<DOC>
[106th Congress House Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:58811.wais]
Y2K TECHNOLOGY CHALLENGE: WILL THE POSTAL SERVICE DELIVER?
=======================================================================
JOINT HEARING
before the
SUBCOMMITTEE ON THE POSTAL SERVICE
and the
SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,
INFORMATION, AND TECHNOLOGY
of the
COMMITTEE ON GOVERNMENT REFORM
and the
SUBCOMMITTEE ON TECHNOLOGY
of the
COMMITTEE ON SCIENCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTH CONGRESS
FIRST SESSION
__________
FEBRUARY 23, 1999
__________
Committee on Government Reform
Serial No. 106-25
Committee on Science
Serial No. 106-35
__________
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
58-811 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
JOHN T. DOOLITTLE, California (Independent)
HELEN CHENOWETH, Idaho
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
------
Subcommittee on the Postal Service
JOHN M. McHUGH, New York, Chairman
MARSHALL ``MARK'' SANFORD, South CHAKA FATTAH, Pennsylvania
Carolina MAJOR R. OWENS, New York
BENJAMIN A. GILMAN, New York DANNY K. DAVIS, Illinois
STEVEN C. LaTOURETTE, Ohio
DAN MILLER, Florida
Ex Officio
DAN BURTON, Indiana HENRY A. WAXMAN, California
Robert Taub, Staff Director
Heea Vazirani-Fales, Counsel
Abigail D. Hurowitz, Clerk
Denise Wilson, Minority Professional Staff Member
Subcommittee on Government Management, Information, and Technology
STEPHEN HORN, California, Chairman
JUDY BIGGERT, Illinois JIM TURNER, Texas
THOMAS M. DAVIS, Virginia PAUL E. KANJORSKI, Pennsylvania
GREG WALDEN, Oregon MAJOR R. OWENS, New York
DOUG OSE, California PATSY T. MINK, Hawaii
PAUL RYAN, Wisconsin CAROLYN B. MALONEY, New York
Ex Officio
DAN BURTON, Indiana HENRY A. WAXMAN, California
J. Russell George, Staff Director and Chief Counsel
Matt Ryan, Senior Policy Director
Mason Alinger, Clerk
Faith Weiss, Minority Counsel
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
Subcommittee on Technology
CONSTANCE A. MORELLA, Maryland, Chairwoman
CURT WELDON, Pennsylvania JAMES A. BARCIA, Michigan**
ROSCOE G. BARTLETT, Maryland LYNN N. RIVERS, Michigan
GIL GUTKNECHT, Minnesota* DEBBIE STABENOW, Michigan
THOMAS W. EWING, Illinois MARK UDALL, Colorado
CHRIS CANNON, Utah DAVID WU, Oregon
KEVIN BRADY, Texas ANTHONY D. WEINER, New York
MERRILL COOK, Utah MICHAEL E. CAPUANO, Massachusetts
MARK GREEN, Wisconsin BART GORDON, Tennessee
STEVEN T. KUYKENDALL, California TIM ROEMER, Indiana
GARY G. MILLER, California
Ex Officio
F. JAMES SENSENBRENNER, Jr., GEORGE E. BROWN, Jr., California+
Wisconsin+
C O N T E N T S
----------
Page
Hearing held on February 23, 1999................................ 1
Statement of:
Corcoran, Karla W., Inspector General, U.S. Postal Service,
accompanied by Richard F. Chambers, Deputy Assistant
Inspector General for Audit, Office of the Inspector
General, U.S. Postal Service; Jack L. Brock, Director,
Governmentwide and Defense Information Systems, Accounting
and Information Management Division, U.S. General
Accounting Office; Carl M. Urie, Assistant Director,
Governmentwide and Defense Information Systems, Accounting
and Information Management Division, U.S. General
Accounting Office; Norman E. Lorentz, senior vice
president, chief technology officer, U.S. Postal Service;
Nicholas F. Barranca, vice president, operations planning,
U.S. Postal Service; and Richard D. Weirich, vice
president, information systems, U.S. Postal Service........ 20
Letters, statements, etc., submitted for the record by:
Barranca, Nicholas F., vice president, operations planning,
U.S. Postal Service, followup questions and responses...... 158
Brock, Jack L., Director, Governmentwide and Defense
Information Systems, Accounting and Information Management
Division, U.S. General Accounting Office, prepared
statement of............................................... 121
Corcoran, Karla W., Inspector General, U.S. Postal Service:
Management advisory report............................... 162
Prepared statement of.................................... 23
Fattah, Hon. Chaka, a Representative in Congress from the
State of Pennsylvania, prepared statement of............... 217
Horn, Hon. Stephen, a Representative in Congress from the
State of California, prepared statement of................. 8
Lorentz, Norman E., senior vice president, chief technology
officer, U.S. Postal Service:
Information concerning the master calendar............... 213
Prepared statement of.................................... 141
McHugh, Hon. John M., a Representative in Congress from the
State of New York, prepared statement of................... 4
Morella, Hon. Constance A., a Representative in Congress from
the State of Maryland, prepared statement of............... 11
Turner, Hon. Jim, a Representative in Congress from the State
of Texas, prepared statement of............................ 16
Y2K TECHNOLOGY CHALLENGE: WILL THE POSTAL SERVICE DELIVER?
----------
TUESDAY, FEBRUARY 23, 1999
House of Representatives, Subcommittee on the
Postal Service, joint with the Subcommittee on
Government Management, Information, and
Technology, Committee on Government Reform; and
the Subcommittee on Technology, Committee on
Science,
Washington, DC.
The subcommittees met, pursuant to notice, at 10 a.m., in
room 2154, Rayburn House Office Building, Hon. John McHugh
(chairman of the Subcommittee on the Postal Service), Hon.
Stephen Horn (chairman of the Subcommittee on Government
Management, Information, and Technology), Committee on
Government Reform; and Hon. Constance Morella (chairwoman of
the Subcommittee on Technology), Committee on Science
presiding.
Present: Representatives McHugh, Horn, Morella, Miller,
Bartlett, Gilman, Biggert, Gutknecht, Turner, Stabenow, Gordon,
Wu, and Rivers.
Staff present from the Subcommittee on the Postal Service:
Robert Taub, staff director; Heea Vazirani-Fales, counsel; Jane
Hatcherson, office and systems administrator/legislative
assistant; Abigail D. Hurowitz, clerk; Denise Wilson, minority
professional staff member, Committee on Government Reform; and
Jean Gosa, minority administrative staff assistant, Committee
on Government Reform.
Staff present from the Subcommittee on Government
Management, Information, and Technology: J. Russell George,
staff director; Bonnie Heald, communications director and
professional staff member; Matt Ryan, policy director; Mason
Aliger, clerk; and Faith Weiss, minority professional staff
member, Committee on Government Reform.
Staff present from the Subcommittee on Technology: Richard
Russell, staff director; Ben Wu, professional staff member; Joe
Sullivan, staff assistant; Mike Quear, minority professional
staff member; and Marty Ralston, minority staff assistant.
Mr. McHugh [presiding]. Let me call the meeting to order
and wish everyone, ``Good morning'' and my personal words of
welcome.
This is somewhat of a unique meeting today, in that we are
joining not just another but, in fact, two other subcommittees,
for a total of three. Two of which have been designated as the,
``experts,'' on the year 2000 problems. My good friend on my
left--only figuratively speaking--from California, Mr. Horn,
fresh from a starring engagement on the ``Today'' show, and his
role as the chairman of the Subcommittee on Government
Management, Information, and Technology. And my other good
friend, Mrs. Morella--Connie, how are you--and her chairmanship
over the Subcommittee on Science and Technology. Rather than a
joint hearing, I suppose we could consider this a ``trifecta''
of sorts--[laughter]--and I certainly welcome the opportunity
to join my distinguished colleagues in this hearing today. I
know we all look forward to having the benefit of the testimony
and input of our very distinguished witnesses.
This is certainly a serious matter that must be addressed
fully--and I want to emphasize the word ``fully''--and must be
addressed within the next 311 days for those of us who are
counting.
The Postal Service has stated that it is assigning a high
priority to addressing the Y2K problem and is spending a
significant amount of money on that effort. The Service has
estimated that the total cost of fixing its Y2K problem could
be one-half to three-quarters of a billion dollars. Given the
importance of the Postal Service's mission to all Americans,
whether at home or at their place of business, we must ensure
that this problem is and, of course, stays on track.
The Postal Service faces a major challenge in updating its
computer system to correctly identify dates beginning in the
year 2000 and, thus, avoid malfunctions that could
significantly, even disastrously, disrupt mail delivery. The
Postal Service has a special responsibility in this regard
because it is likely that a number of private-sector and
Government groups may need to utilize the agency as a backup
delivery system if their computers malfunction, raising
concerns about the prospect of a mail surge in January of next
year.
An early assessment by the Inspector General showed that
the Service was slow to recognize the scope of this problem and
failed to take the necessary actions early on to ensure that
its computer systems were indeed Y2K compliant.
More recently, the Postal system's November 19, 1998,
quarterly report to the Office of Management and Budget, on its
efforts in this matter, indicated progress in its meeting the
challenge. The Service's remaining tasks include completing the
adjustment of its computers so that they are all completely
compliant, fully testing computer systems, and, of course,
preparing contingency plans to help ensure continuity of core
business operations.
Our witnesses today include the Postal Service's Inspector
General, the General Accounting Office, and the Postal Service,
itself. The Inspector General has been working closely to
assess and monitor the Service's progress, and we certainly
look forward to her insights and recommendations.
The GAO has also been evaluating the postal situation, and
that office, I believe, can provide some context given its
assessments of the Y2K problems encountered in other Federal
agencies of similar size and scope such as the Department of
Defense. And, of course, we are anxious to hear firsthand from
the Postal Service on the progress it has made in overcoming
its early difficulties as identified last year by the Inspector
General.
As I stated at the outset, given the importance of the
Postal Service's mission to the American public, close
oversight will be needed to ensure that its year 2000 program
stays on track, and today's hearing, we all hope, is one step
in that very important process.
And with that, before we go to our witnesses, I would be
happy to yield to my good friend, Mr. Horn, who actually came
to me with the idea of this hearing. So I am really relying
upon him to make us all look smarter than I think I am. But
with that, I would be happy to yield to the gentleman from
California.
[The prepared statement of Hon. John M. McHugh follows:]
[GRAPHIC] [TIFF OMITTED] T8811.001
[GRAPHIC] [TIFF OMITTED] T8811.002
[GRAPHIC] [TIFF OMITTED] T8811.003
Mr. Horn. Well, I thank you. As chairman, you have done a
wonderful job over the last few years we have been colleagues
in reviewing the Post Office. Thank you for calling this
hearing.
If I might, I am going to only read one or two sentences
from my opening statement. Mr. Chairman, I would like to have
the statement put in the record as if read at this point.
Mr. McHugh. Without objection, so ordered.
[The prepared statement of Hon. Stephen Horn follows:]
[GRAPHIC] [TIFF OMITTED] T8811.004
Mr. Horn. I think I can say this about the Post Office
Department. Based on my experience, 30 years of living in Long
Beach, CA, I have never had one single complaint about the Post
Office Department. You have a marvelous group of people out
there. Mr. Good, I think a lot of you know, who headed the Long
Beach operation and was moved around the country in a couple of
cases to salvage those operations. They run a fine system. I
have been in every single branch post office in that district
at least four times over the last 6 years. And, again, both
clerks, letter carriers have done things with a smile.
So, I don't come at this from being ``dogged'' after the
Post Office Department. But I come at it because, as the
chairman said in his opening remarks, everybody else's
contingency plan, if their electronics and computers don't
work, all of them are depending on the post office. We have
enough trouble with the ones that have computers, and we hope
they will work, and not just in the Federal Government, but in
the society, in general. But, again, we are going to be really
``up a creek'' or ``down a creek,'' whatever the phrase is, in
needing your help, because January 1, 2000, is right in the
midst of your major rush of the year. If everybody is mailing
43 million checks or 10,000 checks in a small business,
whatever it is, they are going to need your help.
So, one of the things I hope will come out of this hearing
is some understanding of how you can be the contingency person
of the American society.
If we can hold the rest for questions--I am going to have
to step out at 10:45 for about a half an hour, Mr. Chairman,
but I will be back.
Mr. McHugh. I thank the gentleman.
There really is no order of seniority. Well, there is, of
course--[laughter]--but we are not adhering to any kind of rank
here. We have, as I said, three subcommittees, and of course a
lot of Members, I know, will be coming in and out and the fact
that we are going to our third Chair this morning, as the third
spot has absolutely no relevance to anything other than that
seems to be the way it worked out.
But with that, I would be delighted to yield to Chairwoman
Connie Morella for any comments she might like to make.
Mrs. Morella. Thank you, Mr. Chairman.
I appreciate your holding this hearing, with the three
subcommittees coming together, because we recognize what an
important issue this is and how important the Postal system is
to all Americans and to all people who are in the United States
and, as a matter of fact, throughout the world.
So, I am pleased to be here. We talk about three Chairs;
maybe we need to look at the table here that we have before us.
Delivery of the mail, of course, is so fundamental to our
Nation that it would be unthinkable for us to not have it. And
yet, just as in virtually every large business, and the Postal
Service is a quasi independent agency, is arguably the largest
business in the Federal Government with over 700,000 employees
handling over 185 million pieces of mail annually, the Postal
Service is also being bitten by this millennium bug. So, the
Postal Service must take every available necessary action to
correct the Y2K computer glitch, especially in this age of
highly automated mail delivery.
The problem is that, due to initial inadequate leadership
and lack of management priorities, the Postal Service only
began to dedicate sufficient resources, personnel, and funding
to the issue much too late. And as a result, there are
justifiable concerns about the Postal Service's ability to be
fully Y2K compliant before January 1, 2000. And that deadline
is like 311 days away.
