<DOC>
[106th Congress House Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:60939.wais]
OVERSIGHT OF THE YEAR 2000 TECHNOLOGY PROBLEM: LESSONS TO BE LEARNED
FROM STATE AND LOCAL EXPERIENCES
=======================================================================
HEARINGS
before the
SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,
INFORMATION, AND TECHNOLOGY
of the
COMMITTEE ON
GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTH CONGRESS
FIRST SESSION
__________
JULY 7, 8, AND 9, 1999
__________
Serial No. 106-47
__________
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
60-939 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
HELEN CHENOWETH, Idaho (Independent)
DAVID VITTER, Louisiana
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 Director
Grant Newman, Clerk
C O N T E N T S
----------
Page
Hearing held on:
July 7, 1999................................................. 1
July 8, 1999................................................. 125
July 9, 1999................................................. 317
Statement of:
Ho, Alan D., Y2K corporate manager, Commonwealth Edison; Dale
Jensen, director, Y2K customer communications, Ameritech;
Craig Whyte, director, regional community relations, NICOR
Gas; Philip Pagano, executive director, METRA; Gary Mielak,
vice president and chief technical officer, Edward Hospital 210
Kettlewell, Larry, information resource manager for Federal
and State affairs, Kansas Department of Administration..... 52
Lobeck, Al, news director, WIBW Radio, Kansas Broadcasters... 110
McKenzie, Shawn, Southwestern Bell........................... 80
Moser, Joy, Adjutant General's Department, Public Affairs
Office..................................................... 64
Park, Bud, year 2000 project office manager, Western
Resources.................................................. 75
Roosen, Jim, Y2K program manager, Detroit Edison; Raymond
Lozano, manager of Statewide community relations, Michigan
Consolidated Gas, accompanied by Tom Motsinger, director,
information and technology management; James Johnson, vice
president of computing and information technology, Wayne
State University; Don Potter, Southeast Michigan Health and
Hospital Council; and Dan McDougall, director, southeast
Michigan information center, United Way.................... 448
Rubeck, Anne, director, communication technology, Kansas
Hospital Association....................................... 98
Splichal, Edwin, chairman, Y2K task force Kansas Bankers
Association................................................ 102
Sullivan, Morey, information resource manager, Kansas
Department of Administration............................... 48
Surdu, George, director, technical services organization,
Ford Motor Co.; Don Costantino, director, corporate year
2000 program, General Motors Corp.; Roger Buck,
DaimlerChrysler Corp.; and John Parker, vice president,
information services, Northwest Airlines, Inc.............. 413
Swift, Clint, director of bank technology, Bank
Administration Institute; Delores Croft, seniors policy
advisor, Illinois Attorney General's Office; Leonard
Harris, president, Chatham Food Center; Ron Clark,
treasurer, Illinois Ayers Oil Co.; Monty Johnson,
communications coordinator, CITGO Gas; Mike Skarr,
president and CEO, Naperville area Chamber of Commerce; and
Ed Paulson, author of Year 2000 Crisis Survival in 10
Minutes, professional engineer, financial expert........... 258
White, Jeff, director, budget research and information
technology, city of Topeka................................. 58
Willemssen, Joel, Director, Civil Agencies Information
Systems, General Accounting Office......................... 9
Willemssen, Joel C., Director, Civil Agencies Information
Systems, General Accounting Office; George Boersma,
director, management and budget, State of Michigan; Captain
Ed Buikema, deputy State director of emergency management,
Michigan State Police; Arun Gulati, deputy director,
Department of Information Processing, Wayne County, MI; and
Kathleen Leavey, deputy director, Detroit Water and
Sewerage Department........................................ 324
Willemssen, Joel C., Director, Civil Agencies Information
Systems, General Accounting Office; Mary Reynolds, chief
technology officer, Illinois Governor's Office; Don
Carlsen, director of information systems, Department for
the city of Naperville; Tom Mefferd, coordinator, DuPage
County Office of Emergency Management; and Robert Martin,
manager of water operations, DuPage Water Commission....... 135
Letters, statements, etc., submitted for the record by:
Biggert, Hon. Judy, a Representative in Congress from the
State of Illinois, prepared statement of................... 133
Boersma, George, director, management and budget, State of
Michigan, prepared statement of............................ 366
Buck, Roger, DaimlerChrysler Corp., prepared statement of.... 429
Buikema, Captain Ed, deputy State director of emergency
management, Michigan State Police, prepared statement of... 373
Carlsen, Don, director of information systems, Department for
the city of Naperville, prepared statement of.............. 181
Clark, Ron, treasurer, Illinois Ayers Oil Co., prepared
statement of............................................... 277
Costantino, Don, director, corporate year 2000 program,
General Motors Corp., prepared statement of................ 421
Gulati, Arun, deputy director, Department of Information
Processing, Wayne County, MI, prepared statement of........ 379
Harris, Leonard, president, Chatham Food Center, prepared
statement of............................................... 266
Ho, Alan D., Y2K corporate manager, Commonwealth Edison,
prepared statement of...................................... 212
Horn, Hon. Stephen, a Representative in Congress from the
State of California, prepared statements of.......... 6, 129, 321
Jensen, Dale, director, Y2K customer communications,
Ameritech, prepared statement of........................... 233
Johnson, James, vice president of computing and information
technology, Wayne State University:
Letter dated August 9, 1999.............................. 506
Prepared statement of.................................... 473
Johnson, Monty, communications coordinator, CITGO Gas,
prepared statement of...................................... 287
Kettlewell, Larry, information resource manager for Federal
and State affairs, Kansas Department of Administration,
prepared statement of...................................... 54
Leavey, Kathleen, deputy director, Detroit Water and Sewerage
Department, prepared statement of.......................... 386
Lobeck, Al, news director, WIBW Radio, Kansas Broadcaster,
prepared statement of...................................... 112
Lozano, Raymond, manager of Statewide community relations,
Michigan Consolidated Gas, prepared statement of........... 464
Martin, Robert, manager of water operations, DuPage Water
Commission, prepared statement of.......................... 198
McDougall, Dan, director, southeast Michigan information
center, United Way, prepared statement of.................. 498
McKenzie, Shawn, Southwestern Bell, prepared statement of.... 82
Mefferd, Tom, coordinator, DuPage County Office of Emergency
Management, prepared statement of.......................... 186
Mielak, Gary, vice president and chief technical officer,
Edward Hospital, prepared statement of..................... 241
Moser, Joy, Adjutant General's Department, Public Affairs
Office, prepared statement of.............................. 66
Pagano, Philip, executive director, METRA, prepared statement
of......................................................... 249
Park, Bud, year 2000 project office manager, Western
Resources, prepared statement of........................... 77
Parker, John, vice president, information services, Northwest
Airlines, Inc., prepared statement of...................... 434
Paulson, Ed, author of Year 2000 Crisis Survival in 10
Minutes, professional engineer, financial expert, prepared
statement of............................................... 303
Potter, Don, Southeast Michigan Health and Hospital Council,
prepared statement of...................................... 482
Reynolds, Mary, chief technology officer, Illinois Governor's
Office, prepared statement of.............................. 177
Roosen, Jim, Y2K program manager, Detroit Edison, prepared
statement of............................................... 452
Rubeck, Anne, director, communication technology, Kansas
Hospital Association, prepared statement of................ 100
Ryan, Jim, Attorney General, Illinois, prepared statement of. 273
Skarr, Mike, president and CEO, Naperville area Chamber of
Commerce, information concerning local resources........... 298
Splichal, Edwin, chairman, Y2K task force Kansas Bankers
Association, prepared statement of......................... 104
Sullivan, Morey, information resource manager, Kansas
Department of Administration, prepared statement of........ 50
Surdu, George, director, technical services organization,
Ford Motor Co., prepared statement of...................... 416
Swift, Clint, director of bank technology, Bank
Administration Institute, prepared statement of............ 261
White, Jeff, director, budget research and information
technology, city of Topeka, prepared statement of.......... 61
Willemssen, Joel, Director, Civil Agencies Information
Systems, General Accounting Office, prepared stateme 11, 137, 326
OVERSIGHT OF THE YEAR 2000 TECHNOLOGY PROBLEM: LESSONS TO BE LEARNED
FROM STATE AND LOCAL EXPERIENCES
----------
WEDNESDAY, JULY 7, 1999
House of Representatives,
Subcommittee on Government Management, Information,
and Technology,
Committee on Government Reform,
Topeka, KS.
The subcommittee met, pursuant to notice, at 1 p.m., at the
Kansas State Capitol, 300 SW 10th Street, Old Supreme Court
Room, Topeka, KS, Hon. Jim Ryun presiding.
Present: Representatives Horn and Ryun.
Staff present: Subcommittee on Government Management,
Information, and Technology: J. Russell George, staff director
and chief counsel; Matt Ryan, senior policy director; and Grant
Newman, clerk. Representative Ryun's Office: Michele Butler,
chief of staff; Mark Kelly, legislative director; and Jay
Rinehart, press secretary.
Mr. Ryun. Thank you all very much for coming today. I think
your presence indicates that there is a great deal of interest
in the subject. Today will be a time when we can discuss and
determine some of those potential problems, as well as some of
the solutions that have been arrived at.
Let me do a couple of business things. First of all, and
this is not a business thing, I want to introduce some people
who are here today. I want to begin with my wife Anne who is in
the corner. Say hello to everyone.
[Applause.]
Mr. Ryan. I would like to introduce you to my staff that
are here today as well, Michele Butler who has worked
tirelessly on this. Michele is over here, she's my chief of
staff in Kansas. We also have Mark Kelly up in front, Mark
Kelly is my legislative director. Jay Rineheart is here, he is
working with the press, he is my press person, they are all
here to help you. If there are any questions, feel free to talk
with them.
I also want to introduce to you a good friend of mine and
colleague who has been very instrumental in helping bring
greater identification to the Y2K issue. In Washington we often
turn to Chairman Horn and say, ``How are we doing?'' And so
today you will have that opportunity. He is chairman of the
House Subcommittee on Government Management, Information, and
Technology. He is also the chairman of the House of
Representatives Task Force for the Year 2000. He has designated
the year 2000 problem as his top priority, as I think it should
be. He is an expert in Congress on this problem and in fact
this morning, if some of you had the privilege of listening to
WIBW with Jim Case, we went over some of the issues and some of
what was happening. He will be here today to answer some of
your questions, along with the panelists. And as we begin, I
would like to turn to Chairman Horn and have you welcome him as
well. Thank you very much.
[Applause.]
Mr. Horn. Thank you very much, Jim. Jim does a terrific job
in Washington, he sits on three committees, which is one more
than I sit on, so he has got a lot of things going for Kansas.
And this is an international problem as well as a national
problem. We are delighted to be in Topeka, it's a wonderful
city. I have been here about five times before because I have
some good friends living here starting with my junior year in
college.
This hearing of the House Subcommittee on Government
Management, Information, and Technology is not only going to be
in Kansas on this particular trip, we are going to Illinois
tomorrow and Detroit, MI the next day. We did this last year
and went to Louisiana and Texas and New York, you name it. We
haven't missed too many cities in some kind of a hearing. We
are an investigative committee and under the rules of the House
and the Committee on Governmental Affairs in the Senate, as
they call it. We do swear in all witnesses. So Mr. Ryun who is
acting chair will swear in each panel as it comes that they
will tell the whole truth and nothing but the truth to this
particular investigation.
The year 2000 computer problem affects just about every
aspect of Federal, State, and local government operations.
Furthermore, it affects private sector organizations and could
impact the lives of most of us. From Social Security to
utilities to local emergency management, these are all
important issues. The so-called year 2000 computer bug or the
millennium bug, whatever you want to call it, has certainly
been a large management and technological challenge, but it is
mostly a management challenge. There is no silver bullet to
solve it. Everybody knew that in the 1960's when they said,
wait a minute, we have got this huge computer that would fill
this whole chamber; your personal computer today has more
capacity than those computers in a chamber this large. They
said, hey, why don't we just put in '67 instead of 1967, and we
went to the two digit year to save space in the memory. Of
course they knew that when the year 2000 came, it would be 00
and the computer wouldn't know if it was 1900 or 2000. And many
started working on this years ago, the Federal Government has
been lagging except for the Social Security Administration
which started on its own with no Presidential prodding, be it
Republican or Democrat, and they started in 1989 and they are
100 percent compliant. And the only other one that we have
looked at recently on programming areas is the weather service.
And I know that must be good news to Kansas with your
tremendous agricultural resources and farmers getting up at 4
a.m., and 5 a.m., wanting to know what the weather is going to
be. So they are in good shape. And then we have the various
report cards. We have noted that the critical mission systems
in particular agencies are coming along, but it doesn't mean
that some of the problematic areas of that agency have all of
the pieces together. And in our future reporting to the Nation
on this, both the Senate committee and our own committee will
stress that point, it doesn't do much good to have a lot of the
agency's computing operations corrected, but it's a program
that deals with the people and has to put out checks, has to do
analysis in order to do something else, and so we are going to
look at that over the next few months and we will be in various
parts of the country to do that.
Back in April 1996 this subcommittee was the first to bring
the question up in Congress. The Senate finally got around to
it in early 1998 and we urged the President to do a number of
things, one is to get a person in charge, which really wasn't
happening. And No. 2 is to use the bully pulpit, as Theodore
Roosevelt said, and talk to the people about this so that they
don't panic, because we know from every witness that we have
ever had that the longer delay occurs, the more costly labor
and human resources would be to get the problem solved.
Current estimates show that the Federal Government will
spend nearly $9 billion by the end of this fiscal year to
remedy the executive branch computers. The legislative branch
is on its own and so is the Supreme Court. But that's a drop in
the bucket compared to the extensive executive branch. And we
will probably get to $10 billion. But our estimates early on in
1996 was that it would be $30 billion, so in that sense, if
that sticks, we are doing one-third of what all of the experts
said, and we will do it right by January 1, 2000.
Recently, the President's Office of Management and Budget
identified 43 essential Federal programs, I mentioned Social
Security and I mentioned the weather, well there are two more
we are looking at very closely, and that's Medicare which
affects at least 43 million people, and the Air Traffic Control
system. I told the Administrator of the FAA that I will be
taking my every other week flight from Dulles International
Airport to Los Angeles International Airport on January 1st
just to see what happens. She will go from Washington to La
Guardia, which is 45 minutes to my 5 hours. And I told her not
to mess around with the controllers before we both board the
plane. So with those 43 programs, 10 of which are federally
funded State run programs, and we will hear a lot of good
testimony today on that, Medicaid, food stamps, unemployment
insurance, child support enforcement, several of these State
run programs are not scheduled to be ready for the year 2000
until December, leaving little, if any, time to fix unforeseen
problems.
The data exchanges, which is a major thing we are looking
at, and the interdependencies between computers in the field
and computers in the Federal Government and State government
and your local government, they exist at all levels and
throughout the private sector. And a single failure in the
chain of the information could have severe repercussions if
they don't get all of those interrelations straightened out.
For example, let me briefly illustrate how the U.S.' Social
Security program uses computers. The Social Security
Administration maintains data containing pertinent Social
Security payment information for eligible citizens. When the
payments are made, Social Security sends the payment data every
month to the Department of the Treasury's Financial Management
Service. This service then cuts the Federal check which is then
electronically deposited directly into the person's bank
account at a local financial institution. Three organizations
move and manipulate data to make these payments happen; each
uses its own network of computers. If a payment is mailed to an
individual's home, the U.S. Postal Service then plays a key
role in the delivery of that check.
The bottom line is that if any one of these entities fails,
from the Federal Government to the local bank or the Postal
Service, a deserving individual will not receive a payment in
time. And there are 435 Members from the States, 5 Members from
the territories and 100 U.S. Senators who all know that they
would have lines outside their district office. And
Representative Ryun is right across the street in the
Mercantile building, very accessible, and we don't want to see
that happen. So we all have a vested interest in making sure it
doesn't happen. But it takes thousands of people to get this
job done.
If you multiply the clients, the millions of people who
receive those benefits, you know the magnitude of it, one check
a month and 43 million people are affected by that. The other
is Social Security, 50 million people, they also have
disability checks that go out.
But for computers to work we need power, energy. One of the
most essential questions we are asking in the year 2000
challenge is, ``Will the lights stay on?'' We will have
representatives from the power industry talking to us about
that in this area. Without electricity our modern society would
be relegated back to the proverbial ``Stone Age.''
From a personal standpoint I realize that when confronted
with a personal emergency, I can call ``911'' for assistance
and feel confident that the phone will be answered promptly and
that a competent authority will respond rapidly. Year 2000
computer problems present other potentially serious threats at
local levels, from the potential interruption of a citizen's
call for police assistance to delays in a State's ability to
request emergency or disaster assistance from the Federal
Government.
Congressman Ryun is unquestionably the greatest American
miler of all time. He raced as fast as he could toward a
measurable and foreseeable goal--1 mile and a finish line. Our
Nation's race to solve the year 2000 problem requires the same
preparation, determination, and stamina as that of Congressman
Ryun. And this is what we have tried to note to the
administration, it doesn't matter whether they are Democrats or
Republicans, frankly the President has not had the tools until
this last year to really deal with this matter effectively.
And we know, as I said earlier, there are 177 days to go to
January 1st and the clock is ticking and can't be moved and the
testimony we receive today here in Topeka will help our
understanding of the full exent of the year 2000 computer
problem.
I would like to mention a few procedural things in this
hearing before I turn it over to Congressman Ryun to preside.
We are going to be passing cards out, for those of you who have
questions, please write out the question. That will enable us
to get more questions that we can ask either Mr. Ryun or
myself. So some of our staff will be going along on both sides,
just put your hand up, they will give you a card and then if
there are five cards with the same question, the staff will get
it down to one question and that way we can meet most of your
needs. And then we have to run for a plane to Chicago. Mr. Ryun
stays here with his constituents.
The testimony we think will be very welcome and helpful
here. So that's the cards. And then after Mr. Ryun swears in
the witnesses, or if he wants me to swear them in, the
witnesses who are already panel one before us, and when he
introduces them, the transcript they have sent us, the
presentation is excellent that each one of them has written,
that immediately goes in the hearing record when their name is
introduced. And then we will have them speak from the heart for
5 minutes and boil that down in oral testimony. We have all
read your presentations, that's what's going in the hearing
record. But in order for everybody to get into a dialog,
especially panel one, with both of us, that's the best way to
do it we've found from a lot of experience in that.
We then will go into recess to our next hearing in Illinois
from here. So I'm delighted now to turn it over to Mr. Ryun to
preside and chair the meeting and we will follow his direction
from now on out.
[The prepared statement of Hon. Stephen Horn follows:]
[GRAPHIC] [TIFF OMITTED] T0939.001
[GRAPHIC] [TIFF OMITTED] T0939.002
Mr. Ryun. Mr. Chairman, thank you very much. Again, I want
to welcome everyone. I want to say thank you to the panelists
for coming. I don't think any of us fully know what will happen
at the end of the year and the purpose in today's forum is to
provide information to all of you that are listening.
What I have done is organized two panels. The first panel
is going to give the government's perspective on the status and
compliance of the government with the Y2K challenge. Let me
introduce who's on the panel. First of all, Joel Willemssen,
who is the Director of Civil Agencies Information Systems at
the General Accounting Office. It's the Federal Government
office that oversees the effectiveness of government programs
and its agencies. The GAO's chief source of concern for Y2K
problems is the readiness of State and local governments. Joel
is the GAO's Director for Civil Agencies Information Systems,
he has testified before Congress many times about the status of
the Y2K preparations. I know you look forward to hearing from
him and I look forward to hearing your testimony Joel.
Next we have Morey Sullivan, information resource manager
for the Kansas Department of Administration. Governor Graves
has been active in pursuing Y2K compliance since 1996. The
department of Administration Division of Information Systems
and Communications is the designated organization for
coordinating and reporting on the State's year 2000 efforts.
Mr. Sullivan is the information manager for the State, he will
be educating us on the State's activity and the level of
preparedness for this next year.
Seated next to him in the middle is Larry Kettlewell, the
year 2000 Federal and local interface manager of the Kansas
Department of Administration. Larry advises the State's chief
information technology officer on the status of Federal and
State interfaces. And he also serves as project manager for the
State and local interface testing program. He will be
discussing how the State of Kansas deals with the Federal
Government on this issue.
Next to him is Jeff White. Jeff is director of budget
research and information technology for the city of Topeka. The
city started addressing this particular issue back in January
1998, focusing primarily on water, sewers, and public safety
issues. Jeff has been working hard on the city's compliance
since the beginning of the year and we will look forward to his
testimony as well.
The last panelist is Joy Moser. She is public affairs
officer for the State Adjutant General's Office. The Kansas
Division of Emergency Management has provided timely
information to help people with managing Y2K. The Adjutant
General has sent out several different mailings, one of which
is the Year 2000 Survival Test, another is the Executive
Survival Guide for the Year 2000 and the Year 2000 Workbook
Book. She will be our final panelist and we look forward to
your testimony and remarks.
Mr. Chairman, would you like to swear everyone in?
Mr. Horn. Certainly. Would you stand and raise your right
hands, please.
[Witnesses sworn.]
Mr. Horn. The clerk will note that all five witnesses have
affirmed.
Mr. Ryun. We will begin with the first panelist.
STATEMENT OF JOEL WILLEMSSEN, DIRECTOR, CIVIL AGENCIES
INFORMATION SYSTEMS, GENERAL ACCOUNTING OFFICE
Mr. Willemssen. Thank you, Congressman Ryun, Mr. Chairman,
thank you for inviting the GAO to testify today. As requested,
I will briefly summarize our statement on the Y2K readiness of
Federal Government, State, and local governments and key
economic sectors.
Regarding the Federal Government, the most recent reports
indicate continued progress in fixing, testing, and
implementing mission-critical systems. Nevertheless, numerous
critical systems must still be made compliant and must undergo
independent verification and validation. Our own reviews of
selected agencies have shown an uneven progress and remaining
risk in addressing Y2K. And that points again to the
criticality of business continuity and contingency planning.
As we look beyond individual systems and individual
agencies, the Federal Government's future actions will also
need to be increasingly focused on making sure that its high
priority programs are compliant. In line with this, OMB has
identified 43 high impact programs such as Medicare and Social
Security. As you know, Mr. Chairman, we are currently reviewing
those programs for you. At this point it's very clear that much
additional work is needed on almost all of these programs to
make sure that they are ready in time by the turn of the
century.
Available information on the Y2K readiness of State and
local governments also indicates that additional work remains.
For example, according to recent information on States reported
to the National Association of State Information Resource
Executives about 18 States have completed implementing less
than 75 percent of their mission-critical systems. 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 the Federal Human
Services programs which are administered by the States such as
Medicaid, food stamps, unemployment insurance, and child
support enforcement. Of the 43 high impact programs identified
by OMB, 10 of those are the State administered 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. This is based on data that has not yet been
independently verified.
If we look at the risks beyond those faced by the Federal
Government and the State and local governments, Y2K also poses
a serious challenge to the public infrastructure, key economic
structures and to other countries. We have made a number of
recommendations to John Koskinen who is the chairman of the
President's Y2K Conversion Council. And the Council has made
strides in obtaining needed readiness information in these
areas. Nevertheless, there is a good deal of variance among
these critical sectors, and, accordingly, there is going to be
over the next 6 months a need for continuing emphasis to make
sure that the information on the readiness of these sectors is
provided to the citizens of the country so that we can have a
better understanding of where our risks are and the public can
therefore be best positioned with that information.
That concludes the summary of my statement. After the panel
is through, I will be pleased to address any questions you may
have.
[The prepared statement of Mr. Willemssen follows:]
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STATEMENT OF MOREY SULLIVAN, INFORMATION RESOURCE MANAGER,
KANSAS DEPARTMENT OF ADMINISTRATION
Mr. Sullivan. Thank you Congressman Ryun and Congressman
Horn and thank you for the invitation to show and share how we
in State government are progressing toward our year 2000
efforts.
The Department of Administration first started serious year
2000 discussion in 1995. Knowing that a great deal of work
would have to be done, we out-sourced some of that work,
proposals were made by several nationally respected information
technology firms. The successful bidder in our case was
Computer Technology Associates or CTA from Bethesda, MD. A
contract was put in place in December 1996. Since that time
hundreds of applications have been assessed, they have been
repaired and they have been tested. To date over 16 million
lines of mainframe COBOL code have been remediated. We have
identified 662 mission-critical applications that exist across
Kansas State government. These are software applications that
are critical to the running of the day to day operations of
State government.
Knowing that State government and local units of government
have common goals, Don Heiman, chief information technology
officer, our boss, of the executive branch instituted a project
called Outreach to the New Millennium in the fall of 1998. This
program took nationally known speakers and IT professionals on
the road across Kansas to share with local units of government
successful strategies for dealing with year 2000 computer
problems. Materials covering the remediation disciplines were
printed and shared with each person who attended the Outreach
summit. And I have copies of all these books that we have
printed and will be glad to share them with you. Because of
this program we feel that State government and local units are
now better prepared to deal with Y2K concerns.
Currently the State government is approximately 95 percent
complete toward our goal of full compliance. To date the State
government has expended over 171,000 staff hours, we have got
about 17,000 hours left. Although we are close to being
finished, there are still lots of things to do. We are in the
middle of Y2K auditing at the present time. We are in the
middle of contingency planning in case some of those
applications we have talked about don't respond the way we want
it to when we roll over on December 31st.
Year 2000 has taught us in the IT community many things.
Among them is we are more interdependent now upon one another
than we have ever been. Just because your computer systems are
year 2000 compliant, you should not feel safe, because we have
linked our computers in so many ways, we must also be
interested in our neighbors' Y2K compliance. State and Federal
Government are much the same way. There are myriad links that
exist between the two entities. Links that manifest in Kansas
receiving funding from the Federal Government for literally
dozens of programs. This funding then finds its way to
thousands of Kansans across the State. Not an unimportant
issue. Our Y2K efforts have included
tracking the Federal interfaces for just such compliancy. The
gentleman who has guided us in this effort is Larry Kettlewell,
seated to my left, and Larry will now report on Federal
interfaces and share with you some other 2000 issues.
[The prepared statement of Mr. Sullivan follows:]
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STATEMENT OF LARRY KETTLEWELL, INFORMATION RESOURCE MANAGER FOR
FEDERAL AND STATE AFFAIRS, KANSAS DEPARTMENT OF ADMINISTRATION
Mr. Kettlewell. Thank you, Morey. Good afternoon, Mr.
Chairman, Congressman Horn, we are glad to have you back in
Kansas.
I'm very pleased to be part of the panel here today to give
a status report on the efforts by the State of Kansas with
respect to the year 2000 problem as it relates to our Federal
and local interface.
A word for a moment about the Division of Information
Systems and Communications [DISC], as it is known around here.
Just so that people inside the Beltway don't think that we are
a small time operation, we have a $167 million budget. We are
on the level of about a Fortune 300 information technology
organization. We have 1,500 workers and manage 18,000
intelligent devices throughout the State. With that, Morey
touched a little bit upon not what we derive over all from this
information technology architecture. And very important to that
is what we get from the Federal Government. The State of Kansas
right now receives over $1.8 billion in Federal funds,
principally through automated processes known as interfaces or
data exchange. Kansas has 138 of these interfaces disbursed
amongst 14 Federal agencies. The year 2000 readiness of these
interfaces obviously is very important in moving that $1.8
billion back to the State.
I'm very happy to report that as of this morning, and I
would like to make a correction for the record, from the
State's end we are now 93.8 percent complete in terms of our
compliance with Federal interface. As of early May, Kansas was
second nationally in its overall Federal interface readiness.
We no longer have available to us statistics on our status vis-
a-vis other States. That said, I believe this figure gives our
citizens some measure of how well we are doing.
Despite what some in Washington are saying about the Fed
being 92 to 94 percent compliant, I would like to point out
that that is an overall sort of figure. The Federal agencies
that we deal with here in the State and their relevant
interfaces right now have only about 72 percent compliance
rate. This was, again, as of this morning and as reported on
the GSA Federal Website.
This brings me to raise a couple of issues in keeping with
Congressman Ryun's call for ``straight talk.'' That 72 percent
figure mentioned may be even lower. The figures that we have
received from the Federal end have always been without
reporting on critical programs from the Health Care Financing
Administration [HCFA]. Mr. Willemssen touched briefly on
Medicare and Medicaid problems, this is exactly what we are
talking about here. This continues to be a very serious concern
to us.
On June 2nd we were told by the President's Year 2000
Conversion commission that HCFA is ``ready to go.'' Further,
there is the thought about certain end-to-end testing on the
top 10 programs from the Office of Management and Budget, and
that they should commence with this end-to-end testing
forthwith. Despite the assertions and assurances of HCFA's
readiness in the Medicare and Medicaid programs, we remain
skeptical.
Part of that skepticism is in part related to testimony by
one of our witnesses today, Joel Willemssen, from the General
Accounting Office. In testimony before Congressman Horn's
subcommittee on April 27th Mr. Willemssen presented a statement
broadly aimed at the ``Readiness of Medicare and the Health
Care Sector.'' A great deal of that testimony, by the way, was
relating to HCFA and its readiness. While that statement was
made in April, it is clear that the current environment
surrounding HCFA's mission-critical systems does not allow it
to be ``ready to go'' now to test end-to-end. I'm sure, Mr.
Chairmen, both of you have seen this report, it is very, very
sobering.
The second aspect of this is the Payment Management System.
Congressman Horn, you have already alluded to the fact in
earlier testimony in your committee, this system moves $165
billion worth of money back and forth between the Federal
Government and the States, yet it is not year 2000 ready. We
are ready out here to move money. We are confident that the
Department of Revenue, Office of the Treasury, Division of
Accounts and Reports, they have all gone through rigorous
testing, we are ready to receive that money from this end. The
concern, however, is that we are going to be treading water
here outside the beltway and there is not going to be much left
to give us.
Finally, let me just note here a couple of real reasons why
we are here today. First, absent the work done by you,
Congressman Horn, to bring this issue to the public attention,
and even to the attention of some managers in Washington, we
probably wouldn't be here today discussing this issue.
Second, as I understand from my years in Washington, there
is nothing like member-to-member contact to get things done in
Washington. Congressman Ryun has been very positive in
continuing to reach out and inform people on this issue as you
have done here today. We thank you both.
[The prepared statement of Mr. Kettlewell follows:]
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STATEMENT OF JEFF WHITE, DIRECTOR, BUDGET RESEARCH AND
INFORMATION TECHNOLOGY, CITY OF TOPEKA
Mr. White. I feel like small potatoes here today when Mr.
Kettlewell talked about the size of his organization. Let me
give you a little bit of scale, as well, about the city of
Topeka. We have 1,350 employees, $135 million total annual
budget for all city operations. We serve about 25 sites around
the city in different city facilities. Again, I'm thankful
today that I'm me and not Mr. Kettlewell as we look at the
scope of this Y2K issue.
I'm going to give you today primarily the information
technology perspective because that's my primary scope. But
because information technology touches every corner of our
organization, I hope to give you a bigger picture view as well.
We did begin in earnest with our Y2K preparedness effort in
January 1998. Everybody is working hard on this and it's
touched every facet of the organization. We have a full-time
information technology staff of about 14 people, so we have
relied on really a team approach to ensure Y2K preparedness and
have many Y2K experts in every one of our operating
departments.
We found ourselves in the situation of taking primarily a
replacement strategy. We coupled our Y2K preparedness with a
new information infrastructure. It certainly has been a cause
of concern for our governing body in terms of the cost, but we
have been able to achieve some improvements in our information
infrastructure as we have addressed Y2K.
I'm really glad that Morey Sullivan is here today so I can
thank him again for the efforts that the State of Kansas has
made on their outreach efforts to local governments in terms of
Y2K preparedness. The information they have provided has been
an excellent road map for us to follow and we have used that
every day as we move toward Y2K preparedness. So thanks again,
Morey.
We are using the State Model for Compliance which involves
assessment, application, mission-critical applications,
remediating those that have problems, testing, and auditing our
fixes and, of course, providing for business continuity through
contingency planning. Also looking at tiers of mission-critical
applications, those that are absolutely critical we can't do
without and we can't work around them, if they don't work, we
are dead in the water. Those that have to work without fail,
but if they do fail, we can provide or work around. And those
that if they don't work, we can live without it, there are work
arounds available. So if the automatic coffee makers don't
happen to come on at the right time, that's not a big deal for
us.
As of today, assessment is complete, although we are
continuing to keep our eyes open, as organizations change and
we go through time, we have to be continually cognizant of
additions that may create new Y2K problems that we have not
taken a look at.
Our remediation efforts are almost complete as well. We
have a few software replacements that are scheduled in the late
summer to early fall, the majority of those are not mission-
critical or at least mission-critical in the sense that we
don't have work arounds.
I feel very positive that we have very few mission-critical
applications that are home growns. Mr. Sullivan talked about
all of the lines of code they had to rewrite, we simply don't
find ourselves in that situation, we do not have a lot of in-
house code redevelopment that we have had to do. That's a
double-edged sword. We don't have to go through the effort of
171,000 staff hours to recode those lines. The other is the
fact that we rely very heavily on statements by our vendors
that when they say they are Y2K compliant, that they really
are. Again, we are using the testing protocol and such provided
by the State, as well as some interesting things like a test
lab where we can take our AS/400 or our legacy system, payroll
and finance, and actually, rather than taking the city on line
go to a testing environment, run those, and make sure they run
correctly.
Testing has commenced and will continue through the Y2K
turnover. And contingency planning has also commenced and will
continue through Y2K. In our mind we look at Y2K in a lot of
cases the same as any other disaster, man-made or naturally
that might occur, and we have contingency plans already in
place. Ice storms, tornadoes, whatever might hit, and a lot of
those same rules apply as we look at Y2K. So I think we have
got a head start as to contingency planning effort.
What's left? Continuing to work with the vendors, as I
mentioned, is critical for us. Clean management, making sure
that the fixes we make stay fixed. And that's an issue with the
State as well. Public information is something I don't think we
have done a terribly good job at and we need to do more as we
get closer to the century turnover. And then interdependency on
other organizations, those links are also in place. We have to
make sure our neighbors are Y2K compliant as well.
People are mostly interested in the critical systems that
we talked about; water, wastewater, and public safety. Water,
we are ready to go. Contingency plans are mostly in place. We
are going to deal with full stocks of chemicals at the
turnover. And, again, we have contingency planning in place
already for floods or power outages or those type of things.
Most of the operations of the water plant are
electromechanical. That means we can operate them manually. And
we have folks trained that know how to operate those manually,
which is important as well.
Wastewater is almost the same deal. Again, a contingency
plan is in place. Public safety, although the county here runs
our 911 operation, we are obviously a big partner with them and
they are ready to go with 911. Southwestern Bell has been an
excellent partner with us to make sure that that's the case.
Our biggest concern is lack of power, that really drives
everything. We have worked closely with Western Resources to
make sure that we will have power. And we do have standby
emergency generation capabilities if we need them.
A couple of other concerns are civil unrest. What happens
if people get a little weird in this Y2K turnover. The police
and fire folks are taking a look at that and making sure we are
staffed up and ready to go. And hoarding behavior is a concern
as well. If everybody, for instance, goes to the bank and
withdraws $5,000 in cash on New Year's Eve, the criminals are
going to love it. And so we want to be sure that the public
information is out there to make sure that people have taken
appropriate precautions. It's winter,
it's January, the power may go out due to an ice storm, folks
ought to have a few days supply of food on hand and they ought
to have blankets and warm bedding and just take the general
precautions for any kind of emergency.
[The prepared statement of Mr. White follows:]
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STATEMENT OF JOY MOSER, ADJUTANT GENERAL'S DEPARTMENT, PUBLIC
AFFAIRS OFFICE
Ms. Moser. Thank you, Congressman. The Adjutant General's
Department is the emergency response agency in Kansas and it
has been dealing with disasters for many years. The difference
that we have here is that Y2K we know when it is expected. With
a tornado or snowstorm or flood, there is little to no warning.
With Y2K, December 31st is certainly a crucial time. And,
therefore, we are working to prepare ourselves and to provide
preparation for the public.
Preparedness is what we do in the Adjutant General's
Department. It has the Division of Emergency Management whose
mission is to prepare for and coordinate the response and
recovery activities in the event of a disaster. It also has the
Kansas National Guard whose State mission is to provide
emergency response when called upon to assist the citizenry. So
both the groups in our department are working hard to be ready
for a response in case it's needed on December 31st or in the
days that are following.
There are three areas that we are addressing. First of all,
what we are doing prior to December 31st; the plans that we
have in place for December 31st and January 1st; and then what
we think the public ought to do to prepare themselves to help
themselves.
The Division of Emergency Management and the Kansas
National Guard are planning and training to respond if there is
an infrastructure failure due to Y2K related problems. We are
preparing by doing the same kinds of things that we do for
snowstorms, ice storms, floods and tornadoes. So it's that type
of thing.
For instance, in a thunderstorm or a snowstorm, or flood,
or tornado, you might have power outages and you also might
have telephone communication losses. Those are things that we
are also planning for with Y2K. We know that we need to look at
getting water, making water available, making sure that there
is food, and that there is warmth and shelter during the winter
months. And that's the kind of thing that we deal with
regularly when we respond to snow or ice storms and tornadoes
and flooding. The Division of Emergency Management coordinates
State and volunteer agencies efforts to provide relief as
indicated in their operations plan. We want the public to know
that we are in fact doing that for Y2K. It's just a different
type of disaster or emergency that we need to plan for.
Internally, the Kansas National Guard is testing equipment
to make sure they are ready and it will be functioning at
midnight on December 31st. All level logistics systems in the
State have been upgraded. So those computer systems are working
and they can fulfill the tasks of supply and service, should
that be needed. Also, in May, a communications exercise was
held with high frequency radios and we communicated with the
Pentagon in Washington, DC. And we are a communication node so,
we communicated with the seven States that are in our area. So
we will be able to communicate if there is a disaster for Y2K.
We also have inception for another communications exercise. At
this time we are going to go to the armories within the State
and we will be communicating with each one of the armories. We
will have people available so that if there is a need on
December 31st we can help the citizenry.
Prior to December 31st, State agencies will also be
coordinating public service information so that we can provide
informational preparation to the citizenry. A campaign is
expected to begin in September, and will continue through
December 31st. We believe this is beneficial to the public
because it will help the public to understand the steps that we
are taking to respond in case of an emergency. It will also
provide them with the information to help them help themselves.
On the 31st, we intend to have people in our Emergency
Operations Center here in Topeka to communicate with the media
about what is going on. We expect also to have personnel in the
Division of Emergency Management that will respond to requests
that we may get. And we also will have a Kansas National Guard
military operation center in effect here in Topeka. That center
will be open at 6 p.m. on December 31st and it will go through
the night, through January 1st, and will end at midnight on
January 1st. And then we will have people at the battalion
headquarters that will also be able to communicate and help.
The third area that are we were talking about was to help
people help themselves. And some of the things that we are
talking about there is backup heat sources such as fireplace,
blankets, extra batteries if the power goes out, bottled water,
extra food supplies, all of these are things that we suggest
you use for any other disaster. And we will continue to provide
that information. Thank you.
[The prepared statement of Ms. Moser follows:]
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Mr. Ryun. I want to thank all of our panelists. We are
going to go to some questions. I know we have some questions
that are being generated on the cards. There are cards that are
still being handed out. If you would like to write a question,
one thing that I have to respect is the fact that the chairman
has a plane to catch, so we will have maybe another 15 minutes
roughly of questions and then we will move to the second panel.
