Year 2000 Computing Crisis:

Potential for Widespread Disruption Calls for Strong Leadership and Partnerships

AIMD-98-85: Published: Apr 30, 1998. Publicly Released: Apr 30, 1998.

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Pursuant to a congressional request, GAO reviewed the year 2000 computing crisis facing the nation, focusing on: (1) the year 2000 risks facing the government and nation; (2) the evolution of the federal government's year 2000 strategy; and (3) additional actions that can be taken by the Executive Branch to prepare the nation for the year 2000.

GAO noted that: (1) while progress has been made in addressing the federal government's year 2000 readiness, serious vulnerabilities remain; (2) many agencies are behind schedule; (3) at the current pace, it is clear that not all mission-critical systems will be fixed in time; (4) much more action is needed to ensure that federal agencies satisfactorily mitigate year 2000 risks to avoid debilitating consequences; (5) vital economic sectors of the nation likewise remain vulnerable to problems that the change of century will bring; (6) moreover, a high degree of information and systems interdependence exists among various levels of government and the private sector in each of these sectors; (7) these interdependencies increase the risk that a cascading wave of failures or interruptions of essential services could occur; (8) as the change of century grows closer and the breadth of year 2000 work that remains has become known, the federal government's response to the crisis has increased; (9) originally, the Office of Management and Budget (OMB) expressed a high degree of confidence about the federal government's ability to meet the year 2000 deadline; (10) more recently, as many agencies have reported their limited progress in solving the year 2000 problem, OMB has become increasingly concerned; (11) accordingly, at the urging of key congressional leaders, OMB has improved its response to the crisis by issuing much needed policies and increasing its monitoring of agencies; (12) most encouraging is the President's recent announcement of the establishment of a President's Council on Year 2000 Conversion to oversee federal efforts and promote public/private relationships; and (13) the establishment of the President's Council on Year 2000 Conversion provides an opportunity for the Executive Branch to take further key implementation steps to avert disruptions to critical services.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: To more effectively oversee the activities of federal agencies to address the year 2000 crisis, the Chairman, President's Council on Year 2000 Conversion, should for the selected priorities, designate a lead agency to be responsible for ensuring that end-to-end operational testing of these processes and supporting systems occurs across organizational boundaries, and that independent verification and validation of such testing has been performed.

    Agency Affected: President's Council on Year 2000 Conversion

    Status: Closed - Implemented

    Comments: In response to the report, the Chair of the President's Council on Year 2000 Conversion stated that the Council has worked in this area with OMB, which has primary oversight and has assigned a lead agency for each high impact program. It also asked each lead agency to identify to OMB the partners integral to program delivery, to take a leadership role in convening those partners and to develop a plan to ensure that the program will operate effectively. Such plans could include testing between partners. OMB asked the lead agency for each program to announce their end-to-end readiness by fall 1999. In addition, in March 1999, OMB and the Chair of the Council announced that one of the key priorities that Federal agencies will be pursuing is cooperative end-to-end testing.

    Recommendation: To more effectively oversee the activities of federal agencies to address the year 2000 crisis, the Chairman, President's Council on Year 2000 Conversion, should identify all federal agencies beyond the departments and agencies currently reporting that are central to the success of year 2000 readiness and require them to provide regular reports to OMB.

    Agency Affected: President's Council on Year 2000 Conversion

    Status: Closed - Implemented

    Comments: On March 9 and April 21, 1998, OMB issued a memorandum to an additional 31 and 10 organizations, respectively, requiring that they provide information on their year 2000 progress. In July 1998, OMB directed 9 of these 41 organizations to report on their progress quarterly. The remaining 32 organizations are not required to report regularly although OMB has stated that they may be required to report on their progress again in early 1999.

    Recommendation: To more effectively oversee the activities of federal agencies to address the year 2000 crisis, the Chairman, President's Council on Year 2000 Conversion, should require, as part of the quarterly reporting requirement, agencies to report to OMB on their progress in implementing systems intended to replace noncompliant systems.

    Agency Affected: President's Council on Year 2000 Conversion

    Status: Closed - Implemented

    Comments: In April 1998, OMB requested that agencies provide information on the oversight mechanism(s) used to ensure that replacement systems are on schedule. While OMB now requires agencies to provide additional information on their year 2000 replacement efforts, agencies are still not required to provide status information on these efforts (e.g., the percentage of systems in the validation or implementation stage).

    Recommendation: To more effectively oversee the activities of federal agencies to address the year 2000 crisis, the Chairman, President's Council on Year 2000 Conversion, should identify and publicize expectations on the key activities that should be accomplished for each of the assessment, renovation, validation, and implementation phases, and direct agencies to adhere to these expectations in reporting on the status of their programs.

    Agency Affected: President's Council on Year 2000 Conversion

    Status: Closed - Implemented

    Comments: In its April 28, 1998 quarterly reporting guidance, OMB specified that agencies should ensure that their reporting on the completion of phases is consistent with the Chief Information Officers Council's best practices and GAO's enterprise readiness guide.

    Recommendation: To more effectively oversee the activities of federal agencies to address the year 2000 crisis, the Chairman, President's Council on Year 2000 Conversion, should require agencies to develop contingency plans for all critical core business processes.

    Agency Affected: President's Council on Year 2000 Conversion

    Status: Closed - Implemented

    Comments: In March 1998, OMB clarified its contingency plan instructions, stating that such plans should be developed for all core business functions. Moreover, OMB and the Chief Information Officers Council adopted GAO's draft guide providing information on business continuity and contingency planning issues common to most large enterprises as a model for federal agencies. Further, in its April 28, 1998 quarterly report instructions, OMB asked agencies to describe their processes and activities for developing such contingency plans.