I have been assured that, despite these concerns, the
Postal Service is determined that in the new millennium anyone
who drops off mail at the post office should remain absolutely
confident that their letter or package will arrive at its
intended destination, even if it has to be manually sorted or
even if it needs to be delivered by Pony Express.
I have no doubt that getting the mail there will not be a
problem, but the Y2K challenge may ultimately give a stark,
grim truth to the old excuse, ``the check is in the mail.'' The
possibility of significant business interruptions exist if the
Postal Service isn't able to operate in the same manner as it
does now. And these business interruptions could potentially
affect our Nation's economic stability. If there is no
confidence that the Postal Service can deliver the mail in a
timely manner, then businesses and others will turn elsewhere
when a letter or a package absolutely, positively needs to get
there.
These concerns about the Postal Service are especially
pronounced because, in many cases, the Postal Service is the
contingency plan for organizations and individuals that conduct
business electronically.
Assuring the American public that the Postal Service will
have, at worst, minimal Y2K disruptions is vital. It is vital
to maintaining the trust and confidence that the institutional
has held for over 200 years.
To help us achieve that goal, we have a distinguished panel
of witnesses from the Postal Service, the Postal Service
Inspector General, and the General Accounting Office. Both the
Inspector General and the GAO have issued a series of specific
recommendations to guide the Postal Service in its operations
and we appreciate that.
I am looking forward to reviewing the recommendations with
the Postal Service, determining the current status. I expect
this hearing will be very helpful in guiding the Postal Service
toward making the necessary changes in the short time remaining
so that we can be confident that, ``through rain, snow, sleet,
hail, or Y2K,'' our Nation's mail will be delivered in a timely
manner.
And, Mr. Chairman, I just want to announce that young
people are interested in this hearing, too. There is a class
here of information technology students from a high school in
Maryland. It is not in my district, but it is Springbrook High
School, and I am pleased they are here because they wanted to
come and to listen and to learn from this hearing.
I yield back.
[The prepared statement of Hon. Constance A. Morella
follows:]
[GRAPHIC] [TIFF OMITTED] T8811.005
[GRAPHIC] [TIFF OMITTED] T8811.006
[GRAPHIC] [TIFF OMITTED] T8811.007
[GRAPHIC] [TIFF OMITTED] T8811.008
Mr. McHugh. Well, thank you, Connie. We appreciate your
kind comments and your leadership on this issue.
And, we certainly welcome the high school students who have
joined us, as we welcome all of our guests.
One of the positive things about having three Chairs is you
also have three ranking members who are associated, and we have
been joined with one already, the ranking member on the
Government Management, Information, and Technology Subcommittee
who serves faithfully with Mr. Horn, and Mr. Horn tells me does
a terrific job as well, Mr. Turner, the gentleman from Texas. I
would be happy to yield to him at this time.
Mr. Turner. Thank you, Mr. Chairman.
I would like to thank Chairman McHugh, Chairman Horn and
Chairwoman Morella for holding this hearing today on the status
of the Postal Service Y2K conversion efforts.
It is hard to imagine that we have 640 million pieces of
mail flowing in this country every day and 38,000 postal
facilities. You certainly have a challenge ahead of you to be
sure that you are Y2K compliant. It is my understanding that a
concentrated effort is being made, and I commend you for doing
that.
They tell me much work remains to be done. I am told that
there are 148 of the 156 most-critical systems that have been
repaired and in service and ready for Y2K, but only 40 of those
systems have actually had their respective repairs tested and
verified. I am also told that you have much work to be done in
the area of contingency planning. If there is anything that I
would think the American people would expect from the Federal
Government is to be sure that their mail is delivered on time
on January 2, 2000.
So, I commend all of you for your efforts, and we look
forward to hearing your report to us today.
Thank you, Mr. Chairman.
[The prepared statement of Hon. Jim Turner follows:]
[GRAPHIC] [TIFF OMITTED] T8811.009
[GRAPHIC] [TIFF OMITTED] T8811.010
[GRAPHIC] [TIFF OMITTED] T8811.011
Mr. McHugh. I thank the gentleman.
We have something of a logistics challenge here this
morning for the three subcommittees, because we will have
Members coming and going. We are joined already by Judy
Biggert, the gentlelady from Illinois who serves as the vice
chair of the Government Management, Information, and Technology
Subcommittee; Gary Miller, the gentleman from California who
serves on the Technology Subcommittee; Roscoe Bartlett, another
fine Member of the House from Maryland. I would be happy to
yield to any or all of you if you would care to make any
opening comments.
Mr. Miller. Thank you, Mr. Chair----
Mr. McHugh. Mr. Miller.
Mr. Miller [continuing]. For conducting this hearing today
on the status of the year 2000 challenge at the U.S. Postal
Service. I think it is important that we draw attention to the
vital role the U.S. Postal Service will play at the start of
the new millennium. As we discussed in the January 11th joint
hearing which addressed the Y2K problem at the Federal, State,
local, and foreign governments, failure to identify and prepare
for both the probable and worst-case scenarios could result in
consequences ranging from mere inconvenience to long-term
impairment of the economy.
It was ironic; I met with my local bankers last week, and
the amount of concern generated at that level was rather
alarming. You have to hand it to the technology companies when
they sold stock and created the concern over this problem. They
did a very, very effective job. I think our job today is to
create a more calm environment that this issue is really going
to be dealt with.
I am hopeful that the testimony and the questions brought
forth today will help us prepare for the year 2000.
Once again, Mr. Chairman, thank you for holding this
hearing.
Mr. McHugh. I thank the gentleman for his comments.
Any other Members wish to--Mr. Bartlett.
Mr. Bartlett. Mr. Chairman, when I talk to our
constituents, I find more variability, less consensus, about
what the Y2K problem will do to us and about any future event.
So I am here today to listen with great interest to the
preparations of the Postal Service and their prognostications
of what will happen to this vital part of our society in the
year 2000.
Thank you very much for convening this hearing.
Mr. McHugh. I thank the gentleman.
The gentlelady from Illinois.
Mrs. Biggert. Thank you, Mr. Chairman.
I, too, look forward to hearing from the witnesses today on
this Y2K challenge, and I know that certainly the year 2000
will come at the Postal Service's busiest time. And so I know
that the American public and the Congress will be assured that
the mail will be delivered on time and look forward to hearing
those assurances.
Thank you very much.
Mr. McHugh. I thank the gentlelady.
With that, that brings us to the substantive part, we hope,
of today's hearing and that would be, of course, testimony.
As some of you who have appeared before the full committee
and/or some of its subcommittees in the past know, it is
committee rules that all witnesses must be sworn. If you would
please rise. I would also note, for the record, that although
not seated at the head table, Mr. Carl Urie, who is Assistant
Director of Governmentwide Defense Systems of GAO, will also be
sworn from some place in the audience. So, if all of the
aforementioned would rise.
[Witnesses sworn.]
Mr. McHugh. The record will show that all of the
participants affirmed and acknowledged the oath in the
affirmative.
And with that, we welcome you here this morning. Thank you
for your patience. As you have heard from all of the Members
here today, this is a--generically and specifically--to the
Postal Service, a very pressing problem, one that concerns us
all deeply, as I know it does you. We are looking forward to
your testimony. We will begin, as the hearing notice indicated,
with Ms. Corcoran, the Inspector General of the U.S. Postal
Service.
Karla, welcome. It is good to see you again. Thank you for
being here, and our attention and our time is yours.
STATEMENTS OF KARLA W. CORCORAN, INSPECTOR GENERAL, U.S. POSTAL
SERVICE, ACCOMPANIED BY RICHARD F. CHAMBERS, DEPUTY ASSISTANT
INSPECTOR GENERAL FOR AUDIT, OFFICE OF THE INSPECTOR GENERAL,
U.S. POSTAL SERVICE; JACK L. BROCK, DIRECTOR, GOVERNMENTWIDE
AND DEFENSE INFORMATION SYSTEMS, ACCOUNTING AND INFORMATION
MANAGEMENT DIVISION, U.S. GENERAL ACCOUNTING OFFICE; CARL M.
URIE, ASSISTANT DIRECTOR, GOVERNMENTWIDE AND DEFENSE
INFORMATION SYSTEMS, ACCOUNTING AND INFORMATION MANAGEMENT
DIVISION, U.S. GENERAL ACCOUNTING OFFICE; NORMAN E. LORENTZ,
SENIOR VICE PRESIDENT, CHIEF TECHNOLOGY OFFICER, U.S. POSTAL
SERVICE; NICHOLAS F. BARRANCA, VICE PRESIDENT, OPERATIONS
PLANNING, U.S. POSTAL SERVICE, AND RICHARD D. WEIRICH, VICE
PRESIDENT, INFORMATION SYSTEMS, U.S. POSTAL SERVICE
Ms. Corcoran. Thank you. Good morning, Chairman McHugh,
Chairman Horn, Chairwoman Morella, and members of the
subcommittees.
I am pleased to be here today to discuss the Y2K challenge
facing the Postal Service. Joining me is Richard Chambers,
Deputy Assistant Inspector General for Audit.
With your permission, I would like to submit my full
statement for the record.
Mr. McHugh. For the record, so ordered, without objection,
as all of the witnesses statements will be entered in their
entirety.
And, please, all of you feel free to summarize your
comments and make those points you feel are most important for
the moment. Thank you.
Ms. Corcoran. Since beginning my office in 1997, we have
been performing work in the Y2K area. In addition, the Postal
Governors have been very concerned about the Y2K issue. They
have monitored the progress through periodic briefings by
management and my office.
The Postal Service Y2K issues can be examined by answering
four key questions.
One, why is it critical for the Postal Service to address
the Y2K issue?
Two, will the Postal Service be able to deliver mail after
January 1, 2000?
Three, what is the current status of the Postal Service's
Y2K effort?
And, four, what can Postal Service do to minimize the Y2K
risk?
Turning to question No. 1, why is it critical for the
Postal Service to address the Y2K issue? The Postal Service is
an important part of the Nation's communication and commercial
infrastructure. The Postal Service is heavily reliant on
technology, automation, and thousands of critical, external
suppliers of goods and services who also face Y2K challenges.
The Postal Service uses Y2K-vulnerable equipment systems and
processes to deliver 650 million pieces of mail per day,
maintain 38,000 facilities, and pay over 800,000 employees. In
addition, numerous private and Government agencies have
included the Postal Service in their contingency plans if their
electronic systems fail.
Question 2, will the Postal Service be able to deliver the
mail after January 1, 2000? There are too many variables that
currently exist to answer that question. The answer to this
question depends, in large part, on the Postal Service--how
well the Postal Service executes its Y2K plans over the coming
months. The Postal Service has made progress, but much remains
to be done in the remaining 10 months.
We have provided the Postal Service with five reports that
outline opportunities for improvement. Generally, the Postal
Service has taken action on these reports, but with so little
time remaining, ``beating the clock'' will be challenging.
Question 3, what is the current status of Postal Service's
Y2K effort? To answer this question, I would like to look
briefly at eight comprehensive areas.
The first area is external suppliers. Postal Service
estimates it has about 8,000 critical suppliers of goods and
services for areas such as air, rail, and fuel that are needed
to move the mail and maintain its facilities. The Postal
Service has 661 critical national suppliers; it only knows the
Y2K readiness status of 1 out of 7 of these national suppliers.
The Postal Service also knows very little about the 7,000 field
suppliers and their Y2K readiness. Postal operations may be
disrupted if their suppliers' services are not Y2K compliant or
if the Postal Service does not develop alternatives to these
suppliers.
The second area is data exchanges. This is the way that the
Postal Service transfers data with other Government agencies,
businesses, industries, and customers. Only 6 percent of the
2,000 known critical exchanges are Y2K ready.
The third area is technology-dependent facilities. These
are the controls for heating, cooling, fire suppression, and
the numerous other systems that support the 38,000 facilities.
Postal Service is still assessing these controls to determine
what needs to be done to assure the facilities do not shut down
or cause problems on January 1, 2000.
The fourth area is mail-processing equipment. These are the
major automated systems for moving the mail. They consist of
thousands of pieces of equipment. This area is on its way to
being Y2K compliant. Our main concern is whether the Postal
Service will adequately deploy and test its solutions.
The fifth and sixth areas are information systems and the
information technology infrastructure. These are mainframes,
PC's, and information systems that process data. A majority of
these have had solutions developed; however, independent
verification to assure systems' compliance and deployment of
solutions to the actual infrastructure could be a challenge.
The seventh area is readiness testing. Readiness testing
gives Postal Service assurance that their systems will be
reliable on January 1, 2000. The Postal Service has not made a
final determination as to what extent readiness testing will be
performed.
The final area I would like to discuss within this third
question about Postal Service's current Y2K status is their
continuity plans. You can consider continuity plans to be the
Postal Service's insurance plan. If failures occur in any of
their equipment, systems, or processes, alternatives or ways to
assure their operations are not affected must be developed,
implemented, and tested for all core business processes to
ensure movement of the mail, payment of its bills, protection
of its revenue, and protection of the life and safety of its
employees and customers.
The Postal Service plans to complete the continuity plan by
July and test it by August. This is a tremendous challenge
within the given timeframes. But not meeting these timeframes
is not really an option for the Postal Service if they are
going to be ready for January 1, 2000.
In summary, for these eight areas, the Postal Service has
done much, but much remains to be done.
Question 4, what can the Postal Service do to minimize Y2K
risk? There are three things that we believe the Postal Service
needs to do to minimize their risk. First, the Postal Service
should reevaluate its initial assessments to identify only
those most critical business operation systems. Second, the
Postal Service should focus its work on correcting, first,
those systems, equipment, and processes that are absolutely
necessary to ensure core business processes work. Third, the
Postal Service must develop, implement, and test business
continuity plans for core business processes.
In summary, it is critical for the Postal Service to
address the Y2K issue. There are too many variables to
determine what impact Y2K will have on the Postal Service's
ability to deliver mail after January 1, 2000.