But I actually would like to begin with Mr. Sullivan. And one
of the concerns that we have is a continuing readiness aspect
of compliance with Y2K issues as we enter into the millennium.
You had said earlier that you're 95 percent ready, you're still
about 5 percent before you can be completed. Can you identify
what that 5 percent is? You said also that it will take
probably another 17,000 hours roughly to finish what has to be
done. Is there sufficient time?
Mr. Sullivan. Yes, there is. Much of what remains to be
done is testing continuity planning. We have looked at
primarily all of our COBOL codes, we have assessed everything,
we have repaired most everything. There are a few applications
out there in the State government that have received a little
attention, but not as much as what there needs to be. So in
answer to your question, yes, there is sufficient time to get
there because that 17,000 hours is spread across State
government and across the many thousands of employees that we
have. So that is not a problem. We just need to continue to
complete our auditing.
Mr. Ryun. Chairman Horn, any questions?
Mr. Horn. Let me read some from the audience because we
know the panelists have to leave for other engagements, we know
you are all busy people. But one of them is this: ``During this
period of correcting Y2K problems is the entire information
network of government agencies becoming vulnerable to computer
hackers? What security is there?''
Mr. Willemssen, do you know the answer to that? Let's have
the power of the GAO and its thousands of reports hone in on
this question.
Mr. Willemssen. I think that's an excellent question. One
issue that we have previously addressed as Y2K is being
addressed and as systems are increasingly opened up to make the
fixes and also bringing in other parties to help make the fixes
and test those fixes, there is enhanced risk from a security
perspective. And we have previously testified that managers,
therefore, must be very attuned to that security risk when
going about their Y2K programs.
And therefore, I think it is an excellent issue. One that
information security is the next Y2K, as we see it. It's
increasing in scope and severity and an issue that the Federal
Government I know will have to increasingly begin to focus on.
Mr. Horn. I think you will all enjoy the second question,
we are in the middle of some of this, ``Why can't we as the
people just decide to change the date similar to daylight
savings time so the problem is solved? We all agree and then
later change it back.''
At first appearance you might think there is something
wrong with that question, but I'm planning to hold a hearing on
one of my colleagues' bills, Mr. Linder of Georgia, that will
move the January 1st date to Monday if it isn't there now, and
that will give them the whole weekend to be working on it
should something go wrong. In order to get this good idea
explored, we also have to get the Subcommittee on the Civil
Service, which is part of the Government Reform Committee, and
I don't know how many other hands want to get into it or don't
want to get into it.
But you tell us, Mr. Willemssen, has some thought been
given to this and what has the discussion been about?
Mr. Willemssen. There has been discussion about making
January 3rd, which is a Monday, an additional holiday. Based on
information we know, however, from the standpoint of several
agencies they already have very detailed plans in place,
assuming that is not a holiday, and, therefore, to make a
change at this relatively late date could potentially for those
organizations cause more problems than solutions. So we need to
be very careful about doing that. Especially some of the
leading agencies such as the Social Security Administration,
they have their time table down to the minute on exactly what
they are going to be doing every minute through the roll over
period. And upsetting that apple cart at this point could
introduce more risk than solve.
Mr. Horn. If we get that hearing, we will make sure you're
there.
Mr. Ryun. I know this morning as we were talking on Jim
Cates' show you expressed great confidence in the ability to
fly on January 1 after you said that a few moments ago. Part of
what I think the question is going to be dealing with is the
understanding, if you will, that part of what this issue
relates to is the labor intensive having to go back and change
little chips in different places. You expressed great
confidence that your flight would leave Washington and land in
L.A. In fact, you have expressed greater confidence in that
than the elevators in Canada would work for you, I think you
had some difficulty there.
So I think part of what we are dealing with is that a lot
of places where the light needs to shine with regard to the Y2K
issue and we have begun the process of making the changes in
some of those areas.
Mr. Horn. Along that line, one of the things, and maybe you
would like to respond to it, having to go through this tedious
operation in order to make up and adapt and all of that, I hope
a lot of you have said, ``Hey, do we really need this system?
Let's get rid of that.'' How much of that really was part of
what you did and you just got rid of it because it isn't
working?
Mr. White. We have used this opportunity to do a lot of
standardization on types of software we use, desktop on PC's.
And we have used a lot of old stuff our AS/400 systems and
found out that people weren't really using them and if they
were, there were easier ways to do it.
Mr. Sullivan. We found that to be true in the State
government as well.
Mr. Kettlewell. I'll just comment on that. One of the
things about this is that the United States being so
information technology driven, if you will, this has been an
excellent opportunity for all of industry to stop the train,
assess what they have done and for all intents and purposes.
Like with, for instance, the city of Topeka has done, edit what
they have got, throw away the old programs that are not
standard and so old they are no longer efficient. And we have
done that in the State, we have a program like that we have
gone through and pitched a lot of programs. So there is a
degree of standardization and modernization.
Mr. Horn. Ms. Moser, did the Adjutant General do some of
that? Did you get rid of some of that stuff?
Ms. Moser. We got rid of some of our old junk, yes, sure.
Mr. Horn. Was that the COBOL? That's a language of the
1960's. And, believe me, people that retired and were experts
in COBOL, the Civil Service Commission, now called the Office
of Personnel Management for Federal employees, is getting them
out of retirement, they can keep the $100,000 contract, to
solve the COBOL problem, and keep their pension. So it's a good
deal for people that mastered COBOL. I remember making a
program out of one, only one, in the 1960's.
But that's a language that is all over the Federal
Government, I don't know about the State governments. Do a lot
of yours use COBOL?
Mr. Kettlewell. Most of them do, yes.
Ms. Moser. We went to mainframe last year. So we should be
OK.
Mr. Horn. That's great. One question here is: ``Will the
Congress watch the President over Christmas? We have heard the
President will declare martial law while the Congress is on
vacation.'' There is nothing to that, folks. The courts of the
United States are open and the Congress is open. We are very
careful, not just under this President, any of the last
Presidents. If there is a need for us to get into session,
that's the way the adjournment resolution is written by both
the Senate and the House. The Speaker of the House can call the
House together, the Majority Leader of the Senate can call the
Senate together. So there no chance of that. But these rumors
hop around all of the time.
``Please make a statement about security of bank accounts
and balances, availability of cash, availability of fresh food
supplies, state of police, fire, military, medical.'' Well, we
have got good people here in the Adjutant General's Office to
deal with that and we have got Mr. Willemssen on broad
international as well as National review. So the security of
bank accounts and balances, the Federal Reserve I think has
done a terrific job, Mr. Greenspan, 2 or 3 years ago when I
talked to him when we started in on our operations, he
appointed Board of Governors member Kelly to be in charge of
this. And most of the banks of the United States you don't have
to worry about. Some of the State banks you might have to
through your own regulatory authority in Kansas. I don't know
where you are on that. Maybe some of the officials in the State
of Kansas like Mr. Kettlewell knows that question on the banks.
Mr. Kettlewell. In a broad way I do, yes. The Kansas Corp.
Commission really is a controlling factor in that. That said,
about 3 weeks ago I was down in Hillsboro, KS addressing about
150 citizens. At the time we had the regional FDIC examiner
come in from Memphis, TN and he told me that of the I believe
it was around 10,000 or so banks, there are only about 10 or 15
that are doomed for failure, and those banks are going to be
taken over. It is one of the most heavily regulated industries,
so that the failure rate there--the bottom line is you need to
keep your money in the bank, don't put it under the mattress,
don't hide it in the silo, don't hide it in the barn, keep it
in the bank.
Mr. Horn. I think we will ask panel two's group because
there are some talents there, bankers and others. On the fresh
food supply, I think it's prudent, and I think Mr. Ryun agrees
with me on that, just to be reasonable about it. You don't need
all of the food for a year, but you might need 1 or 2 weeks,
vegetables--now, remember, your refrigerator might go out if
there is a power failure. So you have got all those things that
could happen.
But when you come from California as I have, where you have
got fires, earthquakes, floods, I have got the biggest flood
project in the Nation in my district. For example, 500,000
people are affected by it and we are trying to get it done in
the next year and a half so that the levees won't overflow. And
you know what that's like in Kansas and Iowa and Illinois, to
say the least. I think somebody said this morning, I think it
was, that quoted one of the newsmen, was it, when Cates talked
to us and said there would be a shortage of toilet paper. This
is on something 10 years ago, and indeed the next day all of
the toilet paper disappeared from the grocery stores.
So little things like that you might just use common sense
on. I don't think it's something to panic about. A lot of
people are going to make money on books they write on Y2K. I've
got a long shelf of them. I have just packed them to send to
the National Archives. Maybe the next millennium they can pull
that box out and see what happens. But I'm not going to collect
them anymore. But you will have all of the little papers that
you see in the grocery lines for a couple of bucks they want to
scare the living daylights out of you. And some people fall for
that stuff, we don't exactly--in some areas--have a very
literate constituency to work with on this. But even sometimes
people get a panic there might be some reason behind it and we
in government need to do the best we can to avoid that
situation to keep our heads calm to solve the problem, not just
talk about it.
Any comments, Mr. Willemssen, on the food supply, the fresh
food supply to be exact, availability of cash? Mr. Greenspan
has ordered an extra amount of Federal Reserve notes to be in
the bank so if there is a run on them, they have plenty of
money. And it was said, and you're right, to take it and put it
in your pocket at home is where the burglars will head. They
also watch television. If you're smart, you will leave it in
the bank and let them hold the responsibility for it.
Mr. Ryun. I have one final question. I know we are just
about out of time. I want to ask Mr. Kettlewell very quickly
about an issue I know is very important to a lot of our seniors
out here. You said earlier that HCFA is not--that the
administration keeps saying that they are ready, but they
really aren't ready in your opinion. What can we do to make
that correction? What sort of contingency plans are there for
our seniors that are out there?
Mr. Kettlewell. Well, a couple of thoughts on that,
Congressman Ryun. First of all, you're going to have to have a
contingency backup plan, obviously. As I heard one
representative from HCFA testify in front of Congressman Horn's
subcommittee last fall and their contingency plan at that point
was manually processing claims. Now, they process 20 billion
claims in a year. I don't know how many temp workers they are
going to be able to bring in and process those claims and that
amount of money. So I don't know what the good solution is in
terms of their business continuity. What I do know is that some
way or another Health and Human Services in Washington, DC has
to provide better information with respect to its status on
Medicare and Medicaid. People in Washington have to be singing
off the same song sheet or they have to have one spokesman to
tell what the real story is, because there is just a tremendous
amount of confusion out there right now. From one person we get
one story.
As I say, as I quoted in my statement, but if I listen to
your committee and listen to the GAO, and I again go back to
that testimony of Mr. Willemssen, they are not going to be able
to perform. There is not a really good short answer to your
question. I think right now they are besieged, they are in a
very difficult situation in HCFA. How they are going to solve
that problem perhaps is add more resources to it, maybe stop
coming out here and auditing the State agencies, for instance.
We have already been through a State Aging audit, we passed
with flying colors, both from HCFA and the Administration on
Children and Families.
So I think really what they need is they need to focus back
in Washington and less focus out here in the States, because I
think the States by and large are doing a lot better job in
managing their systems than what's going on in Washington.
Mr. Horn. We did have the problem a year ago where Social
Security, which has led the pack since 1989, found that they
forgot to include their State supported operations.
Mr. Kettlewell. Yes. We found that out in March, sir.
Mr. Horn. And those have been fixed.
Mr. Kettlewell. Yes, they have.
Mr. Horn. Joel, do you have anything to say on HCFA? HCFA
means the Health Care Financing Administration.
Mr. Willemssen. It does administer Medicare and helps the
States administer Medicaid. Just to provide a broader context
to this, unfortunately HCFA got an extremely late start on Y2K
for Medicare. Second, they have an extremely complicated set of
computer systems and data exchanges, much of which is not under
their direct control. You combine those factors with the
limited amount of time available and also their relatively poor
track record in managing information technology, and that's why
they are in the risk status they are currently in.
I'm a little more optimistic now with the Health Care
Financing Administration than I would have been last fall, in
part because the leadership of the Administrator, she's done
what she can in the limited time remaining. She also has put a
primary emphasis on contingency planning and they have done
some good work in that area. Those plans now include options
beyond just manual processing of claims. Some of those options
cannot be publicly disclosed because they give a security
perspective that we talked about before. But it's possible
there will be some disruptions in Medicare. Again, I feel more
confident, though, that they have gotten their act together on
contingency plans. So to the extent those disruptions occur,
they have backups in place to address them.
Mr. Horn. Thank you. I want to ask Mr. White, here's a
question for you. ``What is the city of Topeka doing as a
contingency plan for emergency services such as police, fire
and hospital, the 911 and so forth?'' That seems to be a
nationwide problem.
Mr. White. Absolutely. Really good question. Again, we have
contingency plans already in place for any kind of disaster and
certainly work very closely with the Adjutant General's office
and with Shawnee County who runs our 911 system. They have
secondary backup plans for running 911. And certainly, as she
mentioned, this is a potential disaster that we can prepare
for.
So the police chief and the fire chief are coordinating
very closely with the other emergency providers to ensure that
if we have a police emergency, we will have a police car there.
If we have a fire, we will have a fire truck there. If you need
an ambulance, ambulance service will be available. If you have
any concerns, questions, emergencies, you can call 911,
somebody knowledgeable will pick up and dispatch the
appropriate folks to you.
Mr. Horn. In other words, you have a real human being there
at that center.
Mr. White. We have about nine of them at any given time.
Mr. Horn. I take it, because this has nothing to do with
the millennium, but it's something we have had to deal with for
years, and that is the relationships of surrounding fire
departments, police, law enforcement agencies, and do you have
enough frequencies for them to communicate with each other?
Mr. White. I'm not involved with the radio issues. The
Adjutant General's office might be able to speak better to
that. I would imagine that's one of those things they are
looking quite closely at.
Ms. Moser. Certainly we are looking to communicate within
our own system and then we will communicate out to the local
level. So I think that we could make that connection.
Mr. Horn. When I was a university president 10 years ago,
the county of Los Angeles went into an extensive emergency
situation, we have 81 cities in that county, 10 million people,
and we have about probably 15 universities with their own
police force and jurisdiction for several miles around, but we
didn't have the frequencies, they were all sitting in New York
on the east coast and we had to work it out. We couldn't
communicate with each other. When you have got that many
people, 81 cities, it's pretty tough. So they are slowly
working that one out and they have had 10 years to do that
because we knew we had real problems.
Ms. Moser. That is always a problem is whether or not the
frequencies are the ones you can communicate across. But we are
working on that and I think that we will be able to do that.
Mr. Horn. Here's a very well written one. It says, ``Coal
is used to power a majority of our Kansas electric utilities.
From all of that I have read, the railroads absolutely will not
be ready. How will we keep our electricity up and going if they
cannot get coal?''
Any comments from State government, Mr. Kettlewell?
Mr. Kettlewell. I defer to my colleague from Western
Resources on that, but basically, from my conversations with
them before, they have weighed in extensive amounts of coal,
even if the railroad ceased to run, so that reserve supplies
for coal for coal fired utilities would be available. But,
again, I defer to my colleague from Western Resources.
Mr. Horn. Here's a question for Topeka, it's on the water.
And I might say this is the best water I have tasted in a long
time, so you have got a good water department, it's very
marvelous. I have been getting all I can get. We have to get
bottled water in Washington. The Corps of Engineers did a
wonderful job in 1859 with the distribution system. But the
city of Washington has not replaced much since 1859. And when
the metal starts to glow when we were having x rays, we went to
bottled water. That's what they say happened to the Rose
Republic, for those who want to talk about it. That's about it.
We will pursue some with the next panel. We need to move to
panel two, Mr. Chairman. I think we have got a good round on
that.
Mr. Ryun. Thank you all very much for coming. I appreciate
it.
[Applause.]
[Witnesses sworn.]
Mr. Ryun. The second panel is going to be dealing more with
industry. For those of you who would like to participate, there
will be some staffers around the edges who will have cards, if
you would like to write out questions and submit them, we will
ask those questions as we proceed.
Let me begin by introducing the first panelist, it's Bud
Park. Bud is the year 2000 project office manager for Western
Resources who provides power to homes and businesses. The KPL
division is a Kansas Gas and Electric subsidiary that provides
electricity to over 614,000 retail and 75 wholesale customers
in more than 500 Kansas communities. It is a member of the
three power tools, coal, nuclear, natural gas, oil, diesel
fuel, these units generate a net capacity of nearly 5,300
megawatts.
STATEMENT OF BUD PARK, YEAR 2000 PROJECT OFFICE MANAGER,
WESTERN RESOURCES
Mr. Park. Chairman Horn, Congressman Ryun, distinguished
guests and ladies and gentlemen, good afternoon. I thank you
for this opportunity to speak with you today.
Mr. Ryun. Mr. Park, let me interrupt you just a moment. If
you would like to submit your comments and just speak off the
record, you can add those to the record and we will be happy to
include them.
Mr. Horn. Automatically we put the full comments in the
record when the chairman calls your name. In order to get
through the day, we would like you to take 5 minutes and
express yourself on it and then we will go to the next witness.
And that gives us more of an opportunity to have a dialog on
your panel, as well as the members here today.
Mr. Park. Certainly, I'll be happy to. Basically we come
here to tell you the message that as of last week Western
Resources is now year 2000 ready.
We started our project over 3 years ago, I think that's a
little earlier. I think we had a jump on a lot of companies.
And so we have had plenty of time to address the year 2000
issue. We have done what has become the de facto standard year
2000 program, including all of the steps that you have probably
heard many times before. And we concluded the project last week
on June 30th with the dispatch of a letter to the North
American Electric Reliability Council who, as you know, has
been doing an assessment since last year of the nationwide
power grid. That letter essentially told NERC that Western
Resources had concluded its assessment, remediation and testing
of all of our NERC critical systems, software and hardware that
contain embedded chips and we have tested them all and our
testing shows that we expect to be able to provide service to
our customers after January 1st, 2000 just like we do now.
We have established extensive contingency plans as part of
our program. We have also put into place clean management
procedures to ensure that all readiness work that we have done
to date doesn't get undone by some well-meaning programmer who
makes a change that might not be compliant with the year 2000
roll over before January 1st.
So the bottom line is we expect to keep the lights on. Our
testing has shown that we believe that will be true. We will
participate in a drill that NERC is hosting on September 9th.
We expect that the results of that nationwide drill will help
prove what we have come here to say, that we expect no service
interruptions.
[The prepared statement of Mr. Park follows:]
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Mr. Ryun. Thank you very much. We will go to our next
panelist here. Fortune Magazine has described Southwestern Bell
as the most admired telecommunications company in the world.
Shawn McKenzie is here to give us his testimony. Southwestern
Bell is the largest or the biggest local telephone provider in
Kansas, it provides service to 1.4 million customers. We are
pleased to have you here.
STATEMENT OF SHAWN McKENZIE, SOUTHWESTERN BELL
Mr. McKenzie. Thank you, Congressman Ryun, thank you,
Chairman. I appreciate you giving me the opportunity to do
this, especially since I'm sure much of what I'm saying and
what other panelists are saying today you have heard before. I
really appreciate the opportunity to address the constituents
that are here today. I'm going to be talking from a set of
about 15 slides that are in the packet. I'm holding this up
with the back to you so that the folks behind me can see what
I'm talking about.
I wish I had more time to talk, not necessarily because I
have a lot to say, but because my preacher is here today, Dr.
Jim Congdon is over here in the bright shirt. Every Sunday
morning he gets 30 minutes of my time and I thought it would
just be fair if I get 30 minutes of his time.
[Applause.]
Mr. McKenzie. I apologize for any levity with which I
address this, but as I mentioned to Matt before we started, we
see the light at the end of the tunnel now and we have a little
levity that we didn't have just 3 years ago when we started
this process.
Dr. Congdon made a comment in his sermon a couple months
ago when he was talking about potential Y2K problems that the
telephone system may fail on January 1st, 2000 and I was about
the third row and under my breath I said ``not a chance,''
apparently it was a little too loud and he noted that I had
said that and I became part of the sermon for the following
week. What I want to do now is just substantiate what I said
that morning and what I repeat now. Southwestern Bell's
telephone network in Kansas and in the other States served by
SBC communication companies, which includes Pacific Bell,
Nevada Bell, Cellular One, Southern New England Telephone and
many, many, many wireless companies will be ready January 1st.
There is a potential for problems. The biggest problem we
have a potential for is the same one outlined concerning the
toilet paper. If everybody on January 1st picks up the phone at
the same time, I guarantee you it will not work. I guarantee
you that if everyone got up tomorrow morning and picked up the
phone at the same time, it will not work. Much like the
Nation's highways are not designed for every car to be on them
at the same time, nor are the Nation's telephone networks
designed for everybody to be on them at the same time.
SBC Communications is a large company, 37 million access
line telephone customers are what we serve in seven different
States. We have had a lot of resources since 1996 devoted to
solving the problems with our systems. We've spent over $190
million, we are doing 3,000 hours of work a day on this issue.
We have rewritten 340 million lines of software already to have
this problem taken care of. We are about 98 percent ready to
go.
On January 1st our system will be ready, but we are not
going forward as if everything will be OK. We are also making
our own contingency plans just in case things don't go OK. I
think Western Resources will be ready January 1st as Bud just
described, but just in case there is some glitch, we have our
generators ready to go to provide our own power.
So we suggest to our customers that if they want to be as
ready as they can and make sure their phones work that day,
that they have a telephone available to them that's not
dependent on commercial power, because our system on January
1st will not be dependent on commercial power and you will be
able to use your phone even if commercial power fails.
We are going to be ready to move forward. We have groups of
employees that are going to be staffed in addition to the
normal work hours that day to respond to any problems that may
come up that we had not foreseen. So if something doesn't come
up that we don't foresee right now, come January 1st everything
will be working. And rather than work my way through the rest
of these slides, I'll yield time and answer questions later.
Thank you.
[The prepared statement of Mr. McKenzie follows:]
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Mr. Ryun. Our next panelist is Anne Rubeck, who is the
director of Communications Technology for the Kansas Hospital
Association, of which there are 143 hospitals that are part of
this organization. And I'm particularly interested in her
testimony with regard to readiness for critical areas in rural
areas, because I know that I have a great deal of rural people
that are very concerned about what's going to be available. We
certainly look forward to your testimony.
STATEMENT OF ANNE RUBECK, DIRECTOR, COMMUNICATION TECHNOLOGY,
KANSAS HOSPITAL ASSOCIATION
Ms. Rubeck. Thank you, Congressman Ryun. We do appreciate
the opportunity to speak with you about hospitals and the Y2K
issue.
Hospitals and other health care organizations really face a
unique challenge in dealing with year 2000 issues. Not only
must their business and financial systems be ready for the date
change, but be ready to work with various insurance companies,
as well as the Federal Government. But advanced medical devices
must also be compliant so as not to jeopardize patient safety.
Hospitals recognize the tremendous amount of trust placed in
them to safeguard the health and well-being of those for whom
they care. Hospitals concern is first and foremost for the
patients that they serve.
Kansas hospitals have been working diligently on the Y2K
issue for quite some time. The Kansas Hospital Association for
whom I work has provided voluminous amounts of information and
educational programs to its members regarding identifying and
possibly replacing affected equipment, creating and
implementing Y2K readiness plans, creating awareness and
information materials for use with their communities in the
preparation of contingency plans. We have also contracted with
the Georgia Hospital Association to provide access for Kansas
hospitals to their ongoing Y2K educational series via
teleconference. Hospitals are very well aware of this issue and
we should make sure that they are.
The KHA has also participated and cooperated with the three
surveys that have been conducted by the Docking Institute of
Public Affairs which is part of Fort Hays State University. The
final report on the second survey was published in December
1998. The third survey is currently in progress. The December
1998 report states that hospitals reported the highest level of
preparation in many aspects of delivery of services.
Hospitals are also involved in contingency planning as well
as continuing to identify and work with vendors of medical
equipment. Some of the biggest challenges that hospitals face
is that each entity is unique in and of itself in the kind of
systems that they run, and in many cases the kind of equipment
that they use. So there is not going to be one solution that
every hospital can use. Each hospital has to come up with its
own way of dealing with the problem and its own way of being
ready.
But just to show that hospitals are on top of the issue,
the American Hospital Association has also conducted a survey
of the Nation's hospitals which indicates that they are hard at
work to ensure patient safety and a smooth transition of
business affairs at the end of this year. The survey shows that
90.4 percent of hospitals report that they are predicting
compliance of their medical devices or expect no adverse
effect. It is very important to note that if a medical device
is noncompliant, that does not necessarily mean it will be
nonfunctional. Many times the date chips inside a piece of
medical equipment will possibly create paperwork type errors as
opposed to anything that would have anything to do with patient
safety. Obviously this isn't true for 100 percent of medical
devices, but noncompliance does not necessarily mean
nonfunctionality. And hospitals have prepared for those kind of
situations in their contingency planning. The vast majority of
hospitals, 94.2 percent, report that their information systems
are either currently Y2K compliant or are moving toward total
compliance without major difficulties. This is the business
end, so they have two major areas that they have to follow.
As everyone knows, I think, the Y2K event is completely
unprecedented and therefore presents a tremendous challenge for
anyone who has to deal with technological devices. Hospitals
are doing everything they can to be as ready for the event as
possible, as well as making the detailed contingency plans I
mentioned before. We will continue to work unceasingly through
January 1st and beyond to ensure that patient care and safety
are protected. And that concludes my comments.
[The prepared statement of Ms. Rubeck follows:]
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Mr. Ryun. Thank you very much. The next panelist we have
been watching what's been going on in banking for some time and
I hope I'm saying your name correctly, Ed Splichal. Mr.
Splichal is with the Kansas Bankers Association with
approximately 400 members throughout the State of Kansas, total
assets of $34 billion. As we have heard before, you have done a
lot to get prepared for Y2K and we are looking forward to your
testimony.
STATEMENT OF EDWIN SPLICHAL, CHAIRMAN, Y2K TASK FORCE KANSAS
BANKERS ASSOCIATION
Mr. Splichal. Thank you Mr. Chairman and Congressman Ryun,
I appreciate this opportunity to appear before you to discuss
Y2K and its impact on the banking industry here in Kansas. I'm
serving currently as the president-elect of the Kansas Bankers
Association and am chairman of the Association's Y2K Task
Force. The KBA represents 99 percent of the 400 plus banks
presently doing business in Kansas. Our banks have been working
diligently for many months in preparation for the century date
change. Untold hours and millions of dollars have been expended
by these banks to make certain that banking operations
throughout the State will make a smooth transition into the new
year.
One of the major reasons why the preparedness has gone so
well has been the leadership role assumed by the various
regulatory agencies. I firmly believe the banking industry here
in Kansas and throughout the Nation would not be as well
prepared if it had not been for the well-planned procedures
that the Federal and State regulatory agencies required the
banks to complete by June 30th of this year.
By requiring banks to complete each phase of the Y2K
preparedness procedures by a time certain, it kept the banks on
top of the situation and avoided hurried, last-minute attempts
to be ready for business on January 1st, 2000. These procedures
included identification of possible problems, correction of
problems, testing of all date sensitive procedures, development
of business resumption contingency plans, and, finally,
verification. Banks are well aware of the serious consequences
Y2K noncompliance can have not only on their customers, but
also on the future viability of their banks and their
communities.
I'm happy to report that as of this date the technical
phases have gone well for Kansas banks. During the final months
of this year our banks will also be placing a major focus on
their customer awareness plans.
It is this phase where the Y2K Task Force of the KBA has
been most involved. The Task Force, composed of nine bankers
from various regions of the State, has established six main
goals to accomplish before the end of the year.
They include: (1) providing materials that Kansas banks
could use to in keeping their customers informed about Y2K
issues; (2) working with the regulatory agencies to exchange
pertinent information on technical, liquidity, and customer
awareness issues; (3) meeting with newspaper, radio, and
television personnel to discuss Y2K; (4) meeting with public
officials to seek their assistance in keeping the public
accurately informed about Y2K; (5) sharing pertinent
information on Y2K with all member banks in the State through
mailings and articles in the Association magazine; and,
finally, (6) implementing a statewide radio and newspaper
campaign that emphasizes the Y2K readiness of Kansas banks.
To implement one of the goals the Task Force held a meeting
with representatives from the FDIC, OCC, Federal Reserve and
the State Banking Department in March. This proved to be a very
valuable meeting for the exchange of information on what the
regulatory agencies and the banks had done to that point. We
plan to meet with the same regulators again in early September.
We have also worked to involve public officials in the Y2K
awareness campaign. Representatives of the Federal Reserve and
the FDIC plan to appear at a press conference with the Kansas
Attorney General, Carla Stovall, here in Topeka tomorrow. At
that press conference the Attorney General will discuss the
need for Kansas citizens to not be misled by Y2K rumors and
their need to be aware of possible scams that may be
perpetrated based on those rumors. I would once again emphasize
how pleased we have been with the cooperative attitude
displayed by the regulatory agencies and public officials in
working with us on these issues.
In the articles I have written for our Association magazine
I have tried to stress the need for banks in each county to
work together in developing their customer awareness plans,
organizing community informational meetings, and initiating
discussions with the local media. I have also emphasized that
banks must also develop a strong customer awareness program so
that all customers will understand what the banks have done to
make sure all systems will function smoothly as the new year
begins. The response that we have had to the customer awareness
packet prepared for us by the KBA Task Force would indicate
that banks are taking this responsibility very seriously and
will continue to do so for the next 6 months.
We have also discussed with the banks the need to have
sufficient liquidity at the end of the year in case it's
needed. The Federal Reserve has been very helpful in working
through these details since Kansas is a large State and many of
our community banks are located in areas many miles from urban
centers. This is an area of the Y2K preparation process that
our Task Force will continue to monitor closely in the coming
months.
We appreciate the efforts in Congress to try to bring some
common sense to the area of Y2K litigation. We have no
objection to legal action against any corporation that has
failed to properly prepare for the date change. But there
should be limitations that would diminish the possibility for
frivolous litigation relating to Y2K problems. Without such
legislation there is a very significant risk that litigation
may be even more costly than the technical preparedness for Y2K
has been.
We are well aware there is no margin for complacency in and
bankers in this State plan to continue testing our systems,
working with our customers and staying in close contact with
our regulators to make sure it will be business as usual when
the year 2000 dawns.
[The prepared statement of Mr. Splichal follows:]
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Mr. Ryun. Our last panelist is Al Lobeck from WIBW, he
represents the Kansas Association of Broadcasters which
represents 90 percent of all the TV and radio stations in the
State, it includes 22 TV stations and 140 radio stations. He
also represents Jim Cates, who this morning was gracious enough
and throughout the week to make people aware of this time
today. I appreciate your support and am looking forward to your
comments.
STATEMENT OF AL LOBECK, NEWS DIRECTOR, WIBW RADIO, KANSAS
BROADCASTERS
Mr. Lobeck. Thank you very much. We go from the KBA to the
KAB.
The Kansas Association of Broadcasters has prepared a
handout that's in the packet that you have that goes into quite
a bit of detail illustrating not only what Kansas broadcasters,
but nationally broadcasters are doing and what the Federal
Communications Commission has advised to be done.
As one Kansas Association of Broadcasters board member
said, Y2K is like a tornado warning for which we have months to
prepare. Like a tornado, Y2K could be very serious, or it might
not be serious at all. No one will know until the time is here.
As in any disaster, preparation is the key to minimizing the
impact of a potential Y2K disaster.
Broadcasters throughout the State and the Nation are
working diligently to prepare for any possible problems that
might occur. And, for example, the Kansas Association of
Broadcasters at their annual convention, which will be in
September, are having several panels to discuss fine tuning any
plans that are out there.
A bit of background about our particular operation so that
you can understand the impact that our stations could have for
communication in the community and to show you what we have
done to prepare ourselves. WIBW the AM station is the 14th most
powerful signal in the United States, it has the 14th largest
coverage area. We broadcast farm news in the mornings, regular
news and sports and talk programming such as you commented on.
Our FM station is Topeka's most listened to radio station, 97
Country, and broadcast news and weather as needed at times.
Our five person news staff also operates the Kansas
Information Network which is a news organization that
broadcasts via satellite to about 40 stations throughout the
State of Kansas. So we have the ability to communicate
statewide on a regular basis, and we do.
We also originate the Kansas Agricultural Network which has
about 40 stations that also broadcast agricultural news on a
daily basis.
We are also a key entry point for the emergency broadcast
system which, as you well know, is designed to notify the
public here as well as statewide almost instantaneously of any
kind of emergency. And we are also the emergency notification
station for the Wolf Creek power plant, so if there is a
problem there, they call us and we broadcast it.
I want to give you that background so you can understand
that we do take the coverage of news and providing news to the
public very seriously. As a result, for years we have had the
capability to be able to broadcast completely without the
benefit of telephone lines or electricity from the public
utilities. We have emergency power generators at both of our
transmitter sites for the AM and FM as well as at our studios.
So we don't anticipate that there will be any interruption of
any kind for our broadcasting and would be ready to do anything
that would be necessary to communicate to the general public.
I would point out that the Federal Communications
Commission has made a couple of comments that I would like to
read from this particular sheet. And according to their
assessment, they said the public should continue to have access
to critical broadcast news, emergency information, and
entertainment services on January 1, 2000. Individual Y2K
related disruptions should be isolated and because virtually
all listeners and viewers have several free over the air
broadcast servers available, service outages that may occur
likely will leave affected viewers and listeners with several
alternative broadcast stations.
They also point out some hints which I thought were rather
interesting and I wanted to mention them here in case someone
doesn't get a copy of that. The Federal Communications
Commission suggests that you consider having a battery powered
radio or television set available with sufficient supply of
batteries. If a station suffers technical difficulties, tune to
another station in your area for information. If you use your
VCR tuner to change stations on your TV set, be sure you know
how to bypass the VCR in case it has technical problems.
And, finally, they suggest you have a television antenna
handy in case there would be a disruption of cable TV.
[The prepared statement of Mr. Lobeck follows:]
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Mr. Ryun. Thank you for your comments. We are looking
forward to some questions. I would like to begin with Mr. Park,
if I may.
As I have traveled and as we have all tried to evaluate all
of what's going on with regard to readiness for Y2K and the new
millennium. There seems to be a single threat that ties all
this together and that comes back to the electricity. What
assurances can you give us that everything is going to work,
that the lights will be on whether we have a holiday January
1st or not? Have you had an entire systems check, so to speak,
or how have you proceeded in that regard.
And then kind of a part (b) if I may, it was actually asked
during the first panel questions with regard to rail cars,
whether you have enough rail cars to get coal to your plant to
provide sufficient energy.
Mr. Park. That's a mouthful. I'll try to address all of
those. First of all, as far as assurances that there will be no
power outages, of course I can't do that because I can't give
you assurance that the next thunderstorm that comes through
wouldn't cause a power outage. What I can assure you is that we
have tested all of the critical systems necessary for us to
provide power. We have simulated moving those systems into the
21st century. We have tested the critical dates many of the
people are unaware of. Everybody knows January 1st is the date
that we seem to be concerned with, but there are about 14 other
dates that we have also tested that we feel could cause
problems if a computer chip misbehaves.
Mr. Horn. For the sake of the record, could you maybe
identify some of those dates that have already passed, so they
will understand that.
Mr. Park. Of the dates that have passed, January 1st, 1999,
because any program that does a year forward look would be
looking forward to January 1st, 2000. So we passed January 1st,
1999 without a problem. September 9th, 1998 would also be the
same one year look forward for September 9, 1999 which deals
with the 9/9/99 situation. July 1st was the beginning of the
fiscal year for many organizations, and that is essentially
2000 in the fiscal year. That date is now relatively in the
past.
So we have done this testing. The results of our testing
shows no issues that would cause power to have any outage that
wasn't connected with an ice storm, a thunderstorm, lightning
strike, an errant driver hitting a utility policy and knocking
wires down. Those kind of outages could still occur, certainly.
But we don't expect system-wide outages.
I would like to address this rail service question that was
asked of the earlier panel. I don't know where the person who
asked the question got his information, but that is 180 degrees
opposite from the information we have from the railroad. The
assurances we have from them is that they have done similar
remediations of their systems, they don't expect interruptions
to rail service. Because we cannot control the rail service,
however, one of our contingency plans is to stockpile coal.
Three of our power plants are coal fired and we have on a
normal basis anywhere from 30 to 45 days of coal stockpiled. So
even if there is a brief interruption of a few days to even a
few weeks in the rail service, which we don't expect, but if it
happens we will be ready for it with coal on hand.
Mr. Horn. I'm just picking up also some of the things from
the previous panel. ``How can you have unknown ready dates for
key programs in Federal Government . . .'', and Mr. Willemssen
we will have you come back and bring your chair, we always
include Mr. Willemssen with the second panel because he brings
the national and international perspective to this, ``. . . on
various dates for key programs? Does this mean anticipated
failure of those systems on January 1, 2000?'' No, I don't
believe they do. I will leave it to Mr. Willemssen.
Mr. Willemssen. I think some of the dates that were talked
about earlier, some of the key dates that Federal agencies are
testing for also. In addition, obviously the 2/28, 2/29, 3/1
roll over next year. So many of those dates are also being
tested for.
Mr. Horn. A question for Western Resources. ``How much have
you spent on Y2K to date?''
Mr. Park. Chairman Horn, we have spent approximately $6.5
million on our efforts, and our total budget we are estimating
is right at $7 million.
Mr. Horn. For Western Resources also, ``What are you doing
to combat terrorism via hacking?''
Mr. Park. We have systems in place to prevent that. I would
prefer not discussing them publicly because that would defeat
the purpose of some of the protective measures that we have put
in place. We do have measures put in place to protect our
computer systems, though.
Mr. Ryun. Mr. Chairman, may I interrupt for a question
along the lines of what you're talking about?
Mr. Horn. Sure.
Mr. Ryun. Following the line of thinking with Mr. Park on
the cost involved. The Federal Government has at this point
spent roughly $9 billion.
Mr. Horn. Right, by the end of this fiscal year.
Mr. Ryun. How many billions of dollars will the private
sector have spent?
Mr. Horn. Well, the original estimate of the computer
consultants, they were one of our witnesses when we started in
on this in April 1996, they said this is a $600 billion
worldwide problem. Since we are half of the computers in the
world we are $300 billion and the rest of the world was $300
billion. And I asked what do you think the executive branch
will cost us, they said it will be about $30 billion. And
within about 5 months I said my instincts looking at this is
that it will be around $10 billion. Right now I'm closer than
the experts are. That's simply a hunch. It turned out that way.
But they are going to spend about $9 billion through this
fiscal year, and that's 3 months, October, November, and
December, prior to January 1st.
So let me ask you on Western Resources, how many plants do
you have that you have to worry about? Did you go plant by
plant?
Mr. Park. Yes. We have seven power plants that we went
through all of the systems, and each of them were tested.
Mr. Horn. And each of them are now in conformity?
Mr. Park. Yes.
Mr. Horn. As part of the grading of the Federal Government
progress we recently evaluated readiness of 43 essential
Federal programs, I'm just reading that inclusion to a number
of questions. For some programs like food safety inspection,
public housing, we remarked that the program readiness was
unknown because we needed more data as to when the computer
systems and contingency plans would be ready. Social security
has had an A from us in every corner. Social Security also gets
an A on the program money going out. They not only started it,
but they stuck with it. It took them really 10 or 11 years.
And so the other I mentioned was the weather system, they
have got a fancier name now, but it's still the weather system
as far as I'm concerned, it means the farmers will find out
when a storm is coming in Kansas. And we have obviously a whole
series of things such as Medicaid and Medicare that we aren't
convinced yet that they have got this thing working right up to
January and in compliance before January 1st, I think they
will.
