<DOC>
[106th Congress House Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:60934.wais]
H.R. 1599, THE YEAR 2000 COMPLIANCE ASSISTANCE ACT
=======================================================================
HEARING
before the
SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,
INFORMATION, AND TECHNOLOGY
of the
COMMITTEE ON GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTH CONGRESS
FIRST SESSION
ON
H.R. 1599
TO AMEND THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949
TO AUTHORIZE THE PURCHASE OF INFORMATION TECHNOLOGY RELATED TO THE YEAR
2000 COMPUTER CONVERSION BY STATE AND LOCAL GOVERNMENTS THROUGH FEDERAL
SUPPLY SCHEDULES
__________
JUNE 23, 1999
__________
Serial No. 106-46
__________
Printed for the use of the Committee on Government Reform
Available via the World Wide Web: http://www.house.gov/reform
______
U.S. GOVERNMENT PRINTING OFFICE
60-934 CC 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 PATSY T. MINK, Hawaii
THOMAS M. DAVIS, Virginia CAROLYN B. MALONEY, New York
DAVID M. McINTOSH, Indiana ELEANOR HOLMES NORTON, Washington,
MARK E. SOUDER, Indiana DC
JOE SCARBOROUGH, Florida CHAKA FATTAH, Pennsylvania
STEVEN C. LaTOURETTE, Ohio ELIJAH E. CUMMINGS, Maryland
MARSHALL ``MARK'' SANFORD, South DENNIS J. KUCINICH, Ohio
Carolina ROD R. BLAGOJEVICH, Illinois
BOB BARR, Georgia DANNY K. DAVIS, Illinois
DAN MILLER, Florida JOHN F. TIERNEY, Massachusetts
ASA HUTCHINSON, Arkansas JIM TURNER, Texas
LEE TERRY, Nebraska THOMAS H. ALLEN, Maine
JUDY BIGGERT, Illinois HAROLD E. FORD, Jr., Tennessee
GREG WALDEN, Oregon JANICE D. SCHAKOWSKY, Illinois
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 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 Advisor
Grant Newman, Staff Assistant
Mark Stephenson, Minority Professional Staff Member
C O N T E N T S
----------
Page
Hearing held on June 23, 1999.................................... 1
Text of H.R. 1599............................................ 3
Statement of:
Giles, Glenn, managing director, Keane Federal Systems, Inc.;
and Nancy Peters, vice president, Sales and Marketing,
CACI, Inc.................................................. 86
Willemssen, Joel C., Director, Civil Agencies Information
Systems, Accounting and Information Management Division,
General Accounting Office; Frank P. Pugliese, Commissioner,
Federal Supply Service, General Services Administration;
and Gary Lambert, chief executive officer, National
Association of State Procurement Officials................. 51
Letters, statements, etc., submitted for the record by:
Davis, Hon. Thomas M., a Representative in Congress from the
State of Virginia, prepared statement of................... 11
Giles, Glenn, managing director, Keane Federal Systems, Inc.,
prepared statement of...................................... 89
Horn, Hon. Stephen, a Representative in Congress from the
State of California:
Information concerning a survey.......................... 29
Letter dated June 22, 1999............................... 23
Letter dated June 23, 1999............................... 21
Prepared statement of.................................... 6
Prepared statement of Mr. Nold........................... 25
Lambert, Gary, chief executive officer, National Association
of State Procurement Officials, prepared statement of...... 78
Peters, Nancy, vice president, Sales and Marketing, CACI,
Inc., prepared statement of................................ 98
Turner, Hon. Jim, a Representative in Congress from the State
of Texas, prepared statement of............................ 18
Willemssen, Joel C., Director, Civil Agencies Information
Systems, Accounting and Information Management Division,
General Accounting Office, prepared statement of........... 53
H.R. 1599, THE YEAR 2000 COMPLIANCE ASSISTANCE ACT
----------
WEDNESDAY, JUNE 23, 1999
House of Representatives,
Subcommittee on Government Management, Information,
and Technology,
Committee on Government Reform,
Washington, DC.
The subcommittee met, pursuant to notice, at 10:30 a.m., in
room 2203, Rayburn House Office Building, Hon. Stephen Horn
(chairman of the subcommittee) presiding.
Present: Representatives Horn, Biggert, Davis and Ose.
Staff present: J. Russell George, staff director and chief
counsel; Randy Kaplan, counsel; Matt Ryan, senior policy
advisor; Matthew Ebert, policy advisor; Bonnie Heald, director
of communications; Grant Newman, staff assistant; Paul Wicker,
Justin Schleuter, and John Phillips, interns; Michelle Ash and
Faith Weiss, minority counsels; Mark Stephenson, minority
professional staff member; Earley Green, minority staff
assistant; and Patricia Jones, minority congressional fellow.
Mr. Horn. Sorry about the hearing delay. OK. So we will
begin the Subcommittee on Government Management, Information,
and Technology. A quorum is present.
Only 191 days remain until we greet the new millennium, its
expectations and enormous challenges. Last week, on behalf of
the Subcommittee on Government Management, Information, and
Technology, I released our eighth report card on the year 2000
within 24 agencies and departments in the executive branch of
the Federal Government.
Based on our analysis of the agencies' self-reported data,
we gave the executive branch an overall B-minus. That is
progress. We had given them F's, we had given them D's, we had
given them C-pluses, and now they're at the B-minus category.
The agencies have made remarkable progress, frankly, in the
last 6 months.
At the same time, the subcommittee has begun to examine 43
Federal programs that affect millions of Americans, such as
Social Security, Air Traffic Control, and Medicare. The
President's Office of Management and Budget identified these
Federal programs as high impact. When it comes to year-2000
computer readiness, they may also be considered as high risk.
Although Federal computers may be fully prepared for the
global glitch by the January 1st deadline, 10 of those 43
programs are administered and delivered by State governments.
In addition, each program involves a large number of public and
private sector partners, from vendors and suppliers to county
and municipal governments.
The fact is that several of these high-impact programs,
including Medicaid, Food Stamps and Child Nutrition, are not
scheduled to be ready until December, leaving little, if any,
time to correct unforeseen problems.
The year 2000 problem dates back, as we know, to the mid-
1960's when programmers were desperate for space and these huge
dinosaurs that filled the whole room such as this and somebody
had the bright idea, instead of 1967, let's just put in 67 and
drop the 19. And, obviously, when you get to the year 2000 and
you do that, you have zeros in the 67 area, and the computer
might well think it is back to McKinley in the 1900's.
Today, we will discuss H.R. 1599, the Year 2000 Compliance
Assistance Act, proposed by our colleague, Representative Tom
Davis of Virginia. The legislation would amend the Federal
Property and Administrative Services Act of 1949, giving
temporary authority to the General Services Administration to
allow State and local governments to purchase year 2000-related
projects and services from Federal supply schedules. The
participation of these governmental entities and the
information technology suppliers is voluntary.
Our goal today is to discuss how the proposed legislation
would allow the Federal Government to help its essential
business partners--State and local governments--prepare their
computers for the year 2000.
We will examine whether the bill would provide the States
and localities with another tool in their efforts to prepare
for the year 2000.
I welcome our witnesses, and I am delighted to have the
author of the bill, who has been an excellent member of this
committee, Mr. Davis of Virginia, for opening remarks on this
legislation.
[The text of H.R. 1599 and the prepared statement of Hon.
Stephen Horn follow:]
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Mr. Davis. Thank you, Mr. Chairman. Let me first convey to
you how impressed I am by your work and leadership.
Mr. Chairman, over the past 4 years, we have tried to
ensure that our Nation is ready for the year 2000. For this
reason, I am pleased that we are here today to hold this
hearing on H.R. 1599, the Year 2000 Compliance Assistance Act.
This bill is critical to addressing the very unique
circumstances brought on by the year 2000, circumstances that
exist only once every thousand years, by providing our State
and local governments with the necessary assistance for
achieving year 2000 compliance.
As a former local government official and high technology
executive, I recognize the tremendous burden placed on State
and local governments as they work to ensure that their mission
critical systems are ready for the new millennium.
Over the past 4 years, under the persistent urging of the
chairman of this subcommittee, Mr. Horn, and Representative
Connie Morella of Maryland, the Federal Government has
sluggishly moved toward readying most Federal mission-critical
systems for the year 2000 conversion. However, many are now
just beginning to turn their attention to the condition of
State and local government mission-critical systems that are
critical to the seamless delivery of essential services at all
levels of government.
As John Koskinen, the chair of the President's Council of
Year 2000 Conversion, has emphasized, we should all be
concerned about the ability of some State and local systems to
interface with year 2000 compliant Federal systems. There are
approximately 160 different State systems that interface with
the Federal Government. These systems include the delivery of
vital services such as Medicaid, unemployment insurance and
child nutrition aid programs.
Many State and local governments have been unwilling to let
the Federal Government or the private sector know the progress
of their Y2K work for fear of lost public confidence and/or
fear of the potentially negative effect on their bond rating.
This reluctance makes it exceptionally difficult for us to
judge our true readiness for January 1st, 2000.
At the Federal level, we should do all we can to help State
and local governments that lack the resources and expertise to
tackle Y2K problem. As the latest report card from this
subcommittee indicates, the Federal Government and its mission-
critical systems are rapidly reaching compliance or are already
compliant. It is time to make the valuable resources and
expertise of the IT firms included on the FSF/FTS schedules
available to State and local governments.