The Postal Service recognizes its Y2K challenge, is taking
action, and has made progress. However, with 10 months
remaining before year 2000, much remains to be done. The Postal
Service should focus resources on the most critical core
business processes and develop, implement, and test their
continuity plan to minimize Y2K risk.
My office will continue to work with the Postal Service to
identify challenges and to help the Postal Service minimize the
Y2K risk.
The concludes my statement. Thank you for interest, and I
will be pleased to answer any questions.
[The prepared statement of Ms. Corcoran follows:]
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Mr. McHugh. Thank you very much, Ms. Corcoran. We
appreciate your comments and observations.
As we had decided earlier, and as your presence all at the
same table at the same time suggests, our plan is to go forward
and to have all three presentations and then return for the
questions and answers.
So, in keeping with that, hearing no outcry of outrage--
[laughter]--I would now be pleased to recognize Mr. Jack Brock,
who serves as Director of the General Accounting Office's
Governmentwide and Defense Information System, under the
Accounting and Information Management Division.
Mr. Brock, good morning, sir. Thank you for being with us.
Mr. Brock. Thank you very much, Mr. McHugh, and I
appreciate being here.
I was here on Friday before another one of your
subcommittees on the District of Columbia. I will be here next
Tuesday on the Department of Defense before Mr. Horn.
So, the problems and the issues that the Postal Service is
facing are not unique. I mean every agency, every private-
sector company, all face Y2K concerns. So, they are not unique.
Mr. McHugh. Are you renting a room in the back? [Laughter.]
Or, are you just commuting? [Laughter.]
Mr. Brock. Well, we are being kept busy, but it is nice to
be employed.
Every morning when I get up, I turn on the lights, and I
expect the light to turn on. I usually call into my office and
check my voice mail, and I expect the phone to work. In a very
similar fashion, every afternoon when I come in from work, I go
to my mailbox, and the mail is always there. I cannot recall
ever having a misplaced letter. I have never had a call from a
creditor saying, ``Your check, I guess, is in the mail, but we
haven't received it.'' I mean I have come to expect really--as
Mr. Horn has discussed in his opening remarks--first-class
service from the post office.
Over 100 million Americans every day have this level of
expected service. The logistical operations that the post
office has to go through to deliver this 650 million pieces of
mail and to provide the ubiquitous service they provide across
the Nation is incredibly complex.
Of all the agencies that I have responsibility for
reviewing, I think that only the Department of Defense has a
more complex set of operations that have to be ready on January
1st.
In many respects, the post office, the Postal Service, is a
public utility. It provides a public service that is absolutely
necessary, and it has to perform at a high level. There are too
many people, too many businesses, that depend on the Postal
Service for their livelihood. For example, people getting
prescription drugs through the mail are dependent on the Postal
Service; others are dependent for delivery of checks. There are
other benefit payments, for businesses that depend upon timely
receipt and transmission of packages and bulk mail; everything
has to work, and it has to work at a high level.
So, just as on January 1st, if you can't turn on your light
switch, if you can't pick up the phone and get a dial tone, I
think the Postal Service is in a similar situation. If it
doesn't deliver mail reasonably effectively, then we are going
to have the same kinds of problems. So it is very important the
Postal Service work.
I think for that reason, regardless of their status, that
it is important to have these hearings and this oversight to
provide a great assurance that things will work next year. So,
I commend you on having these hearings and providing that level
of oversight.
As the Inspector General indicated in her remarks--and I
will try not to duplicate it--it is a complex environment that
they have. A third of the Federal work force works for the
Postal Service. As I mentioned, the 650 million pieces of mail
a day that are delivered, thousands of local facilities, over
30,000 individual post offices, a couple of hundred mail
facilities that sort mail, deliver, do the set-up that is
necessary for mail delivery--all of this is supported by a very
rich, complex environment that relies on automation, that
relies on computers to make it work.
So, the Postal Service has identified 152 critical systems
that have to work in order for the mail to be delivered. They
have identified 349 important systems that need to work in
order to make life bearable for them. They have identified a
number of facilities that must work in order for the mail to be
stored, to be delivered. They have identified hundreds and
thousands of interfaces that must be in place. They have
identified 43 types of mail-processing equipment that are
installed in several hundred locations that have to work, and
they have identified a number of interfaces, not only within
the Postal Service, but with their customers and their
suppliers, that also have to work. So, it is not just a
question of 152 mission-critical systems working; it is a
question of an entire operating environment working. If that
does not work, the Postal Service will have problems.
In terms of their status, I think the IG covered that very
well. But they are running somewhat behind the OMB guidance for
implementation, and, as a result, they are going to be facing
some time compressions.
One of the things that I would like to comment briefly on,
though, is on what I believe is the strength of the Postal
Service and that is their new management structure. Until
recently, the burden of ensuring the year 2000 readiness
largely resided in the Program Management Office under the
general director of the vice president of information systems.
The program focus here was more directed at systems and
processes that supported business operations, rather than on
the readiness of business processes, which typically involve a
lot of activities that are more complex than just individual
systems.
In December 1998, the Service reorganized its program
management to better reflect year 2000 efforts in terms of
these business operations. The new organizational structure
represents a matrix approach to managing ongoing efforts.
Senior vice presidents that have responsibility within
functional areas like mail operations or finance or marketing,
are now required to ensure that individual business processes
will, in fact, be decomposed, and that each process will work.
Those processes are responsible for developing individual
contingency plans and for conducting the simulation of what we
would call ``end-to-end'' testing that is required to make sure
that processes work, not just systems.
The vice president for Information Systems still has the
responsibility for system remediation across these business
areas. And then across all of the areas, the Service's chief
operating officer has the responsibility for developing a
comprehensive business continuity plan to allow for a certain
level of business to be conducted in the event of failures.
We are very supportive of this management approach. The
problem with it is--we would have been even more pleased if it
had been put in place a couple of years ago. So, it is new; it
hasn't been tested; it is just getting off the ground. But,
nevertheless, if implemented appropriately, we think it will go
a long ways toward serving the Postal Service.
However, even with this process in place, we believe the
Postal Service has two big, big challenges, and the first one
is time. They are running out of it; they have until the end of
the year. However, that deadline is further compressed by their
business cycle which picks up considerably in September with
holiday mailing and further compresses the availability and the
attention of top management to devote themselves to Y2K.
Second, they still have a large number of unknowns that
they are working toward. They have no complete inventory on the
IT infrastructure, on the internal and external interfaces, and
on field equipment and systems. They don't know yet whether the
majority of the critical vendors they have will, in fact, be
ready, themselves, to supply them with goods and services that
are necessary for the mail to be delivered. They don't have
assurances yet on the public infrastructure--
telecommunications, electrical power, things like that, that
all businesses, that all Government operations have to depend
on. Until they complete their simulation testing, they have no
real assurance yet that the internal business processes will
work.
So they have a large number of challenges that they must
successfully address over the next few months in order to
maximize assurance and to minimize risk that, in fact, they
will be ready on January 1st.
For that reason, our recommendations are pretty
straightforward--is that they, in fact, have sustained
attention by the management stakeholders that the plan is
followed. They need to develop a comprehensive plan; that is in
the stage of being developed, but not yet developed. They need
to make sure the plan is followed. They need to make sure that
all key decisions are really bought into and made by the key
stakeholders, not by the technology guys, but the business guys
need to make the decisions about any tradeoffs that will occur
on the priorities that the Inspector General said had to be
made. They need to ensure that adequate support is being
provided throughout the process, and they need to make sure
that all the components in the individual business areas really
support the whole--that is the mail delivery--that you don't
suboptimize individual process in lieu of making the
overall process as good as it can be.
Mr. Chairman, that completes my statement, and when the
other gentlemen are through, I would be pleased to address any
questions that you might have.
[The prepared statement of Mr. Brock follows:]
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Mr. McHugh. Thank you very much, Mr. Brock. We appreciate
your comments.
Our last presenter this morning is Mr. Norman Lorentz, who
is senior vice president and Chief Technology Officer for the
U.S. Postal Service.
Good morning, Mr. Lorentz. Thank you for being here. As you
may have gathered, you and your department are the focus of our
attention here this morning. So, we are very anxiously awaiting
your comments.
And with that, our attention is yours.
Mr. Lorentz. Good morning, Chairman McHugh, Chairman Horn,
Chairwoman Morella, and subcommittee members.
On behalf of the U.S. Postal Service, I welcome the
opportunity to speak to you today about the Postal Service's
efforts to address the year 2000 computer problem.
With me today are Nicholas Barranca, the vice president of
operations planning, and Richard Weirich, vice president of
information systems.
It is gratifying, not only to myself but to the Postal
Service employees in thousands of communities across the
Nation, to be reminded of the trust and confidence the American
people have in the mail system.
While years of predictions suggest that there is no place
for paper-based communications in this digital world, the fact
that we are sitting here today demonstrates that is not the
case.
As Postmaster General William Henderson said in this very
room less than 2 weeks ago, ``The health of the Postal Service
is important to the American people. It is a measure of how
much American companies and consumers depend on reliable,
reasonably priced postal services to communicate and conduct
business.''
We have taken this obligation seriously for the last two
centuries, and we take it just as seriously as we move into the
next. The coming of the year 2000 presents a host of
challenges. The coming year is both anticipated and never
before experienced, by either the Postal Service or any other
business or Government agency.
The Postmaster General and senior Postal Service management
are giving this subject significant attention, with weekly
meetings of the Management Committee serving as a forum for
reports and discussion about the status of our year 2000
program. This is one of the most important public policy issues
we are facing this year.
It is a challenge of vast magnitude with a deadline--as was
mentioned--311 days away, that cannot be changed. And it is a
challenge that has engaged the men and women of the Postal
Service for a number of years.
Like any forward-thinking organization, the Postal Service
is doing everything possible to minimize and eliminate the
potential for disruption that could arise from the year 2000
computer problem. But, unlike many of those organizations, only
the Postal Service is in the position of saying, ``The buck
stops here!''
The fact is, the Postal Service is part of the year 2000
contingency plans for many organizations that rely on
electronic communications, whether benefit payments by Federal
agencies, electronic payments in the private sector, or simple
data transmission from person to person. This means that our
readiness efforts must focus on maintaining the ability to
process and deliver normal mail volumes as we enter the new
year, and to absorb additional volumes that could be diverted
from the electronic message stream.
I want to state clearly and unequivocally that we are ready
in the U.S. Postal Service to take on this challenge.
Our mail system is no stranger to operating successfully
through national and regional disruptions. We delivered 2 years
ago when a strike all but shut down the United Parcel Service,
just as we delivered through two recent airline strikes. Since
the first days of the national postal system, we have found
ways to deliver through war, floods, earthquakes, and other
natural disasters.
Even with this experience, we want to be sure that we are
doing the right things to prepare for the potential year 2000
disruptions. This is why our planning for the year 2000 problem
has been extremely thorough, establishing a step-by-step
program that takes us in to a new century with a reasonable
level of assurance that the Postal Service will continue to
deliver.
We began our efforts with an inventory of all components
and all systems that can be affected. The next step was the
assessment of the criticality of each of these systems. One
question was, ``Is this system necessary to our core mission of
delivering the mail?'' Then we began remediation efforts on our
mission-critical systems. If we found a problem, we fixed it.
It is not sufficient that our own people tell us that something
is fixed. We also require independent verification that our key
components and systems have been fully remediated.
With remediation efforts on schedule, we are expanding our
focus this year to the next logical steps--business continuity
planning and recovery management.
Simulation testing, in an actual operating environment,
helps add further confirmation to the status of remediation.
Knowing what individual elements of our systems and processes
will be available provides us with a firm foundation for
business continuity planning.
We began testing our critical mail-processing systems last
August at a mail-processing plant in Tampa and a bulk mail
center in Atlanta. The results of these tests and others that
are being conducted are very, very encouraging. They
demonstrate that, following remediation of our basic mail-
processing equipment, mail is being sorted correctly as it
moves through our system.
Despite our best efforts to fix all of the vulnerable
systems and components, and testing them to make sure they
work, being prepared means that we also have to anticipate that
there may be some year 2000 problems.
In our own systems, we are looking at 100 million lines of
computer code. On top of that, we rely on commercial air and
surface transportation to move mail both locally and across the
country. We also power our facilities from the same utilities
as other customers. As you can see, some of the key elements
that are necessary to support a national postal system are not
within our direct control.
Through business continuity planning, we are exploring
``what if'' scenarios that anticipate specific disruptions,
internal or external, that might arise. The ``work arounds'' we
are developing will help us to minimize the potential problems.
All of our senior officers are actively engaged in the process.
But business continuity plans cannot be successful by
themselves. They go hand-in-hand with recovery management.
Recovery management gives our people a structured way to
report problems and implement the plans that have been designed
to address them. Some decisions will be based on specific plans
that have been developed to meet a particular contingency.
Other decisions will be dynamic, based on the unique confluence
of events that may occur at any point in time. Either way,
recovery management is one of the most important tools we will
have to continue moving the mail.
Throughout each of these key processes--remediation,
business continuity planning, and recovery management--our
actions have been consistent with the approach taken by other
Government and private-sector organizations. We have contracted
with the help of over 1,300 technical support people to
implement and manage many of the technical elements of this
critical program. The entire effort is being supported by a
level of financial resources necessary to address this once-in-
a-lifetime issue. Unlike other Government agencies, the U.S.
Postal Service is receiving no appropriations for the year 2000
readiness.
While we at the Postal Service are confident that we are
doing the right things to protect universal service, we also
recognize that we do not have all of the answers--and nobody
does.
In this respect, we welcome the positive contribution of
those who have reviewed our activities and offered us
constructive suggestions and proposals. Both the U.S. Postal
Service's Inspector General and the General Accounting Office,
who also reported to you today, have been actively engaged in
helping us to meet this challenge.
