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Addressing the year 2000 computer problem is a substantial challenge
to the Federal government. Overall, the Federal government continues to make
progress in addressing the year 2000 problem -- but the rate for some agencies
is still not fast enough. President Clinton has taken action to accelerate
agencies' efforts by discussing the issue with his Cabinet and
establishing a year 2000 conversion council of senior executives from key
As of May 15, 1998, Federal agencies identified 7,336
mission-critical systems. That number is 514 fewer than were reported in
February as senior Federal managers have reevaluated which systems are critical
to their organizations' missions and set priorities within their
organizations. Of those mission-critical systems, 40 percent are now year 2000
compliant (compared to 35 percent that were reported compliant in February), 42
percent are being repaired, 14 percent are being replaced, and 4 percent are
being retired. Of the systems being repaired, Federal agencies have completed
renovation of 55 percent of them and have fully implemented 27 percent.
Agencies now estimate they will spend $5.0 billion fixing the problem in
Federal systems. Through independent verification and validation efforts,
agencies are reducing the risk of failure of their mission critical systems
that are being fixed. They are also beginning to develop plans to assure
continuity of their functions in instances where system failures are possible.
The Federal agencies are coordinating their efforts and making
progress government-wide in such areas as buildings systems,
telecommunications, and bio-medical devices and laboratory equipment. In
addition, the agencies are proactively working with their data exchange
partners to coordinate work on assuring that year 2000 problems with exchanged
data are addressed on time.
Nine agencies are identified in the report as making adequate
progress on year 200; nine are identified as making progress, but with
concerns; and six are identified as not making adequate progress. OMB will ask
the 15 agencies that are either not making adequate progress or about which
there are concerns to provide their monthly schedule for completion of year
2000 repairs for all mission critical systems. Agencies will update their
status against that schedule each month. Also, for the six agencies not making
adequate progress, the Chair of the Year 2000 Conversion Council will attend
each agency's monthly year 2000 briefings for senior agency officials in
order to assist these agencies in managing the problem.
Six agencies have identified systems that are either behind schedule
or that will miss the March 31, 1999 implementation deadline. OMB will ask
for more detailed information on the contingency plans for those systems, as
well as on the continuity of business planning for the organizations as a
OMB asked 41 small and independent agencies to report on their
progress for the first time this quarter. A brief summary of each agency that
reported is included in the report. OMB will ask 10 of those agencies to begin
to report their progress quarterly.
Progress on Year 2000 Conversion Report of
the U.S. Office of Management and Budget as of May 15, 1998
This report is the fifth in a series of quarterly summary reports to
Congress on the Administration's progress in fixing the year 2000 computer
problem ("Y2K") in Federal systems. It outlines the continuing work to avert
the problems that could occur if systems are not able to correctly process the
year 2000. This report summarizes information received from the 24 agencies
that serve on the Federal Chief Information Officers' (CIO) Council and
describes the status of government-wide activities underway. OMB sends these
reports to the Congress on or before the 15th of March, June, September, and
December. For this report, information on the status of selected small and
independent agencies has also been included. This report and all previous
reports are available on the Federal Chief Information Officers' home page
The Administration has taken several significant steps during the
last quarter. In addition to providing support to agencies as they work to fix
their own systems, the President's Council on Year 2000 Conversion, which
began operations in March and is chaired by John Koskinen, has initiated
efforts to increase awareness of the problem beyond the Federal Government.
Under the Council's direction, agencies are reaching out to private sector
organizations, State and local governments, and international institutions in
their policy areas and are participating on Council working groups to address
year 2000 activities in key infrastructure areas including energy,
telecommunications, and financial institutions. These working groups have met,
and will continue to meet, with industry representatives in these areas to
facilitate and coordinate information sharing on year 2000 progress and
possible solutions across business lines.
In addition, for this quarter, OMB collected information from
selected small and independent agencies on their year 2000 progress for this
report. A summary of the responses to those requests is included in this report
under the heading, "Status of Small and Independent Agencies." OMB will
continue to collect information from these agencies.
OMB's initial Y2K report, entitled "Getting Federal Computers
Ready for the Year 2000," was transmitted February 6, 1997. The report outlined
the Federal government's strategy to address the Y2K problem in its
systems, one that remains predicated on agency accountability. To assist in
that effort, OMB is requiring agencies to report quarterly on their progress on
the fifteenth of February, May, August, and November for each year until 2000.
This report summarizes the agencies' progress based on the agency reports sent
to OMB on May 15, 1998, and describes other actions being taken to assure
success. It also responds to requests for information contained in House Report
105-240 and Senate Report 105-49.
The Federal government's strategy is based on the five phases of
the best practices for addressing the problem: awareness, assessment,
renovation, validation, and implementation. Working with the CIO Council, OMB
has set government-wide milestones for the completion of work in each of the
phases.Agencies have established plans to complete the work in each
phase.The five phases overlap -- for example, validation of some
systems can begin while renovation of others continues.
II. SUMMARY OF GOVERNMENT-WIDE PROGRESS
This summary report shows that:
Virtually all agencies have adopted accelerated schedules for the
completion of their Y2K work. While three agencies' schedules (Energy,
HHS, and AID) are behind the government-wide milestones, several agencies'
schedules are in advance of these milestones (Justice, Treasury, OPM, SBA, GSA,
Agencies now identify 7,336 mission critical systems, which is
less than the 7,850 identified in the February report. This change results
principally because of senior management decisions that certain systems were
not mission critical and therefore are a lower priority.
