<DOC>
[106th Congress House Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:60491.wais]
THE YEAR 2000 PROBLEM: STATUS REPORT ON THE FEDERAL, STATE, LOCAL, AND
FOREIGN GOVERNMENTS
=======================================================================
JOINT HEARING
before the
COMMITTEE ON
GOVERNMENT REFORM
and the
COMMITTEE ON SCIENCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTH CONGRESS
FIRST SESSION
__________
JANUARY 20, 1999
__________
Committee on Government Reform and Oversight
Serial No. 106-40
Committee on Science
Serial No. 106-42
__________
Printed for the use of the Committee on Government Reform and the
Committee on Science
Available via the World Wide Web: http://www.house.gov/reform
______
U.S. GOVERNMENT PRINTING OFFICE
60-491 WASHINGTON : 1999
COMMITTEE ON GOVERNMENT REFORM
DAN BURTON, Indiana, Chairman
BENJAMIN A. GILMAN, New York HENRY A. WAXMAN, California
CONSTANCE A. MORELLA, Maryland TOM LANTOS, California
CHRISTOPHER SHAYS, Connecticut ROBERT E. WISE, Jr., West Virginia
ILEANA ROS-LEHTINEN, Florida MAJOR R. OWENS, New York
JOHN M. McHUGH, New York EDOLPHUS TOWNS, New York
STEPHEN HORN, California PAUL E. KANJORSKI, Pennsylvania
JOHN L. MICA, Florida GARY A. CONDIT, California
THOMAS M. DAVIS, Virginia PATSY T. MINK, Hawaii
DAVID M. McINTOSH, Indiana CAROLYN B. MALONEY, New York
MARK E. SOUDER, Indiana ELEANOR HOLMES NORTON, Washington,
JOE SCARBOROUGH, Florida DC
STEVEN C. LaTOURETTE, Ohio CHAKA FATTAH, Pennsylvania
MARSHALL ``MARK'' SANFORD, South ELIJAH E. CUMMINGS, Maryland
Carolina DENNIS J. KUCINICH, Ohio
BOB BARR, Georgia ROD R. BLAGOJEVICH, Illinois
DAN MILLER, Florida DANNY K. DAVIS, Illinois
ASA HUTCHINSON, Arkansas JOHN F. TIERNEY, Massachusetts
LEE TERRY, Nebraska JIM TURNER, Texas
JUDY BIGGERT, Illinois THOMAS H. ALLEN, Maine
GREG WALDEN, Oregon HAROLD E. FORD, Jr., Tennessee
DOUG OSE, California ------
PAUL RYAN, Wisconsin BERNARD SANDERS, Vermont
------ ------ (Independent)
------ ------
Kevin Binger, Staff Director
Daniel R. Moll, Deputy Staff Director
David A. Kass, Deputy Counsel and Parliamentarian
Carla J. Martin, Chief Clerk
Phil Schiliro, Minority Staff Director
COMMITTEE ON SCIENCE
HON. F. JAMES SENSENBRENNER, Jr., (R-Wisconsin), Chairman
SHERWOOD L. BOEHLERT, New York GEORGE E. BROWN, Jr., California,
LAMAR SMITH, Texas RMM**
CONSTANCE A. MORELLA, Maryland RALPH M. HALL, Texas
CURT WELDON, Pennsylvania BART GORDON, Tennessee
DANA ROHRABACHER, California JERRY F. COSTELLO, Illinois
JOE BARTON, Texas TIM ROEMER, Indiana
KEN CALVERT, California JAMES A. BARCIA, Michigan
NICK SMITH, Michigan EDDIE BERNICE JOHNSON, Texas
ROSCOE G. BARTLETT, Maryland LYNN C. WOOLSEY, California
VERNON J. EHLERS, Michigan* ALCEE L. HASTINGS, Florida
DAVE WELDON, Florida LYNN N. RIVERS, Michigan
GIL GUTKNECHT, Minnesota ZOE LOFGREN, California
THOMAS W. EWING, Illinois MICHAEL F. DOYLE, Pennsylvania
CHRIS CANNON, Utah SHEILA JACKSON-LEE, Texas
KEVIN BRADY, Texas DEBBIE STABENOW, Michigan
MERRILL COOK, Utah BOB ETHERIDGE, North Carolina
GEORGE R. NETHERCUTT, Jr., NICK LAMPSON, Texas
Washington JOHN B. LARSON, Connecticut
FRANK D. LUCAS, Oklahoma MARK UDALL, Colorado
MARK GREEN, Wisconsin DAVID WU, Oregon
STEVEN T. KUYKENDALL, California ANTHONY D. WEINER, New York
GARY G. MILLER, California MICHAEL E. CAPUANO, Massachusetts
JUDY BIGGERT, Illinois VACANCY
MARSHALL ``MARK'' SANFORD, South VACANCY
Carolina
JACK METCALF, Washington
C O N T E N T S
----------
Page
Hearing held on January 20, 1999................................. 1
Statement of:
Gershwin, Lawrence K., Ph.D., National Intelligence Officer
for Science, Accompanied by Norman Green, Deputy National
Intelligence Officer for Science and Technology, National
Intelligence Council; Michael Harrington, Ph.D., principal
technical staff, MITRE Corp.; Mary Walsh, Year 2000 Issues
Manager, Directorate of Intelligence, Central Intelligence
Agency; and Joel Willemssen, Director of Civil Agencies
Information Systems, Accounting and Information Management
Division, General Accounting Office........................ 55
Koskinen, John, chairman, President's Council on the Year
2000 Conversion............................................ 15
Letters, statements, etc., submitted for the record by:
Gershwin, Lawrence K., Ph.D., National Intelligence Officer
for Science:
Information concerning international litigation.......... 115
Information concerning reactors.......................... 117
Prepared statement of.................................... 59
Horn, Hon. Stephen, a Representative in Congress from the
State of California, prepared statement of................. 4
Koskinen, John, chairman, President's Council on the Year
2000 Conversion:
Information concerning the Senior Advisors Group......... 17
Prepared statement of.................................... 22
Morella, Hon. Constance A., a Representative in Congress from
the State of Maryland, prepared statement of............... 8
Ose, Hon. Doug, a Representative in Congress from the State
of California, prepared statement of....................... 14
Willemssen, Joel, Director of Civil Agencies Information
Systems, Accounting and Information Management Division,
General Accounting Office, prepared statement of........... 72
THE YEAR 2000 PROBLEM: STATUS REPORT ON THE FEDERAL, STATE, LOCAL, AND
FOREIGN GOVERNMENTS
----------
WEDNESDAY, JANUARY 20, 1999
House of Representatives, Committee on Government
Reform, joint with the Committee on Science,
Washington, DC.
The committees met, pursuant to notice, at 11:15 a.m., in
room 2154, Rayburn House Office Building, Hon. Dan Burton
(chairman of the Committee on Government Reform) presiding.
Present from the Subcommittee on Government Management,
Information, and Technology of the Committee on Government
Reform: Representatives Horn, Biggert, Ose, Miller, Maloney,
Norton, and Turner.
Present from the Subcommittee on Technology of the
Committee on Science: Representatives Morella, Gutknecht, and
Jackson Lee.
Staff present from the Subcommittee on Government
Management, Information, and Technology: J. Russell George,
staff director and chief counsel; Matt Ryan, senior policy
director; Bonnie Heald, director of information and
professional staff member; Matthew Ebert, clerk; Mason Alinger,
staff assistant; Paul Wicker and Kacey Baker, interns; Faith
Weiss, minority professional staff member, Committee on
Government Reform; and Earley Green, minority staff assistant,
Committee on Government Reform.
Staff present from the Subcommittee on Technology: Richard
Russell, staff director; Ben Wu, professional staff member; and
Joe Sullivan, clerk.
Mr. Horn. A quorum being present, the joint hearing of the
Committee on Government Reform and the Committee on Science
will come to order. We are here to receive a status report on
the effort to overcome the so-called ``Millennium Bug,'' Y2K,
year 2000. Whatever you want to call it, it has got the same
problem. During today's hearing, administration officials will
report on the efforts of the government at the Federal, State
and local levels, as well as at the international community to
remedy the year 2000 problem.
The year 2000 problem is the result of decisions made in
the 1960's and the 1970's when many computer systems were
developed. At that time, computers had limited storage
capacity. In an effort to conserve memory, programmers
designated the year by the two digits; in other words, instead
of 1967, they put in a 6 and a 7.
Now, until recently that worked. However, when confronted
by the zero-zero of the year 2000, these computer systems and
microchips may not know if the year 2000 is up or we are back
to the year 1900.
This confusion could result in the transmission of
corrupted data, computer malfunctions, system breakdowns.
There are only 345 days left to assure the public that the
computer systems which are critical to our lives and getting
the job done, whether in business or in government, are year
2000 compliant. Unfortunately, even today, many private
organizations and governmental entities are only beginning to
recognize the potential impact of this problem. Some are just
starting to fix their system. Some are leaving little, if any,
time for one of the most important aspects of the remediation
effort, which is adequate testing.
The problem is real; the consequences are serious; and the
deadline is unmovable.
The House Subcommittee on Government Management,
Information, and Technology, which I chair, has focused on the
potential problem since early 1996. In April of that year we
conducted the first congressional hearing. In July 1996, the
subcommittee issued its first report card grading the 24 major
Federal agencies on the status of their efforts to address the
year 2000 problem.
Since then, the Subcommittee on Government Management,
Information, and Technology along with Congresswoman Morella's
Subcommittee on Technology of the Committee on Science has held
numerous hearings, both in Washington and across the country,
on Y2K.
On November 23, 1998, the Government Management
Subcommittee issued its sixth report assessing the executive
branch's year 2000 status. Unfortunately, the overall grade
received was a ``D.'' We hope that changes. Most Federal
departments and independent agencies have responded much too
slowly to this problem.
However, there are two notable exceptions: the Small
Business Administration and, as the President again noted in
his State of the Union Address last night, the Social Security
Administration. Both agencies report that their mission-
critical systems are 100 percent year 2000 compliant.
It is noteworthy that the Social Security Administration
spent 10 years achieving that goal. Even with that effort, the
agency has yet to perform comprehensive end-to-end testing of
its system. Although Social Security calculates benefit
payments, it relies on the Treasury Department and the banking
system to distribute them.
No Federal entity is an island and no Federal entity can be
complacent, regardless of its Y2K status, until its partner
organizations are also adequately prepared for the new
millennium.
I also remain deeply concerned about the Department of
Defense. The Department reported last week that it was making
great progress on the year 2000 problem, despite the ``D-
minus'' it earned on the subcommittee's recent report card. I
look forward to today's testimony which will allow for
elaboration on the Department of Defense's progress.
Much of our focus has been and will remain on the Federal
Government's year 2000 readiness. Mrs. Morella's subcommittee
will go beyond that into many of the private areas in this
country. But Federal agencies do share information with State,
local and international governmental agencies as well as many
organizations in the private sector.
We are unsure of the consequences on Y2K compliant Federal
systems if this shared information is corrupted by a
noncompliant system.
On December 11, 1998, the United Nations held its first
conference on the international ramifications of the year 2000
problem. Over 120 nations sent representatives to discuss their
countries' approach to the problem. According to U.N.
officials, many nations had not started their efforts until
this conference was announced.
In today's hearing we will receive testimony on these and
other important Y2K issues from three key witnesses. First,
John Koskinen, chairman of the President's Council on the Year
2000 Conversion, and Assistant to the President, will present
the status of public and private sector efforts to address the
year 2000 problem. He will be followed by Dr. Lawrence K.
Gershwin, National Intelligence Officer for Science and
Technology at the National Intelligence Council, who will
report on the status of foreign efforts to deal with the Y2K
problem.
We are unsure of the consequences which exist abroad and
one of our perennial expert witnesses will be finally Mr. Joel
Willemssen, Director of Civil Agencies Information Systems at
the General Accounting Office, and he will provide the General
Accounting Office's assessment of the readiness of key public
infrastructure and economic sectors.
So we welcome all of these expert individuals, and we
particularly are delighted to see Mr. Koskinen, who has brought
a lot of order to this effort within the executive branch since
he assumed the problem in February 1998.
I now yield to the chair of the Subcommittee on Technology
of the Committee on Science, and the co-chair of this task
force, Mrs. Morella.
[The prepared statement of Hon. Stephen Horn follows:]
[GRAPHIC] [TIFF OMITTED] T0491.001
[GRAPHIC] [TIFF OMITTED] T0491.002
Mrs. Morella. Thank you, Mr. Chairman and co-chair of the
task force. I am pleased to welcome everyone to the latest in a
series of ongoing year 2000 hearings held jointly with the
Science Committee's Technology Subcommittee, that I chair, and
the Government Management, Information, and Technology's
Subcommittee chaired by my distinguished colleague from
California, Congressman Horn.
It was, as you probably all know, well over 2\1/2\ years
ago when our two subcommittees, which last Congress was
designated by the Speaker as the House Y2K Task Force, first
began joint hearings on the year 2000 computer problem, and
that was back in the 104th Congress.
In the past, our oversight activities and legislative
initiatives have pushed for the creation of a national Y2K
strategy, greater governmental management, legal protection for
Y2K information that is exchanged in good faith within
industry, and the establishment of a high-level senior
administration official to lead our Nation's Y2K efforts.
Now, as we begin the 106th Congress, facing just 345 days
before the immovable January 1, 2000 deadline, there is a
greater sense of urgency to ensure that our Nation's public and
private sectors will be ready for the beginning of the new
millennium.
It is clear that we cannot move forward to meet the
priorities and challenges of the next century if our Nation's
computers are moving backward.
We intend to vigilantly continue our congressional
oversight responsibilities, press wayward Federal agencies that
are behind schedule, and work collaboratively with the
administration on industry initiatives so that we can provide
the American public with full confidence that our Nation will
not suffer from any lasting catastrophic Y2K failures.
Earlier this month, the bipartisan chairs of the House Y2K
Task Force wrote the President urging him to use his bully
pulpit and to personally play a significant role in leading
this effort. We asked the President to use his State of the
Union Address to emphasize the importance of fixing the problem
in order to ensure that our Nation will take direct, effective,
and timely action.
And that is why I was frankly delighted when the President
said last night that we need every State and local government,
every business, large and small, to work to make sure that this
Y2K computer bug will be remembered as the last headache of the
20th century and not the first crisis of the 21st.
It seems appropriate, then, that we continue our Y2K
hearings by reviewing today the Y2K impact on State, local and
foreign governments, and we have before us today a very strong
panel, and I am looking forward to hearing their testimony.
I want to welcome back to our subcommittees the chair of
the Year 2000 Conversion Council, John Koskinen, who has
accomplished a great deal since he was named the Y2K Czar less
than a year ago.
I also want to welcome back Joel Willemssen from the
General Accounting Office, who has worked diligently and kept
us informed since we began our Y2K efforts.
I am especially interested in the issue of how American
industry in this global marketplace may be affected by the year
2000 efforts, or the lack thereof, of our international trading
partners.
I am deeply troubled by the potential for Y2K disasters in
a number of foreign countries. I am concerned that any
potential Y2K economic and social instability across the globe
will ripple through to the United States, so I very much
anticipate the testimony of both the National Intelligence
Council and the Central Intelligence Agency and their
declassified assessment of the status of year 2000 efforts
among foreign governments.
I have looked at the testimony. It does indicate that we do
have some major international problems. And, frankly, I just
returned yesterday from Korea, Indonesia, Hong Kong, and Tokyo,
and in all instances I mentioned the year 2000 computer problem
and asked what was being done. There were times when eyes
glazed over and times when they said, ``Oh it's being taken
care of.'' There were times when they didn't understand what it
was, and then I got an honest appraisal in Hong Kong where they
said that it was definitely going to affect the economy.
The economy. Indonesia is sort of a basket case. Korea is
trying, but not very well. And members of the Japanese Diet
didn't even know what Y2K was. So they promised they would come
up with a resolution. That is just a sampling of the immensity
of the problem, particularly because of the interoperability
and connective-ness.
So we know the end of the millennium knows no international
boundaries and, indeed, Y2K is a global problem and as such it
requires global coordination. America can lead the way on Y2K
but we must make sure the rest of the world follows.
So, Mr. Chairman, I yield back. I did want to mention that
we do have--and maybe they will have an opportunity to say
something--Judy Biggert, who is a new member, who is here and I
think is going to be on the Science Committee. We have not
totally organized yet. And Gary Miller, who is also going to be
on the Science Committee. I welcome them. And Doug Ose, who I
believe is going to be on the Government Reform Committee.
I yield back, Mr. Chairman.