As the former chairman of the Fairfax County Board of
Supervisors, I understand all too well the countless number of
local government services the citizens take for granted on a
daily basis. If a county is not prepared for the year 2000, it
is quite possible that the school bus won't be there to pick
the kids up at the end of the winter break or that the locally
controlled stoplights will not be operational.
Oftentimes, the technical expertise necessary to correct
the Y2K problem may not be readily available to State or local
governments. Access to the GSA schedule will give State and
local governments access to the companies and products that can
address these problems. Many officials from State and local
governments are not aware of the scope of the problem either.
Different computer systems must be tested together in order
to see whether or not they can interface on January 1st, 2000.
It is not just the local fire station's computer system but its
ability to communicate with neighboring jurisdictions, the
local police department and so on. Critical information must
still be transmitted from computer system to computer system in
every level of government.
In the metropolitan D.C. area we have seen a stark contrast
in the resources available to State and local governments and
the readiness of local governments. For instance, on June 15th,
1999, Fairfax County in northern Virginia tested their Y2K
readiness in best case and worst case scenarios successfully.
Clearly, this is a local government that is comfortably
prepared to deliver local services on January 1, 2000. However,
just a short distance away, the District of Columbia is still
struggling with Y2K compliance as they work to find out the
status of many of their computer systems.
A General Accounting Office report on the status of D.C.'s
Y2K conversion efforts reported that our Nation's Capital was
at significant risk of not being able to effectively ensure
public safety, collect revenue, educate students and provide
health care services.
In my role as chairman of the Subcommittee on the District
of Columbia, I have had the opportunity to watch our Nation's
Capital struggle to address its Y2K situation. Despite the
Herculean efforts on the part of the District's chief
technology officer, strong private sector support and
substantial Federal resources, it appears that the one thing
that cannot be controlled during D.C.'s year 2000 compliance
efforts is time. Many States and localities are simply running
out of time.
Unfortunately, I believe that a substantial number of
States, cities, towns, and villages across the country are in
similar situations as our Capital City.
According to 1992 census statistics, it's estimated that
there are 84,000 local governments operating throughout the
United States. Our State and local governments are responsible
for management or delivery of essential services such as fire
and police services, airports, transit systems, and court and
criminal justice systems. Are we at the Federal level prepared
to say that we are unwilling or unable to provide all of the
tools at our disposal to State and local governments to deliver
these services?
That is why I introduced the Year 2000 Compliance
Assistance Act. This legislation is a voluntary program where
the Federal Government will allow State and local governments
to purchase year 2000 conversion-related information technology
products and services off GSA's IT multiple award schedules.
Under this emergency authority, State and local governments
will have one more option in the fight against time to procure
year 2000 compliance assistance in a cost-effective and timely
manner. I believe that during this period of moving
governmental responsibilities back to the States and localities
the Federal Government has a unique opportunity to provide
procurement assistance to State and local governments to ensure
nationwide year 2000 compliance and contingency preparation.
The authority under this legislation is limited to the
unique nature of the year 2000 computer bug, and I want to
underscore that this legislation is intended for the unique
nature of the year 2000 computer bug. It doesn't include drug
companies, fire stations, fire equipment or anything else.
There is no intent to do that here, no underlying intent to do
that. We are trying to solve a once-in-a-thousand-year problem.
The authority would expire on December 31, 2002; and,
frankly, after looking at the letter today from--Mr. Chairman--
--
Mr. Horn. Lee.
Mr. Davis [continuing]. The White House, we are willing to
make that much sooner schedule if that will accommodate some of
the critics. This can only be used by State and local
governments for procurement necessitated by the year 2000
computer problem. I don't consider this legislation the first
step on any pathway toward cooperative purchasing, and I
welcome any constructive comments to alleviate any lingering
concerns on that front. I have long been a proponent of working
toward forging reasonable compromises that allow us to
accomplish our end goal and will gladly work with those who
have concerns about H.R. 1599. I want to stress that this is a
unique legislation to address a unique circumstance.
Again, Mr. Chairman, I thank you for holding this timely
hearing on this bill, and I look forward to the testimony from
our two panels on this critically important legislation.
[The prepared statement of Hon. Thomas M. Davis follows:]
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Mr. Horn. I now yield enough time for an opening statement
to the vice chairman of the committee--subcommittee, Mrs.
Biggert, the Representative from Illinois.
Mrs. Biggert. Thank you, Mr. Chairman. I am pleased to
participate in the hearing today about the Year 2000 Compliance
Assistance Act, and I commend the gentleman from Virginia.
I believe that, largely because of congressional attention,
our Federal agencies will be ready for the year 2000 date
change. But will our Nation's State and local communities have
the necessary technology to partner with the Federal Government
in service delivery? Many of the programs that our constituents
rely upon are administered by our State. So it's not enough for
the Federal Government to be ready. Our States also must help
to provide seamless delivery of key programs such as Medicare
and nutrition services.
I am pleased to be from a State, Illinois, that has
reported 98 percent of Y2K renovations completed. However, some
States may not be so far along. The Y2K computer date change
will affect every business, consumer, local government, and
school.
This July, we will hold a hearing in my home District to
determine the Y2K progress made in our community. At our
hearing, local gas stations, grocery stores, banks and
utilities will testify to their computer capacity. So we must
all work together to find solutions to the Y2K problem.
I look forward to hearing today how Mr. Davis' legislation
will assist the States in preparing for year 2000, for as we
all know, the year 2000 won't wait.
Thank you.
Mr. Horn. Thank you.
Mr. Turner. Mr. Chairman, thank you for holding this
hearing on H.R. 1599, the Year 2000 Compliance Assistance Act,
which presents a possible approach to helping State and local
governments with Y2K readiness. As this subcommittee has
observed, the Federal Government is making progress in ensuring
that its mission-critical computer systems are Y2K compliant.
However, many State and local governments have not made as much
headway in their efforts.
Numerous State and local governments began their Y2K
readiness efforts significantly later than the Federal
Government, and as a result, we are just now hearing about
potential Y2K problems at the local level. For example, last
week in Los Angeles, the testing of a septic system caused
sewage overflows that resulted in the closing of a city park
for several days. I am pleased that testing is occurring. It is
certainly preferable to experience these small test failures
now rather than confront whole system failures in the year
2000. However, the results of this test do illustrate the
magnitude of the work that remains at the State and local
levels.
In addition to State and local problems with regard to
personal computers, elevators, telephone switches, and the
breakdown of computer-aided dispatch operations, the Federal
Government could also suffer from the impact of Y2K failures at
the State and local government level because of the frequent
information exchanges between local and Federal computer
systems. The Federal Government sends and receives data from
the States in support of many social service programs,
including Medicare, Medicaid, welfare, food stamps, and
unemployment insurance.
The Federal Government will not be able to deliver critical
social services if data exchanges with State governments are
not Y2K-compliant. According to John Koskinen with the
President's Council on Year 2000 Conversion, approximately 165
Federal interfaces with State systems have been identified. And
according to the Office of Management and Budget [OMB], as of
May 27, 1999, Federal agencies report that 75 percent of
Federal/State data exchanges are Y2K-compliant.
There is no question that we need to have State and local
governments Y2K compliant, and we know that compliance efforts
will place a burden on State and local budgets. H.R. 1599 would
offer assistance by permitting State and local governments to
purchase computers and other information technology off of the
Federal supply schedules. Due to the volume of purchasing done
by the Federal Government, these schedules generally have very
good prices, so we might actually be helping State and local
governments quite a bit.
In closing, I look forward to hearing from our witnesses as
to how the Year 2000 Compliance Assistance Act, or any other
resource or tool that we may be able to provide, can assist
State and local governments meet their goals for Y2K
preparation and compliance.
[The prepared statement of Hon. Jim Turner follows:]
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Mr. Horn. Let me put in the record some communications we
have received, without objection.
One is from the Baxter firm, a developer and manufacturer
of medical products. They are opposed to the Federal
cooperative purchasing concept in this legislation, and a
letter has come here to the chairman dated June 23rd. It will
be put in the record without objection.
[The letter referred to follows:]
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Mr. Horn. We have a communication from the Acting Deputy
Director for Management of the Office of Management and Budget.
Their concern is that they would recommend H.R. 1599 be amended
to provide the authorities strictly to address critical Y2K
needs and to be available only through June 2000, a period of
time during which such purchases would be directly related to
Y2K readiness. And this correspondence was signed by Deidre A.
Lee, the Acting Deputy Director for Management. We put it in
the record at this point without objection.
[The letter referred to follows:]
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Mr. Horn. The testimony of Mr. John J. Nold, the Director,
Office of Information Services for the State of Delaware. He
favors the proposed legislation of Mr. Davis, and without
objection that will go into the record.
[The prepared statement of Mr. Nold follows:]
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Mr. Horn. We also have two very interesting documents from
the National Association of Counties. One is the Y2K Survey of
America's Counties, and the other is a statement for the
record. And the National Association of Counties favors the
Davis legislation. Without objection, all of that is in the
record at this point.