In closing, I can't promise that there will be no problems,
but we remain confident that with the continued hard work of
everyone involved in this effort, we will achieve our goals of
delivering the mail, protecting our employees, and protecting
our finances.
Thank you.
[The prepared statement of Mr. Lorentz follows:]
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Mr. McHugh. Thank you, Mr. Lorentz.
Before we proceed to questioning, I just want to
acknowledge we have been joined by three members of the
Technology Subcommit-
tee which, at the moment, is leading for the well-attended
prize--
Mrs. Morella, great job. In the order in which they came into
the
room; the gentlelady from Michigan, Ms. Stabenow--Debbie, wel-
come--Bart Gordon, gentleman from Tennessee--Bart--and David
Wu, gentleman from Oregon. We thank you all for being here with
us. Oh, also, gee, a fellow-New Yorker and the dean of the New
York delegation--I will really get in trouble. [Laughter.]
We have been joined by my dear friend, Ben Gilman, chairman
of the International Relations Committee, as well. Mr.
Chairman, good morning.
Mr. Gilman. Good morning. Thank you for conducting this
hear- ing, and I was very much concerned with Y2K.
We have just met with a number of our European
parliamentar- ians and they, too, are very much concerned
around the world of how this will affect all services, all
governmental services, as well as the industry. We are all very
much concerned about this sensitive program, and certainly the
Postal Service which affects so many of our citizenry all over
the country. It plays an important part in what we are going to
be doing.
So, I regret I wasn't here at the start of this hearing,
but I will look over the testimony, and we are hopeful that our
Postal Service will be able to do whatever has to be done to be
prepared for the year 2000.
Thank you, Mr. Chairman.
Mr. McHugh. I thank the gentleman. Again, I thank him for
being here.
If the old adage, ``a little knowledge is a dangerous
thing,'' is true, I am a very dangerous man, because this is an
incredibly complex situation, as all of you know so very well.
I just want to start with a couple of general questions
and, then, move to those who have been working on those
subcommittees that are far more conversant with the specifics
of the problems than I am.
But one of the things--as I took time out over the weekend
to read your statements--I couldn't help but being impressed
by, was the enormity of this situation facing the Postal
Service. Mr. Lo- rentz spoke of just about 100 million lines of
computer code; both the IG and Mr. Brock spoke about the
thousands upon thousands of suppliers, both critical and less
so, and the interfacing of the Postal Service with corporations
and companies that are so essential--be they airline or
otherwise--and yet, by most measures, are beyond their direct
control. Fifty-three percent of the suppliers responded in all,
to a survey the Postal Service very correctly tried to conduct
to try to assess their Y2K compliancing.
The thing that seems to strike me as I look at what we see
the numbers to be and what has to be achieved in the next 311
days, and less an hour that we have been here this morning, is
the enormity of the task. And I am not convinced that, even if
everything went perfectly and everything humanly possible was
done, that we could meet this challenge. I would be interested
to see what your assessment of that is.
Are we in a process where we are attempting to minimize the
likelihood of disaster or, do we really--and ``disaster'' is an
overstatement, the likelihood of significant interference and
interruption--or are we truly in a position, still, to fix this
problem to the highest possible extent?
I will just begin with the order in which you testified and
sit back and listen.
Ms. Corcoran. I believe that the Postal Service has a
challenge, as I mentioned earlier. What we recommended, as we
were going through our testimony, is that they need to refocus
their resources to make sure that they are dealing with those
processes that are most important to moving the mail, paying
their bills, protecting revenue, and protecting the life and
safety of their employees and customers.
Postal is now moving in that direction, and they are
continuing to decrease the number of systems and equipment that
they have to fix.
As long as they stay focused on really making sure they get
to those that are critical, hopefully, there is a chance. But,
again, they need to have contingency plans and all these other
things done to make sure that if something doesn't work, that
they have an alternative.
Mr. McHugh. Mr. Brock, you mentioned in your testimony
that, with the possible exception of the Defense Department, no
Government agency faces a Y2K problem as complex as the Postal
Service. I guess if DOD is not prepared, we lose the war. If
the Postal Service isn't prepared, the Social Security checks
don't go out. As an elected official, I am not sure which I
would prefer. [Laughter.]
So, how do you assess their ability to get to the end
successfully? And just an added twist for you, how might you
compare the Postal Service's progress to a DOD, for example?
Mr. Brock. That is a difficult question because it is an
``apples'' and ``oranges'' kind of question. Nevertheless, I
will answer it. [Laughter.]
One of the reasons that I personally want to make sure that
the Department of Defense is ready, it is like an insurance
policy. Even if we are not engaged in a war, hostilities--as
you want that insurance policy, you don't want it to lapse; you
want it in place.
The Postal Service, as I mentioned earlier, is a utility;
it has to work. So, I want it to work as well. So it is
important that both work.
One of the challenges at many agencies is that their
primary objectives are carried out through transaction
processing. You know, you write checks; you distribute checks;
you either mail them or you send them electronically. But with
both the Postal Service and DOD, you have a whole series of
logistical operations that you have to carry out as well, as
well as making sure that thousands and thousands and thousands
of facilities are going to be ready. So, it is pretty complex.
The issue that we would have with the Postal Service--to
get back to your original question--in terms of increasing
assurances, that they will be able to provide an acceptable
level of service, is to not only focus on remediating the
systems, but increase focus on the contingency plans and to
really scrub those down. A contingency plan, or a business
continuity plan, should be more than a piece of paper. It
really needs to define what an acceptable level of process is,
and that may be delivering mail at the same level, or it may
be, in fact, changing your standards for a period of time and
saying, ``This is the level of service we would be willing to
accept.'' It means taking a look at all of those processes--
systems and suppliers and things--that support that business
operation and doing a sort of a risk analysis, ``And what are
the risks that this will fail?''--and then, funding it. I will
just give you sort of an extreme example.
If you, in fact, assume that first-class mail delivery had
to meet the current standards, and you had no certainty that
some of your key suppliers or some of the key infrastructures,
such as telecommunications or electrical power, would be ready;
you would, in fact, have to develop a very expensive
contingency plan to make sure that was funded.
So, these are business decisions where a lot of pros and
cons need to be weighed. I think this is where the crunch is
going to come this summer with the Postal Service. And really
scrubbing these plans and having a level of assurance that is
shared by their stakeholders--and I would include the Oversight
Committee as a stakeholder, as representing the American
public--that, in fact, these are acceptable levels of service
and that, in fact, the provisions are made to supply that level
of service are acceptable.
Mr. McHugh. Thank you.
Mr. Lorentz, no pressure. [Laughter.]
Are you going to make it? [Laughter.]
Mr. Lorentz. We are very confident with the amount of
planning and the process approach that we are taking, and the
use of some of the best resources money can buy, that we will
be in position on January 1, 2000, to move the mail.
We are focusing, specifically--getting back to the
Inspector General's point--we are focusing, specifically, on
the processes that are directly involved with moving the mail,
with collecting revenue, with paying bills, and most
importantly, with protecting the safety of our employees. So,
when you compare the other processes relative to those, those
are the ones we are focusing on, moving into the year 2000.
Mr. McHugh. Thank you.
We have, as I said, other members here far more conversant
in these things than I am.
I have a number of other questions, but, at this time, I am
happy to yield to the gentlelady from Maryland, Mrs. Morella,
for any questions she might have.
Connie.
Mrs. Morella. Thank you, Mr. Chairman.
I think you have been asking great questions, and I
appreciate hearing from our parties here who are very much
involved in the postal system.
One of the questions I wanted to ask has to do with the
international operation of the mails. I was recently in
Indonesia, but I don't think they know what Y2K is. And then
even in Tokyo, members of the Diet didn't seem cognizant of the
impact of it. Now we are going to want to communicate, by
virtue of the mails, also to our international partners and
countries, and I just didn't see anything really in your
statements that gave me any lead in terms of how you are going
to be handling that. I wondered if you would address that.
All three of you, or anyone who wants to.
Mr. Lorentz. OK. I guess I will start first, seeing as we
are the ones doing the interfacing, and I would like my friends
here to participate as well.
There are really three classifications of international
players here. There are the large industrial nations like
Canada, the UK, France, and Germany, that are probably as
prepared as we are. There is a group of large nations like
Brazil and China that are less automated, less mechanized, and
while they--it is a double-edged sword--while they may have
less mitigation or remediation issues, they have another set of
problems. Then there is the less industrialized nations. And we
do participate in forums in the Universal Postal Union. There
are 200 postal administrations that actually participate in
looking at, and trying to share information from the common
interest and the member readiness.
And, Nick, you might want to speak on any other issues.
Mr. Barranca. If you look at the international mail volume
that we originate and we process from the rest of the world,
our systems are being remediated and plans are being developed
so that we will deal with the originating international mail in
this country in the same way that we will deal with our
originating domestic mail.
We will also be prepared to process incoming international
mail in the same way that we will process and deliver our own
originating mail for this country.
As Norm indicated, there are two international
organizations that are dealing with the Y2K problem from an
international standpoint. It is the UPU, the 200 countries that
participate in that forum. It is an issue on their agenda.
There is also the International Postal Corp., which is 21
industrial postal administrations around the country that has
the Y2K issue on their agenda. We are participating in those
discussions.
From a country standpoint, as Norm indicated, those
countries that rely on automated systems, which are those
handful of large, industrialized countries, are dealing with
the issues in the same way we are. Those countries that
actually depend more on manual systems to process and deliver
their mail, the problem is not as significant--I don't want to
minimize it. It is not as significant as those that rely on
automated systems, because the world doesn't change to a great
extent, in that their systems are basically manual now. So----
Mrs. Morella. Are we offering any assistance to any of
these countries through these two international organizations
or individually?
Mr. Barranca. We are an active participant in these two
organizations and their committees. Our international business
unit is involved in those discussions. I can't tell you exactly
what the nature
of their involvement or their details are. I would be happy to
make that available for the record in the future.
Mrs. Morella. That would be great.
And do you have contingency plans for the international
mail?
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Mr. Barranca. Our contingency plans for collecting,
processing, and transporting mail that originates in this
country are the same, regardless of whether the destination of
that mail is here in this country or international
destinations. We will be prepared to collect, process,
transport, and move it to the international destination.
For international mail originating outside of this country
to be delivered here, we have contingency plans to deal with
that volume in the same way that we deal with our originating
domestic mail.
Mrs. Morella. If I send a letter to Korea and then a letter
is sent to me from Korea, which will reach its destination?
Mr. Barranca. If you send a piece of mail to Korea, we will
get it to Korea.
Mrs. Morella. You will get it there.
Mr. Barranca. To the extent that the Korean postal
administration will get it to the address in Korea is what the
UPU and--not in Korea's case--the ICP is dealing with.
Mrs. Morella. And Kim wants to send something to us, and we
will get it?
Mr. Barranca. As long as it gets----
Mrs. Morella. Through the mail?
Mr. Barranca [continuing]. To this country, we will get it
delivered; yes.
Mrs. Morella. Could I just ask you--I know that the end-to-
end stuff is very difficult, and I won't spend much time on it,
but I hope you will look to addressing that because of your
many connections, your many contractors that are all involved.
On March 9th, we are going to have a hearing on liability. I am
curious about whether the postal system could be subject to any
liability suits or issues.
Mr. Lorentz. I am not aware of that issue. I do know there
were some contractual issues that we had relative to supplier
liability.
Rick, you may want to address that.
Mr. Weirich. We have continued to look at this emerging
issue of everyone managing their potential liability in year
2000. We are having difficulty getting some of our supplier
data, although some of the changes that you all have made
certainly have helped in that regard.
I am not an expert on whether we might be liable under the
statutes. I would have to bring our General Counsel to answer
those questions though.
Mrs. Morella. But I think you are also saying, though, that
with suppliers you find that there is sort of a chilling effect
for fear that there could be liability suits. And, of course,
there are those who speculate that that cottage industry of
lawyers could end up costing more than remediation of the Y2K
problem. It is something we need to look at, not to give any
waivers, but to look at, in terms of what we can do, to make it
be a more encouraging information and data exchange and working
together.
I like the idea that we have got the Inspector General and
GAO working with the Postal Service. I think that is the kind
of union that there should be.
And I think you wanted to make a comment, Ms. Corcoran.
Ms. Corcoran. Madam Chairman, we have done an audit report,
or an advisory report, where we did look at some contractual
issues. We would be happy to share these with you.
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Mrs. Morella. Very good, thank you; thank you.
I have taken up enough time. Thanks, Mr. Chairman.
Mr. McHugh. I thank the gentlelady. The gentleman from
Texas, Mr. Turner.
Mr. Turner. Thank you, Mr. Chairman.
Mr. Lorentz, you said in your statement that the Postal
Service is the only organization that is in a position to say,
``the buck stops here.'' As I look at this panel, it is pretty
clear that in the totality of those gathered here, you are the
one that has to say, ``the buck stops here,'' because if things
don't work out, I am sure that you are the one that is really
going to be looked to for the explanations.
Part of the purpose, I think, of our hearing here today is
to try to reassure the American public that their mail is going
to be delivered on time. There is a lot of--as you know, and as
all of us know--a lot of hysteria surrounding the Y2K problem.
It is somewhat amazing, as we have gone through many of these
hearings with other agencies, to realize that we are all
gathered here because of a problem that some computer folks
from the past did not take care of.
Perhaps, there are some comments you could make that could
be reassuring, and let me direct the question to you this way.
One of the concerns I have was when I noticed that so far
you have spent $200 million addressing the Y2K problem. Yet, I
also read that, in the next 300 days, you are going to spend
$400 million more, which suggest to me that there is a whole
lot left to be done, and maybe we are behind if we have to
spend $400 million at the Postal Service in 300 days.
Maybe it would help if you could specifically tell us of
the efforts you have made for that first $200 million. What
problems did you find that you fixed, and if you hadn't fixed,
would have resulted in some disastrous consequence for the
American postal customers?