[The prepared statement of Hon. Constance A. Morella
follows:]
[GRAPHIC] [TIFF OMITTED] T0491.003
[GRAPHIC] [TIFF OMITTED] T0491.004
[GRAPHIC] [TIFF OMITTED] T0491.005
[GRAPHIC] [TIFF OMITTED] T0491.006
Mr. Horn. I thank you for introducing those three fine
individuals. They are all coming into Congress for the first
time, and we are delighted to have them because they bring to
this committee and your subcommittee a very strong background
in organization and management and caring about some of these
problems. So we welcome them all.
Now we have a new ranking member, I am delighted to say,
who we have worked with before on the full committee, and that
is Jim Turner of Texas. Mr. Turner, would you want to make some
opening remarks?
Mr. Turner. Thank you, Mr. Chairman. First I want to thank
you and Chairwoman Morella for your leadership in the
technological issues that are facing us in this country, and I
am honored to be the ranking member of your subcommittee, Mr.
Chairman. You have always been known to have one of the
hardest-working subcommittees in the Congress, and I look
forward to that challenge. You are also noted for running your
committee in a very bipartisan way, which we on this side of
the aisle very much appreciate.
Today we are here, of course, to discuss the status of both
domestic and international efforts to fix the year 2000
computer problem, commonly known as Y2K, which occurs when
computer systems or microchips fail to recognize a four-digit
date code.
We have heard from people who warned that Y2K will cause a
global financial crisis. On the other hand, we also know that
13 stock exchanges and 29 major brokerage firms have finished
extensive Y2K repairs and turned their computers forward to the
year 2000 in recent preliminary tests of their system.
Fortunately, only 1 percent of stock trades in the tests were
affected by computer problems.
We also know that in Maryland, Montgomery County has
recently simulated the century date change in a test of its
traffic, telecommunication and emergency response systems, all
of which functioned properly.
It is important to recognize that in both of these examples
it took many months of testing, repair, and preparation and
hundreds of thousands of dollars to be successful. These
examples point out, as well as many others we could cite, that
early preparation, concerted efforts and testing are the answer
to the Y2K problem.
Although no one knows for sure what will happen on January
1, 2000, it is important for all of us to try to separate fact
from fiction, reality from media hype, and encourage
rationality rather than hysteria. Hopefully, preparations will
keep disruptions to a minimum and public health and safety and
the environment will not be put at risk. Rumors, false fears,
and Internet chat can, in fact, change imagined problems into
very real ones.
The government and private sector entities that prepare
adequately likely will make it through this next year without
serious disruptions in their operations and in their
activities. The Federal Government, under the leadership of Mr.
Koskinen, has been working hard to make sure that it is ready
for the date change. Last night President Clinton reassured our
senior citizens that Social Security checks and direct deposits
will not be disrupted. The Federal Government needs to keep
pushing to assure that no Federal programs are negatively
affected by the Y2K problem, particularly those Federal benefit
programs that are administered by the States.
We have the mechanisms in place now to track the Federal
Government's progress on Y2K and provide the necessary
oversight. However, many other governmental entities and
private sector industries do not fall within the Federal
Government's purview and are at greater risk of failure than
are the Federal computer systems. Unfortunately, we are
beginning to hear that small and medium-sized companies, and
even State and local governments, may not be preparing
adequately for Y2K.
We have very little information on international
preparations for the date change, and from what we know so far,
there appear to be serious problems in many foreign countries,
and in particular, the lesser-developed countries. China and
Russia may be especially hard hit. International shipping,
transportation, telecommunications and financial sectors may be
particularly vulnerable to the Y2K problem. Because of the
global nature of our modern economy, the United States may be
adversely affected by their failure to prepare.
I would like to thank Mr. Koskinen for his leadership and
all of our witnesses today for providing us with the benefit of
their knowledge on this subject. Working together, I am
confident that we will be able to meet the challenge of Y2K.
Thank you, Mr. Chairman.
Mr. Horn. I thank the gentleman very much for those
constructive comments.
Mrs. Morella has one more point.
Mrs. Morella. I wanted to thank Mr. Turner for pointing out
the extraordinary work in Montgomery County, MD, which I happen
to represent. Thank you.
Mr. Horn. Any comments from our new members or any opening
remarks? Mr. Ose.
Mr. Ose. I have no idea what I am doing, Mr. Chairman. I am
afraid to say the wrong thing and, apparently, the phrase I
want to use is, I yield back my time.
[The prepared statement of Hon. Doug Ose follows:]
[GRAPHIC] [TIFF OMITTED] T0491.007
Mr. Horn. Mr. Miller, any comments?
Mr. Miller. Yes, Mr. Chairman, I am honored to be here. I
thank you for holding these hearings. I also appreciate the
focus we are making on the problem we are going to deal with in
the future, and I am looking forward to being an integral part
of this committee.
Mr. Horn. Thank you. Mrs. Biggert, any comments to make?
Mrs. Biggert. Thank you, Mr. Chairman. I am also very happy
to be here and am honored to be on this committee. I have
served in the Illinois Legislature and was the sponsor of the
Y2K Task Force in Illinois, so this is an opportunity for me to
broaden my horizons to the national and the global issues that
concern this. So I am very happy to have the opportunity to
participate.
Mr. Horn. Well, We are glad to have you here, and we are
delighted the chairman of the full committee has designated you
as vice chairman of this Subcommittee on Government Management,
Information, and Technology. So we look forward to working with
you.
Now, Mr. Koskinen, you know the routine that we swear all
witnesses that come before us, and you have taken the oath many
times, so I am sure you know it by heart.
[Witness sworn.]
Mr. Horn. Thank you very much. Please be seated. Start in.
We are going to give you as much time as we can divide between
the three of you this morning, because we want to thoroughly
get into this. So feel free to educate us.
STATEMENT OF JOHN KOSKINEN, CHAIRMAN, PRESIDENT'S COUNCIL ON
THE YEAR 2000 CONVERSION
Mr. Koskinen. Thank you and good morning Chairman Horn,
Chairwoman Morella. I am pleased to appear again before this
joint session of your subcommittees to discuss the activities
of the President's Council on Year 2000 Conversion and the
status of public and private sector efforts to address the year
2000, or Y2K as it is known, computer problem.
With your permission I will submit for the record my full
statement, along with the most recent OMB report on the status
of Federal progress and the first quarterly report by the
President's Council on the national assessments of progress in
critical sectors. With your permission, Mr. Chairman.
Mr. Horn. Without objection it is in the record.
Mr. Koskinen. I appreciate the increased visibility you
have given to the year 2000 problem through your oversight and
regional hearings. The problem presents us with a management
challenge unlike any we have ever seen. Businesses and
governments across the country are engaged in vigorous efforts
to ensure that systems are prepared for the date rollover. The
scope of the challenge is vast, and not every system will be
fixed by January 1, 2000. While progress is being made in the
public and private sectors, continued efforts are necessary if
we are to achieve our shared goal of minimizing Y2K-related
disruptions.
One aspect of the Y2K problem applies to every public and
private sector organization. You are never really done. It is
not enough for the Federal Government or any organization just
to fix its own systems. Organizations also need to be concerned
about the progress of partners they exchange data with and
depend upon as well as progress among other organizations whose
failure could have a significant effect upon their operations.
The Council began its work last year using this ``three-
tiered'' model. From the Federal Government's point of view, it
means first ensuring that critical Federal systems are ready
for January 1, 2000; next, working with our interface partners
for important Federal services, primarily States, to ensure
they are remediating their systems; and finally, reaching out
to those whose failures domestically or internationally could
have an adverse effect upon the public.
To reach out beyond the Federal Government, the Council has
formed working groups focused on Y2K challenges in over 25
critical sectors such as finance, communications,
transportation, electric power, oil and gas, and water supply.
The working groups have reached out to form cooperative working
relationships with major trade associations and other umbrella
organizations representing the individual entities operating in
each sector.
We have also created a Senior Advisors Group to the
President's Council which will hold its first meeting tomorrow.
This group is comprised of Fortune 500 company CEOs and heads
of national public sector organizations representing our
working groups. I am submitting for the record also the present
list of group members.
Mr. Horn. Without objection it will be put in the record at
this point.
[The information referred to follows:]
[GRAPHIC] [TIFF OMITTED] T0491.008
Mr. Koskinen. The group will provide the Council with an
additional perspective on Y2K challenges that cut across sector
lines and will recommend how industries can best work together
in critical areas.
As noted, our first challenge is to ensure that Federal
systems are prepared for the year 2000. I am pleased to report
that the Federal Government continues to make strong, steady
progress in solving its Y2K problems.
According to the most recent OMB report released last
month, 61 percent of all Federal mission-critical systems are
now year 2000 compliant, more than double the 27 percent
compliant a year ago. The report also states that of critical
systems requiring repair work, 90 percent have been fixed and
are now being tested.
The President has established an ambitious goal of having
100 percent of the government's mission-critical systems Y2K
compliant by March 31 of this year, well ahead of many private
sector system remediation schedules. Although much work
remains, we expect well over 80 percent of the government's
mission-crictical systems will meet the March goal, and monthly
benchmarks for completing the work will be available for every
system still being tested and implemented. We expect that all
of the government's critical systems will be Y2K compliant
before January 1, 2000.
This does not mean that we are without significant
challenges. While the Defense Department continues to make
progress in addressing its massive Y2K challenge, OMB reported
that DOD's rate of progress indicates that not all of its
systems will meet the March goal of being 100 percent
compliant. At a recent day-long meeting at the Pentagon to
review the status of all DOD mission-critical systems, Deputy
Secretary Hamre and I were advised that most systems will
either meet the March date or be in the process of
implementation. And, in fact, as of January 1 of this year, 73
percent of the Department's mission-critical systems are now
compliant.
According to the last OMB quarterly report, the Energy
Department had completed testing on only 53 percent of its
critical systems, below the governmentwide average. Secretary
Richardson made clear at the beginning of his tenure at the
Department that this issue will receive his personal attention,
and recent progress has the Department confident that over 90
percent of its systems will meet the March government deadline.
HHS's Health Care Financing Administration [HCFA] has
finished renovating and testing all of its internal systems.
Although a tremendous amount of systems work and contingency
planning will remain after March, most Medicare contractors are
expected to complete renovation and testing by the
governmentwide goal.
The State Department also faces a significant challenge in
simultaneously managing its complex Y2K project and completely
replacing information systems installed around the world.
However, as I was informed at my monthly meeting last week with
the Department senior managers, the State Department expects
that well over 90 percent of its systems will meet the March
governmentwide goal.
At the Transportation Department, the FAA's rate of
progress has improved dramatically, but the percentage of DOT's
critical systems that have been tested and implemented
continues to lag behind the government-wide schedule.
Nonetheless I am confident the air traffic system will be
totally compliant well in advance of the year 2000.
Our second challenge is the work with the Federal
Government's interface partners, primarily the States, as they
work to ensure that their systems are ready for the year 2000.
As a general matter, most States are making good progress in
remediating their systems. But not every State is doing well. A
National Association of State Information Resource Executives
survey indicated that a handful of States report that they have
not yet completed work on any of their mission-critical
systems.
Federal agencies are actively working with the States to
ensure the Federal-State data exchanges for State-administered
programs will be ready for the year 2000. Most Federal agencies
and States have now inventoried all of those exchange points
and are sharing information with one another to ensure the
exchanges will function in the year 2000.
For the February 1999 quarterly report, OMB has asked the
Federal agencies to provide assessments of each State's Y2K
progress on key State-administered Federal programs such as
food stamps and child welfare programs.
The third challenge for the President's Council is to reach
out beyond the Federal Government and its partners to those
organizations whose failures would have an adverse effect upon
the public. As noted earlier, the Council has formed over 25
working groups performing outreach in critical sectors. The
working groups, under the leadership of their outside industry
group partners, are focused on gathering industry assessments
of Y2K preparedness in critical sectors. Earlier this month the
Council issued its first quarterly summary of this assessment
information, which I have provided for the record.
While many industry groups are just beginning to receive
survey data from their members and some report they expect to
have such information for the first time within the first
quarter of the year 2000, I would like to make three points
about what we know thus far.
First, we are increasingly confident there will not be
large-scale national disruptions in key infrastructure areas.
In particular, the telecommunications and electric power
industries have constructed well-organized and comprehensive
responses to the problem.
Second, banks, large and small, are well prepared for the
year 2000 transition. In the most recent examination by Federal
regulators, 96 percent of the Nation's depository institutions
were on track to meet the regulators goal of completing Y2K
work by June 1999.
The third point is obvious but bears repeating. Our
greatest risk lies in organizations that are not paying
adequate attention to the problem. The greatest risks therefore
at this time, in our view, are in three areas: smaller
government entities, small businesses, and internationally.
At the local level, many towns, cities, and counties are
aggressively attacking the problem and are making good
progress. But according to a December 1998 National Association
of Counties survey done for us of 500 counties representing 46
States, roughly half of the counties do not have a county-wide
plan for addressing year 2000 conversion issues, and almost
two-thirds of the respondents have not yet completed the
assessment phase of their year 2000 work.
Many small and medium-sized businesses are also taking
steps to address the problem and to ensure not only that their
systems are compliant but that organizations they depend upon
are ready for the year 2000 as well. However, a National
Federation of Independent Businesses survey released this month
indicates as many as one-third of small businesses using
computers or other at-risk devices have no plans to assess
their exposure to the Y2K problem.
Internationally, there is more activity now than there was
a year ago, but it is clear that most countries are
significantly behind the United States in efforts to prepare
critical systems for the new millennium. Awareness remains
especially low among developing countries. While strong
international coordination of Y2K efforts has existed for some
time in the areas of finance and more recently has begun to
take shape for telecommunications and air traffic, we are very
concerned about the lack of information and coordination in the
area of maritime shipping.
The Council has been working to improve the response among
smaller governments, small businesses, and international
entities. For smaller governments, we have been working to
reach out through groups like the National Association of
Counties and the National League of Cities. We are also
encouraging State year 2000 coordinators to focus on the
efforts of smaller governments within their jurisdictions.
For small businesses, the Council joined the SBA, the
Commerce Department, and other Federal agencies in launching
National Y2K Action Week last October, to encourage small and
medium-sized businesses to take action on the year 2000 problem
with educational events that were held across the country.
Another week is planned for this spring. And SBA has mounted an
aggressive outreach program where, through its Web page and
partners in the banking and insurance industries, it is
distributing Y2K informational materials to the Nation's small
businesses.
Internationally, as the chairman noted, the Council worked
with the United Nations to organize last month a meeting of
national year 2000 coordinators from around the worlds, perhaps
the most important year 2000 meeting to date. More than 120
countries sent representatives to New York, and I was delighted
Chairman Horn and Congressman Kucinich attended as well. The
delegates at the meeting agreed to work on a regional basis to
address cross the border issues. They also asked the steering
committee we had created to help organize the meeting to
establish an international mechanism for coordinating regional
and global activities, including contingency planning. We are
now working with this steering committee to create an
International Y2K Cooperation Center which will support
regional activities and international initiatives in areas such
as telecommunications and transportation.
The Federal Government responds to a range of emergencies
under the direction of several agencies. One of the challenges
of the Y2K problem is that while we do not expect major
national failures in the United States, it is possible that we
will have a confluence of demands for assistance and response
as the clock turns to January 1, 2000. Therefore, we are
working with all of the major emergency response agencies to
create a coordinating center to ensure that we can respond
effectively to whatever challenges we face moving into the next
century.
We will also be discussing with our partners in our varied
working groups, under the leadership of the Senior Advisors
Group, the status of industry-wide plans for dealing with any
emergencies they may confront. While these responses are
primarily the responsibilities of each individual enterprise
and industry, we clearly will all benefit by coordinated
planning and communication.
Let me close by noting that we all continue to confront the
challenge of encouraging organizations to take the Y2K problem
seriously, remediate their systems, and prepare contingency
plans without causing a public overreaction that is unnecessary
and unwarranted. Our strategy is based on the premise that the
public has great common sense and will respond appropriately
when they have the necessary information.
We believe, therefore, that everyone working on this
problem, at the Federal level, at the State and local level,
and in the private sector, needs to provide the public with
clear and candid information about the status of their year
2000 activities. That is why we are making the industry
assessments we gather publicly available. That is why the OMB
reports on Federal progress are available to the public. That
is why we have created the 1-888-USA-4-Y2K information line for
consumers. That is why we will provide details of our
contingency planning and are encouraging others to do the same
for the public.
A corollary principle is that everyone working on this
problem has a responsibility to ensure their comments
accurately reflect the factual information that is available
and that they avoid overgeneralizations that will only play
into the hands of those who want to create panic for their own
gain.
We remain committed to working with your subcommittees and
others in Congress on this critical issue, and I would be
pleased to answer any questions you may have at this time.