[The information referred to follows:]
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Mr. Horn. We now will go to panel one, and I think most of
you know the routine. We swear in all witnesses in this
investigating committee, and we would like you to summarize
your statement as best you can. The statements automatically
become a part of the record and to be printed when I introduce
you. And so if you gentlemen will rise and stand and raise your
right hands.
[Witnesses sworn.]
Mr. Horn. All three witnesses have affirmed, the clerk will
note.
We will begin with Joel Willemssen, the Director for Civil
Agencies Information Systems, Accounting and Information
Management Division of the General Accounting Office. Mr.
Willemssen has been our principal witness in almost every one
of these hearings and usually starts out with a fine statement;
and we keep him usually till the end to get back into it in
terms of the dialog and discussion, if you don't mind.
Mr. Willemssen. Certainly, Mr. Chairman.
Mr. Horn. So go ahead.
STATEMENTS OF JOEL C. WILLEMSSEN, DIRECTOR, CIVIL AGENCIES
INFORMATION SYSTEMS, ACCOUNTING AND INFORMATION MANAGEMENT
DIVISION, GENERAL ACCOUNTING OFFICE; FRANK P. PUGLIESE,
COMMISSIONER, FEDERAL SUPPLY SERVICE, GENERAL SERVICES
ADMINISTRATION; AND GARY LAMBERT, CHIEF EXECUTIVE OFFICER,
NATIONAL ASSOCIATION OF STATE PROCUREMENT OFFICIALS
Mr. Willemssen. Thank you, Mr. Chairman, Congressman,
Congresswoman. Thank you for inviting GAO to testify today.
As requested, I will briefly summarize our statement on the
Y2K readiness of State and local governments and on H.R. 1599.
Available information on the year 2000 readiness of State
and local governments indicates that much work remains. For
example, according to recent information on States reported to
the National Association of State Information Resource
Executives, about 18 States had completed implementing less
than 75 percent of their mission-critical systems. Further,
while all States responding said they were engaged in
contingency planning, 14 reported their deadlines for this as
October or later.
State audit organizations have also identified significant
Y2K concerns in areas such as testing, embedded systems and
contingency planning. Recent reports have also highlighted Y2K
issues at the local government level. For example, a March
1999, National League of Cities poll of over 400
representatives found that almost 70 stated that they would
finish 75 percent or less of their systems by January 1, 2000.
Another area of risk is represented by Federal human
services programs administered by States, programs such as
Medicaid, food stamps, unemployment insurance, and child
support enforcement. Of the 43 high-impact programs identified
by OMB, 10 are State-administered Federal programs. OMB
reported data on the systems supporting these programs show
that numerous States are not planning to be ready until close
to the end of the year. Specifically, a large number of State
systems are not due to be compliant until the last quarter of
1999. Further, this is based on data that predominantly has not
been independently verified.
To provide an additional option to State and local
governments to address Y2K, especially for those entities
facing major risks, Congressman Davis has introduced H.R. 1599,
a bill enabling State and local governments to use the GSA
schedule to address Y2K.
Although State and local governments have in the past
expressed interest in having access to GSA's schedules, the
extent to which they would use it is somewhat uncertain.
Factors that could limit use include lack of authority in laws
or ordinances, in State or local purchasing preferences and
possibly higher prices on the schedule for some items. By
contrast, States and localities could benefit to the extent
they could acquire needed information technology products and
services at lower prices, more quickly and with less
administrative burden.
In particular, access to the information technology
schedule would provide States with an additional tool for
obtaining essential Y2K help. Such access may be especially
appealing to those entities not planning to be compliant until
close to the end of the year.
In addition, another consideration of the bill is the
effect on businesses of opening the schedule. Those that would
choose to participate could benefit from increased market
exposure and sales and lower administrative costs. Conversely,
some businesses that are not on the schedule could lose
business to those that are on the schedule.
Nevertheless, the Congress should balance concerns such as
those against the extraordinary circumstances facing the Nation
because of Y2K.
Further, some of the concerns may be reduced by the limited
nature of the bill and by GSA publishing implementation plans
showing how the bill would be implemented. At the same time, to
be most useful, this bill will need to be implemented
expeditiously because of the very limited time remaining until
the turn of the century.
That concludes a summary of my statement, and after the
panel is through, I will be pleased to answer any questions.
Thank you.
Mr. Horn. Well, thank you for that usual, very thorough
statement.
[The prepared statement of Mr. Willemssen follows:]
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Mr. Horn. The next witness is Frank P--and I don't quite
know the pronunciation. I apologize.
Mr. Pugliese. Pugliese, Mr. Chairman.
Mr. Horn. Pugliese, OK--Commissioner, Federal Supply
Service, General Services Administration. Mr. Pugliese.
Mr. Pugliese. Good morning, Mr. Chairman, members of the
subcommittee. I appreciate the opportunity to be here.
I don't have a formal statement. In fact, we worked late
into the night trying to work out some appropriate language and
were unable to do that. So what I would like to do is, without
sounding like a plug for the schedules program, which I am a
big proponent of, I will be happy to answer whatever questions
that come up as a result of the later testimony, and I can
certainly get into lots of nitty-gritty on the program and what
I feel we can achieve with it.
GAO's testimony is to the point. Time is of the essence.
This will certainly be a vehicle that allows us to expedite
this process.
Mr. Horn. So we really need to ask you a few questions to
get your views on the record?
Mr. Pugliese. Yes, sir, Mr. Chairman.
Mr. Horn. Have you had a chance to read the Davis bill?
Mr. Lambert. Yes, sir.
Mr. Horn. Can you comply with that should the Congress
approve it?
Mr. Pugliese. I think the Davis bill will go a long way in
achieving and accomplishing what we need to do, which is quick
response to a very serious problem. It also will allow you to
get to 1,800 companies who have already negotiated contracts
with us.
I would like to step back for a second. And there always is
some concern about what does this do from a pricing standpoint.
The beauty of the schedule program, the way it currently is
structured, is if our price is not good, get a better price,
negotiate with the vendor, establish a BPA or, in fact, say,
you guys are not a good deal; I'm walking away. I think that's
the beauty of that program, and it's the beauty of this current
legislation. The way it's being proposed, it is voluntary on
both parts.
Mr. Horn. Has legislation similar to this ever been passed,
do you know?
Mr. Pugliese. Never.
Mr. Horn. In terms of the 50 years of the GSA?
Mr. Pugliese. Never. It always comes close, Mr. Chairman,
but never quite makes it.
Mr. Horn. Well, this is focused in on a very narrow thing
and a very narrow time period. You noted the statement I read
from Ms. Lee of OMB. Would you concur with her in terms of----
Mr. Pugliese. Yes, I read the statement early this morning,
and I believe it's a reasonable statement, and certainly this
is an issue that does become a hot button for certain
industries, even though they are in fact excluded and there is
no intention to include them. I think it is a very reasonable
approach.
Mr. Horn. Now, where do you keep these different products
throughout the Nation? You've got various regional facilities.
Mr. Pugliese. We--I guess, the other beauty of the
schedules program is I'm not really keeping anything anywhere.
It's between a buyer and a seller, and the seller would be a
commercial partner of ours, and, as I say, there are 1,800
firms; 78 percent of those are small businesses, for those
folks who like to say it's only the big boys that play with us;
78 percent of those 1,800 are small business concerns; 450 of
those 1,800 are small disadvantaged concerns. So this is not
just the big boys playing in this game, and it is truly a
commercial transaction.
You as a customer make your selection, negotiate your best
deal and deal with the commercial partner who can deliver,
whether it's hardware, software, integration services. So it is
strictly a commercial transaction once we have done our work
which has already been done.
Mr. Horn. I have fairly strong feelings in this area, and
that is my worry about a small businessperson who has a
franchise in a particular community, let's say, it's the county
seat, the State capitol and, quote, a Wal-Mart type operation
comes in, drives them out. And I have seen this with Home Depot
which came into my end of Long Beach, drove two wonderful
hardware stores that had been there for 50 years out of
business. Then they moved to another city. So we have no
hardware stores. And what kind of worry is that to GSA?
Mr. Pugliese. What we have generally--it is a concern
because the core of our program, as I said, is 17 percent small
business concerns. What we see generally when we look across
the landscape, though, is--I mean, local purchase normally is
local purchase. State and local governments try to deal with
local folks.
When you look at our schedules program what you will see as
you look across the landscape is almost every person, every
company, every State is represented because they are in locales
all around the country. I mean, if you deal with a CACI or an
IBM or a smaller group, they are usually not just in one place;
and, in fact, even if they are located here in D.C., they have
staff who are going to go to where they need to go.
What you are seeing right now also is State and local
governments, aside from not being able to use the schedules
program, have been fairly creative and have actually formed co-
ops to do similar kinds of things when they see what they can
get.
Mr. Horn. This is off the record.
[Discussion held off the record.]
Mr. Horn. Would you have any other comments on the
legislation?
Mr. Pugliese. I just believe it is--time is of the essence,
and if we are going to move forward, we should probably move
forward and allow State and local governments to get the
benefit.
Mr. Horn. OK. I don't want to shortchange you without a
Member here, Mr. Lambert, so we are going to be in recess till
Mr. Davis comes back, and then he can pick up on you, and then
we will have a dialog. By that time I will have come back. So
we are in recess until Mr. Davis returns.