Federal Aviation is another one. I've held four hearings on
that this last year and the Aviation Committee of the House has
held another hearing and so it goes. But we think that will be
in good shape based on the current administrator and what she's
doing. So I think we can fly. As I have said to many, she and I
are both flying that night. I'm going to Los Angeles, she's
going to New York. I hope the plays are good and I hope Los
Angeles' weather will be good because it will be snowing at
Dulles or getting ready for it to snow on January 1st. My wife
thinks I'm crazy, but that's OK, that isn't a new thought. I
just thought I should give my faith over to the air
controllers. And I have told the Administrator not to mess with
them before we get on board.
Southwestern Bell, ``Just last week there was a software
problem that created a temporary 3 hour phone outage.
Supposedly this was not Y2K related. And realizing there can be
problems at any time, when will the contingency plan be
implemented, 1 hour, 2 hours, 3 hours, etc.?'' Do you have any
estimate on that?
You're absolutely right. When President Kennedy was
assassinated everybody picked up the phone in Washington and
everything came to a standstill, and that can happen any day as
people wonder about their friends and relatives and so forth.
Mr. McKenzie. Our network has been improved since the
Kennedy assassination so that when everyone does pick up their
phone, there are essential lines that are maintained such as
pathways between emergency agencies, so it won't be as serious
of a problem as it was back then. Contingency plans for us kick
in instantly once we realize there is a problem. We have dealt
with disasters since the beginning of telecommunications, we
know how to deal with disasters.
The problem last week, and I'm glad it came up because it
was not Y2K related. A very good technician of ours made an
error when making a software upgrade. And he instantly knew he
made an error, we ended up rebooting the system to make it work
right. The system never completely failed, it just moved slow.
We are now working with the provider of that piece of equipment
so that we also have a fail safe should another technician
sometime in the future make that error. I have been in this
business 20 years and I know one technician for sure in Topeka,
KS that will never make it again.
Mr. Horn. Isn't the Internet designed to solve that problem
if there was a catastrophe to get around the obstacles? To what
degree are there plans to use the Internet? That's why it was
started, it was for National Security.
Mr. McKenzie. I was told it was to collect taxes.
Mr. Horn. You have just given us an idea. Frankly, they
would try to tax the air if they could.
Mr. McKenzie. With the exception of very few, most people
access the Internet via Southwestern Bell. So the contingency
plans we have in place for local telephone voice calling is the
same that we have in place for data communication.
Mr. Horn. But I just wondered, you haven't really tried the
Internet at this point to see if that would be helpful?
Mr. McKenzie. I do not have a specific contingency plan
that depends on the Internet to answer your question directly,
no.
Mr. Horn. I just wondered if anybody has given thought to
that. I probably should ask the Vice-President, apparently he
invented it. He would take that in good spirit.
``If hospitals can't get their bills out correctly over the
systems they have now, how can they truly assure us, convince
us, that things will go smoothly?''
What's the answer to that, Ms. Rubeck?
Ms. Rubeck. Well, as I said before, each hospital has to
deal with its own unique situation. Billing errors are not
unique to the health care industry, as I myself can attest, and
errors do occur. Because humans are entering the data, errors
do occur. What I can assure you is that first and foremost the
very first line of attack that hospitals took was inventorying
every piece of medical equipment in their hospitals and
contacting vendors, finding out by serial number about
compliance, yes or no. If it's no, it's replaced.
So patient safety has always been the very first and
foremost concern and was the first thing addressed. The
business issues, the business side of it, is also being
addressed. And while I can't say that no errors are ever going
to occur, because errors occur now, and, like I said, it's not
unique to our industry, I know from working with the
information systems people in Kansas hospitals that those
systems are also being addressed in detail.
Part of our concern and something that was expressed in the
earlier panel is the interfaces that we have to make with
various insurance companies, including HCFA for Medicare and
Medicaid claims. If HCFA isn't ready, hospitals will be
affected very adversely or they could be. We also like to make
the assurance that regardless of whether that system is up and
whether our hospitals are able to communicate with HCFA. That's
a separate issue from patient care. Patients will continue to
be cared for regardless of what paper snarls we have to
untangle.
Mr. Horn. Last year when we were in Cleveland we had
excellent testimony as to what they had examined in terms of
emergency room particular equipment. There is a Website
nationally where all hospitals can plug in their particular
thing, whether it be x ray or whatever, MRI. And I take it
you're all using that same thing to save energy, because if you
put the model number, manufacturer, it's all there. If it isn't
there, you make a new entry.
Ms. Rubeck. Right. It is a fee based service. We have made
that available to our hospitals at an extremely reasonable cost
because especially many of our rural hospitals, aren't able to
pay thousands and thousands of dollars to find this.
But there is a service on the Internet where you can any
time of day, 24 hours a day, 7 days a week you can find a piece
of equipment by serial number and get the manufacturer's
statement of compliance or noncompliance.
Mr. Horn. The Nuclear Energy Regulatory Commission told us
that they were monitoring about 10 percent of the reactors. We
questioned that and we still haven't heard from them in
writing. We wanted 100 percent. They said orally that, ``Well,
we have different types of reactors than the French do and
thank heavens than the Soviets do.'' So they are not worried as
much as some people are. We don't have that many reactors in
this country, rather than only 10 percent of them. So I don't
know if any of you can comment on that. Any of you use nuclear
reactors to generate power? Mr. Park.
Mr. Park. Chairman Horn, Western Resources is part owner of
Wolf Creek Nuclear Power Plant. We are not the operating agent
so it's the Wolf Creek Nuclear Operating Corp. that runs that
plant. But we have worked very closely with them. And my
counterpart at Wolf Creek, Mr. Bill Eils, and I work together
on many occasions, share information, share readiness progress
on both of our projects. I know that the NRC is looking at Wolf
Creek because they have been there to do an audit, which Wolf
Creek passed with flying colors.
I also know that the NRC has issued a generic letter to all
nuclear power plants that requires them to be ready and certify
their readiness to the NRC to keep their operating license
valid. To my knowledge Wolf Creek is fully on track to be able
to certify to the NRC that they are ready and expect to keep
their operating license.
Mr. Horn. The question that gave me the information for the
other part says that utilities themselves you have to remember
are self-reporting. And that's of course our situation in
looking at each Federal agency, those are all self-reporting.
When we send the General Accounting Office they verify that,
and the Inspector General's of the various agencies verify
that, and they also hire outside consultants to verify that.
And the proof in the pudding, of course, will be on January 1,
2000 to see if the information given us in the last quarter or
last 2 to 3 years is accurate. If it isn't accurate, they will
have a few problems. So this nuclear regulatory review
apparently was requested by the Department of Energy.
And in fact the author of the question says, ``The real
test of Y2K readiness on an industry level is set for September
when a full dress rehearsal of December 31, 1999 will be
simulated.'' On another question he says, ``If electricity is
such a critical measure, why was it decided to report via a
self reported survey and what level of oversight is provided
directly inside the utilities themselves?'' Since we have two
utilities here, give us your best shot as to your verification
system if it's self reported.
Mr. Park. It is self reported, but I think that if we were
reporting anything grossly different from the majority of other
utilities, the other electric utilities in the country, that
might raise some eyebrows. The fact that that is not true would
lend credence to the fact that what we have found through our
remediation, and it is admittedly self reported to NRC, we are
finding the same sorts of things that the majority of other
utilities are finding.
On a different note, we have had an external agency in to
audit our year 2000 efforts, an independent auditor, Arthur
Andersen. So it wasn't just our own eyes looking at this.
Mr. Horn. Mr. McKenzie.
Mr. McKenzie. I'm not familiar with our self-reporting
requirements. I know the process we have followed within the
company has been to find the problem, fix the problem, test the
problem, physically use whatever has been fixed and then we
have pretty much celebrated from that point on. There is no
gain for us to pretend we did something we didn't do or to hide
something that didn't work right.
Mr. Horn. And the individual that wrote this question on
the nuclear power industry points out that the banking industry
is onsite regulated by various regulatory agencies that require
outside verification of that. And apparently the Department of
Energy really has not required that, but they have asked the
Nuclear Regulatory Commission to take a look at it. And that is
in part an outside agency. And presumably some of the State
public utilities commissions have done that.
Have you been in States where that's true, where they want
outside verification? Say the Kansas Public Utility or if you
go outside of Kansas, you have a number of States, I would
think, in your area, don't you?
Mr. Park. Actually, for electric service we deal with
Kansas. And the Kansas Corp. Commission has inquired into our
readiness. However, they have accepted the NRC status report,
that's North American Electric Reliability, the organization
that we have been reporting to on a monthly basis. The Kansas
Corp. Commission receives that data and accepts that as our
input to them.
Mr. Horn. One general question for all of you. ``To what
extent are you relying on suppliers and how can you be certain
that those organizations and its products are year 2000
compliant?''
Mr. McKenzie. I'll go first. We have about 1,400 suppliers
that provide us with about 15,000 different products, and we
are about 96 percent compliant with them right now. They test,
we retest and we use it to prove that it really does what the
test says it will do. Again, we are 96 percent complete with
that process.
Mr. Horn. Any other comment on that?
Ms. Rubeck. Hospitals deal with many suppliers, whether
it's from medication to basic medical suppliers, many kinds of
things like that. I know that the American Hospital Association
is assisting us in making sure that supply lines will be
operational given any number of contingencies. And like many
other agencies here, much of hospital planning is very similar
to disaster planning. If supply lines are down, laying extra
supplies, power generators, that kind of thing is all part of a
hospital's preparedness for any kind of disaster.
So I know personally, at least anecdotally, of many
hospitals that are contacting every single person they do
business with to assess their Y2K compliance. I'm filling out
four to five surveys from our own members every week wondering
whether the Association is year 2000 compliant. Even though we
have no connection with how they provide patient care or how
they do any kind of billing. Every single entity that they do
business with, they are contacting.
Mr. Horn. Any other comments? Mr. Willemssen, any comments?
Mr. Willemssen. No.
Mr. Horn. Let me close out the questions with posing an
answer, and the question is obvious. Our staff director, Mr.
George, happened to buy the Kansas City Star today and the Ann
Landers column is worth reading.
It says,
Dear Ann, please warn your readers about a scam I just
heard about, elderly folks are particularly vulnerable. Here's
the way it works. The con artist calls and says he or she
represents the person's bank, he informs the person that the
bank is having difficulty meeting requirements to be computer
ready for Y2K. The con artist says, ``The bank needs you to
transfer your money to a bond account structured to protect
your money until the bank can be fully Y2K compliant.'' Then he
asks the person to confirm his or her account number and give
verbal authorization to transfer the funds. This is a huge
scam, banks are almost all Y2K compliant and would never ask a
client to confirm a bank account or its number over the
telephone. If you give out this information, these con artists
could get their hands on your money and you will never see it
again.
Please, Ann, tell your readers never to give out this kind
of information no matter who asks, and to report such calls to
the phone company or the State Attorney General's Office. Thank
you for getting the word out. ----SP in Missouri.
your neighbor.
Dear Missouri, some scam artists are so smooth and sound so
convincing that the average person would suspect nothing. Your
admonition never to give an account number or approval for
transferring funds over the phone should be carefully heeded.
Thank you for the heads up.
So, you know, scum are scum and the scum are the ones that
are now working the Y2K problem. So that's a pretty sad state
of affairs.
Mr. Chairman, I'm going to thank the staff who participated
in this. J. Russell George, the staff director and chief
counsel seated down there. Matthew Ryan is the senior policy
director for the year 2000 hearing. Patricia Jones in the
middle down there is the American Political Science
Association. Grant Newman is the clerk for the subcommittee,
and we have the three interns in Washington did a lot of work
on this, Lauren Lufton, John Phillips and Justin Schlueter.
And from Congressman Jim Ryun's office, they have been very
helpful. I must say Kansas has the nicest people I have run
into in a long time. Mr. George is from New York, so he's not
used to that kind of treatment. But I kid him a lot. We go up
there and we can't find the subway, we went into the mayor, he
said, we know where it is.
Anyhow, Michele Butler, chief of staff, we thank her very
much. And Amy Glaze, the constituent service representative,
Ron Cheevers the department of administration here in the
Governor's area, and the court reporter Sandy Rider. Thank you
for the help.
And, Mr. Chairman, I am yielding back to you, we are going
to recess to the Illinois hearing and then the Michigan
hearing, so this is a continuing body here like the U.S.
Senate.
Mr. Ryun. Mr. Chairman, first of all, let me say thank you
very much for coming to Topeka. I know I can speak for all of
us that we have been greatly informed, we have learned a lot,
there are still questions to ask, but I also know that as a
result of your presence and the panelists and the information
that they have provided, you have helped accomplish three of
the things that I had hoped to do.
I might mention that my coach Bob Timmons is here, he's the
one who taught me at a very young age it's always worthwhile to
have a goal and purpose. I actually had three purposes for this
time today. One was to dispel the rumors, to be able to provide
answers. Another was to provide information, to let those that
were listening and also the subcommittee to be able to glean
information from this part of the country. And also the third
part was to ask and answer questions. And it's been very
interactive.
I know we did something today, actually the first time,
that is passed out little cards so that there would be
interaction from you, the constituents having an opportunity to
ask questions.
So on behalf of all of Kansas I would like to thank you and
the subcommittee for coming and thank all of you for coming
today. And let's just say that if there are other questions or
other concerns that you have, the office of the Second District
does stand open ready and willing to help you.
And I guess it's mine to say that we are now in recess.
Thank you very much.
[Whereupon, the subcommittee was recessed subject to the
call of the chair.]
OVERSIGHT OF THE YEAR 2000 TECHNOLOGY PROBLEM: LESSONS TO BE LEARNED
FROM STATE AND LOCAL EXPERIENCES
----------
THURSDAY, JULY 8, 1999
House of Representatives,
Subcommittee on Government Management, Information,
and Technology,
Committee on Government Reform,
Naperville, IL.
The subcommittee met, pursuant to notice, at 9:10 a.m., at
Naperville City Hall, Naperville, IL, Hon. Stephen Horn
(chairman of the subcommittee) presiding.
Present: Representatives Horn and Biggert.
Staff present: J. Russell George, staff director and chief
counsel; Matthew Ryan, senior policy director; Grant Newman,
clerk; Patricia Jones, American Political Science Association
congressional fellow; Bonnie Heald, director of communications;
Kristin Wolgemuth, legislative director; Kathy Lydon, district
chief of staff; John Hoffman, district director; and Yadira
Rosas, staff assistant.
Mr. Horn. The hearing of the House Subcommittee on
Government Management, Information, and Technology will come to
order. I would like to welcome and thank your representative,
Congresswoman Judy Biggert, who is the vice chairman of this
committee in Washington, for being such a gracious host as the
subcommittee meets in her hometown here of Naperville. It's a
beautiful area, as we told your distinguished mayor, George
Pradel, and we are most grateful for all the courtesies that
have been given to the subcommittee in making these
arrangements with both Congresswoman Biggert's staff and the
mayor's and city's staff. It's a lovely area you're in.
The year 2000 computing program affects just about every
aspect of Federal, State, and local government operations.
Furthermore, it affects private sector organizations and could
impact the lives of most individuals.
From Social Security to utilities to local emergency
management, the year 2000 computer bug has certainly been a
large management and technological challenge for all of us. No
single organization, city, State, even country can solve the
problem alone.
The problem, of course, dates back to the mid-1960's, when
you had computers that would fill a room this size, and right
now your personal computer contains more storage than they had
in the sixties. So somebody had the bright idea, look, we use a
lot of dates, why are we punching in 1967, why don't we just
put in '67; and we moved from a 4-digit year to a 2-digit year.
And they knew at the time that as you got to the year 2000,
you'd have some trouble. In other words, January 1, 2000, on
the computer, it's 00. The 20 is not there. So the computer
thinks it's 1900 and you're back to the days of McKinley. Might
not be too bad, but there it is. And they said, Oh, well, we're
Americans, we'll solve that. Technology will solve it.
Technology has not solved it.
In the estimates we had in our very first hearing on this
in April 1996 when we started this in the Congress was that it
was a $600 billion worldwide problem and since America has half
the computers, it is a $300 billion American problem. And I
asked at that time, what would it cost to remedy and adapt the
Federal Government's computers, and the Gardner Group estimate
was $30 billion. As the year went on and I held more hearings,
I thought they were a little high and turns out I'm right and
they're wrong, but they get a lot of money as consultants and
we don't; that is, the fact that we are spending $9 billion in
Federal money to get their computers adapted in the executive
branch between now and the end of the fiscal year on September
30th. It might well get to $10 billion before we're done. But
again, there's no simple solution to this, but hard work of
going through the various codes and all of this.
Current estimates show the Federal Government will spend
going on, as I say, $9 to $10 billion. The President's Office
of Management and Budget has identified 43 essential Federal
programs such as Social Security, Medicare, the Nation's air
traffic control system. Each day these programs provide
critical services to millions of Americans. Of these 43
programs, 10 are federally funded State-run programs, including
Medicaid, food stamps, unemployment insurance, and child
support enforcement. Several of these State-run programs are
not scheduled to be ready for the year 2000 until December,
leaving little if any time to fix unforeseen problems.
Data exchanges and interdependencies exist at all levels of
government and throughout the private sector. A single failure
in the chain of information could have severe repercussions.
For example, let me briefly illustrate how the U.S. Social
Security program uses computers. The Social Security
Administration was the first to deal with this problem. No
President told them to do it. They just did it and it's the
best run agency, without question, in Washington. It was in the
sixties, and it is in the nineties. And so they started on
adapting their tapes where they had millions of code that had
to be checked. They are fully in compliance now with the year
2000 and there shouldn't be any problem.
But they provide the data to the financial management
service of the Department of the Treasury that actually cuts
the 43 million checks for one part of Social Security and 50
million checks a month in another part. Turned out the
financial management service in the Department of Treasury was
having real trouble, and over the last few months, by focusing
on them, they've pulled out of that and they now cut the checks
and electronically deposit it in your bank account. And there
are a number of other organizations that are related to that.
So what we're talking about here is a very interactive,
interrelated system and many of the Federal agencies, when we
said what's your contingency plan, they said our contingency
plan is the post office. In other words, if we can't work the
code and we can't get the electronic deposits, we'll just mail
it to them. Well, that didn't quite work. We had the post
office before us and the post office had no contingency plan if
they dropped down. So those are the kind of things that you run
into.
The bottom line is if any of these entities fail, from the
Federal Government to the local bank or the Postal Service, a
deserving individual will not receive the payment. Now multiply
the situation by millions of people that receive Social
Security benefits. There's 43 million in one program, 50
million in the other, and you can appreciate the magnitude of
just one aspect of the year 2000 issue.
Fortunately, the Social Security Administration has been
working on the problem. As I say, it's in good shape. But the
computers to work, we need power, and that's one of the
questions we asked everywhere we go.
We are holding six of these field hearings this summer. We
started in Topeka yesterday, recessed to Naperville and will
recess to Detroit and then we will be back in Washington for
the opening of the session again.
So electric power is key here because thousands of plants,
if that power due to either a malfunctioning microchip or
whatever it is, is not delivered, we will just have people laid
off and everything else. But I don't think that's going to
happen if we all do what we have to do and we're going to be
glad to hear it from the companies that relate to the power,
whether it's coal or hydro or wind or solar, nuclear; whatever
it is, we're asking that question.
So we want the lights to stay on. From a personal
standpoint, I realize when confronted with a personal
emergency, I can call assistance 911 and feel confident the
phone will be answered appropriately and a competent authority
will respond rapidly.
Well, in some areas we're having a problem on that.
Sometimes there aren't enough frequencies for law enforcement
areas. When we went through emergency planning in Los Angeles
County, it would have been 10 years ago at this time, we
realized most of the frequencies were in New England and the
East. We needed them in the West. We have 81 cities in the
county of Los Angeles which has 10 million people and when you
need all those police departments and sheriffs' offices to
merge, you have real problems in coordination, be it an
earthquake, a fire, a flood, whatever.
And Illinois is used to floods and other things, just as
we're used to all of them and we don't have tornadoes that the
South seems to have. Although we did have a roof torn off in my
hometown last year, which had never happened in 100 years. One
thing for sure, there are only about 176 days till January 1,
2000. The clock is ticking and, accordingly, the testimony we
receive today is very important and we thank the witnesses for
coming.
Let me explain some of the procedure. Mrs. Biggert will
preside at this session as the vice chairman of the
subcommittee. I'm simply here to ask a few questions now and
then. She will swear in the witnesses. This is an investigating
committee of the House of Representatives so all of the
witnesses, when that panel comes up, if you would stand before
we start, raise your right hands, and Mrs. Biggert will
administer the oath. Then we will go down the line, based on
the agenda, and one by one we will hear the testimony.
And we have your written presentations. They will
automatically go in the record when she calls your name, and
then we'd like you to spend 5 minutes, not more than that, to
give us sort of a summary orally. We don't want you to read
your statement. If that happens we'll be here till midnight,
and we can't because we've got to be in Detroit. So 5 minutes
will be when the gong comes.
Mr. Ryan, the counsel to the subcommittee, among others
here, will put up the 1-minute marker so you know you've got 1
minute to go to finish that particular round. The reason we do
this is we want a dialog to occur after you make your key
points. We want the panel to interact with itself. We want Mrs.
Biggert and myself to interact with you, and we are also asking
the audience for questions.
We will be passing out cards, and if you have a question
particularly of this panel, please, if you know what the
subject is, just enter the type of area, and say here's the
question; it will be picked up; we will eliminate the
duplicates because seven people will have the same question;
and put it to them after the panel is done with its
presentations and then that will get the audience into it. It
will get Mrs. Biggert and I into it, and our own staff has
already given us, I don't know how many questions, which we do
just as we go through the testimony. So we hope that way we do
get all the issues on the table.
And now it is my great pleasure to turn it over to the vice
chairman of the subcommittee who's conducting the rest of the
hearing. Thank heavens.
[The prepared statement of Hon. Stephen Horn follows:]
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Mrs. Biggert. Thank you, Mr. Chairman. Welcome to the 13th
Congressional District of Illinois. I'd like to say, with as
much modesty as possible, that you are in one of the most
vibrant and exciting parts of the country right here in
Naperville, IL. I'd also like to thank Mayor Pradel and the
city council and the city of Naperville for allowing us to
conduct the hearing here today. It is a wonderful facility and
we really appreciate being able to hold the hearing here. Let
me thank all of you for coming here today.
The purpose of our hearing today, which we have entitled
are you Y2K OK, is to help people understand what they should
expect from the millennium bug and how they can prepare. I
think our panelists today will help to answer the questions
that many of us have.
The media is full of stories about the Y2K bug. I'm told a
disaster movie is on the way. One of my younger staff members
even informs me that it was the basis of an episode on
``Beverly Hills 90210'', obviously I can't--that doesn't roll
off my tongue, so I haven't watched it. I suspect also that
programmers who dropped the two digits from their computer
codes had no idea that they were actually developing plot lines
for Hollywood. But the Y2K bug is not simply a creation of the
media. It is real and it is coming.
A recent poll showed that more than two-thirds of Americans
believe that they will experience at least minor problems
related to the bug. I think they are right to be at least a
little concerned. There should be some disruptions in services.
There may be some shortages. I believe that we should prepare
for this as we do for a big snowstorm. This is Chicago land and
there may be no serious Y2K problems, in which case you'll be
ready for the next snowstorm which inevitably will come
probably in January or February, right after the turnover.
So what does it mean to prepare commonsense things? I think
we should have extra food and water on hand. Make sure your
car's gas tank is half full. If you take prescription
medicines, to have at least a week's supply. And I think the
panelists will come up with a whole list of things and advice.
Since I don't expect America to suddenly become a set for a
disaster movie or even anything close, in many ways our Nation
is prepared for the Y2K bug but in other ways we are not. As
the vice chairman of the subcommittee, I can say that there has
been a lot of progress in the Federal Government, largely
because of Chairman Horn's efforts to raise awareness of this
issue.
But it troubles me, for example, that the Air Traffic
Control System is not yet prepared and we have not been given a
date when it will be prepared. Does that mean that the planes
are going to be falling out of the sky on December 31st?
Absolutely not. But I can tell you that I might not be in the
air that day. I don't travel during snowstorms if I can avoid
them and I don't plan to travel as the clock ticks over. But if
progress continues to be made, and I think it will, there may
only be some small glitches. But as a former Girl Scout, I am
taking to heart the advice of ``be prepared.''
So I look forward to hearing from the panelists today and
what we should be doing and what we don't have to do because
the year 2000, January 1st, should be a time of celebration. It
is the turn of the century so we want to make sure that we can
enjoy the rollover and not have to worry about these glitches.
I think I'll swear in the panelists and then introduce
them. If you could all stand, please.
[Witnesses sworn.]
Mrs. Biggert. Today we'll have three panels and then we'll
have questions after the first panel. Speaking first today will
be Joel Willemssen. He's from the General Accounting Office in
Washington. With the way that the weather has been in
Washington, I suspect that he's probably glad to be out of
Washington for a few days since they've had weather over 100
degrees. And Joel has testified before our committee many
times, and his agency is really the watchdog of what the
Federal agencies are doing. So we look forward to his
testimony.
Mary Reynolds is the chief technological officer for the
Office of Governor Ryan in the State of Illinois and is an old
friend. I'm happy to see her. I miss being down in Springfield
and seeing all my old friends.
Don Carlsen is the information systems director of the city
of Naperville and will be talking about the city services that
are being affected. And this is his hometown, and I know we'll
hear good things from him.
Tom Mefferd is the coordinator for DuPage County Office of
Emergency Management, and we're in the heart of DuPage County,
so thank you for coming, Tom.
Robert Martin is the manager of water operations for the
DuPage Water Commission, and the water commission provides
service to 700,000 residents, so he's got a big job to ensure
that that water will be ready for us on the rollover.
So thank you all, and we'll begin with Joel Willemssen.
Thank you.
[The prepared statement of Hon. Judy Biggert follows:]
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STATEMENTS OF JOEL C. WILLEMSSEN, DIRECTOR, CIVIL AGENCIES
INFORMATION SYSTEMS, GENERAL ACCOUNTING OFFICE; MARY REYNOLDS,
CHIEF TECHNOLOGY OFFICER, ILLINOIS GOVERNOR'S OFFICE; DON
CARLSEN, DIRECTOR OF INFORMATION SYSTEMS, DEPARTMENT FOR THE
CITY OF NAPERVILLE; TOM MEFFERD, COORDINATOR, DuPAGE COUNTY
OFFICE OF EMERGENCY MANAGEMENT; AND ROBERT MARTIN, MANAGER OF
WATER OPERATIONS, DuPAGE WATER COMMISSION
Mr. Willemssen. Thank you, Vice Chair Biggert, Chairman
Horn. Thank you for inviting GAO to testify today.
As requested, I'll briefly summarize our statement on the
Y2K readiness of the Federal Government, State and local
governments and key economic sectors.
Regarding the Federal Government, the most recent reports
indicate continued progress in fixing, testing, and
implementing mission-critical systems. Nevertheless, numerous
critical systems must still be made compliant and must undergo
independent verification and validation. Our own reviews of
selected agencies have shown uneven progress and remaining
risks in addressing Y2K and therefore point to the importance
of business continuity and contingency planning.
If we look beyond individual systems and individual
agencies, the Federal Government's future actions will need to
be increasingly focused on making sure that its highest
priority programs are compliant. In line with this, the Office
of Management and Budget has identified 43 high-impact programs
such as Medicare and Social Security and, as you know, Mr.
Chairman, we're currently reviewing those programs for you to
determine the executive branch's progress. But what I can tell
you at this point, it is very clear that much additional work
is needed to make all these programs compliant by the turn of
the century.
Available information on the Y2K readiness of State and
local governments also indicates that, overall, 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.
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, March 1999,
the 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 priority areas I mentioned
earlier, 10 of these are State-administered Federal programs.
OMB reported data on the system supporting these programs
shows that numerous States aren't 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 has not
yet been independently verified.
Beyond the risks faced by our governments, Y2K also poses a
serious challenge to the public infrastructure and key economic
sectors in other countries. We've made a number of
recommendations to John Koskinen and the chair of the
President's Y2K Conversion Council, and the council has made
strides in obtaining needed readiness information in key
sectors. Again, nevertheless, there's a great deal of work
remaining in the less than 6 months we have until the turn of
the century.
Accordingly, there still needs to be a great deal of
emphasis on those areas to make sure that they're ready in
time.
That concludes the summary of my statement and after the
panel is done, I would be pleased to address any questions you
may have. Thanks again.
[The prepared statement of Mr. Willemssen follows:]
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Mrs. Biggert. Thank you. Ms. Reynolds.
Ms. Reynolds. Thank you very much. Congressman Horn,
welcome to Illinois. And Congresswoman Biggert, it is great to
see you again. Thank you for inviting me to share where the
State of Illinois is in its preparation for Y2K.
Governor Ryan has made Y2K a priority in his administration
and has taken very aggressive steps to make sure that every
agency of State government has in fact done all of the
reasonable steps to become Y2K ready. In the first weeks of his
administration, Governor Ryan created the Illinois Technology
Office. Included in my duties as the head of that organization,
I oversee the Y2K efforts of State government.
This spring we've designed and implemented a new monthly
reporting system by State agencies that adopts a unique
approach to definitions and public reporting. I am not aware of
any other State in the Nation that is publicly reporting the
amount and depth of information Illinois is providing in regard
to the Y2K readiness of State agencies.
While many organizations have chosen to remediate computer
systems, our focus has been to ensure that the functions of
government are Y2K ready and operational. We ask each agency to
report the functions and services that it is required to
perform and then list each of those systems or components that
support the function.
Agencies are asked about the detailed readiness of all the
components to support those functions of government. The
supporting components include all types of computer systems:
Mid-range, PCs, desktop, mainframes as well as the electronic
data interfaces, embedded systems, and supplier customer
dependency chains.
We do not consider a system as Y2K ready until all the
supporting systems and components that support that are in fact
ready. That is a very difficult definition to meet.
Within the monthly report, we ask each agency to rank the
tiers by functions. Programs, services, or functions included
in tier 1 could not be interrupted for more than 24 hours
without endangering the public health, welfare, or safety of
the citizens of Illinois or seriously impacting the State's
revenue streams. Tier 2 functions are those that cannot be
interrupted for more than a week, and tier 3 functions are
everything else.
A new monthly report will be released next week, but
according to our latest report as of May 31st, State agencies
have completed 85 percent of the effort to be Y2K ready.
Our current focus among the agencies is now on contingency
planning. We're doing this on two levels statewide. The
Illinois Emergency Management Organization is coordinating our
statewide consequence management plan while the individual
agencies are preparing contingency plans for their own
functions of government. Overall, I'm coordinating these plans
to make sure we integrate the functions of government and are
able to employ the resources where they are needed.
Governor Ryan is also emphasizing the need for State
government to work with other levels of government as well as
the private sector to prepare for Y2K. Over the past several
months we've worked closely with Federal agencies as well as
local governments and private industries to coordinate efforts
and assist each other in preparations.
Overall, under Governor Ryan's leadership, the State of
Illinois is doing everything it reasonably can to prepare for
Y2K. We must now make sure that citizens are aware of our
efforts and take a reasonable approach to their own
preparations. Later this summer and fall, we'll be conducting
community forums throughout Illinois at many of our community
colleges. We'll also be distributing literature and pursuing
public awareness campaigns, and we will continue to update our
new enhanced Y2K Web page to make sure the latest information
is also available electronically.
We believe the best way to relieve and ease public concern
and apprehension over Y2K is by communicating openly and
frequently about the status of our Y2K efforts. We appreciate
your attention to this matter and at the appropriate time I'll
be happy to answer any questions.
Mrs. Biggert. Thank you very much.
[The prepared statement of Ms. Reynolds follows:]
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Mrs. Biggert. Next is Mr. Carlsen.
Mr. Carlsen. Congressman Horn, Congresswoman Biggert, thank
you for allowing me to testify today. I think the city welcomes
this kind of a hearing because we have really done a lot of
work in this area and really feel confident that we're working
toward compliance.
To date, the city, the computer systems in the city, are 96
percent compliant. We expect to be 100 percent compliant by
September. I think the State has adopted some great compliance
guidelines that I think we may look into as well. There's some
really nice definitions as far as the linkages between the
systems. It's something we're going to look at.
The systems that we're looking at that we feel that
citizens need to know more about that may be affected in our
area really come under four main areas. Those would be the 911
system, the utilities, mainly electric and wastewater.
We own the electric utility in Naperville, which is not
common in Illinois. It may be more common in California, Texas,
those types of places, but we buy power wholesale from ComEd so
we have some linkages there: Traffic signals and heat for
residents, which really fall under Nicor, and natural gas as
well as ComEd.
As far as the 911 system goes, the city does operate a
public safety answering point in the police department, and we
have conducted rigorous tests on the software, hardware, and
phone interfaces, radio interfaces with those systems, and to
date they have all proven to be compliant, and we have done
some upgrading of those systems to make--some of them were not
compliant originally. We have made them compliant at this time.
Really a lot of work went into that. We actually had to travel
to some test sites to do some work and really did a lot of work
with our software vendor in that area.
Within the utility arena, as I mentioned, the city owns and
operates the electric distribution, water distribution,
wastewater collection, and reclamation systems. We've tested a
lot of our computerized and embedded systems within those
plants and we are close to compliance on a number of those
systems.
Like many cities, we receive electricity and water from
outside source. I mentioned ComEd, DuPage Water Commission, and
we're pleased to note that both ComEd and DuPage Water
Commission have worked closely with us to assure us of
compliance and we're really--we're happy that they've done a
lot of work in that area.
Traffic signals present an interesting concern for
residents not only in Naperville but a lot of different
communities. The city is responsible for 118 signals within our
jurisdiction. All of our signals have been tested, and we have
found no problems with any of our systems. There is an issue
with electricity if they do go out. The contingency plan is to
use the full-length stop signs which would obviously cause a
little bit of trouble in traffic but hopefully it wouldn't be a
longstanding problem.
As far as heat goes, living in the Chicago area we're
obviously concerned that the weather may be bad, that there may
be some problems with heating, with electricity or natural gas
and, as I mentioned, we're working with Nicor and with ComEd to
make sure that's not a problem.
As far as contingency planning goes, we met actually
yesterday, with all the department directors, representatives
from different departments, to discuss contingency planning,
and what we've really done is moved from the focus on computer
systems to the focus on public safety, those types of areas.
And that is being headed by our Emergency Management Agency,
and I think within the next couple of months we'll have some
contingency plans set so we can handle any kind of public
safety situations, those types of things that may occur.
In conclusion, I'd like to say we're cautiously optimistic
that there will only be minor interruptions and no show-
stoppers relative to Y2K within the city of Naperville. As
Congresswoman Biggert stated, we're adopting the statement
philosophy. We're urging residents prepare as they would for a
snowstorm. Our biggest problem that we feel may be out there
may be the overreaction to any problems that occur on or around
the new year.
I look forward to answering any questions. Thank you.
Mrs. Biggert. Thank you very much.
[The prepared statement of Mr. Carlsen follows:]
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Mrs. Biggert. Mr. Mefferd.
Mr. Mefferd. Thank you, Vice Chairman Biggert, Chairman
Horn. I would like to address real quickly the issues relative
to DuPage County's preparedness as we look at the overall
picture. One of the things that we need to look at is DuPage
County's response in two fronts.
First of all, internally, DuPage County is a facility much
like everybody else's facility in big business. What we've
tried to do is look internally at our computer systems. We've
looked at our life safety systems. As of the end of June, we
had been advised by our Management Information Department that
we are 99.4 percent complete in upgrading for our computer
systems and should reach 100 percent compliance by the end of
July.
Relative to our life safety systems, we've looked at things
such as our ability to generate backup power if that was
necessary. Heat and cooling capabilities for the county jail,
for example, the convalescent centers and our other facilities,
and we feel we are in good shape relative to those issues.
Externally there are three major areas we looked at from
the county's perspective. One of the biggest issues that we
addressed externally was the issue of utility reliability. I'm
not going to address that in great detail as you'll hear from
them, not only with Mr. Martin directly following myself, but
in the second panel. But with the assurances we have received,
we feel pretty comfortable that utility reliability will be
there, which allows us to move on to other areas.
Second, as we looked at external issues, we looked at the
issue of emergency communications, 911, our emergency radio
transmitter sites around the county, that we've been assured
that those systems are in good working shape. There's been a
significant amount of work done with the countywide computer-
aided dispatch system to ensure that it, in fact, is reliable.
There's been some hardware changes made in that area which
assures that it will be up and running.
Also, the issue of traffic control is something we looked
at. The county has looked at five of its different type of
controller systems which are common to all of our 100-plus
intersections that we control. Every one of those five
different types of controllers that the county uses has been
tested by allowing the clock and the system to run from 10
minutes prior to midnight to 10 minutes after midnight into the
year 2000. There's not been one glitch in any one of those
traffic control devices, and that information has been shared
with all of our municipalities to ensure the reliability of
their systems which are using the same type of controllers.
As we move on to the area of public safety, and that's
really where I want to focus today, a lot of questions
routinely get asked around the country as we talk about
emergency planning. Will do DuPage County develop a specific
Y2K emergency planning? The answer to that question is no. The
reason for that is that DuPage County, like every other county
in the State of Illinois as well as around the country, is
required by the State law as well as by the Federal Emergency
Management Association to maintain an all hazard emergency
plan. That plan must address everything from tornadoes and
floods to utility failures or any type of other incident.
The county emergency operations plan 2 years ago was
reformatted, if you will, to be in concert with the Federal
response plan. Specifically with the thought of the fact that
if we have a disaster of large proportion that would be large
enough to implement our entire emergency plan, it would
definitely be big enough to bring in the Federal Government.
And we wanted to ensure that we were all signing off of the
same sheet of music, if you will. So our emergency plan that is
currently in place is currently undergoing a revision at this
time to make sure that it is compliant. That is required, by
the way, by State and Federal requirements on a biannual basis.
That will be completed by October 1st.
Under that system, not only DuPage County but all of our
municipalities operate under something called the Incident
Management System or IMS. Under that system, there is one
technical lead agency that assumes responsibility for any type
of hazard that may occur, again whether it is a tornado or a
flood or a civil disturbance or, in this case, the Y2K issue.
As we have looked at our primary threats relative to Y2K,
the major areas of concern as we look at this issue are law-
enforcement-related, so we have addressed that. The sheriff's
office as well as local law enforcement are the technical lead
in dealing with the Y2K-related problems that we anticipate.
This Y2K response not only involves the sheriff's office but
will involve a variety of other areas, such as the Department
of Human Services and others.
The County Emergency Operating Center, located in Wheaton,
will be staffed prior to December 31st and through the rollover
of the millennium, to make sure the county is available and is
prepared to deal with any type of emergency.
Let me real quickly close with two other areas that we feel
are important. One is the importance of community preparedness,
individual family preparedness. We realize, as you've
indicated, Vice Chairman Biggert, that every person has a
responsibility in this issue, not just government, and we are
urging through a program called the Family Disaster
Preparedness Program that individuals develop emergency plans
on their own, that they have emergency supplies that will be
available not only for a rollover in a Y2K scenario but any
type of major emergency or disaster.
Also, public information. We're working very hard at the
county level to make sure every public information officer that
represents any level of government within the county has the
same information, has up-to-date information so that as they
receive informational requests, we can address them.