[The prepared statement of Mr. Koskinen follows:]
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Mr. Horn. Thank you very much for that very thorough
testimony. I have simply one question and then we are going to
yield to Mrs. Morella for 5 minutes, then yield to Mr. Turner
for 5 minutes, then go down the line for each Member with 5
minutes, and if more arrive we will alternate by party.
But let me ask you, one of the key things here that I think
worries you as well as worries us, and that is the status of
the Federal agencies' data which are based on self-reporting.
And I think you will recall that we had a case where the
Inspector General of Defense found that--and GAO, I might add--
found that the Department of Defense reported certain systems
fixed when in fact they were not.
How do you deal with that when you are getting the data and
you are not over there, and how do we handle something like
that?
Mr. Koskinen. It is obviously an important problem across
the board. You may recall I chaired the interagency groups of
Inspectors General in my prior incarnation when I was at OMB. I
have met regularly with the Inspectors General and encouraged
them to independently review the status of the agency year 2000
efforts. And, in fact, they have done an excellent job in a
number of agencies by revealing areas where there are problems.
OMB has also required all of the agencies to have
independent verification and validation. In fact, before the
President announced that Social Security was completed, we
waited until the Social Security Administration had certified
its systems were compliant, we waited until the Treasury
Department's Financial Management Service was able to certify
that its systems were year 2000 compliant, and we waited until
those systems had been tested and worked together. So I think
there is an ongoing need to ensure that we continually evaluate
and check the information agencies provide.
GAO has also done an excellent job not only in providing
general information about how to deal with the problem, but in
conducting independent reviews to determine whether or not
there are gaps. As the agencies and the Inspectors General
understand, the goal here is not to, in fact, find people who
have made a mistake and point that out for the sake of pointing
it out. The goal is to ensure that as many systems as possible
are functioning and are able to function as we move into the
year 2000.
Mr. Horn. I thank the gentleman. And now, Mrs. Morella, the
co-chairman, 5 minutes.
Mrs. Morella. Thank you. Thank you for the progress you are
making Mr. Koskinen. We appreciate it and you have to be kind
of a wonder man to do it all.
Let me just reiterate the fact that last year I introduced
a bill which had three different segments, Mr. Barcia had
contributed one of his bills to part of it, and Mr. Leach in my
bill, and it passed the House. I am recrafting it because it
didn't get out of the Senate because I want you to be involved.
I want your support of the bill.
The administration appeared to be in favor of it. We have
changed it so that it doesn't have as many requiring mandates
within it, which I think was one of your concerns. I don't know
whether you have had a chance to look at it, but----
Mr. Koskinen. I have not seen any drafts.
Mrs. Morella. I would like to work with you on it very
soon.
Mr. Koskinen. I would be delighted to review the draft and
certainly to work with you and your staff.
Mrs. Morella. Excellent. I think something is needed. It is
not something that is going to be threatening and I think it is
something that definitely will help. So I have your assurance
we are going to work together soon.
Now, when I was in Tokyo, I remember reading in the
newspaper there, the Japan Times, about the fact that China had
issued a mandate that on January 1, 2000, every plane was going
to be flying. Now, I don't want to fly on one of those planes.
Mr. Koskinen. Actually, the mandate is that every senior
executive of the airlines be on those planes.
Mrs. Morella. Every senior executive will be on those
planes. Now, I don't know quite how to respond to what that
tells us. I mean I suppose it is a good opportunity to put
people on certain planes and take care of changing the
governmental leadership, but I wonder how you feel about that,
because actually that gets into my question.
I understand that you have detailed Bruce McConnell from
OMB to spearhead the Council's international efforts. Can you,
not only whatever response you may have to what the Chinese
officials are mandating, but also if you could give us more
details regarding this effort and then how we in Congress can
best assist.
Mr. Koskinen. I think the thrust of the Chinese initiative
is to ensure that there is a great incentive to make sure their
planes are able to fly. As you know, the problem with the
planes flying is not safety, it is really whether in fact there
are substantial delays. And, in fact, I have been committed for
some time to fly to New York on New Year's Eve on a commercial
airliner and take the first plane back on January 1st so that I
can be in my office, because I do think it is important for the
public to understand that we are confident these systems are
going to work.
With regard to the International Cooperation Center, as
Chairman Horn remembers, when we pulled the 120 countries and
their senior year 2000 executives together at the United
Nations meeting, we had a couple of goals. One was to get the
delegates to commit to going back to their respective countries
and to work on a regional basis to address cross-border issues,
whether they be in telecommunications, power, shipping,
whatever. They also asked the steering committee to set up an
International Cooperation Center. Mr. McConnell's detail to the
Council will allow him to chair and organize that center.
The center will be a virtual organization with
contributions of senior executives from other countries. We
already have offers from Mexico, Chile and South Africa. The
center will provide support to existing regional activities.
There is a major meeting coming up in Manila the first week of
March.
It will also help coordinate and support international
sector activities in such areas as banking, where the central
banks have been supportive; telecommunications, under the
International Telecommunications Union; and air traffic, under
the International Civil Aeronautics Organization.
Also, as a result of the U.N. meeting, and through the
leadership of the Coast Guard, we are creating and organizing a
meeting that will also be held the first week in March of all
major shipping interests around the world--private and public--
to ensure that there is more coordination in that area.
Our goal is to support with other countries a more
organized global approach to this problem, not only by
countries but by sectors. We went to try to do as much as we
can, first to ensure that countries fix as many systems as
possible, and second to ensure that there is an organized set
of contingency plans and emergency response mechanisms in place
around the world.
Mrs. Morella. The 120 countries have all indicated that
they are going to be part of this conference and be involved?
Mr. Koskinen. Yes. We were overwhelmed with the response to
the United Nations meeting. We had thought we would do very
well if we could get 50 countries. But when we had 120
countries show up and commit not only to do this work but to
meet again in June at the United Nations to review progress
across the board in great detail, I was convinced it was
probably the most significant year 2000 meeting that had been
held to date.
Mrs. Morella. It certainly is important. And, of course,
the resources that are going to have to go into this, too,
countries are just not aware of that, nor do they know how to
expeditiously do it, since it is so labor intensive.
Just one final question. A number of my colleagues are very
concerned about the potential of a deluge of civil litigation
for possible Y2K failures. Is the Council going to be working
with industries, consumer organizations for legislative
remedies?
Mr. Koskinen. Liability is not totally within our domain.
Our goal, as I have told people, is to have systems function at
the end of this year. What happens after this year, once they
are functioning, is not within the Council's jurisdiction.
We have worked very closely with Congress, and we genuinely
appreciate the committee's support of the Year 2000 Information
and Readiness Disclosure Act, because, as you noted, the
disclosure of information is critical if we are to have systems
function. But within that context we obviously have a wide
range of working groups and contacts and we are listening to
their concerns about liability. We have asked them to begin to
quantify what the reality of those concerns are. There is a lot
of hype and overexaggeration in all aspects of this problem.
The art form, I think, is to try to figure out what is the
reality, or what can we really expect, and then what is an
appropriate response to that reality.
At this point, there are a wide range of industry groups
focused on this problem who have yet to come together
themselves on a common approach, but we are prepared to listen
to their suggestions.
Mrs. Morella. We are concerned about a cottage industry of
lawyers waiting there in advance.
Thank you.
Mr. Horn. I thank the gentlewoman and now yield to the
ranking minority member, Mr. Turner, 5 minutes.
Mr. Turner. Mr. Koskinen, thank you for your report today.
I know the Internet is full of doomsday theories. One area I
wanted to particularly inquire about--I have a district with a
lot of small towns and rural hospitals--is the suggestion that
rural hospitals may be more vulnerable than most with some of
the equipment that you find in emergency rooms and in intensive
care units that are date-sensitive.
Is that a problem, and do you know what is going on,
particularly among rural hospitals, to try to address it?
Mr. Koskinen. It is an important question. The rural
hospitals are no more exposed to equipment issues than large
hospitals. The concern we all have is that in rural areas, or
smaller towns and communities, there may not be the same level
of attention and focus on this problem or there may not be the
same resources available.
We have been working in our health care outreach area with
the American Hospital Association, and other health care groups
to provide them and encourage them to provide technical
information and resources to all of their members and to
nonmember hospitals many of which are in rural areas so that
they can take advantage of the experience and information that
has been gained by large hospitals and major research centers
who have been dealing with this problem.
The FDA, the VA, and the Department of Defense have all
banded together to provide a Website with updated information
on the status of medical devices. Fortunately, it turns out a
very small percentage of those devices have a year 2000
problem. For those that do, the problem is generally not that
they don't function but, as you noted, that they provide
erroneous or incorrect data information, which can be
critically important.
These are systems over which we have no direct control, but
our goal is to try to do everything we can to increase the
amount of information that is available to every rural hospital
in this country on how to deal with the problem. Obviously, it
is their responsibility to use that information, but our goal
is to make sure that no one is unaware of the problem and
without access to the best information that we and our working
group partners can provide.
Mr. Turner. I have been told that there are one or more
dates during 1999 that could provide opportunities to know
whether or not systems will fail on January 1, 2000. Is that
the case, and, if so, would you explain that to me a little
bit?
Mr. Koskinen. There are a range of issues that software
programs will confront as we move through this year. First, any
system that has to look forward into the year 2000 will
obviously be challenged. We have all had experience with credit
cards that have expiration dates that for a long time said
1999. Now, many cards expire in the year 2000 or beyond and
most card processing systems are able to deal with the year
2000. If you have to make an airline or hotel reservation, if
you order inventory and need to track it in the year 2000, the
systems have been made to be compliant.
As we noted in December, unemployment insurance is the
first major Federal program to encounter the year 2000 problem
because those benefits are calculated on a look-forward of 12
months. So starting the first week of January 1999, the State
systems running that program had to be able to deal with the
first week of January 2000. Some of the State systems are not
yet compliant but, fortunately, those States have good
contingency and backup plans so no one is missing an
unemployment check while those States are finishing the work.
There are other dates people have focused on, particularly
those that involve the number 9. A nonstandard programming
practice was to use numbers like 99 to end a program operation.
Fortunately, it was not an acceptable practice. But people
originally focused on September 9, 1999 to see whether that
date would work. People were also interested whether just
rolling into the year 1999, whether January 1, 1999 would
trigger defaults. Thus far there are only a handful of
anecdotal reports from around the world that anyone had a
problem with January 1, 1999. Another date will be April 9,
1999, which will be the 99th day of 1999.
Our expectation is that these dates will not cause major
problems first, because everybody is aware of them and, second,
because it was not a standard programming issue. But countries,
governments, and businesses with fiscal years that start before
the end of this year, will have fiscal year 2000 issues to
confront. Many States have fiscal years starting in April, June
or July. The Federal Government's begins on October 1, 1999,
and will be operating against a fiscal year 2000 issue.
So all of those dates are important and all of them will
give us some indication as to how successful year 2000
remediation has been. But I will tell you that even if you meet
the September 9, 1999 and other challenges, it does not
necessarily mean that you will not have a problem with the year
2000 transition.
Mr. Turner. Thank you. I know the Federal Reserve has
requested the Treasury Department print an extra $50 billion in
cash for potential use at the end of the year. There are a lot
of people, I noted in a town meeting I had a week ago, who seem
to be aware that it might be important for them to withdraw
cash from their bank accounts before January 1, 2000.
I assume that someone determined that the $50 billion in
cash would be a sufficient amount, but is that a real problem
and should the public be concerned about being able to get
cash?
Mr. Koskinen. No. As I have said on numerous occasions, we
have an obligation to be very candid with the public and tell
them what works and what doesn't work, what has been completed
and what has not been completed, so they can respond
accordingly.
Initially, when people started talking about this and the
Fed made that announcement some months ago, there was a concern
about whether the ATM machines would work, whether you would
have access to your cash, whether the banks would be able to
function. The good news is that, at this point, as I noted, 96
percent of the banks are at the highest rating of preparedness
in terms of dealing with the year 2000, according to the
independent Federal regulators. So we expect the banks will be
able to function.
The reason for ensuring that people are confident that the
cash is there is not to combat fears that they won't get access
to it, but to allay concerns about banks running out of cash if
everyone decides to take out some extra money. The calculation
was made that, on any basis, it is reasonable that the public
should not be concerned about cash availability. And like
anything in banking, if people are confident the cash is going
to be there, obviously they will be less likely to actually use
it.
It is a long weekend; our general advice is that people, as
they normally would, should have cash for that long weekend.
What we are anxious to do is to not have the public
unnecessarily decide that they need a month's cash or 2 months'
cash, which would be a very different problem.
Mr. Turner. It seems that the public information challenge
that you have is enormous. You could make a judgment that to
talk about it makes the problem worse. You could say, no, we
have to talk about it because people need to know the facts. I
find that people are very uneasy about it.
In this town meeting I referred to, we went through a
litany of things that I knew from service on the committee were
taking place to try to prepare for the year 2000. The group
listened, obviously with some skepticism, and at the end they
said, ``Congressman, what are you going to do on January 1st?''
And in a moment of candor I said, ``Well, I probably won't fly
that day.''
Mr. Koskinen. I was just going to invite you to join me.
But that is an issue. As I said when I testified last spring,
if nobody gets off an airplane in Hawaii for 2 weeks, just to
be careful, and if that is not necessary, we will have created
a very major economic problem for the airlines and for Hawaii.
Again, my view is I don't want the public to do anything that
is risky. On the other hand, I think it is important for the
public not to unwittingly create a problem even if the systems
are running fine; that we have a problem with financial
markets, we have a problem with banks, or we have our problems
with a sector of the economy.
So I think what you are saying, the high wire act from the
start has been on the one hand to be able to get people to
understand this is a real problem, it is a serious problem that
needs to be dealt with without, on the other hand,
unnecessarily having them take unnecessary action. So we have
an obligation to inform the public, and we are going to work on
that. That is why we have the hotline, to provide the public
with all the information we have and to give them our best
advice as to what they ought to be doing to prepare for
whatever the eventualities are.
My bottom line is we are concerned about preparedness at
the local level and we are anxious in small and medium-sized
cities and counties, to have people asking their governments to
discuss with them where they are and what steps they have taken
to deal with this problem.
Mr. Horn. I thank the gentleman. And now the gentlewoman
from Illinois, the vice chairman of the Subcommittee on
Government Management, Information, and Technology, Mrs.
Biggert, 5 minutes.
Mrs. Biggert. Thank you, Mr. Chairman. Last year I
understand that the chairman, Mr. Horn, did meet with the staff
in Illinois, the Year 2000 Task Force, to talk about the year
2000 compliance. And out of this meeting came assurances that
the Illinois utilities will be prepared for the year 2000, and
particularly the systems that depend on power, such as water
and sewer and things that we think of applying to
municipalities, and they will continue to function effectively.
Is this true of other States? Are they far along in
planning for these, dealing with utilities and things that
cross really municipal lines but really are the functions that
will go across the State?
Mr. Koskinen. As I noted, we are in the process with our
working groups of reaching out and asking organizations to
provide information on progress at the State and local level to
us. That is where the National Association of Counties survey
came from. As a general matter, I think the vast majority of
States are doing a very good job. They are well organized and
prepared to deal with the program. There are a few that are
starting slower and have had a lower priority, but I think that
is changing.
Our concern, even in the States doing very well, is at the
local level. As you know, there are thousands of counties and
cities out there that States do not directly manage those and,
in fact, oftentimes do not have regular communication with
them. So the challenge I have given to the States, as well as
to Federal agencies, is to do whatever we can to reach out to
make sure that every mayor, every city manager, and every
county executive has this problem as a priority. If they have
it off on the side, if they say somebody else is taking care of
it; or, as we increasingly hear, ``We will fix it when it
breaks.'' I think that there is great risk in those communities
to their emergency response system, their local hospitals,
their local power plants, their local telephone companies.
Mrs. Biggert. What are you doing, then, to increase that
awareness; are there meetings?
Mr. Koskinen. We have had meetings. We are working with the
associations of counties, of cities, of States. We are
providing information to them. We are encouraging them to
provide information to them. The National League of Cities and
the National Association of Counties have an organization,
Public Technology, Inc. [PTI], which has been providing
information to local governments.
Ultimately it is the responsibility of the local
communities and the local governments are responsible for
fixing their own systems, but our goal is to make sure nobody
can say, ``Gee, I didn't know about it.'' They may have to
explain why they didn't do anything about it, but we are making
sure that we are doing everything we can to make sure it is on
their radar screen. It is up to them to make sure it is their
priority.
Mrs. Biggert. It is their responsibility, but do you have
any contingency plans in case the State systems should fail?
Mr. Koskinen. Yes. Our concern, as I noted, is that I think
we will end up with no major national problems, but without
work done locally, we could have a whole series of local
problems, of local power outages or other local challenges. And
it will all happen at once, as we go into the year 2000.
