid  Integrated Eligibility System 20 0 15 15 4 0 0

Medicaid  Management Information System 17 0 19 14 4 0 0 Temporary
Assistance for Needy Families 19 3 12 15 1 4 0

Page 8 GAO/ T- AIMD/ GGD- 99- 221

For each program, the lead agency was charged with identifying to
OMB the partners integral to program delivery; taking a leadership
role in convening those partners; assuring that each partner has
an adequate Year

2000 plan and, if not, helping each partner without one; and
developing a plan to ensure that the program will operate
effectively. According to OMB, such a plan might include testing
data exchanges across partners, developing complementary business
continuity and contingency plans, sharing key information on
readiness with other partners and the public, and taking other
steps necessary to ensure that the program will work. OMB directed
the lead agencies to provide a schedule and milestones of key
activities in the plan by April 15. OMB also asked agencies to
provide monthly progress reports. In response to the March
memorandum regarding the high- impact programs, the Departments of
Agriculture, Health and Human Services, and Labor reported on
various actions that they are taking or plan to take to help
ensure the Year 2000 compliance of their state- administered
programs. For example:  The Department of Agriculture reported in
May 1999 that its Food and Nutrition Service requested that states
provide their contingency plans and had contracted for technical
support services to review these plans, as needed, and to assist
in its oversight of other state Year 2000

activities.  The Department of Health and Human Services reported
that its Administration for Children and Families and Health Care
Financing

Administration had contracted for on- site assessments of state
partners, which will include reviews of business continuity and
contingency plans.  The Department of Labor reported that states
are required to submit a certification of Year 2000 compliance for
their benefit and tax systems

along with an independent verification and validation report. In
addition, Labor required that state agencies prepare business
continuity and contingency plans, which will be reviewed by Labor
officials. Further, the department plans to design and develop a
prototype PC- based system to be used in the event that a state's
unemployment insurance system is unusable due to a Year 2000-
induced problem. An example of the benefits that federal/ state
partnerships can provide is illustrated by the Department of
Labor's unemployment services program. In September 1998, we
reported that many State Employment Security Agencies were at risk
of failure as early as January 1999 and urged the

Page 9 GAO/ T- AIMD/ GGD- 99- 221

Department of Labor to initiate the development of realistic
contingency plans to ensure continuity of core business processes
in the event of Year 2000- induced failures. 18 Just last month,
we testified that four state

agencies systems could have failed if systems in those states had
not been programmed with an emergency patch in December 1998. This
patch was developed by several of the state agencies and promoted
to other state agencies by the Department of Labor. 19 The
important services that state and local governments provide to the
nation's citizens warrant actions such as these to help states
ensure that critical human services will be successfully
transitioned to the next century. Indeed, additional actions may
be needed to provide further assurance that disruptions will be
minimized.

Observations on H. R. 1599, the Year 2000 Compliance Assistance
Act

To provide an additional option to state and local governments in
their Year 2000 efforts, on April 28 1999, Congressman Thomas M.
Davis introduced H. R. 1599, the Year 2000 Compliance Assistance
Act. This bill, if enacted, would amend the Federal Property and
Administrative Services Act of 1949 to authorize state and local
governments to purchase information technology related to Year
2000 conversion through specific federal supply schedules. In
particular, it states that  the General Services Administration
(GSA) may allow state and local

governments to use federal supply schedules for automated data
processing equipment (including firmware), software, supplies,
support equipment, and services (as contained in federal supply
classification code group 70) related to the Year 2000 computer
conversion;  participation by firms that sell through the federal
supply schedule shall

be voluntary with respect to a sale to the state or local
governments; and  the authority provided would expire on December
31, 2002.