[Recess.]
Mr. Davis [presiding]. Now, we will come back to Mr.
Lambert.
Mr. Lambert. Thank you.
Mr. Chairman, members of the Subcommittee on Government
Management, Information, and Technology, thank you for inviting
me to testify before the subcommittee this morning. I'm here to
speak in favor of H.R. 1599, the Year 2000 Compliance
Assistance Act.
For several years now State and local governments have been
working diligently to ensure that the systems that we use will
function properly on and after January 1, 2000. Despite all of
this hard work and diligence from dedicated government workers
and their contractors, they are still faced with the fact that
more work and assistance from our work force and our colleagues
in the private sector is needed if we are going to be
successful at all levels of government.
We are working against the clock, and we need to provide
State and local government officials, procurement
professionals, and chief information officers with all of the
tools available in the public sector. What we need is cross
boundary and cross-jurisdictional cooperation and coordination.
We cannot afford to spend time bidding for and developing
contracts that replicate those that may already be in place at
the Federal level or available in sister States. What State and
local government needs is easy access to all public sector
contracts that offer Y2K solutions. By enabling State and local
government more tools to tackle the Y2K problem head on, our
chances for success on January 1, 2000, will increase
significantly, particularly at the local level where several
small communities continue to struggle with this problem at
this late date in 1999.
I applaud the efforts of Congressman Davis of Virginia for
championing this bill, but I contend that without rapid passage
and enactment of the bill, his efforts will be for naught.
Throughout State and local governments today, people are
running out of time to address the problems of Y2K, and the
longer it takes to pass H.R. 1599 the less likely it will be
that there will be an opportunity to utilize the Federal supply
schedules to solve this problem.
Also, I submit that Congress and the General Services
Administration must do their part to guarantee State and local
government easy access to the schedules and not complicate the
administrative process by requiring a myriad of bureaucratic
registration, ordering, reporting and/or auditing requirement.
Failure to apply the KISS principle--keep it simple and
stupid--will be as harmful to this effort as not passing the
legislation.
For NASPO, National Association of State Procurement
Officials, to be in a position to fully support this
legislation, we must be able to demonstrate to our members and
to the local government purchasing professionals, who in many
instances are our customers, that there is value in the use of
these schedules for Y2K. This means that use of the schedules
must be as easy, or easier, than the use of our current
contract at the State and local levels. There must also be a
willingness on the part of scheduled vendors to work
cooperatively with State and local government once we make a
decision to explore using the services available to us on the
schedules.
Without the easy access to the schedules by State and local
government and without a willingness from vendors on the
schedules to enthusiastically take on State and local
government business, this legislation, if enacted, will not
live up to the expectation of NASPO, its members and the
customers we serve.
Thank you for the opportunity to appear before the
subcommittee; and on behalf of the National Association of
State Procurement Officials, we look forward to working with
you and other members of the subcommittee to successfully
implement H.R. 1599.
Mr. Davis. Thank you very much.
[The prepared statement of Mr. Lambert follows:]
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Mr. Davis. Let me say at the start that the criticism I've
heard of this legislation doesn't go to what this legislation
does. I think everyone recognizes that Y2K is a critical
problem, and for many State and local governments in particular
where they're bound under different procurement rules,
sometimes it's lengthy. You have to go under State code and
everything else. You don't know where to get this. This becomes
and will become over the next--particularly September, October,
November, December, panic will set in; and they will want to
know where they can get answers and where they can get it very
quickly.
And I don't think anyone really objects to what this
legislation is trying to do, but the concerns are where else
does this go? Is this the camel's nose under the tent? And I
think the opposition--in fact, drug companies, pharmaceutical
companies that are opposing this, I can't believe they wouldn't
want State and local governments to be Y2K compliant. Why in
the world would they not want that or do everything they could?
So we are going to try to do what we can to assuage them
and let them know this is a once-every-thousand-year type of
episode, but we think, frankly, that the Federal Government is
doing some other extraordinary things to assist State and local
governments with Y2K, and this falls along those lines rather
than being the camel's nose inside the tent for cooperative
purchasing. And I'm a little suspect because I have been a
strong supporter of that, and we fought that battle, and we
lost it last year in a conference report.
That's not what this is about, though. That's why we have
narrowly tailored this, and we don't want that fear of where
this might go to be the enemy of what otherwise I think
everyone agrees is a pretty good bill. And if the
administration has concerns about this, I'm again a little
nervous because they wanted the full-blown, cooperative
purchasing and fought hard for it a year ago, and now they want
this bill tailored, very narrowly focused, and I guess they're
all over the place. But we will work with them. I mean, that's
the legislative sausage-making that goes through here.
What we have to do is sit down and accommodate a lot of
different interests that sometimes change their minds and roll
back and forth. But if we don't get there, it's going to be
very difficult for some little village out there or State or
locality that has to get an answer to be able to get it and
coordinate it in an appropriate fashion. And I don't want
something to go wrong in Bullfrog Corner, West Virginia, or
wherever on a Y2K and not knowing that we didn't do everything
we could here at the Federal level to try to assist these
localities and that someone is hurt because we didn't do
everything that we could, and that's really what the motivation
of this is.
And I think, from the thrust of your comments, this is
something that can work very, very well, and it may make a
difference in some people's lives if we can pass it, and it
may--and we want to do it in a way where we are not setting
some outstanding precedent that's going to be cited down the
road. And I will just say for myself, I'm not going to cite
this as a precedent if these issues come back. I just want this
to pass because I, along with Chairman Horn, Mrs. Morella and
others who have been on the cutting edge of this Y2K, we want
as minimal disruption as we can of services from all levels of
government on January 1, 2000.
Let me just ask a few questions.
Mr. Pugliese, in dollar amounts, how much does the Federal
Government procure each year in computer systems, software,
hardware?
Mr. Pugliese. Total government is probably doing--we have
seen a couple of estimates, anywhere from $30 to $70 billion.
Our piece of that is probably $8 to $10 billion goes through
schedules.
Mr. Davis. And growing, isn't it?
Mr. Pugliese. And growing.
Mr. Davis. And the schedules just work really well in
terms--I mean, what I see around town is with the procurement
reforms we've made and the growth of the schedule, the only
losers are really the protest lawyers, of which I used to be
one.
Mr. Pugliese. Yes.
Mr. Davis. That's why I'm here now.
Mr. Pugliese. That's correct. And the schedule program,
when Federal supply took it over on the IT side of it only,
because we do schedules for other things, like furniture and
other commodities, was about a little more than a billion, and
it will probably finish this year at about $10 billion.
Services in all fashions are all growing, aside from IT
services also.
Mr. Davis. OK. Thank you very much. And I think no one is
in disagreement with the fact that State and local governments
that are encountering acquisition problems getting
procurement--in fact, some of them are still waking up, and we
will see this in the next panel, still waking up to the fact
that there is a problem. This Y2K problem is tough.
My wife is a physician out in Fairfax, a gynecologist, and
she and her two partners had to pay $25,000, which is a lot of
money for a small practice like that, operating under managed
care and seeing what's happened to her income, just to get Y2K
compliant in their own offices.
So this is, you know, something people would rather not
spend money on. As an elected official, you get no credit for
spending money on Y2K because nobody's life is improved, you
aren't adding any value. What you are doing is, you're cutting
losses. You're trying to make sure something bad doesn't
happen, and when you have these budgets out there that are
already tight to begin, these State and local governments,
spending money, you just get no credit. So many governments
have been very late to come to the table on this. This is a
time-sensitive problem.
Let me ask you, there are products, aren't there, windowing
and some other issues, that can give you short-term solutions
sometimes when you're backed against the wall that can be used
in some circumstances?
Mr. Pugliese. Yes, there are some short-term products, but
I think more appropriately what we are looking at here,
obviously, is the correct fix in a timely fashion, which
hopefully this legislation will allow State and local
governments--and I think we need to also be careful that State
and local governments do have enough protective devices. If
they are concerned about their local firms, there are some
requirements and remedies on the State and local governments
that they would be prohibited probably from using, but there's
enough here to let folks get to where they need with a solution
quickly.
Mr. Davis. Let me ask Mr. Willemssen, according to GAO, how
close do you think that State governments are in reaching the
Y2K compliance with the mission-critical systems that have to
interface with the Federal Government? Is there any way of
estimating that or is the data just so sketchy in terms of
what's available to you?
Mr. Willemssen. The best data we've seen is for those 10
State-administered Federal programs such as Medicaid, food
stamps, child support enforcement; and that data for the most
part has not been independently verified and validated. What
the data shows is a tremendous variance among States and even
in some cases within States. Several States, and several
programs have taken the lead and been aggressively dealing with
Y2K for several years. On the other hand, the data indicates
that there are States and programs that aren't planning to
resolve their Y2K issues until the last quarter of 1999 and
that's the State's estimates.
As you know, as well----
Mr. Davis. There is some risk in that, isn't there?
Mr. Willemssen. As you know, IT projects historically run
late. So to the extent that those kind of organizations can
have other available tools accessible to them to make sure they
get the job done on time, I think that will be to everyone's
benefit.
Mr. Davis. And my observations have been that you--
governments always tend to undertake the problems for a lot of
reasons.
Mr. Willemssen. Correct.