Second, of the $400 million you are going to spend in the
next 300 days, what do you think you are going to fix, that if
you don't, will be problem?
Mr. Lorentz. In answering the first question about the $200
million; we have over 500 important systems of which 152 have
been identified as either ``severe'' or ``critical.'' And
``severe'' means that it affects moving the mail; it affects
those four areas: moving the mail, collecting revenues, making
payments, and the safety of our people. And of those severe
systems--the difference between ``severe'' and ``critical'' is
that there is no work around for a severe system; you have to
fix it. And the criticals, there is an identifiable work
around.
Of those 152 systems, we have completed what we call
``remediation.'' In other words, that is a euphemism for
``fixed.'' We fixed 131 of the technical problems in those 152
systems, and we have actually implemented 108. In addition, we
have 55 that have been actually externally verified.
We are also looking at the balance of the 359 that are less
than critical. The 152 has been a major investment. It is very
expensive to go into 100 million lines of code, to actually do
an external verification.
We also have completed some simulation testing on the
automation that we have in our plants, both P and DC's and bulk
mail centers.
So what we have gotten up to this point is the ``lion's
share'' of the, ``technical fixes.''
The balance of the $400 million that you addressed, I think
we are going to end up--we are currently for the year at about
$99 million. I think we have spent about $197 million up to
this point. We plan on spending about $340 million for the year
to look at the balance of those 349 systems. And we have also
got the continuity planning and contingency planning, the
``what ifs,'' where we cannot remediate something, where we
have to build a contingency, that is what the investment
resources are for.
Mr. Turner. Well, give me just one concrete example of
something you did fix that if you hadn't, it would have
resulted in some specific consequence. Maybe in the area of
delivery of the mail would be the more interesting example, and
if you hadn't fixed it, what would have happened----
Mr. Lorentz. We have----
Mr. Turner [continuing]. On January 1st?
Mr. Lorentz. We have systems that delivery sequence letter
mail. And, basically it varies how much that we literally have
there, depending on the location--between 80 and 90 percent of
the mail is in delivery sequence mode. That is a tremendous
amount of the letter mail that is in delivery sequence. That
would be something that would be very difficult to replace with
manual sortation.
Another example is----
Mr. Turner. You know that that would not have happened if
you hadn't gone in and fixed this problem?
Mr. Lorentz. Absolutely. We believe that to be true.
Mr. Turner. It wouldn't have been sorted?
Mr. Lorentz. Well, it would have been much more difficult
to sort. I guess I can refer Nick to part of this question. But
over the last few years, we have invested a tremendous amount
of money in letter mail automation to remove manual
intervention in that mail stream. And so, basically, that is
what those systems do.
Mr. Turner. I know you have a lot of people looking over
your shoulder, and they are never going to tell you that you
have done enough. That is a risk they won't want to accept.
What is your greatest fear of what might happen if you don't
move forward in the things you are going to spend the next $400
million on? What is your greatest fear that you now need to
address?
Mr. Lorentz. Well, I really appreciate--[laughter]--having
the ability to answer that question, because this is an area
where I think we need your help, and I think this hearing can
be helpful.
We have a very significant issue with getting the attention
of suppliers.
And you have brought up the issue, Mrs. Morella, of the
fact that there are liability issues and so forth and so on,
but we are making an earnest effort to contact our suppliers
and determine their situation relative to Y2K.
So, if there is an area of concern, it is being able to
fully engage with our suppliers and get the information about
where they are.
Mr. Turner. As a percentage of your total annual Postal
Service budget, how much are we spending on remediating Y2K?
Mr. Lorentz. The total projected cost, at this point, is
$607 million.
Mr. Turner. As a percentage of what your operating expenses
at the Postal Service, what would that be?
Mr. Lorentz. It is----
Mr. Turner. On an annual----
Mr. Lorentz. It is less than 1 percent. In our terms, it is
the equivalent of about six ``rounding errors.''
Mr. Turner. Of what?
Mr. Lorentz. Six ``rounding errors.'' A ``rounding error''
is $100 million in a $63-billion company.
Mr. Turner. About 1 percent?
Mr. Lorentz. One percent.
Mr. Turner. Additional operating costs?
Mr. Lorentz. Yes.
Mr. Turner. Thank you, Mr. Chairman.
Mr. McHugh. Thank you.
The gentleman from Maryland, Mr. Bartlett.
Mr. Bartlett. Thank you very much.
In trying to understand the potential implications of the
Y2K problem, I have taken a very simplistic look at the
exponential function involved here.
If there are just seven process or services that are
essential for the delivery of mail; like power, and
communications, and suppliers, and sorting equipment, and
information systems, data exchanges, information technology
infrastructure, and so forth--there may be a whole lot more
than that. But, if there were only seven, and we look at the
probability that we are going to be able to deliver the mail,
if we have a 90 percent probability that each of those seven is
going to work. Then, you multiply 0.9 times 0.9 times 0.9,
seven times, and you come out with a total system probability
of success of less than 42 percent.
If you make the assumption that maybe the future is not
quite that rosy, that there is a 60 percent probability that
each of these seven systems--services, whatever--need to work
before we can deliver the mail; then, 0.6 times 0.6 times 0.6,
seven times. The exponential function is really quite
fascinating, because now we come to a 1.6 probability that we
are going to be able to deliver the mail.
Mr. Brock indicated you have the second most complex system
in our country--the most complex being the Defense
establishment--have you looked at the probability of what will
happen and what contingency planning you need to put in effect
from this exponential analysis viewpoint?
Mr. Lorentz. I guess an understatement would be that it is,
obviously, a very complex situation. I think where we gain
confidence that we are approaching it in an effective way is
that we have used common approaches in industry where we have
done unit remediation; we have done string testing. I think the
most significant area that we are getting into now--we have
started on it, our critical operational processes--is something
called, ``simulation testing,'' where we fit all of the
processes together and make sure all of it works. And to me, I
think, that is a key for us.
By the same token, being a systems person, you know that
once you put something live, what you have come in the front-
end could be a different circumstance than maybe you even
tested for. And I believe that is where we have to be very
effective at looking at what our contingencies need to be.
But our approach, we believe, puts us in the position to
have an effective outcome.
And, Nick, and, Rick.
Mr. Barranca. Yes, I understand, the premise that you laid
out for us, and it can result in that type of cumulative
probability. And as part of our continuity planning and our
contingency planning, what we are trying to do, and what we
have done initially, was to look at the appropriate levels of
planning at the national, the area, and the local level.
Because I think as things do not work--and some things won't
work; I mean we all realize as we get into this, something is
going to fail at some place in time. I think one of the facts
will be that it won't fail every place at the same time.
So our continuity planning and contingency planning is
looking at what happens at the local level for local issues
that need to be addressed.
To a certain extent--and I don't want to minimize the
problem--but to a certain extent, I think it is like a weather
issue, in that there will be hurricanes on January 1st in some
parts of the country that we will have to react to, like we
have in the past. But I don't think there will be a hurricane
for the entire country.
Our continuity planning and our ``recovery management,''
which is another term for ``command, control, and
communications,'' which we will have in place before and after
January 1, will focus on: what are the appropriate issues that
need to be addressed at the local level, and what are the
issues that need to be addressed at the area level? What are
the issues that need to be addressed at the headquarters level?
And we will have the command, control, and communications in
place at all those levels. And the contingency plans are ready
to be implemented, depending on if it is a local situation, a
broader geographic issue to be dealt with in the area, or a
national situation that we have to deal with here at the
national level.
So, while what you lay out likely could happen, I hope it
doesn't happen in the entire country. It might be one area that
we really have to focus our attention on. But our plans are
structured in a way that they are layered based on the level of
the organization that has to respond to the situation that
presents itself.
Mr. Bartlett. Of necessity, of course, you address the
problems one-by-one. If you are looking at each of the problems
separately, one can have reasonable confidence that there is a
reasonable level of expectation that we are going to be
successful in solving that problem.
But my concern was, since this is a very complex system,
relying on a number of things happening, sequentially--
successfully happening sequentially--that it is interesting to
look at the probability that the mail is really going to get
through by this of simply multiplying one probability by
another probability by another.
Of course, there are some of these things, that if they
don't work, you are not going to deliver the mail at all. If we
don't have a power grid, for instance, the mail is not going to
be delivered at all. So that is a 100 percent shutdown if that
one doesn't work.
I wonder if the other two organizations that have looked to
this have looked at the exponential complication here?
Mr. Brock. Not precisely in the way you have addressed it,
but we have recognized that when you are doing the overall end-
to-end testing, the simulation testing, that as you introduce
more complexities into it, it certainly increases the risk that
you will have failures that will affect the ability of the
overall process to function properly.
And that, second, as you develop the contingency plans,
since you are developing them now for something more than just
a single system or a single element of that process, that it
also increases the complexity and, ultimately, the expense of
those plans.
There is something to be gained from that, though, by going
through processes like this. Organizations that have not done
it before can develop an inherently better understanding of
their business processes and the key flow through those
processes and what may, in fact, be ``fat'' and what is of
necessity, ``muscle.''
Ms. Corcoran. We haven't looked at that issue either, from
an exponential aspect. However, in our very first report, we
talked to the Postal Service about their need for continuity
plans from the standpoint that things are going to go wrong,
and they need to understand exactly how these things all fit
together. And it does paint a very bleak picture when you look
at it in the manner in which you did.
Mr. Bartlett. Mr. Chairman, I wonder if maybe our enormous
success might ultimately be the basis of our undoing. We have
been so successful in automation and in high tech. And we now
become, because we have been so successful there, we become
more vulnerable to the Y2K bug.
Thank you very much.
Mr. McHugh. I thank the gentleman.
The gentleman has been very successful in his first
question, reminding me why I majored in political science.
[Laughter.]
The gentleman from New York, Mr. Gilman.
Mr. Gilman. Thank you, Mr. Chairman.
I do have several questions.
I think it was Mr. Lorentz that said that 152 severe
systems still were part of the 500 systems. Of those remediated
were 131, but only 55 have been verified for Y2K compliance.
How long will it take to verify the balance of those severe
systems?
Mr. Lorentz. The balance of those systems will be
externally verified by the June timeframe. And we have just
three of those specific systems that will be verified after
June. So, 149 will be verified by June, and then three after
that, but all before the end of year.
Mr. Gilman. Some agencies have discovered that some of
their system which they had considered to be Y2K compliant
needed additional work to be fixed. Does this mean that the
Postal Service doesn't really know today whether the systems it
has worked on to make them Y2K-ready will actually work on
January 1, 2000?
Mr. Weirich. Well, like everyone else, we haven't been
there yet; we have only tested. Certainly, there is some risk
that there could be a deficiency in our testing that we will
discover when the time comes.
Mr. Gilman. But when will you put a deadline on getting all
of that testing done?
Mr. Weirich. The deadline is the one Mr. Lorentz
communicated. We have tested each of these systems as we have
done the work. We have been giving each system to an
independent team; basically, set up a ``tiger team'' structure
where we have a complete independent review of the testing that
was done, whether all the test cases were, indeed----
Mr. Gilman. Is that an in-house testing group?
Mr. Weirich. This is done by an external supplier who is
providing a check and balance against our own folks.
Mr. Gilman. Will they be able to do all of that check and
balance by your deadline?
Mr. Weirich. Yes, they will.
Mr. Gilman. The Service uses computer networks to conduct
financial transactions with the Treasury Department and
financial institutions. How could the Service's operations be
disrupted if it has Y2K-related problems in the electronic data
exchanges? And, what is the risk of that happening?
Mr. Lorentz. That is one of our most significant portfolio
systems, the financial systems, and that is being overseen by
the chief financial officer. We have very specific plans in
place for all of those interchanges, and there are specific
test plans that have been developed.
Mr. Gilman. So what is the----
Mr. Lorentz. So we have been----
Mr. Gilman. So what is the progress of all of those?
Mr. Lorentz. Rick, do you want to speak on the progress
issue?
Mr. Weirich. Those are proceeding on plan. We are working
with Treasury, specifically, and doing joint testing. That is
one of the areas where we recognized the need to test together,
so end-to-end, we know that our processes both work.
Mr. Gilman. Well, how many electronic data interchanges
have been identified as having Y2K problems? And of those, how
many have been renovated, tested, and validated?
Mr. Lorentz. I have some statistics if I find the right
sheet. The statistics that we have relate to the electronic
interfaces with some of our suppliers of the equipment that
generates postage. I can get you that specific information. We
don't have it with us.
Mr. Gilman. Would you supply that to the committee----
Mr. Lorentz. Absolutely, I will.
Mr. Gilman [continuing]. At your earliest convenience.
Mr. Lorentz. Thank you.
Mr. Gilman. I would like to make that part of our record
today.
The General Accounting Office, while not issuing a formal
report, has been conducting ongoing audits of the Postal
Service. And among the GAO's many concerns, the fact that the
Postal Service serves as a primary backup system for our
Federal agencies in the event of Y2K failures in their
organizations, potentially creating a multitude of problems in
mail handling caused by the steep spike in mail volume. GAO
found that the USPS lacked a detailed project plan for any
system that would contain target dates for remaining tasks and
necessary resources. It does not have a good picture of system
conversion status because the progress reports are inaccurate
and that you were late in implementing your post-implementation
validation plan and have not prepared the contingency plans.
Have those problems been resolved?
Is our GAO representative--Mr. Brock, can you respond to
that? Have they resolved those questions?
Mr. Brock. They are working on resolving those questions.
There are still unknowns--as I mentioned in my statement, Mr.
Gilman--that they need to resolve to provide the certainty.
I would like to add something to my statement, though. When
you were talking about the Postal Service, in fact, acts as a
contingency plan for many organizations who rely on electronic
commerce. I think a couple of things could well happen here is,
first of all, that some organizations not wanting to risk
triggering their own contingency plan may, in fact, start to
mail more later in the year, therefore, increasing the burden
on the Postal Service.