So FEMA is now engaging in starting a series of regional
meetings with State and local emergency managers and their year
2000 coordinators to look at that problem, because I think that
will be the real challenge for the emergency response system.
We can handle a localized hurricaine or a tornado or whatever
it might be. The question is how do the State systems and the
Federal systems respond to what may be not necessarily
guaranteed, but what may be a wide number of, local outages or
problems.
If you have 20 such problems in a State and you have 50
States, you could have 1,000 communities all across the country
saying, ``Gee, we should have done more and now we have a
problem, what help can you give us?'' And we need to have a
system capable of responding.
Mrs. Biggert. Just one other question, then. As far as the
Department of Defense, you said that they were probably not
moving as fast as some of the other agencies. Can we be really
assured that they will meet those goals that have been set?
Mr. Koskinen. Yes. The Defense Department, obviously, is
the largest Federal department. It has, in many ways, the most
challenging systems because it has a lot of embedded chips or
integrated circuits built into all their weapons systems. If
you look at the structure in response to this problem over the
last 12 months, you will see major changes in the way the
Department has organized with it.
In August, the Secretary made it clear that this was on his
agenda; that every commander in chief had to have it on their
agenda. This issue was moved out of being an issue or CIO issue
and into an operational force readiness issue. And, as I said,
a week ago Saturday we spent the entire day reviewing the
progress of every service and every function. And I think that
while not every Department of Defense system will make the
governmentwide compliance goal, I think the Department will
have close to 90 percent of its systems done by March 31, which
is an amazing accomplishment in light of where they were 9
months ago.
Mrs. Biggert. Thank you. Thank you, Mr. Chairman.
Mr. Horn. You have still got 30 seconds or so.
Mrs. Biggert. Well, in the words of Mr. Ose, I yield back
my time.
Mr. Horn. We will go right to the top of the ladder. Sheila
Jackson Lee is with the Subcommittee on Technology of the
Committee on Science, 5 minutes for questioning.
Ms. Jackson Lee. Mr. Chairman, thank you very much. I
appreciate the opportunity for this hearing. Let me say to the
public, if you wanted to know who that singular member was, it
was my good friend, Connie Morella, last night standing up. And
I am sure Chairman Horn was nearby on the Y2K issue, a very
important issue.
In fact, let me say to Mr. Koskinen that I am being asked
these questions in my district, so people are really concerned
about the Y2K.
Not hearing all your presentation, and I apologize for
being in other meetings and also apologize for having to leave,
but would you take a stab at a question that has been posed on
various news magazine shows and various sort of expose news
magazine, television programs of people running to the hills
and preparing?
Since the government has the responsibility of setting the
tone and giving comfort to our citizens that we are aware of
this issue, that we are moving expeditiously to ensure that
civilization as they know it remains, can you speak to limiting
hysteria about the issue that we are dealing with?
I know the questions were asked earlier, but I do want to
have you just state for me succinctly, in looking at
Congressman Horn's assessment of the government efforts. I
think I heard you say March 31st, but can you say to me why you
think that is going to happen with what they have in place?
With respect to the public and its general concern about us not
being prepared, do you have a response to that?
Mr. Koskinen. Yes. And there is a longer response in my
formal statement. But I think the bottom line is, what we are
saying is in a context in which we have an obligation to
provide real information to the public, and I think that is
important. At this point, there is no indication that there
will be any major national problem resulting from the year 2000
and, therefore, there is no indication that people need to
disrupt their lives in preparation for it.
We will continue to provide the public information. I am
confident--and Congressman Horn and I continue to discuss
this--that the Federal Government is not only making great
progress, but the vast majority of systems will meet the March
31 deadline and all systems will meet the January 1, 2000,
deadline. So the Federal Government will not be the source of
any difficulties that the public or the economy confront as we
move into the year 2000.
On the other hand, there are areas we are concerned about.
We are concerned about issues internationally. We are concerned
about ensuring, to the extent we can, that State and local
governments and smaller businesses all pay attention to this
problem. And ultimately our commitment to the public is that
they should know everything about this problem that I know; and
we are doing everything we can to share information with them.
Because I think what the public needs and what is an obligation
in the private sector, as well as the public sector, is to
provide information. The public needs to know about the state
of preparedness.
The Federal Government is now acknowledged as the most
transparent organization in the world on this issue. There is
no one that provides as much information about its year 2000
progress, and as much discussion about it, as the Federal
Government. And a lot of that is the result of an ongoing,
constructive dialog between these committees and the executive
branch. But we need to have that happen more often, because I
think people are uneasy when they have no information about
what the facts are, and they don't know what is going to
happen.
So our goal over the next 6 months is to provide that
information to the public. But at this stage in time, I can
state confidently there is no evidence that there are going to
be major dislocations. But people need to be engaged in a
dialog with their county executives, with their mayors, with
their city managers to ensure they are paying attention to this
problem.
Ms. Jackson-Lee. On that, might I followup very briefly?
Last evening the President acknowledged that all Social
Security checks would be on time. This computerized problem
probably will impact most decidedly those who are least
advantaged, primarily the beneficiaries, if you will, of
government programs. And when I say ``government programs,''
AFDC, and you mentioned local governments, but Veterans, et
cetera.
We mentioned Social Security. Where are we on those other
kinds of issues, and would you also comment--and forgive me if
it is in your speech as to whether or not--in your remarks,
there are internal task forces, I imagine, in each of the
departments and the agencies that correlate with your work.
Mr. Koskinen. Yes, there are. Benefit programs run by the
Federal Government are basically--to all intents and purposes,
are none, not only Social Security, but Veterans Affairs and
those benefits. Our challenge is that most Federal benefit
programs are actually administered by State and local
governments; food stamps, unemployment insurance, Medicaid are
all State-run programs.
As I noted, we are concerned about this because it won't do
us any good if 45 out of 50 States do a wonderful job. In those
five States, the answer cannot be that beneficiaries do not
receive benefits. So in the next OMB quarterly report, we have
asked the Federal agencies to report the status of each State
in each of the major Federal programs in terms of their
progress, and we will monitor that progress as we go forward,
because we need to ensure that those programs operate.
Because you are exactly right, the people most in need will
oftentimes be Social Security beneficiaries, veterans
beneficiaries and local people benefiting from programs like
food stamps; and we have to ensure that jointly, working with
the States, those programs operate.
Mr. Horn. Thank you very much.
Ms. Jackson-Lee. Thank you.
Mr. Horn. We now have, first, the Government Management,
Information, and Technology Subcommittee and then we are going
to yield to the Technology Subcommittee. And eventually, we
will cover everybody here.
Mr. Ose, the gentleman from California.
Mr. Ose. Thank you, Mr. Chairman.
First, may I pass a compliment, noting the subject matter
that we are on, I walked in the room this morning at 11:14 and
promptly at 11:15 this committee meeting started. So I think
that is a great standard to adhere to. And I want to compliment
you, Mr. Koskinen, I have a couple questions.
Is the Fed prepared?
Mr. Koskinen. Yes.
Mr. Ose. Treasury?
Mr. Koskinen. The Fed and the Treasury not only began work
on their own systems, but have been major leaders not only
domestically but internationally in trying to ensure that the
financial systems around the world and the banks around the
world operate. The Fed is a leader with the world's central
banks; the Fed acutally chairs the joint Year 2000 Council
which the banks set up.
The Fed has already been testing its interfaces with
several thousand banks to make sure they work. And the Fed is
one of the most active participants on the President's council.
So I think, while we have issues and a lot of work going on in
the other areas, the financial institutions area is in the best
shape of any business area in the United States.
Mr. Ose. So when the check-clearing process hopefully
doesn't stop, if it does stop, we know where to come?
Mr. Koskinen. That's right. I think at this juncture, that
won't be the problem, at least from the Federal Government. I
can't guarantee that every company's financial management and
payroll system will function, but the clearinghouses will
function, and the Federal checks will be issued.
Mr. Ose. All right. I want to followup on my colleagues'
comment or question earlier, am I right, the question about
insurance. Any of the interface partners, the contractors that
we deal with here, many of them cannot provide service when
asked to bid, because they cannot obtain insurance on any
actuarially sound basis, because there is no way of quantifying
the exposure.
With respect to Mrs. Morella's question about the liability
exposure, is there any way we, as the Federal Government, can
set a standard for quantifying that exposure that would then
allow insurance companies to set a policy for potential service
providers in this area?
Mr. Koskinen. Well, it is the kind of a transition
challenge in the legal issue. There is the issue in terms of
how do we ensure that people can continue to work on systems.
And there is a warranty and a patent and copyright problem; if
the manufacturer doesn't exist or can't help you, can you work
on this system, without violating copyright and patent laws? So
those areas fit into my concern about what do we do to make
sure the systems operate.
At this juncture, while there has been a lot of talk over
the last 6 to 9 months about the insurability or
noninsurability with people doing the work, it does not appear
to have been a major impediment--certainly, from the Federal
Government, where we monitor it carefully--to getting the work
done.
It doesn't mean that there aren't companies out there that
are having difficulty; there was a recent article about some
service providers who have been negotiating in that area. So I
think it is worth considering. But at this juncture, and even
in our working groups, we have not found significant parts of
the economy or the government that have said, we cannot get
people to work on the problem because they cannot get
insurance.
Mr. Ose. Mr. Chairman, if you will indulge me, I don't
quite know if this is the context, but in the course of our
deliberations, I think this is one of the critical issues that
we are going to deal with is finding a way to open the door for
providers to come and provide assistance, not only to the
Federal Government, in our world here, but also to private
industry.
With that, I yield the rest of my time.
Mr. Horn. You have made a very good point, and I thank you
for making it. Now, long-suffering Mr. Gutknecht has 5 minutes
and then Ms. Norton, Mr. Miller, and that will round out the 5-
minutes.
Mr. Gutknecht. Thank you, Mr. Chairman. I couldn't help
observe as I came into the room that about--almost 4 years ago
we had our first hearing on this matter, at least in the
technology committee. And at that hearing, I think we had three
experts, maybe half a dozen staff, maybe two people who
wondered in off the street. But there was almost no interest in
this matter. And it is interesting how it has now finally, I
think, dawned on the American people, this is a serious issue.
And I remember that first hearing and almost no one showed
up. And, in fact, I sort of wondered why I was there when I
looked at the audience. But I do congratulate the Chairs. And I
congratulate you, I think we have made significant progress.
More for the benefit of some of the other Members here, I
would encourage other Members--all Members should consider
doing what my staff and I did about a month and a half ago,
back in our district, in fact, I hope we can do another one.
That is, have a town hall meeting just about this subject.
And we invited some people from the financial institutions,
a couple of large banks. We invited people from State and local
government. We invited people from the utilities. We were
fortunate enough to get the top person from Northwest Airlines
to come in and speak. And it was a very, very interesting
hearing. And the only regret that I had is, we didn't publicize
it quite enough. So we should have had a little better public
attention, but it did get pretty good press.
I think what was great about that, really is twofold, first
of all, it opened up my eyes--and I will get to a question. The
problem in some respects is even bigger than some of us had
thought before the meeting.
And you raised the issue of embedded chips, and I want to
come back to that.
But it was also very impressive to me how much is being
done in the private sector. I sort of kept a little running
total of the companies and, as I say, these were--well, we had
a couple of major utilities and a major airline, and obviously
it is an important issue to them. But I think of the private
concerns that testified that day at this town hall meeting that
we had, they were committing somewhere north of $100 million to
this effort. So they take it extremely seriously, and I think
that was the good news.
But the bad news--I want to come back to this--one of the
utilities had testified, I think, if I remember correctly, they
had discovered that they have somewhere in the area of 312,000
embedded chips somewhere in their whole system. And you touched
on that. How serious do you believe that problem is?
They are confident that they have enough backup systems, or
even if one should cause a problem somewhere, that it will not
cause a major disruption. From your perspective, do you have
any idea how big the embedded chip problem is for the Federal
Government and are things being done about it?
Mr. Koskinen. Well, fortunately, from sampling the Federal
Government, the embedded chip problem is primarily an
operational issue, and other than the Defense Department and
running a few power plants, the government is primarily engaged
in information and data exchange and, the financial exchange
software side of the issue. But it is a major issue. Depending
on who you ask, there are 40 to 50 billion chips out there,
loose or tied down, in the world.
Last week, the North American Electric Reliability Council
issued its second assessment of the electrical power industry,
and they are obviously, as noted, focused on this. They had a
lot of concerns in their first assessment, released last fall,
about the scope of the embedded chip problem. The report last
week revealed that fortunately it turns out the number the
chips that actually have the problem in power production or
distribution is relatively small, and most of them would not
shut down the power plant; they would create problems in
bookkeeping and recordkeeping and other issues. And the NERC is
confident that information is now available and is being shared
within the industry.
So that in the power industry, while there are a large
number of chips out there--in terms of thousands per company
and probably billions in the industry generally--companies are
beginning to address the problem effectively. And at this
point, the industry does not view it as being an insurmountable
obstacle or a major threat to them, although it is going to
take a lot of work.
Mr. Gutknecht. Let me just come back to one last point
before my time expires here.
You have stated you will be in crisis management in 1999?
Mr. Koskinen. Right.
Mr. Gutknecht. Judging by your general demeanor, I find
that hard to believe, or I should say, I am not certain anyone
will really know, and I think thats good. I appreciate the fact
that you are approaching this with a very calm demeanor.
Have you developed a crisis management strategy and, if so,
how will you implement that? I mean, I am not really clear on
what you mean by that.
Mr. Koskinen. Yes, I have been--I said we would go through
and the council would go through a proselytizing, organizing
phase into a monitoring and assessment phase, which is where we
are now, and into a contingency planning, crisis management
phase. We need to be prepared as we move through this year, and
certainly as we move into January 1st to be prepared for
whatever happens, domestically and internationally.
Our strategy across the board is to buildupon existing
infrastructures and organizations and experiences. So we are
forming a coordinating center for the Federal response to this
issue, whatever it might be, which will build on the existing
work of FEMA domestically, the State Department and the
Treasury and the Defense Department internationally, along with
the intelligence community, and that would be built into the
Federal level. We are working with State and local governments.
Tomorrow, with the Senior Advisors Group, will begin discussing
with them the status of industrywide plans, industry by
industry, for their own emergency responses.
All of that will be integrated, so we will know if somebody
has a water treatment problem or a power plant problem where
the resources are in the private sector, to deal with that
issue. There will be data bases available and inventories of
the resources done, and with a little luck, we will have a very
effective structure that won't have much of a challenge.
But what we have to be prepared for in terms of dealing
with those crises and what the public needs to have confidence
in is, in the fact that we are prepared for whatever will
happen.
Mr. Gutknecht. Thank you.
Mr. Horn. I thank the gentleman, and now call on the
delegate from the District of Columbia, Ms. Norton.
Ms. Norton. Mr. Chairman, I want to--despite the fact that
I have been delayed in getting here, I certainly want to
commend and thank you for starting this session off right with
a Y2K Federal Government hearing.
I just want to say to my colleague, John Koskinen--who has
always been unflappable ever since we were in law school
together, so I am not surprised he remains unflappable in the
wake of this problem--that under his leadership, I am
absolutely confident it is being solved.
I do want to thank the Federal Government, as well, for its
assistance to the District of Columbia, which is going to be
receiving some assistance as it readies itself for the Y2K
problem. It is particularly important because the District
government itself is being rebuilt and the District doesn't
want to build into the Y2K problem, but just the opposite.
The question on crisis management, I think, is the one that
is really in the--that you have just heard is Sputnik is in the
back of everybody's mind that, yeah, all the big fellows do
their jobs, but then somebody else doesn't, and there is some
ripple effect and we all end up, God knows where.
I have two questions, and one is, I don't quite understand
how anybody who does her job can control people who are not
doing theirs when it comes to this problem. I just do not
understand how that occurs. And I take it you could only
safeguard yourself in case those who ripple down the line
haven't done theirs. I would just like to get a few words on
that. I apologize for being tardy; I might have missed
something in that regard.
And, second, I would like to know how the government,
whether the government has any posture it wants to take with
respect to how ordinary citizens should respond to the
independent operator analysts who are out there, some
predicting the end of the world; and unfortunately, Y2K
corresponds with the millennium, so there is a bunch of fools
running around as well, and whether there is any--and any
thought has been given to some kind of sane, reliable voice
that people could turn to who aren't in this hearing, who
haven't heard all the facts, so that as the time approaches,
you won't have people hunkered down in their basements or--and
please tell me now if you should have that--or gathering their
food for the next year.
In other words, have you taken into account that a crisis
mentality may be building up unless somebody hears from
somebody they can trust?
Mr. Koskinen. All right. Well, the first question. Clearly
that has been a challenge for us from the start. We are working
with and trying to raise the level of awareness, activity, and
compliance within organizations internationally, as well as
domestically, over whom we have no authority at all. In fact,
most of the people I spend my time with don't have to listen to
me at all, and our goal and challenge has been to set up
cooperative working relationships with them internationally and
domestically.