Of the 7,336 mission critical systems, 2,913 (40 percent) are now
year 2000 compliant, compared to 35 percent in the previous report. This
includes systems repaired, replaced, and those that were already compliant.
Of the 7,336 mission critical systems, 3,117 (42 percent ) are
still being repaired; 1,020 (14 percent) are still being replaced; and 286 (4
percent) will be retired.
Of those systems that have been or will be repaired, the
government-wide average for completion of renovation is 55 percent, while
validation is 32 percent complete and implementation is 27 percent complete.
Agencies now estimate they will spend $5.0 billion fixing the
problem from fiscal year 1996 through fiscal year 2000, a slight increase from
$4.7 billion in the previous report. At this time, we believe the increased
costs for fiscal year 1999 can be met within existing agency requests. These
estimates cover the costs of identifying necessary changes, evaluating the cost
effectiveness of making those changes (fix or scrap decisions), making changes,
testing systems, and preparing contingencies for failure recovery. They include
the costs for fixing both mission critical and non-mission critical systems, as
well non-information technology products and systems such as air conditioning
and heating. They do not include the costs of upgrades or replacements that
would otherwise occur as part of the normal systems life cycle. They also do
not include the Federal share of the costs for state information systems that
support Federal programs. In the event that additional year 2000 requirements
are identified, the President's FY 1999 Budget contained an allowance to
pay for emergencies, including unforseen Defense and non-Defense costs, natural
disasters, and unanticipated, non-emergency expenses of the year 2000
conversion. OMB expects that future quarterly reports will continue to refine
cost estimates as agencies gain more experience about how much it costs to
renovate, validate, and implement their systems.
These figures do not include the information reported by the small
and independent agencies. A summary of the status of these agencies is provided
in the table in the section entitled, "Status of Small and Independent
Evaluation of Progress
Overall, the Federal government continues to make progress in
addressing the year 2000 problem -- but the rate for some agencies is still not
fast enough. OMB has categorized agencies into one of three tiers based on
evidence of progress in their reports. Tier 1 comprises agencies where there is
insufficient evidence of adequate progress. For agencies in Tier 2, OMB sees
evidence of progress, but also has concerns. The remaining nine agencies in
Tier 3 are making satisfactory progress.
Although 71 percent of the systems in Tier 3 are compliant, only 31
percent of the systems of the Tier 1 agencies are compliant. It is critical
that those agencies most at risk devote more management attention to the
problem in order to ensure that solving the year 2000 problem is the
agency's highest information technology priority. The following table
provides detail on the progress of the agencies by tier.
Government-wide Summary -- Year 2000 Status
* "Y2K Compliant" means that the system will
accurately process data through the century change. "Renovation complete" means
that necessary changes to a system's databases and/or software have been
made. "Implementation Complete" means that the system has been tested for
compliance and has been integrated into the system environment where the agency
performs its routine information processing activities. For more information on
definitions, see GAO/AIMD-10.1.14, "Year 2000 Computing Crisis: An Assessment
Guide," September 1997, available at http://cio.gov under Year 2000 Documents.
To improve on this progress, the Administration is taking several
additional steps. First, the Chair of the President's Council on Year 2000
Conversion will attend the monthly briefings for the senior management of all
Tier 1 Cabinet agencies in order to assist these agencies in managing the
problem. Second, all agencies that are rated as Tier 1 or Tier 2 will be
required to provide to OMB their monthly benchmarks for renovation, validation,
and implementation of systems necessary to meet the government-wide milestones.
These agencies will also be asked to provide to OMB a monthly chart reporting
on their progress against these benchmarks. The first monthly reports will be
due to OMB on Friday, June 26. Updates will be due August 1 and the first of
each month thereafter. OMB's next quarterly report will provide summary
information based on those progress reports. Third, OMB will require agencies
to provide more detailed information on contingency planning for those systems
that are expected to miss the March 1999 deadline for implementation, as well
as on their continuity of business plans as a whole.
III. GOVERNMENT-WIDE ISSUES
In January 1998, OMB and the CIO Council set accelerated
government-wide goals for the completion of renovation, validation, and
implementation. The goals are completion of renovation by September 1998,
completion of validation by January 1999, and completion of implementation by
March 1999. Four agencies, the Departments of Transportation, Justice,
Health and Human Services, and Treasury, report that they have not completed
their assessments. The Department of Energy reported that it will complete
validation by February 1999, but plans to complete implementation on schedule.
All other agencies' schedules are consistent with the government-wide
goals. Seven Departments (the Departments of Agriculture, Defense, Health and
Human Services, Interior, Transportation, Treasury, and State) report they have
systems that will not be implemented by March 31, 1999, or systems that are
behind schedule. These Departments also described the steps they are taking to
develop contingency plans. A discussion of systems is included at the end of
Many products or systems, such as diagnostic equipment, security
systems, elevators, or heating and air conditioning systems, contain embedded
chips. Frequently, these chips include a date function that helps run the
system -- for example, to time maintenance procedures or to regulate
temperature. If this date function is not year 2000 compliant, then the chip
may not work. Although all agencies indicated that they are making progress in
this area, and many are fixing such products, others still need to complete
their assessments. In areas where affected products are widely used, OMB has
established government-wide working groups. (More information is provided under
All agencies indicated that they have begun their assessments of
their telecommunications systems. Many indicated that they are making progress
on ensuring that their telecommunications systems will be ready for the year
2000. In most cases, agencies must work with vendors to receive system upgrades
and are somewhat dependent on these vendors in terms of timing. GSA also chairs
a working group that is working with vendors government-wide to ensure
readiness. (More information is provided under "Government-wide Areas.")