Second, if----
Mr. Gilman. Are they prepared for that?
Mr. Brock. This is something they should be examining in
their contingency plans.
Mr. Gilman. Have they been examining them?
Mr. Lorentz. Yes, we have.
Mr. Brock. The second issue--and the one that is, frankly,
a little more troublesome--that if, in fact, the trigger events
that would cause someone engaged in electronic commerce to have
to rely on the Postal Service, and some of those trigger events
might be a break down in electrical power, or things like that,
would also be trigger events that would have a negative impact
on the Postal Service and would, in fact, impact their ability
to act as a contingency plan for another organization.
So, it is sort of a vicious circle there.
Mr. Gilman. Well, how do we address that? How is that being
addressed?
Mr. Brock. I think that, at this point, we are now talking
about contingency plans that need to be elevated to the
national level. These are things that the Y2K Conversion
Council, under John Koskinen, should be considering, I believe,
starting in the April through June timeframe, when they begin
to look at national contingency plans.
Mr. Gilman. Are they looking at that now?
Mr. Brock. They are preparing for that now.
Mr. Gilman. What does ``preparing'' mean? Are they going to
address the problem----
Mr. Brock. Yes.
Mr. Gilman [continuing]. Or not address it?
Mr. Brock. Yes; they have hired contractors to help develop
what they call ``tabletop exercises,'' that will allow them to
examine a number of contingencies, and contingencies such as
this are some of the ones that they would be examining.
Mr. Gilman. Just one or two other questions, Mr. Chairman.
The Postal Service, I have been informed, is using outside
contractors to help deal with Y2K, as you have indicated. These
contractors employ many foreign workers. How has the Postal
Service dealt with this from a security perspective? Has there
been any security arrangements?
Mr. Weirich. Yes, we have rather strong requirements for
security screening of personnel who work on our sensitive
activities.
What we have done in the case of foreign nationals is
target them at work areas that were not sensitive. We have not
been using foreign nationals, for example, to modify our code,
itself. But we have been using foreign nationals to assist in
some of our project management and oversight activities.
Mr. Gilman. How has the Postal Service ensured that the
external suppliers, who have self-reported readiness, will not
run into unforeseen problems come January 1, 2000? How do you
check up on the readiness reports?
Do you do any checking up on readiness reports?
Mr. Weirich. Yes, we are. In addition to talking to our
suppliers, we are monitoring all the information that is
publicly available. We are looking to sources like industry
groups and trade groups. We do sit on several of the different
Federal groups that monitor areas like transportation, so that
we get a perspective of what is going on in an industry and
what other information is available about the likely
performance of the suppliers we depend on in that area.
Mr. Gilman. Well, do you have reliable way of checking on a
specific contractor that says, ``Yes, we are ready?'' How do
you know they are ready?
Mr. Lorentz. I guess I would say that is where we rely on
the three-tiered testing approach, where we have a supplier
that is helping us to remediate and, basically, fix the code,
et cetera. We have a different supplier that is doing an
external verification. And then, last, in the very critical
processes, we are doing simulation testing, which is an
entirely different process for exercising all of the systems at
once.
So, in terms of process, that would be our approach to
making sure we are not kidding ourselves.
Mr. Gilman. So all of your contractors, then, will be
tested?
Mr. Lorentz. In their----
Mr. Gilman. Is that what you are telling me?
Mr. Lorentz. In their various roles.
Mr. Gilman. The Inspector General recited a number of
recommendations for top management.
Can I ask the Inspector General, has this list been
complied with?
Ms. Corcoran. The Postal Service has been very good about
working with us and accepting our recommendations and working
to implement them. These are not things that can be done
overnight. It is the direction that they are moving. As I had
mentioned earlier, one of the first things we had recommended--
--
Mr. Gilman. Could you put that mic a little closer to you?
Ms. Corcoran. One of the first things we recommended, in
March 1998, was that they start working on their continuity
plans. They just have recently, since last fall, started
working on it. We would have liked to have seen them get on
that one a little faster. But, generally, they have been
working with our recommendations.
Mr. Gilman. Have there been any shortcomings so far?
Ms. Corcoran. In terms of dealing with our recommendations?
Mr. Gilman. Of complying with your recommendations.
You made 17 recommendations, as I understand it. Have they
all been complied with?
Ms. Corcoran. We follow up as we are doing additional work.
At this point in time, I believe they have all been dealt with.
As I said, the one that was really concerning us was the one on
continuity plans.
Mr. Gilman. So everything else has been complied with
except----
Ms. Corcoran. The last report, we just issued last Friday.
Mr. Gilman. And did you find any shortcomings in your
report?
Ms. Corcoran. Yes. This is the one that we believed that
the Postal Service needed to put together better data, use a
more consistent format, and assure, when managers were making
decisions, that they really knew what they had, instead of
shifting definitions and numbers. The Postal Service has agreed
to do that. But to my knowledge, they have not complied with
that report yet.
Mr. Gilman. And how will you followup with regard to your
recommendation?
Ms. Corcoran. We are constantly in the Postal Service
looking at the Y2K area. At this point in time, we have about
25 percent of our evaluator resources looking at the Y2K issue,
and so it will be something that we will be monitoring on an
almost daily basis.
Mr. Gilman. Have you submitted your latest report to this
committee?
Ms. Corcoran. Yes, sir. It was attached to the testimony.
Mr. Gilman. Thank you.
Mr. McHugh. I thank the gentleman.
Mr. Gilman. Thank you, Mr. Chairman.
Mr. McHugh. Thank you, Mr. Gilman.
Mr. Turner.
Mr. Turner. Thank you, Mr. Chairman.
Mr. Lorentz, earlier, in response to my question, you gave
me a specific example of something that you had discovered to
be non-Y2K compliant that had been fixed, and you referred to
the computer systems that sort the mail, that replace the
manual sorting of the mail.
Mr. Lorentz. I would like to clarify what my response was
on that. The issue that my understanding of your question was,
``Could you give me an example of a system that, if it was not
fixed,'' and that was the context in which I answered that
question. So----
Mr. Turner. So, that sorting system----
Mr. Lorentz. That was just purely an example of a severe
system that, if it was broke, we would have a difficult time
replacing it.
Mr. Turner. And I take it that----
Mr. Lorentz. That is, by the way, one of the systems that
is fixed so--[laughter.]
Mr. Turner. So, if it hadn't been fixed, we would have----
Mr. Lorentz. Yes, that is correct.
Mr. Turner [continuing]. Had a problem sorting the mail.
As I understand it, over the last several years, you have
installed across the country a lot of these computerized mail-
sorting systems?
Mr. Lorentz. That is correct.
Mr. Turner. Over what period of time has that been done by
the Postal Service?
Mr. Lorentz. Do you want to address that?
Mr. Barranca. The letter automation and flat automation
programs started in 1987.
Mr. Turner. And have continued up to when?
Mr. Barranca. The bulk of the equipment is currently in
place and being used. We are making refinements to the system
on an ongoing basis, and we are still deploying some pieces of
equipment to sort the larger-size envelopes which we call
``flats.''
Mr. Turner. Of the systems that you fixed, how old were
they?
Mr. Barranca. How old were they?
Mr. Turner. How old were they?
Mr. Barranca. The original systems went in 1987, but the
computer and the software components of those systems are
updated on an ongoing basis. So, I mean we don't have systems
out there that date back to 1987. We have some frames and some
mechanical aspects of the equipment that date back to 1987, but
the software is updated on a continuing basis, because one of
our objectives is to make it better so it reads more mail, so
we can finalize more mail in the automated system.
Mr. Turner. So it was the software that had the problem
that you fixed?
Mr. Barranca. That is correct. Well, all of our systems
were--software was tested to make sure that it was Y2K
compliant, so that we had assurances that, internally, mail
that we are processing today, on equipment we are using today,
will still function in the same manner it functions today,
after the year 2000.
Mr. Turner. Is there only one supplier of this software, or
are there several companies that supply this software?
Mr. Barranca. The equipment has been supplied by a number
of suppliers. The software changes to that equipment is
developed and provided to field sites from a centralized
location that we manage at our Engineering Development Center.
We have a Process Control Unit that controls the software for
all of our automated sorting equipment.
Mr. Turner. So it is fair to say that the problem you found
and corrected was a software problem, not a hardware problem?
Mr. Barranca. That is correct.
Mr. Turner. And, private companies supply this software to
the Postal Service?
Mr. Barranca. They have supplied it as part of the original
equipment deployments. As I said, we have a unit out at our
Engineering Development Center, which is a Postal Service
unit--that is our Process Control Unit--that provides all the
new software and updates to all of our existing software.
And so, when we stamp out a piece of equipment for an OCR,
it is developed in our Engineering Development Center. It is
tested in a number of sites, and then it is sent out to all of
our sites so that we have some control over what processes we
are using at all our facilities.
We make sure that we are using the most efficient software
in all of our plants, so that we can keep as much of the mail
processed in automation to take advantage of the advancements
we have made in sorting software.
Mr. Turner. It would be fair to say that, when you
discovered that your software had a problem that had to be
fixed to be Y2K compliant, that the problem you found was one
created by the Postal Service because you engage in the
function of producing the software for the Postal Service?
Mr. Barranca. Yes, whether or not we had a problem in the
example that Norm used, I would have to go back and check. What
he basically said was that, ``If we have a problem in this
software application, it would create a big problem.'' I can't
sit here and tell you that we had a problem in that software. I
would have to check on that.
Mr. Turner. Well that----
Mr. Barranca. But we did check it all to make sure it
worked in the year 2000.
Mr. Turner. All right.
In my original--and maybe I wasn't clear with Mr. Lorentz--
but what I was looking for is an example of something you had
discovered to be non-Y2K compliant, in the course of your
testing and your evaluation.
Mr. Barranca. Right.
Mr. Turner. And you have fixed it.
Mr. Barranca. Yes, I can----
Mr. Turner. If you hadn't have fixed it----
Mr. Barranca [continuing]. Give you an example along those
lines.
Mr. Turner [continuing]. There would have been a problem.
Mr. Barranca. I can give you an example of that.
Mr. Turner. All right. That is what I was looking for.
Mr. Barranca. OK. One of the systems that we did test where
we found we had a problem was the system we use to bill or
assign mail to our commercial air carriers. When mail is
assigned to carriers--when mail is billed to a carrier, we
assign it to a particular flight in order to make a planned
arrival time so our service standards would be accomplished.
And what we did find in that system was that it would not
function in a Y2K environment, thus we had to go and make
adjustments to that system so it still would assign mail to
commercial air carriers in the year 2000.
That is a problem we found as a part of the testing, and
that is a problem that we have fixed.
Now there were ``work arounds'' if the system failed, which
is we could go back to the way we did it prior to ``CAB
sunset,'' which was manual assignment to air carriers and
pulling out the ledgers and the pencils and doing bulk
assignments.
Mr. Turner. That was a software problem that you fixed?
Mr. Barranca. That was a software problem.
Mr. Turner. And were you the supplier of the software, or
was that a private supplier?
Mr. Barranca. I think we probably supplied that software.
That system goes back probably 10 or 15 years. But our testing
led us to that problem which, in turn, led us to a ``fix,''
which is not a problem now.
Mr. Turner. But of all the testing and verification that
you have done thus far, do I take it that that is the only
concrete example that you can cite me of something you found
that would have been a problem had it not been fixed?
Mr. Barranca. Well, I am sure there are others. I was
trying to identify one that, from an operation standpoint,
would have been a significant problem if we hadn't found it.
Mr. Turner. I mean, I am asking this question, primarily
because, as you know, the Postal Service is like any large
corporation, and I am trying to get a feel for the scope of the
kind of Y2K problems that we are running into. I know we are
spending millions, billions of dollars in the public and
private sector to test to be sure we are compliant, and I was
just curious as to what your experiences have been, what you
have discovered that was really a problem. And that, obviously,
is the primary example that comes to your mind.
Mr. Barranca. That is one that I can state now. There are
probably others that others might be aware of.
Mr. Weirich. As an example of what happens, yes, we just
had our first failure case that we were able to document.
At the first of the year, we had a problem in one of our
payable systems, and there was an edit in there that looked a
year ahead. And when we looked and projected failure dates,
that had not been noticed, and we did not realize the system
was due to fail on the first of 1999. We had thought it would
fail later. In fact, we had created a remediated version that
was still in testing but had not put it into production.
So, indeed, the old version did ``rear up'' and fail on us.
We had to call some programmers in, and we spent 3 hours in the
middle of the night taking the patch and putting it on the old
thing so it would work correctly. But, frankly, we would not
have been able to pay the bills until we patched that program
so that it would handle transaction.
In the case of the information systems, that is a lot of
what we find in the repairs. A particular transaction would not
process if the system were not fixed to correctly handle dates
that have traveled the centuries.
In other cases, we have certainly--the system would
incorrectly calculate intervals and would not be able to
determine, for example, whether I had adequate years of service
to collect an annuity. So people trying to retire would have
problems proving their eligibility.
We have certainly identified a host of things in the
systems where the calculations would have been incorrect, had
we not gone through and changed them. And, indeed, in well over
half of the systems that we have worked on, we can point to
specific errors that would have occurred--they run the gamut--
had we not made the changes to the code.
Mr. Turner. I might just followup with Inspector General.
You have heard their responses. I get the impression that
of all the efforts that have been made in testing and
verification, that the number of discovered problems seems to
be fairly minimal. It gives me some assurance that, perhaps,
what remains to be done may not reveal any significant
problems.
I know that is not a very scientific way to approach this,
but it does seem to me that the number of problems that they
have found and fixed is relatively small, compared to the scope
of the testing that they have done.
Is that an accurate assessment, or am I somewhat off
target?
Ms. Corcoran. I am going to let Mr. Chambers answer that
question.
Mr. Chambers. Well, I think if I understood Mr. Weirich
correctly, he just indicated that they had found problems in
about 50 percent of their systems.
