Is 2000 a budget victim?

Date code funding should be
John A. Koskinen says.

The Clinton administration will propose that any fiscal 1998 budget extensions take
year 2000 funding into account, the White House’s year 2000 czar said last week.

“If emergency funds have to be offset, we are going to have a funding
problem,” Koskinen said.

“The bottom line is that I can’t imagine the Congress wants to bring back on
themselves the responsibility for this problem,” he said.

If lawmakers withhold funds, “I think Congress will deservedly get credit for the
problems agencies have,” he said. “When the dust is settled, rationality will

Joel Willemssen, director of civil agencies information systems accounting for
GAO’s Information Management Division, said it is important for the administration to
be clear about what is needed.

“It’s incumbent that the executive branch make clear what the needs are and
what the consequences would be,” he said.

Rep. Steve Horn (R-Calif.), co-chairman of the House Y2K Taskforce, has said on several
occasions that Congress will provide whatever funds agencies need for year 2000 fixes.

Koskinen cited worries about the Health and Human Services Department’s Health
Care Financing Administration. With about 1 billion transactions a year representing $250
billion, an HCFA systems failure could be a major disaster, he said.

HCFA systems are run primarily by the private sector, making it difficult to ensure the
readiness of the 12 disparate systems, Koskinen said.

HCFA also started late after its Medicare Transaction System project, intended to be a
“mammoth fix all at once,” fell behind schedule, Koskinen said. As a result,
HCFA is increasingly focusing on contingency planning. “In HCFA’s case,
it’s a critical task for them,” Koskinen said.

Koskinen praised the work done by the Federal Aviation Administration in recent months.
FAA was the “poster child for the most likely to fail,” he said. “I’m
beginning to get more optimistic in how FAA is going to do.” Congress, however,
continues to criticize the agency’s efforts.

He also praised the IRS’ year 2000 progress. The tax agency has set detailed
priorities and weekly benchmarks to carefully monitor progress. “They have a lot of
work left to do,” he said.

Both Koskinen and Willemssen heaped praise on the Social Security Administration, which
has almost finished fixing its date code. SSA is now doing rigorous testing, Koskinen

As an illustration of agency interdependencies, however, SSA has been monitoring the
progress of the Treasury Department’s Financial Management Service, which prints
Social Security checks.

FMS has been having year 2000 problems for some time, Koskinen said. FMS officials,
however, have been testing the interface with SSA over the summer and expect it to be
fixed soon.

“We are as close as you can guarantee in this situation” that Social Security
checks will be issued without a hitch come 2000, he said.

Koskinen and Willemssen spoke shortly after OMB had issued its most recent status
report on agencies’ year 2000 work and Horn, chairman of the House Government
Oversight and Reform Subcommittee on Government Management, Information and Technology,
handed out his latest grades for agency date code efforts.

OMB has added the State Department to its list of six other agencies that it deems too
far behind on systems fixes.

The other agencies on the red-flag list are the Agency for International Development
and the departments of Defense, Education, Energy, HHS and Transportation.

State faces a significant challenge in managing its year 2000 project while
simultaneously replacing systems installed at more than 230 locations around the world,
the OMB report said.

“State did not report adequate progress on completion of systems it is renovating
nor did it report adequate progress on final validations of systems,” OMB said.

Dave Ames, deputy chief information officer in State’s Year 2000 Problem Program
Management Office, said the department considers the year 2000 problem its No. 1 priority.

The department will meet the goal of having systems ready in time, he said.

Meanwhile, OMB moved Treasury off what it calls its Tier 1 critical list of agencies
and moved it to Tier 2. OMB lists agencies in Tier 2 when it sees progress but is still
concerned that work won’t be finished on time.

Although some of the most troubled agencies have improved their pace on year 2000 work,
“overall progress must increase if they are to meet the governmentwide year 2000
milestones for completing their work by March 31, 1999,” the report said.

OMB requires agencies on the critical list to update OMB monthly. In addition, Koskinen
meets with the heads of Tier 1 agencies monthly. Vice President Al Gore this month also
met with senior officials at these agencies to review their plans for prioritizing year
2000 efforts.

Agencies overall have made some progress, the OMB report said. Of the government’s
7,343 mission-critical systems, 50 percent were year 2000-ready as of Aug. 15, compared
with 40 percent in May.

Horn, in his most recent report card, gave agencies an overall grade of D, a slight
improvement from the F he assigned in May.

“Based on current projections, more than one-third of the government’s
mission-critical systems will not be ready on time,” Horn said.

Agencies that plan to fully replace systems rather than renovate them lost points on
Horn’s grading scale. He said he views replacement as a high-risk strategy.

“When was the last time you heard of the government putting a new computer system
in place on schedule?” Horn said.

There also is a continuing disagreement over how much year 2000 work will cost the
government. Horn and GAO said the bottom line will be $6.3 billion, based on agency
estimates. OMB officials put the cost at $5.4 billion, up from $5 billion in May.

The Environmental Protection Agency, one of the few bright spots in Horn’s report
card, worked its way from an F to a B. EPA is behind significantly in creating contingency
plans and coordinating with outside partners, Horn said, but he gave the agency a B
because 79 percent of its computers are 2000-ready.  

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