Year 2000 solutions are fighting time and money

The General Accounting Office warned federal agencies last week that potential computer malfunctions due to the Year 2000 problem are among the top risks to agency operations over the next three years.

Unless agencies upgrade their systems to prevent such failures - which will occur if systems improperly read the last two digits "00" in the Year 2000 as being 1900 - the repercussions are likely to extend to encompass interactions with state and local governments foreign governments and private-sector systems GAO concluded. To fix the problem agencies must engage in the "widest-scale system and software conversion effort ever attempted" by the federal government.

The GAO alarm included as part of a series of reports on the most serious management problems facing federal agencies capped more than a week of debate about whether the government has underestimated the cost of Year 2000 upgrades. The Office of Management and Budget reported earlier this month that agencies would spend $2.3 billion through fiscal 2000 making changes to their systems - far less than the widely cited $30 billion estimate offered by The Gartner Group last year.

The reports from GAO and OMB have prompted concern from Congress that agencies may not be realistic about their ability to meet deadlines for completing system upgrades. Most agencies expect they will not finish making necessary changes until the last minute - sometime during December 1999.PMeanwhile GAO said agencies have already encountered century date errors. GAO reported that one Defense Logistics Agency system recently flagged three-year contracts as delinquent even though they had not yet been awarded.

Lawmakers and industry experts contend that agencies have not allotted enough funds for testing and validating their software fixes before bringing planned upgrades on-line. According to OMB agency cost estimates do not include either the cost of regular system maintenance or replacements that agencies have already planned.

Rep. Connie Morella (R-Md.) one of several lawmakers who have pushed agencies to account for their Year 2000 strategies said the GAO report "should be another wake-up call to all federal agencies on this impending crisis." Morella said agencies "have clearly underestimated the time and money it will take to avoid a computer catastrophe" and are running out of time to meet "an immovable deadline."

Olga Grkavac senior vice president of the Information Technology Association of America's Systems Integration Division said the cost estimates for testing software upgrades "should be double" what agencies have projected partly because the initial solutions will not always work. According to OMB agencies have budgeted $477 million for Year 2000 work in fiscal 1999 when most of the testing will occur.

Administration projections also do not include the federal share of costs for state information systems that are used to support federal programs although the government will have to cover these costs as well said Sally Katzen administrator of OMB's Office of Information and Regulatory Affairs. She said such systems include those that states use to run the federal food stamps program and to distribute unemployment insurance.

In defending the low estimate John Koskinen OMB's deputy director for management said last week that industry analysts have assumed incorrectly that the government plans to fix all its systems rather than take the opportunity to scrap some of them. He said agencies would "replace consolidate or simply shut down a lot of the systems."

In a speech last week Koskinen said one agency which he declined to name had found "85 systems that nobody uses " and another had found it could disconnect a third of its systems rather than make them Year 2000-compliant.

"With scarce resources the issue is upgrading three systems or consolidating them into one " he said during a later interview and agencies will tend to consolidate them. "In some ways overall it's very possible that the cost of the Year 2000 will be a net gain for us."

But an aide to Morella said even if agencies decide to kill many of their systems they will still have to pay for some replacement systems that they have not yet accounted for in their budgets.

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