I think the important concern that we have about what
remains this year is not necessarily in the information
systems, because they appear to be on track to get the bulk of
those fixed.
Our biggest concerns, as Ms. Corcoran indicated earlier,
are in a lot of the more traditional non-information systems
areas, such as facilities and these other non-suppliers and
some of the other non-traditional areas. But to the extent that
they have been reviewing the systems, these severe and critical
systems, if they have been finding about 50 percent of them
with some degree of problems, then I think it was probably an
exercise well worth it.
Mr. Turner. Thank you.
Thank you, Mr. Chairman.
Mr. McHugh. I thank the gentleman.
We have been joined off and on, as I indicated earlier--we
knew we would--by various Members, and I want to recognize and
thank them. The gentlelady from Michigan, Ms. Rivers, was here
for a time.
And from those of us who dabble in computers talk about
``spam,'' we think about one thing, but when those of us who
were raised in the 1950's think about ``spam,'' we think of
something else and--[laughter]--we have been joined by a
gentleman who represents the great ``spam'' industry, a
gentleman, Mr. Gutknecht, Gil Gutknecht. We welcome him, and I
would be happy to yield to him at this time.
Mr. Gutknecht. Thank you, Mr. Chairman.
Actually, part of the reason I was late for the meeting, we
were meeting with a delegation of members of parliament from
Canada. We were talking, among other things about hogs and
``spam,'' and it did come up. [Laughter.]
I hope that this question hasn't been answered, and I
apologize, but, you know, I understand the first real test that
we are going to face, according to some of the experts that
have testified previously, is on September 9, 1999.
I am just curious, have you run any tests, or anybody want
to comment on what is going to happen on September 9, 1999? Do
we have some handle on what that is going to reflect?
Mr. Weirich. We would certainly agree with you. I think
that is our first critical date. We are treating it as such. We
have included this in the cases that we test for those systems
that do operate on a month and fiscal year, for example. That
will not affect a number of our systems, because not all of our
systems use that forum. But for those where it does occur, yes;
that will be the first we will be alert to.
Mr. Gutknecht. I take it that you are comfortable that you
will meet that test on September 9th?
Mr. Weirich. As comfortable as we are about anything else
in this program.
Mr. Gutknecht. That is an honest answer.
Let me just--one of the other issues that has come up in
some of our other hearings is the issue of embedded chips. And
how vulnerable are you to the problem of embedded chips? And do
you have an inventory of how many you have?
I raise that issue because, not only do we have a little
company that makes that wonderful pork product that was talked
about earlier, but we also have in my district, a relatively
small company that is a chip broker. They buy and sell chips
all over the world. They have told me that there are a lot of
companies who may not even realize that there are chips built
into their all kinds of equipment that may or may not be Y2K
compliant. I am just curious, in terms of the Postal Service or
any other Federal agencies, have they done the inventory?
For example, one of the utilities in our State, they found
that they had over 300,000 embedded chips in their system, most
of which were not a problem, but at least they had an inventory
and a better idea. Have you done the same?
Mr. Weirich. No, we have not done that per se. We have been
pouring over our mail processing equipment primarily in this
area, looking for whether we can identify any embedded chip
weaknesses in those systems. To date, we have not. We have
tested the systems.
Mr. Gutknecht. Do you plan to do that inventory?
Mr. Weirich. No, we don't plan an exhaustive inventory of
all the chips.
Mr. Gutknecht. Thank you, Mr. Chairman.
Mr. McHugh. I thank the gentleman.
Mrs. Morella.
Mrs. Morella. I guess to followup, why? Why are you not
doing any inventory on the embedded chips?
Mr. Weirich. We are looking for a case where they would
have a date function that potentially could cause a machine to
fail. The way we see them used in the machines, we have not
identified cases where we believe they will cause a problem. We
are continuing to review that, however.
Mrs. Morella. Would the Inspector General and the GAO
representative agree?
Ms. Corcoran. We are certainly following and monitoring
what they are doing. One of the places I think you might find
embedded chips are in some of the facilities and some of the
controls for the various equipment and things. That is one of
areas I spoke about earlier, where Postal still has work to do
to determine exactly where this is leading.
We believe that Postal has done a fairly good inventory of
known systems at this time, in terms of knowing where things
are. So, we will continue to monitor that, but, at this point
in time, we wouldn't be doing any additional work on embedded
chips either, other than just monitoring it.
Mr. Brock. The question of embedded chips is, I think, very
difficult for many agencies to answer because it is difficult
sometimes to determine the inventory. I think that, with
respect to the mail process equipment that the Postal Service
was discussing, that there is probably not as great a concern.
And they have looked at that, and it is easier to look at.
One of the issues, though, sometimes with chips, is that
even with the same model of equipment, that the manufacturer
can substitute a different chip. So when you test one piece of
equipment, in fact, you can have a problem in another piece
because of a change in the chip.
In terms of where most embedded chips would be, I would
agree with the Inspector General that they are probably located
at the facilities. One of the things that the Postal Service
needs to do is to, as they are going through some of the
facilities, make a determination about where chips might occur,
and what effect chip failure might have on postal operations at
particular facilities. They need to weigh that against the time
and the cost that it would take to do an exhaustive inventory,
and whether or not doing such an inventory might, in fact,
divert them from some other mission critical activities. This
is something they have to put in the balance in the coming
months.
Mrs. Morella. And the balance is probably necessary, but it
is a tremendous concern. And I think that we kind of have
blinders on. You have got to be able to try to identify where
you can for remediation.
I would like to pick up on a report that GAO did rather
recently, and it dealt with the fact that the Postal Service
had had some difficulty holding onto some qualified staff and
had been using some contractors. I am wondering if the use of
contractors has exacerbated the cost of this remediation, and
if it is a trend? And if we are saying that we are now using
more and more contractual staff, is this making some kind of a
statement with regard to the Postal system?
Mr. Brock. We did a survey of all Government agencies about
a year ago or so, and it was self-reported by the Postal
Service that personnel issues were a concern to them. They have
largely supplemented their staff with a large number of
contract employees, I believe 1,200--that sticks in my mind. We
are finding that most agencies, or at least the agencies I deal
with, extensively rely on contractors because, in many cases,
the specific skills are simply not in-house to run the business
as usual, and then take on Y2K as well.
I think this is true in the Postal Service, that it was
forced to rely on contractors in order to do the remediation
that was required, that they simply did not have the staff on
board, nor was it feasible in the short time remaining to hire
them and bring them up to speed in order to do the vast amount
of work that had to be done.
Ms. Corcoran. The OIG is currently looking at the issue of
contractors and how well these moneys are being spent, what
contractors are doing. We hope to have a report out probably
within the next month looking at this issue.
Mrs. Morella. That would be great if you would share the
report with the three subcommittees who are here represented. I
think it says something about the Postal Service and cost and
efficiency.
I just have one final question, really, and it deals with--
again, I think, Mr. Brock, I jotted down, I think you said it
at some point during your testimony, that the business guys
must make the decisions and not the ``techies.'' Right?
Mr. Brock. That is correct.
Mrs. Morella. Can you explain that?
Mr. Brock. Sure. One of the reasons we are in this problem,
some technical decisions were made about how to conserve space,
and, you know, instead of using a four-digit date, a two-digit
date was made. I am not quite sure that business owners ever
really understood the long-term ramifications of that decision,
even though I believe the technical people did understand that
long-term ramification.
One of the major problems that I find across Government,
when we are looking at information management, is the failure
of business process owners to actually own the information
technology and to make the hard decisions that have to be made
in terms of ``are we making the best investment?'' ``Are we
making the right decision; are we spending wisely?''
As crunch time comes, and it will come, and decisions and
tradeoffs are going to have to be made about, ``Well, do we
remediate this first, this first, or this first?'' That needs
to be done within the context of the business operations that
those decisions support. And they are most appropriately made
by the business process owners, not by the technology people
that support the processes.
Mrs. Morella. It just seems to me that there has got to be
sort of a partnership when you talk about balance.
Mr. Brock. Oh, yes.
Mrs. Morella. Are you blaming the late Admiral Grace
Hopper, who is the one who devised COBOL?
Mr. Brock. I would never do that. [Laughter.]
Mrs. Morella. Is now looking----
Mr. Brock. No. [Laughter.]
Mrs. Morella. I frankly think everybody knew. People have
asked me, ``Why didn't anybody know this early on?'' And I
said, ``Of course they knew it.'' They just felt, either they
wouldn't be around, or there would be some way to remediate it.
But, at the moment, I think the business people were probably
involved in terms of saving the space and, therefore, saving
the money. I don't know.
But very interesting response, and I appreciate it. Thank
you.
Thank you, Mr. Chairman.
Mr. McHugh. I thank the gentlelady.
This hearing is going to continue; I will leave it to you
if that is the good news or the bad news.
The good news certainly is for you, I have a meeting with
our Governor, and I deeply apologize, but I am going to yield
the Chair to the gentleman from California, Mr. Horn.
But, before I do, I want to thank all of you for being
here--Mr. Lorentz, Mr. Brock, and, of course, Ms. Corcoran.
This is obviously a very serious problem, one that we are
deeply concerned about, and I know that the Postal Service
understands the ramifications--real and perhaps somewhat
imagined, but po-
tentially real, as well.
We are looking forward to working with you, in hopes that
this challenge can be met successfully and we appreciate GAO
and the IG's office assistance in this matter.
Let me thank, last, all of my colleagues, but particularly
my co-
chairs, Mr. Horn and Mrs. Morella, for their interest and their
support and their leadership. So, thank you.
And with that, I turn the Chair over to Mr. Horn.
And Mr. Turner, too, as the ranking member, who has been
here faithfully, and Mr. Wu--everybody, thank you. [Laughter.]
Mr. Horn [presiding]. I thank the gentleman, and we
appreciate the patience of all of you when you are in one of
these sessions.
I believe Mr. Wu has not had an opportunity to ask a few
ques-
tions. The gentleman from Oregon, we are delighted to have you
here.
Mr. Wu. Thank you very much, Mr. Chairman.
I have only one question, and that is assuming that all of
your efforts to become Y2K compliant are successful within the
con- tinental United States, and that we have a seamless
transition. Will we have significant problems develop in Europe
or Asia or Canada or Mexico? Besides the obvious problems with
the inter- national mail, what is the potential for foreign
computer problems in their mail systems, or elsewhere, becoming
our problems in the USPS?
Mr. Weirich. The biggest concern would be that it would,
obvi- ously, it would be a change in the flow of the mail.
Every time that we have met with different mailer groups and
looked at the things that could go wrong, our big fear for
anybody--also includes people mailing things in the United
States--is if they have problems, will those ripple down to us?
Will we see a difference in their ability to prepare mail
correctly or get us the mail on time to deliver it? It would be
the same coming in from the foreign administrations. It would
also present some challenges for us outbound.
Nick could probably address; we have had problems before.
If a receiving administration is unable to handle what we give
them, we have various processes to shut off that flow of mail
until they are able to recover. I believe that is what we would
get into.
Mr. Barranca. Yes. I understood your question to be more
along the lines that, could there be a problem in a computer
system off- shore that could create a problem in one of our
resident systems?
Mr. Wu. And, also, given the number of vendors that you
have, some of your vendors may be domestic, and some of your
vendors may be foreign entities.
Mr. Barranca. Yes. I guess, you know, we are focusing our
ef- forts on making sure that the physical piece can move from
where it originates to where it ``destinates,'' for those
pieces that originate in this country. We feel we will be
capable of continuing to deliver mail like we do it today in
the year 2000.
We are also confident that mail that arrives in this
country, we will be able to deliver to its destination the same
as we do today.
So, when we are doing testing, doing remediation of our
originating processing systems and our destinating processing
systems, we are doing that for domestic and international mail.
I really can't address the concern of--if I understand your
question, ``What is the possibility of a computer problem in a
foreign country creating a computer problem in this country
that we haven't really anticipated?'' That is not something
that I would be able to address. I don't know if----
Mr. Wu. Coming out of this industry sector in the relative
recent past, I have a--let's just say I have a higher level of
confidence in what we are doing in this country.
I am deeply concerned about what is happening in other
countries, whether they are making the same type of efforts and
having the same kind of progress.
And we are having difficulties with our schedules; I
imagine that is a much greater problem in certain foreign
countries, and that is where, you know, my personal focus is on
trouble in any Y2K trouble scenario.
Mr. Barranca. Yes, as we addressed earlier, there are two
international organizations that are focusing on those issues.
That is the UPU, and, this is an item on their agenda. They
represent 200 postal administrations around the world. And then
there is the International Postal Corp., which represents 21
industrialized nations, and this is also an item for discussion
on their agenda.
So, we are talking together about the potential issues.
And, as Norm answered earlier, if you sort the countries into,
say, three categories--those that are highly automated like we
are, they are dealing with their Y2K problem in a similar
manner as we are, looking at their systems, making sure they
can work. Then there are other countries that don't rely as
heavily on automated processing, and they rely more on a mix of
automated and manual processing; to a lesser extent, the
problems are as severe. And then the other countries that rely
mainly on manual processing, to a great extent, the world won't
change a whole lot as a result of the year 2000.
But there are two international organizations that are
trying to address the problems jointly to see if they can learn
from what the members are doing. We are an international unit
as part of those discussions. And, as I volunteered earlier, we
can make available more information for the record, as we have
it.
Mr. Wu. Thank you for an opportunity to get the issue on
the table.
Mr. Horn. Thank you very much.
The gentleman from Maryland, Mr. Bartlett.
Mr. Bartlett. Thank you.
I would like to return for a moment to the potential
problem of embedded chips. It is my understanding that many of
these chips are generic chips; that is, they are made with a
variety of capabilities and the application to which you put
them may use only one or a few of those capabilities.