Mr. Davis. Also, Mr. Willemssen, is the noncompliance by
State and local governments hindering the ability of the
Federal Government to reach Y2K compliance?
Mr. Willemssen. Yes, because of the massive amount of data
exchanges that Federal agencies and State governments in
particular have, that can be a hindrance.
And in particular, again on these State-administered
programs which are considered Federal programs but administered
at the State level, it's particularly important that those
systems are compliant. We are looking at hundreds of those
systems and so the risk that some of them will not be compliant
is there. I think the States and the Federal Government have to
use all available avenues and tools that are out there to try
to get done in time.
Mr. Davis. So let me understand, the Federal Government can
do--can have its programs clean as a whistle, fixed, Y2K
compliant, every terminal, everything's fine, and yet people
who are the beneficiaries of some kind of Federal aid that's
funneled through the State or whatever can get hurt because the
State government may not be compliant and may not have--for
whatever reason?
Mr. Willemssen. Correct, and even two different entities
may, looking at just themselves, be compliant but if one entity
has expanded their date fields and another one has windowed and
they haven't dealt with the data exchange or tried to exchange
the data properly, all of that good work by the individual
entities may go for naught because they haven't dealt with that
exchange.
Mr. Davis. So the interconnectivity really--if the Federal
Government wants to become compliant, we have to do everything
we can to make sure the State and local governments and even
the private sector we interconnect with are compliant?
Mr. Willemssen. Correct.
Mr. Davis. Mr. Lambert, will the ability to shop off the
GSA schedule for Y2K products provide States with more timely
access to necessary tools, do you think, to bring these systems
into compliance?
Mr. Lambert. I think it will. I think it provides a
wonderful opportunity for those States particularly that are
behind right now to gain access to a whole series--1,800
companies is not a small number of companies--to gain access to
get those solutions. And as you step it down into the villages
and the smaller communities, the fixes may not be difficult,
but the procurement process may be more difficult than the fix
in opening the schedule up, and giving access is going to
provide that opportunity to perhaps get back up to speed or at
least get back on schedule, so that, come January 1, 2000,
those small town halls or whatnot may only have a few PCs and a
server will be compliant as opposed to losing all of their data
potentially and not being able to recreate the records because
they don't have the skills.
Mr. Davis. Let me ask this. If this legislation doesn't
pass, and I'm a small town and I want to get Y2K compliant and
it's October and I'm bumping up against the edges and, oh, my
goodness, we need to fix this, what's preventing me from
getting a schedule, opening up and just calling some of those
vendors and cutting my own deal?
Mr. Lambert. It's really going to depend on what the local
laws say. In some cases, there may be an emergency provision in
the laws that will allow them to do that. In other cases, it
may be a question of whether or not you call someone off of
that schedule and say, well, I can't really work because the
legislation didn't pass with you off of the schedule so we are
going to have to think about this and----
Mr. Davis. With this legislation, we basically allow State
and--many State and local governments who couldn't do that to
be able to buy off and waive the usual procurement?
Mr. Lambert. Correct, and it also provides an affirmative
statement that this is something that you can do, as limited as
the timeframe may be, but it is something that you can do to
solve a very critical problem for your constituents within that
community.
Mr. Davis. Any liability to the Federal Government by
opening up these schedules? A State or local government decides
to buy off the schedule, the vendor that they pick botches the
job, somebody is injured, and they say, well, gee, the Federal
Government recommended these people, they put them on the
schedule.
Mr. Lambert. That's going to be hard to say. It depends on
how the schedules are worded and what the liability conditions
are there.
Mr. Davis. But as a general rule?
Mr. Lambert. As a general rule, a botched job is a botched
job, and you are going to go after whoever made that mistake.
Mr. Davis. Mr. Pugliese.
Mr. Pugliese. Let me try to take a stab at that,
Congressman.
A botched job is a botched job, that's correct, but at
least when you're under the schedules program, you have the
immediate recovery of saying, let me go back to that 1,800 and
figure out how to get this botched job fixed, No. 1 priority,
which is what you want to do; and, second, let me have recourse
against my commercial partner, which you would have in any case
in any contract.
Mr. Davis. So you don't really--the Federal Government's
exposure on this----
Mr. Pugliese. In the normal government parlance, what you
would have had to do is start your procurement process all over
again and select somebody hopefully who could successfully
complete, whereas in this process you move to your next x
number of folks you'd like to consider, you make your choice,
and you still can't recover for damages.
Mr. Davis. Let me ask Mr. Lambert this from the State
procurement office. Do you think this would be widely used by
State and local governments or do you think it would not be if
this were passed?
Mr. Lambert. I think the potential is there for it to be
widely used.
It's really going to be a timing matter. If we get into
late summer, there may not be a reasonable number of local
governments that are going to be able to wait that long for
this to happen in order to take advantage of it and maybe far
enough down another road that it will be too late to turn back
or there will be some concerns about whether or not they should
stop in the middle of a process now in order to take advantage
of the schedules. So timing is very, very important right now.
Mr. Davis. Well, let me ask you this, and I'll ask all of
you, what do you bet January 2nd, 2000--I think that's a
Monday, I'm not sure of what the date is--when they open up,
things have gone bad over the weekend, they find they've got a
problem, this schedule could still help them even if--when you
find you have a problem after January 1, right?
Mr. Lambert. That's very true, on the back end. And also,
if I may, the OMB date of June 2000 may be a bit too
shortsighted. From the standpoint of--if you have that major a
problem come January 2nd, you may be spending enormous amounts
of time trying to, A, recreate the records before you can
actually solve the problem or doing both, and 6 months may not
be a broad enough window to get all of that work completed. So
it may be a question of interpretation of what does June 2000
mean. Does June 2000 mean that you cannot engage a service
after June 2000 or does it mean that all services must be
completed and all products must be installed by June 2000 for
that Y2K fix?
Mr. Davis. You know, that's an excellent point. I think
from our perspective the question is, are we trying to fix a
problem or is there another agenda? And there's nothing wrong
with having other agendas. I mean, I think if you're sitting
there as a pharmaceutical and you're very nervous about the
expansion of this, that's not a bad agenda. I understand that.
But we want to work with that because the goal of this
legislation is to solve the problem without creating other
problems.
And I just want to tell you that I know Mr. Horn and myself
and others feel the same way, we want to get this Y2K problem
resolved to the best ability we are able. If something goes
wrong, we don't want it at our doorsteps that we didn't do
everything we could to make this--and we will work with anybody
to try to draft this legislation I think in a way that solves
our problem and solves their problems or concerns about it as
well. I think the chairman would agree with me.
Mr. Lambert. I have no issue with just focusing this on
Y2K. My real concern is just making sure that if we are doing
this to solve the Y2K problem that we give that amount of time
that's necessary to do that problem solving.
Mr. Davis. Thank you very much.
Mr. Horn [presiding]. Before you leave that question, could
I just ask Mr. Willemssen if you would like to put a GAO figure
on that? We now have the author in 2002, we have Ms. Lee, June
2000. What does GAO think after they looked at the complexities
throughout the Nation?
Mr. Willemssen. I'll give you my estimate not from a
procurement or legal perspective but more from a Y2K
remediation perspective. To be safe, you would probably want to
look at early 2001, especially to the extent that there's a
large amount of windowing done. You also increase the
possibility of problems down the line, but you may want to go
one more calendar year rollover just for added assurance of any
additional problems that may occur. I don't know that you'd
have to go to December 31st of that year, but----
Mr. Davis. That's an excellent point. I think what you are
saying is you may want to use the schedule to get a short-term
solution, but then the permanent ones, when it comes along, you
want to keep it open.
And let me just say, again, I think we want to have
discussions with OMB, and we want to keep everyone here in the
loop. We are trying to solve a problem. We are doing everything
we can to solve the problem before it becomes a problem, and if
you look at that as the goal and everybody understands that is
the limited goal, there is no hidden agenda, I think we can get
this done.
If more people are concerned about protecting their own
industries long term from some precedent or something like
that, it becomes more difficult to resolve. But I sincerely
mean this when I say we are just trying to solve a problem at
this point, and we are doing everything we can so that on
January 1, 2000, citizens across this country at all levels of
the government are going to have minimal disruption in their
lives, and hopefully no one will get hurt.
Mr. Chairman, I yield back.
Mr. Horn. Well, thank you for that line of questioning. Let
me just throw in one or two others.
Do the State and local governments currently have access to
information about products and services on the Federal supply
schedule?
Mr. Pugliese. Mr. Chairman, yes, they do, from the
standpoint of this issue has been swirling around Washington,
DC, as long as I have been in Washington, DC. So they are very
familiar with schedules. So they are very familiar with
schedules. They are very familiar with the companies that are
on the schedule; and most of them, because they cannot do
cooperative purchasing, in some cases they have basically
approached companies and used the scheduled price as the
starting point for their own negotiations. That is, my
benchmark is this schedule price. Can you do better? Will you
do better? So, yes, they are very familiar with what's
available on the schedule.
Mr. Horn. How many State GSAs are there? I know there's a
very active one in California that used to love to bill back
everything so they could go to the legislature and say we cost
you nothing.