Cooperative Purchasing Previously Authorized, Suspended, and
Repealed GSA's Federal Supply Service negotiates and awards
contracts for

information technology products and services as well as other
goods and services available through the federal supply schedules.
Federal agencies 18 Year 2000 Computing Crisis: Progress Made at
Department of Labor, But Key Systems at Risk (GAO/T-AIMD-98-303,
September 17, 1998). 19 Year 2000 Computing Challenge: Labor Has
Progressed But Selected Systems Remain at Risk (GAO/T-AIMD-99-179,
May 12, 1999).

Page 10 GAO/ T- AIMD/ GGD- 99- 221

order products and services directly from vendors on a schedule
and pay the vendors directly. In fiscal year 1998, there were
about 140 federal supply schedules and sales totaled $8.1 billion.
GSA reported that about three- quarters of the contracts awarded
under the program were to small businesses.

Under the cooperative purchasing program authorized by section
1555 of the Federal Acquisition Streamlining Act of 1994, the
Administrator of GSA was permitted to allow state and local
governments, the government of the Commonwealth of Puerto Rico,
and Indian tribal governments to purchase items available through
federal supply schedules. Participation by vendors was to be
voluntary. Subsequent concerns were raised about the purchasing
program from several industries that because of either their
market structure or other factors, they would be subject to
adverse effects from cooperative purchasing. As a result, in 1996
the Congress suspended GSA's authority for this program. The
Congress also required that we assess the effects cooperative
purchasing may have on state, local, tribal, Puerto Rican, and
federal governments and on industry, including small businesses
and local dealers. Our subsequent February 1997 report 20 found
the following.

 Cooperative purchasing would not be likely to adversely affect
the federal government if GSA would exclude schedules from the
program when adverse effects are indicated. At that time,
information technology services were not available on the
schedule. Today, both information technology goods and services
are available. Whether cooperative

purchasing would have positive effects on the federal government
depends largely on whether increased use of the schedules by state
and local governments would lead to lower prices and reduced
administrative charges by GSA. It is unclear whether either of
these would occur.  The potential effects of the cooperative
purchasing program were likely

to vary among state, local, and the Puerto Rican governments. Some
of these governments may experience benefits such as cost savings
and a reduction in the time to procure items. However, several
factors such as state or local laws, ordinances, or policies that
direct how or where state or local purchases can be made could
limit the extent of these benefits.

20 Cooperative Purchasing: Effects Are Likely to Vary Among
Governments and Businesses (GAO/GGD-97-33, February 10, 1997).

Page 11 GAO/ T- AIMD/ GGD- 99- 221

 The potential effects of the cooperative purchasing program on
industry, including small businesses and dealers, were also likely
to vary, although sufficient data were not available to
conclusively predict these effects. Some businesses expected to
benefit from increased sales or reduced administrative costs,
while others expected to lose sales or have lower profits. Still
other businesses did not believe that they would be affected by
the program. Most of the concerns that businesses

expressed about significant adverse effects involved only a few
GSA schedules, such as fire- fighting vehicles, airline services,
and construction and highway maintenance equipment.

 Cooperative purchasings' effect on all parties also depends on
how GSA implements the program and, at the time of our review,
GSA's implementation plan was still evolving. Details such as
whether federal or state prompt payment provisions would apply and
controls against program abuse were uncertain. To address these
issues, we recommended that GSA develop a detailed implementation
plan, including how GSA intended to evaluate the program, so that
the

Congress and others would know how GSA intended the program to
work. GSA concurred with this recommendation. In late 1997, the
Congress repealed the part of the Federal Acquisition Streamlining
Act of 1994 which permitted GSA to allow state and local
governments to use the federal supply schedules. 21 However, in
certain cases, the Congress has allowed use of the schedules
program beyond

federal agencies. For example, in 1993, the Congress authorized
state and local law enforcement agencies involved in counter- drug
activities to use the schedules program. 22 Potential Benefits of
Allowing State and Local Governments to Use the Information
Technology Schedule

GSA's information technology schedule offers a variety of goods
and services that could prove helpful to state and local
governments, such as business continuity and contingency planning
services. As of June 18, 1999, GSA's schedule 70 (information
technology) listed 1,818 vendors, of which

291 were specifically designated as vendors who have millennium
conversion (Y2K) products and/ or services. According to GSA,
about 76 percent (220) of the vendors that provided Year 2000
products and services were small businesses. 21 Public Law 105-
61, October 10, 1997. 22 Public Law 103- 160, November 30, 1993.