All agencies reported that they completed or nearly completed their
assessments of non-mission critical systems. By definition, such systems are
less critical to the functioning of the agencies, but many are still important.
All of the agencies reported they have an active program to fix these systems,
albeit as a lower priority.
Independent Verification and Validation (IV&V)
Because the year 2000 problem is so widespread, it is unlikely that
immediate assistance will be available to organizations if they have a problem
in January 2000. Therefore, it is essential that managers take every action
possible now to identify and fix any problems that could occur, particularly as
they may affect mission critical systems. Independent validation and
verification assists senior management by providing a double-check that their
mission critical systems will be ready. All large agencies have independent
verification programs underway for that reason. These activities are paying off
as some agency systems, which were considered compliant, have been found not to
be, allowing sufficient time for management to take action.
It is essential that accurate information be reported to senior
management in a timely manner, so that they can take appropriate action. Agency
Inspectors General have been helpful to senior management in this regard as
well. They have, for example, taken an active role in verifying the accuracy of
reports to senior agency management and reports to OMB and the Congress.
Business Contingency Planning
Overall, the agencies need to focus more attention on contingency
planning for systems that are at risk of not meeting the March 1999 deadline
for implementation. In addition, all agencies, regardless of the status of
their systems, should be developing continuity of business plans. Such plans
should address, in addition to an agency's internal systems, implications
of the year 2000 problem that are outside of the agency's control, such as
the inability of suppliers to provide products to the agency or the loss of
critical infrastructure. These continuity of business plans will be a primary
activity in Federal agencies between now and the year 2000. Most Federal
agencies are just beginning to prepare them. To assist in this effort, the CIO
Council's Year 2000 Committee, working with the General Accounting Office,
is developing guidance on such planning. The Social Security Administration
recently completed its plan. That plan was circulated to the other Federal
agencies as a model and will be reflected in the CIO Council's guidance.
Data Exchanges with States and Other Partners
Federal agencies exchange data with each other; with foreign, State,
and local governments; and with private entities. Of particular importance are
data exchanges with the States, because States operate many important Federal
programs. To help assure that these exchanges are Y2K compliant, the CIO
Council is working with the National Association of State Information Resource
Executives (NASIRE) to specifically focus on the exchanges between the Federal
government and State governments. All agencies have inventoried their data
exchanges and initiated discussions with their data exchange partners regarding
both the format of their data exchanges and the timing of making fixes to the
In addition, on May 19, 1998, OMB issued instructions to the agencies
on reporting the status of their year 2000 fixes to their data exchanges with
the States. The General Services Administration (GSA) will provide a format to
Federal agencies for them to provide an electronic report on the status of data
exchanges. The status of each data exchange will be broken down by State and
must be shown as one of four categories: (1) compliant and successfully tested
by both parties; (2) successfully bridged with both parties concurring in the
format; (3) Federal side ready but not yet tested; and, (4) not yet compliant
or testing still in progress. In July, agencies will provide their first
submissions of this information to GSA. This information will be updated on a
Other Government-wide Areas
OMB has identified and is working on three government-wide areas
where the Y2K problem occurs in other than computer systems:
telecommunications; bio-medical devices and laboratory equipment; and
buildings. In these areas, the problem occurs in commercial products that rely
on computers or have computer chips inside them; the problem needs to be fixed
by the manufacturers of those products. OMB has established interagency working
groups, each chaired by a key program agency, to raise awareness and to work
with manufacturers to assure that products are fixed. Each group is contacting
vendors on behalf of the entire Federal government, performing tests to verify
compliance, and sharing information through electronic databases.
The Telecommunications Working Group
Government, like the private sector, is reliant upon commercial
vendors and the information they supply to address the compliance of their
telecommunications systems. GSA owns, manages, or resells consolidated
telecommunications services to Federal agencies throughout the United States.
The Telecommunications Working Group is chaired by the Federal
Telecommunications Service (FTS) of the GSA.
The Telecommunications Working Group is working with industry to
ensure that the telecommunications services and systems provided to the Federal
government are year 2000 compliant. As vendors continually evaluate the year
2000 status of products, agency year 2000 plans, schedules, budgets, and
deadlines continue to evolve. Through special interest groups for testing
telecommunications equipment, the Working Group is learning more about
compliant and non-compliant telecommunications products. Inventory data has
been added to a government-wide database of agency information. This database
is available for vendors to post the status of their products at
http://y2k.fts.gsa.gov. The Working Group has been leading discussions with
vendors and has received positive responses from the major telecommunication
providers and manufacturers. The Working Group is also investigating how the
Federal government can participate in testing of certain critical systems.
GSA is using a two-fold approach to ensuring that the Federal
government's local telecommunications services will be year 2000
compliant. First, as a reseller of service using Government wide-owned Private
Branch Exchange (PBX) equipment, GSA has direct control over the equipment. At
this point, testing has shown that 90 percent of the PBXs owned by GSA are
already compliant. For the remaining 10 percent, manufacturers have indicated
that they will provide upgrade solutions. Second, as a reseller of service
using Central Exchange (CENTREX) service obtained from Local Exchange Carriers
(LECs), GSA has limited authority or leverage over the internal networks of
these carriers. Currently, there are 247 CENTREX systems which are wholly
owned, managed, and maintained by LECs, but which sell service to the Federal
government. The Federal government has designated GSA regional points of
contact and instructed them to contact their respective LEC service providers
and request information on the year 2000 status for the CENTREX service they
receive. This information will then be provided to other Federal agency users.