To close, let me bring up one very important point to
ponder. We need to remember that the rollover will occur on
January 1st. January 1st, 1999 saw this county as well as much
of northern Illinois suffer through a major blizzard, a
blizzard that was so large that the President of the United
States declared us a Federal emer-
gency area. We need to remember that Y2K does not create
snowstorms. And if in fact, as you've indicated before, we
prepare for a snowstorm because again this is occurring in the
middle of winter, then we ought to be prepared for Y2K.
Mrs. Biggert. Thank you very much.
[The prepared statement of Mr. Mefferd follows:]
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Mrs. Biggert. And now Mr. Martin.
Mr. Martin. Thank you. Just on a little bit of a
background. The DuPage Water Commission purchases water from
the city of Chi- cago for resale to utilities in DuPage County.
The commission has water purchase agreements with 25 municipal
utilities, Argonne National Laboratory, and one private utility
with six service areas. It is estimated that the commission's
utility customers provide service to approximately 700,000
people.
The commission has been working on the year 2000 compliance
issue for close to 2 years. The two main information systems
that the commission has are a supervisory control and data
acquisition, known as a SCADA system, and a local area network.
The SCADA system is the instrumentation that the commission
uses to monitor and control water operations. The local area
network serves as the administrative system used for word
processing, payroll, account- ing, purchasing, and preventative
maintenance.
The commission has contacted its hardware and software ven-
dors, and with our testing we feel that our hardware and
software is year 2000 compliant.
The commission's operations rely heavily on the Chicago
Water Department, Commonwealth Edison and Northern Illinois
Gas. The commission has sent Y2K compliance letters to these
support- ing utilities, and the following are the responses
received from these utilities.
The Chicago Water Department has retained a consulting firm
to work with city staff to evaluate the issue. Fortunately, the
Jardine Water Purification Plant which is the plant that treats
our water is in the process of installing a SCADA system and it
would appear that their water treatment equipment is not
vulnerable to Y2K.
Commonwealth Edison has responded to the commission's in-
quiry stating that their goal is to finish a companywide year
2000 compliance by the third quarter of 1999. In addition,
Common- wealth Edison's Y2K program Website indicates that
January 1, 2000 falls on a weekend when electrical demand is
relatively low and ComEd expects and plans to have excess
generating capacity available at that time.
Northern Illinois Gas has indicated that they have the
necessary contingency plans.
The commission is performing the necessary activities to
mini- mize service disruptions due to Y2K problems. The one
significant concern for the commission is if there were minor
electrical outages at midnight on January 1, 2000. In this
event the commission would not be able to close the discharge
valves at the 74 delivery points to prevent the distribution
system pressure from dropping below the Illinois Environmental
Protection Agency required mini- mum pressure of 20 pounds per
square inch. If the distribution sys- tem pressure did drop
below 20 psi, it would be necessary to issue a countywide boil
order. To reduce this possibility, the customer utilities have
been directed to have all their reservoirs and storage
facilities filled by 11:45 p.m. on December 31st. At this time
the outlet valves on the connection points will be closed. The
commis- sion will continue pumping at a reduced rate during
this period. If there is no interruption in electrical service
by 12:30 a.m. on Janu- ary 1st, water service will resume. This
temporary interruption in service should have no effect on
water users because of the requirement for the customer
utilities to maintain 2 times average day storage. The water
usage during winter months is generally 90 percent of average
water usages.
If you have any questions, I would be glad to answer them.
Mrs. Biggert. Thank you very much.
[The prepared statement of Mr. Martin follows:]
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Mrs. Biggert. That brings us to the questions from the
subcommittee and then we will--if you have questions and have
not turned them in yet for this panel, can you pass them over
and somebody will pick them up.
First of all, I'll ask a couple of questions. Mr. Mefferd,
you mentioned about the traffic signs and how many there are.
Is it a contingency plan--let's assume the traffic lights all
went out. Is it a contingency plan to have all of those lights,
or do they already have the type of stop signs that drop down
so that you could have a stop sign there or what would happen?
Mr. Mefferd. The plan is on the county intersections that
those stop signs would be installed.
Mrs. Biggert. But they have not been now?
Mr. Mefferd. That is the plan for later this year.
Mrs. Biggert. That would be beneficial not only for Y2K but
for----
Mr. Mefferd. Absolutely; any power outage that occurs.
Mrs. Biggert. Saturday, I attended a cardboard boat regatta
and I thought it was just little cardboard boats that they
raced across this lake, but it turned out that they would have
as many as 10 people in these boats and the first--one of the
first boats was named Y2K Bug, and I have to say it was the
first boat that sank. So I hope we have sunk the bug and taken
care of all of our problems. But it was a nice bright yellow
boat, but it didn't make it even out of the starting box, as I
recall. I think maybe we have solved all the problems.
Ms. Reynolds, what are you doing, in the message at the
public forums, are you recommending that people take
precautionary steps?
Ms. Reynolds. The public forums are really intended to get
a sense of what's going on around the State so we have asked
the community colleges around the State of Illinois to in fact
host their community leaders and we will bring a State team in
then to help moderate, to provide information, and to really
organize and structure the events. But our message really is to
what the State is doing, and then to find out how the
communities are in fact preparing, and it really involves a
panel such as you've organized today.
But it also is, I think, incredibly important to make sure
that the public knows how their own community leaders are
preparing and then to offer suggestions as we would again with
any winter storm. This is in the middle of winter. It is
Illinois. Just make sure you are taking precautions as you
would for the spring tornado season as well.
So it really isn't a message of make sure you've got your
basement full of food. It really is a message of take
reasonable approaches to your own preparations, but we want to
make sure that you know where your local governments are. It is
also a way for us to assess where we need some State resources
or some State attention in regional areas of the State or in
specific communities that may need additional help.
Mrs. Biggert. Thank you.
Mr. Carlsen, what are you doing to communicate your message
to the residents?
Mr. Carlsen. We've started what our community relations
people have termed a 3-pronged approach on using newsletters
that are sent out to all residents. We've already sent one out.
We have a copy of the original newsletter that was sent out as
one of the handouts. Our Website is really a big focus.
Naperville has a lot of people who have computers or have
access to the Web, and that's where we've pointed them.
Newspaper articles through the press. They've been really
good with us as far as talking to us about what's going on and
there's been a lot of really good articles done that way. I
think those are the three main areas that we've used but we
also communicate at each council meeting through an FYI device
to the council to let them know where it is at and also that
those agendas are available to the public as well.
Mrs. Biggert. Do you have a budget for what's been spent on
the Y2K?
Mr. Carlsen. Yeah, we do. We've spent about $600,000 to
date. That's actually kind of low for a city our size, but the
reason that is, is because a lot of our normal replacement
programs have funded a lot of the replacement of computers that
would not have been compliant but they weren't done for
compliance sake. So $600,000 was spent strictly as a result of
things that were not compliant.
Mrs. Biggert. Thank you.
Mr. Martin, have you recommended contingency planning for
municipalities in case there is an interruption in your
services?
Mr. Martin. We have not. We don't feel there will be a
problem and if there is, as I've indicated, a minor electrical
problem because of the 2 times average day storage that they're
required to have, that problem should be resolved before the
water is used up in storage.
Mrs. Biggert. So you are really putting your percentage at
100 percent that there's not going to be----
Mr. Martin. Yes.
Mrs. Biggert. Good. Positive thinking.
Mr. Willemssen, you have kind of the overview of the whole
situation and have done so much with the Federal agencies. Do
you think that maybe just people here would like to know if you
think that all the Federal agencies will be compliant by our
next deadline? As you know, Mr. Horn gives pretty tough report
cards to the agencies, and I think that's based on your work.
Mr. Willemssen. I would say overall I'm much more
optimistic today on where Federal agencies stand compared to a
year ago and much more optimistic compared to 2 years ago, in
large part because of the oversight done by Chairman Horn and
his subcommittee. There has been much more urgency on the part
of top Federal leaders to address Y2K that, frankly, we didn't
see 2 years ago. I can remember hearing in July 1997 with the
Office of Management and Budget indicating that they didn't
think this was a major issue. Shortly thereafter they changed
their tune and so has senior Federal leadership, so I'm more
optimistic today than I was at that time.
Nevertheless, as I mentioned earlier, there are some major
risk areas among Federal programs that have to be addressed. As
Chairman Horn indicated in his most recent grading session of
the 43 high-impact programs, the data supplied to the
subcommittee only indicated that 2 were ready and 41 were not,
and it is July 1999. So there is still a lot of work to be
done, and I don't think Federal agencies can rest easy until it
is done.
Mrs. Biggert. Thank you. Those are my questions.
Chairman Horn.
Mr. Horn. I'm going to ask a couple for the panel in
general, and just if anybody is willing to respond to this. If
you had to do this over again, what have you learned that you
should have done first after you've gone through this
exercise--not that we'll go through it again, maybe? I would
like to get your wisdom after you've dealt with this for months
or even years. Any thoughts? Let's just go right down the line.
Mr. Willemssen. I'll offer a couple of comments. I think if
we're starting over again, one thing we've learned is where the
emphasis needs to be. While systems are important and we have
to address the computer systems and address the 2-digit problem
for the year in those systems, we probably should have earlier
on had more of an emphasis on providing programs, functions,
and services to the public. Because the bottom line to the
public is they don't really care if the system works. What they
care about is that they get their benefit or their service that
is expected. That kind of emphasis, at least from a Federal
agency perspective, didn't occur until this year so that was a
little late.
Second, I think the other thing that's been learned is when
many went into this Y2K issue early on, they thought of it
primarily as a mainframe problem and as they started peeling
the onion, they found out it was much bigger than that. There
was little discussion a few years ago about drinking water and
wastewater, little discussion on telecommunications, electric
utilities. It was predominantly talking about old IBM
mainframes and COBOL. As more work was done on Y2K, we quickly
understood that it was a much broader problem in scope and
that's something that I think if we could have done that
earlier would have been beneficial.
Ms. Reynolds. My only regret is not having started on this
earlier. We only took office 6 months ago, so I wish we would
have been in office last year to be able to address this a
little earlier. But at this point I really have no regrets. We
have done exactly what he suggested of taking a functional
approach to government and services.
I didn't feel like I honestly could have gone to the
Governor and said three critical systems may not be compliant,
Governor. He would have said, ``What does that mean? I want to
make sure the services of State government can in fact be
delivered. Period.'' So that's what our approach has been. I
really have no regrets to this point.
Mr. Horn. Mr. Carlsen.
Mr. Carlsen. I would echo that sentiment. We started in
1997 and involved about 20 or 30 employees over the term of
what we've done. I think we didn't take a functional approach
at the beginning. I think that might be something I would say
that I wish we would have done and we've done more of that now.
I think that's because we focused on systems. That's what we're
trained to do. When we moved on those things and got some of
those things out of the way, we were able to move on and start
taking a higher level approach as far as functionality. That
would have been nice to start that way.
Mr. Horn. Mr. Mefferd.
Mr. Mefferd. I think in the same light, one of things we're
fortunate about in this county is we have a good working
relationship between the county government and our
municipalities. One of the real benefits we have reaped from
this, and I can't say we want to go back and do it over again,
but we have opened some doors relative to closer cooperation
not only with the government agencies but more with the private
agencies, and we've found ways to better coordinate and better
cooperate not only for this emergency but others.
And I guess we can always say if we had more time to do
more of it, we could come up with a perfect world. I think the
more time we are in preparation for any disaster or a major
emergency event, the better off we can be prepared and better
ensured of public safety. That's our ultimate goal.
Mr. Horn. Mr. Martin.
Mr. Martin. We have with our water system a pretty
sophisticated instrumentation system, but we've always taken
the approach that at some time the system might not operate. So
we've always tried to prepare ourselves with contingency plans
in the event that we don't have a working control system and so
we really had--it was just modifying our systems for the year
2000, but we had already come up with contingency plans and we
just modified them.
We're a newer agency so we have the advantage there in that
we were able to include this in the original design but we
really haven't--I don't think there would be anything that we
would really do differently.
Mr. Horn. Ms. Reynolds, since you are the chief technology
officer for the State of Illinois, let me ask you to what
degree has the various Federal programs that the State
administered and Federal agencies been in touch with you and
are the interconnections being made that have to be made once
they give you the money you administer it? What's happening on
that front?
Ms. Reynolds. We have had several teams of Federal auditors
in Illinois that I have met with as a State perspective, and
then they have been going over individual agencies' programs.
Just this week I have spent another day with a second team from
HCFA to go over, in fact, the Medicaid programs with our
Department of Public Aid and our Department of Human Services.
So they have been very thorough and they have been very
supportive of our efforts and there's been a nice coordination.
About a month ago I spent a day with the FEMA regional
meeting of 6 States and that was a very productive day as well,
and they had all the Federal agencies represented there as
well. And about 2 months ago I was invited by the Chicago
Federal Executive Board, which is a conglomerate of all the
Federal agencies in this region, to work with them on Y2K
efforts. So there's been extremely good cooperation both among
the Federal agencies and the State government as well as, I
might add, the city and municipal governments.
The one in particular that I'm working with on a weekly or
monthly basis is the city of Chicago. And we are working with
them very closely and I would echo really this has been--Y2K is
an opportunity to strengthen those types of relationships. And
it's also been a great opportunity to get a better sense of
inventory, I think, than certainly government and probably
private industry has ever had in terms of technology. So I
really look at it as an opportunity to work with the Federal
agencies on a day-to-day basis in the future beyond January,
hopefully.
Mr. Horn. I think that's very well said. You are absolutely
right. If nothing else comes out of this and we get improved
Federal, State, and local cooperation, I think it's been an
exercise worth having done.
Let me ask you, what is the major mistake that you think
people have made in this area and you'd try to remedy that
again? So you don't have to confess yourself, but just from
what you hear and see in terms of other governmental entities
and other States. You are all parts of States' associations.
Ms. Reynolds. The biggest mistake, I think, is people
aren't communicating the full ramification of both their
efforts or their remediation plans, and I think the general
public is just scared. I mean, they're generally skeptical of
the government ``I'm from government, I'm here, you can trust
me'' kind of attitude. So I think people are generally
skeptical and they want to see details.
Whether they use that detail I think is immaterial. It is
important to me that we communicate very openly about where
we're at. I've told the agencies I don't want you to lie. If
the truth is bad, I want to know the truth. It doesn't matter
to me whether you'll be done December 31st or July 1st. To me,
I want to know the truth in where you're at. Because I think
that's critical to how the public reacts to that preparation.
So I think the biggest mistake people have made is not
communicating the full truth or the full story.
My other sense is that people haven't taken it seriously in
all areas or all levels of government or public utilities. I
think the larger facilities and the larger companies and the
larger municipalities have certainly done an admiral job of
addressing the issue. But I think there are some smaller
communities, smaller companies, smaller businesses, that have
in fact not taken it seriously and may not have the staff or
the resources to do much about it, and those are probably the
links in the chain that I'm most concerned about.
Mr. Horn. That's well said. Does anybody have another point
they'd like to make before I get into the audience questions?
Let me start on the audience questions, and it comes at a
very good time. Mr. Martin, you are the manager of water
operations for DuPage County Water Commission. The first
question here is, Will the toilets flush? This is by,
obviously, a practical person in the audience here who is in
touch with reality.
Mr. Martin. Yes, they should. I know one of the concerns
that people have with the fact that we're going to stop
providing service to our municipal customers, but they have
again--and that's the reason you have water storage is so you
can operate during interruptions in electrical power service.
I don't anticipate anything going wrong with the water
system because we've been told by the electric utility that we
should have electrical service. Things can happen and that's
why we maintain the 2 times average day storage so we can
survive periods of time without electricity. So I think you can
flush your toilets.
Mr. Horn. Well, that's helpful. I take it the water I'm
drinking is under your commission's jurisdiction?
Mr. Martin. Yes. Isn't it good?
Mr. Horn. I must say, it is a great pleasure for all of us
to get out of Washington where we have to use bottled water.
And yesterday in Topeka, and now Naperville, we've got great
water. I keep drinking it all the time. But back there we have
wonderful reservoirs and everything that the Corps of Engineers
built in 1859, but the city of Washington hasn't upgraded our
distribution system since 1859. And we decided, I guess when x
rays started showing metal in our bodies, that we would get
private water, although the L.A. Times series says there isn't
much difference. I envy you with decent water out in the
hinterlands, so keep it coming.
Mr. Willemssen of GAO, maybe you can explain to an
individual in the audience, What's the difference between Y2K
OK, Y2K ready, and Y2K compliant?
Mr. Willemssen. Those terms have been thrown around loosely
by many different organizations and you really have to rip away
the detail behind the definitions to clearly understand what
they are. I think, for example, the State of Illinois testified
that their definition of compliance includes making sure that
all the exchanges have been thoroughly addressed. Other
organizations do not do that before deeming their systems
compliant. Other organizations just simply look at the
application code and once that's fixed, they view their system
as compliant, irrespective of whether the supporting hardware
and operating system are compliant.
So I think it is a valid question. It is one of the issues
that in the guides that we initially put out in draft form in
February 1997, we said an organization, one of the first things
you need to decide is defining what you mean by Y2K compliant
and making that definition clear to all, because there
continues to be a wide variety of definitions used by differing
organizations.
Mr. Horn. The next one I think is also directed at you.
Since there's a vast quantity of items that are imported along
with the crude oil and some foods, how will Y2K affect these
supplies after January 1, 2000, the foreign countries being
much further behind and transport being suspect?
Well, you are absolutely right on both refinery and oil and
other liquid resources. There are problems with microchips on a
lot of the tankers, and there's also a lot of them on the
pipelines. Let's take Russia, for example. Mrs. Biggert
mentioned the snows in January here. Russia provides most of
the natural gas for eastern Europe and parts of central Europe,
and if their pipelines go down because of malfunctions due to
the particular microchips they have in either diverting it in
certain pipes and in certain methods and the particular
refinery ships, they will have some real problems in central
Europe in freezing at that point in the year. Now, this was
what happens afterwards. Hopefully things will get back to
normal afterwards.
Mr. Willemssen.
Mr. Willemssen. I think that's a very valid issue, one that
we've done some work on, and one that we've made some
suggestions to John Koskinen, the chairman of the President's
Y2K Council. In particular, the oil issue was one of concern to
us.
Because of the many unknowns surrounding other countries'
readiness on their oil production and distribution system and
because of our heavy reliance on imported oil, we had
recommended to one of the working groups of Mr. Koskinen that
they put together some credible national-level risk assessments
and develop national-level scenarios and contingency plans in
the event that there was a disruption with oil imports, and put
those contingency plans together so that they can be ready if
that disruption occurred. They agreed with those suggestions.
They are in the process of putting together those contingency
plans so that in the event the disruption occurs, that there
will be some backup plans in place.
Mr. Horn. Next question is directed to county officials and
some local officials. It says: I called the DuPage emergency
group and the Kane County to request a representative to speak
to a local government group. Both said they weren't getting
involved till the end of August. Why?
Mr. Mefferd. I think we have in fact been speaking on a
regular basis to various groups. I'm not aware of any specific
request that came in. I would be more than happy to respond to
that.
Mr. Horn. We'll point that anonymous person and push them
in the direction of Mr. Mefferd. I think we all agree that the
sooner we get information out, the less rumor and panic and the
rest of that nonsense, and people wanting to make a living on
misery, writing books; and now you mentioned the movie that I
guess is starting in ``Melrose Place'' or something, Beverly
Hills--what's the difference? OK.
Mr. Willemssen, State contingency programs at National and
State levels must go on through testing. I understand testing
is considered 60 percent of the work. If so, we're in trouble.
What do you think on that?
Mr. Willemssen. I think there is reason for concern on some
of those State administered Federal programs, especially where
we see completion dates targeted for the fourth quarter of
1999. And what we've seen to date, at least Federal agencies,
is very typically underestimation of the amount of testing
that's required. And cutting that a little finer, it's the
amount of effort involved in resolving the problems that result
from the testing. So when we see those fourth quarter 1999
completion dates, it is cutting it very tight.
And in some cases the fail date is not January 1, 2000. In
some cases it will be October 1, 1999. In the case of State
unemployment insurance agencies, we had a fail date of early
January 1999 and four States and territories actually didn't
have their systems done in time and had to implement a
contingency plan. So I think there is a reason for concern in
that area.
Mr. Horn. The last question from the audience--the others
will go over to panel 2 where they're more pertinent. Ms.
Reynolds states that Illinois provides more information on Y2K
compliance than any other State. Where does this information
go? I haven't seen much.
And no matter how many times we always can say something in
any agency, Congress, executive branch, States, we don't reach
everybody; and one person wisely said, When you are tired of
saying it about the 100th time, that's just when you begin
sinking through. So what's the State of Illinois doing to do
this? And when bills are sent out by city, county utilities, I
would think that's one good way to get the message out.
Ms. Reynolds. I hadn't thought about it till now. Property
tax notices are due all over the State right now. We probably
should have sent it out with the property tax notices.
In terms of public information, we've certainly put out
press releases this spring and the beginning of the monthly
reports, once we got the report redone and enhanced in the way
that I have suggested. But it is all available. The monthly
reports are download-able on our Website which is
www.state.il.us/y2k. It is available off the State home page.
It is also available in printed format through our office, the
Governor's office. We'd be glad to supply that to anybody who
requested it.
It's also been made available to the media throughout the
State and there simply has not been a lot of coverage on it. My
suspicion is this fall when people begin to get back to school
and focus on the end of the year, I think there will be more
public attention to the matter, but we have in fact tried to
provide it. It is a fairly lengthy report in terms of our
monthly report. This summer we'll be doing a pamphlet and we'll
be providing more, smaller packets of information available to
people in terms of a very public way statewide.
Mr. Horn. Your suggestion on the schools is fine. How about
the libraries throughout the State?
Ms. Reynolds. Anybody can get access to the Internet and
access to the home page through their libraries. That is one
way to access the Web page, certainly. The libraries, in terms
of their preparation--is that your question?
Mr. Horn. Yes. People ought to know--I think you were wise
if we could have gotten it on that property tax. That's a good
idea.
Ms. Reynolds. I just thought of it right now. People
probably wouldn't have been appreciative of State information
in their tax bills. That's not always one of their favorite
pieces of mail they receive. But at any rate, we will try it
this fall and try through public service announcements and
through other avenues. Our intention is to try to get
information out through numerous avenues this fall.
Mr. Horn. I think you've got to remember that most of the
citizenry do not know how to work a computer. Not everybody is
going to get into the Worldwide Web so we've got to reach them
another way.
Thank you very much. Appreciate it.
Mrs. Biggert. I would like to thank the entire panel. I
think that your testimony and your comments were very helpful
to us, and we really appreciate your taking time out of your
busy schedules to come. So I will excuse this panel and we will
call the second panel up. Thank you very much.
If you'd all like to stand, I'll administer the oath.
[Witnesses sworn.]
Mrs. Biggert. I think for this panel I'll introduce you one
at a time so that the audience will be able to have a better
background as you start.
Our first panelist of the second panel is Alan Ho from
Commonwealth Edison. He's going to review how Commonwealth
Edison is becoming or is Y2K compliant. Thank you very much.
STATEMENTS OF ALAN D. HO, Y2K CORPORATE MANAGER, COMMONWEALTH
EDISON; DALE JENSEN, DIRECTOR, Y2K CUSTOMER COMMUNICATIONS,
AMERITECH; CRAIG WHYTE, DIRECTOR, REGIONAL COMMUNITY RELATIONS,
NICOR GAS; PHILIP PAGANO, EXECUTIVE DIRECTOR, METRA; AND GARY
MIELAK, VICE PRESIDENT AND CHIEF TECHNICAL OFFICER, EDWARD
HOSPITAL
Mr. Ho. Good morning. Thank you for the opportunity to
testify here today. I had testified last September and stated a
few things. I would just like to go back to that, just to
provide some continuity.
We at Unicom and ComEd recognize the important role that we
play in this whole Y2K issue, and indeed last September I
stated that if we are unsuccessful in our readiness efforts,
why then the readiness efforts on the part of others would
really go unnoticed. I'm glad and pleased to state today that
as of June 30th, Unicom and the ComEd company is Y2K ready.
And so what do I mean when I say that? That includes all
Unicom companies, ComEd's nuclear stations, ComEd's fossil
generating systems, our transmission and distribution system,
our enterprise wide mainframe computer systems and
applications. It includes our distributed computer operations,
our local area and wide area networks, our office facilities,
and our supply chain.
Some of the activities that we've undertaken this year to
increase the certainty of our readiness and strengthen our
readiness include independent verification and validation
activities where we've hired third-party reviewers to come in
and review our management process as well as dig into the
computer code that's been renovated and remediated as well as
the embedded systems work.
We've also had peer reviews by other utilities come in and
review our work and we've reciprocated by going to those other
locations as well to provide lessons learned and share
information.
Another activity we undertook this year to further
demonstrate our readiness is performed numerous integration
tests. This year alone we've performed over 90 integration
tests on our electric operating system. That includes our
generating stations as well as our transmission distribution
system and our computer systems. These are date rollover tests
that we've conducted with dates including this year, the year
2000, and into the year 2001. Again, these tests are tests that
were performed on our actual systems, not computer simulations,
actual tests at our plants and our facilities.
Third, the fact that we are today Y2K ready, we need to
maintain a vigilant position. We have instituted a Y2K
moratorium starting on July 1st to manage the risk and maintain
our readiness. We've implemented a clean management program and
a program that requires senior officer approval to make any
changes to our computer systems and our embedded systems. So
there's very tight control. Because we've worked so hard to
make our systems Y2K ready, we want to keep it that way through
the rollover period.
Last, we have prepared numerous contingency plans and have
developed what I call an operating plan, which I will use to
run our Y2K command center on New Year's Eve. Basically, it
will be our playbook that will guide us through the various
scenarios that we've developed. And between now and then, we
will be practicing monthly exercising and practicing getting
ready for our September nationwide drill that will be
coordinated through NERC, and there's also a drill that we're
helping with the NRC in October, all in preparation for New
Year's Eve.
Last, I would like to offer a practical tip for our 3.4
million customers. I would just ask that our customers keep to
their normal electrical usage pattern. The reason for that is
having a predictable load pattern will allow us to avoid any
additional challenge that may come up on New Year's Eve.
I would be glad to answer any questions that you might
have. Thank you.
Mrs. Biggert. Thank you very much for your testimony.
[The prepared statement of Mr. Ho follows:]
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Mrs. Biggert. And now we have Dale Jensen, Ameritech
director, year 2000 customer communications. Thank you.
Mr. Jensen. Good morning, Vice Chair Biggert, Chairman
Horn. Thank you for inviting me to present testimony on
Ameritech's activities to address year 2000 issues within our
company. In the interest of time, I propose to direct my
testimony to the following five areas: The scope of our
initiatives; the identification and status of key areas of the
initiative; additional readiness activities underway at
Ameritech; our participation in industry year 2000 readiness
activities; and some tips for consumers, courtesy of the
Federal Communications Commission.
We began our year 2000 initiative at Ameritech in 1996.
Throughout our efforts, our overriding goal has been to make
the year 2000 event transparent to our customers by working to
ensure that the products and services we provide avoid material
problems associated with the year 2000.
Our year 2000 initiative includes reviewing more than 2,500
products and services; remediating an IS portfolio of
approximately 1,000 applications; upgrading 1,400 host and
remote switches; analyzing and preparing thousands of desktop
and office components; and preparing the access and security
systems, heating and cooling plants, alarms and elevators in
over 12,000 buildings and equipment vaults.
A major component of Ameritech's year 2000 initiative is
ensuring that we address and resolve any year 2000 issues
within three critical areas of our business.
The first area was our network infrastructure; which
includes our local exchange, cellular paging, advance data
services, video and long distance networks.
The second area is our information services infrastructure,
which includes the information services hardware; applications,
and operating systems that enable us to conduct the day-to-day
operations of our business.
And the third area was our operating infrastructure; which
includes items such as real estate properties that we occupy as
well as employee support tools such as desktop personal
computers.
Having broadly defined the critical areas of our
initiative, I would like now to discuss the status of each of
those areas as of March 31, 1999. While I recognize that this
hearing is taking place in July 1999, at Ameritech we report
our results to our customers on a quarterly basis, and we're
still in the process of compiling our data for the second
quarter of 1999. We expect to post those results on our
Internet Website in mid-July.
For Ameritech's network infrastructure, as of March 31st,
all identified mission-critical network components of
Ameritech's local telecommunications services, dedicated voice
and data transport services are year 2000 ready. Similarly, as
of March 31st, all identified mission-critical network
components for Ameritech cellular, paging, and long distance
service networks are year 2000 ready.
Corrective activities are also far along for our cable
television service infrastructure and those mission-critical
network components are expected to be made year 2000 ready well
in advance of the turn of the century.
As of March 31st, Ameritech had completed its year 2000
remediation activity on all of the mission-critical information
services systems and applications in its IS infrastructure, and
they are now year 2000 ready.
And, finally, as of March 31st our operating infrastructure
was over 95 percent year 2000 ready.
As I mentioned, at Ameritech we've made significant
progress to address and resolve the year 2000 issue, and we
believe that we'll have all Ameritech systems essential to
maintain customer service completely year 2000 ready well
before the turn of the century, perhaps even as early as July
31st.
In addition, although we are confident that we have taken
appropriate steps to assure that we do not encounter year 2000
issues within our company, we are also developing business
recovery and continuity plans designed to quickly address and
resolve any significant potential problems that may arise.
In addition to internal company activities focused on
addressing year 2000 within Ameritech, we were also
participants in several industry forums that focused on
addressing and resolving year 2000 issues within the
telecommunications industry. As a member of the Telco Year 2000
Forum, a nationwide group of the largest telecommunications
companies, Ameritech participated in intra-network tests
covering voice, high-speed data and 911 emergency services.
Almost 2,000 tests produced only 6 anomalies, a 99.9 percent
success rate, and each anomaly was corrected.
Before I conclude, I would like to share several consumer
tips that were published by the FCC in its recently released
Y2K communications sector report wire line telecommunications
sector. In that report the FCC suggests some tips for
consumers, including try to place some important telephone
calls, particularly those overseas, before or after New Year's
Day; minimize phone use on New Year's Day. Heightened traffic
volume could overtax the network. And have at least a phone
available that doesn't rely on electric power to operate.
Cordless phones normally do not work without a separate power
source.
I would like to conclude my testimony just by saying, as
the subcommittee has recognized, the year 2000 issue represents
a significant challenge to Ameritech's business and residential
customers as well as to the government. As had been noticed, it
is a worldwide concern which has been declared by many industry
experts as the largest single project many companies will have
to face. Resolving the issue requires strong project
management, timely and informative communication, and
cooperation across industry boundaries. At Ameritech, we're
confident that we've addressed those challenges. I thank you
for the opportunity to share these thoughts with you today.
Mrs. Biggert. Thank you very much.
[The prepared statement of Mr. Jensen follows:]
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Mrs. Biggert. Next is Craig Whyte from Nicor Gas. He says
that gas service will not be interrupted.
Mr. Whyte. Yes, you will have gas. Of course. Thank you
again, Congresswoman Biggert and Congressman Horn.
On behalf of Nicor, we're very pleased to be here. We've
been working on this project since 1996. We've had a committee
established of 40 people and have made tremendous progress. As
Alan mentioned, we believe we're Y2K ready as well. However,
we'll continue to do testing throughout the end of the year.
In order to make my testimony more concise--which I'm sure
you appreciate--as well as informative, we've put it on a
video, and the video will be made part of the testimony when
we're done. So in lieu of any more time, I think we'll just
roll the video and if time permits, I'll wrap up afterwards.
Mrs. Biggert. That will be included in the testimony,
without objection.
Mr. Whyte. Additional copies will also be made if needed.
[Videotape played.]
Mr. Whyte. We've made that tape available to all of the
local municipalities that we currently service, over 400. A
majority of them have used it on their cable access channel to
put the word out. We've also distributed it to all of the local
television, newspapers, and so forth. So the word is out there.
We started our presentations early in January. We've been very
successful with local and civic organizations and so forth.
With that, I would be happy to answer any questions you might
have.
Mrs. Biggert. Thank you very much. That was a different
type of testimony than we're used to.
Mr. Whyte. It's a lot easier for me, that's for sure.
Mrs. Biggert. Next we have Gary Mielak, vice president and
chief executive officer at Edward Hospital.
Mr. Mielak. Thank you, Vice Chairwoman Biggert and Chairman
Horn.
In 1992, Edward Hospital launched an orchestrated attack on
the millennium bug. As the community's health care provider, we
have invested more than $4\1/4\ million on the project. We have
also invested labor that's equivalent to four full-time
employees. As a result of this 7 year Y2K project, Edward has
made provisions to enter the new year with adequate power,
supplies, staffing, communications and fuel, along with Y2K
compliant medical devices.
Edward Hospital has deep roots in Naperville, having served
as the community's health care provider for decades. Edward
Hospital today is a medical center providing a broad spectrum
of health care services to Naperville and a widening area of
surrounding communities.
Like other hospitals, Edward maintains a posture of
readiness for emergencies and disaster response. Because of
this orientation, Edward is among those at the head of the
pack. According to a Chicago based consulting firm, Edward is
among the Nation's top 25 percent of hospitals in Y2K
preparedness. The bottom line for us is anything with the
potential to affect our patient's health and welfare is a high
priority.
Let's look at the Y2K problem in the context of health care
delivery. While Edward and other hospitals have a history of
emergency readiness, the Y2K bug is a unique animal for us. In
the worst case scenario, many of the interdependent services
could be cut at one time, requiring hospitals to survive on
emergency backup systems and processes which were really never
meant to sustain a hospital for an extended period of time.
Failure in the chain of major utilities supply distribution,
communications, and financial services would cripple a
hospital's ability to serve its community, and this is a
serious threat.
Y2K presents an incredibly complex planning job and
challenge for the hospitals. The sheer number of areas that
must be addressed is vast. The issues involve interdependency
among patients, doctors, suppliers, payors, and agencies.
In addition to care delivery and office management issues,
we're also dealing with potential supply chain problems beyond
our control. For example, manufacturers and vendors are not
always aware of their products' Y2K readiness because some of
the components come from yet another supply chain. However,
many areas remain that we can affect and minimize the impact of
Y2K.
And here are some of the things that Edward has done:
First, medical monitoring equipment with microprocessors and
embedded chips. These are devices that are critical to life
support in a lot of cases. These include infusion pumps,
glucose monitors, ventilators, dialysis machines, heart
machines, defibrillators and others. So far, of the date
sensitive equipment that is high priority, we have found that
less than 3 percent of the devices have required repair or
replacement.
Next, the hospital has emergency power from its routine
backup generators as well as a large extra generator leased for
additional power during this period of time that will sustain
us during any kind of an emergency. Information systems, of
course, affect everything from patient scheduling to clinical
records and inventory management.
To date, close to 100 percent of the computer software and
hardware products the hospital uses are compliant. A new
control computer for the heating and ventilating system had to
be replaced because it was not complaint. The hospital has made
provisions for bulk delivery of water and fuel oil, for heating
and electricity generation, as necessary. And Edward will keep
an additional 7 day patient food supply on hand during critical
Y2K periods.
Security systems have been checked and made compliant.
Elevators will operate. The telephone system is being tested,
as we speak today, for compliance at the manufacturer's site. A
radio station is working with the hospital to provide emergency
communications for calling in staff. A network of CB radio
users will be formed for communication if necessary.
Internal and external communications to the staff and
public are an integral part of the preparation. We will
continue to inform the public about what we are going to do in
case of an emergency. Planning is underway to ensure
appropriate staffing levels. Interhospital planning has just
begun and we're working with our colleagues to make sure plans
and ideas are shared.
In conclusion, behind all of the devices, processes, and
plans are
people. Our health care professionals' ingenuity, integrity,
and pride in providing quality health care will drive us all
regarding Y2K preparedness. Thank you for the opportunity to
make our presentation today.
Mrs. Biggert. Thank you very much for being here.
[The prepared statement of Mr. Mielak follows:]
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Mrs. Biggert. Now, Mr. Pagano.
Mr. Pagano. Thank you for inviting us here today. For the
benefit of those not familiar with Metra, let me start with a
brief summary of what we do. You'll quickly see why we took
this very seriously and aggressive approach to the Y2K
readiness situation.
In terms of ridership, Metra is the second largest commuter
rail system in the United States. Last year we carried 77
million people, which was our highest ridership since 1984.
This year we are ahead of that mark and intend to set another
record.
In terms of our network, however, we are the largest
commuter rail system in the United States. We operate over 11
lines, have 500 route miles, have 130 locomotives, 900
passenger cars. We service an area the size of Connecticut and
carry nearly 300,000 passengers weekly.
Finally, we operate this network with a great deal of
reliability and it is recognized as the leading commuter rail
agency in the United States.
If some computer glitch forced those riders out into
Chicago's expessway system, we'd have instant regional
gridlock. I'm happy to say that we don't think that will
happen. We've been working on the Y2K compliance since 1996. We
have found no Y2K problems in our computers, facilities, or
equipment that would cause a disruption to our computer rail
service.
Looking for possible Y2K bugs, we first focused on large
mainframe legacy financial administrative systems. We then
broadened our focus to include all areas of computer use and
established an internal Y2K task force.
That group surveyed and assessed support computers and
embedded computers in equipment and facilities. They also
evaluated the readiness of key suppliers, service providers,
and other railroads that interact with Metra.
For all areas of computer use, we employed a methodology of
awareness, inventory, assessment, testing, and implementation.
During the assessment phase, we measured each computer system
for Y2K processing issues and classified each as mission-
critical or not. We gave remediation priority to systems that
are mission-critical to safety reliability of train operations,
revenue collection, and compliance with government regulations.
Throughout this process, Metra's Board of Directors, senior
management and auditors, along with the Federal Transit
Administration and the Federal Railroad Administration, have
received regular reports. Specific areas of investigation
include mainframe and administrative computer systems,
locomotive and passenger cars, track and signalstations, so on
and so forth.
Of course, we can't guarantee that nothing will fail or
that our service is totally immune to disruption from a third-
party problem. We are prepared to respond to any such situation
with the same dedicated manner as during other unexpected or
winter-related disruptions to service. We rely on established
procedures within our operating rules and contingency plans for
power losses or problems caused by bad weather. We also rely on
federally required manual backup systems and procedures for
components or equipment failures.
We're confident that we won't have to do this. As I said
earlier, we really don't see any Y2K problems. So far, to date,
we have spent about $750,000, and again we have found very few
of our systems that had to be tinkered with or modified. With
that, we'll answer any of your questions.
Mrs. Biggert. Thank you very much.
[The prepared statement of Mr. Pagano follows:]
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Mrs. Biggert. That concludes the testimony for this panel,
so I think I'll ask Chairman Horn to ask questions.
Mr. Horn. Let me ask you generally the same question I
asked the last panel. And that is if you had to do it over
again, what have you learned that you should have done first?
Let's just go down the row with Mr. Ho.
Mr. Ho. There isn't much I think that we would do
different. I do believe there is significant value gained now
on a go-forward basis beyond these Y2K rollover dates, and that
comes from the additional configuration of control that we have
over our computer systems. We have inventoried everything. We
have also retired non-standard applications, so we've taken an
opportunity to standardize work so that--standardized
applications as well as systems. And so that has value both
internally and across our supply chain.
Mr. Horn. The next gentleman, Mr. Jensen.
Mr. Jensen. I would agree with Alan. I think at Ameritech,
we have a strong program in place. I don't--in retrospect, I
don't think we would have done anything different. Certainly,
probably everyone would have started earlier but--and I suspect
in the future if we run into a situation like this, we probably
will start earlier.