Mr. Pugliese. We actually--we were fairly proactive
actually with the State of California GSA, because they looked
at our electronic commerce site and also the fact that we have
not used paper invoices in 10 years in Federal supply, and
California still does a tremendous amount of paper invoicing
and purchase orders. So there are 50 of them. Everybody
recreates or reinvents the wheel in a little bit different form
or fashion.
Mr. Horn. Any comment on that, Mr. Lambert, in terms of the
use of the GSA schedule in terms of negotiation?
Mr. Lambert. It's used effectively throughout most of the
country. There are some States where the laws are pretty
restricted, but there are not that many. There are probably 10
where low bid rules, and you must do a low bid procurement
every time, but other than that, people do use the GSA schedule
as a benchmark and to a minimum. It is not a negotiating tool.
Mr. Horn. Any further questions on our side, Mr. Ose?
Mr. Ose. No, sir.
Mr. Horn. OK. With that, we will move to panel two; and we
thank all of you gentlemen on panel one.
And, Mr. Willemssen, if you would like to sit through panel
two, please join us.
So we have Mr. Giles and Ms. Peters.
OK. If you would stand and raise your right hands.
[Witnesses sworn.]
Mr. Horn. The clerk will note that both witnesses have
affirmed.
Mr. Horn. We will begin with Mr. Giles, who is the managing
director of Keane Federal Systems, Inc.
Welcome.
STATEMENTS OF GLENN GILES, MANAGING DIRECTOR, KEANE FEDERAL
SYSTEMS, INC.; AND NANCY PETERS, VICE PRESIDENT, SALES AND
MARKETING, CACI, INC.
Mr. Giles. Good morning, Mr. Chairman and members of the
committee. Thank you for this opportunity to give you an
industry perspective on H.R. 1599, the Year 2000 Compliance
Assistance Act.
I'm Glenn Giles, a managing director in Keane, Inc., and I
am responsible for Keane's public sector's subsidiary. Keane's
a $1.1 billion software services company headquartered in
Boston, with operations throughout the United States, Canada
and the United Kingdom. Keane's 12,000 employees help
organizations plan, build and manage applications software. Our
clients include Fortune 1000 companies, Federal, State and
local agencies and health care organizations.
In this .com age of the Internet, the market drivers are
convenience, speed, selection, and price. These drivers are not
new to the consumer marketplace, and they are no different for
our government clients as they acquire goods and services to
benefit American taxpayers.
As we approach the new millennium, these drivers have
become more and more important to the civil servants who
oversee and implement Y2K solutions. For the last 5 years,
Keane has provided Y2K services in virtually every industry of
the United States, eventually becoming the U.S. leader in Y2K
services. We have planned, analyzed, fixed, tested, verified
and validated thousands of systems, both for the commercial and
government sectors. Many of these systems would have failed had
it not been for timely access to affordable, high-quality Y2K
services.
Y2K solutions need to be formulated and acquired very
quickly now. There is no time to waste. Year 2000 transactions
for many State and local governments begin, if they haven't
already, in 7 days, on July 1, 1999, as they enter their fiscal
year 2000. Others will enter their fiscal year 2000 over the
next 6 months. We should soon begin seeing the successes and
failures of government Y2K efforts in a very graphic way as the
year progresses.
Access to the GSA schedule will allow State and local
governments who haven't been able to make significant headway
on their Y2K problems the ability to make up lost time,
potentially. For those who have made significant progress, it
will allow them to access Y2K capabilities to quickly solve
problems that suddenly and unexpectedly appear, probably at the
worst possible time.
The competitive procurement process takes time. If State or
local governments are in the early stages of developing
procurements for Y2K remediation, they are in trouble.
Alternatively, these government organizations could use the GSA
schedule and avoid the precious administration time, cost and
resources that they don't have at this late stage in the game.
Service to the citizen has no less urgency and priority
than customer service in a commercial setting. When the check
isn't in the mail or it is in the mail and the mail room
tracking system doesn't work and can't find it, or it is sent
and it's too much or it's too little, citizens suffer. When a
Y2K problem occurs or must be avoided, quick access to
appropriate vendors must be an absolute given, not a question
mark.
Convenience goes hand in hand with speed. The potential for
quick response from contracted services is of little value if
the front end process to gain contract access is made laborious
and confusing by Federal restrictions and paperwork. GSA must
keep its process simple for its potential State and local
buyers just as it has for its Federal customer base.
An enormous amount of money has been spent by U.S. industry
and public sectors on their Y2K problems. Most of these funds
have come from ``out of hide'' and, therefore, have caused
impacts on new technology priorities, postponed new systems
initiatives and created much pressure on IT budgets. Y2K
compliance expenditures, for the most part, were not
investments in upgraded capabilities or functionality. We
simply restored broken systems to a working state.
Since Y2K expenditures are predominantly viewed as
maintenance expenses rather than capability enhancing
investments, funding efforts to achieve compliance have been
especially painful. Y2K funds are diminishing from many State
and local agencies, so it is vital that we enable access to
economical, competitive services through vehicles such as the
GSA schedule.
Finally, passage of the Year 2000 Compliance Assistance Act
will allow selection options by State and local governments of
seasoned corporate veterans having extensive experience in the
unique and not-so-unique Y2K problems encountered in government
computer systems.
The key issue at stake is allowing the State and local
governments to decide for themselves. I don't advocate that the
use of the GSA's schedules be made any more or any less
attractive to potential non-Federal users, only that they be
made available for the asking.
Mr. Chairman, as a result of my experience as a manager of
both Federal and State contracts, I can without any reservation
whatsoever encourage this committee and this Congress to pass
H.R. 1599. Allowing the States to use the GSA schedule for Y2K
addresses the critical need for speed, convenience, price, and
selection. This legislation is in the best interest of our
taxpayers, our citizens and our economy.
Thank you.
Mr. Horn. We thank you.
[The prepared statement of Mr. Giles follows:]
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Mr. Horn. And Ms. Peters is the sales and marketing vice
president, and do we--how do we pronounce this? What does C-A-
C-I stand for?
Ms. Peters. Well, it doesn't stand for anything any longer.
It once was a computer company name, but it is C-A-C-I--or CACI
as someone referred to it.
Mr. Horn. As in army and uniforms?
Ms. Peters. Not exactly. A unique spelling.
Mr. Horn. Were these the partners' initials or what?
Ms. Peters. No. It was a computer--California Analysis and
Computer Institute. That was----
Mr. Horn. I see.
Ms. Peters. That was 37 years ago.
Mr. Horn. OK. Now, I have that little bit of history in my
head.
Ms. Peters. Valuable information.
Mr. Horn. Well, I always like to know.
Ms. Peters. The company did start in California.
Mr. Horn. Where did it start there? Do you know? Was it in
Silicon Valley?
Ms. Peters. Silicon Valley didn't exist then. It was
another valley.
Mr. Horn. OK. We have lots of valleys.
Ms. Peters. Yeah.
Mr. Horn. OK. Ms. Peters, it's all yours. Try to summarize
it if you can. Take your time.
Ms. Peters. Yes. Good morning, Chairman Horn and members of
the subcommittee. I'm pleased to appear here today on behalf of
CACI, a systems integration company located in northern
Virginia, and ITAA, the Information Technology Association of
America, to express our support for H.R. 1599, the Year 2000
Compliance Assistance Act. Congressman Davis, as you know, is
the chief sponsor of this legislation, with several cosponsors.
I commend the chairman and the subcommittee for holding
this hearing and urge you to support the bill which will allow
State and local governments to acquire needed Y2K products and
services. With only 191 days left, time is of the essence.
In addition, not all of the systems used by these entities
will be Y2K compliant by January 1st. Many of them were not
deemed mission-critical but will need to be remediated during
the year 2000. Since the bill's provisions will be extended at
a yet to be determined date, perhaps this provides sufficient
time for all systems to be converted.
A key question is, why are the schedules so attractive?
That's because they work. They work quickly. The Federal
procurement process has been greatly streamlined and has been
extensively used by Federal agencies for some time now, and
there are services on the schedules from a variety of companies
that address the entire Y2K process from assessment through
mediation and all the way through IV and V and contingency
planning.
As this committee knows so well, in dealing with the year
2000, speed is a good thing and delay is the enemy. Federal
agencies have been able to gain rapid access to a variety of
service providers such as CACI through the schedules, and these
ordering processes have often been completed within a number of
days. The ease of purchase of these vital services is one of
the reasons that State and local governments need to have this
access. One of the most appealing features of the schedules is
that they are contracts with the Federal Government with
negotiated terms and conditions already in place. This includes
negotiated labor ratings for services and products, which have
the guarantee of preferred customer status.
Another advantage to State and local government in gaining
access to our Federal business partners is that it opens the
door to service providers who have supported the Federal
Government for 2 years or more. This gives them the added
assurance that the companies on the schedules have successfully
met their Federal customers' needs and have experience in
providing Y2K products and services with skilled employees who
understand public sector systems.
In the case of CACI, we've been providing Y2K support for
Federal agencies for more than 2 years, primarily through the
schedules. We've also provided Y2K services to State and local
governments through some State contracts, often established
when the Congress repealed the cooperative purchasing
provision.
In addition to my experience with Federal, State and local
governments, I serve as the Chair of the ITAA Year 2000 Task
Group. I have been a member since its formation in 1995, and we
have repeatedly been concerned that some State, but especially
local, governments are lagging in their Y2K preparedness. Study
after study has indicated that some local governments have
barely started their remediation and have no contingency plans
in place.