Page 12 GAO/ T- AIMD/ GGD- 99- 221

Although state and local governments have in the past expressed
interest in having access to GSA's schedules the extent to which
they would use it is uncertain. Factors that could limit state and
local government use of the schedule include, in some instances,
lack of authority in their laws or ordinances, in- state or local
purchasing preferences, and possibly higher

prices on the schedule for some items. On the other hand, state
and local governments could benefit to the extent that they could
acquire needed information technology goods and services at lower
prices more quickly, and/ or with less administrative burden than
they otherwise could.

In particular, access to the information technology schedule would
provide states with an additional tool for obtaining essential
Year 2000- related products and services. Such tools may be
especially welcomed by states and localities that do not plan to
have essential programs Year 2000 compliant until the last quarter
of the year and are, therefore, at greater risk of service
disruption. Still, this bill would be most useful if implemented
expeditiously because of the limited time remaining until the
change of century. If implemented expeditiously, states could
still have time to use

the federal supply schedule to obtain help in areas such as the
development of business continuity and contingency plans. Another
consideration is the effect of opening the information technology
schedule on businesses. Those that would choose to participate
could benefit from increased market exposure and sales and lower
administrative costs to the extent that they would not have to
prepare separate bid proposals for state and local governments for
purchases through the schedule. This could also benefit the
federal government should participating vendors lower their prices
for the schedule items due to the

higher sales volume and lower administrative burden. The federal
government would also benefit from the 1 percent administrative
fee charged for schedule purchases to cover GSA's administrative
expenses.

On the other hand, some businesses that are not schedule vendors
that supply information technology goods and services to state and
local governments could lose some or all of this business to
schedule vendors. The extent that this would happen and the
effects it would have on the vendors are uncertain. However,
information technology firms were not included among the groups
that raised major concerns about the cooperative purchasing
program.

Page 13 GAO/ T- AIMD/ GGD- 99- 221

Notwithstanding the concerns raised by vendors, the Congress
should balance these issues against the extraordinary
circumstances facing the nation because of the Year 2000 problem.
The bill would provide state and local governments with an
additional option that could assist them in completing key Year
2000 tasks in time. Moreover, some of these concerns may be
reduced by the limited nature of the bill and because vendor and
state and local government participation would be voluntary. Some
concerns may also be reduced if GSA were to publish implementation
plans describing how the bill would be implemented, including a
provision for

monitoring the implementation so that any significant adverse
effects could be promptly identified and mitigated. In summary,
much work remains at the state and local levels to ensure that
major service disruptions do not occur. In particular, several
states do not plan to have their systems that support state-
administered federal

programs Year 2000 compliant until the last quarter of 1999.
Federal agencies are working with their state partners to obtain
readiness information and evaluate key activities such as business
continuity and contingency plans. Nevertheless, some state
completion dates are so close to the turn of the century that the
risk of disruption to their programs is substantially increased,
especially if schedule delays occur or if unexpected problems
arise. Accordingly, creative solutions such as allowing state and
local governments access to federal supply schedules for Year 2000
purposes, as called for by H. R. 1599, may well be warranted.

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

For information about this testimony, please contact Joel
Willemssen at (202) 512- 6253 or by e- mail at willemssenj. aimd@
gao. gov. For information regarding the federal supply schedules,
please contact Bernard L. Ungar at (202) 512- 4232 or by email at
ungarb. ggd@ gao. gov. Individuals making key contributions to
this testimony included Margaret Davis, Michael Fruitman, Linda
Lambert, Marcia McWreath, and Glenn Spiegel.

(511769) Let t er

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