The question has been raised that if you have a generic
chip that has a date code, even though you are using it in a
situation where the date is of no relevance like sorting mail--
that sorting machine couldn't care what day of the week or year
or millennium it was sorting mail in. What kind of confidence
do we have that if an embedded chip contains a date code, that
when we go past the year 2000, that, in fact, that chip is
going to continue to work for the purposes for which you are
using it?
It has been suggested that if there is a date code in the
chip, even though you have no interest in the date, that that
chip may possibly not work after the year 2000. Have you looked
at that? And how many of your chips are generic chips, and what
is the potential extent of this problem?
Mr. Lorentz. I guess a general answer to the question is,
if we are testing the specific equipment as one of our critical
or severe, or even the 500 systems, and we are testing it for
the date issue, that if it does have an embedded chip, we
believe that that would properly exercise that chip.
As far as the more technical aspect of that, we can
certainly address that, but we believe that the remediation of
the overall system should take that into account.
Mr. Bartlett. I have trouble understanding how we check to
see if a generic chip with a date code capability, which we
aren't assessing and, therefore, can't exercise how we are
going to be sure that that chip is going to continue to perform
the functions that we need of it in the year 2000 if we don't
know whether or not it is going to continue to function if it
has a built-in date code.
I don't understand how we can test for that.
Mr. Lorentz. I think we have two issues here: No. 1, we are
testing the equipment capability; we are doing that.
Mr. Bartlett. But, you are testing it today, not in the
year 2000.
Mr. Lorentz. And then the other issue that we need to
address, as the previous conversation, is the issue of
individual chips, managing the individual chip issue, and we
accept that.
Yes, we are simulating; when we go through simulation
testing, we are taking all of the automation equipment in the
systems into year 2000. So, we are exercising those chips as
part of simulation.
Mr. Bartlett. But, ``how do we advance the clock in the
chip if the date code in the chip is not something we are
interested in and not something we are accessing?'' is the
question that has been raised to me.
Mr. Lorentz. By advancing the clock in the rest of the
system.
Mr. Bartlett. I still am less than sanguine about our
knowledge of embedded chips and how much of a problem they are
going to be in the year 2000.
I thank you very much.
Mr. Horn. I thank the gentleman.
Let me just ask a few closing questions, do a little bit of
administrative bit, and then do a short closing statement.
Just for the record at this point, how many systems have
you defined as ``mission critical'' systems within the U.S.
Postal Service? What is the number of those?
Mr. Lorentz. 152 systems.
Mr. Horn. OK.
How about ones that are not ``mission critical?'' What
other systems do you have?
Mr. Lorentz. 349.
Mr. Horn. 349.
And does then when you add them up, that is essentially 501
or so?
Mr. Lorentz. That is correct. Yes, sir.
Mr. Horn. Yes.
Do you find as you go along that maybe some of those that
weren't defined originally as ``mission critical'' are
``mission critical,'' when you put the whole context together?
Mr. Lorentz. We actually, as we have worked through our
three-step process, we have actually both included or excluded
systems as we have gone along, so the number, for instance,
could increase to 153 or could decrease to 151. So there has
been that kind of a situation that has occurred; yes.
Mr. Horn. Seems to me, as we go through this experience,
which is once in a millennium, hopefully, that we also learn
that you want to avoid ``garbage in'' and ``garbage out'' by
saying, ``Do we really need this system? Could we merge it with
something else?''
Is that going on within the Postal Department, just as a
matter of organization?
Mr. Lorentz. Absolutely, and we have actually retired--
specifically, retired--some of the systems.
Mr. Horn. Let me ask a few questions. I hope you haven't
covered it when I had to be unavoidably detained.
Do we have a master schedule? Is fixing your computer
systems under that schedule?
Mr. Lorentz. Yes.
Mr. Horn. Well, if so, does the schedule have certain
provisions for business continuity and contingencies?
Mr. Lorentz. We specifically have constructed an approach
around three specific process areas--business continuity and
recovery or contingency, the systems' remediation, as well as
doing communication.
We have--just to kind of give you an idea as to how that
fits into the management structure--in every management
committee meeting that the Postmaster General holds, there is a
standing agenda item on Y2K mitigation.
There is a subgroup called the Executive Council Y2K that
is chaired by the Deputy Postmaster General, Mike Coughlin, on
the PMG's behalf, where those specific process owners, as well
as the what we call ``portfolio owners,'' which are senior vice
presidents, the business process owners, come in and
specifically review in a very structured, consistent way
exactly what the current situation is with those systems. And
that is consistent with the suggestions and findings from the
Inspector General's office. So those are in progress, as well
as, we are explicitly creating for our own usage a ``war
room,'' if you will, where we have a very consistent graphic
representation for anybody at any time. They can walk in and
see what the current state of the Y2K approach is.
Mr. Horn. What is the view of the General Accounting Office
on this, Mr. Brock? Have you seen the master schedule?
Mr. Brock. It is my understanding, Mr. Horn, that the
master schedule had not been developed at the time of our final
exit last week, that they were working on that, that many of
the individual business processes had detailed schedules. Our
concern by not having an overall master schedule is that it is
easier to suboptimize and that you can't look at the
relationship of one schedule versus another to make sure that
things are coming together.
Again, it was my understanding that the master schedule was
being worked on and that it was near completion, but we think
that something like that needs to be ready as soon possible so
that it can be managed against.
Mr. Horn. How about the Inspector General, Ms. Corcoran,
have you seen the master schedule?
Ms. Corcoran. No, sir; we have not.
Mr. Horn. You have not. Is that because it has been done in
the last week, maybe in preparation for the hearing, or what?
Ms. Corcoran. I can't really say. I knew they were working
on it, but I have not seen a copy of it, nor have my people.
Mr. Horn. Did they send any drafts around to either GAO or
the Inspector General?
Ms. Corcoran. No, sir.
Mr. Horn. OK.
Well, it seems to me when you go about, as I have said,
from day one of April 1996 when I got into this, this is a
management problem. It is not a bunch of ``techies'' running
loose. If it is a bunch of ``techies'' running loose, that is
part of the problem.
That is why IRS failed years ago with $4 billion down the
drain. That is why FAA failed 5 years ago when I was a freshman
in this Congress and $4 billion went down the drain. And you
could walk into the room, and I knew at 10 seconds that there
was no management to that operation. And everybody had a new
idea every morning, ``so let's try the new idea''--never
closure, never getting one thing related to the next.
It seems to me, before you even start in this thing, you
have got to have some schedule of what is most important. What
is the limiting factor in relation to all other systems that
you have got to worry about? Is there a few real trunk systems
that everything else depends on, and if they go out, you can
forget all the peripheral business?
So, how long have we been working on that master schedule?
Mr. Lorentz. I would say that, specifically, we have gone
through an evolution, and I certainly think it is as my
colleagues here portray it. Initially, we underestimated the
complexity. We did approach this from a systems perspective
initially. We have evolved that approach. We now, in a very--
and I mean the Postmaster General makes it clear every time he
talks about this--this is a business problem. So, Mr. Chairman,
I absolutely--we absolutely share your perspective on that.
Are the plans that we have in place perfect? No. Are they
under construction?
Are they going to be continuously improved as we deal with
this business problem? Absolutely, yes.
And I would say that we are comfortable we are headed in
the right direction, but we are not done.
Mr. Horn. How many pages is there in the current draft of
the master schedule?
Mr. Lorentz. I do not know the answer to that question.
Mr. Horn. Does anybody with you know it?
Mr. Lorentz. No.
Mr. Horn. All right.
Mr. Lorentz. We can provide that.
Mr. Horn. I am saving a big space in the records for,
within a week, getting that copy of the master schedule,
without objection, and insert it in the record at this point.
My next question is this--and maybe it has been covered,
but just give me a brief answer--who is the contingency for the
Postal Service?
You are the contingency for everybody else we review with
our staff, known as the executive branch of the Federal
Government. They have sort of got you as No. 1. And a lot of
them don't know what to do anyhow. But those that say, ``Yes;
we can check it off.''--you get a plus; you at least have an
idea that if everything fails in the computers, you can mail
the stuff.
What happens to you?
Mr. Lorentz. We really----
Mr. Horn. Who is your contingency?
Mr. Lorentz. We believe that the ``buck stops here.''
Mr. Horn. So that is it? There is no contingency? Or, is
there another alternative way around?
Mr. Lorentz. Word of mouth. I mean we do not----
Mr. Horn. Smoke signals on hills, or what are we down to?
Mr. Lorentz [continuing]. We believe we are the ultimate
contingency; yes.
We certainly are accepting that responsibility. [Laughter.]
Mr. Horn. Well, yes. One of my colleagues mentioned the
Pony Express, and 30 years ago, I was living in this city and a
good friend of mine, Jim Boren, president of the International
Association of Professional Bureaucrats, challenged the post
office on mailing that he would put in Baltimore and
Philadelphia to Washington, and he did it by horseback, and
they did it the regular way. He won. That did hit every paper
in America. And Mr. Boren is teaching students how to do those
things, I am sure, wherever he is posted in Oklahoma or Texas.
But that is one contingency, maybe, that might be possible,
if everything else happens.
Now, what assurances do we have that the mail will be going
through? I mean you have got all this tremendous thing that I
mentioned earlier, known as the ``backlog'' at Christmas and
all the rest of the third class mail and second class mail and
all that. Have we got some assurance here that the mail will go
through?
Mr. Lorentz. We believe that the plans and the resources
that we have in place, we have a high degree of confidence that
we can deliver the mail. As well as our experience has been
articulated by Mr. Barranca, we are, some can say, an expert at
contingency planning to weather elements and other disruptions.
So we do have experience at dealing with those issues as well.
[The information referred to follows:]
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Mr. Horn. OK. Well, we wish you well on that.
Let me just say what I think I have learned in looking at
the papers, as well as hearing the testimony.
We have learned that you are making progress in solving the
year 2000 technology challenges, yet you still have a long way
to go, and it is in a very short period. We are talking about
311 days from now is the real test, and I am glad you are
simulating.
In response to the gentleman from Maryland, that is the
only way you are going to know in advance if you have got a
real serious problem on microchips that people don't even know
about, whether it is the elevators in your building or your
others buildings around the country. They are often by
microchips.
And some of the programming and some of the firms have gone
out of business in the older buildings when you phone up, but
the medical profession is doing a pretty good job in this area.
They have a website, and they started with the emergency rooms.
And when we had a field hearing in Cleveland with the Cleveland
Clinic, one of the outstanding medical facilities and programs
in the country, that they are checking all the design numbers
and everything else, calling the manufacturers so people don't
have to trip over everybody in this. They do it once and if
they have got data tested against it and put it in if it is new
and don't worry about it; just use the other fellows that we
had in 2 months ago.
So I think that is certainly one thing that would be well
to do, to look at either a website with other industrial
groups, that I know Mr. Koskinen has. Are you involved with Mr.
Koskinen's operation?
Mr. Lorentz. Yes, we are.
Mr. Horn. Is it in a separate team that you are there, or
is the post office just standing alone on here?
Mr. Lorentz. We are involved at two levels. The Postmaster
General is involved in the CIO Council. Mr. Weirich represents
us on the President's Council. So we are involved at both
levels. And there are other industry representatives involved.
Mr. Horn. Good.
Well, what leads me to that concern in the short period of
time, is the obvious. You have got many systems, more than
almost any place but the Department of Defense and perhaps HHS,
Health and Human Services. But you have got 8,000 suppliers
that have to relate to your computing, I would think, in terms
of their inventory control and the Japanese method of
inventory, so you don't have to build many storage sheds
everywhere, but keep it moving. Do you feel there is a problem
there on trying to make sure that they are converted, so when
they interact with your system--if they do interact with it--
that they don't pollute the system because they haven't done
their job?
Mr. Lorentz. We do have a very significant issue with the
suppliers' side that we are aggressively pursuing with plan,
but it is an area of concern.
Mr. Horn. Good.
Any last comments any member might want to make now that
you have heard everybody else's comments?
Inspector General, do you have any thoughts on this?
Ms. Corcoran. We are going to continue to monitor----
Mr. Horn. OK.
Ms. Corcoran [continuing]. And provide you information----
Mr. Horn. Good.
General Accounting Office have any other comments?
Mr. Brock. We will continue as always, Mr. Chairman, to
monitor, not only the Postal Service but the other agencies
that we have a responsibility for, and reporting back to you on
the progress of agencies all across the Government.
Mr. Horn. Very good.
Let me just thank the staff on both sides of the aisle that
put the hearing together: J. Russell George, the staff director
and chief counsel for the Subcommittee on Government
Management, Information, and Technology. He has given up on us,
I think, and headed to the next hearing. Mr. Ryan is to my
left, the senior policy director on my subcommittee. He came to
us from the General Accounting Office. Bonnie Heald, director
of communication, professional staff member, sitting way in
back, so she has a decent seat and doesn't have to have us
tripping over her and vice versa. Mason Alinger, our reliable
clerk is here that arranges all these hearings. And then we
have got a lot of free labor and help with college interns,
Paul Wicker, Kacey Baker, and Richard Lukas; we thank you,
ladies and gentlemen.
And for the minority, we have Faith Weiss and Jean Gosa,
and we thank you all for your usual professional help.
And from the Postal Service Subcommittee, we have Robert
Taub, the Postal Subcommittee staff director; Heea Vazirani-
Fales, the Postal professional staff member; and Abby Hurowitz,
the Postal clerk.
From the Technology Subcommittee of the Committee on
Science, we have Richard Russell, the staff director of the
Technology Subcommittee; Ben Wu, the member of the professional
staff there; and then, Joe Sullivan is the clerk to the
committee.
And I have here Denise Wilson for the minority staff,
professional staff member.
And last but not least, our brave court reporter, Sarah
Swanson. And when you have all that many people on a panel, I
don't know how you keep track of them. [Laughter.]
And thank you all.
And with that, this hearing is adjourned.
[Whereupon, at 12:22 p.m., the subcommittees adjourned.]
[The prepared statement of Hon. Chaka Fattah follows:]
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