The Biomedical and Laboratory Equipment Working Group
The Biomedical Equipment Working Group is chaired by the Department
of Health and Human Services. On January 21, 1998, the HHS Deputy Secretary
wrote to over 16,000 manufacturers of biomedical devices and laboratory
equipment, asking them to verify the compliance of their products. Responses
were due to the Food and Drug Administration (FDA) on March 23, 1998. As of May
1, the FDA had received approximately 1,600 responses. Many of these responses
were from companies that manufacture no electronic equipment and for which
developing a response was easy. The information received is being posted to a
public web site at http://www.fda.gov/cdrh/yr2000. The FDA must aggressively
pursue responses from the remaining equipment manufacturers.
The web site contains information about products that are compliant
as well as information about products that are not. For those that are not
compliant, it also provides detailed information as to how it is not compliant,
and most importantly, the solutions that the manufacturer will offer to
mitigate the problem, such as software updates, along with the date on which a
compliant product will be available.
The overall response has been limited, indicating a possible lack of
awareness or even denial of the problem in this industry. On the other hand,
those who have responded have thanked the Working Group for providing them with
an easy way to publicize the compliance of their products. In fact, the request
for web site posting of product year 2000 compliance status is designed to
provide an opportunity for manufacturers to communicate and better serve
customers in a responsible and proactive manner and to avoid the necessity for
manufacturers and vendors to field numerous calls and letters from individual
organizations. The Working Group hopes that the web site will be useful to
hospitals, doctors, government health facilities, as well as patients.
The FDA is planning to conduct follow-up with the manufacturers of
medical devices containing microprocessors. The follow-up to manufacturers by
FDA will be targeted toward the manufacturers of medical devices which are the
most critical and the most likely to have year 2000 date related problems. The
FDA also plans to conduct outreach to both manufacturers and the health care
industry through speeches, contact with the professional associations, and the
placement of articles in prominent medical and medical equipment-related
journals. The first two articles, which appear in the FDA Medical
Bulletin and the Journal of the American Medical
Association, appeared on June 1 and June 3 respectively. The FDA
will also publish a Federal Register notice elaborating on the FDA's
expectations of medical device manufacturers
under current laws and regulations. Publication of this notice is
expected by July 1.
Buildings Systems Working Group
The Building Systems Working Group of the CIO Council is chaired by
the Public Buildings Service at GSA. Their charge is to ensure that building
system equipment containing embedded microchips and software is year 2000
The Working Group has surveyed approximately 60 percent of its
building inventory and identified equipment considered susceptible to year 2000
issues. Vendors and manufacturers of this equipment are being contacted to
determine the compliance/non-compliance of the equipment and to determine any
necessary remedial action. GSA has established a website
(http://y2k.lmi.org/gsa/y2kproducts) that provides all year 2000
compliance/non-compliance information for building systems products that has
been gathered thus far. While there are now over 6000 products listed on this
site, only 5 percent of all products are identified as non-compliant. The list
of non-compliant items includes items which will experience nuisance problems
(e.g., print reports dated "1900" rather than "2000" but will not experience
operational degradation. All building systems in Federal buildings considered
at risk are being evaluated. At this juncture, elevators are somewhat less of a
concern while security/access systems are coming under closer scrutiny.
All lessors that provide GSA space were sent letters between February
and April that describe potential problems associated with building systems
containing embedded microchips and requested that they certify their space as
year 2000 compliant. Response rates varied greatly by region, although the
typical response rate was between 50 and 70 percent. The Working Group is using
the Logistics Management Institute (LMI) to follow-up with non-responsive
lessors. LMI follow-up includes offers to help lessors determine compliance of
their major building systems and equipment. For lessors that fail to respond to
both of these letters, a risk assessment will be made for each location and a
more stringent approach may be implemented if warranted (e.g., inspect leased
locations to determine year 2000 compliance of major components/systems).
Additionally, for all new leased space, a year 2000 clause was developed for
inclusion in all Solicitations For Offers.
Finally, another website is currently under construction which will
allow personnel from Federal agencies to determine the year 2000 compliance
status of Federally owned and leased facilities. This site will be for Federal
government use only.
IV. AGENCY SPECIFIC PROGRESS
While many agencies appear to be making good progress in addressing
this problem, some are not. In evaluating agency progress, OMB used the same
basic criteria as in previous reports. For this report, the detailed criteria
Status of agency assessment -- Has the agency completed its
assessment of mission critical and non-mission critical systems? Has the agency
completed its assessment of non-IT systems, including embedded chips? Has the
agency completed its inventory of data exchanges with outside entities?
Measurable improvement -- Is there measurable and adequate
progress on renovation, validation, and implementation of computer systems,
including its data exchanges? Is there progress on addressing other systems,
including telecommunications systems and embedded chips?
Schedule for completion of the phases of best practices and
overall prognosis -- Has the agency adopted a realistic schedule that is
consistent with the government-wide goals? Has there been a change in the
number of mission critical systems that are expected to miss the March 1999
implementation date? Does the agency have a strong management team and a
credible strategy in place?
Risk management -- Is the agency preparing a workable continuity
of business plan for its core business functions? Does the agency have a
deadline for when plans must be complete? Does the agency have an effective
independent validation and verification program in place? Is there adequate
oversight of efforts to replace non-compliant systems? Are systems previously
reported behind being brought back on schedule?