It's high time for these localities to cut to the chase and
be able to cut through red tape. We can help them by enacting
H.R. 1599. It would give governments immediate access to
hundreds of companies, as I learned today, 1,800 companies,
large and small, on the schedule. This is an invaluable
resource. There are, it's true, some States, cities and
counties that are leaders in Y2K conversion, but there are many
more lagging behind private sector and the Federal Government,
and they could greatly benefit from access to these services.
The Y2K problem is unique, not even a once-in-a-lifetime
occurrence, and it requires bold and innovative solutions by
Congress to pass such a bill. In many cases, Y2K problems are
going to be felt most heavily at the local level. It's the
local governments' success that will make a difference.
Mr. Chairman, I know you are partial to Y2K report cards.
As a former teacher myself, I suggest you give Representative
Davis and his cosponsors an A for this innovative legislation.
I would also give high marks to every Member of Congress who
can understand that the Nation's business continuity in this
unprecedented situation means a break from business as usual.
Let's get on with getting it done.
I will be glad to respond to any questions you have.
Mr. Horn. Well, thank you very much.
[The prepared statement of Ms. Peters follows:]
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Mr. Horn. Now, do you have--how does the system work with
your firm? Do you have franchises or do they operate all over
the United States on their own?
Ms. Peters. We have offices all over the country, about 80
around the country.
Mr. Horn. So you don't really--some of your adaptation in
working on Y2K things are not left with local people that might
have other firms work through them?
Ms. Peters. Sometimes they do. Certainly, with the work we
are doing in Ohio and Virginia, we have subcontractors working
for us and companies that are subcontracting to us who are
local firms.
Mr. Horn. Would you essentially be--if this legislation
passed, in your adaptation mission, you would buy off that
schedule, I take it? Is that how it works with you?
Ms. Peters. I don't understand your question.
Mr. Horn. Well, if you have got people that are helping
solve the Y2K problem of various firms around the country and
at these governments, nongovernment, you go in and do most of
that work to make sure they are 2000 compliant, right?
Ms. Peters. Yes, uh-huh.
Mr. Horn. OK. And you sometimes contract with local firms
to use your method and approach and all that?
Ms. Peters. Right.
Mr. Horn. OK. That--and leading up to that, do any of the
local firms object to you going off and doing that? I realize
it's far different than a manufacturer.
Ms. Peters. Right.
Mr. Horn. But they might want to do it themselves, and
could they, if they are under contract to you? You'd be doing
all that, I assume.
Ms. Peters. We wouldn't be preventing them from doing other
work.
Mr. Horn. So they could do--well, on your contract, could
they go draw on the GSA schedule to fulfill your contract that
you want them to do?
Ms. Peters. Are you suggesting that they would do the work
through our contract but without us?
Mr. Horn. Yeah--no. They could use you for the advice----
Ms. Peters. Oh, certainly.
Mr. Horn [continuing]. And the consultant work. I'm talking
about getting the software or maybe even hardware.
Ms. Peters. Oh, absolutely. They could do that.
Mr. Horn. OK. So you could both access the GSA schedule
essentially?
Ms. Peters. Right.
Mr. Horn. And that wouldn't be a problem for the people
with whom you contract if they are regulars and not just a one-
shot affair?
Ms. Peters. Yeah, as long as we have a subcontract in place
with them, that would not be a problem.
Mr. Horn. OK. Because I think one of the things we are
interested in is, on the software in particular, if that's a
franchise or if they are trying to put it everywhere in
America, I realize that might be their best approach, but let's
say there's some franchise, certain computing approaches,
programs, so forth, and I'm just interested in, is there a
feedback coming on those? And maybe your experience would tell
us that, Mr. Giles.
Mr. Giles. Yeah, I think there's----
Mr. Horn. If there's a feedback, do you get any? Do they
say, hey, what are you doing?
Mr. Giles. Just to further comment on what Ms. Peters said,
typically, the tools come along and are deployed by people, and
CACI and Keane are predominantly focused on services that
utilize tools. The tools are commodities. It's our
methodologies and our management that really ensure the Y2K
solutions. So it would be unlikely that we would totally
franchise or totally subcontract a year 2000 engagement to a
subcontractor, even if they were going through our GSA schedule
simply because the liabilities are too high, and we want to
ensure that the benefits of all of our corporate knowledge were
going to be put into play for any particular engagement.
Mr. Horn. Now, your firm meets a lot of people, has acted
and is asked to do certain things in a lot of different States.
How would you sum up where the States are in America at this
point on the Y2K compliance? And you don't have to name the
States, but which ones are successes in a way? And if you want
to name them, fine, and there are others that aren't successes,
where do you think the mistakes were made by some States in how
they organized to get the job done?
Mr. Giles. I think just as the Federal Government has its
A's and its F's, within each State agency there are A's and
F's, except they don't for the most part have anybody giving
them report cards. So their intention isn't focused as well in
many of the States.
Keane is located in 26 States around the country, and we
are doing State and local business in probably 20 States or so.
I would have to say that States that I'm personally involved in
run across the gamut, not only from State to State but within
States. We have found that States that are more dependent upon
financial information seem to have gotten the message early on,
started working more quickly. Those that aren't as financial
information centered have waited a long time to get started
because the urgency just didn't seem to be there at the
beginning.
The States that we are finding that have been more
successful are the ones that had a well-crafted plan laid out
at the very beginning and an organized approach to making sure
that most or all of their agencies are adhering to a standard
methodology or standard approaches.
Mr. Horn. Where those success stories are, was that because
the Governor was very active or the Governor's department of
finance or department of organization and management?
Mr. Giles. Yeah, I would say that whenever there is
executive leadership and administration leadership on these
issues we have encountered a lot more success. Whenever there's
leadership at the top, there's always a natural ability to get
things done more quickly, more focused.
In other agencies or other States, I've found that the
States that thought they were going to wait for a silver bullet
to come along were the ones that were fooled. We have not
encountered a silver bullet. The tools are enabling devices,
but they are not the end-all solutions. The States that have
depended on silver bullets coming along are going to have to
resort to the pick and shovel method, and that's where I
believe the GSA schedule can help the most.
Ms. Peters. May I comment?
Mr. Horn. Sure.
Ms. Peters. Of the States that I think are in pretty good
shape, and I will just stick my neck out and name a few,
certainly Washington, Oregon, California to some extent,
Maryland and Virginia, New York, Ohio, those were all States
that put into place some sort of procurement vehicle for Y2K
service and products, but they did it 2 or 3 years ago, and it
took in some cases many months to get that vehicle in place. I
think about the shortest turnaround I know about with a State
was something like 3 months.
The point of this legislation is to give people access now
to a schedule that's in place. States don't have time to
develop some sort of procurement vehicle now, and for that
reason we need to give them a vehicle that's easy to use and
available because the time is gone for putting those in place.
Mr. Horn. Do any of you have any estimate from your own
pricing system where--how much you would save if the products
that GSA has a bargaining with were used by you as part of your
adaptation and implementation process? Would you say 5 percent
or 2 percent or what are we talking about here in real money?
Mr. Giles. There are economies of scale. There are quite a
few States that have so-called convenience contracts that are
somewhat similar to the GSA schedule, a lot of vendors that
they can select from fairly easily. For the most part, those
convenience contracts have as their basis pricing from GSA's
schedule. The States are aware of GSA's schedule contracts, and
they use them often as a basis for that. In those States that
have tracked their pricing to the GSA schedules, unless we
negotiated a discount independently, they would probably not
save a lot of money, but they would indeed some time perhaps.
In other States, we would probably be able to save them
money, 5 percent, 10 percent I think is probably an outside
number. It would have to be on a case-by-case basis, though.
Mr. Horn. Now, we have a lot of people in the country
saying they can really help firms, adapt them. They are
bringing people that know COBAL out of retirement and so forth.
What's your impression? Are most of these legitimate or are
some just saying they can do it and when the chips are down
nothing much has changed?
Mr. Giles. One of the things that Keane has maintained all
along, and I believe our other competitors in Y2K services
area, is Y2K is a management problem more than it is anything
else. It is difficult to bring a tool based or a commodity
based solution into place and make it successful. And many of
the companies that want to sell a COBAL body or a silver bullet
solution that's not surrounded with a management and a
methodology approach are not successful because they are not
looking comprehensively at the problem with a comprehensive
solution. So we have not had a lot of success in relying on
those sorts of firms. In some cases, we will subcontract to
them and bring them into the overarching solution, the
management techniques and methods that we have.
Mr. Horn. We have been preaching that management point
since April 1996, so I'm glad that's followed out. I think it's
pretty obvious that chaos sort of reigns when you don't have
decent management.
Mr. Giles. Indeed.
Mr. Horn. Now, has Keane worked for any of the Federal
executive departments and agencies or have you been mostly
working with the States?
Mr. Giles. No. States. Our private or public sector
business is about 15 percent or $175 to $200 million of our
revenues per year. I would say approximately a third to a half
of that is in the Federal sector. We have done a lot of Y2K
business across the analysis to independent verification,
validation and everything in between for at least 12 to 15
agencies.