And the good news is, thus far, certainly in the United
States, we have had wonderful cooperation and response from
every critical sector in the country and the major trade
organizations. You are exactly right, this problem reveals the
growing inter-connectiveness of everything. That is why we
started out saying even if we could get all the Federal systems
done, it doesn't necessarily come close to solving the problem.
The reason I am spending all this time in all these other
areas is because it is, in fact, an increasingly seamless web.
And no one is an island unto themselves, either as an
individual or a country or a city. And so we all have a great
stake in everybody else's ability to deal with this problem.
And the crisis management issue and the contingency planning we
are asking all Federal agencies to engage in and encourage
everybody in is to first take a look at doing the best they can
to fix their problems, and second to have a backup program. If
your systems don't all work, what will you do to keep your
business operating, your government agency functioning; and
what is your backup system if others you depend upon have
systems that don't work.
In the Washington, DC area, in the last few days a lot of
people obviously had to exercise backup plans when power that
they relied upon was not available. With regard to public panic
and public response, I think over time we will continue to
provide the public with information and advice.
The Red Cross now has a very good Website that basically
says that if you are worried about the year 2000 transition you
should think of preparing as you would normally be prepared in
the wintertime for a long weekend or a winter storm, and have a
couple of days and water and food. But our view is that, at
this juncture, there is no indication that you should disrupt
your life.
And one of the things we need to do is to ensure the public
is confident about our ability to deal with the problem. As you
said, if we thought you ought to be hunkering down, we would be
the first people to tell you, because I think the Federal
Government has an obligation to give the people its best
advice.
So on our hotline, as we move forward, we will continue to
update the information we have and to provide advice to the
public on what we think is an appropriate response. At this
juncture our advice to the public is not to panic, not to go to
New Mexico and buy a lot, and, in fact, primarily to be
informed consumers of information, to pay attention, call our
hotline, look at our Website. There will be plenty of time as
the spring unfolds for all of us jointly to review that
information and respond accordingly.
And we will be providing the public with updated
information about what we think are the appropriate responses.
Mr. Horn. I thank the gentlewoman.
And now I yield to the gentleman from California, Mr.
Miller, who has been long-suffering, waiting to get his
questions in. And we finally made it, Gary.
Mr. Miller. Well, thank you, Mr. Chairman.
It is a good feeling to be a new member and a freshman on a
committee. And it is especially refreshing when you ask all the
questions last, and all the good ones have been asked, and you
are left with the other ones. But I look back at this and I
have to praise the technology companies over the past years for
getting this message out and creating the panic. You did a
great job in driving the stock prices up. It really did; I
invested in some of those companies.
And then the press further took those concerns and expanded
upon them because they sell newspapers. And then I have
listened to the questions presented by the knowledgeable and
experienced members on this committee, and they create more
questions. I hate to fall into the category of those crazies we
refer to out there, who look at panic and comply with that and
become a part of it.
But there are some questions I guess I have never thought
of until I listened to the questions asked today and the
questions answered. One was the Y2K problem, many have said is
going to be the end of the world as we know it; and the press
did a good job of playing that up very well.
But I look at what we have done. Welfare reform is a good
example. When the Federal Government enacted welfare reform,
they turned it over to the States; and the States' and our job
at this point is we turned it over to many counties. And
counties also are responsible for Medicaid distribution and
others.
And I guess I am concerned on the flow of technology to the
States and substates who are fiscally impacted currently and
counties, and most of our counties are fiscally impacted,
especially California, and how the flow of technology gets to
those counties, because now the counties are distributing the
welfare funds that we provide to the States and the Medicare
checks that are--Medicaid checks that are being given to them.
How do we ensure that there is an adequate flow not only to
the States, but to the counties? Because by the time the flow
of information gets to the States, they are dealing with their
issues. How do we ensure that information also flows to the
counties, who are actually providing most of the services that
are being delivered today?
Mr. Koskinen. That is and has been one of our biggest
challenges. I spent last summer at the National Association of
Counties executive meetings, because in many ways the hardest
people to get a hold of in this country are counties. They
don't have a regular line of communication directly with the
Federal Government, and in fact, the States told me when I
started working with them last spring, counties don't want to
hear anything from the Federal Government and they don't want
to hear too much from the States. So there aren't regular, as
you say, lines of communication.
We hope in response to your earlier question that we have
done everything we can think of, but we are going to continue
to work on it to get the information to the counties about the
importance of the problem and ensure that they have access to
technical information. With regard to State-run Federal
programs, we are now going State by State to get assurances
from the States as to the status of their preparedness; and to
the extent they rely upon counties, information they have on
county preparedness and what work they have been doing with
counties.
And California has done a very good job. California held
statewide meetings of county executives in major cities last
year to start dealing with this problem. And, in fact, they and
several other States have done that, Texas and others, we
encouraged States to have that as a benchmark to follow.
There are some States where there is very little
communication going on with their counties. And as I noted, I
am concerned about that.
Again, I don't think we can mandate compliance across the
board, but we can be very focused on at least the
administration of Federal programs. There are 160 Federal
programs that are run by States and localities, and we need to
continue to focus on them. And I think, as we go through the
spring, that is going to be a growing problem for us, which is
why I am delighted when there are regional and local hearings
and town meetings. Because while we need to keep paying
attention to how the Federal Government is doing, and it was an
appropriate place to begin the dialog 3 or 4 years ago, it is
increasingly clear to me that the problem is going to be at the
State and local level if we are going to have a problem.
Mr. Miller. Mr. Ose touched on an issue that has become a
concern, and that is, we are asking people to share technology.
The minute you do that there is liability risk associated with
that sharing of technology. And I guess this question can be
for the chairman, although, I think, more for him to think of
in the future: What are we doing to cap the liability risk to
encourage sharing of technology? I mean, I am sure in many
cases organizations or groups will have the technology
available, but they understand that clearly by them sharing
that with others, they are at risk if there is a problem that
occurs through that sharing of technology.
Are we doing anything in that fashion?
Mr. Koskinen. Yes. In my earlier discussions with the major
industries, including telecommunications and securities, they
were concerned about this issue. And, as I noted, last October
the President signed into law legislation passed by Congress
that protects not only companies, but trade associations who
voluntarily disclose technical or other information about how
they deal with this problem. It does not deal with the issue of
those who are selling that service, and whether they can get
insurance, but we have now removed the legal obstacles to
information sharing. The interesting problem is--we are working
with about 170 trade associations--many lawyers are still
advising their clients not to say anything on the grounds that
it will get them into trouble.
Mr. Miller. That is where the problem is?
Mr. Koskinen. Yes. So in our working relationships with
industry groups we are trying to figure out exactly how to
break that barrier down, because you are exactly right, the
exchange of that information is critical not only for large
companies to compare test results, but it is critical
information available to smaller and medium-sized organizations
in the public and private sector, who can then go to that
information and say--I haven't got a lot of time left, but I am
told by those people that this is where I ought to spend my
time and money and that is what I am going to do, and if they
are wrong, at least I am better off than I would be otherwise.
Mr. Miller. A closing question about maritime. And this is
a question I hate to ask because maybe it is a little
farfetched. Listening to the rumor, watching the press and the
panic that could be created, we talked about printing available
cash, but what impact might that have on our banks that have
cash reserve requirements they have to meet, minimum
requirements of standards? If this thing is blown out of
perspective, that might impact that.
Are we doing anything to alleviate that impact?
Mr. Koskinen. Yes. We have--one of the reasons to have cash
available is to ensure the banks don't run into difficulties.
But again it goes into the balancing act I talked about and we
have all worried about for the last year. This is a serious
problem, people have to pay attention, and we have to solve it.
But on the other hand, if 200 million Americans decide to do
anything very different economically than they normally do,
that has the potential of being a self-fulfilling prophecy of a
major problem, even if all the systems run fine.
So all of us have to try to deal with that problem. I am
trying to make sure people address that problem, and understand
the seriousness of it. But on the other hand, I do not want
people to gratuitously decide, ``Well, I think what I am going
to do is not necessarily buy a lot in New Mexico, I will just
take some money out of the markets, some money out of the bank,
and go out and buy some extra supplies.''
Mr. Miller. We are going to address the reserve problems if
that does occur?
Mr. Koskinen. If there is a reserve problem, the Fed is
focused on it.
Mr. Horn. I thank the gentleman.
I see Mrs. Maloney, former ranking member of this
Subcommit-
tee on Government Management, Information, and Technology.
Would you have any questions to pose to our witnesses?
Mrs. Maloney. Of course, Mr. Chairman, I congratulate you
on your chairmanship, and I see you are on the case. We just
got organized yesterday and you are already holding hearings.
And I just wondered--I thought it was very important that
the President mentioned very, very strongly the Y2K problem and
the attention that he and the Vice President and the
administration are giving the problem in making sure that we
are ready for the 21st century.
And I just want to know, in a brief oversight or review, do
you think we are going to be ready? Do we have reason to be
concerned? Could you just respond?
Really, I am sure you heard the President's speech last
night, and I am sure you heard him talk about year 2000. I
would just like to know in a general sense, where do we stand
in the Federal Government?
I know you say some of the smaller governments are having
some problems. What about internationally? Would you like to
just give us a broad, brief overview of, do you think we are
going to be ready? Are we going to meet the President's
challenge of being ready and making sure that everything is
working?
Mr. Koskinen. That is more than a 5-minute answer. My
testimony is designed to deal with those issues. As a general
matter, I think the Federal Government will be ready; I am
confident of that. I think that the vast majority of States are
doing a good job. I am concerned about local communities that
may not be focused on the problem, but a lot of them have done
that.
I am concerned about the risks of overreaction by the
public, and internationally, I am concerned about the countries
that have not yet paid enough attention to this problem and
have the potential to create difficulties for the American
economy and the American public.
Mrs. Maloney. Well, since you seem to think that
domestically we are all right, could you talk about the
international problems that you expect would possibly be the
most problematic to the United States?
Mr. Koskinen. The most problematic to us and the largest
challenges, I think, are in maritime shipping; and I think that
not because I know there is a problem, but because I don't know
what the information is, because there is no organized attack
on that problem in that area yet.
I think that international financial transactions are
generally in good shape. It will not be a problem for us. We
are concerned about ensuring that in a lot of countries there
are power supplies, particularly that those provided by
Russian-made nuclear plants are safe and can operate as we go
forward.
I think we will have, in some countries, difficulty getting
telephone or other services. So I think, while it may not
affect the American public generally, we will have an
obligation to advise travelers about what they can expect in
some countries and to work with American businesses operating
abroad. At a minimum, we have to worry about how to run
embassies and consulates in areas that may have difficulty with
their infrastructure.
Mrs. Maloney. Well, the chairman has had numerous----
Mr. Horn. That is panel 2, you know, on the international
situation.
Mrs. Maloney. Well, since he is here and he mentioned
shipping, if I could ask him a brief question on that.
Mr. Horn. Sure.
Mrs. Maloney. And I know, Mr. Chairman, you have had many,
many hearings, and I congratulate you for being on the case.
But you express some concern on international shipping and
that 95 percent of all goods that enter the United States are
transported by ship. And specifically what are your concerns
and why hasn't there been enough focus on this area, given the
fact that 95 percent of all goods come by ship; and what can we
do to change that so that the shipping or maritime industry
will not be disrupted during this date change?
Mr. Koskinen. The U.S. Coast Guard has done an excellent
job on their statistics for me, and they have been working very
actively with American shipping interests in American ports. As
I noted, there has been no organized global effort in this
area. We are trying to solve that by, in fact, starting that
effort in March, in London, with all the major international
port and shipping associations dealing with this problem.
Certainly, when you look at oil or any other thing we rely
on that comes from abroad you have to figure out, how do you
get it out of the ground or out of the production mode to the
port? How do you get it through the port and onto the ships?
How do you get it across the oceans and into U.S. ports? That
is a complicated supply chain, and we hope to have more
attention paid to it.
The individual companies and major shippers, and certainly
U.S. ones, have been paying attention to this, but again they
do not control foreign port operations and often they do not
control foreign production sources. We all need to see what we
can do about that in the next 344 days.
Mrs. Maloney. Well, my time is almost up. But I want to
make sure the electricity is working on that day. I mean, we
are going to all need it. And the Secretary of Energy, Bill
Richardson, publicly raised concerns earlier this month about
electric utilities falling behind the Y2K repairs. A recent
industry poll indicates that a number of utilities will not
meet their June 30th deadline for compliance systems. And
Secretary Richardson indicated that he may name specific firms
if sufficient progress is not achieved.
Should other Cabinet secretaries follow this approach for
vital industry sectors and businesses that are not on track for
the Y2K, compliant with public health and safety, and does the
Y2K Council have any plans to release the names of companies
that are likely to miss Y2K deadlines?
Mr. Koskinen. We do not have that information. In fact, the
act that was passed allows us to collect industry association
information and industry information by protecting individual
companies from having anybody reach that data, so that
companies will be candid about it. But one of the reasons the
North American Electric Reliability Council has 96 or 98
percent participation is that they have listed everybody who
participated in their survey, which drove a lot of people to
participate. We are going to encourage other industry groups to
do that. This way the public will know which companies are
actually providing the information and participating in the
surveys.
With electric power, I think it is important to note that
what the Secretary is concerned about is a small percentage of
the power companies. The industry has a June 30 goal to have
everything done; it is not a question of those companies not
meeting the January 1, 2000 goal. And I think it is appropriate
for all of us, as I say, to know as the Secretary said, there
are no show stoppers and there will not be national issues. But
it is also appropriate for us to be concerned about our local
power companies. And we in Washington are concerned about, how
will Pepco and Virginia Power deal with it, and we won't find
that out from the national assessment.
We need to find that out, and those companies need to be
forthcoming across the countries locally. We are going to try
to do what we can to encourage that.
Mrs. Maloney. I thank you for your testimony and for your
public service. I can see why the President called you back
into public service to work on this critical problem for the
country. And I appreciate your willingness to serve and for
being here today. Thank you.
Mr. Koskinen. Thank you.
Mr. Horn. In rounding this out, I am going to yield myself
5 minutes, which I have not taken. And let me just ask three
fast questions.
During our staff research, we found that the police
departments have not been too proactive on assessing the Y2K
status of the 911 systems.
Do you have any information? Have any of your staff taken a
look at that problem?
Mr. Koskinen. Yes. In the Emergency Services Working Group
we are reaching out to--there is a group of people who run 911
systems, there is an association, and our Emergency Services
Working Group is reaching out to get an assessment from them of
that problem. FEMA and the Justice Department are working with
State and local emergency managers to get people to understand
they need to look at it.
The 911 systems are at risk. They are generally
increasingly sophisticated computer operations that have
problems, and we are concerned about that.
Mr. Horn. In terms of your plans with reference to Federal
agencies, are you assured in your mind that all of them will
meet the January 1, 2000, deadline?
Mr. Koskinen. I am.
Mr. Horn. You are?
Mr. Koskinen. Yes.
Mr. Horn. What makes you so optimistic?
Mr. Koskinen. I don't view it as optimism. I have actually
spent since May----
Mr. Horn. I know you are a happy personality.
Mr. Koskinen. I am a very happy person. I should start
frowning more when I say we have big problems. I have been
meeting with all of the OMB tier 1 agencies and their senior
managers on a monthly basis since May and monitoring their
progress, as OMB has been doing and ensuring. I am confident at
this juncture, and have been for some time, that the
Secretaries of each of those agencies is personally committed
to dealing with that problem.
I met yesterday at the Energy Department with Secretary
Richardson and his senior staff as part of my monthly surveys,
and they are making strong progress. I am confident that the
information is generally accurate, because as I have said, if
agencies wanted to make up the numbers, they would have figured
out how to do that a couple of years ago, and they wouldn't
have had either negative reports from you or OMB.
It has taken a lot of work. It is a great tribute to
phenomenal efforts by Federal employees in all of those
agencies. And I am, as I say, confident on the basis of the
progress they are making and the reports that are coming out--
and I think you are going to see in, as I noted in my
testimony, the major agencies we are all concerned about by the
time we get to the March 31 deadline, that substantial progress
has been made over the last 6 to 9 months. And it has come with
a lot of prodding and encouragement from all of us.
And as I have said in my prepared testimony, I think we all
have to be prepared to acknowledge that accomplishment, just as
we have been prepared to encourage them to move forward.
Because a lot of employees are working around the clock, they
are working weekends, they are dedicated to making sure that
their agencies can perform their missions.
Mr. Horn. What legislation do you feel the administration
should be recommending and Congress acting on that relates to
Y2K? What is needed now to be helpful in the next phase?