    Recommendation: To more effectively oversee the activities of federal agencies to address the year 2000 crisis, the Chairman, President's Council on Year 2000 Conversion, should require agencies to develop an independent verification strategy to involve inspectors general or other independent organizations in reviewing agency year 2000 progress, to include: (1) assessing whether the agency has developed and is implementing a comprehensive and effective year 2000 program; (2) providing an independent assessment of the agency's quarterly report to OMB; (3) assessing whether the agency has a reasonable and comprehensive testing approach; and (4) assessing the completeness and reasonableness of the agency's business continuity and contingency planning.

    Agency Affected: President's Council on Year 2000 Conversion

    Status: Closed - Implemented

    Comments: The Chair of the President's Council on Year 2000 Conversion and OMB reported that agencies are now required to have an independent verification and verification strategy. Agencies are also required to report quarterly to OMB on their verification strategy.

    Recommendation: To more effectively oversee the activities of federal agencies to address the year 2000 crisis, the Chairman, President's Council on Year 2000 Conversion, should ensure that the agencies participate in the Chief Information Officer (CIO) Council's Year 2000 Committee and that the CIO Council's Year 2000 Committee subcommittees establish and publicize plans, milestones, and enforcement mechanisms.

    Agency Affected: President's Council on Year 2000 Conversion

    Status: Closed - Implemented

    Comments: According to the Chair of the President's Council on Year 2000 Conversion, all large agencies and a number of smaller ones are actively participating in the CIO Council's Year 2000 Committee. The Year 2000's Committee's working groups provide reports on their activities to OMB which are incorporated into OMB's quarterly report.

    Recommendation: To more effectively oversee the activities of federal agencies to address the year 2000 crisis, the Chairman, President's Council on Year 2000 Conversion, should develop a personnel strategy which includes: (1) determining the need for various information specialists; (2) identifying any administrative or statutory changes that would be required to waive reemployment penalties for former federal employees; and (3) identifying ways to retain key year 2000 staff in agencies through the turn of the century.

    Agency Affected: President's Council on Year 2000 Conversion

    Status: Closed - Implemented

    Comments: While the Chair of the President's Council on Year 2000 Conversion has not developed a personnel strategy, the Council and the Office of Personnel Management have taken actions that effectively meet the intent of this recommendation. For example, the Council established a working group on workforce issues. In addition, OPM provided information to federal agencies on mechanisms to aid in the recruitment and retention of federal employees, including recruitment and reallocation bonuses, superior qualifications appointments, temporary and term appointments, retention allowances, performance and incentive awards, and quality step increases. Moreover, in March 1998, OPM issued a memorandum stating that the year 2000 problem was an "unusual circumstance" which would allow OPM to grant agencies waivers to allow them to rehire former federal personnel without financial penalty on a temporary basis. Some agencies have already taken advantage of this waiver process.

    Recommendation: To steer the United States through the year 2000 crisis, the Chairman, President's Council on Year 2000 Conversion, should develop a comprehensive picture of the nation's year 2000 readiness, which would include identifying and assessing the risks of the nation's key economic sectors, including those posed by international links and by the failure of critical infrastructure components.

    Agency Affected: President's Council on Year 2000 Conversion

    Status: Closed - Implemented

    Comments: The Council has established over 25 sector-based working groups and has been initiating outreach activities since it became operational last spring. In October 1998, the Chair directed the Council's sector working groups to begin assessing their sectors. On January 7, 1999, the Chair, in conjunction with OMB, began issuing quarterly reports summarizing these assessments. The Council's assessment reports have substantially increased the nation's understanding of the year 2000 readiness of key industries.

    Recommendation: To more effectively oversee the activities of federal agencies to address the year 2000 crisis, the Chairman, President's Council on Year 2000 Conversion, should establish governmentwide priorities, and ensure that agencies set agencywide priorities, for the most mission-critical business processes and supporting systems, using criteria such as the potential for adverse health and safety effects, adverse financial effects on American citizens, detrimental effects on national security, and adverse economic consequences.

    Agency Affected: President's Council on Year 2000 Conversion

    Status: Closed - Implemented

    Comments: In response to the recommendation, on March 26, 1999, the Office of Management and Budget issued a memorandum to the heads of the executive departments and agencies. This memorandum identified 42 high impact federal programs (subsequently changed to 43) and assigned a lead agency for each program. The memorandum required each lead agency to identify the partners integral to the program, take a leadership role in convening those partners without adequate plans, and develop an overall program plan to ensure that the program will operate effectively throughout the century date change. Setting governmentwide priorities helps to ensure that the most important federal processes are identified and prioritized so that the associated critical systems are fixed first and thoroughly tested.

    Recommendation: To steer the United States through the year 2000 crisis, the Chairman, President's Council on Year 2000 Conversion, should establish public/private partnership forums composed of representatives of each major economic sector to help: (1) gauge the nation's preparedness for the year 2000; (2) periodically report on the status and remaining actions of each sector's year 2000 remediation efforts; and (3) ensure the development of contingency plans to assure the continuing delivery of critical public and private services.

    Agency Affected: President's Council on Year 2000 Conversion

    Status: Closed - Implemented

    Comments: In December 1998, the Chair of the President's Council on Year 2000 Conversion formed the Senior Advisors Group. This group is composed of representatives from private sector firms across key economic sectors. Members of this group are expected to offer perspectives on cross-cutting issues, information sharing, and appropriate federal responses to potential year 2000 failures. Moreover, the Council has enlisted agencies to serve as "sector coordinators" to promote action on the problem and to offer support to public and private sector organizations-both domestically and internationally- within their policy areas. In particular, agencies are working with industry trade associations (which have unique capabilities for communicating with their members about the year 2000 problem), individual companies, and state and local governments.

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