Mr. Horn. Now, how does that happen? Does somebody come to
you because you've got a reputation in the area or do you talk
to who with an agency and does GSA route in or do you just deal
directly with the particular agency or department? How does it
work?
Mr. Giles. Five years ago we knocked on a lot of doors that
didn't open up because no one wanted to talk about the year
2000 in the Federal Government. That's when our commercial
sector really started paying attention to the year 2000. I
would say several years ago agencies started listening, and a
year or two ago, agencies started calling us up to either begin
remediation for them but recently to perform independent
verification, validation services on efforts that have already
been under way. So we've kind of matured through this process
as the market has and vice versa. Many agencies are using our
GSA schedule for these services. Others are using their own IT
IQ contracts for us to provide them services.
Mr. Horn. In your testimony you said, ``funding
documentation requirements and the local procurement statutes
will test the effectiveness of the GSA scheduled solution.''
Can you explain what you meant by this and how the local
procurement laws and regulations would affect the ability of
State and local governments to procure off the Federal supply
schedules?
Mr. Giles. I have found that even within the Federal
Government, whenever an agency is using somebody's else's
contract vehicle, whether it's a GSA schedule or whether it's
an IT IQ contract, GIWAC or what have you, there is always an
education, orientation and negotiation process that goes on
within the buying agency's procuring shop. They tend to want to
do things in-house. They tend to want to stand behind whatever
their particular agency's regulation--acquisition regulations
are; and sometimes there is a lag, if you will, to overcome
that.
I believe--and particularly when it comes to the whole
funding document and funding process, how do you transfer
funds? How do you get the right signatures within these
procurement shops and contracts groups and through their legal
counsel to expedite the process? I don't think it will be any
less daunting a test than in the State and local agencies,
particularly because they are dealing with an entirely
different government entity.
Mr. Horn. Ms. Peters, has your experience with CACI been
about the same as Mr. Giles where 3 or 4 years ago you didn't
have any open doors and awareness came and then panic came
and----
Ms. Peters. Right, right.
Mr. Horn [continuing]. Et cetera? Is that the way your
situation has gone?
Ms. Peters. Yes. I would say that about half of our Y2K
business is with Federal agencies and the other half with State
and local governments. In a number of cases, Federal customers
have already been our customers and have called us up and said,
can you help? Sometimes we get calls from people. Often they
will call and say, I need Y2K support. Do you have a GSA
schedule? Because they know if we have a GSA schedule that, in
fact, we can probably get something in place and get work
started within a matter of days because GSA doesn't have to
intervene. We just have to verify through our schedule number
that we, in fact, have a contract in place with the Federal
Government, and it's a matter of agreeing on labor categories
which are already set and kinds of services and products, if
they are relevant, and then we move forward, and so it can be a
very simple and very expedient process. It's a matter of being
willing to trust that process.
I certainly have some instances with Federal agencies where
we set out to do some Y2K work through an internal vehicle or a
GIWAC of some kind. In one case, it took 6 months to get the
work started.
Mr. Horn. Now, is that because of their procurement system
in this particular area?
Ms. Peters. Right, it was the internal agency's procurement
system.
Mr. Horn. Did they have a chief information officer?
Ms. Peters. Yes.
Mr. Horn. Was that a helpful position to bang heads?
Ms. Peters. Not in that particular situation. It has been
in others.
Mr. Horn. Yeah. I was wondering because, during this 4
years, shall we say, since 1996 up, you've got more and more
chief information officers, and they're better and better in
many cases than it was before 1996. So I just wondered how
helpful they could be. They're supposed to report directly to
the Secretary or the Deputy Secretary, and unless they are just
sloughed aside somewhere and somebody says, ``oh, yeah, we've
got one of those. Where is he or she?''
Ms. Peters. I think as the visibility of the CIO has
increased and they have gained in authority that they've been
able to be much more effective.
Mr. Horn. Good.
Ms. Peters. And certainly can make some differences. But we
also have agencies who have normally dealt with us through
their own vehicles who have gone to the GSA because it's easier
and, in some cases, less expensive.
Mr. Horn. Yeah. Well, that's always interesting.
You heard some dates passed around here. Mr. Davis has
2002. The OMB, Ms. Lee speaking as Deputy Director for
Management, says it ought to end in June 2000; and the GAO has
a view on it also, as we heard from Mr. Willemssen.
By the way, Mr. Willemssen, if you have some sum-up things
here, I'd like you at the table, and feel free to get into this
one because this is one of the last two or three questions.
So, do you have any feeling on how long that authority
should last for the schedule?
Ms. Peters. I think June 2000 is unrealistic in terms of
organizations being done. We've been focusing and talking about
mission-critical systems for some time now because those are,
obviously, the ones that have to be dealt with first. But in
most organizations, mission-critical systems can comprise as
little as 10 percent of the whole organization systems, and
while there are some systems that will fade away, they won't
work and nobody will notice, it won't be 90 percent of the
systems that will fade away. So it seems to me one of the
things we really have to deal with after the year 2000 begins
is all of the nonmission-critical systems or the mission-
enabling or mission-essential systems that will also have to be
fixed and dealt with, and I think you need at least a year, and
that's probably pushing it.
Mr. Giles. I would agree. June 2000 will only allow some of
the temporary fixes that people have put in place to cross over
the year 2000 boundary to fail.
My concern would be these band-aids that have been put on
some of these systems that would fail after June 2000 which
would cause the fire drill that would require some new or some
easy access to contract vehicles after everybody's guard's let
down because January 1st has already gone, we create some
problems. I would advocate that we at least let it go into the
first quarter of calendar year 2001, because you get a full-
year cycle, you've cleared out everybody's fiscal year
boundaries, and you've got some postmortem assessment time
after that year boundary has been crossed to determine what
your procurement actions and your responses need to be.
Mr. Horn. Some of these agencies that reflect some of our
13 appropriations subcommittees are obviously going to be
seeking long-overdue upgrades in their equipment, and that
could last, as you suggest, I think through 2001 and maybe even
2002, given the budget cycle and how much you can do in a
particular year. Do you think that needs an even longer
extension than Mr. Davis wanted in his bill? Should it be 2003
or what?
Mr. Giles. That's going to be conditional. I mean, we are
predicting here, and there's one thing that I found out about
year 2000 problems, you don't predict anything very well with
them. They crop up where you don't expect them.
I would think that a reasonable procurement cycle to allow
the procurement for any particular year 2000 fix with hardware
and software be allowed to gestate. I don't know that needs to
be until the year 2002, but what I am suggesting is, the
systems that we've dealt with, I think the preponderance of
them would be--would show their stripes, whether they are Y2K
compliant after a full-year cycle.
Mr. Horn. Mr. Willemssen, any additions you'd like to make?
Mr. Willemssen. One related comment in this area is that
there can actually be Y2K problems that occur that aren't
actually noticed for many, many months afterwards, especially
in financial-oriented systems, where a problem may have
happened but has not been picked up until many months later by
senior management, and when they start investigating, they
uncover the full exposure of what that problem is. So that also
points to the need to have this--the deadline beyond June 2000.
Mr. Horn. Well, I thank you for that, and I thank you and
the previous panels. We obviously want to help State and local
governments in their efforts to ready their computers for the
year 2000, and this bill, while it's limited in scope, clearly
does target that significant problem. As the legislative
process continues, we must also remain mindful of the bill's
impact on the businesses and vendors who are supplying year
2000 products and services.
I want to insert in the record at the beginning, after Mrs.
Biggert as vice chairman, please put the opening statement of
the ranking member of the Democratic side, Mr. James Turner,
the gentleman from Texas, and that will be put in as read.
I now want to thank the subcommittee staff for the hard
work they've done on such short notice. Mr. J. Russell George
is the third one in on my left and against the wall, the staff
director and chief counsel. Randy Kaplan is over here with the
flag backing him up, is the counsel; and Matt Ryan at the other
end is the senior policy advisor.
The one that did the most to set up this particular hearing
is to my immediate left, Patricia Jones. She's a professional
staff member and congressional fellow, which is a great
program.
I happened to be in it in 1958-1959, so I'm well aware of
it. You weren't born in 1958-1959, I don't think, but that was
the fourth year of the program; and it's a good program run by
the American Political Science Association to turn around the
attitudes of the profession of political science; and we did
it, and that's--so it was all Presidential executive oriented,
and every great political scientist was working for Roosevelt
in the Second World War.
This program has resulted in probably 400 books that have
come out of it of the fellows in the program. And she is on
loan from the National Security Agency [NSA], and we are
delighted to have her with us. And we wish you would educate
all your colleagues in the executive branch when you go back
there, but smile a lot when you do that because they won't
believe you, that we work hard.
And Bonnie Heald, our director of communications, is over
there, second in from Mr. Ryan; and Grant Newman, our clerk.
There he is. And we've got a few interns--Paul Wicker. Is Paul
around? He's down there working. You know what interns--they
slave all summer. Justin Schlueter is the other intern and
Lauren Leftin, intern.
On the other side, we have Faith Weiss as minority counsel;
Earley Green as minority staff assistant.
And our official reporter for this hearing, Melinda Walker.
Melinda, thank you very much. We appreciate it.
With that, this hearing is adjourned.
[Whereupon, at 12 noon, the subcommittee was adjourned.]
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