Mr. Koskinen. We have asked the President's Council and the
agencies to provide us any legislative needs they have, either
for expanded authority or limited authority in particular
areas. At this juncture, we do not have a major legislative
request or initiative that we can see.
The emergency funding has been a significant help for us
and a major issue. We are listening and trying to learn more
about what the concerns are in the private sector on liability,
but at this point, there is not a coordinated industry response
in that area. But in terms of specific agency responsibilities,
the only issue we are looking at that may require legislation
is what, if anything, should we do around the January 1
weekend.
There have been issues raised about whether or not to move
the holiday and whether we can allow people to move payments
from the first week in January to the last week in December to
take pressure off systems. If you do that and want to keep it
as year 2000 income, you need a tax policy or a tax change. We
have a task force, led by the Federal Reserve actually and all
the agencies, looking at that. I think we will not recommend a
holiday change, but we have other recommendations in terms of
technically allowing companies and certainly Federal agencies
to try to take pressure off their systems and that may take
legislation. But other than that, I think our problem is
primarily management and administration.
Mr. Horn. Well, I agree with that, with over the years, and
my own feeling was, last fall, as you know, I was not keen on
any legislation relating to liability at this point. I wanted
everybody to get out there, provide leadership, get the job
done and quit worrying about it. And I felt a lot of people had
been misadvised by saying, Don't say anything, Chief; then they
can't sue you.
Well, it seems to me if you don't say anything and don't
provide the leadership, they will sue you.
Mr. Koskinen. Exactly.
Mr. Horn. So we are now, though, into another era, and the
question is, should liability legislation be developed to
either get a specialized court that would really know something
about computing and the whole history of it, or do some other
things that would limit the liability if good-faith efforts
have been made.
Do you have any reaction to that?
Mr. Koskinen. At this point we do not have a position. As I
say, at this juncture, we do not have any proposals or any view
that there is a need for legislation. But we are--we are
cognizant of the fact that a wide range of people are focused
on it, and we are prepared to listen to what they have to say.
Mr. Horn. OK. I am going to yield back the rest of my time,
so if Mr. Turner, as ranking member, has any questions--feel
free--Mrs. Morella, as co-chair, has any questions, fine.
Or we can send him down and have the staff and you answer
them and put it in the record at this point.
So whatever your wishes are. We have two more witnesses and
two major topics to go into.
Mrs. Morella. Just briefly. You are going to love the
legislation that I am going to ask you to look at. It is not
liability, because I recognize the difficulty of coming up with
something, particularly at this point, that is going to cover
the liability system, but it would help to provide for the
acceleration of business continuity plans, et cetera, and for
more openness.
I want to ask you, have you thought about doing any PSAs,
because another part of this bill would have to do with letting
consumers know what they should be asking, kind of reaction
plans. But it just seemed to me it would just be a great
opportunity to do some PSAs to alert the public, as well as the
businesses, about the----
Mr. Koskinen. We for some months have been looking at what
the appropriate Federal role should be in that area. The
Advertising Council early on told us the programs they
generally work with have a 5-year time horizon and, therefore,
the short-term nature of the Y2K problem didn't fit within the
5 year timeframe.
The other problem with PSAs, by themselves, if they are
free, they usually run late at night and at odd times. We have
actually talked with public relations and advertising firms
about, what it would take if you mounted a full-scale program;
and in some detail, we have had proposals to spend $50 to $100
million. As I said, I am not quite sure how to explain to you
or the public that I spent $100 million on an advertising
program, as opposed to giving the money to people locally to
solve their problems.
One of the things we hope to explore with our Senior
Advisors Group and the working groups is to see what the
private sector is doing in terms of both research about the
problem and their media campaigns, and take a look at what the
appropriate integration of a Federal response to that ought to
be.
In the meantime, we are spending a lot of time with the
press responding to all of the inquiries. We have yet to turn
anybody down. But it is a very important point, and we are
trying to figure out what is the most effective way to get
information into the hands of the public. And to the extent
that it--and we can find an effective role for the Federal
Government and even the expenditure of some money integrated
into the messages that others are providing, we will do that
and be pleased to share it with you.
But at this juncture no one has been able to convince me
yet that it is the right of priority for us to independently be
spending phenomenal amounts of money.
Mrs. Morella. No, but you know, PSAs, as you say, they have
to do it, the media; and I just think that you can get
television and radio--it won't all be at 2:30 a.m. Besides,
there are a lot of people who listen at this time and watch
anyway. But I think they would use it at various other times
during the day.
I think you should consider that in other ways also of
communicating this. Don't be an alarmist, but don't be a
Pollyanna, you know, I mean that kind of thing.
I know that--I don't want to take more time, because we
have got two more panels. But I think it is always a shame that
a person like you can't be there when the other two panelists
are talking so you can respond, because I have already read
much of that testimony. And, you know, we are talking about
trade, we are talking about commerce, a suggestion from Mr.
Willemssen that maybe we prioritize, your council prioritize
what the United States needs, in terms of oil, in terms of food
and commodities; and then have plans to make sure that we are
going to receive it, the early warning system, that this is
from the National Intelligence Council. Mr. Gershwin talks
about Russia and China and early warning systems.
And then I also wonder about, in the United States, our
own--the money we transmit for Medicare, Medicaid, for all
kinds of things, student loans and all--have we, have we traced
any of that money to the States and the localities to find out
whether they are compliant? What I am saying is, a steady
stream--the hip bone connected to the thigh bone connected to
the knee bone--have we made these agencies that dole out this
money find out from their recipients whether they are ready?
In other words, say you are part of our food chain of the
line; do you see what I am getting at?
Mr. Koskinen. Yes. Let me first say to your general
concern, Mr. Gershwin is an active member of the President's
Council. We are working very closely with the National
Intelligence Council on this matter, so I think I am very well
versed on where he is. And Mr. Willemssen and I show up in a
lot of places together. And actually, once a month GAO, Mr.
Willemssen and Mr. Dodaro and others and I sit down and spend
an hour or two reviewing where we are and their recommendations
on what we are dealing with. So I think I am well advised about
what their suggestions are.
And, as always, we have found that GAO's suggestions are
particularly helpful. And as you will note, over time, a lot of
those suggestions have been accepted and integrated into either
the OMB work or our work.
Mrs. Morella. The recommendation is great. But I mean in
terms of the action beyond the recognition. I know you are
working very hard; I commend you for what you are doing. It is
just, I do think they offer some good recommendations that need
some action. Thank you.
Thank you, Mr. Chairman.
Thank you, Mr. Koskinen. I look forward to meeting with
you.
Mr. Horn. Mr. Turner, any questions?
Mr. Turner. Mr. Chairman, maybe just a couple.
Chairwoman Morella expressed an interest in PSAs, and I was
just looking at the latest report from OMB to this committee
regarding the estimated cost to the Federal Government of
complying with Y2K, and I believe it says it is close to $6.5
billion.
Mr. Koskinen. Correct.
Mr. Turner. Maybe $100 million, if it would be profitable
and helpful, might not be that large a sum in the scheme of
things.
My concern, as I shared with you earlier, is that I
certainly want to be very careful about what PSAs we are
airing, because it is hard, I am sure, to judge whether PSA's
are going to increase public comfort or discomfort with the
problem.
One of the things that I wanted to ask you about is that a
year ago people were saying there just aren't enough computer
programmers out there to help us comply with this problem, and
we are going to have to figure out how to find some folks and
get them trained. You don't hear a lot about that anymore.
What is the status of the necessary personnel to solve Y2K?
Mr. Koskinen. It is a problem we are all concerned about;
as a potential problem, we have been monitoring it very
carefully with the Federal Government. One of the first things
we did when I started was to have OPM authorize the agencies to
bring back annuitants, retirees, who knew about these kinds of
issues without forcing them to give up their retirement
benefits.
What has happened, while the cost has gone up in the
private sector, to some extent for services, which generally
happened, I think, as we monitored--and the reason there hasn't
been a national shortage is that the tools and the techniques
for dealing with this problem have increased at about the same
rate as the demand, so that the original assumptions--where you
would have to take each line of code and change it--and people
then started multiplying out how long it took and how many
billion lines of code there were, it turned out there have been
a lot of what are called ``windowing techniques'' that allow
you to adjust for the problem without necessarily changing all
the programmatic codes.
Also, while there is no silver bullet, there are a wide
range of tools that, depending on the software programs and the
operations, that have speeded up the process for either finding
out where the problems are or testing against them.
There have been some anecdotal reports of shortages. GAO
again did a review of the agencies and found some specific
areas and pockets of concern. But as a general matter, the
Federal Government has not found that it or its contractors
have had trouble getting enough personnel. And even in the
private sector, we have not yet seen major shortages occur.
And I think it is primarily not because people are wrong in
the concern; I think it is because everybody has gotten a lot
better at figuring out how to get the work done efficiently.
Mr. Turner. Thank you.
Thank you, Mr. Chairman.
Mr. Horn. Vice Chair Biggert, any last questions?
Mrs. Biggert. No.
Mr. Horn. OK. We will now move to the second panel.
And we thank you very much for spending the time with us. I
never--I know you will never not answer a question. You answer
it eloquently. You answer it very speedily.
Mr. Koskinen. Thank you, Mr. Chairman, and Chairman
Morella. I do appreciate your ongoing support.
Mr. Horn. If you can stay a little, we would welcome
anything you want to say.
Mr. Koskinen. Thank you, but as you can imagine what my
life is like, right now I am almost late for my next meeting.
Mr. Horn. If panel 2 would come forward, please.
We have, on panel 2, Dr. Lawrence Gershwin, National
Intelligence Officer for Science and Technology of the National
Intelligence Council. This is Dr. Gershwin. And then you are
accompanied by Norman Green, Deputy National Intelligence
Officer for Science and Technology. So can we have him take a
seat also?
I am going to swear you all in, since one of you will be
talking probably somewhere along the line. Dr. Michael
Harrington, principal technical staff--and tell me how to
pronounce it; is it the MITRE Corp., is that the best way----
Dr. Harrington. Yes.
Mr. Horn [continuing]. And Mary Walsh, Year 2000 Issues
Manager, Directorate of Intelligence, Central Intelligence
Agency.
Come on up, get chairs here. Will the staff make sure that
we have enough chairs or just grab one. And Joel Willemssen,
our favorite witness here, Director of Civil Agencies
Information Systems, Accounting and Information Management
Division, General Accounting Office.
So have we got everybody a seat?
[Witnesses sworn.]
Mr. Horn. The clerk will note that all five witnesses have
affirmed the oath.
And we are now going to begin with Dr. Lawrence Gershwin,
National Intelligence Officer for Science and Technology at the
National Intelligence Council. You might tell us the formation
of the National Intelligence Council, just for the record.
STATEMENTS OF LAWRENCE K. GERSHWIN, Ph.D., NATIONAL
INTELLIGENCE OFFICER FOR SCIENCE, ACCOMPANIED BY NORMAN GREEN,
DEPUTY NATIONAL INTELLIGENCE OFFICER FOR SCIENCE AND
TECHNOLOGY, NATIONAL INTELLIGENCE COUNCIL; MICHAEL HARRINGTON,
Ph.D., PRINCIPAL TECHNICAL STAFF, MITRE CORP.; MARY WALSH, YEAR
2000 ISSUES MANAGER, DIRECTORATE OF INTELLIGENCE, CENTRAL
INTELLIGENCE AGENCY; AND JOEL WILLEMSSEN, DIRECTOR OF CIVIL
AGENCIES INFORMATION SYSTEMS, ACCOUNTING AND INFORMATION
MANAGEMENT DIVISION, GENERAL ACCOUNTING OFFICE
Dr. Gershwin. Sure. The National Intelligence Council works
for the Director of Central Intelligence as an interagency
intelligence mechanism. And our purpose is to bring together
the work of all of the intelligence agencies into one unified
set of analyses for the purpose of serving the Director of
Central Intelligence in his overall role as manager of the
entire intelligence community.
And as such, I am 1 of the 12 National Intelligence
Officers on the council. And our job is, of course, to work
certain areas, and in my case, science and technology issues,
for the Director of Central Intelligence.
Mr. Chairman, Mrs. Morella, I am pleased to be able to
discuss today the understanding that the intelligence community
has about foreign efforts to deal with the Y2K problem. I will
give you our current assessment of where we see the problems as
most likely to occur. But we are not yet in a position to make
a confident assessment of the global impacts of the likely Y2K
failures or the implications for U.S. interests.
The Y2K situation is very fluid, and our assessments could
change significantly over the next several months as more
information becomes available, as countries become more aware
of and deal with Y2K issues, and as incidents of Y2K failure
increase. I will highlight for you today those areas that we
think have a significant chance of affecting U.S. interests.
All countries will be affected to one degree or another by
Y2K-related failures, and problems in one country sector can
have widespread consequences because of interdependence between
sectors worldwide. The consequences of Y2K failures abroad will
range from the relatively benign, such as a localized inability
to process credit card purchases, to problems within systems
across sectors that will have humanitarian implications, such
as power loss in midwinter.
We have few indications that countries are today
undertaking contingency planning for recovery from Y2K
failures. Foreign countries trail the United States in
addressing Y2K problems by at least several months and, in many
cases, much longer.
Y2K remediation is underfunded in most countries, and time
and resource constraints will limit the ability of most
countries to respond adequately by 2000. Governments in many
countries have begun to plan seriously for Y2K remediation only
within the last year, some only in the last few months; and
some continue to significantly underestimate the costs and time
requirements for remediation and, importantly, testing.
Because many countries are way behind, testing fixes will
come late and unanticipated problems typically arise in the
testing phase. The largest institutions, particularly those in
the financial sectors, are the most advanced in Y2K
remediation. Small- and medium-sized entities trail in every
sector worldwide.
Most countries have failed to address aggressively the
issue of embedded processors. And while recent understanding is
that failures here will be less than previously estimated, it
is nevertheless the case that failure to address this issue
will still cause some highly dependent sectors with complex
sensor and processing systems to have problems centered right
around the January 1st date.
The lowest level of Y2K preparedness is evident in Eastern
Europe and Russia, in Latin America, in the Middle East, and
Africa and several Asian countries, including China. But global
linkages in telecommunications, financial systems, air
transportation, the manufacturing supply chain, oil supplies,
and trade mean that Y2K problems will not be isolated to these
individual countries, and no country will be immune from
failures in such sectors.
Regarding Russia and Ukraine, the coincidence of widespread
Y2K-related failure is likely to occur in the winter of 1999 to
2000. With continuing economic problems and food shortages,
already difficult conditions for the population could have
major humanitarian consequences for those countries. While the
Russian Government initiated centralized guidance to ministries
and agencies in May 1998, the State committee responsible for
initiating overall guidance has stated that there is not enough
time or money to resolve the Y2K problem. We think they are
right.
Russian estimates of the cost of remediation of their
government system seem considerably less than Western estimates
for comparable systems in other countries or what we regard as
what it will cost in Russia. Thus far, both Russia and Ukraine
have exhibited a low level of Y2K awareness and remediation
activity. While Russia possesses a talented pool of
programmers, they seem to lack the time, organization and
funding to adequately confront the Y2K problem.
Concerns include problems with computer-controlled systems
and subsystems within power distribution systems and nuclear
power generating stations leading to reactor shutdowns, or
improper power distribution resulting in loss of heat for
indeterminate periods of time in the dead of winter in Russia
and Ukraine. Indications point toward a slow, reactive mode of
operations on the part of, for instance, the Russian Atomic
Energy Ministry.
Although Western Europe is in relatively better shape than
some of the regions I have cited earlier, European awareness of
and concern about the Y2K problem is uneven, and they do lag
the United States in fixing their problems.
I should point out that none of the countries that we are
dealing with seem to have anything like the level of
government-led activity, as we heard earlier from John
Koskinen. And frankly it is that level of government activity
and leadership on it that I think is required worldwide in all
of these countries, including some of the more advanced
countries in order to make this stuff work.
European attention was focused on modifying computer
systems for the European Monetary Union conversion, which was
implemented successfully on January 1, but this was done, in
many cases, by postponing coming to grips with Y2K problems.
For example, the Netherlands has expressed concern that the EU
members are not working together to solve Y2K problems and has
threatened to cutoff its own power grid from the rest of Europe
in order to protect domestic power distribution from external
problems.
The Asian economic crisis has hampered the Y2K remediation
efforts of all of the Asia-Pacific countries except Australia.
While the lines of authority for China's Y2K effort have been
established, its late start in addressing Y2K issues suggest
Beijing will fail to solve many of its Y2K problems in the
limited time remaining and will probably experience failures in
key sectors such as telecommunications, electric power and
banking.
We are focusing increasingly in the intelligence community,
in our own study of foreign Y2K problems, on those critical
sectors that directly affect U.S. interests. These include,
among others, foreign military systems, trade, and oil
production and distribution, all of which I will elaborate on.
