Year 2000 Computing Challenge:

Estimated Costs, Planned Uses of Emergency Funding, and Future Implications

T-AIMD-99-214: Published: Jun 22, 1999. Publicly Released: Jun 22, 1999.

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Pursuant to a congressional request, GAO discussed the costs associated with the year 2000 problem, focusing on: (1) estimated year 2000 costs and agency processes to track costs to date; (2) planned uses of emergency funding; (3) year 2000 costs for fiscal year (FY) 2000 and beyond; (4) agency program and information technology (IT) initiatives delayed by year 2000 activities; and (5) lessons learned from year 2000 efforts that can be applied to other IT activities.

GAO noted that: (1) meeting the year 2000 challenge has been necessary but expensive, with estimated federal costs rising from $2.3 billion in February 1997 to $8.7 billion as of May 1999; (2) between February and May 1999, the estimated cost rose $1.2 billion; (3) with respect to year 2000 costs incurred through FY 1998, the 24 major federal departments and agencies reported costs exceeding $3 billion; (4) while some agencies reported actual costs incurred through 1998, others reported estimates; (5) in FY 1999, agencies have requested emergency funds and plan to spend much of these funds on renovation, validation, and implementation activities, along with replacing personal computers and network hardware and software; (6) beyond FY 1999, estimated year 2000 costs have continued to climb, now reaching over $1 billion; (7) determining the extent of continued year 2000 cost escalation is difficult because of many uncertainties; (8) one major unknown is whether agencies will implement their business continuity and contingency plans; (9) such plans, if triggered, could entail substantial costs; (10) agencies' high-level business continuity and contingency plans were due to the Office of Management and Budget (OMB) by June 15, 1999; (11) OMB's review of these plans should consider whether agencies provided estimated business continuity and contingency plan costs; (12) if not, OMB needs to require that this information be provided expeditiously so that it can provide Congress with information on potential future funding needs; (13) GAO intends to review the plans submitted to OMB and advise Congress of potential funding ramifications; (14) another less direct but undeniable issue associated with the year 2000 challenge has been the postponement of many program and IT initiatives so that resources could be dedicated to year 2000; (15) such demands--including system enhancements and computer security--have not vanished; in fact, they have grown; (16) on the positive side, however, the government will likely approach these future IT challenges better prepared, having gained much valuable information from experiences in meeting the year 2000 challenge; and (17) this was the motivator that resulted in many agencies' taking charge of their IT resources in much more active ways, from inventorying and prioritizing systems to implementing reliable processes and better controls.

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