But overall inventory, the benefits are numerous going
forward from an inventory control, supplier management and
supplier relationship and so I don't think we would have
changed very much, if anything, in our program.
Mr. Horn. Mr. Whyte, Nicor Gas.
Mr. Whyte. I would have to agree with the comments made. We
started in 1996, which is really a 4-year tenure, which gives
us a lot of time to prepare. We started our informational
process up early, which has been very beneficial. So I really
can't say that we would have changed anything drastic.
Mr. Horn. Mr. Pagano, Metra.
Mr. Pagano. I think what we learned was, as a benefit, we
had many of the people that had put in the systems for us on
staff so that they were able to quickly make an assessment. I
think in the future what we've learned is that there needs to
be more documentation of procedures so that recordkeeping is
there in case you don't have the old heads around to followup.
Mr. Horn. Mr. Gary Mielak, the vice president and chief
technical officer for the Edward Hospital.
Mr. Mielak. I think the two issues that we learned more
about than anything going through this process was that
interaction with our professional colleagues, other hospitals
and agencies. I wish we would have had more time to do that,
because everybody was so busy focusing on their own areas of
expertise within their own facilities and hospitals that people
just didn't have time to look around. Even having started in
1992, we only found the time recently to start looking outward
from our facility.
Mr. Horn. Did you start in 1992?
Mr. Mielak. We started in 1992.
Mr. Horn. I congratulate you, because you were 6 years
ahead of the executive branch of the Federal Government, and it
took us 3 years to prod them into doing anything, and they
didn't do it until 1998.
Mr. Mielak. Thank you.
Some of the supply chain concentration also is another
thing that I think that we could have spent and should spend
more time on between now and the end of the year. But it is
very difficult for a lot of the suppliers to even know their
situation for us to appropriately interact with them.
Mr. Horn. Perhaps you can answer the question that was
filed with the first panel, but we really didn't have an expert
on this: What is the situation with the drug manufacturers? As
a pharmacist in the community, says the writer, a common
question is, How much of a supply should I keep in store and on
hand that's extra? What we have been told is a 90-day period we
ought to prepare for.
Can any of you comment on a contingency plan regarding the
situation?
Well, I guess, Mr. Mielak, you have the same problem they
face?
Mr. Mielak. I think we probably do. However, hospitals, of
course, having always an emergency preparedness plan, even for
pharmaceuticals and other items that patients use, we really do
keep several days' and sometimes a week or more worth of
supplies on hand, and one can usually tell from your inventory
turnover how fast that supply will deplete in each one of the
drugs. It is not our intention to hoard supplies or to bring
weeks' worth of supplies in, but to be prudent about what we
think maybe an inventory shortage might be, and work with our
suppliers to have an adequate supply on hand for a week or so.
Mr. Horn. OK. Do we have any more questions here from the
audience?
With concern in it being a leap year--I guess it means
about a leap year and turning--I really--staff is going to have
to put it into English I can read. I can't read it.
Mrs. Biggert. I'll read it. With concern with it being a
leap year and the turn of the century, will there be any
problems on February 29th? Will this affect us?
Mr. Horn. I guess I'll answer that first. The leap day,
February 28th, 29th, and March 1st have been dates that have
been included in our overall test program so our electric
systems and our computer systems can handle that date in the
year 2000 and beyond.
Mr. Mielak. There are several applications also in the
hospital area where we have started testing software a few
months ago for date changes that might be applicable all the
way until the year 2004. So there are several dates along the
way that I know in our applications we have to be mindful of.
Mr. Horn. Next question is, Where and when can a citizen
obtain the summary of this hearing?
The hearing transcripts will be printed shortly, but the
testimony that the members before you have given in three
panels--we have two panels so far--they will be put on our
Website and the Website is www.house.gov/reform/gmit. It stands
for Government Management, Information, and Technology. So
right now they can put this testimony on when they get back
tomorrow.
Mr. Ho of Consolidated Edison, what are the ComEd staffing
plans for December 31st to ensure delivery of power and as a
contingency if the power fails?
Mr. Ho. We have normal staffing every day around the clock.
For New Year's Eve and for the other rollover dates, we have
planned additional staffing to be at the ready. So we will be
in a ready posture, with staff physically located throughout
our northern Illinois territory so as to monitor the system as
well as respond, should there be any outage occurrences,
whether Y2K related or otherwise. And so we look to have a
rapid response to any occurrence.
Mr. Horn. Mr. Whyte of Nicor--gas is supplied through a
network of pipelines with gas moved along by pumps operated by
turbines and generators. Is there a problem if electrical power
is disrupted?
Mr. Whyte. We currently have 8 major pipelines coming into
our area, all independently operated. To have all 8 of those
pipelines go down, I think, would be very remote. But should
that happen, it is important to know that a majority of the
natural gas industry is run on mechanical, by nature, so most
of the valves can be overridden. If not overridden, they can
certainly be hand-manipulated open or shut. That night we will
also have a full staff on, as well as people at these locations
should the power fail. We do have generators to rate our own
electricity, so to speak, if we need to. And should that fail,
for whatever reason, we have a manual override. Should that
fail, we physically can put someone out there and crank open
valves if necessary.
Mr. Horn. Mr. Mielak, representing the Edward Hospital, and
you partially answered the pharmaceutical question, but another
one along that line puts a little different wrinkle on it. As a
major percentage of prescription medicines are imported, what
contingencies are being made to ensure adequate availability?
It should be noted that insurance only allows monthly
purchases. Is that correct? Or do you have a pharmacy in the
hospital?
Mr. Mielak. We have an internal pharmacy at the hospital
and there are the Naperville pharmacies who are independent of
the hospital. I really don't have an exact answer to that
question. It is very difficult for me to look out into that
supply chain and make comments on it.
Mr. Horn. Well, I would think the Pharmaceutical
Association for the State of Illinois would be working on that
problem and since every pharmacist probably pays dues to that
agency, get them to work if they haven't answered that
question.
Now, on the utilities in general, with respect to the
utilities, do you rely on what they tell you, or do you audit
their statements? What type of independent verification efforts
has each utility undertaken?
In other words, we face the same problem with the Federal
Government. We ask the inspector generals in each agency that
are really one step apart--they don't report to the Secretary.
They're independent people, and the General Accounting Office
that Mr. Willemssen represents and is here, they're part of the
legislative branch. To look at the financial and programmatic
aspect of the executive branch, and so they're asking the same
now of utilities. Have you gotten outside independent
verification, or is this simply your own people verifying it
and should we trust them?
Mr. Ho. We've had several levels of independent review.
We've had third-party consultants come in, assess our
management process as well as the coger-mediation embedded
systems renovation work and those reports have been given to
the senior officers of the corporation as well as our Board of
Directors.
Second, the NRC has come in, the Nuclear Regulatory
Commission has come in and audited our Braidwood Station and
indeed our entire nuclear fleet, our corporate IS, our supply
chain activities, and given us high praise in their January
report. They've since followed up and reviewed our contingency
planning activities and there will be a report coming out later
this month.
We've also had peer reviews where we've had other utilities
come and look at our process, look at our results, and we've
shared and exchanged resources and information to that point.
So we think there's a very solid basis for the results that
we've achieved and reported.
Mr. Horn. Was that the Nuclear Regulatory Commission, the
Federal Commission?
Mr. Ho. Yes.
Mr. Horn. How many different facilities of yours did they
look at? Just one?
Mr. Ho. They looked at all of our nuclear facilities. There
was a very strong focus at our Braidwood Nuclear Station. They
asked to look at the results across our nuclear fleet.
Mr. Horn. So the answer would be they have looked at every
single facility in your company's jurisdiction that has nuclear
reactors?
Mr. Ho. That's correct.
Mr. Horn. I'm glad to hear it because when they started
out, they said we're only going to audit 10 percent, and we
argued with them on that and we said we wanted to see 100
percent. They've never given us an answer to our letter on why
they were doing just 10 percent. So at least in your situation,
you got 100 percent audit from them.
Mr. Ho. That's right.
Mr. Horn. Thank you very much on that.
Mr. Willemssen is still here, I'm sure. There's a chair
right down here at the end, Joel. From the audience, despite
all the optimism stated by your committee--I guess he's
referring to us--the consensus in the technical computer world
is that no one really knows what really will happen. A worst-
case situation may be a lack of power and utilities for several
months. Are you even considering a worst-case situation?
Mr. Willemssen. I think even in those Federal agencies who
are far ahead of the game, such as the Social Security
Administration, they have also been on the forefront of doing
business continuity and contingency planning, recognizing that
they, along with other organizations, cannot provide an
absolute guarantee that there won't be some Y2K problems at the
turn of the century or at other critical dates. And therefore
they have put a lot of emphasis on contingency plans to have
them available in the event of disruptions and have them
available to trigger at appropriate points in time.
I think a scenario that was laid out in the question of
widespread electric power disruption over a couple months, I
don't think any reasonable organizations have thought that far
out in terms of worst-case scenario. Worst-case scenarios for
the contingency plans that I've reviewed, and I have reviewed
several, do not go beyond a few weeks in terms of electric
power outage. Frankly, if we did have that situation, and we
don't have any evidence to suggest that would be the case, we
would be looking at an entirely different scenario than the one
we've talked about today.
Mr. Horn. Thank you very much for that.
Mrs. Biggert. Thank you, Chairman Horn. I have just two
more questions from the audience. The first one is addressed to
Mr. Ho. Can Commonwealth Edison isolate themselves from the
power grid to continue to service their customers if the power
grid is in trouble?
Mr. Ho. The simple answer to that is yes, but the Eastern
Interconnection in the grid, as everyone refers to it, is
really designed to be a robust system and reliable because
everyone shares in that pool. And so our plans are not to
island or isolate ourselves should there be a problem. The real
benefit to the grid is that ComEd can help support, and the
surrounding utilities can support one another should there be a
stability problem on the system. And so we look to not
implement a sort of islanding or isolation-type of approach.
The grid is very robust and we look to maintain that.
Mrs. Biggert. Thank you.
And then the last question is for all of you. Should
glitches occur in service, how will they be communicated to the
public? Will there be additional staff on board to handle these
calls? And third, will we call the same service numbers that we
currently call or will hotlines be set up? I think we can start
with Mr. Ho and just go down the line.
Mr. Ho. On New Year's Eve, we will start our staffing of
our command center early in the morning, 6 o'clock New Year's
Eve morning, and we'll have an eye on the globe. We will be
providing press releases and system status reports three times
throughout that business day. By 8 o'clock that evening, we
will be fully manned at our command center, at which time we
will start hourly system status reports. Those status reports
will go out across the normal channels through our account
managers for those commercial industrial customers, through our
public affairs directors, to the various municipalities, such
as here in Naperville. We'll have media briefing and, in fact,
media will be with us at our command center.
So we look to have constant reporting and increased
frequency of reporting as the day goes on. So there will be
additional staff, like I said, across our territory; and our
communications staff will certainly be right in the thick of it
with us.
Mr. Jensen. Like Alan, Ameritech will also have a command
center in place and we'll be undergoing many of the same
activities and preparation.
I think that what I would like to address here is on the
other side of the coin: What would we ask our customers to do
in the event that they encounter a problem? And we're asking
customers to do the same thing that they do today; call the
same trouble reporting number, follow the same procedures. We
don't want to confuse the issue by putting anything different
in place. We expect, just like probably Alan and everyone else,
to have additional staffing on hand to take care of any
additional calls that we may get. So keep it simple is kind of
our watch word. Our customers just call the same number that
they would call today if they encounter a problem.
Mrs. Biggert. Thank you.
Mr. Whyte.
Mr. Whyte. Real briefly, the service numbers they call
right now will certainly be the same numbers they will use
then. As far as staffing, it'll definitely be beefed up. I know
I will be there, as well as all of our representatives, they
will be there. We'll have our labor staff available.
As far as communications are concerned, we are in the
process now of developing a list of all key contacts through
all of our municipalities that we serve so that on that night,
should they have any issues or questions, they'll know who to
call as well as when we have updates throughout the day and
night, we have someone to contact as well.
Mrs. Biggert. Mr. Pagano.
Mr. Pagano. Yes, they'll be using the same hotline phone
numbers. We'll have additional staff there to take care of any
problems.
Mrs. Biggert. Thank you.
Mr. Mielak. Assuming normal communications, telephone,
pagers, cell phones stay in operation, we don't have any
problems in those areas. All of our normal service lines will
be open, and there will be staff there to answer any telephone
calls or concerns by patients in the communities or others
looking for information.
Should that not be the case, our fallback readiness
position, of course, in an emergency is always to go to the
radio systems that the emergency folks have both in Naperville
and the hospital. Ambulance services are all equipped with
these standby emergency systems. Of course, we can't get out
and talk to the general public about what's going on under
those conditions, but we certainly can try to get out to the
radio station and get out the word otherwise through some means
that we have yet to talk about.
Mrs. Biggert. Thank you.
Mr. Willemssen. The Federal Government right now is in the
process of setting up a command center that will be led by
retired General Peter Kind, and they're putting their
procedures together right now. They intend to get contacts and
links set up with all the major Federal agencies and also with
States so that the reporting process will occur as the rollover
happens. In addition, they will be monitoring the activities
through the State Department of all other countries. As you
know, obviously we have a tremendous built-in advantage in our
country. We will have lead time to see what happens in other
countries as the clock switches there before it does in our
country.
Mrs. Biggert. Thank you. Again, this is all part of being
prepared, and I hope that none of these hotlines have to be
called or none of these phone numbers--they won't be busy if
somebody does call, because there won't be the problems. But I
think as long as everybody is ready and have those contingency
plans, that things will go smoothly.
So I thank you all on this panel for coming. I think it's
been very enlightening. And to hear what our utilities are
doing, what our hospitals, transportation, is all very
important to all the citizens of this area and to the State and
to the country. So thank you very much for coming.
We'll then call up the next panel.
Mr. Skarr, if you want to come up and join the panel. We
will have to do a little switching of mics, but I think there's
almost room.
If you all want to stand.
[Witnesses sworn.]
Mrs. Biggert. Thank you again. This is the third panel of
the hearing this morning, and I think again I will start by
just introducing you as each of you speak and if you can limit
that to 5 minutes, particularly since we have a larger panel
this time, it would be appreciated.
The first member of the panel is Clint Swift who is
director of Banking Technology, the Bank Administration
Institute of Chicago. Thank you very much for coming, Mr.
Swift. You may proceed.
STATEMENTS OF CLINT SWIFT, DIRECTOR OF BANK TECHNOLOGY, BANK
ADMINISTRATION INSTITUTE; DELORES CROFT, SENIORS POLICY
ADVISOR, ILLINOIS ATTORNEY GENERAL'S OFFICE; LEONARD HARRIS,
PRESIDENT, CHATHAM FOOD CENTER; RON CLARK, TREASURER, ILLINOIS
AYERS OIL CO.; MONTY JOHNSON, COMMUNICATIONS COORDINATOR, CITGO
GAS; MIKE SKARR, PRESIDENT AND CEO, NAPERVILLE AREA CHAMBER OF
COMMERCE; AND ED PAULSON, AUTHOR OF YEAR 2000 CRISIS SURVIVAL
IN 10 MINUTES, PROFESSIONAL ENGINEER, FINANCIAL EXPERT
Mr. Swift. Mr. Chairman and Madam Vice Chairman, thank you
for providing a public forum on the year 2000. Just a week ago,
the banking industry passed the last of the major federally
mandated milestones for year 2000. The bankers are intensely
aware that the challenge has shifted from a technological one
to a psychological one. It is crucially important that people
understand the lengths to which banks have gone to ensure that
it will be business as usual before, during, and after January
1, 2000.
As one independent observer after another has told you, the
reality is that financial services are in good shape. Banks,
thrifts, credit unions will be spending much of the next 6
months ensuring that the key energy, telecommunications, and
other providers they rely on are ready as well.
I can state this for the record. First, your bank will be
ready for the century date change. Many of them are ready now.
The rollover is going to be a non-event for almost all bank
customers. Your bank is the safest place for your money. Your
money is insured there up to $100,000, but there are at least
two other significant issues. Your bank will have accurate
records of your accounts and you'll be able to get the cash you
need when you need it.
How can I say these things? First, for the last 2 years
I've been working day to day with 50 of the Nation's largest
banks. Institutions that represent about two-thirds of this
Nation's banking assets. I know personally the quality of their
planning, their systems inventories, their code repairs and
their testing. These institutions have verified that the
systems that support checking, savings, certificates of
deposits, loans, and other products and services, process dates
accurately before, during, and after January 1, 2000. Now
they're monitoring Y2K progress at the suppliers and service
providers they rely on.
Second, banking is a highly regulated industry. As part of
Y2K preparation, Federal examiners have visited each bank in
this Nation at least three times. At the end of May, more than
98 percent of the Nation's 10,000 federally insured depository
institutions had received the highest ranking. During the next
6 months I can promise you that the handful that didn't can
look forward to a very personal relationship with your
examiners.
To ensure that banks have plenty of cash for anyone who
needs it, the Federal Reserve has accelerated printing of
nearly $50 billion in currency, and they're placing that at 100
locations, closer to banks than their own Federal vaults are.
In this highly interconnective world, nobody with any sense
is going to give you a guarantee that there will be no
disruptions at the century date change. For all but a handful
of Americans, the lights are going to come on. By the time you
get the phone to your ear, there is going to be a dial tone.
Where outages do occur, research and testing across industries
say they will be localized and of short duration.
In case one of those limited local outages occurs in DuPage
or Kane Counties, let me also observe that banks, thrifts,
credit unions have always been among the first to reopen after
a hurricane, tornado, or other natural disaster. Why? Because
they're practiced masters at contingency plans. Banks have
always been required to keep multiple backup records of your
transactions in case of power outages or computer problems, and
fresh backups are made every day. Banks have now supplemented
their existing contingency plans with special preparations to
cover the glitches that may occur due to the year 2000 date
change.
Before I close, I want to address the notion that people
need to withdraw a month's worth of cash to get through the
rollover period. I live in the next town north of here,
Wheaton, with my wife and son. Based on what I know about
banking, I'm going to withdraw the same amount of cash that I
would for any other holiday weekend. I know that if I need
more, I'll be able to get it from an ATM or from a teller. In
the meantime I know I'm not going to be contributing to a
sudden shortage that could keep my neighbors from getting the
cash that they need.
And keeping large amounts of cash outside the bank is not
just unnecessary, it is dangerous. Local law enforcement
officials are some of the most outspoken opponents of stashing
months of cash around your house. Theft is a very real threat.
At a recent White House Community Conversation I attended, a
police chief said that 90 percent of thefts in his jurisdiction
involved people close to the victims, such as family or so-
called friends.
You can have confidence in the year 2000 preparations of
your
bank. It is going to be business as usual at the bank today,
tomorrow, during the year 2000, and after.
If you have questions about the details of bank readiness,
I would be pleased to try to address them.
Mrs. Biggert. Thank you very much for your testimony.
[The prepared statement of Mr. Swift follows:]
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Mrs. Biggert. Next we have Leonard Harris, president,
Chatham Food Center. You may proceed.
Mr. Harris. Good morning, Vice Chairman Biggert and
Chairman Horn. Thank you for the invitation.
What I hope to do today is three things: Introduce you to
FMI and what we do as an association; tell you about what we're
doing to give you some assurances that we will be ready for the
Y2K; and to voice our concerns.
Food Market Institute has 21,000 members. They do $220
billion in sales, and we represent more than half of the
supermarket sales in the United States. We represent national
chains, local chains, and independent operators. I'm happy to
say as a member of FMI, as a single store operator in the city
of Chicago, that I have been closely intertwined with what's
going on with the technology group, which means stores big and
small are involved and being communicated to about what's going
on in the industry.
What we have done; 2 years ago we issued a year 2000 white
paper for the purpose of helping members understand the broad
scope of the problem and to develop comprehensive solutions.
The first of this year we set up an electronic share group with
an Internet-based discussion platform for the purpose of
members being able to access the Internet, and not only leave
questions on the Internet to be answered but also to see the
answers from other members who have had questions and have had
their answers left on the Internet.
FMI and the Grocery Manufacturers of America have produced
a joint Y2K business contingency plan framework and they've
held three joint Y2K contingency planning forums. FMI is
working with the Y2K Food Sector Working Group of the USDA and
the President's Council on Year 2000 Conversion and
Communications Industry Readiness.
There's a lot of talk in the industry about reduction of
inventory levels. At one point in time, the average inventory
in the pipeline was 120 days. The industry has cut that
inventory level down to 60 days and its store level down to 2
weeks. We believe that will be more than sufficient inventory
to deal with any contingency. We issue a quarterly newsletter
and we've had seminars discussing the issue at our major
convention each year in Chicago.
Our concerns are with those industries that are outside of
our industry, primarily utilities and the government's food
assistance program, the EBT program. Certainly there have been
breakdowns in that program on an ongoing basis, and we're
concerned that not only the system be running properly January
1, but also that there be no new revisions or conversions of
that system before the first of the year.
Certainly I'm happy to be present here. I have been
reassured, listening to the conversations and testimony from
our utility groups and our transportation groups, and I will be
happy to report back to our chairman and our president that
this committee is doing an excellent job and we just hope that
you stay on top of this. Thank you.
Mrs. Biggert. Thank you very much.
[The prepared statement of Mr. Harris follows:]
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Mrs. Biggert. Delores Croft, seniors policy advisor, Office
of Attorney General Jim Ryan. Thank you for coming in. You may
proceed.
Ms. Croft. Good morning, Chairman Horn and Vice Chair
Biggert. By now you are familiar with the term Y2K. I will
attempt to give you a different perspective on how others will
use Y2K as a means of exploiting you.
Fraud is a big business in America, taking in about $100
billion a year according to the U.S. Office of Consumer
Affairs. Law enforcement officials believe that seniors are the
targeted customers. The FBI estimates that approximately 10
percent of the Nation's 140,000 telemarketing firms are
fraudulent and nearly 80 percent of the crooked companies
target seniors.
Y2K provides another opportunity for unscrupulous
individuals and companies to scam the seniors. This is a time
that con artists will choose to prey on the elderly. They will
attempt to cash in on fears about the year 2000. Beware of
people telling you where to hide your money. Some hiding places
being recommended to seniors are wrap your money in aluminum
foil and place it in the freezer, wrap it in dirty laundry and
hide it in the laundry. Stuff the money in your spare tire in
the trunk of your car. Remember, the same people that tell you
where to hide it will be the very ones to return and to rob
you.
One senior stated to me that she was told, ``Your money is
safe in the house of the Lord.'' Beware of these statements
where you are told that you should remove your money from the
bank and place it elsewhere.
Be especially weary of phone solicitors. Many times they
will call and want you to verify certain personal information.
They may ask for your bank account number, stating that they're
calling from the bank. They may ask you to tell them the last
purchase that you charged on your credit card. And because your
cards are supposedly insured, they may ask you to verify
exactly how many cards you have and at some point during the
conversation, they may ask you for your card number. Beware.
Social Security numbers also provide a means for the con
artist to claim a new identity--yours. Beware. Con artists prey
on seniors all year, not just during the Y2K period. Remember,
don't make purchases for your home or auto from unfamiliar
companies. Take your time before making a decision, consult
others that you trust such as family members or friends. Be
suspicious when a salesman or telemarketer tells you that you
must make the purchase so that there will be ample opportunity
for it to be in place before the new year.
What can you do to be prepared? You should prepare for an
emergency that might arise from a Y2K problem as you would
prepare for any other emergency situation. Just keep in mind
that con artists materialize during emergency situations.
Before allowing any stranger into your home, ask for a picture
identification first. If in doubt, call the company or agency
they work for. This includes employees from the gas company,
the light company, and the telephone company. You should not
have any difficulty verifying your local policeman or fireman
because they should be in a marked car or truck. However, if in
doubt call the agency first. If you have any questions, do not
hesitate to call the Attorney General Jim Ryan's Senior Citizen
Hotline at 1-800-243-5377.
And Illinois Attorney General Jim Ryan would like to thank
you for inviting the office to give testimony on this important
issue.
[The prepared statement of Mr. Ryan follows:]
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Mr. Horn. I congratulate you on that statement. Yesterday
in Topeka, another distinguished resident of Chicago, IL who
happens to have her column in the Kansas City paper--and that's
Ann Landers--she had a great column yesterday on just the point
of the senior citizen fraud by the Y2K bit. They're phoning up
saying that we're from the bank, of course; we're checking; we
want to move your money from accounts into the bond accounts so
they can't be hurting you in any way, and all this nonsense. So
you've got a lot of scum out there that are going to take
advantage of senior citizens throughout America.
Thank you for making the point. Ann Landers closed her
column with saying call your State Attorney General's office.
Ms. Croft. Good. We'll be there to answer.
Mrs. Biggert. Thank you for your testimony.
Next we have Ron Clark, treasurer, Illinois Ayers Oil Co.,
representing the National Association of Convenience Stores.
You may proceed.
Mr. Clark. Vice Chair Biggert and Chairman Horn, thank you
for inviting us here today. Our company in west central
Illinois operates 27 convenience stores, doing business as
Ayerco Convenience Centers. All of our stores sell convenience
goods and 25 of our stores sell gasoline.
We are happy to be able to provide this testimony on how
Illinois Ayers Oil Co. and the convenience store and petroleum
marketing industry have responded to the year 2000 challenge.
I appear before you representing NACS as you stated, an
international trade association representing over 2,100 retail
members operating approximately 65,000 convenience stores
nationwide. Convenience stores sell 55 percent of all U.S.
gasoline. Approximately 2,700 convenience stores are operating
within the State of Illinois.
Illinois Ayers began assessing its software and hardware
for Y2K compliance in spring of 1998, followed by the upgrade
of non-compliance stores, including the installation of new
systems and training store employees on those systems. Overall
we've budgeted approximately $350,000 for equipment alone, such
as the new personal computers and point-of-sale terminals.
Probably the biggest area of concern for Illinois Ayers was
the supply of gasoline and convenience goods to our retail
sites. In contacting each of our 12 fuel suppliers, we found
that most were either in the midst of, or had already
completed, their Y2K readiness. We use one grocery supplier for
our entire chain, and they have assured us that they are
compliant and we should not experience any disruption in
deliveries. At this time our Y2K readiness is approximately 85
percent complete.
The central point Illinois Ayers and NACS wish to make is
that unless they are without electricity for extended periods
of time, the vast majority of convenience stores should adhere
to their normal operating hours on January 1, 2000. NACS has
provided industry retailers with information and resources to
assist them in achieving Y2K compliance, and through NACS our
industry is represented on the President's Council on the Year
2000 Conversion as part of both the Oil and Gas Sector Working
Group and the Food Supply Working Group.
According to the results of the NACS year 2000 survey
released just this week, these efforts are bearing fruit. The
survey found that 95 percent of store owners and petroleum
marketers planned to be Y2K ready by November 30, 1999. By
November, also, 94 percent of the respondents plan to have a
contingency plan in place; that is, a plan of action for
dealing with uncertain operational events caused by the Y2K
problems.
Sixty-five percent of respondents have been gathering
equipment compliance documentation from business partners,
while 20 percent have been conducting joint contingency
planning. The NACS survey also found that the majority of
industry operators, 72 percent, are concerned about the
possibility of consumer overreaction to Y2K in the manner of
hoarding food, gasoline and/or money. This finding will become
more important as we near the close of 1999. Retailers are
deservedly skittish about consumer reaction during the last few
weeks of 1999 and into the year 2000. Consumer reaction is the
wild card in all of our industry Y2K efforts.
While the aforementioned responsible efforts and survey
results should help allay any consumer concern, we're also well
aware that a minority of consumers will remain concerned. For
that small minority, NACS urges that they act responsibly.
Specifically regarding gasoline, we suggest that concerned
consumers make sure to keep their gasoline tanks at least half
full starting in early December. As for the storing of extra
gasoline, NACS urges extreme caution. Consumers should contact
their local fire department for more information on the rules
and regulations governing gasoline handling and storage. If
consumers do not overreact, we do not expect either gasoline
rationing or shortages. We also urge all consumers to seek
information from responsible parties. The President's Council
on Year 2000 Conversion can be reached via phone at 1-888-
USA4Y2K or via the Internet at www.y2k.gov.
In addition, the Council's Oil and Gas Sector Working Group
and Food Supply Working Group have Web pages offering
responsible information on our industry's Y2K readiness as well
as consumer information. Through such meetings and hearings as
this, as well as retail industry and public education efforts,
consumers should begin to feel more confident. NACS and
Illinois Ayers stand ready and willing to assist as our means
dictate in any efforts to ensure that consumers know that the
convenience store and petroleum marketing industry is preparing
for Y2K.
Again, I thank you for inviting me to appear today. I would
be pleased to answer any questions.
Mrs. Biggert. Thank you very much.
[The prepared statement of Mr. Clark follows:]
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Mrs. Biggert. Next is Monty Johnson from Citgo,
representing the American Petroleum Institute.
Mr. Johnson. Thank you. First of all, I want to thank Mr.
Horn and Mrs. Biggert for the opportunity to be here today. I
am particularly pleased to be in Naperville. I had a chance to
walk around your beautiful city last night, and I plan to come
back.
With the help of staff, I'm going to step through a quick
slide presentation. I'm here really in my role as chairman of
the Public Information Group of the American Petroleum
Institute's Y2K Task Force.
Explain the role of the task force: It is approximately 50
of the major oil companies that began in 1997 meeting every 6
to 8 weeks to share information, do benchmarking studies, set
up committees on key areas of the Y2K issue and share
information with both the government and the public.
Some of the things that we've accomplished so far: We have
a very comprehensive Website where we share information not
only among the member companies but also with the public. We've
established a data base of readiness information on equipment
that's common throughout our industry. We've interfaced
considerably with other industry organizations.
Mr. Clark's presentation was a good lead-in because NACS is
one of the areas that we coordinate with very closely.
We've established a contingency plan framework that all of
our member companies are following, just so we have some
consistency in exchanging information among ourselves. We've
set up an effort to meet with all our supply chain partners
because many of us in the petroleum industry deal with the same
suppliers and vendors, so rather than 50 of us contacting a
pump supplier, for instance, we can contact them once and get
the information and share it among our members.
We've also set up standards for testing embedded systems.
We're very involved currently on assessing the readiness of
some of the international supply areas.
Mr. Horn, you mentioned Russia. A number of our member
companies operate around the world. So our companies have a
very personal interest in assuring the readiness of the
infrastructure of those companies to support their operations.
And our task force is also the focal point for the government
for the oil industry.
The next slide talks about our role as the focal point of
the industry to the President's Council. The President's
Council has been mentioned several times today but the API Y2K
task force is the focal point for the oil and gas industry. The
other segments of that task force are shown there and our
reports are given quarterly to FERC as we report the findings
of surveys that we've done quarterly to assist the readiness of
the overall industry.
Next slide shows members of the task force, which shows it
is a pretty broad representation of all the major segments of
the oil and gas industry.
Gas Processors Association: We had gas utility reporting on
their readiness efforts a little earlier.
The Petroleum Marketers Association of America: We don't
have NACS directly in our reporting relationship, but we're
certainly sharing information and coordinating a lot of effort,
since many of our member companies market our products through
convenience stores.
The current focus of our activities: We have ongoing
working groups, and this is representatives from our member
companies that are focusing on the specific areas of embedded
systems, retail automation, all the dispensing equipment,
point-of-sale equipment at our retail operations.
Supply chain, both the vendors and suppliers that provide
services and equipment to our companies as well as our
customers downstream. We believe a disruption anywhere in that
supply chain could have a severe impact on our ability to
operate, so we're concerned with not only what's upstream of us
but also what's downstream.
International issues as they relate to our domestic
operations: Contingency planning is a big focus currently. And
public information is the reason I'm here today.
We do benchmarking studies every 6 to 7 weeks among our
member companies, and this has been a tremendous help to us in
sharing information and helping us all find out if we have
common problems. We can come up with solutions that we can
share among our members. We feel like this has saved us a
tremendous amount of time and effort that we each would have
had to do individually had we not had this information sharing
operation.
Hot issues for this year. Managing public perception: A
number of people have mentioned today that public reaction to
the Y2K issue is probably a bigger concern than some of the
technology issues, and that's very much our belief.
Cross industry reliance: We're very active in sharing
information with both the electric utilities and the
telecommunications industry since those are where we feel our
greatest vulnerabilities are, and we have a very high
confidence that those facilities will be in operation.
Contingency planning is our big focus, and international
vulnerability as it relates to our ability to supply products
and have gasoline at the pump when you need it.
In summary, our oil and gas companies are focusing on our
operations to be reliably able to have the gasoline there when
you want it. Our efforts are very comprehensive, all the way
from planning the effort to resolving the problem. All of our
companies are currently in either their remediation or
contingency planning stages and very near resolution, and we
feel we're well on the way to Y2K readiness.
And with that, I'll focus your attention on a news release,
copies of which are outside, and you have a copy for the
record.
These are the results of a survey of 1,250 oil and gas
companies that are task force conducted. The results were
reported on June 28th after they were presented to FERC and
this shows that of these 1,250 companies, 95 percent of them
showed that they are going to be Y2K ready by September of this
year, and the results
of this survey represent 93 percent of the domestic oil and gas
demand in the country. So it is a very high representation of
the industry and their ability to provide services.
With that, I'll be prepared to answer questions.
Mrs. Biggert. Thank you very much.
[The prepared statement of Mr. Johnson follows:]
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Mrs. Biggert. I think I'll skip over Mr. Paulson, our
author, for just a moment and go to Mike Skarr who is the
president and CEO of the Naperville Area Chamber of Commerce to
talk about businesses, and then we'll come back to you.
Mr. Skarr. Thank you, first of all, for your flexibility in
listening to a few comments I've got. I will be very brief
today. First of all, let me thank Congress for the recent
passage of legislation dealing with the potential liability
issues of the Y2K issue. We lobbied very hard that legislation
be passed. We think it brings a sense of sanity, hopefully a
sense of sanity into a world of the future that most of us
don't know very much about. So we're very appreciative of that.
For those of you who don't know, the Naperville Area
Chamber of Commerce is an organization of 1,600 members. We're
one of the largest Chambers in the State of Illinois. We have
some of the large businesses, many who testified here today are
members, down to many small home-based businesses.
We have a very active technology committee that's been in
operation for over 3 years and I think ties in to many of the
comments that have been made today.
Much of the testimony that's been presented today really
focused on government or infrastructure services, and while I
found that all very informative, I'm glad I did come. The
reality is that the private sector, in my opinion, has an even
greater interest in this whole area.
Using stockpiled food and using stockpiled water implies to
me that businesses have been forced to shut down. Production
stops, services stop, and most importantly paychecks stop. The
possible economic consequences of that scenario, in my opinion,
are disastrous.
We have been discussing the issue at the Naperville Area
Chamber of Commerce for quite some time. There isn't a month
that doesn't go by that we either don't hold a seminar or
training session or include articles in our newsletter relative
to the Y2K issue. I would point out, though, that America's
success to a great extent rests on the shoulders of small
business. Our organization reflects the composition of business
in America. Y2K to a great extent is going to rest on the
shoulders of small business rather than big business,
ultimately to us in local communities.
As a result of that challenge, we have assembled resources
for use by our members. Local resources or local solution
providers are really the key issue in the Y2K case as far as
we're concerned. Washington will not be solving the problems of
many of our local businesses here in our community; fellow
business members will.
I will leave copies of the local resources we have
assembled here in our local community.
[The information referred to follows:]
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Mr. Skarr. I also encourage, as you listen to other
testimony, encourage other business organizations to focus on
developing local resources that local businesses, particularly
smaller businesses, can use to become Y2K compliant and Y2K
ready.
Last, I would congratulate you on the forum you've created
today. It is reassuring to know that our government is in fact
working on our behalf, and I thank you for the opportunity to
be here today.
Mrs. Biggert. Thank you very much, Mr. Skarr, for those
kind words.
Now, last but not least, is our last panelist, Ed Paulson,
who is the author of the book, Year 2000 Crisis Survival.
Mr. Paulson. Thank you for the invitation to address the
committee this morning. I appreciate it. As you said, my name
is Ed Paulson. I'm a local native Chicagoan and also a local
western suburban resident. I'm the author of 12 business and/or
technology books, including the recent book from McMillan on
Y2K and specifically a consumer-oriented guide.
I'm also a registered Texas professional engineer and I
have been in high technology now for longer than my nephew has
been alive, but well over 20 years.
What I would like to do is, I have studied this problem,
kind of cursory, for 15 years; but I would like to take what
I've learned over the last 2 years of really intensively
following this Y2K problem.
The good news is I think that the Y2K situation improves
every day. A lot of it is due to the work of the committee,
such as this one, the Senate committee chaired by Senator
Bennett and Senator Dodd, and also John Koskinen and his
committee. I think that the public awareness brought from these
committees and bringing people in from the different industries
to address what they are doing, I think everything works better
with a deadline, and I think the committees have worked real
well to move the United States forward.
And the good news is the United States is further ahead
than anybody else in the rest of the world. There's some bad
news associated with that, too, which I'll address in a moment.
Another good news item that I've seen is that the embedded
controller problem is a smaller item today than it was
originally assumed to be early on. I think that's good news. Is
it still a problem? Yes. But is it as big a problem as everyone
was afraid it was? I think the answer to that is now no. I'm
hearing numbers of 2 to 3 percent as opposed to a 95-plus
percent problem, which is good news for anybody.
My major domestic concern is that if people do not prepare
for Y2K eventualities, that they may at the last minute start
to panic. I go back to my situation of trying to buy a snow
blower last January here in Chicago. I would call, and 15
minutes later, four snow blowers would have gone out of the
local Menard store.
I had this flash when I was going through that situation
last January. I had this flash in my head of what would it be
like January 1st, 2000, if all of a sudden the power did go out
for whatever reason, and the gas did go out for whatever
reason, and people now go to their local grocery store to buy
food and they find out everyone else has had the same idea and
the shelves are barren.
All of a sudden now, I think people can start to kick in a
whole new level of concern, and that concerned me. So that's
why I'm out talking to people, saying please take this problem
seriously. It is not going to be the end of the world. We're
not going to have Mad Max Beyond Thunderdome happening in
January, but we are going to have, I think, a possibility of a
problem arising. And I think if people prepare for that, we'll
be better served going into the new year. I'll talk a little
bit more about that in a moment.
The other uncertainty I have and concern I have is
international, and that I think the United States is well ahead
of the rest of the world, but that means everyone else is
behind us. I think that presents problems from both an economic
perspective in that if I need a part for a car and that part is
in Korea and I need to get that part for domestic production,
what's the possibility of me getting that part in?
The second one is a humanitarian issue, and that it is cold
in Siberia, and if those people don't have food, water, and/or
services, I think the United States and the other more ready
countries may have the humanitarian position put in where we're
having to assist these other countries. And I would suggest
contingency planing in those areas. It may indeed be going on
and I don't know about it, but I think that's an area that the
more prepared countries are going to have to deal with.
Here at home, I think folks can take a look around their
house to see what the susceptible devices are. The ones that
are most susceptible are the ones that have day, date, and year
associated with them. Your VCR, if you are one of the few
people who can actually program one and you do take advantage
of that, if--there is a good chance that it may or may not have
a Y2K problem. It is worth it to check it out.
Home computer absolutely should be checked out, including
the applications on it. Believe it or not, your camera may be
because it puts a little day and date on it. It may have a
problem in that the year 2000 is a leap year, but a lot of
people didn't know that when they were creating the programs so
there are possibilities of problems in that area, and also
watches could be a problem.