First, regarding military systems, military systems and
their command and control are particularly information-
technology dependent, and thus potentially vulnerable to
disruption if Y2K problems are not adequately addressed. We
have been especially attentive to the issue of foreign
strategic missile systems, and particularly those in Russia and
China, to experience Y2K-related problems. United States and
Russian officials have been discussing these issues for some
time now, and we do not see a problem in terms of Russian or
Chinese missiles automatically being launched or nuclear
weapons going off because of computer problems arising from Y2K
failures.
Rather, the problem that we are more focused on is whether
the Russians will manage to locate and fix problems in their
early warning systems that they use to monitor foreign missile
launches and how their leadership is preparing to deal either
with the prospect of incorrect information being provided by
such systems or with system outages. The level of concern in
Russia is growing on these issues as awareness of the nature of
the Y2K problem grows.
Turning to world trade and oil, some of our most important
trading partners have been documented by, among others, the
Gartner Group, as behind the United States in fixing their Y2K
problems. And China and Japan will be good examples.
Significant oil exporters to the United States and the global
market including a number of countries--Venezuela, Saudi
Arabia, Mexico, Nigeria, Angola and Gabon--that are lagging in
their Y2K remediation efforts.
Oil production is largely in the hands of multinational
corporations in the oil-producing countries, but this sector is
highly intensive in the use of information technology and
complex systems using embedded processors, and is highly
dependent on ports, ocean shipping and domestic
infrastructures.
The oil industry is fraught with potential Y2K problems.
Embedded microprocessors are found throughout the oil industry
in drilling, pumping, transportation, processing and refining
operations. A typical offshore platform or onshore gas plant
reportedly uses 50 to 100 embedded systems, each containing up
to 10,000 individual microchips.
While the industry has been actively involved in
remediation, planning for remediation of a single offshore
platform can reportedly involve up to 60 different vendors. We
are concerned about the shipping of oil products, because ocean
shipping and foreign ports have both been flagged as among the
least prepared sectors.
One additional issue I want to raise is that many foreign
officials and companies who are aware of Y2K problems are
looking to the West, and particularly the United States, for
help, and to western suppliers for technical solutions. In some
cases, foreign companies or governments may blame the United
States and other foreign vendors for problems in this equipment
and thus seek legal redress for their failures. And worldwide
litigation issues are quickly becoming a part of the Y2K
international scene.
In closing, let me note that today we can list all the
issues that concern us worldwide in terms of the impact of Y2K
failures on infrastructures, economies, countries and regions,
national security, trade and so on. But today we cannot yet
provide good answers or predictions that would be meaningful on
the consequences. We have cast a wide net for information on
Y2K developments and are working very closely through the
President's Council on Y2K Conversion, with the rest of the
Federal Government. As the time for greater likelihood of
failures comes nearer, awareness of and reporting of Y2K
problems abroad should increase dramatically and we thus expect
to have a much better handle on the type and extended failures
we are likely to see around the world.
But the incredible complexity of global interconnectivity
and interdependence, and the effects when some parts of the
information technology baseline start to fail, is a daunting
challenge to interpret and analyze. There will be many analysts
in both public and private sectors here and abroad trying to
make reasonable judgments about the consequences and
implications. The problem is formidable, but we will do our
best to support the U.S. Government in assessing these
consequences. Thank you.
[The prepared statement of Dr. Gershwin follows:]
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Mr. Horn. We thank you for that very helpful statement, and
we will now go to Mr. Willemssen.
Mr. Willemssen. Thank you, Mr. Chairman, Chair Morella,
Ranking Member Turner, Congresswoman. Thank you for inviting us
here to testify today on Y2K.
I will briefly summarize our statement on, one, where the
Federal Government stands, issues confronting State and local
governments, and the readiness of key infrastructure and
economic sectors. And in doing so, I will focus on suggestions
we have for Mr. Koskinen and OMB to improve its oversight of
these areas.
First, regarding the Federal Government. While the most
recent November quarterly reports show improvement in
addressing Y2K, many agencies still have a long way to go. We
have a number of suggestions for Mr. Koskinen and OMB to
consider in this area.
First, on reporting of Y2K progress. OMB's draft guidance
to agencies for the upcoming February quarterly reports asks
agencies to identify and report on their core business
functions that are to be addressed in their business continuity
and contingency plans. We endorse this initiative. In fact, OMB
could go a step further and use this information to ask
agencies to report on their end-to-end testing and contingency
plans for these critical functions.
For example, with the time available for end-to-end testing
diminishing, OMB should consider for the government's most
critical functions setting target dates and having agencies
report against them for the development of end-to-end test
plans, the establishment of test schedules, and the completion
of those tests.
For business continuity and contingency plans, OMB could
consider setting a target date such as April 30th for the
completion of those plans, and a date such as September 30th
for completing testing of those plans.
Another key task that could be aided by identifying the
government's core business functions is setting priorities.
Having this information in hand provides an opportunity to
ensure that the most important areas will be addressed; namely,
those affecting health and safety, national defense, adverse
financial impact to the citizen and adverse economic impact.
This would enable agencies and OMB to report in 1999, after
March 31, on the Y2K compliance of business functions, not
individual systems. And, really, that is the bottom line of
what we are trying to accomplish here, is business functions
being Y2K compliant, not individual systems.
Another key element of a business continuity and
contingency plan is the development of a zero day, or day one
strategy for the period in late December 1999 and early January
2000. The Social Security Administration, a recognized Federal
leader on Y2K, has developed such a strategy. Among the
features of that strategy is a moratorium on software changes
for the last few months of 1999 and first few months of 2000.
Because this type of action can reduce agencies' risks, we
think OMB may want to consider requiring other agencies to also
take this kind of initiative.
Turning next to State and local governments. They face a
major risk of year 2000-induced failures to the many vital
services they provide. The report we issued in November on
State systems used in Federal welfare programs revealed that
the majority of those systems were not compliant. For example,
States told us that only about 16 percent of Medicaid systems
were compliant.
The extent of information available to the public on State
and local year 2000 readiness, however, varies considerably.
For example, while some State and local governments provide
detailed year 2000 readiness information on their Websites,
others provide very limited data. We think that States that are
providing detailed data are doing their citizens a service in
letting them understand what kind of progress is being made.
Accordingly, we think another initiative that Mr.
Koskinen's council could undertake is developing and
distributing to State and local governments a template that
identifies the types of year 2000 information that the entity
could disclose to the public. Disclosure of such information
could reduce the public's concern and potential panic over
potential disruptions caused by Y2K.
Turning last to the key infrastructure and economic
sectors, we believe Mr. Koskinen and his council are to be
commended on the strides they have made over the last several
months in this area. However, to enhance the further
availability of information on sector Y2K readiness and to
further reduce likelihood of major disruptions, we offer some
additional suggestions for Mr. Koskinen.
First, the Council must continue to aggressively pursue
readiness information in the areas in which it is lacking, such
as the health sector and local law enforcement. If the current
approach of using associations to voluntarily collect
information does not work, the Council may have to consider
other legislative remedies such as requiring such disclosure,
especially where it is important in certain infrastructure
areas.
Second, to encourage the reporting of more complete
information, the Council should consider requesting that all
the national associations publicly disclose, at a minimum,
those companies that have responded to surveys.
Third, for the next report of the Council scheduled in
April, we would urge the Council to include key data to help
evaluate the readiness of sectors and to identify each sector's
major components and its readiness.
And last, since the international arena, as we have heard,
carries some of the greatest risks and uncertainties, the
Council could consider prioritizing those trade and commerce
activities that are most critical to our Nation's well-being
and identify alternative options to obtain needed materials,
should the need arise.
That concludes a summary of my statement, and I would be
pleased to address any questions that you may have.
[The prepared statement of Mr. Willemssen follows:]
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Mr. Horn. Thank you very much. I yield 5 minutes to the co-
chairman of the Task Force, Mrs. Morella, chairman of the
Subcommittee on Technology.
Mrs. Morella. Thank you, Mr. Chairman. I want to commend
both of you for your excellent, succinct and candid testimony.
I must say to GAO, Mr. Willemssen, you have certainly done a
tremendous number of reports that all deal with Y2K. I
remember, I think it was 3 years ago, under the issues at risk,
at-risk issues, Y2K was mentioned then with computer security
on it, which continues to be mentioned.
Mr. Gershwin, I certainly again value the statement you
made about other countries and what they haven't done, what
they have done, and the leadership that we must show.
I asked Mr. Koskinen kind of the question in sort of a
rough-hewn verbiage to try to find out what is being done under
his direction to coordinate the concerns that both of you have
expressed. And you have expressed a series of recommendations
throughout. You have expressed the problems with some ways that
maybe we can look at it.
Would you tell us, these two committees, subcommittees, how
you work with Mr. Koskinen; what more needs to be done to push
forward that kind of action that we need? Either of you can
answer first.
Mr. Willemssen. I will start first. As John mentioned up
front, when he was here earlier, we do meet with him on a
monthly basis and we share issues that we have, and he does
likewise.
In addition, as issues come up on individual agencies where
we are doing reviews, we will give him a heads-up as soon as we
have the available data, to let him know of our concerns and
that we will be reporting on those.
Similarly, with some of the suggestions we have offered
here today, we have let him know of those suggestions, and also
OMB, and I think it is accurate to say they, in general, agree
with those suggestions. They also added we might be a little
ahead of them; that they were considering these types of
actions anyway. But we do have general concurrence.
So we have found the working relationship to be working
pretty well. Not to say that we haven't always wanted a little
more aggressive action in some of these areas. But if you look
back at some of the major recommendations we made to Mr.
Koskinen as soon as he took the job, most of those
recommendations now have been implemented, although some of
them not as quickly as we would have liked.
Mrs. Morella. Would you like to comment, Mr. Gershwin?
Dr. Gershwin. Yes. I am the intelligence community's
representative on the President's Council on the Y2K
Conversion, so I regularly attend the meetings. But much more
than that, we are heavily involved, my deputy Norm Green and I,
in the international working group that is part of the Council.
We have been actively involved with State Department, who
chairs that working group, and in providing briefings to people
in State Department about our information on the foreign Y2K
efforts. We will be doing the same thing with the Department of
Energy, because I have been meeting with those folks.
We are very actively engaged with the Defense Department's
work in the President's Council. In fact, Norm Green and one of
the DOD people chairs a subgroup that has to do with
international issues. So I think we are extraordinarily
involved in the work of the President's Council, as well as
doing our own independent analysis of this. But it is
essentially all being provided to not only John Koskinen but
other members of the Council.
Mrs. Morella. Too bad we cannot clone both of you in terms
of what you know needs to be done.
My concern is that these governments have so many other
problems, like the Asian financial crisis, that Y2K is still,
regardless of your international group, still at the bottom of
the list; and in terms of putting money into it and the
expertise that they don't have.
Mr. Willemssen, I am interested in, too, is the suggestions
are made, they are listened to, affirmative response in terms
of we agree with what you are saying. Do you, the next month
when you meet, followup and say, these are some recommendations
that it would have been far better had you done something with
it; or would you tell us what you have done? What kinds of
accountability is there other than these are some suggestions?
Mr. Willemssen. We do followup with them. I will give you
one example. The recommendations that we had made early in 1998
was for John Koskinen to take a sector-based approach and
conduct detailed assessments of those sectors. He eventually
did that. I wish he would have done it 6 months earlier. And he
knew that we were pushing him to do that, and I am glad that he
has done it.
The type of rich detailed data that we need on many of
those sectors still isn't there. And I think when the next
quarterly report comes out from John in April, if we still
continue to see the dearth of rich detailed data, then we have
to start looking at other alternatives to get that information.
Mrs. Morella. It is a tremendous frustration, from my point
of view, in terms of so many things need to be done. I am
convinced we are not going to be ready, and yet I am not one
who panics. I tell everybody, ``Don't worry, critical-mission
systems will be taken care of.'' I am not really even sure of
that. And I am really worried about, what did you call it,
``business connections,'' when I talk about making sure about
how one group links with one another. Oh, ``business continuity
points.'' Whatever, you know exactly what I mean. The kind of
connection I think we need to do more evaluating and working on
that.
So I look forward to continuing to work with both of you
and with your very capable staffs to make sure that it is
incorporated soon.
Thank you, Mr. Chairman.
Mr. Horn. Thank you. Now Mr. Turner, the ranking member, 5
minutes for questioning.
Mr. Turner. Dr. Gershwin, one of the concerns you addressed
was the lack of preparation in Russia by the Russian Atomic
Energy Ministry. If I were to ask you what are the greatest
threats or problems that could occur, what national security
problems would be on your top list of concerns? What kind of
things would you list for us?
Dr. Gershwin. As far as Russia is concerned?
Mr. Turner. Russia and, in general, national security
concerns.
Dr. Gershwin. OK. National security in a broad sense is
more than military issues, obviously, and we are really quite
concerned now, as we see it, about world trade issues, which
are essentially U.S. and global economic security.
The potential for there to be enough disruption of the
global economy that, as we have seen in the last 6 months, the
United States is certainly tied into the global economy in a
serious way. So I would probably put that as the top issue I
would raise as far as the international implications.
Another one, which I think is really quite important, is
the fact that these disruptions, particularly in places like
Russia and China, will be taking place in the middle of winter.
And we have had a little taste of that in our area here in the
last few days.
Mrs. Morella. My area, as a matter of fact.
Dr. Gershwin. Particularly in Montgomery County. But Russia
is likely to experience some serious power outages. Their
nuclear reactors, some of their nuclear reactors may shut down.
One of the issues on their nuclear reactors is simply the
vital role that Russian nuclear reactors play in the overall
power distribution in that country and the difficulty they
might have in getting them back up again, leading to serious
power outages, which would hurt an already hurting economy.
In addition, a worry that we have, and that we are working
on rather hard to get more information on, is the potential for
nuclear reactors in places like Russia to have safety problems
in their shutdowns. If the nuclear reactors experience
failures, if the back-up diesel generators experience failures,
there could be electrical problems that interfere with the
safety mechanisms in those nuclear reactors.
While we don't want to raise the specter at this point of
huge problems in terms of safety of nuclear reactors worldwide,
the fact is that in Russia itself that is a concern to us, and
we are going to be studying that in a lot more detail over the
next few months. So I would certainly raise that, then, as an
important national security concern because of nuclear power
problems.
Taking that a little further, I think just the electric
power grids in many of these key countries are susceptible to
some sort of failures, because I don't think most of these
countries we are talking about, such as China and Russia, have
done nearly the work done in North America. All of these
countries are extremely dependent, frankly, on their electric
power for many, many things.
So, again, in terms of major domestic disruptions in those
countries, leading to all kinds of economic difficulties,
possible needs for United States and western humanitarian
assistance to those countries in the middle of winter, I see
some of those as the critical national security issues.
Mr. Turner. I have seen a lot of efforts being made by our
domestic utility companies to comply and be ready for Y2K, and
I am sure many efforts are being made with regard to nuclear
power plants within our own country. Have we made any efforts
to offer international assistance, or would that be an
appropriate response to what appears to be a very serious
potential problem?
I assume you are talking about that it is not beyond the
realm of possibility that there could be another Chernobyl as a
result of Y2K in Russia or some other country where they have
not prepared their nuclear reactors.
Dr. Gershwin. That would be the issue obviously we ought to
be worried about, although at this point I think it would be
premature to raise that flag, but I think it is something that
we are watching.
The Department of Energy is certainly in a position to
discuss nuclear power issues with other countries. You would
really have to ask them where they stand in terms of those
kinds of discussions. But I think there is a fair amount of
information shared from one country to another; various
mechanisms to discuss nuclear power problems.
One of the issues is simply that countries like Russia do
not easily welcome advice from the West on their Y2K problems.
There has been some discussion, but they have been very slow to
react in many areas, and that would be one of them.
Mr. Turner. Thank you, Mr. Chairman.
Mr. Horn. Thank you. Vice Chairman Biggert, 5 minutes.
Mrs. Biggert. Thank you, Mr. Chairman.
Dr. Gershwin, you mentioned that there are many of these
countries in the infancy stage of awareness. What is kind of
the cutoff date? If they haven't done anything, is there a time
that it really is too late, and then what do we do?
Dr. Gershwin. As John Koskinen told me sometime back, when
we start to go through these, there are countries that are 24
months behind the United States, 36 months behind. It is never
too late to do something. And part of the purpose of the U.N.
meeting in December was to make it clear to countries that, as
behind as they are, they can do an awful lot in 1999 to help
themselves out. They may not, and in fact they won't be as well
prepared as the United States, but they can do a heck of a lot
better and avert a lot of the problems by doing some serious
contingency planning and the like.
