OMB pushes year 2000 cost estimate up by $785 million
- By Christopher J. Dorobek
- Mar 16, 1998
The government last week raised by more than three-quarters of a billion dollars its
cost estimate for preparing federal systems to handle dates after Dec. 31, 1999.
Based on the latest quarterly reports filed by agencies, the Office of Management and
Budget now expects to spend $4.7 billion on year 2000 programs, up $785.5 million since
OMB's last projection in November.
The estimate jumped because several agencies told the oversight agency that they expect
to spend more on date code conversions than they previously reported.
For example, the Agency for International Development more than doubled its estimate to
$37.2 million, up from $13.7 million, and the Treasury Department boosted its estimate to
$1.43 billion, up $245.5 million. Surprisingly, the Transportation Department's estimate
fell by a third, to $177.1 million from $267.7 million.
Changes in the Defense Department's cost projections account for most of the overall
increase, though the percent change in DOD's estimate is not as large as it is for some
agencies. DOD officials told OMB that they now expect to spend $1.9 billion on date code
work--a $521.6 million increase since the department's fall report.
The Air Force is responsible for much of the DOD increase because it underestimated its
costs. Last fall the service expected to spend about $405 million on year 2000 fixes.
Prompted by a recent General Accounting Office report, the Air Force revised its cost
projections and now estimates it will spend $622 million, a $217 million increase (see
story, Page 44).
Transportation's unexpected decrease came after GAO told Congress it was unlikely that
the Federal Aviation Administration would have air traffic systems ready unless the agency
sped up its date code conversion [GCN, Feb. 23, Page 8]. DOT is on OMB's critical
list, which identifies agencies that aren't meeting the administration's timetable for
fixing date code.
Other agencies on the critical list include AID and the departments of Education,
Energy, Health and Human Services, and Labor. OMB added Labor and removed the Agriculture
Department and Office of Personnel Management.
Although the report said Transportation continues to make overall progress, it again
criticized the status of FAA.
FAA "continues to be at significant risk of system failure," the report said.
"Although FAA has completed its assessments, it identified 101 additional
mission-critical systems since the last reporting period. Considering its slow progress,
the FAA needs to give significantly greater attention to contingency planning."
Transportation and NASA were the only agencies to report decreases in year 2000 cost
estimates. Twelve agencies reported increases, and 10 reported no change.
Agencies are managing the year 2000 problem with a five-phase process: awareness,
assessment, renovation, validation and implementation. Agencies must complete fixes for
the renovation phase by September and finish testing for validation by January.
The OMB report said agencies have assessed 99 percent of their mission-critical
systems. Of those, 35 percent are year 2000-ready, compared to 27 percent in November.
Fewer systems are now considered mission-critical because senior managers in several
agencies dropped them from their lists, the report said.
DOD has assessed 99 percent of its 2,915 mission-critical systems, renovated 53
percent, tested 16 percent and implemented 9 percent.
Although DOD is making progress in renovating mission-critical systems, OMB said the
department is cutting its year 2000 deadlines too close. Defense officials said they are
developing contingency plans for edge systems, and will give those plans to OMB in May.
Most agencies adjusted their plans after OMB moved the deadline for completing work on
mission-critical systems from November 1999 to March 1999 [GCN, Feb. 23, Page 1].
Overall, agencies are repairing 45 percent of their systems, replacing 14.6 percent and
retiring 4.6 percent, the report said.
Capital Hill lawmakers praised the OMB report. "I am glad that they are getting in
touch with reality," said Rep. Steve Horn (R-Calif.), chairman of the House
Government Reform and Oversight Subcommittee on Government Management, Information and
"We're not surprised by the latest figures," said subcommittee staff director
Russell George. Horn's subcommittee has "been saying all along that this is about a
$10 billion problem. As the OMB figures show, it looks like we are getting there,"