Devices, though, that are on a 24-hour timer or devices
that are event driven, do not have that kind of exposure. So
your car, stove, refrigerator, microwave, TVs, those kinds of
things will not typically have problems unless they have a day
or date associated with them.
So I would suggest that people prepare for sporadic
outages. Why? Because the problem is simply so complex. 85 to
95 percent of bugs can be caught in advance of putting them
into production. That's basically a software industry standard.
That means 5 to 15 percent are not caught. Because of that,
when you started adding those 5 to 15 percents together through
large networks, there's a higher than likely possibility of
something going wrong. Not to the end of all utilities as we
know them, but I think sporadic outages.
I'm concerned, too, that if people don't take individual
responsibility, that--if they try to rely on the local services
of FEMA and/or the local community services, that they're going
to be in a position where they're going to be disappointed.
Because those folks are going to be busy taking care of other
problems.
On the top of page 3, you'll see a preparation matrix which
I won't go through in detail, other than there's two down here
at the bottom that you'll see if the public is not prepared and
there are no Y2K problems, we're just flat lucky; and if there
are Y2K problems and the public is not prepared, we could have
panic and trouble, and that's my major concern.
So the minimum preparation steps that I suggest people
take: I suggest people stockpile up between 2 and 4 weeks' of
food. Not a year's worth of freeze-dried raisins, but 2 to 4
weeks of food.
I don't think there's need for razor wire around your house
either. Please make sure you have a means of opening the cans.
Don't wait till December to do this. Gradually stockpile the
food over the course of the year so you do not put a major
drain on the distribution channels we talked about. Make sure
you have a way of safely cooking that food over a period of
time that you need to.
Have a full tank of gas going into December 31st. Keep all
of your financial records for the last 6 months of 1999, and
specifically for December, because if there are problems with
the financial industry, which I do not expect--I agree that
industry is probably as prepared as anybody--but if there are,
if you have paper backup, it is a good idea.
Leave your money in the bank. It is FDIC-insured and way
safer there than in your mattress or buried in the backyard. I
would suggest you also verify the readiness of your mutual
funds and also how they're assessing the securities in which
they have specifically invested. Hold them responsible for
doing the management activities that you are paying them to do
with your fees.
Have a little extra money on hand. I encourage you not to
have it in cash, because the less-than-honorable people in our
society would love that. But I suggest having them in the form
of travelers checks. If you are traveling internationally, I
encourage you to check with the country specifically. The State
Department is going to make an announcement later this year, I
believe it is in September, about what countries they feel are
the most ready, and I think if you are planning to go to a
country that the State Department has got concerns about, I
would be concerned about it. Also Y2K travel insurance should
be considered.
Medication: If you have medication that you are required to
take, talk to your doctor and pharmacist to find out if indeed
if there is a problem, how are you going to get that critical
medication? And, finally, prepare yourself by reading more
about the problem through books like mine or other books that
are on the market.
I suggest people treat Y2K like an extended storm. They
prepare just like they're expecting a 2-week ice storm or
hurricane to hit, without the massive damage of a hurricane.
And just make the proper preparation for their own local
household.
We can and will recover from Y2K as a technology problem,
but recovering from the damage caused by a Y2K panicked public
will
have farther reaching, longer term consequences that are best
avoided by education and moderate preparation.
I thank you for the invitation to present, and I'll answer
any questions.
Mrs. Biggert. Thank you very much.
[The prepared statement of Mr. Paulson follows:]
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Mrs. Biggert. I appreciate all of your testimony.
First question. Mr. Johnson, since we already have enough
batteries with enough capacity to move our cars, trucks,
planes, and trains--although I have seen a new car they're
developing, or new truck, so that might be on its way but it
won't be ready by January 1st, I guess--we really need our oil
and gas products. And the oil and gas industries have relied
on--the United States has a great dependency on foreign
countries to augment our own supply. And in the last 3 months,
our country has seen prices go from recent all-time low to
high--higher than expected. So don't you have concerns that the
foreign countries will not be ready for the year 2000, and what
alternatives have you for the shipping industry and how about
the prices? Do you expect those to go up because of this
problem?
Mr. Johnson. First of all, price is very much a function
of worldwide supply and demand, and demand for petroleum
products anywhere in the world is going to have an impact on
what we pay at the pump here in this country.
As far as our supplies coming from foreign suppliers, the
three major sources of the foreign crude that comes into this
country are Venezuela, Saudi Arabia, and Mexico, and all three
of those entities have representatives on our API Y2K task
force.
So we do have very current firsthand information about
their readiness. We have high confidence that those three
suppliers are at the same level of readiness as the domestic
companies. So, as far as there being a disruption in those
supplies, we didn't believe that is very likely.
Now, what the prices will do later in the year, it is
anybody's guess. I mean, once again there are economic
political factors around the world that are going to affect
supply and demand, and I don't have a crystal ball to predict
where that may be by the end of the year.
Mrs. Biggert. Thank you. Mr. Paulson, you talked about the
problem internationally with some of the foreign countries,
too; and I think that we have had some real concerns,
particularly about Russia and being ready. I know that there
was a recent meeting of the United Nations discussing this
problem, and 173 countries attended that meeting and there were
very mixed reactions as to who was really compliant or whether
they've really begun or not.
It is my understanding that Yeltsin has just sent out a
letter to his cabinet, or his government, suggesting that they
start to look at the Y2K problem. This gives me great cause for
concern that if a country of that size and with those power
plants is beginning to look at Y2K--when really you are
starting in 1996 which still was the average time--was not way
ahead, whether these countries will be ready?
Mr. Paulson. I would share your concern completely, because
when you look at the caliber of people who sit on the panels
presenting to the committees and you realize the money and
talent and resource that we've been putting behind us in the
United States for 3 to 5 years in some instances, and these
companies are still now just getting ready--for somebody who's
planning to do this in 6 months, for a country, to me that just
would be a huge cause for concern. I would share your concern
on that completely.
Mrs. Biggert. Thank you.
And then, Ms. Croft, I thank you for that testimony really
to let people know that there are the scam artists that are out
there. And this is one forum to do that. But what else is Jim
Ryan's office doing to ensure that the public knows about
what's happening, what's been happening in the neighborhoods?
Ms. Croft. We have an outreach department that is staffed
by people that do nothing except go out and give consumer
education to different organizations and groups, as they
request. And we just feel that the most important thing is to
educate the public; and if they're educated, then they can be
aware of the problems that may possibly exist.
Mrs. Biggert. Do you target different areas or is this just
what the organization----
Ms. Croft. We're statewide. We go all over.
Mrs. Biggert. Thank you.
Mr. Clark, have you begun to see people starting to put
goods aside, or is this something that you wouldn't know about
if it is done on a gradual basis?
Mr. Clark. We wouldn't really have a way of knowing that.
We track our sales, naturally, by month to month and we have
not seen a large increase in sales. Naturally, we like to see
increases, but we have not seen enough of an increase to say
that it has anything to do with the Y2K problem at all.
Mrs. Biggert. At one of our hearings it was stated that you
cannot buy a generator now, that they are all gone. Some people
must be feeling concerned and going out and following
suggestions. I don't advise buying a generator because I don't
think that we'll need it, but I think there are people that are
planning to have it.
Mr. Clark. I feel there's going to be a certain number of
people that will be concerned no matter how much information we
throw at them. But I think that our industry is going to be
prepared. If all else fails, we started with a hand system, we
can go back to a hand system, and barring any electrical
outages, people should be able to come to our units and get gas
and other things that they need.
Mrs. Biggert. Thank you.
And, Mr. Harris, kind of the same question about whether
you are seeing people starting to put aside goods but also when
you stock your stores, and this is done by inventory that I
would assume is by computer; so that you really need to ensure
that your computers are working in order to be able to get the
inventory in.
Mr. Harris. Correct. Everything nowadays is done by
electronic data transfer. So we've checked with our wholesaler
to make sure they were compliant and that our systems are
working properly. As to the question of hoarding, I would think
that most of the hoarding would be done in staples and in
perishables, and so it is far too early at this point in time
to tell.
All the information that I have would suggest that the
consumer may keep an extra week's supply. Most customers shop
twice a month anyway. My customers probably shop a little more
often than that, feeling that they get fresher merchandise by
shopping two or three times a week. But my feeling is,
especially after being here and listening to the testimony
today, is that any shortages or problems with Y2K would be
short term. So I would suggest at most 1 week's supply. As I've
already stated, in the pipeline we have 120 days supply so I
don't see any major concerns.
Mrs. Biggert. Thank you. I'll yield to the chairman, Mr.
Horn.
Mr. Horn. Thank you very much. We will go through some of
the questions that have been handed in by members of the
audience to the staff of the subcommittee. And let's just start
with what are the preparations that all the panelists are
making in their own homes regarding toilet flushing, food,
water, heat, and medicine, credit cards, cash, and stock
accounts? Anybody want to say what they are doing on this?
Let's go down the line. The author, and then on down.
Mr. Paulson. I've pretty much written what I'm going to do.
I think it is prudent. As I said, I don't expect that there's
going to be a major disruption for months and/or years on hand,
but I think a few weeks is prudent and that's what I'm doing.
I'm basically stockpiling every time I go to a store. I've
set aside an area in my basement, a cool area. Every time I go
to the store, I buy a couple extra cans and/or non-perishable
items that I can just keep on hand as a contingency. And then I
make sure that expiration dates are after March 2000 and
basically accumulate that.
Also water. Some people are doing a form of bottled water
and every time they go, they buy an extra 5-gallon bottle of
water and they save up 10 or 15 of these. Worst case, if it
doesn't turn out to be a major disaster, you just eat the food
in February or March; but if it does turn out to be a problem,
I'll feel better to have it on hand.
Mr. Horn. You can have a neighborhood picnic on February
1st or so.
Mr. Johnson. I'm not taking any extraordinary measures at
my office. I live 2 blocks from my office. It is a holiday
weekend. I'll be working. We're going to staff 24 hours for the
day before New Year's Day and the day after. If I've got to
walk to work, I've done that before. It is a holiday weekend.
It is New Year's Day. I hope to watch the Rose Bowl, watch Dick
Clark drop that new Waterford ball at Times Square and pretty
much have a holiday weekend just like I normally would.
Mr. Horn. Mr. Clark.
Mr. Clark. To date, I have not done any extra preparations.
I'm an optimist and I feel fairly certain that in Quincy, IL
we're going to be operating business as usual throughout the
city. So I'm not anticipating at this point.
Mr. Horn. Ms. Croft.
Ms. Croft. Well, my family tells me that I hoard food all
the time so I don't think I really need to buy any additional
food. I do have bottled water at home. I plan on having a full
gas tank in my car. I will have probably a couple of dollars in
the house, no more than I would have if it were any other
holiday, and I think that's the basis. I don't really take
medication, so that lets that out.
Mr. Horn. Mr. Harris.
Mr. Harris. I intend to have a week's supply of food at
home, and we have bottled water at home, so we usually have a
couple extra jugs which is about a 3-week supply, and have a
full tank of gas and that will be the extent of my contingency
plan.
Mr. Horn. Mr. Swift.
Mr. Swift. I've got a colleague who likes to sign his e-
mail, ``Hope for the best, prepare for the worst.'' but that is
not a way I think that businesses and rational people ought to
prepare. You have to temper the impact with the likelihood of
it actually happening.
I've already stated, and I believe after listening to some
of the people we've heard here today, for 2 years, that any
shortages are going to be local and brief. I've already said
that I think cash is a non-issue. I'm not going to have any
extra. We are a family that drinks bottled water. We will have
some of that on hand, and I would like nothing better to see my
family eat its way through what's in the pantry.
Mr. Horn. Mr. Skarr.
Mr. Skarr. I really don't intend to do anything except
maybe stockpile red wine, because if any of these come true,
the red wine will provide me more comfort than anything else
will.
Mr. Horn. Question 2 from the audience is: If you receive a
phone call from someone conducting a survey about a product,
company, or political situation, should you answer the
questions over the telephone?
I don't know if any of us are capable on some of it. If
they claim they're in a political situation, most of us that
run for office do participate sometimes in surveys, and we'd
certainly like honest information when we do a random sample of
the home.
But, gentlemen, and Ms. Croft, if you have any thoughts let
us know. Actually, it was directed to you, Ms. Croft, since you
mentioned some of the scams going on.
Ms. Croft. If it is merely a survey and if they want to
answer the questions, I think it is fine. The first time they
act like they want to sell something, if they're not
interested, I would just simply say I am not interested and
hang up immediately.
Mr. Horn. Right. That's a technique I used. Sometimes their
automatic dialer comes back to you, and especially people with
phones not in the book. You get sort of irked more with the
product than anything else when you find a call coming in,
especially at dinner time.
Mr. Johnson, a member of the audience says, how would you
evaluate international Y2K readiness for delivery to the United
States? Do we have any more thoughts on that one?
Mr. Johnson. Well, other than what I mentioned about our
three biggest sources of imports, our committee has really
struggled on how to report what our member companies know about
the countries in which they do business. Most of that is
because those companies are there at the invitation or at the
whim of the local or the State owned oil companies, so they're
very reluctant to be critical of those facilities. However, the
three countries where we do get our biggest sources of imported
crude, we have firsthand information about their level of
readiness and a high level of confidence that they will be
ready.
Mr. Horn. The additional part of the question then--I guess
I can answer that, Mr. Willemssen--is what is the overall
percentage of international readiness? It is a very difficult
situation to assess.
Some capitalist-countries, democracy in Europe, when I
talked to some of their leaders for the last year or so,
they've said, ``Oh, well, you know, these things work out--and
blah, blah, blah.'' I thought, brother, are you in for a
surprise on January 1st. Some of those smaller countries will
be, and they have the money to deal with it.
The countries that really have a problem, of course, are
the developing nations in Africa, in southern Asia, some in the
Middle East and so forth. They have a real problem in this
area.
So we've had the Central Intelligence Agency look at a lot
of it and it is pretty gloomy if you've got to interact with
them.
And of course a lot of our international business, you are
talking about interaction in particular countries. We did
suggest back in 1997 to the Secretary General of the U.N. that
he needed to educate his members; and he appointed a very able
Ambassador from Pakistan to do that. And last fall, December
actually, we had the first conference of the 120 nations
represented in New York on this. And just 2 weeks ago, I think
it was 173 nations that came to New York.
So it isn't too late, but they're in the last stretch for
most people. And the World Bank is trying to fund some of the
developing nations to get this solved.
I don't know. Mr. Willemssen, you know a lot about it. If
you want to add anything, feel free.
Mr. Willemssen. I think you summed it very well, Mr.
Chairman.
Mr. Horn. We go to question 4: Can you suggest some
Websites for the year 2000? And that's for Mr. Paulson, the
author. Mr. Paulson, how about it? What Websites should the
average citizen ought to tap into. We read ours 2 hours ago or
so.
Mr. Paulson. There are so many Websites on the Internet
related to this. One of the hardest challenges I had in writing
this book is finding information I trusted. There's a
difference between finding Websites with information and
finding Websites with valid information that doesn't have
somebody trying to drum home a point. I've got one that I've
put on my own Website, which is--I won't try to sell you
blankets or sleeping bags or, as I said, raisins or bottled
water. It is strictly for people's use to go to the Website. It
is www.edpaulson.com, and there's a year 2000 link, and on
there they'll find divisions for different areas--finance,
government--and that will then take in other links.
So I'm hoping what people will do is use that as a resource
to get to the other specialized locations, like the Board of
Governors Website for the Federal Reserve. It is a hard one to
find unless you know how to find it, but there you can find
really credible information about what the finance industry is
doing, right directly from the Federal Reserve's own
statements. And there are others.
Mr. Horn. That is a great service and I thank you for
offering that. The vice chairman has a question for you.
Mrs. Biggert. Not really a question. I just wanted to add,
in the information that we have out there, we do have some of
the Websites for general sites, and then government sites, and
it is a sheet I believe that's out on the table.
Also, how to get testing tools and software patch sites so
you can check out your software. Again, you always take it with
what you find there, but at least it is a way to start and get
into the Internet on this issue.
Mr. Paulson. There's another site that I found that I've
come to discover lately that I really like. It is
www.y2ktoday.com. It is been out for a while, but I've been
going to it regularly and checking it out. I actually like that
site a lot. That's another alternate site I would recommend to
people and that will take them to other locations.
Mrs. Biggert. That's on this list also, as is yours.
Mr. Horn. I'm glad you mentioned it because I was going to
praise you for it. This is the best list I have seen any Member
of the House do, and your representative has done it and it is
on the table out there. It is Y2K Readiness Guide to U.S.
Representative Judy Biggert, 13th District of Illinois.
[Note.--See prepared statement of Judy Biggert.]
Mr. Horn. And that's very useful information I think for
all of you, and you don't have to scribble notes in the
audience or anything else.
I'm going to ask one last question of this panel, which
I've asked every panel. Now that you are into this, what have
you learned that, if you ever had to go through it again, ought
to be No. 1? Let's start with Mr. Skarr up there.
Mr. Skarr. I think particularly for small business, because
I'm not sure we're home free yet relative to small business, it
is creating greater awareness. And even hearings like this
probably should have been done earlier on just to build a sense
of national awareness of the importance of this. So just plain
old public awareness and business awareness is probably the
issue that we needed to start a little bit earlier in my
opinion.
Mr. Horn. Mr. Swift.
Mr. Swift. Four things come to mind. One, like everybody
else, I wish we started earlier because a large portion of this
work could have been accomplished as part of routine
enhancements or upgrades to hardware and software.
No. 2, I wish that the lines of business in all our major
organizations had accepted the reality that this is not just a
technology issue but it is one that threatens whole businesses.
Three, directors and officers, I think they needed in some
cases to have stepped up to their responsibilities earlier. If
you asked the Federal examiners, What is the common
characteristic of banks that have not performed satisfactorily?
They will tell you it is not a matter that they do not have the
money to throw at this or something; it is that their directors
and officers have not asserted themselves aggressively in the
process and have the project leaders reporting to them, and on
a scheduled timetable. And then, finally----
Mr. Horn. I completely agree with you on that. I've
preached that now for 3 or 4 years, and I think they got very
bad advice from some of their general counsels, which sort of
was, Hey, chief, if you don't say anything, they can't do
anything to you in court.
Well, that's just utter baloney. You should have done
what--both the government organizations and private sector and
nonprofits--they should have said, ``Hey, we're going to do
everything we can now and if some idiot wants to sue us,''
which a few are out there waiting now that they don't have all
that tobacco money and the tort bar, ``that we should do the
best we can,'' and when you do the best you can, nobody is
going to be able to touch you very much. And I think you are
right on the target there.
Mr. Swift. You just stated my fourth point which is
communications. I think you are going to find this summer and
through the fall, banks will be much more ready to state the
readiness of their organizations.
Mr. Horn. Ms. Croft.
Ms. Croft. I think that communication and consumer
education and hearings such as this to make the public aware of
what is available to them and what they should be cautious of.
I think those are the most important issues. From the beginning
of Jim Ryan's term, he has been very instrumental in making the
public aware of the problems that possibly exist and giving
them a forum in which to call for information if they're in
doubt.
Mr. Horn. Mr. Clark, any thoughts of what we should do
first, next time around?
Mr. Clark. I would have to echo the thoughts of others, is
that we probably would have been better off starting a little
earlier. But all in all, it helped us get a better handle on
our inventory of equipment and so forth, but just timeliness
would have, had we started earlier, would have been better.
Mr. Horn. Mr. Johnson.
Mr. Johnson. I think once you mentioned about breaking
down the barriers of sharing information. I think the Y2K
Readiness Act that was enacted last fall got a lot of the
attorneys off of our backs and allowed us to speak more freely
about what our readiness plans were. It has done a tremendous
amount in our industry to help us share information among
ourselves, and I think the lingering benefit of this exercise
is that we have broken down barriers, and I think the
technology and the advancements we've made are going to extend
way beyond what we're gaining just as a Y2K issue.
Mr. Horn. Thank you. I agree with you completely on getting
everybody off everybody else's neck and it's really been
encouraging to see very bitter rival firms working together and
sharing information because they've got a common interest.
Mr. Johnson. And we're interdependent.
Mr. Horn. Yes, exactly.
Now we have Mr. Paulson. Any more thoughts on that?
Mr. Paulson. The only comment I would have is from my
perspective is I wish I had gone public, proactively public
earlier with this, trying to raise the awareness with some of
the other people who were the early evangelists on public
awareness on this topic.
I think the other thing I would have probably promoted is
to have business start to treat this as a new beginning, not an
end. I think a lot of the business has been reactive to this,
like they're being attacked. And the context of how they did
the work was, I think, initially almost antagonistic. Where now
what I'm starting to see, that as my colleagues in the
information technology industry are going through this, they're
saying, ``You know what, we've really cleaned up a lot of our
systems.'' And a lot of them are treating this like we're
really going into 2000 on a brand-new, stable, solid technology
footing. It is kind of like cleaning house.
Some of the technology in this industry are now treating it
that way, and instead of treating it like a bad thing, they're
treating it like a good thing. I wish I had seen that earlier,
to be able to push this.
Mr. Horn. When we question government agencies, we say,
``Now, did you learn something in the process of getting rid of
some of the systems or buying them, rather than having to do
the expense and--when that isn't going to take you too far with
the next generation?'' You should be wanting the new
generation.
The Federal Government is very far behind the private
industry in a lot of things, computing power that they have,
and they don't have this. They had to bring people out of
retirement to do COBOL. Well, most people thought COBOL hasn't
been used for 30 years, but it has been and it is. And those
people in COBOL who didn't retire from the Office of Personnel
Management said, Hey, you can keep your pension check every
month. God bless you on the $100,000 contract you are getting.
People wonder where did this come from. I think those are all
useful thoughts. I will try to use these when I'm trying to
justify the Office of Management, because the Office of
Management and Budget simply doesn't give a hoot about
management problems, they're so overwhelmed with the budget
problems.
So hopefully we will get something done on that front. I
thank you for all your one-liners.
I want to thank you, Judy, for the great hospitality your
staff has offered us and for your being here. You do an
excellent job in Washington. I'm glad to see your constituents
are here to see what you are doing. You sent one fine lady to
Washington, DC, and I will tell you and her predecessor, who is
also a great Member, we appreciated that.
I do want to thank the staff, both your district office
that has helped us on these arrangements, Kristin Wolgemuth,
the legislative director; Chris Close, legislative aide; John
Hoffman, your district director; Yadira Rosas, staff assistant;
and intern, Peter Rayor. And then your chief of staff, Kathy
Lydon, and Caroline Stillman, an intern.
And then for us--put your hand up--Russell George. You are
in the audience. He's the staff director of the Subcommittee on
Government Management, Information, and Technology--a little
shy, you can see, sitting in the audience--and chief counsel.
Matthew Ryan who is to the chair's left and your right, senior
policy director. He brings a great deal of experience to this
situation. And then we have Patricia Jones. Where is she here--
oh, she's on her way to the airport--American Political Science
Association congressional fellow. Grant Newman, our clerk.
There he is, back in the audience. And Laura Lufton, intern;
John Philips, intern; Justin Schlueter, intern; and during the
summer we have a lot of free labor. That's why we have so many
interns.
And our court reporter today is Laurie Harris. Thank you,
Laurie. It is great to get the transcripts from you. They're
very helpful.
And I want to thank the Chair, and if she has any closing
statements she'd like to make, please make them.
Mrs. Biggert. Thank you very much, Chairman Horn, and thank
you so much for coming. I know it is quite a distance from
California and we really appreciate it. I think the field
hearings, where the members of the public really have an
opportunity to hear about what we're doing in Washington, is a
reminder this the Government Reform Committee's Subcommittee on
Government Management, Information, and Technology and our
chairman has led the way in really examining the Y2K bug; and I
have to say that I think that that boat is almost sunk, that we
really are on our way to solving the problems of Y2K.
And I want not to leave you with anything that would cause
anybody to panic. Because I think that's why we're having these
hearings, why people are proceeding the way that they are. So,
that we will be able to celebrate the year 2000 rather than to
have to worry about the glitches because it is--the year 2000
is going to be--the new millennium is going to be a wonderful
time. And we want to be able to celebrate it rather than to be
out in the forest by a fire.
So this is going to happen, I think. I really thank you for
all that you have done over the years, and I'm very privileged
to be on this committee and to have the opportunity since
January to participate in these discussions. And I think that
we've all learned a lot today, at least I have, I hope that
everyone has, in what we should do, what responsibility we as
citizens should take to be prepared for the year 2000.
I thank you very much and I again thank Mayor Pradel for
the opportunity to be here in the great city of Naperville and
to hold this hearing here. Thank you very much.
Mr. Horn. I want to give you a little advice from a person
who is a bank vice president. I think he's right on the mark.
He said: ``I would like to remind everyone that the bank
records for the end of December, particularly the last 3 days,
2 days, may not be available till January 4 and 5. Data
processors and printing will be overloaded to get the
statements out so please be patient, for they will be accurate
and available.'' And I think that's good advice.
And with that, we go into recess until we pick up this
hearing tomorrow in Detroit. And with that, we're in recess.
[Whereupon, at 12:20 p.m., the subcommittee was recessed.]
OVERSIGHT OF THE YEAR 2000 TECHNOLOGY PROBLEM: LESSONS TO BE LEARNED
FROM STATE AND LOCAL EXPERIENCES
----------
FRIDAY, JULY 9, 1999
House of Representatives,
Subcommittee on Government Management, Information,
and Technology,
Committee on Government Reform,
Detroit, MI.
The subcommittee met, pursuant to notice, at 9:06 a.m., in
the Wayne County Commission Chambers, 600 Randolph Street,
Detroit, MI, Hon. Stephen Horn (chairman of the subcommittee)
presiding.
Present: Representatives Horn and Knollenberg.
Staff present: J. Russell George, staff director and chief
counsel; Matthew Ryan, senior policy director; and Grant
Newman, clerk.
Mr. Horn. In the interest of the time of the witnesses and
also we have a few people that will be coming in, I believe Mr.
Conyers, your Representative from this area, will be possibly
here; Mr. Knollenberg, who is in the suburbs, he is driving in
now, but I do not want to hold everybody up.
So let me thank first Commissioner George Cushingberry for
helping us to arrange this beautiful historic building here and
this particular Commission room. I studied General Wayne over
the years when I was writing a book on President Washington's
first administration and the Congress' first, so he was a great
figure in American history and it is a great name. So thank
you, Mr. Cushingberry, we appreciate the help.
Let me just outline some of this--I am Stephen Horn, a
Member of Congress from Long Beach, CA and chairman of the
House Government Reform Committee's Subcommittee on Government
Management, Information, and Technology. This is an
investigating committee, so we have a practice here of swearing
in all the witnesses that testify before us.
Our main concern is of course the year 2000 computer
problem, which affects about every aspect of Federal, State and
local operations. Further, it affects private sector
organizations and could impact the lives of many individuals in
our Nation. From Social Security to utilities to local
emergency management, the year 2000 computer bug has certainly
been a large management and technological challenge for all of
us. No single organization, city, State or even country can
solve the year 2000 problem alone.
The problem, of course, dates back to the mid-1960's when I
think most of you, if you are around my age--and most of you
are not, but those that are, you will remember a whole room
this size would be filled with mainframe computers. They had
very little memory capacity and I guess maybe nationally
programmers all over said, ``Gee, why are we putting in 19 when
we are putting in 1967, let us just put 67?'' and we gained a
lot of memory in that. And of course that whole room could be
reflected now in your personal computer in terms of memory. But
they knew when they hit the year 2000, that the 00 would be a
problem and the computer would think it is 1900, not
necessarily 2000. And so they said oh well, do not worry about
it, American technology, we will always solve that problem. The
fact is, there is no silver bullet, they did not solve the
problem. I do not know how many people have even tried, but it
is a long, laborious situation where they go through the codes
and they are bringing COBOL people out of retirement, in the
case of the Federal Government, which is good for those who had
to study COBOL. I only did a program in it once, so it is way
in my past.
The problem that we face is really a management problem, it
is not a techie problem. And the ones that have succeeded in
this have been individuals that have organized properly and
gone through this what I called earlier a laborious matter.
More than 3 years ago, in April and June 1996, this
subcommittee held the first congressional hearing on the year
2000 problem. Since that time, we have held almost 30 hearings,
issued eight report cards to monitor the status of the Federal
Government's year 2000 computer solutions. Current estimates
show the Federal Government will spend by the end of this
fiscal year on September 30, about $9 billion to fix its
computer systems. I have often said the figure will probably
reach $10 billion, and we have a few months to go after
September 30th.
Recently, the President's Office of Management and Budget
identified 43 essential Federal programs, such as Social
Security, Medicare and the Nation's air traffic control system.
Each day these programs provide critical services to millions
of Americans. Of these 43 programs, 10 are federally funded,
State-run programs, including Medicaid, food stamps,
unemployment insurance, child support enforcement. Several of
these State-run programs are not scheduled to be ready for the
year 2000 until December, leaving little, if any, time to fix
unforeseen problems.
Data exchanges and interdependencies exist at all levels of
government and throughout the private sector. A single failure
in the chain of information could have severe repercussions.
For example, let me briefly illustrate how the U.S. Social
Security program uses computers. And Social Security has always
received an ``A'' on our report cards. They faced up to this
way back in 1989. The Department of Transportation could have
if they had listened to the woman programmer that had laid it
all out for them, but they knew better. So they are getting
``F's'' and ``D's'' usually in the last eight report cards. And
of course, in that agency is the FAA, the Federal Aviation
Administration. But Social Security is a prime example of how
to get the job done well. When the payments are made, however,
Social Security sends the payment data to the Department of the
Treasury's Financial Management Service. The Service then cuts
the Federal check for about $43 million in one program and $50
million in the other, which is then electronically deposited
directly into the person's bank account at a local financial
institution. There organizations move and manipulate data to
make these payments; each uses its own network of computers. If
a payment is mailed to an individual's home, the U.S. Postal
Service then plays a key role.
And many of the agencies in the Federal Government have
said to us when we have asked where is your contingency plan,
they said, ``Oh, we will use the post office.'' In other words,
mail the check, do not electronically deposit it. The humorous
thing about that is when we held a joint hearing with the
Postal Service Subcommittee of our full committee, the post
office did not have a contingency plan. So we will see what
happens.
The bottom line is if any one of these entities fails from
the Federal Government to the local bank or Postal Service, a
deserving individual will not receive a payment. Now multiply
this situation by millions of people that receive the Social
Security benefits and also remembering there are 435 Members of
Congress, there are 5 from the territories and commonwealths
and there are 100 U.S. Senators. And you can believe it, if
grandma does not get her check, there will be a long line out
of our district offices. So we are trying to avoid that
situation.
But for the computers to work, we need, of course, power.
One of the most essential questions concerning the year 2000
challenge is will the lights stay on? Without electricity, our
modern society will be relegated back to the proverbial stone
age.
I see our colleague from the suburbs of Detroit has made it
through the rain, Mr. Knollenberg.
Mr. Knollenberg. Good morning, how are you?
Mr. Horn. Joe, it is great seeing you. Joe is one of the
most powerful guys in my class, being on the Appropriations
Committee. So he can do a lot of good for the State of Michigan
and the country, and he does. So we are glad to have you with
us. Come on up here, Joe, you can sit here.
Mr. Knollenberg. I can sit in the big chair.
Mr. Horn. No, I got rid of the big chair, but you can sit
in a chair that you do not have to go backward on or something.
We are reminded of the Speaker's chair in the House, sort
of as a catapult into the wall.
One of the most essential questions on the year 2000
challenge is will the lights stay on? Without electricity, our
modern society would be relegated back to the proverbial stone
age. I wonder how automobile plants would continue to
manufacture cars without power, even if only for a short time.
From a personal standpoint, I realize that when confronted
with a personal emergency, I can call 911 for assistance and
feel confident the phone will be answered promptly, that a
competent authority will respond rapidly. Year 2000 computer
problems present other potentially serious threats at local
levels--and we will cover some of those today--from the
potential interruption of a citizen's call for fire or police
to the delays in the State's ability to request emergency or
disaster assistance from the Federal Government.
One thing is for sure, there are only 175 days left until
January 1, 2000. The clock is ticking, you cannot change the
date. Accordingly, the testimony we receive today will be very
helpful into our understanding of the full extent of the year
2000 problem.
I would ask my colleague, Mr. Knollenberg, do you want to
make any opening statement here?
[The prepared statement of Hon. Stephen Horn follows:]
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Mr. Knollenberg. Mr. Horn, I will be very brief.
Steve is very kind to introduce me as a person of influence
because I am on the Appropriations Committee. That means I
write the checks and obviously sometimes that is not so easy
because I also sit on the Budget Committee and I have to style
the budget to get to the point where we can write the checks,
but nonetheless everybody likes me because I am the check
writer. But I hope you understand that everybody likes to talk
to me about whatever is on their mind.
I, very briefly, will just add this. Steve Horn has been a
leader on this issue from the very, very beginning. And with
his leadership, the Federal agencies are closer to compliance.
And I think he has already told you, they are not there either,
and you hear stories about, for example, the FAA air traffic
control is not yet prepared to deal with the day January 1,
2000.
I think that he may have already talked to you about the
point that we have reached here is that the House did pass
overwhelmingly the Y2K litigation reform, 404 to 24. I think
you might have mentioned also that the Senate did likewise on
the very same day, July 1st. So we are moving forward, but as
Steve Horn says, the clock is ticking, there is 175 days now
and the end, while it is not near, the end of the time that it
takes to actually bring about architecting the right kind of
program that leaves us frankly on top of things and not behind
the eight ball is rapidly approaching.
So I am going to conclude with those remarks. I am just
delighted to be here with Steve and look forward to the
testimony of the panel and obviously to the point of perhaps
asking a question or two.
Thank you.
Mr. Horn. Thank you very much. We appreciate you coming.
When Members are home in the District, it is awful nice of them
to break away from that and get their wisdom on some of these
questions.
Let me just note our procedures here. We have panel one
before us and there will be panels two and three. And the way
we work is we swear in all witnesses, as I mentioned earlier,
and when we introduce you--and we introduce you in the system
laid out on the agenda--your full statement is automatically
put in the record. We do not want you to read your statement,
we have had a chance of those that we do have, to read them,
and we would like you to sort of summarize it in 5 minutes. And
the reason for that is we can then get into a dialog between
members of the panel and between ourselves and the panel. And
we get a lot more from that than hearing statements we already
have.
So if you could just summarize it in 5 minutes, we will--
counsel for us will hold up a 1-minute sort of marker, so that
you will know you have 1 minute to wind it up. He is keeping
the time.
We also have another routine on these field hearings in the
States. We started in Topeka 2 days ago, and were in the
Chicago area yesterday and Detroit will end it. And we found it
very useful that we pass out cards for those in the audience,
and if there is a question you would like us to raise with the
panel, we are glad to do that. And we found we have been able
to get a tremendous amount of information out of that because a
lot of people in the audiences often have some real questions
from their industry standpoint or the governmental standpoint.
So, if the panel will stand and raise your right hands, we
will swear you in.
[Witnesses sworn.]
Mr. Horn. Thank you. The clerk will note that all five
witnesses affirmed the oath. And we will begin with a witness
that has probably had about 100,000 miles of travel with us
over the last couple of years, and that is Joel C. Willemssen,
the Director for Civil Agencies Information Systems of the
General Accounting Office. The General Accounting Office is
part of the legislative branch of government under the Budget
and Accounting Act of 1921. It is Congress' right arm,
originally for fiscal review, in the traditional accounting
office role. But in the post-war period, for programmatic
review. And they do an outstanding job on doing that and doing
special studies for the Appropriations Committee, the
Government Reform Committee, this subcommittee, so forth.
So Mr. Willemssen has one of the most overall bits of
knowledge on this problem. So Joel, go ahead.
STATEMENTS OF JOEL C. WILLEMSSEN, DIRECTOR, CIVIL AGENCIES
INFORMATION SYSTEMS, GENERAL ACCOUNTING OFFICE; GEORGE BOERSMA,
DIRECTOR, MANAGEMENT AND BUDGET, STATE OF MICHIGAN; CAPTAIN ED
BUIKEMA, DEPUTY STATE DIRECTOR OF EMERGENCY MANAGEMENT,
MICHIGAN STATE POLICE; ARUN GULATI, DEPUTY DIRECTOR, DEPARTMENT
OF INFORMATION PROCESSING, WAYNE COUNTY, MI; AND KATHLEEN
LEAVEY, DEPUTY DIRECTOR, DETROIT WATER AND SEWERAGE DEPARTMENT
Mr. Willemssen. Thank you, Mr. Chairman, Congressman, thank
you for inviting GAO to testify today. As requested, I will
briefly summarize our statement on the Y2K readiness of the
Federal Government, State and local governments, and key
economic sectors.
Regarding the Federal Government, the most recent reports
indicate continued progress in fixing, testing, and
implementing mission critical systems. Nevertheless, numerous
critical systems must still be made compliant and must undergo
independent verification and validation. Our own reviews of
selected agencies have shown uneven progress and remaining
risks in addressing Y2K, and therefore point to the importance
of business continuity and contingency planning.
If we look beyond individual agencies and individual
systems, the Federal Government's future actions will need to
be increasingly focused on making sure that its high priority
programs are compliant. In line with this, OMB has identified
43 high impact programs such as Medicare and Social Security.
And as you know, Mr. Chairman, we are currently reviewing for
you the executive branch's progress in addressing those
programs. However, at this point, it is very clear that much
additional work is needed to make all those programs ready for
the turn of the century.
Available information on the Y2K 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 Resources
Executives, about 18 States had completed implementing less
than 75 percent of their mission critical systems. 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 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 and food stamps. Of the 43 high impact priorities that
I mentioned earlier 10 of these are State-administered Federal
programs. The available 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. And further, that is
based on data that has not been independently verified.
If we look at the risks beyond those facing our governments
and the risks that Y2K poses to our infrastructure, key
economic sectors and to other countries, we have made a number
of recommendations to the chairman of the President's Y2K
Conversion Council, John Koskinen, and the Council has made
some major strides in addressing these areas. Nevertheless,
there is a good deal of variance on the Y2K readiness among
these various sectors. Accordingly, there will be a need for
continuing emphasis, which will be critical to fully address
those areas in the less than 6 months that remains.
That concludes a summary of my statement and I will be
pleased to address any questions that you may have.
Thank you.
Mr. Horn. Thank you very much for that. We will move
through the various witnesses and then we will open it up to
questions.
Mr. George Boersma, the director of management and budget
for the State of Michigan is our next witness. Welcome.
[The prepared statement of Mr. Willemssen follows:]
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Mr. Boersma. Thank you. I appreciate the opportunity to be
here today to talk about the State of Michigan and what we have
done to provide Y2K readiness for State government services.
When the State started this program in earnest in the
middle of 1996, we wanted to make sure that the year 2000
project addressed issues such as correcting date problems to
prevent any material impact to government services to our
citizens. We wanted to make sure it was cost-effective. And we
also wanted to go and make sure that we took something away
from this as opposed to just fixing the problem, we were able
to use something down the road.
We have gone and we have been able to look at the executive
branch of State government in a lot of different areas as it
relates to application software, systems software, hardware,
telecommunications, physical plant as well as the State vendors
that we have--that we deal with, to make sure that they are Y2K
compliant as well.
We spent a lot of time in the 1996-1997 area to do
discovery and assessment. In 1997 and 1998, we spent a lot of
time fixing the problem and 1999 is a year that we are making
sure that the problems that have been fixed are in fact
correct, so that we can go and do business as usual in the year
2000.
I am happy to report that of the 672 critical applications
within State government, that 99 percent are compliant and back
in operation. There are five applications that still need to be
compliant and they will be done around the end of--the schedule
right now is the end of August and they will all be completed.