So it is really hard to put a firm cutoff date; but,
frankly, if a country is 24 months behind the United States,
and the United States will be prepared without a lot of time to
spare, then I would say a lot of the countries, particularly in
the developing world, are going to have failures that they have
not prepared for and are going to have to deal with the
consequences afterward.
The best bet, I think, for these countries is to identify
where their problems are most likely to occur and start making
plans for how to work around those problems.
Mrs. Biggert. Have you seen evidence of these countries
identifying these problems since December and since that
meeting?
Dr. Gershwin. It is probably a little too quick to be able
to tell. Some of them just appointed national coordinators for
this to get ready for the meeting in December, and a lot of
their plans are only going to start rolling in over the next 2
or 3 months. And, frankly, one of the problems we have in
trying to assess this is the lack of information, certainly
publicly available from abroad, compared to what is going on in
this country, makes it difficult for us to gather a lot of key
information about sectors and countries and so on.
In the intelligence community we have other ways to get
information, other than what people declare, but the fact is
that openly available information would be extremely helpful to
us. A lot of countries are simply not providing that at this
point because I don't think they themselves even know.
Mrs. Biggert. Well then, can you say there really is no
problem that there might be an automatic missile launch from
China and Russia?
Dr. Gershwin. Fortunately, countries like China and Russia
are countries that we have for years, for decades, we have
studied very carefully their missile systems. I used to do that
for a living, before I got into the Y2K business here. And so
we know enough about the Russian strategic weapons, the Chinese
strategic weapons to be quite confident that those systems
should not experience the kinds of failures that would lead to
anything automatically launched.
The worry we do have, and as I expressed in my testimony,
and particularly for the Russian early warning system, that the
Russian early warning system needs some serious scrutiny by the
Russians so that they understand the potential failures they
could have there, and that they don't misinterpret the
information. But in terms of automatic anything, we don't think
automatic launches of missiles are conceivable.
Mrs. Biggert. I think that Mr. Koskinen stated that the
international financial transaction markets were in good shape,
and we certainly have been working on that at a domestic level,
for example, in Illinois. But what about the Asian financial
markets; could this cause a problem there? And then how would
that affect other international transactions?
Dr. Gershwin. Well, the issue from countries in the Asian
area is, since they have been heavily preoccupied with the
financial problems over the last many months, it tends to
detract from their attention on the Y2K problem. And one thing
we have learned about the Y2K problem is, you have to be
consistent and energetic in working the problems and then good
things will happen.
So, frankly, we are not yet in a position to evaluate on a
kind of a regional basis just how well Asian financial
solutions will take place. But certainly the countries that
have been experiencing problems, it is a real flag that would
go up. I indicated in my testimony that we think at least some
of the Chinese financial institutions could have some problems.
I would certainly worry as well about Japan, just because of
the enormous difficulty they have had in the last many months.
Any country experiencing global financial disruptions is
going to focus so heavily on that that it could detract from
their Y2K fixes.
Mrs. Biggert. Have there been any international lawsuits
filed over this issue?
Dr. Gershwin. Yes, there have, and I don't know if any of
my colleagues have any specifics on that. I know there have
been already some international litigation being filed. Anybody
know? No.
Mrs. Biggert. Do you know what the type or nature of the
litigation is?
Dr. Gershwin. I think it has to do with western information
technology companies that have been involved in these
countries, and whether they have essentially provided
technology and services which warrant Y2K compliance and,
hence, are undermining the economies and technologies and
companies and so on.
But we do have some specifics on that, not a lot, but it
has been building. We could certainly get that for you.
Mrs. Biggert. Could you supply that for the record?
Dr. Gershwin. Certainly.
Mrs. Biggert. Thank you.
Mr. Horn. Without objection it will be put in the record at
this point.
[The information referred to follows:]
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Mrs. Biggert. Then a question for Mr. Willemssen. Do you
agree with Mr. Koskinen that the traffic control system will be
totally compliant well in advance of the year 2000?
Mr. Willemssen. No, I wouldn't agree with that statement,
especially well in advance. FAA's air traffic control system
still has a lot of risks.
FAA, its Administrator, Administrator Garvey, the Program
Manager Ray Long, have done a tremendous job over the last
year. Unfortunately, FAA got a very late start on this issue,
and they are heavily automated. In some cases that automation
is fairly archaic, and it will take a tremendous effort,
continued tremendous effort for them to be fully compliant and
to test those systems from an end-to-end perspective and have a
full understanding of their data exchanges and data flows with
other partners, such as airports, airlines, National Weather
Service, Department of Defense.
So am I optimistic that they will complete all of that well
in advance? No.
Mrs. Biggert. They have also put in new computer systems in
some of the regions, too, and there has been some downside to
that; there have been some failures. You suggested having a
moratorium on software changes and other things. How is that
going to affect?
Mr. Willemssen. You have just pointed out another reason
for why it is so difficult for FAA. They have multiple
locations throughout the country. We are not talking about one
system in one place. That increases the complexity that much
more. And to the extent they continue installing new systems or
modifying existing systems, every time you open up the
software, you increase the risk of additional Y2K-related
problems. And, therefore, that is something that FAA is going
to have to look at as they near the end of 1999.
Once they have certified, for example, a system is
compliant, if they go in and modify the software, well,
essentially, that is not really compliant anymore, if you have
made a lot of adaptive changes or made major modifications to
the software. So that is something for them to consider.
Mrs. Biggert. Thank you. Thank you, Mr. Chairman.
Mr. Horn. Thank you. Good questions.
Let me just ask a few wind-up questions, although if my
colleagues have other questions, fine.
But, No. 1, on the reactors--and the vice chairman comes
from a State where much of their electric power is from nuclear
reactors in Illinois--what do we know about the types of
reactors that we have around the world and the extent to which
there can be a malfunction there of some sort that would affect
the power grid and power coming out of those reactors?
And if you had to look from the Moon down at the United
States and then at Russia and then at France, because the
competition on reactors over 30 years has been the United
States reactors or the French reactors, what would you be able
to tell us as to where is the highest risk that a power grid
can go out just because of something that is built into any of
those reactors?
Dr. Gershwin. I think Russia is the No. 1 problem.
Mr. Horn. How many Chernobyl-type reactors do they still
have, or did they change that?
Dr. Gershwin. No, they still have roughly the same number
they had before because they really have not modernized their
reactors.
Mr. Horn. That is about 11 or so?
Dr. Gershwin. No, I think there are more than that.
Mr. Green. In the mid-fifties.
[The information referred to follows:]
The Number of active Chernobyl-type reactors in Russia,
Lithuania, and Ukraine that pose a potential moderate to high
risk of radioactive release is 14. There are some 20 reactors
of other types in Russia and East Europe that also present a
potential moderate to high risk.
Dr. Gershwin. There are a number not only in Russia but
actually in some of the other countries, in Eastern Europe,
Lithuania, places like that.
Those particular reactors are worrisome to us. We have
studied in the intelligence community, with the support of the
Department of Energy, what we call the most dangerous reactors
in the world, apart from just Y2K issues. Russia and its former
allies just lead that list.
Those are dangerous in the sense of we didn't think their
safety enhancements were very good. These are the very same
reactors that have not really received enough Y2K attention in
terms of Y2K remediation. And they are, obviously, extremely
connected to the electric power grids in Russia and some of the
other countries, which can work both ways: failures in electric
power grid, causing reactor problems; failures in the reactors,
causing overall reduction in the electric power available to
run the country.
So when you look at all that, I think the Russian reactor
problem and those of some of the other nearby countries is
serious, a serious problem.
I should just mention in France, and it is an area
obviously we are interested in as well, French reactors are
pretty much all of the same design. If there were a Y2K problem
in French reactors, it might affect a large number of reactors
in France, and that could cause France to have some serious
problems.
This is something we will be looking into. I am not raising
the issue right now that we are worried about France, but just
the nature of nuclear reactors is such that we ought to look
particularly carefully at nuclear reactors around the world.
And we will be doing that.
In fact, we have a study under way at Pacific Northwest
Laboratories in the State of Washington under the Department of
Energy guidance, which I asked them to do, to look specifically
at reactors and the implications of reactor failures in terms
of what could happen in those countries, both from a safety
point of view and an energy point of view. So we will be
looking very closely at that particular subject area.
Mr. Horn. Is there a problem with the embedded chips within
these reactors, or to what degree do they operate on sort of an
automatic flow-through; that that power can be shut off under
certain circumstances or permitted to go into the distribution
system or what?
Dr. Gershwin. There are certainly embedded processors in a
lot of those systems. We don't necessarily have the exact
designs of all those things, so in some cases we have to
estimate it. But they are very complex indeed, in many cases
largely because of the safety mechanism and how those are
implemented. So nuclear reactors are certainly an area where
the embedded processor problem could become significant.
Mr. Horn. If you looked at American reactors the same way
you look at Russian reactors--and you know we have had a
blackout in the central States, we had a blackout in New York,
we had a recent blackout in San Francisco--anything we can
learn from what is going on elsewhere? Are we in that danger?
Dr. Gershwin. Well, of course, we in the intelligence
community don't really study the United States as such, so I
can't really say about that.
Mr. Horn. Well, I always felt you should. And when I was in
strategic intelligence, we looked at a lot of stuff to see what
other people could find. And all you did was go to the
Government Printing Office and there was the plans usually for
everything.
Dr. Gershwin. I know there has been quite a bit of scrutiny
already of U.S. nuclear reactors. In fact, when I was at
Pacific Northwest Labs last month, one of their experts, who
was a nuclear reactor designer, had in fact been visiting some
U.S. reactors and had learned how they are dealing with the Y2K
problem. And the message he gave me was you have to really know
an awful lot about these reactors to identify places where
there could be a Y2K problem, and then it is quite fixable.
He was quite optimistic that the U.S. reactors would do
well in this Y2K remediation. But he, as a result of that,
became more concerned about foreign reactors because he knows
how complicated it is to take a look at these things and figure
out what to do.
Mr. Horn. Moving to refining and to these huge tankers, to
what extent do they pose a problem in terms of embedded chips,
microprocessors?
Dr. Gershwin. They are very heavily dependent on embedded
processors and processor systems for many, many key functions,
because they do a lot of monitoring, status monitoring, looking
at recent maintenance to make sure that things are being
maintained on a proper schedule. So there is quite a bit of
date sensitivity in the oil industry and the shipping
associated with it.
So that throughout the oil industry, from extraction,
refining, shipping and so on, there are just many, many places
where Y2K problems can emerge. So that it is a very complicated
business, in fact, to take a look at this. And our concern is
because of that complexity, the potential for failure is
significant. And we know enough about this to know that there
is quite a bit of concern being raised about some of the
foreign oil companies, particularly located in some of these
foreign countries, as to how well they are going to do. It is
an area of high interest, obviously now by the President's
Council, by a number of folks.
Mr. Horn. To our knowledge at this point, would there be
any chance of an environmental spill as a result of something
going wrong?
Dr. Gershwin. I would just hazard a guess that, yes, that
could possibly happen. We haven't specifically looked at that,
but that would certainly be within the realm, I would think.
Somebody else might disagree, but I will just give you my top-
of-the-head impression.
Mr. Horn. Who will look at that question? Is it EPA, is it
the Department of the Interior? Who is going to take a look at
the environmental----
Dr. Gershwin. I think the Department of Energy and the
Environmental Protection Agency would seem like naturals for
that issue.
Mr. Horn. We are going to have them in in a couple of
weeks. We are going at the laggards that were pretty far behind
and trying to find out what the problem is, as well as some of
the success stories which we ought to be sharing with the
others.
Do any of my colleagues have any other points here they
would like to make?
Mrs. Morella. This has been excellent testimony. With
regard to the prioritizing, what should happen after that is
done? You suggest prioritizing in terms of oil, trade, food,
pharmaceuticals. I guess you would add nuclear reactors to
that.
Dr. Gershwin. Yes, and military systems generally.
Mrs. Morella. Military systems. What actions would you
suggest following prioritizing?
Dr. Gershwin. Well, our role, at least in the intelligence
community, is to try to assess the likelihood of failures in
some of these key infrastructure areas and then assess the
implications for the United States, which should, hopefully,
lead to ideas for actions the United States could take to
reduce the impact on the United States.
If you look at sort of the oil industry example, as we get
closer to understanding this, we should be able to have a
better sense of a scope of the magnitude of the potential
failures. And that should help lead to an assessment of whether
that will have a small effect on the United States' interest or
a big effect.
Mrs. Morella. Have we done anything in terms of
prioritizing, or is that just a suggestion?
Dr. Gershwin. We are just moving in that direction now. We
have a lot of work to do. We are still gathering data, and we
have not done a lot of assessment yet, frankly.
Mrs. Morella. Right. One of our problems is that we don't
have the opportunity to have a continuing resolution when it
comes to January 1, 2000. So I do hope you move. It is a great
idea. I do hope you get the Council to move very fast on that.
Dr. Gershwin. I think we are doing--there is a lot of
energy being put into this at this point, by not only the
President's Council but by the U.S. intelligence community.
Mrs. Morella. Mr. Willemssen, do you have any other
comments you want to make?
Mr. Willemssen. No, other than glad to hear the comments
Dr. Gershwin made that there is an increasing focus in this
area. We need data in order to make some decisions and
understand where our risks are so that we can take appropriate
actions.
Mrs. Morella. I hope you will both keep us posted, and I
look forward to working with you. Thank you. Thank you, Mr.
Chairman.
Mr. Horn. Thank you.
Mr. Willemssen, I have just one short question. Months ago
I suggested to Mr. Koskinen that he ought to have some people
on a weekly report to keep the heat on them. Do you know if
they are doing that at all at this point, and are the laggards
being separated out from the people that do know what they are
doing?
Mr. Willemssen. Those in the bottom two tiers are reporting
monthly to OMB and Mr. Koskinen. One thing you may want to
consider is, obviously, the March 31 date is fairly important.
It may be something useful for OMB and Mr. Koskinen to report
shortly after that date so that we know where indeed we stand
as a Federal Government.
And then we have to start shifting the focus away from
compliance of individual systems and thinking more about
compliance of key business functions and whether they are going
to operate as intended; multiple systems, again working
together, often across agency boundaries, often involving our
State and local governments. That is where a lot of the
attention is going to have to be paid in the latter part of
1999.
Mr. Horn. Well, those are helpful suggestions. I share Mrs.
Morella's praise for both of you and your testimony and your
colleagues that have helped with that.
Today's compelling testimony, I think, further provides
evidence that the Federal, State and local governments are
striving to identify and solve their problems, but as Mr.
Willemssen suggests, there are a lot of ways to go about that,
and we can't just make it an afterthought as we concentrate
solely on the Federal Government because we have found numerous
connections between agencies and the State and county
governments, for that matter, that have administered many of
these programs for 40 or 50 years. Still, we in Congress are
deeply concerned that much work remains. And as the President
said last evening, Y2K must not become the first crisis of the
21st century.
In the very near future we will hold hearings to review the
status of Y2K efforts at the Departments of Defense and the
Postal Service. We have not been involved with the Postal
Service, but our understanding is that a report of the
Inspector General there seems to require us taking a look at it
in conjunction with the Subcommittee on the Postal Service of
Government Reform. In addition, we will be delving into the
muddy area of Y2K litigation.
As a government and as a Nation we must continue to be
industrious and vigilant in these efforts so that we can zap
this so-called computer bug that some people still don't
believe in. Some think it is a hoax. Some think it is a way to
sell books. We have heard every excuse you can think of, but
most of us know that, in most situations, we have got a
problem, and we ought to deal with it in some managerial,
efficient and effective way.
Let me now thank the staff that prepared this hearing,
starting with J. Russell George, the staff director and chief
counsel of the Government Management, Information, and
Technology Subcommittee; Matt Ryan, who we are glad to have
back with us, sitting right behind me, a senior policy adviser
for the subcommittee; Bonny Heald, who is out there somewhere,
and our director of communications and professional staff
member, who has been very helpful; Matthew Ebert, our clerk,
who puts most of this work together; and Mason Alinger, the
staff assistant for the subcommittee; and then Paul Wicker and
Kacey Baker, our interns. We appreciate their help.
And for the Subcommittee on Technology, Richard Russell,
the very able staff director of that committee; and Ben Wu, the
professional staff member; and Joe Sullivan, is it? Am I
reading that right? I have a problem with some people's
penmanship, even though I am a former college professor and can
read almost anything, who is the clerk on the Technology
Subcommittee.
And then for the minority, Faith Weiss is the professional
staff member. And Earley Green, staff assistant.
And then our overworked--and we should have taken a recess
if we had known we were going to go this long--court reporters,
Pam Garland and Cindy Sebo. Thank you both.
With that, this hearing is adjourned.
[Whereupon, at 1:55 p.m., the hearing of the joint
subcommittees was adjourned.]