Dramatic changes in previously reported information or other
indications of concern -- Have there been dramatic changes in cost, schedule,
changes to the number of systems, or changes to the number of systems behind
schedule? Are there any concerns with the availability of key personnel?
Tier One comprises agencies where there is insufficient evidence of
adequate progress. The six agencies in the first tier are:
Department of Defense
The Department has a massive year 2000 challenge which must be
accomplished on a tight schedule. Since its February report, progress has
slowed. The percentage of compliant mission critical systems has only increased
from 24 percent to 29 percent, the percentage of mission critical systems being
renovated has only increased from 53 percent to 58 percent, while the
percentage of mission critical systems that has completed implementation has
increased from 9 percent to 17 percent. At this pace, the Department will not
meet its goals and complete its work on time. To accelerate its work, the
Department has streamlined and strengthened its oversight mechanisms, including
establishing an executive program office. The Department is now treating the
year 2000 problem as a high-priority national security operations and readiness
issue, and the Deputy Secretary is regularly briefed on the Department's
progress. Overall, the Department has implemented a coordinated management
program and appears poised for improvement despite a slower rate of progress in
the last quarter.
Department of Education
The Department of Education has continued to make progress in
addressing its year 2000 problem. It has significantly increased staff
resources committed to this task, has finalized its year 2000 work plan, and
has accelerated schedules to complete all work by March 1999. The Deputy
Secretary is providing strong leadership and is personally tracking progress.
The Department has established a schedule for its year 2000 work, developed a
detailed plan for fixing its mission-critical systems, begun renovation, and
has hired a consultant to assist with key project management and technical
tasks. The Department has contracted with two firms for independent
verification and validation services for all mission critical systems. The
Department has undertaken an extensive outreach effort to communicate with the
entire education community, beyond those customers that are data exchange
partners, on the year 2000 problem. However, the Department remains behind most
other Federal agencies, with renovation of eight mission critical systems only
14 percent complete, and with zero percent complete on validation and
implementation. Three of these eight systems have completed 30 percent or less
of the work necessary to finish the renovation phase.
Department of Energy
The Department has identified all mission-critical systems at its
government and contractor sites; however, assessment of the Department's
embedded chips systems and lab equipment continues. On the positive side, the
percent of renovation completed has improved from 19 percent in the February
report to 34 percent in the May report, and progress in the other phases is
also improved. Moreover, the Department indicates that it is on schedule to
complete implementation by March 1999 for all but six of its 411 systems; those
six will complete implementation not later than October 1999. While there has
been improvement against its internal schedule, DOE remains behind the
In response to concerns identified in the November 1997 report, the
Department required all program officials to certify to the CIO that adequate
progress was being made in achieving year 2000 compliance prior to receiving
information technology funding. All but one program official (Environmental
Management) has provided this certification, and non-Y2K information technology
funds remain unavailable to that program. One site, Savannah River, has been
unable to certify that adequate progress is being made in achieving Y2K
compliance. (Although nuclear materials are processed at Savannah River, the
systems that will miss the March 1999 deadline do not pose a health, safety, or
environmental threat.) In time for the May report, the Department completed a
survey of all sites regarding data exchanges. The survey is a good start on
ensuring that all mission critical data exchanges are Y2K compliant. Although
the Department's CIO is conducting site compliance reviews in cooperation with
the Office of the Inspector General, independent verification and validation
contractors are not being used by the Department for compliance reviews.
Overall, the Department has improved its management coordination and has made
real progress in some areas; yet until its progress comes closer to the
government-wide goals, it will remain on the troubled list.
Department of Health and Human Services
The Department of Health and Human Services (HHS), as a whole, has
made some progress from the last quarterly report. However, some operating
divisions and individual systems continue to raise concerns. In two specific
cases, HHS reports systems that are projected to achieve compliance later than
the HHS-wide deadline for implementation of 12/31/98. These systems are
described later under "Exceptions." In addition, the Department reevaluated
which systems should be designated as "mission critical." Although this has
resulted in fewer mission critical systems for some operating divisions, this
has also resulted in a lower percentage of compliant mission-critical systems.
The focal point of HHS' efforts is the Health Care Financing
Administration (HCFA), which has almost finished assessing the system that its
external contractors, such as Medicare fiscal intermediaries and carriers, use
to process Medicare claims. The success or failure of HCFA's overall Y2K effort
is closely linked to the success or failure of Medicare contractor systems. It
is critical that these contractors complete their assessments and begin
renovations to ensure compliance by December 31, 1998. Given the
government's limited ability under current law to influence Medicare
contractors, the Administration submitted a draft bill to Congress on May 19,
1998, that would increase the Secretary's contracting flexibility. The
Administration encourages Congress to pass this legislation as soon as possible
to ensure that HCFA has all the tools it needs to achieve full compliance. HCFA
is performing on-site visits to every Medicare contractor and is using an
independent verification and validation contractor to perform a risk assessment
of Medicare contractors. HCFA's independent verification and validation
efforts alsoexamines all otheraspects of the Y2K project. HCFA
is in the early stages ofdeveloping detailed contingency plans to
ensure the continuity of operations of its health programs into the next
millennium. HCFA and HHS must continue closely tracking progress in this
Department of Transportation
The Department of Transportation has greatly improved its management
oversight in the last quarter and appears to be devoting considerable resources
to the problem; nevertheless, reported progress since the last report was
minimal. With 14.9 percent of its mission critical systems validated and 7.4
percent implemented, the Department lags well behind the government-wide
schedule, and its assessments of four systems had not been completed as of the
May reporting date.