So we have spent a lot of time and effort to make sure that
all of our systems are up and running. We are spending 1999 to
make sure--as I said earlier, we are working on closing the
remaining open systems that we have. We are making sure that
our infrastructure is ready with additional testing. We are
working on all of our embedded technology in all of our areas,
whether it be in our hospitals or prisons, et cetera, to ensure
that all of those particular chips have been tested and are
compliant.
We have a supplier compliance data base listing close to
7,000 items that we have on the Internet for not only the State
to use but also for letting others use as well, to see what
issues are compliant.
In addition to the regular testing that we have done on our
very critical applications, we have done what is called end-to-
end testing, to make absolutely sure that these critical
applications are in fact compliant. And to date, we have had
very, very little problems in doing that end-to-end testing.
We have had independent consultants come in to do an
independent verification and validation of all of our processes
within all of our agencies, and we have gotten an approval with
our agencies on the way we have handled this entire operation.
I should also point out that many of the Federal agencies
have had auditors come in to check all of our applications and
at this point in time, again, we have received a clean bill of
health on all of those particular applications that they have
audited.
We are spending a lot of time in the awareness and
communications area, both within government, but also outside
of government and Captain Ed Buikema will talk more about that
in his presentation.
We are spending a considerable amount of time now on
business continuity and contingency planning. We have
identified some 82 essential functions that we believe are
essential--that need to be basically provided within the zero
to 5 day category. So we are in the process of completing
contingency plans on all of those essential functions right
now. We have the first drafts in and we are reviewing those at
this time and they look--right now, they look very good.
The other thing we are doing is we are calling it zero day
planning. Basically we have identified some key dates, October
1st, which is the State's fiscal year, as well as the end of
the year, whereby we are basically looking at best practices as
to what we should do, each agency should do, on those
particular dates to make sure that come January 3rd, that the
State government can work as normal. And so we are working in
that regard as well.
We have prepared a tool kit that is in the packet that I
have submitted to you, which has been sent to all the local
governments and school districts for their review, so that they
can go and look at what the State has done. And this is a
guideline that they can use to do that. We also have gone and,
as I said, prepared various types of awareness sessions
throughout the State.
I would be happy to answer any additional questions later.
Mr. Horn. Well, thank you. That is a very interesting
proposal that you have been through and that has been
successful.
Our third witness on this panel is Captain Ed Buikema, the
deputy State director of emergency management for the Michigan
State Police. Welcome.
[The prepared statement of Mr. Boersma follows:]
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Mr. Buikema. Thank you, Mr. Chairman, and good morning;
good morning, Congressman Knollenberg. I appreciate the
opportunity to be here this morning testifying before your
committee.
By statute, the director of the Michigan State Police is
the director of emergency management within our State. But the
legislature created the Emergency Management Division to manage
the day-to-day activities within the State and local
jurisdictions pertaining to emergency management.
Our responsibility is to coordinate State government
response to emergencies and disasters of all kinds. Now as we
face the Y2K issue, we figured--we determined that the issue of
information was absolutely critical, that we could get our arms
around what to expect, what level of planning had taken place
and what kind of guidance and information we could provide,
especially to local units of government in preparing for Y2K.
So we embarked on a series of infrastructure round tables
where we would bring folks in and ask them some very direct
questions as to where were they in their preparedness
activities for Y2K, what kind of problems could we expect and
what kind of guidance could we provide to local government in
terms of emergency planning. We have held infrastructure round
tables, which is what we are calling them, with electric
utilities, for both the big electric utilities as well as with
the rural electric cooperatives and the munici- pal power
providers, with natural gas providers, chemical manufac-
turers, transportation, telecommunications, water and waste
water, as well as with the Michigan Hospital Association, and
we are planning a round table with 911 providers at the end of
the month.
During each of these round tables, we would have a
transcriber present, who would transcribe the proceedings. We
then passed them out extensively to local government, we put
them on our Website, with the intention again of providing the
best and most recent information about those elements of the
critical infrastructure to local government, to provide them a
basis for putting together plans for Y2K.
A companion effort in that regard was providing guidance to
local government as to how to proceed with planning for this
Y2K issue. We produced a couple of documents similar to what
has been done in other States. First of all, we put together an
assessment tool which has been provided widely to local
jurisdictions in the State of Michigan to again help them
assess their risks and vulnerabilities. And then we developed a
contingency planning guide as well that has been widely
distributed to help them put together contingency plans for
their jurisdictions as they look at the Y2K issue. Again, both
of those documents have been placed on our Website and have
been widely distributed throughout the State.
The State of Michigan then on June 2nd, conducted an
exercise for State agencies and there were about 125 persons
present at that exercise, and we asked a lot of the what-if
questions and worked our way through those in the form of a
table top. We are in the process of developing an after-action
report for that exercise, which should be completed very soon.
In terms of training and outreach to both State government,
but specifically to local government, there has been a lot of
activity in our State this year. We have a structure in our
State where we have district personnel and we have encouraged
them, as well as the local emergency managers that exist all
over the State, to conduct town meetings within their
jurisdictions or conferences or forums or seminars. And from
our staff, we have provided support to those folks, and at last
count, we have appeared at over 100 of those local
presentations around the State of Michigan.
More recently, we put on three large Y2K symposiums
throughout the State and we brought in a number of State agency
representatives to describe where their agencies were in terms
of Y2K preparedness, as well as our partners from the utilities
as well, to again describe where they were. And we received
pretty good media coverage as well, describing that entire
effort.
For the end of the year, again as with most States, the
State Emergency Operations Center here in Michigan will be
activated. We will be asking for information from local units
of government on a timely basis; specifically, on January 1st,
to tell us what, if anything, has occurred in their
jurisdiction. We expect to put together a joint public
information center where we are partnering with a variety of
State agencies as well as with our utilities, making sure we
can receive information in from local jurisdictions and provide
guidance and direction as well to the media as well as to our
citizens throughout the turnover.
We recognize that this is a unique situation for us, as you
mentioned, the Y2K date is non-negotiable. But we also
recognize that it provides a real opportunity for us to
strengthen the relationships in the emergency management field
and we expect to reap the benefits of those relationships well
beyond the turnover.
So with that, that gives you an overview of some of the
activities that have been taking place in our State and I would
be happy to answer any questions later on. Thank you.
Mr. Horn. Well, that is very helpful and I think we will
probably have a lot of questions because that point you made in
ending, particularly, on the relationships that are established
in the long run is what is really helpful here out of this.
Our next presenter is Mr. Arun Gulati, the deputy director,
Department of Information Processing for Wayne County, MI. Glad
to have you here.
[The prepared statement of Captain Buikema follows:]
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Mr. Gulati. Good morning and thank you for giving us the
opportunity this morning to share the information with you in
regard to the actions the county has taken to ensure to our
stakeholders that our services will not be impacted because of
the Y2K issues.
Realizing the importance of having management involved as
well as the number of days left to address the Y2K issue, last
year the county formed a management team which includes the
directors of all departments and representation from the
legislative branch as well as the judicial branch. The
executive team also includes representation of elected offices
as well as agencies.
The goal through this management team is to ensure that we
have the necessary team to make the necessary decisions to move
forward in a manner so that we can quickly make the decisions
and correct the Y2K issues.
The Y2K program is being directed by Ms. Carol Steffani,
she is the director of information processing. Our program
follows a detailed charter and we have all the information
relating to the charter on the Internet to share with our
public. The county program includes three areas--technical,
legal and the contingency planning.
The technical area is to ensure that we have identified all
the areas and taken the necessary steps to ensure that
components will work as we move into Y2K.
The legal is to ensure this team that we are minimizing the
liability by taking the necessary steps to do that by
communicating to our vendors as well as suppliers as well as
our other partners.
Contingency planning is to define that we must have backup
plans to ensure that all critical systems will operate as we
move into Y2K.
The county has adopted the GAO standard which includes
different phases--awareness, inventory and assessment,
conversion/remediation, test, and implement and certification.
Though these are different phases, they are being run to ensure
this team that not only we remediate, but after we remediate,
we go back and test to ensure this team if the remediation was
not correct, we can go back and forth to ensure that it is
functioning as we designed it to.
The county has completed the inventory and assessment of
all the information technology components and also completed
the remediation of the system running on the mainframe. Though
some of the systems will not be implemented in production until
later in this quarter, we expect to complete the remediation of
the mainframe applications as well as the network by the end of
September.
In order to ensure that all technical components are Y2K
compliant, we are also going in and remediating approximately
3,200 PCs and we have provided the necessary tools to our users
as well as the departments to ensure this team that they run
the necessary check, that not only the applications are Y2K
compliant, but also the data on those applications.
The county is also examining 70-plus facilities. These
facilities include jails, airport, some of the key buildings
within the county.
In order to manage all the projects that we have, we have a
Y2K program office which is presently tracking over 250
projects and out of those 250, there are 42 that are mission-
critical. And that is producing the necessary reports for the
management team.
Through some of the testing we have done, we have found
that some of the applications that the vendors informed us were
Y2K ready, when we plug in all the dates that are related to
the Y2K, they are not ready and some of the vendors have gone
back and they are going to bring in the necessary changes to
ensure that those products are Y2K ready.
The key dates for the county to be ready for the Y2K are
June 30th, that is the date to be ready and have all the
contingency plans for the airport. The airport must complete
compliance documentation of all critical systems and put
written contingency plans in place. That is the key date and
yes, we have completed that.
July 16th is a date when we are going to bring the
management team together for a table top emergency preparedness
exercise.
September 30th is the date to complete the remediation and
also the testing.
Wayne County has also adopted a formal emergency readiness
plan which specifically defines the steps that we will take to
ensure this team that we have prepared for the Y2K.
Contingency plans are being prepared as we speak, and yes,
we will have the contingency plan for all mission-critical
systems.
Realizing the complexity that we face with the Y2K, we are
also looking at developing the transition plan into the last
quarter of this year. This transition plan will assure that as
we gather and learn new information, we have the team together
to manage the risks for going into the year 2000.
In conclusion, yes, we will be ready for the Y2K. But
again, we have realized over the last 2 or 3 years now that not
only our computers, but the operation of all computers that may
be of the citizens, of the State or the Fed, must function
properly in order to be ready for the Y2K.
And we very much appreciate your having this forum to share
this information and giving us the chance to learn about others
also. That is the overview of my testimony and I will be here
to answer any questions later on.
Mr. Horn. Thank you. We appreciate that.
Our last presenter on this panel is Kathleen Leavey, the
deputy director of the Detroit Water and Sewerage Department.
[The prepared statement of Mr. Gulati follows:]
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Ms. Leavey. Good morning, Congressman Horn and Congressman
Knollenberg. I appreciate the opportunity to be here this
morning to advise you on the status of our Y2K readiness.
I can tell you that we are confident that we have
identified and are in the process of remediating all of our
mission-critical systems and processes so that we can fulfill
our mission of providing water and sewer service on January 1,
2000.
Because we are an environmental agency and because we are
charged with public health and safety responsibilities, we have
followed the EPA guide on the process that should be followed
for the readiness on Y2K. That includes the same steps that are
in the GAO, but they are a little bit different. We do have
awareness, assessment, correction/remediation, contingency
planning, testing and implementation.
We are working on all of these areas simultaneously. I am
the department's Y2K coordinator, I have a team that is
comprised of both consultants and employees who have been
working on this process for the last 3 years. We have gone
through the department, we too have a lot of facilities, and
most of our facilities are active process service facilities.
We have a concern, obviously, that we be able to turn on our
tap on January 1st and get water, et cetera.
We have been meeting with all of the other utilities in
southeastern Michigan to ensure that we are all on target for
January 1st. The electric industry, Michigan Consolidated,
Ameritech, ourselves and any other utility services have had a
round table that we have been working in for the last year. Our
purpose is to assist each other and to know what each other's
contingency plans are, so we are all on the same line on
December 31st. I can tell you in meeting with the other
utilities that we are confident that they are doing everything
possible to be ready, as are we, on January 1st.
We also have been participating and working with the State
emergency planning. There also is a regional planning center
that is an emergency center that is going to be set up, an
operations center in I think it is Northfield, for the State.
We are going to participate in that. We also have a city of
Detroit Emergency Center which we will participate in, but we
also will have our own emergency operations setup.
At this point we have, for the last 16 years, done table
top exercises and contingency planning, again because of the
nature of our business. We have worked closely with the
University of Michigan and they are developing and we have
already done one Y2k table top. We will do others and probably
later on in the year, we will involve our customers in that as
well.
We have a service area that is approximately 1,000 square
miles. We serve 126 communities with water, we serve 76
communities with wastewater services. We have formed a customer
task force on Y2K because we want to be able to keep the lines
of communications open with our customers. They are an integral
part of our contingency communication plan and they will be
involved in assisting in either manning or operating processes
in the various areas where they are located.
We, as I said, are doing everything we think is necessary.
Our contingency plans are not real complicated. We are
intending to invest a great deal of money to provide backup
service at stations and facilities that we have identified as
critical. Those generators are being manufactured as we speak
and installed and tested as we progress through the year. In
order not to waste any money on that, we have very involved
plans for their use after the rollover date.
But that is our primary contingency plan. However, as I
indicated, we have been doing table top emergency exercises for
over 16 years. We are treating the Y2K rollover as if it were
an emergency, because essentially, if our services stop, we
want to find alternative ways to provide service to our
customers. We do have a redundant system; that is, most of our
large water plants, all of our large water plants and our
customers have service, water service coming from two different
directions. So if it is shut off in one direction, we have the
ability to feed from another. We have water plants located as
far north as Port Huron and as far south as Allen Park, we have
a total of five. Most of the water plants predate the computer
in 2001, so we do not have to worry really about embedded chips
there. They have never been operated by computers, they have a
life span that exceeds most computers and they will be
operating fine and they have been tested.
On the wastewater side, we have some newer computerized
processes and those we have been remediating for at least 3 to
5 years.
We, again, feel very confident that we will be on target on
January 1. What we have tried to do is to get information to
our customers and that is our biggest concern at this point. We
do not want people panicking, but we do want people to be
prepared in the event that something other than Y2K happens.
As the State Police Chief mentioned, this is an opportunity
for all of us to bone up on our emergency operations. We pulled
out a booklet that we have had for about 15 years and are using
that as one of the things that we distribute to our customers,
what to do if you are concerned about a water emergency, what
are you going to do if you are concerned about the rollover
time, December 31. So we are giving advice in those regards in
both water and wastewater service areas.
So our next area we are going to tackle is trying to find a
way to make sure our employees are comfortable when they come
to work that night, and that is making sure their families are
in a place that is safe and sound and they can feel confident
and comfortable that their families are OK.
That concludes my testimony, I will be here for questions
obviously. Thank you.
[The prepared statement of Ms. Leavey follows:]
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Mr. Horn. Thank you. Let us now open it up for questions. I
would like Mr. Knollenberg to begin the questioning and we will
sort of alternate maybe every 5 minutes and we will get the
questions from the audience and then we will get a dialog among
yourselves. So Mr. Knollenberg.
Mr. Knollenberg. Thank you, Mr. Chairman. And thank you for
your testimony.
Let me start with Ms. Leavey, regarding the water
situation, you seem to feel comfortable that things are in
relatively decent shape. There is about 200,000 public water
systems regulated under, as you know, the Safe Drinking Water
Act that serves some 240 million people. The balance of the
population is serviced of course from private wells.
Can the Detroit Water and Sewerage Department ensure that
there are no violations associated with the Safe Drinking Water
Act?
Ms. Leavey. Yes, we can do that now, we expect to be able
to do that on January 1st. We have never had a problem with
that, our water source is very clean, the Detroit River and
Lake Huron are very good sources for our customers.
Mr. Knollenberg. And the redundancies you spoke of, you
feel pretty comfortable about those functioning as backups in
the event there are failures?
Ms. Leavey. Yes, we do. We think that if there is any kind
of failure in the electric grid, that it will probably be
isolated, but we are looking at a normal situation when the
power goes down, how do we respond. Normally we have a 3-day
turnaround, 1 day turnaround. We can have the same thing happen
if a water line breaks like it did in Auburn Hills, where we
have people without water service for several days.
So we do not expect Y2K to shut us down. We really do not
expect to be shut down by Edison or any of the other utilities.
Our biggest concern is that it is the winter time, in the city
of Detroit, that is the time where we have more breaks than
anything else, and we are concerned that people, if anything
happens, will say ah-ha, Y2K. And that is not what is going to
happen.
Mr. Knollenberg. It becomes a whipping boy, I take it, for
everything.
Ms. Leavey. Oh, sure.
Mr. Knollenberg. If I could, Mr. Chairman, one other
question I would like to direct. This could be to any of the
panel members, but it has to do with emergency management and I
think Captain Buikema, you are probably the person that this
could go to.
As I travel throughout this part of the State and my
district and beyond, I have become acquainted with the
inconsistency of the 911 systems that are in place and some
rely on older telecommunications, some are certainly--and the
best computer equipment is available in some cases. Have you
done an assessment that looks at testing these various computer
systems associated with both the police force and the fire
department in the State of Michigan?
Mr. Buikema. Well, we are planning, as I mentioned, to do a
round table with--we have invited I think something like 50
911s to attend at the end of the month on July 30th. And we
expect to have an extensive dialog with them about that very
issue at that time.
Up to this point, we have reached out to 911 directors and
911 centers, both--we have encouraged the local emergency
management coordinators to have a dialog with those folks to
ask the questions that you just asked as well as the State
police post commanders--and there are some 64-65 State police
posts in the State of Michigan--to also have a dialog with our
911 providers.
We hear anecdotal information concerning various pieces of
equipment, some of which have been installed as recently as
last year, that are not Y2K compliant, and we are hearing
stories that the typical public safety answering points, PSAPs
is what they are called, are having to spend anywhere from
$20,000 to $40,000 to bring them up to be Y2K compliant.
But we do not have a good assessment overall on that, which
is why we want to hold that round table at the end of the
month, to get our hands around it a little bit better.
Mr. Knollenberg. Would you say that that is something in
your discussions with members from other States that is a
problem that they have as well?
Mr. Buikema. Yes, just this past Wednesday, I participated
in a public safety round table in Washington, DC, with John
Koskinen. And there were representatives from around the
country there and the issue of 911s was one of the areas of
uncertainty, let me put it that way. I think it is just
unknown--there were statistics, there are estimates I guess
that there are something like 7,000 911 centers in the United
States. Assessments have been done in some fashion, but only
less than half of them have returned their surveys back. So
there are still a lot of unknowns concerning them and Michigan
is no different than any of those other States.
Mr. Knollenberg. Thank you. Mr. Chairman.
Mr. Horn. I was very interested in the water and sewerage
particularly. Did you read about the Los Angeles situation?
That was not a really Y2K situation, but tell me what you have
learned from that and are you testing along the line they were?
That was what, a 300 million sewage----
Ms. Leavey. Gallons of sewage, yeah.
Mr. Horn [continuing]. Spilled, yeah.
Ms. Leavey. It was our understanding--and yes, we are aware
of it certainly, it gave everybody a heads up. It was our
understanding that they were in fact doing a Y2K test on some
of their machinery and discharged accidentally. We certainly
have no intent of discharging intentionally or accidentally but
we are aware now that we have to test those portions of the
system as well. However, we already have been looking at those
in terms of assessment and inventory, checking with the
manufacturers, et cetera, doing the normal process to determine
if they are Y2K compliant. We are pretty confident that they
are.
Mr. Horn. Well, that is good news, because I think that is
one of the things that would really disrupt a community, not
just the water, but what the use of the water is.
Ms. Leavey. Well, yeah. We do have a concern about that,
but our greater concern is individual--well, we have two
concerns, the water consumption, public health. We also have a
concern about public health in regard to any backups into
people's basements. If there is a very large storm and there
are any power shutdowns related to the transmission system for
either water or for wastewater, then to protect public health,
we may discharge into the Detroit River. But it is our
expectation that at that time of year, we would not experience
anything like that. But we have met with the State Department
of Environmental Quality. In an emergency situation, we would
always opt for that as opposed to storing it in people's
basements.
Mr. Horn. One question that I am always interested in is
since you have gone through this situation of planning and
adapting and remediating and so forth, I ask the whole panel,
what have you learned that if you had to go through this
situation again, what would you want to do first that maybe you
did not do in this, because we have all been working our way
along trying to solve the problem, or at least remediate it.
Let us start with the first presenter here and that is--we
will wait on Mr. Willemssen a minute. Mr. Boersma, what do you
think from the State level you would have done differently?
Mr. Boersma. I started as the CIO of the State in July 1996
and that was the No. 1 priority that we dealt with. So I think
that from that perspective, we certainly had to initially in
the first year, year and a half, we had to make up some time.
And so we really pushed forward, because the goal--knowing that
a lot of IT projects, whether it be public or private sector,
do not get done on time, we wanted to make sure that we were
not in that situation because, as you said earlier, the date is
not going to change.
So we made it a goal that the majority of our critical
applications had to be remediated, tested and back into service
by the end of this past year. We were successful in doing
almost all of those with the exception of a few. So that was a
very critical thing. Obviously I think everybody would say one
of the key issues is to start earlier on this so that there was
more time to go and do this. But we have--as a State, we have
learned a lot with Y2K and that is the fact that we did this
centrally so we took best practices, even though all of our
agencies were involved in this. We took best practices of the
agencies and really made it a team effort and we put over a
million hours of effort into this and we had very good
reporting, so we knew application by application exactly where
we were from an effort perspective. It took a lot of upfront
time and effort by the agencies to put all this information
together, but it proved to be very successful.
Because as you do, we have given all our agencies score
cards as well, and I can tell you, the ones that were in the
red, we had various meetings with them and their goal was to
get out of the red very quickly and that proved to be very
beneficial for us.
Mr. Horn. Well, I am glad to hear that. A number of Cabinet
officers have told me in Washington that our report card has
given them a good excuse to beat the bureaucracy to get the job
done. So, they do not like the ``F's'' and ``D's'' and ``C's,''
but it has worked out, some of them are now at the ``B's'' and
the ``A's,'' which was the whole aim of the thing.
Let me ask Mr. Buikema, what have you learned that you
would like to have done differently?
Mr. Buikema. I probably would echo what George Boersma just
said, in terms of getting started earlier. I think the process
that we are following getting information from the critical
infrastructure, promoting awareness, developing guidance, that
is a sound process, working closely with the Federal agencies,
specifically FEMA on this issue, as well as with local agencies
and State departments. But I wish we could have gotten started
earlier like everybody else did.
But I think we are building on what exists for all hazards,
as most States or all States are. There is an existing
emergency management structure in the United States that has
all hazard emergency operations plans that are flexible enough
to respond to most hazards. The Y2K issue of course has some
unique circumstances to it, which is why we are promoting
contingency planning.
And in summary, I guess we could have gotten started a
little bit earlier on that aspect.
Mr. Horn. Mr. Gulati, now that you have been through it,
what would you have done first next time around?
Mr. Gulati. I guess if we had more time, that would have
definitely helped. And also in an ongoing operation of
anything, I think we need to take in account that when the
programmers developed applications back in the 1960's, they
only thought that they were developing for only the next 5
years. We need to look at it that yes, we are making something
for a much longer period of time.
And another challenge we ran into is the inventory aspect,
of what all do we have. I think the county adopting a mechanism
so that on an ongoing basis we know what we have, so that if a
need arises, to come up with a plan to address whatever, you
have the necessary information there to be able to make the
management decisions on that.
Mr. Horn. Well, thank you. Ms. Leavey, what would you do
differently?
Ms. Leavey. I would definitely start earlier, for sure.
Mr. Horn. When did you start?
Ms. Leavey. We started in 1996, but really I do not think
at the start, anybody had a sense of the volume of what we
would have to do.
I think another thing that we would do is begin educating
the public a lot earlier, getting our Websites up and running
earlier.
Mr. Horn. Let me just go back down the line on the date
when you started.
Mr. Gulati, when was that?
Mr. Gulati. We started back in 1996.
Mr. Horn. In 1996. And Captain, when did you start?
Mr. Buikema. We really did not start on Y2K until last
fall.
Mr. Horn. Well, you are about like the executive branch of
the Federal Government on that one.
How about it, when did the State of Michigan start on this?
Mr. Boersma. We had new applications that we had installed
in the early 1990's that we made sure they were Y2K compliant,
but we really did not start in earnest on this until mid-1996.
Mr. Horn. Federal Government did not really in earnest
start on this until April 1998, despite 2 years of prodding
this subcommittee had given them. But they finally faced up to
it.
Mr. Willemssen, what would you like to ask or comment after
what you have heard?
Mr. Willemssen. Just a couple of points I would like to
emphasize of what I heard from the other witnesses. One is that
it is especially important from here on out that the
organizations make sure that they do have independent
verification and validation of their efforts. Another set of
eyes to let top management of the organizations know that the
testing and remediation has gone as expected. It is usually the
case that some things have been overlooked or some things have
been missed and therefore, an independent verification and
validation agent can be especially useful in focusing on that.
And second, I think it is also very important for the
organizations to look beyond the boundaries of their own
organization. It is one thing to say that they are Y2K
compliant, but unfortunately because of the high level of
connectivity and the reliance on other organizations in our
computerized world, they also need to make sure that they
understand the compliance status of the other organizations
they interact with. So that will be increasingly important over
the next several months.
Thanks.
Mr. Horn. Thank you. I want to ask Commissioner
Cushingberry if he has any questions he would like to ask the
panel, since he, like Mr. Knollenberg and I, are down there at
the grassroots and we get a lot of questions from a lot of
people and they wonder how they are doing.
Mr. Cushingberry. Mr. Chairman, for the record, I serve as
a member of the Information Tech Committee of the National
Association of County Commissioners, so I am pleased to be here
to testify on our behalf. We are meeting with the Allied
Council in St. Louis, MO, where all the county commissioners
across the country get together. We are pleased that your
committee has had such leadership. We are participating as part
of the Information Task Force through the National Association
of County Commissioners. My distinguished colleague,
Commissioner Cavanaugh of the east side of Detroit, is also on
what is known as the Research Technology Committee and we are
trying to work with the major universities across the country
to see to it that we get the better theoretical methodologies
included in our future plans.
[Inaudible comments.]
Mr. Horn. Well, thank you. If I had to sit here making
decisions every week, I would day dream and just look at the
architecture. So how do you focus around here with this type of
beauty. Thank you again.
Mr. Knollenberg, any further questions?
Mr. Knollenberg. I am satisfied, Mr. Chairman, thank you.
Mr. Horn. Mr. Willemssen and I are on the same track,
because I was going to get on verification and I think he is
very right. Sometimes we have internal verification but
sometimes you need external verification.
So we thank this panel.
We did not have any questions from the audience that the
staff picked up. But hopefully there are other things, as we go
ahead this morning, feel free to write the questions and we
will put it to the panel.
But thank you very much, those on panel one, you have given
us some good testimony and we appreciate it.
So panel two will come forward. We have Mr. Surdu, Mr.
Costantino, Mr. Buck, Mr. Parker.
Gentlemen, if you would stand and we will administer the
oath.
[Witnesses sworn.]
Mr. Horn. The clerk will note all four witnesses took the
oath. And we will begin with George Surdu, the director of
technical services organization of the Ford Motor Co. We are
delighted to have all of you automobile people here. It is key
to the country. Please proceed. And as you heard earlier, if
you could summarize the testimony in 5 minutes or so, that
gives us more time for interaction because we do have your fine
statements.
STATEMENTS OF GEORGE SURDU, DIRECTOR, TECHNICAL SERVICES
ORGANIZATION, FORD MOTOR CO.; DON COSTANTINO, DIRECTOR,
CORPORATE YEAR 2000 PROGRAM, GENERAL MOTORS CORP.; ROGER BUCK,
DAIMLER-CHRYSLER CORP.; AND JOHN PARKER, VICE PRESIDENT,
INFORMATION SERVICES, NORTHWEST AIRLINES, INC.
Mr. Surdu. I would first like to thank the subcommittee for
affording Ford Motor Co. the opportunity to provide an update
on the year 2000 program. As you just mentioned, I am the
director of technical services and the global year 2000 program
manager for Ford Motor Co. I have been in that position since
the inception of our program in 1996.
In 1996, Ford Motor Co. initiated a formal program to
address this year 2000 challenge. We established a senior level
steering committee that has been headed up by our chief
financial officer, our vice president of quality and process
leadership and our chief information officer. A global year
2000 program office was created and a robust program management
process was put in place to guide compliance actions across all
the potential impact areas.
I believe we did a very innovative thing within Ford Motor
Co. in that we really sliced the business across technology
lines. So we began taking a look at all the major impact areas,
which include business computer systems. Ford Motor Co. has
about 300 million lines of code, about 2,700 systems, and about
a third of those have been deemed mission critical.
In addition, we have looked at our technical
infrastructure, our plant floor equipment, our product
development test equipment, our suppliers, dealers and
affiliates, end-user computing which includes all of the
spreadsheets and the access databases, those kinds of things
that our business partners create on a year-to-year basis to
support the business, our building infrastructure, and of
course, our vehicle components.
In addition, we have continued to monitor the compliance
actions of other impact areas as we move forward on the
programs, such as our transportation carriers, our medical
equipment suppliers and in fact customs offices around the
globe.
The sophistication of this program has been recognized by
the Information Technology Association of America, with
certification that Ford's program meets the challenging Y2K
best practices standards.
We established stretch objectives back in 1996 across all
of these major impact areas, and to have all of those impact
areas compliant by the middle of this year. We are going to be
fundamentally there in all those areas, we are going to use the
summer shutdown period to complete some of the remediation
work, but I would like to give you some data to give you a
sense of where we are at across the program.
As of this report, 98 percent of all of our critical
systems are compliant, 97 percent of all systems are compliant,
that is all 2,700 systems. They have been remediated, tested
and are now back in service.
In addition, an enterprise test plan has been established
for all of our key business processes, with completion of that
enterprise testing by September.
On the plant floor side, for the 167 plants and warehouse
facilities around the globe, we presently have 99 percent of
all the equipment has been remediated. We have got a handful of
equipment that we are waiting again until the shutdown period
to make sure that all of that is working properly.
In conjunction with the Automotive Industry Action Group,
and I think you will hear from my team mates here today a
little bit more about that, we have been involved with the
AIAG, the Automotive Industry Action Group, and other
organizations similar to that around the globe, the VDA in
Europe, as an example. We have been participating in a global
supplier readiness program for our production and what we call
our non-production suppliers and that includes our utilities,
of course some of the folks that have already provided feedback
this morning.
As of this report, 80 percent of these suppliers are
responding that they are ready. That is as of June, with 100
percent to be ready by the end of the year. About 10 percent of
our suppliers have not responded and we have additional actions
underway to validate the status of these suppliers and any
suppliers that are not anticipating being ready by September.
We have a very similar program that we have put in place
for our affiliates and today 89 percent are ready, with 100
percent ready by the end of the year.
Compliance in some of the other impact areas that I would
mention very quickly, 86 percent of all of our critical product
development test equipment are compliant and back in service;
93 percent of all of our end-user using technology is
compliant; 95 percent of all of our technical infrastructure is
compliant; 83 percent of our end dealership systems and 93
percent of all of our physical properties and infrastructures.
And finally, 100 percent of all of our vehicle components are
compliant and have continued to be compliant since we began
evaluating that back in 1996.
As previously stated in our most recent SEC filing, Ford is
anticipating spending about $375 million to complete the
program. When it actually formally commenced, we absorbed our
funding initially within our own process leadership
organization when we kicked this program off, but this $375
million began about mid-1997 and is going to carry us through
about the middle of 2000. This outlay accounts for about 10
percent of our total infrastructure costs.
We are very, very confident in our readiness as well as
that of our affiliates, dealers and suppliers. However, the
inter-dependence of the entire supply chain--and you heard a
little bit about that this morning--does represent the greatest
risk to Ford. In particular, an extended infrastructure
failure; that is, electric, gas or water, would make it
difficult for us to operate our manufacturing operations.
Accordingly, during the fourth quarter of last year, we began
to develop contingency plans. Most of those plans are now
complete, we are going to validate those plans by September. In
addition, we have created what we have called a global response
center, we actually launched that July 1st, and that center is
collecting information and will act as an information
clearinghouse for the most current status available as we enter
the new millennium.
Finally, I should mention that we have notified a small
number of our employees that we intend to have onsite or on
call over the holiday period, to coordinate any unexpected
glitches that may be experienced.
Finally, and it was mentioned again earlier, we have
engaged an outside organization to do independent verification
and validation. Even though all of our critical systems were
compliant, those--a third of the inventory that I mentioned
were all compliant by the end of last year. We have been doing
enterprise testing and now we have an independent organization
that is reviewing all of those critical systems to make sure
that we have not missed anything.
So with that, that is a summary of my prepared statement
and I would be happy to answer any questions when the time
comes.
Mr. Horn. Well, thank you, that is very helpful
information.
Next is Don Costantino, director of corporate year 2000
program for the General Motors Corp.
[The prepared statement of Mr. Surdu follows:]
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[GRAPHIC] [TIFF OMITTED] T0939.288
Mr. Costantino. Good morning, Congressman Knollenberg and
Representative Horn.
Mr. Horn. Thank you for being here.
Mr. Costantino. I am happy to be here today to represent
General Motors.
We too have a very formal program inside of General Motors.
It is headed up by our vice president and chief information
officer. We report directly to both the Board of Directors and
our Automotive Strategy Board, which is our lead group, on a
regular basis.
Getting into some of the specifics of our program, we have
approximately 6,100 application type systems--things like
financial systems, scheduling systems, et cetera--comprising
probably a billion and a half lines of code. At the present
time, we are well over 99 percent complete, we have less than a
handful of those left to be done. They have all been
inventoried, they have all been assessed, they have all been
remediated and put back into service.
From the systems and component area where we talk about the
plant floors, we talk about engineering work stations,
computers, et cetera, we have over 1.4 million of these devices
which we had to inventory and assess. We are currently in a
position now of well over 99 percent of those complete and they
will be finalized during the month of August during the plant
shutdown period. So we will be basically complete with the
remediation and testing of all of our applications and
infrastructure globally.
We have moved into a very serious readiness testing phase.
This is a phase in which we basically test all of our systems,
either singularly or connected, since most of our functions
connect, of course, across different departments. These are
done in a setting of a future clock, with future data, so that
basically they are all being tested, in an environment that
duplicates the year 2000. We are probably going to run about
3,000 of these tests either individually or in conjunction with
other systems in an integrated fashion. At this point in time,
we are probably about 90 percent complete with that testing.
We have also put in place what we call a live production
test in all of our assembly and manufacturing plants. We have
run over 100 of these so far, and this is actually building
cars or parts in the plant with future clock, future data. So
we have basically put our assembly plants into the year 2000,
run the product and then turn the clock back to bring it back
into the current timeframe.
As with, I am sure, everybody else on this panel, we are
also doing independent verification of our systems with an
outside firm. Although in our case, we also use EDS obviously
that did most of the remediation of our applications work.
From a supplier standpoint, this has always been a very
critical area of our program. We obviously participated with
the Automotive Industry Action Group [AIAG], in the self-
assessment survey but we went I think quite a bit farther than
that. We have had teams in place globally for at least the last
2\1/2\ years. We have done onsite visits with trained assessors
at over 3,500 suppliers. We have held workshops across the
globe that have brought in another 3,000 suppliers and
basically feel at this point in time we have an excellent
understanding of our supplier base and it's readiness. We have
narrowed this down now to several hundred suppliers that we
believe still need some additional attention, which is less
than 10 percent of our supply base. And we are in the process
now of further evaluating them to determine what type of
contingency plans we will have to put in place if in fact they
are unable to be ready for the year 2000.
In conjunction with that, we have also looked at logistic
suppliers worldwide, and obviously we are looking at both
indirect and direct. We have also just in the last 3 months
spent a great deal of time internationally looking at the
infrastructure in various countries focusing on utilities. We
are fairly satisfied that the United States is in pretty good
shape, but since we have operations worldwide and suppliers
worldwide, in order for us to better understand what type of
contingency plan we would have to develop, we needed an
understanding of the overseas utilities environment and that is
basically now complete and we are now applying that against our
supplier base to determine what type of contingency plan we
will have to put in place.
Contingency planning, as mentioned by George, is ongoing
now in all areas and will be complete and basically be in the
test phase starting in September; although in most cases, the
contingency planning is actually a reflection of our normal
planning that we would have for any type of a disaster
recovery.
Command centers are being put in place, one in Detroit and
the rest of them globally. They will be integrated throughout
the month of December and January to assure that we can respond
properly to any issues if we do have them, although at this
time we do not anticipate anything of a real material impact,
but probably more like a minor shutdown. We have informed, as
George has at Ford, our employees, a number of them that they
will not get vacation, they will be working and the EDS
organization has put all people on notice throughout their
company, from the month beginning the middle of December
through the middle of January, so we will have our technical
resources in place if we need them.
Finally, from an expenditure standpoint, GM, is at the
current time estimating that we will spend about $540 to $600
million. About $190 million of that will go to EDS, our primary
supplier of services.
Thank you.
Mr. Horn. Well, thank you, we appreciate the testimony.
Next is Roger Buck of the DaimlerChrysler Corp.
[The prepared statement of Mr. Costantino follows:]
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Mr. Buck. Thank you, Representative Horn and Knollenberg
for asking me to be here today. Before I begin, I need to cover
a topic on this non-receipt of Federal funds. We are filling it
out currently and will have it to your office shortly.
We take this issue at DaimlerChrysler of Y2K very
seriously. We have project teams in both Stuttgart and Auburn
Hills and we are coordinating our efforts. These efforts began,
of course, when we were separate companies, Daimler-Benz and
Chrysler.
Each team is responsible for developing a comprehensive
compliance program to assess potential problems within
DaimlerChrysler and its key suppliers, implement and verify
remediation action and devise contingency plans. Each team has
allocated resources based on our internal assessments to
address the issue, and the potential impact to our company,
both its operations and financial conditions.
The teams both report to the Board of Management of
DaimlerChrysler AG which is our parent company.
We believe we will achieve our goal of substantially
completing Y2K remediation at our facilities around the globe
by September 30th of this year. This includes addressing the
problems of Y2K with our business computer systems, our shop
floor devices, our sales and service activities and PCs for
each of our business units. Critical business computer systems
were 99 percent remediated at the end of 1998. This has allowed
us to perform additional integration testing using CPUs rolled
forward into the year 2000. The upgrading of critical shop
floor equipment will be completed this summer with our shutdown
period. There are several items that needed 1 to 2 weeks to
actually fix. We cannot find a single failure in any of our
vehicles when the clock rolls over to January 2000.
In addition, the European Airbus consortium has issued a
report indicating that date sensitive embedded chips in Airbus
products will not be materially adversely affected by the Y2K
problem. Our automotive dealer's business systems in all the
major markets are Y2K ready. Even our employees are wrapping up
their efforts to make sure their desktop PCs are ready for Y2K.
DaimlerChrysler's largest Y2K business risk continues to be
our suppliers. We participate in some automotive industry trade
associations, both in North America and globally, the AIAG here
in North America and the VDA in Europe. Each group has
developed a common approach to the compliance along with its
members, which includes seminars for first, second, third tier
suppliers and confirming compliance through either
questionnaires or reviews. We have sent questionnaires and done
reviews and about 85 percent of our suppliers have said they
will complete their remediation by June 30th of this year. We
also offer remediation assistance to suppliers who we believe
have not made adequate progress and we are also reviewing
suppliers on a selective basis for compliance. We are now
asking each of our key suppliers to provide a statement of
readiness to confirm that they have achieved their expected
compliance. Suppliers that are not compliant by September 30
will be reviewed, and if appropriate, asked to establish
contingency plans to ensure an uninterrupted supply of parts
for DaimlerChrysler.
