FMS brings Y2K-ready payment system online

The Treasury Department's Financial Management Service last week brought online two Year 2000-compliant systems for processing Social Security retirement and disability checks for 50 million beneficiaries. The agency plans to make its first payments using those systems early next month.

Connie Craig, chief information officer of FMS, said her agency has reached "a major milestone" because Social Security payments account for 71 percent of the

850 million checks that the service sends out every year. Although FMS has yet to have the systems certified as Year 2000-ready, Craig said simulations of the century-date rollover have made her confident that the systems will work on Jan. 1, 2000.

But a leading industry observer of federal agency progress addressing the millennium bug said problems with the renovated systems could still happen.

"People's lives and livelihoods depend on those checks," said Olga Grkavac, senior vice president with the Information Technology Association of America's Systems Integration Division. "What we're finding in the commercial sector is that the testing finds some very serious problems. That's why companies leave so much time for testing. You have to have some time to fix those [problems] and test again."

In its recent report on Year 2000 progress, the Office of Management and Budget said FMS was one agency that needed to work faster to update its systems. The report said a new FMS accounting system is behind schedule, and the agency now plans to renovate the existing Government Online Accounting Links System.

Richard Henry, FMS' Year 2000 program manager, said his agency "presented a very positive image of our progress" to OMB. "I can't comment on why they made those statements," he said.

Writing checks is one of the federal government's major functions, and FMS is responsible for processing 85 percent of them, including veterans benefits, tax refunds, federal employee salaries and vendor invoices. The Defense Department, the U.S. Postal Service and the Health Care Financing Administration, which runs Medicare, have separate payment systems.

Craig said the Social Security payment systems would be certified by the end of the year. "One reason we're not expecting bugs," she added, is that "less than 3 percent of the [software] code does much with dates." FMS payment systems have to read instructions from other agencies as to when to issue the checks, rather than performing any complex date-dependent calculations.

SSA already has certified its systems that transmit payment data to FMS, including the link between SSA and the check-writing agency, said Bob Vaccaro, Year 2000 project director at SSA.

Even if federal systems are certified, whether people are able to receive the money depends also on whether their banks are able to process the transactions. SSA makes more than half its payments electronically and is under a congressional mandate to electronically disburse nearly all its payments by January.

In testimony before the House Banking and Financial Services Committee Sept. 17, federal regulators reported that about 90 percent of the nation's financial institutions are making "satisfactory" progress toward Year 2000 compliance, but they have not necessarily completed their testing.

Craig said FMS has updated its system for processing 90 million tax refunds and plans to have the system that handles 40 million annual veterans benefit checks ready in December. She said the remaining FMS systems, including several accounting and collection systems, will be finished by March 1999, the deadline OMB has set for all agencies to have their computer systems Year 2000-compliant.

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