Although the Federal Aviation Administration (FAA) has a strong
management team in place and a good organizational commitment to remediation,
the FAA continues to be at significant risk. It needs to determinepriorities for system conversion and replacement based on systems'
mission criticality; develop plans for validating and testing all converted or
replaced systems; and continue working to develop realistic contingency plans
for all business lines to ensure the continuity of critical operations,
including the availability of critical telecommunications support. Of
particular concern is the FAA's HOST computer system, which is the
backbone en route air traffic control. The FAA intends to replace the HOST
computers at a pace sufficient to guarantee an adequate supply of spare parts
for the remaining computers. FAA is continuing to assess the potential
vulnerability of the system's micro-code and is validating the feasibility
of a date roll-back as one of its potential contingency plans. The FAA's
contingency planning must provide for continuity of operational capability of
the National Airspace System (NAS), including scenarios when the HOST computer
is not available.
The United States Coast Guard is falling behind schedule in the
repair of three safety-related systems, with one, the Marine Safety Information
System, having problems with old hardware and archaic software similar to that
being experienced by FAA.
U.S. Agency for International Development
USAID has reported no new progress in terms of the total number of
systems renovated, validated, or implemented. While USAID has made a number of
management improvements, including plans to increase independent validation and
verification of contractor deliverables and increasing agency-wide awareness of
the year 2000 problem, these steps are too recent to have resulted in
measurable progress. However, since the last report, standard code to process
date/time data for USAID's mission critical systems has reached the design
phase under a new contract. In addition, a new prime contract for year 2000
project management was awarded May 29, 1998. Both actions are consistent with
best practice recommendations of independent studies.
For agencies in the second tier, OMB sees evidence of progress, but
also has concerns. Some of these agencies have strong Y2K programs and OMB
expects them to continue to improve. The nine agencies in the second tier are:
the Departments of Agriculture, Commerce, Housing and Urban Development,
Interior, Justice, Labor, State, and Treasury, and the Office of Personnel
Management. A summary of progress and concerns for these agencies appears
Tier 2 Agencies -- Progress, But Concerns
Progress in renovation, validation, and
implementation of systems; actively working on data exchange issues with
states. States report that all Food Stamp systems will be Y2K compliant by
Embedded systems, facilities, and
telecommunications issues are not yet resolved; contingency planning and
proactive independent validation and verification efforts have not yet been
established. Based on current information from States, all but two State WIC
systems will be compliant by 12/31/99. New York plans to use its existing
manual WIC system until 8/1/00, at which time its system will be compliant.
Complete information from Ohio on telecommunications progress is not available
so USDA is unable to determine whether the State will be fully compliant by
12/31/99. (USDA will work to receive more information from Ohio on the status
of its WIC system.)
Overall, making progress. Undertaking IV&V
and contingency planning.
PTO, OS/ADMIN, and ITA lag government-wide
goals; Department must find a CIO.
Good management team with some improvement in
the number of systems validated. Chief Information Officer recently hired.
Actively working on embedded chip, telecommunications, and data exchange
Need greater progress in renovating
mission-critical systems. Independent validation and verification efforts have
not been formally established although the Inspector General is examining HUD
Strong management team with good progress on
data exchange issues. Good progress on embedded technology and
Limited progress in renovation, validation, and
Progress is being shown and independent reviews
continue to demonstrate value.
Pace of renovation, validation and
implementation must improve if Department and government-wide goals are to be
Top priority of the Secretary; significant
progress on renovation; good progress on data exchanges, especially with State
Despite progress, still lags behind the
government-wide goals. Must complete assessment of embedded
Permanent CIO in place; actively assessing and
upgrading non-IT systems; taking steps to improve IV&V
Some progress, but evidence of schedule
slippage; consolidation of some systems is a complicating factor; progress
needs to be accelerated on overseas financial systems.
Strong management team; leader in work on
embedded systems, buildings, and telecommunications. Actively working on data
exchange issues with the States. Good progress in Customs and
Greater progress is needed in FMS, particularly
with respect to the Government On-line Accounting Link System (GOALS), which
supports 18 separate financial management applications used by the agencies.
The GOALS system has yet to be fully assessed for year 2000 conversion; if the
system is not made compliant, the accuracy of government-wide payments,
collections, debt management, and accounting information could be
Strong continued senior management involvement
has resulted in a credible strategy and progress; contingency planning is much
improved with well defined goals and milestones.
Rate of validation and implementation must
increase in order to meet government-wide goals.
The remaining nine agencies in Tier 3 appear to be making
satisfactory progress. These nine agencies are the Environmental Protection
Agency, the National Aeronautics and Space Administration, the Social Security
Administration, the Federal Emergency Management Agency, the General Services
Administration, the National Science Foundation, the Nuclear Regulatory
Commission, the Small Business Administration, and the Department of Veterans
Status of Small and Independent Agencies
Based on the results of a one-time request for reports from 41 small
and independent agencies, OMB is asking several agencies to report again on
their progress on August 15, 1998. OMB is asking for these reports in the next
quarter because of the importance of these agencies' missions, because of
concerns about the rate of progress, or because their initial reports did not
provide sufficient detail. Those agencies are: the Federal Communications
Commission, the Federal Housing Finance Board, the National Archives and
Records Administration, the National Labor Relations Board, the Office of
Administration in the Executive Office of the President, the Peace Corps, the
Tennessee Valley Authority, the U.S. Postal Service, and the U.S. Trade
Representative in the Executive Office of the President.
