Year 2000 Computing Crisis:

Costs and Planned Use of Emergency Funds

AIMD-99-154: Published: Apr 28, 1999. Publicly Released: May 4, 1999.

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Pursuant to a congressional request, GAO provided information on year 2000 costs and funding at 41 federal agencies and organizations, focusing on the: (1) agency-reported year 2000 costs through fiscal year (FY) 1998 and the agency processes used to track these costs; (2) reported status of FY 1999 obligations for year 2000 activities; (3) estimated year 2000 costs for FY 1999 and the planned uses of emergency funds; and (4) estimated year 2000 costs for FY 2000.

GAO noted that: (1) the estimated year 2000 costs by the 24 major federal agencies have more than tripled during the last 2 years to a total of about $7.5 billion, according to the agencies' February 1999 quarterly status reports to the Office of Management and Budget (OMB); (2) the agencies reported that less than half of these costs had been incurred prior to FY 1999; (3) however, these reported costs were generally estimates and not actual costs; (4) of the 24 major agencies, only 7 reported that they separately tracked actual costs of year 2000 activities and 5 reported that they tracked some actual costs and estimated other costs; (5) the lack of tracking was also reflected in the reported obligations for the first quarter of FY 1999; (6) obligations of $68.4 million for year 2000 costs were reported by 24 organizations, including 2 organizations that reported only obligations of emergency funds; (7) however, 8 organizations did not know what their obligations of appropriated and emergency funds were for the quarter and the remaining 9 organizations, including 5 major agencies, did not provide obligation information; (8) the estimated year 2000 costs reported by the 24 major agencies for FY 1999 have increased during the last year from about $1.1 billion in February 1998 to $2.8 billion in February 1999, according to their quarterly reports to OMB; (9) beginning in November 1998, the agencies requested emergency year 2000 funds for some of these costs; (10) the civil agencies plan to use the emergency funds for a variety of activities, including renovation, validation, and implementation of systems, replacement of personal computers and network hardware and software, outreach, and independent verification and validation; (11) the Department of Defense plans to use emergency funds for testing, operational evaluations, and contingency planning; (12) according to their justification submissions, organizations requested emergency funds because they identified new requirements such as outreach activities and decisions to replace personal computers and networks; had increased costs of ongoing year 2000 activities; or regular appropriations were not available for planned year 2000 activities; (13) for FY 2000, the major agencies estimate that year 2000 activities will cost about $1.1 billion, according to their February 1999 quarterly reports to OMB; and (14) only one major agency--the Department of Health and Human Services--reported to GAO that it expected to have year 2000 costs beyond those projected in its budget submission.

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