A summary of their progress will be included in the next quarterly
report to Congress. OMB is asking all small and independent agencies to report
again on May 15, 1999. OMB will continue to work with all small and independent
agencies, as appropriate, to ensure that they are prepared for the year 2000.
Summary of Small and Independent Agency
Armed Forces Retirement Home Board
Agency has completed assessment, including
non-IT systems; non-mission critical systems are compliant.
Although the agency has adopted government-wide
milestones for its two systems under repair, there has been no progress on
Commodities Futures Trading
Good progress on all phases. Good outreach.
Weak contingency plan.
Consumer Product Safety
Satisfactory progress overall; good outreach
No contingency plan; no independent validation
Corporation for National and Community
Sound management; progress on certification and
Assessment incomplete; accounting system will
be finished late.
Defense Nuclear Facilities Safety
Small number of office systems are on schedule;
verification in progress.
Equal Employment Opportunity
Good progress on all phases, including non-IT
Need contingency plan; need independent
verification and validation.
Export-Import Bank of the United
Excellent progress on phases; good management
oversight; using contingency planning and IV&V.
Farm Credit Administration
Good progress on phases.
Weak contingency planning.
Has recently improved management oversight;
good outreach efforts.
Renovation to be completed 3/99; no contingency
plan; no IV&V.
Federal Deposit Insurance
Good progress on phases.
Weak contingency plan.
Federal Elections Commission
Progress behind schedule. No contingency plan;
Federal Energy Regulatory
No IV&V. Needs to improve outreach efforts.
Federal Home Loan Mortgage
Federal Housing Finance Board
Satisfactory progress on phases.
No IV&V; weak contingency plan.
Federal Reserve System
Excellent progress on all phases; excellent
Federal Retirement Thrift Investment
Working closely with National Finance Center,
which has responsibility for major systems. Most other systems consist of
Good progress on non-IT systems and data
Federal Trade Commission
Good progress on all phases. Good outreach
JFK Center for the Performing
States that all systems are compliant.
No mention of contingency plan; no IV&V.
Legal Services Corporation
National Archives and Records
Good management team; working with DoD &
OPM on personnel records; working with GPO on data exchanges with the Office of
the Federal Register.
Assessment of mission-critical systems is only
75% complete; contingency planning just beginning.
National Credit Union
Excellent progress on phases.
Weak contingency plan.
National Gallery of Art
Progress slightly behind schedule.
No IV&V; no contingency plan; need to
National Labor Relations Board
Completed assessment of non-IT systems; data
Three systems will miss target; no IV&V; no
National Mediation Board
On schedule for phases.
National Transportation Safety
Submitted response to GAO survey in lieu of
Good progress; independent audit planned.
No mention of continuity of business plan;
could improve outreach.
Office of Administration, Executive Office of
Senior management working aggressively to
continue progress and enhance communications.
Need additional contingency plans; progress
dependent on FY99 appropriations.
Overseas Private Investment
Putting in place an IV&V contractor.
No continuity of business plan.
Started risk management steps.
Complications as a result of international
Explicit management strategy; has hired
Behind on phases.
Railroad Retirement Board
May need to work more on contingency plans.
Securities and Exchange
Moderate progress, excellent outreach.
Pace of renovation needs to quicken.
Selective Service System
Good progress on internal systems; relies on
larger agencies for some systems.
May need to work more on contingency plan.
Good management of the problem; provided
detailed status of systems.
No IV&V; no contingency plan; no outreach.
Tennessee Valley Authority
Good management tracking system. Good progress
on renovation. Contingency planning in place.
Assessment incomplete. A number of systems will
miss March 1999 target.
U.S. Arms Control and Disarmament
Good progress; major thrust is replacement of
Planning should include continuity of business
U.S. Enrichment Corporation
U.S. Information Agency
Good management. Good progress. Assisting
Status complicated by uncertainty of merger
with State Department.
U.S. International Trade
IV&V scheduled for summer; all systems to
be implemented by fall.
Minimal attention to non-mission critical data
exchanges; no contingency planning.
U.S. Postal Service
Full senior management involvement. Independent
verification process implemented. Critical systems targeted for implementation
Better crosswalk needed between USPS program
measures and government-wide benchmarks. Greater detail needed on certain key
items such as contingency planning and IV&V.
U.S. Trade Representative Executive, Office of
Although systems are limited to office
automation/ databases, progress is modest. No outreach; no independent
verification and validation. May miss March 1999 date.
In addition, agencies are required to report on any mission-critical
systems for which year 2000 renovation or replacements have fallen more than
two months behind schedule. In addition, agencies are required to report on any
system that will not meet the March 1999 target for completion of
implementation. The following agencies report specific systems that are behind
schedule or that will miss the March 1999 target.
Department of Agriculture
Two agencies reported slippage in dates beyond March 1999, the
Agricultural Marketing Service (AMS) and Departmental Administration (DA). The
Agricultural Marketing Service Financial Information System is being
redeveloped using year 2000 compliant hardware and software. Since the
submission of the May report, approval for support services for year 2000
compliance has been granted. Two additional AMS systems are under development,
therefore the approval process for these systems required additional steps. The
AMS Field Infrastructure System has received approval to proceed based on the
condition that the newly developed system would be validated and verified as
year 2000 compliant through independent means. Milestones for this system are
being developed. The AMS Data Repository has received approval to proceed based
on the condition that the newly developed system would be validated and
verified as year 2000 compliant through independent means. Milestones for this
system are being developed.
The Departmental Administration Systems are no longer an exception.
The Department will make the current systems that were scheduled for
replacement compliant by January 1999.
Department of Defense
The Department of Defense reported that nine mission critical systems
have fallen behind schedule: one Army system, two Air Force systems, two
systems at the Defense Finance and Accounting Service, one system at the
Defense Logistics Agency, and three systems at the National Security Agency. Of
those nine, one was previously reported behind schedule: the Air Force's
MARK V system, which remains behind schedule due to a COTS vendor delivery
problem. The Department also reported 34 mission critical systems being
repaired or replaced that had completion dates after March 1999: seven Army
systems, eighteen Navy systems, two Air Force systems, one system at the
Defense Intelligence Agency, one system at the Defense Information Systems
Agency, one system at the Defense Logistics Agency, one system at the National
Imagery and Mapping Agency, two systems at the Office of the Secretary of
Defense, and one system at the On-site Inspection Agency. The DOD CIO is
establishing a special review board to focus leadership actions on mission
critical systems such as these that are not meeting the DOD required dates for
Department of Health and Human Services
The Health Care Financing Administration's Financial Accounting
Systems (FACS) is behind schedule as a result of a delay in validation.
Validation will commence, contingent upon the installation of a year 2000
compliant version of the commercial, off-the-shelf database system, known as
IDMS, and the availability of future date testing tools. These problems are
being addressed, and HCFA anticipates that FACS will be in the validation phase
HHS reported two other systems that are projected to achieve
compliance later than the HHS-wide deadline of December 31, 1998. The first is
the system called IMPACT which is used to process personnel actions
Department-wide. It was to be replaced by a new system,
FED HR-21, which is already year 2000 compliant. However, FED HR-21
will not be implemented until late 1999. As a contingency plan, PSC is making
the legacy system compliant by February 1999. The second system reported late
is the Health Resources and Services Administration's contractor-operated
National Organ Transplant System, which is not projected to be compliant until
a new replacement system is implemented in July, 1999.
Department of Interior
The Supervisory Control and Data Acquisition (SCADA) System at the
Bureau of Reclamation is used to manage the Glen Canyon Powerplant. Preliminary
estimates to renovate the system were significantly higher than anticipated, so
a statement of work was developed requiring a three-phase effort to reassess
costs, make repairs, and test the system for year 2000 compliance. An estimate
of the costs for renovation is anticipated by the Department in May 1998. In
the meantime, a waiver to the Dual-Compensation Act has been granted for 10
Powerplant Operators. This is part of the bureau's contingency planning so that
all dams can be operated in a manual mode. The Bureau's estimate is that
SCADA's renovation, testing, and implementation will be completed before
The Supply Automated Receiving System (SARS), Enhanced Automated
Procurement System (EAPCS), Mail Sorting Equipment Network (MSE), and the
Electronic Receipts System (ERS) within the Bureau of Administration are
planned to be on a reestablished schedule by June. Early delays involved
evaluation of commercial off-the-shelf system alternatives, funding requests
and contract modifications. Virtually all of these issues have been resolved
with only the contract modifications awaiting finalization in June. Renovation
of the SARS and the Medical Archiving Retrieval System (MARS) within the Bureau
of Personnel will extend beyond the September 1998 renovation milestone, but
other applications (including EAPCS, MSE, and ERS) will meet this deadline.
SARS will be renovated by January 1999, and the MARS will be renovated by
Department of Transportation
The United States Coast Guard reported that three of its mission
critical systems have fallen behind the OMB target dates for work in the
remaining phases. Two of these systems are projected to miss interim target
dates, but are still on track to comply with the March 1999 implementation
phase deadline. The third system, the Marine Safety Information System (MSIS),
is experiencing difficulties achieving its milestone targets largely due to the
complexity of custom-built code, usage of what are now archaic programming
languages, and some hardware components that are unique to the MSIS. The MSIS
technical staff is training additional people to work on the software issues
and at this time, is projecting a year 2000 solution to be tested and
implemented by September 1999.
The Government On-Line Accounting Link System (GOALS) at the
Financial Management Service is comprised of 18 application subsystems that
collect, edit, and telecommunicate data. GOALS-II was initiated in September
1995 to replace GOALS-I. Based on the analysis of the current development
schedule, not all of the 18 subsystems of GOALS-II will be completed and
implemented prior to the year 2000. Consequently, FMS has determined that it
must renovate the existing GOALS-I system to ensure year 2000 compliance. FMS
is working with the program areas responsible for each of the subsystems to
develop contingency plans. These plans are scheduled for completion in June
Key Federal Web Sites on the Year 2000
FDA site on biomedical devices
Federal CIO Council
Small Businesses Administration
GSA site on compliant commercial products
GSA site on telecommunications equipment
GSA site on buildings and facilities
Progress and Plans for Year
2000 Compliance of Mission Critical Systems
Mission Critical Systems
Number Still Being
Mission Critical Systems Repaired and
AGENCY YEAR 2000 COST ESTIMATES Fiscal Years
1996-2000 (Dollars in Millions, by Fiscal Year)
Notes: These estimates do not include the Federal share of the costs
for State information systems that support Federal programs. For example, the
Agriculture total does not include the potential 50 percent in Federal matching
funds provided to States by Food and Consumer Services to correct their Year
2000 problems. Similarly, the HHS total does not include the Medicaid baseline
costsfor the Federal share of state systems. And, while Labor's FY 1998
appropriation includes $200 million for States to correct Year 2000 problems in
State unemployment insurance systems,that amount is not included in this