As part of DaimlerChrysler's Y2K efforts, each of its sites
is required to prepare a Y2K rollover plan. This rollover plan
will assess the readiness of key infrastructure items,
including process equipment, business computer system
availability, building facility readiness which includes such
things as electricity, gas, water, sewage, heat, fire alarms,
emergency services, securities and phones, and community
readiness--police, fire, emergency management services,
hospitals, et cetera. Each site will report their status to a
central location on Saturday, January 1st and Sunday, January
2nd.
We do not have a crystal ball to tell us where the world
might have missed Y2K problems. Disruptions to basic critical
infrastructures like electricity, gas, water, sewer,
telephones, et cetera will make it virtually impossible to
operate plants. We believe, however, DaimlerChrysler has taken
every possible step to ensure that internal Y2K problems have
been eliminated in all material respects and external risks
have been significantly reduced. We fully expect all
DaimlerChrysler facilities to operate normally on Monday,
January 3, 2000.
I will be available for questions.
Mr. Horn. Thank you very much. After Mr. Parker, we will.
John Parker is the vice president, information services,
Northwest Airlines. I take it we should all fly Northwest now
since you have the highest paid flight attendants in the United
States and the world. [Laughter.]
Congratulations. You are one of my favorite airlines.
[The prepared statement of Mr. Buck follows:]
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[GRAPHIC] [TIFF OMITTED] T0939.296
Mr. Parker. Thank you for inviting me to appear before this
committee to give you an update on Northwest Airlines' Y2K
readiness. I would like to begin by assuring the committee that
Northwest Airlines expects to offer its passenger and cargo
customers a full, regular and normal schedule of services as we
begin the new century. As always, we will make any adjustments
necessary to ensure the safety and integrity of our operations
and the convenience and comfort of our passengers. Ensuring
safe operations is the No. 1 priority of our airline and the
basis on which we have built our Y2K program.
Northwest recognizes the importance and magnitude of making
the necessary changes required for operating successfully in
the 21st century and is working both internally and with
external entities worldwide to ensure a smooth transition to
the Y2K.
I will give you a brief overview of how we at Northwest
have approached the Y2K challenge, our collaboration within the
airline industry, the current status of our program and what we
expect to do for the remainder of 1999.
Northwest's effort on the Y2K transition program began in
January 1996. We currently employ a full time staff of 26 who
are dedicated to leading more than 200 Northwest people on Y2K
related activities. Our estimated costs for Y2K related
activities is somewhere between $45 and $55 million and we have
currently spent over $30 million to date.
Our objectives are clearly defined and focused to ensure
that Northwest's computers and computer-related systems will
function properly on January 1, 2000 and beyond; to assess the
Y2K compliance of the external organizations on which we rely;
to develop workable contingency plans which will enable
Northwest to maintain safe, reliable air transport of
passengers and cargo.
To effectively address the Y2K issues, Northwest adopted
the methodology prescribed by the General Accounting Office's
Guide on the Y2K Computing Crisis. The phases that we followed
were awareness, assessment, renovation, validation and
implementation, as outlined in this document and it has served
us very well in dealing with the complex and interdependent
nature of the problem in the airline industry. In a similar
way, we followed the GAO's Business Continuity and Contingency
Planning guidelines which were published last year.
Additionally, we have an assessment and evaluation of all
supporting documentation and compliance to these guidelines
that is subject to independent verification by the Northwest
Audit and Security Department.
Within this context, we have identified 531 internal
systems which are approximately half of all of our systems,
which required conversion or replacement to be Y2K compliant.
In addition, all of our business areas were tasked with
identifying and assessing their critical components and
suppliers for Y2K compliance; again, which followed the
guidelines.
Assessment of domestic and international airport and air
traffic control systems readiness has been undertaken with a
cooperatively and jointly funded effort with the Air Transport
Association and the International Air Transport Association,
and other trade groups. Member airlines, in addition to their
own Y2K programs have invested $44.5 million in the Y2K
programs of these associations.
Northwest has worked closely with Boeing and Airbus to
assess and test our fleet of more than 400 aircraft and our
fleet of 20 flight simulators which must be identical to our
actual aircraft to be suitable for training and certification
of pilots.
To assess the readiness of the worldwide infrastructure
systems, Northwest initiated a collaboration with the Gartner
Group that is being used by many airlines.
And finally, we have established a cross department
steering committee which was charged with identifying and
developing contingency plans for processes considered essential
for maintaining the airlines' normal operations and where the
potential for failure is high.
At present, Northwest has completed approximately 98
percent of its application remediation and completed testing of
more than 90 percent of our high priority applications. The
remaining renovation and testing is on target to be completed
within the third quarter of 1999.
Minor modifications have also been made to bring
Northwest's aircraft fleet into Y2K compliance. It is important
to note that no Y2K safety of flight issues have ever been
documented within Northwest's aircraft fleet.
Northwest's reservation systems were successfully renovated
and capable of booking and selling tickets through all of our
distribution channels, including our Internet site. Since
February 4 of 1999, and to date we have--more than 75 of
Northwest's major internal systems have successfully passed
their initial failure dates.
I would also like to highlight two industry reports that
give a snapshot of the industry. The ATA reported to the
President's Council on Year 2000 Conversion on July 1, 1999,
that United States and Canadian airlines are 95 percent
finished with their Y2K remediation efforts. The Nation's
airports are on schedule with their own Y2K efforts and the FAA
has met its June 30, 1999 completion date for Y2K remediation.
And that final independent verification by outside contractors
and government agencies is pending.
An additional status report was presented to the
International Civil Aviation Organization, ICAO, to the United
Nations National Y2K Coordinators Meeting on June 23rd. It
reports substantial progress in all critical areas of air
transport and in the development of contingency plans for all
contracting States of ICAO.
Mr. Chairman, what I have been discussing to this point has
shown how Northwest Airlines and the aviation industry are
addressing Y2K readiness. For the remainder of 1999, Northwest
will shift its primary focus into what we are calling
transition management. This consists of executing contingency
plans as necessary, developing alternative flight schedule
scenarios as required and dealing with events as they actually
occur through the transition.
As the year progresses and more information becomes
available on the status and readiness of our destinations,
Northwest will make and announce changes to our flight
schedule. And you can rest assured, Mr. Chairman, that should
any adjustments to Northwest's schedules be deemed necessary,
those changes will be promptly communicated to the traveling
public.
Northwest will continue to be actively engaged with
industry activities to complete remediation and to reassure the
public that they can plan to travel during the transition
period with full confidence and that the same standards for
safety, which have been the hallmark of the airline industry,
have been rigorously applied to our Y2K remediation work.
In conclusion, I want to again assure you and the committee
that Northwest Airlines is on track with its Y2K program, that
we are working closely with our industry associations to
complete readiness and contingency planning activities and that
we expect to have normal operations at the start of year 2000.
I will be glad to take any questions.
[The prepared statement of Mr. Parker follows:]
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Mr. Horn. Thank you very much. We will now go to questions.
Mr. Knollenberg.
Mr. Knollenberg. Thank you, gentlemen, for the testimony. I
am particularly pleased that we have the big three--I guess it
is the big three still--in the audience--getting bigger, each
one.
And it is no surprise, Chairman Horn, that they would be
here. They do not call this MoTown for nothing, it is motor
town, it is vehicle town. And with no apologies to anybody and
certainly now we have multi-national connections and obviously
all three of you represent those multi-national connections. So
I am delighted you are here.
I have heard from each of you about how close you are to
compliance and what you have got in place to get there before
D-day. About these suppliers, for example, you have hundreds,
thousands of them, and you have them in foreign countries. When
it comes to the percentage of those--and I think, Mr. Surdu,
you mentioned was it 10 percent have not responded? How
critical are those 10 percent and what percentage of the
criticality of the automobiles that are being made depend on
their contribution? Is that something that we could focus on
for a moment? And if there is a problem there and they do not
respond, do you have backup suppliers?
Mr. Surdu. First of all, the 10 percent is an overall
number at this point. That number is, I believe--and I would
have to verify it--less than 2 percent in terms of our critical
suppliers. For those that have not formally responded through
the AIAG process, we have had onsite visits to validate where
they are at, so in terms of all of our critical suppliers, we
are very, very confident on where they are at. The other
suppliers, as I mentioned, that have not responded to date, we
are taking a look at them, we have got other actions in terms
of additional onsite visits very similar to what Mr. Costantino
mentioned from General Motor's plan, and we need to validate,
you know, their state of readiness, not assuming that they are
in bad shape. But if you take a look at the percentages, the
percentages for failure are consistent for us around the globe.
So as we take a look at the state of readiness of our suppliers
in North America versus other parts of the globe, the numbers
are fairly consistent.
In terms of our business contingency planning, of course,
that has come into play. We have been mapping that, we do have
alternative sources if need be, but we have no plans on doing
that. We feel very, very strongly about the relationship we
have with our supply base and what impact they would have on
our facilities are all a function of our contingency plans.
Mr. Knollenberg. Could I pose the same question to Mr.
Costantino and of course Mr. Buck. Mr. Costantino, if you
would.
Mr. Costantino. With respect to the supplier base, I would
say right now that out of our critical suppliers--we have
obviously got thousands of suppliers, many of which would not
really impact us if they did not operate on that date. When you
get down to the absolutely critical number, you are probably
down in the 3,000 to 4,000 range. We have probably got, I am
going to say, 400 to 600 of them that we are watching closely
right now that we have probably not only had site visits but
actually have put people out there to help them remediate.
Mr. Knollenberg. Let me pose this question, are most of the
suppliers who have not responded or who are dragging their
feet, are they in North America or are they overseas?
Mr. Costantino. I would say right now that the majority of
the ones that we are currently working on are not in the United
States, they are basically outside, off shore. And our teams
overseas are now working with them. Anyone on that list has
been visited, everyone on that list will have a contingency
plan put together, including, if need be, our going in to
provide technical assistance if in fact there is no alternative
to ensure the supply chain.
Mr. Knollenberg. Mr. Buck.
Mr. Buck. Yes, our about 15 percent that we are trying to
wrap up with, we are meeting personally face to face with them.
They are having to come into Auburn Hills and meet with our
buyers. Basically by the end of this quarter, if we cannot be
satisfied that they are ready, then we will have a contingency
plan with them, which could go as far as banking parts. That is
how we are assessing that situation.
Mr. Knollenberg. Thank you.
Let me go to the question about--I think it was Mr. Parker
who mentioned the Gartner Group who is addressing or working
with several airlines to address your problems. Was there a
single group, for example, with the automotive companies, that
you sought help from to contribute to eliminating or
alleviating your problems, or did you do it internally?
Mr. Buck. We worked together at the Automotive Industry
Action Group since February 1997 and they are having a common
problem with our suppliers, so our suppliers would not have to
do a GM way or a Ford way or a Chrysler way, now
DaimlerChrysler way of determining what they needed to do. And
the first thing we did was put together joint sessions. We
invited our top 5,000 suppliers between us to a session, a half
day session. We invited the chief executive officers in May
1997. We brought them in and said, you know, you probably know
you have got this problem with your computer systems, but you
also have a problem on your shop floor. We went through and
showed them that our plans----
Mr. Knollenberg. When you say we, you mean all three of
you?
Mr. Buck. It was a joint program. And actually we used our
audit firms of Deloitte & Touche and Coopers to put this
program together. We have a common year 2000 Office for our
suppliers, actually several other auto companies have joined
that also. We offered it to the world. And we have been sharing
information. Basically we talk all the time, ``Gee, did you
know that when we did this, this happened at one of our
sites?'' That has really made us take action in making sure
that we had the problem handled.
Mr. Knollenberg. So you have worked in a fairly unique
fashion then, as I see it.
Mr. Surdu. Consistent with the Automotive Industry Action
Group practices, it is really an opportunity for companies like
Ford, GM and DaimlerChrysler to get together on common issues,
and certainly this was a common issue for us.
Mr. Knollenberg. Here is a common issue as well, the big
three, as you are seated there, have over the years and
recently produced automobiles that have a great deal of
amenities, one of which is the on-board computer. I understand
some of these computers are used for the purpose of fuel
injection and navigation. What can you tell me about--have you
communicated to the consumers, to the customers, just what the
potential problems might be if there are any? Have you
reassured them that there will not be problems? Are you doing
that now?
Mr. Surdu. Let me begin and we will--I think you will
probably hear very similar programs.
But first of all, we have communicated to our entire
population, we have responded to every inquiry, several
thousand inquiries in terms of the readiness not only of Ford
Motor Co. but of its vehicles, both past and present. And we
have sent communications out through our dealer body as an
example. So there have been very many different mechanisms that
we have communicated our readiness and our status. And in
particular your question about vehicles, the interesting thing
about the technology that is in the vehicles is that the chips
themselves are not like the chips you find on a PC. They do not
have a system date, they do not carry that kind of
functionality. And so there is no date-related functions in the
chips themselves. We verified that through our chip
manufacturers, our subassembly manufacturers, we have done
internal testing. We have even gone so far as to do a global
all-employee message or inquiry as to any past or present
thoughts that our entire work force might have in terms of our
vehicles and researched all of those. And all of those findings
came out zero.
You could theoretically put some functionality from a
software standpoint into your vehicle that might be date-
related, but if you think about the functionality in the
vehicles themselves, and certainly in particular in our
vehicles, we do not care about the date. If I am looking for
maintenance, and the example I like to give our customers is
that if you park your Ford vehicle in the garage for 6 months,
you do not want the on-board computer to say that it is time
for maintenance. We care about things like engine cycles, we do
have counters which get reset every time the vehicle is
started. So there are no date-related functions that care about
the year, that affect either the safety or the performance of
our cars.
Mr. Costantino. From our perspective, we are doing the same
thing, we have a great deal of communication through the
Internet even to try to assure all of our customers, current,
future, that we have found no problems in past or current
vehicles and we have done the same level of extensive testing
on those vehicles. I think our focus has been even more on the
dealerships to ensure that they clearly understand this and
ensure that they are ready because, quite frankly, they are the
face to the public and we want them to be fully operational
come the transition period as well.
Mr. Knollenberg. Mr. Buck.
Mr. Buck. For DaimlerChrysler, it is the same situation. In
our vehicles, we have not found anything that would impair or
affect in any way running that vehicle. And we have
communicated it through the means mentioned. Also, I believe
all three of our companies have a statement that is on the
National Transportation Safety Board site that also says the
same thing. So it is out on the Internet available to the
public.
Mr. Knollenberg. I think Y2K may have hit me already, I
have a car that has an on-board computer and it tells me I need
an oil change, the dealer says it does not need an oil change.
I will work that out but I think it may be the fact that
somebody did not reset it or some such. So I am not going to
blame that on Y2K yet.
Mr. Parker, just in regard to--and I will close with this
question--with regard to the airlines, you just heard the
automotive people are working together to share information and
I remember your saying again that Gartner has worked with
several airlines. Is there any communication between the
various airlines on this matter, that may go beyond Gartner or
maybe in addition or worked in with Gartner?
Mr. Parker. Yes, it is very substantial. When I was
referring to the Air Transport Association and the
International Air Transport Association, there are upward of
120 airlines that are working to share information about--if I
can drawn an analogy to the supplier network in the automotive
industry--we share airspace control and airport control
functions around the world and so we have been very active from
the very beginning sharing information, finding out the state
of the programs of the different agencies that control those
and share that. That is the majority of where our cooperative
effort has been focused.
Mr. Knollenberg. Do you feel good about the year 2000,
January 1, 2000?
Mr. Parker. I do.
Mr. Knollenberg. Are you going to travel?
Mr. Parker. I would travel. I will be with my programming
staff at our data center.
Mr. Knollenberg. So you are going to have your critical
employees that will be available during that timeframe, that
December 15-January 15 timeframe?
Mr. Parker. Yes. We have--we will have, much like you have
heard earlier, we have canceled all of our vacations for our
technical staff. They will be positioned either at our data
center or at our major sites such as our major hub airports. We
also will have our executives and other decisionmakers in a
command center type program, similar to what you have heard
from my colleagues, ready to make decisions and reaction to
events as they occurred.
Mr. Knollenberg. Is this called insurance, pretty much just
in case.
Mr. Parker. Yeah.
Mr. Knollenberg. But you feel good about where you are. And
I guess I am hearing that from all of you, but you also want to
make sure that there is no glitch at the end and you are going
to be available to handle customer problems.
Mr. Parker. Yes.
Mr. Knollenberg. Thank you very kindly for your testimony,
gentlemen. And Mr. Chairman, thank you. Back to you.
Mr. Horn. Thanks a lot, Joe. Good to see you.
We appreciate having Mr. Knollenberg with us this morning.
Since he is getting a little car advice, let me ask Mr. Surdu.
I have been a quite happy customer of Mercuries for a long
time, and the reason I bought my 1988 Mercury was one reason
and that was that dashboard. And now I do not see anybody using
it. It was terrific, you can know what the speed is with a 1
inch numeral and I love it. A little bit of the electronics
went out and I really do not care about that part of the
dashboard, but what happened? Why are we back to those crazy
needle things that you can hardly see in any car that I have
seen?
Mr. Surdu. You know, I wish I could answer that question.
Being a systems professional for the company, I cannot answer
an engineering question, but I think it has to do with customer
needs and customer wants and customer interests. We still have,
by the way, some of those dashboards with big dials. I can put
you in a vehicle that has one, if you would like.
Mr. Horn. I just wondered, do I have to buy a Lincoln or
something to get that dashboard back? Is that the motive?
Mr. Surdu. I will take that back with me. How is that?
Mr. Horn. OK. But I always wondered what happened, because
you go in, and really those dashboards with that crazy little
needle, you cannot even see it and usually the steering wheel
is blocking it and that wonderful dashboard of 1988, which I
still have that car and it has worked great for 11, going on 12
years. But I did not know if that was obsolescence or all the
other things we hear, but it is a great board, get back to
putting it in and I think we will all be happy.
Let me ask you a couple of the questions I did the previous
panel, just for the record.
When did Northwestern start undertaking the year 2000 bit?
Mr. Parker. We began looking at it in 1995 and funded the
program in January 1996.
Mr. Horn. And when did Chrysler start that?
Mr. Buck. Both Chrysler and DaimlerChrysler began in 1995,
both sides of the company.
Mr. Horn. I see. So even though you had not merged at that
point, why your brains were thinking along that line?
Mr. Buck. Yes.
Mr. Horn. Well that is great. How about General Motors?
Mr. Costantino. I would say in earnest, 1996.
Mr. Horn. And how about Ford?
Mr. Surdu. June 1996.
Mr. Horn. In June 1996?
Mr. Surdu. Right.
Mr. Horn. Because your leadership under Mr. Peterson was a
very international oriented leadership that did a lot for Ford
and I just wondered if you would be ahead of that or not, based
on that international executive experience you had there.
Mr. Surdu. Well, we seem to think that we certainly have
this well under control. You know, you asked the question
earlier on in terms of what would we do differently, obviously
I would parrot back ``more time''.
Mr. Horn. Yeah.
Mr. Surdu. But certainly we have learned a lot from this
program, there is a lot of positive that has come out of this
for us. We understand more than we ever did before the
technologies that we have in place on a global basis. And if I
would say we would like to start earlier, it would be to take
advantage of the things that we now know in terms of some of
the things that we are moving forward with. So it has been a
very worthwhile, at the end of the day, experience for us, one
I would not like to do too often, but certainly it has been of
real value to us.
Mr. Horn. Well, you raise an interesting point. What about
your foreign competitors in those days, both Europe and Asia,
were they into this earlier than you or after you, or what?
Mr. Surdu. Well, I certainly cannot speak for our
competition. I can tell you what--and we have kept very, very
close to organizations like the Gartner Group and Forrester and
others and our own internal, if you will, intelligence in terms
of where the globe is in this Y2K issue. And generally
speaking, we agree with all the documentation that Europe has
been behind North America, in particular, and other parts of
the Far East and South America are working very hard to catch
up.
We, within Ford Motor Co., when we initiated the program in
1996, it was a full global program, so we put a full court
press on for us internally and began working, as the panel here
has indicated, from the big three, with our supply base very,
very early on a global basis. But I cannot speak for the other
automotives.
Mr. Horn. One of the interesting things is when you look at
the global picture, it is mostly in developing countries that
the problem exists. And as you know, the United Nations held
two conferences on this, and they had a great turnout at the
last one just 2 weeks ago, I think 173 countries were
represented, whereas the one in the preceding period had been
about 120 countries. So the message is getting through, but as
you look at the globe, it is the developing countries that
frankly do not have the money to do some of this, and the World
Bank, I gather, is trying to help them on that. But some of you
have plants in these developing countries. Is that a different
situation when you are surrounded by people who have not really
corrected the tapes and all yet and would that affect you or
are there any interactions between your plants and the
surrounding economy? I mean, does it make a difference when you
are in those developing countries?
Mr. Costantino. Oh, the answer is, I think, it does. But I
think we are treating each one of those as we would the United
States. In all of our operations, we put the Y2K teams in
place. The supply base, I think for all of us, is really global
in nature. So in many cases, those suppliers that are actually
supplying a Brazilian operation could very well be supplying a
North America operation as well. So I think the desire to
basically ensure those suppliers are ready is there for not
only the international, but also domestic.
I think the piece that we have added is to really take a
hard look at the utility situation in those countries, because
we may find ourselves where a supplier is ready, but our
intelligence tells us that the chances for outages of 2 or 3
days is imminent and therefore, you need to do something from a
contingency standpoint to protect your supply chain and also
that supplier. And that is an effort that is going on right
now.
Mr. Horn. You heard your colleague from Ford say time would
have been helpful on this. What was your experience, if you had
to do it again now, what is it that you wish you had done?
Mr. Costantino. One thing I wish we had done is kept a
better inventory. It took a lot of effort, way more than I
think people thought it would take, to really get an
understanding of all of the plant floor equipment, et cetera.
And now that we have this information, I hope that we maintain
it so if we ever needed it again, we could move more quickly.
Mr. Horn. Was that in relation to the codes in particular
processes?
Mr. Costantino. It is everything. I mean just simply
knowing where you have 1.4 million devices and how to get to
them all took an awful lot of effort and I think the Gartner
Group has under-estimated in some cases the front end of the
work that had to be done.
In addition, for General Motors, we had the complication of
being kind of diverse and therefore, we do not have singular
systems in many cases, which made the job even more difficult.
Again, opportunities in the future though to take advantage of
what we have learned.
I am not sure on the time, I think we are where we need to
be right now and I think it is the right time. The concern I
have is one I was reading last year, people saying they are
ready for Y2K. Then they must have an industry that is making
no changes because one of the most difficult things we will all
face in the next 6 months is managing change, because the world
around us, the computers, the things they want to change fast,
the systems want to change fast, the plant floor wants to
change fast. If you go and think you are done a year and a half
ago, you are not done, because I doubt you could shut down
change. So I think we are kind of in a good position there
because we know the changes have to come but we want to try to
manage them.
Mr. Horn. Well, on that matter, as you went through this
process for the year 2000, were you able to get rid, able to
combine some of your systems that you had to look at and rather
than just adapting them, getting rid of them?
Mr. Costantino. I am not sure this is good or bad news, but
we eliminated probably between 3,500 and 4,000 systems already.
Mr. Horn. Yeah, well it makes a lot of sense.
Mr. Costantino. Oh, yes.
Mr. Horn. How about DaimlerChrysler?
Mr. Buck. Just to change the question slightly. Instead of
what have I learned, what would I do different; what have I
learned that is going to make me do something different in the
future. When we ran what we call time machine tests of our
manufacturing plants, we found a bug that would have shut our
plants down for one shift. And so we are now looking at, you
know, what if this had occurred, what could we have done on
January 1st and 2nd so we would have caught this in time and
not shut our plants down. We are seriously right now looking at
operating a plant Saturday night, January 1st, a third shift
operation, running for 4 hours, then running all the systems
behind that as though it was a normal work day, giving us a day
to fix any bugs that we have missed.
You know, we all run tests, but the real world where you
are going through a telecommunications company that is in the
year 2000 and you are going to suppliers who are bringing in
just in time material, and you are doing everything, so that we
have some reaction time so that on Monday, the 3rd, we would
have a higher degree of certainty that we are ready.
Mr. Horn. Mr. Parker, how about Northwestern, if you had to
do it over again, what is it that stands out that you wish you
had done first?
Mr. Parker. Interestingly enough, I think that we allocated
enough time to the overall effort. I think starting earlier
would have made the whole program a little bit cheaper because
it would have been less of an auxiliary effort and more of a
mainstream effort. But there are probably three things I would
have done differently. I would have liked to have educated the
business community inside Northwest, to understand that it was
not just an IT problem, to get them involved with business
process changes and contingency planning and things much
earlier in the cycle. I think we would have been much more
aggressive about retiring older systems than--as opposed to
fixing them, because we could use this as an opportunity to
build for the future better than perhaps we did. And I think we
also could have encouraged our industry associations to begin
digging for information much sooner than we did.
Mr. Horn. Now when Northwestern began its efforts was about
what?
Mr. Parker. It was in January 1996.
Mr. Horn. Yeah, January 1996. By the way, Mr. Willemssen,
come on up and join the panel for the last couple of questions.
He is our worldwide expert. We have a chair for you.
What I am interested in is what else needs to be done, if
anything, by the Federal Government on the awareness side and
what do you wish had been done by the Federal Government in
that respect--not that it is doing your work, but what could it
have done to be helpful. They finally got around to it. I think
they are doing a pretty good job now and it is happening, but
it took years to get them to face the music. They ignored it--
well, they ignored everything up until, as I said, April 1998.
That is when they finally got Mr. Koskinen in there to do the
job.
So anything else we could have done on our side on
awareness, whatever?
Mr. Parker. I think on the--from the airline industry,
having more visibility into the program sooner, having the--
particularly the FAA and other government agency programs
started sooner and made aware of the progress to us sooner
would have helped. Because we had to start our programs with
assumptions that we would have at some point run into some
additional work because the assumptions did not hold.
Mr. Horn. I take it on verification, some of you have used
inside verifiers, others have used outside verifiers, on the
fact that your codes have been adjusted and so forth. What has
been the practice at Ford on that, did you have an outside team
do it? I remember you mentioned a few accounting consultant
firms.
Mr. Surdu. We actually have addressed this in two fashions.
Internally, we used both internal and external resources to
assist us in the remediation testing and initial verification.
We actually did verification work prior to testing. It turns
out it simplifies the process to find the problems up front
before you get into testing and it facilitates testing. So we
used both internal and external resources for that.
Same thing on the auditor side, our general auditor's
office has been engaged from the very beginning on this
program, and we have used Coopers Price Waterhouse as well.
On the pure verification now, we are taking another pass at
it and that is all using external resources.
Mr. Horn. How about General Motors, somewhat similar?
Mr. Costantino. Very similar, actually almost exactly the
same. We have multiple testing obviously inside and again, we
use EDS which brings in additional outside resources, although
they are a prime supplier. But many of our critical systems
have been going through independent verification with a totally
outside third party.
Mr. Horn. How about Chrysler--Daimler?
Mr. Buck. At DaimlerChrysler, when we had finished 99
percent of our business systems at the end of last year, we
raised the tier or the measurement of completeness to doing
integration testing with stand-alone main frames or stand-alone
servers, and this sign-off with not only the IT individuals,
but with our customers--we are involving all of our customers
in our testing and they have to sign off on critical
applications. We are using Deloitte & Touche to do independent
verification.
Mr. Horn. Mr. Parker, how about your situation in
Northwestern?
Mr. Parker. We follow a similar program, we do an internal
IT testing and validation; we then go to our business units and
have them sign off for completeness after user acceptance
testing. We have an internal auditing department which
validates the results and we have also used Ernst & Young as
our external audit group. We are also using Price Waterhouse
Coopers in our contingency planning efforts, which is an
umbrella that sits above virtually all of the program and they
have looked at it as well.
Mr. Horn. For the workers you have on America's assembly
lines and on the airlines, how have your companies trained
employees to recognize and address possible year 2000-related
problems? Are they sensitized to that?
Mr. Costantino. In our case, basically we are just taking
our normal practices which say that every single plant we have,
for example, has procedures--and I am sure it is true for both
gentlemen here--to handle any kind of situation such as a power
outage or a supplier issue. I mean we deal with these things
every day. Y2K is really almost an extension of what we do deal
with. So we are back in there just doing two things--making
sure everybody is following and understands those procedures
and is prepared, and also if there is any uniqueness with
respect to potential Y2K ones, how to deal with it. But in many
cases, we will also have some technical teams, if we run into a
problem that is beyond our capability, that we will then send
out to handle any technical problems.
Mr. Horn. How about Ford, about the same way?
Mr. Surdu. Yeah, the one other item in response to your
question is we have gone out with numerous all-employee
communiques in terms of not only the year 2000 challenge but
where the company was and what the company was doing. In
addition to that, they have been personally engaged as a result
of our end-user computing process. Every desktop owner, we have
provided a tool, we have provided training on how to use the
tool, and they actually personally go through a compliance and
analysis and a validation phase through the things that they
develop. So there is a rich amount of awareness within Ford
with our employee base.
Mr. Horn. How about DaimlerChrysler?
Mr. Buck. In addition to the, what we call incident
management teams at each site and what we call our PC rollout
where everyone who has a PC has to run a program and assess
whether they have created anything that is not compliant, we
have put posters all over our company, both an English version
and German version, telling the employees here are the types of
things we found going wrong. If you know of anything that you
think is not compliant, here is who you contact. So we have
tried to do everything we can to get down to the employee
level, to make sure that if there is something that we have
missed, that they are asking the questions. And they are, they
are asking the questions. Their interest is growing as we near
the year 2000.
Mr. Horn. If you have got an extra set of those posters, I
would like it filed with the subcommittee and its chairman in
particular, to see if my German has any relationship to my
English.
Mr. Buck. Sure.
Mr. Horn. How about Northwestern?
Mr. Parker. We have a formal communication plan that
includes all of our constituencies. As it relates to the
employees, what we have found with the front line employees is
that most of what they need is a consistent way to answer
customer questions, passenger questions. So what we have done
is given them some documentation both in written form and on
their systems that they can access to be able to answer those
questions. And we have also instructed them to point our
customers to our Website which contains kind of our formal
communication to our customers.
At a leadership level, we have worked with the different
departments throughout the organization to ensure that they
have a consistent way of communicating to the work force. And
then from a decisionmaking standpoint, those people that are
required to make decisions that would recognize Y2K events and
make decisions to modify the airline plans, we have gone to a
much more formal area and we have attached that in our command
center approach with our existing command center and lengthened
the time window to be able to accomplish that. So it is more of
a formal plan than a communication plan.
Mr. Horn. Well, thank you.
Mr. Willemssen, what needs to be asked of this panel that I
have not asked?
Mr. Willemssen. The one thing that I think that I would
like to emphasize is to extend on some of the remarks that were
made earlier. I think it is especially important for the
companies here to continue publicizing verified facts to the
public. That is the best way to combat any rumor or potential
panic down the road. I think one comment was made about making
sure that the dealerships, since they are the face to the
customer, have that information in hand. I think that is
especially important, because as we roll into the fall, there
are going to be a lot more questions raised about Y2K than have
been raised cumulatively to this point. So I think it is
especially important that the companies continue putting the
word out, here are the facts of the situation and here is what
we know about our products and services and their compliance
status.
Mr. Horn. Yeah, I agree with you that is very important,
because as we get closer to January 1st, you are going to have
people selling their books, selling their solution and all the
rest of it. And there is going to be a lot of fear mongers,
shall we say, in those wonderful little tabloids as you go
through the grocery store line--that kind of thing. So they
will turn to that and we just need to head them off by, as you
say, getting the facts out there for the public to know.
And I think on the previous panel of public people with the
bills they send to the citizens, they might want to put a
little information in there about what is happening on the
utilities and the water and the electricity and so forth. And
we are getting to the electric panel.
One question has come here from the audience--is there
another one? Just one. It is for both Northwest and the General
Accounting Office. What is the preparedness of other countries
like Jamaica in terms of air traffic control? Northwest got any
feelings on that?
Mr. Parker. We do. I cannot specifically speak to Jamaica,
but we keep a very close eye on all of that. We would agree, I
think, with the assessment that I heard earlier that the United
States is in better shape than the rest of the world. Europe is
somewhat lagging behind, Asia would probably fall into that
area and then a lot of unknowns still remain in the rest of the
world.
As you look at the rest of the world, there are really--
that part that is the unknowns, there are really two states of
being. One is their systems are so old and their normal
processes are so inconsistent, that it will just be like a
regular day if they were to have a Y2K problem. And we know how
to deal with that, we deal with that every day.
The other part is where they have made some modernization
of their systems, but we do not know how far they are going to
be going into the remediation effort.
Our general read on things now is that it will be safe to
fly. Airworthiness, flight safety issues will be addressed, but
some passenger convenience things like moving sidewalks or
elevators or HVAC systems, heating and cooling systems, may not
be ready and may run into some problems in the smaller
countries.
Mr. Horn. Mr. Willemssen.
Mr. Willemssen. I think there is reason for concern in
other countries in the air traffic control system, not
necessarily because of what we know, but because of what we do
not know. Later this fall, the State Department working with
the Transportation Department, plans to issue travel advisories
to the citizenry where they have real concerns about the
systems within those countries. I think that is a reasonable
step from a public information perspective.
Mr. Horn. Yeah, I agree with you. I have a lot of faith in
the American Federal Aviation Agency and the Administrator that
runs it now. They sort of dragged their feet for awhile and
then when she got in there, she started to clean house a
little. So I think that is going to happen, at least in the
American sweep, but obviously our planes are flying all over
the world. And there are some situations where I am sure they
are going to have to really clean up and the ICAO,
International Civil Authority ought to be working on that right
now with the developing countries.
You have raised a good question. We have not particularly
satisfied all the answers; but in terms of the U.S. situation,
the Administrator has the power in law from Congress to ground
any planes that are in any unsafe situation. So I think there
is a lot of effort going on in the towers of this country, and
by the way, at L.A. International 4 years ago, they had a few
vacuum tubes still, and they had post-its on the windows and
things like that. We are getting a little beyond that now
hopefully and I long ago suggested to FAA when I was on the
Aviation Subcommittee, why do you not go look and see what
Lufthansa is doing and 2 years ago, I had a chance to go over
there and look and guess what, Ratheon equipment, all over the
tower in Berlin. The FAA, in 1993-1994 had blown $4 billion to
try and accomplish the same thing Ratheon had already done with
Lufthansa. So hopefully we learn from these experiences.
All of you have given some very important testimony and we
appreciate your doing it and we are glad to see people working
together, because I know we passed that Good Samaritan Act so
competitors could work together without somebody saying it is
an antitrust violation, and I have been delighted to see all
over this country firms that are pretty--very competitive and
did not particularly like their colleagues, are working
together to solve this problem. And I think that is good news
for the American public. So thank you very much for coming.
We will move to panel three now. Panel three is Mr. Roosen
of Detroit Edison; Mr. Lozano of Michigan Consolidated Gas; Mr.
Johnson of Wayne State University; Mr. Potter of the Southeast
Michigan Health and Hospital Council and Mr. McDougall of the
Southeast Michigan Information Center, United Way.
OK, we have got everybody, if you would stand and raise
your right hands.
[Witnesses sworn.]
Mr. Horn. The clerk will note six witnesses affirmed the
oath. We will begin with Mr. Jim Roosen, the Y2K program
manager for Detroit Edison. Glad to have you here.
STATEMENTS OF JIM ROOSEN, Y2K PROGRAM MANAGER, DETROIT EDISON;
RAYMOND LOZANO, MANAGER OF STATEWIDE COMMUNITY RELATIONS,
MICHIGAN CONSOLIDATED GAS, ACCOMPANIED BY TOM MOTSINGER,
DIRECTOR, INFORMATION AND TECHNOLOGY MANAGEMENT; JAMES JOHNSON,
VICE PRESIDENT OF COMPUTING AND INFORMATION TECHNOLOGY, WAYNE
STATE UNIVERSITY; DON POTTER, SOUTHEAST MICHIGAN HEALTH AND
HOSPITAL COUNCIL; AND DAN McDOUGALL, DIRECTOR, SOUTHEAST
MICHIGAN INFORMATION CENTER, UNITED WAY
Mr. Roosen. Thank you, Mr. Chairman. My name is Jim Roosen
with Detroit Edison Co. and I am one of several Y2K program
managers working in our program office. I had submitted some
formal testimony and I would like to make some additional
comments, if I may.
Mr. Horn. Right, and you have all heard that your statement
goes in the minute we introduce you. We would like you to
summarize it, do not read it, 5 minutes, and then we can have
more dialog.
Mr. Roosen. Correct.
The scope of Detroit Edison's Energy year 2000 Program is
quite fast. Just for purposes of the audience and the
committee, we serve 2.1 million customers in southeastern
Michigan in 13 different counties and have 9 power plants and
36,000 miles of distribution line.
We are keenly aware of the seriousness of the year 2000
issue and we are committed to providing a safe, reliable flow
of electricity well into the millennium. We began working on
our Y2K program in 1996. We, subsequent to that work in our
Information Technology Group, we established an enterprise-wide
year 2000 program office to oversee all of the year 2000
activities. We have a dedicated team of five executive
managers, who have over 125 years of utility experience and
they have been assigned to the project. They have both IT
experience and operating experience. We have committed over 450
employees to the effort over the last 2\1/2\ years.
We have a rather structured program that reports directly
to the office of the president of DTE Energy, and we regularly
report to the audit committee of the Board of Directors.
Additionally, we have issued a call to action memo to all
of our employees in July 1998, to advise them that we would--
not to arrange for vacations during the rollover, that there
are certain needs that we will have in order to carry out our
contingency plans and to be prepared for the unknown.
Where are we? We are on track after 3 years of the program,
and the intricate planning and implementation to address the
Y2K issues.
In summary, our inventory and assessment considered over
140,000 individual assets and that is complete. Our compliance
testing of those assets was completed and of those assets that
were determined to be not ready, about 2 to 3 percent of the
total assets, 99 percent of that equipment is ready for the
year 2000. Everything has been remediated, we are now in the
testing phase of that remediated code. And the final system,
which has nothing to do with delivering electricity, but it is
the back office, the billing systems and some of the support
systems, will be moved into production no later than October
1st.
However, the systems that are necessary for the generation,
the transmission and distribution of power are ready as of
January 30th. In fact, we have sent letters to the North
American Electric Reliability Council, who have been asked by
the Department of Energy to provide oversight of the national
grid, we have sent letters to them informing them that all of
our facilities, all of our systems that are necessary for
generation, transmission and distribution are in fact complete
by the June 30th date.
Additionally, we have sent a letter to the Nuclear
Regulatory Commission with regard to our nuclear plant, Fermi
2, that it is ready, has complete Y2K readiness and was
complete by June 30th. So those have been completed.
We are in the process now of moving from that asset phase,
the individual assets, to what we call a business process
approach where we look at it from an integrated standpoint
enterprise end-to-end, to make sure that those systems when all
hooked together will continue to provide the level of service
to our customers that they expect and deserve. We have operated
five of our generating units successfully into the millennium
mode and some of them are still operating with a millennium
year 2000 clock.
We developed some rather detailed business continuity plans
and they basically are extensions of our present readiness
plans, but with the kind of Y2K twist to them. We are
continuing to communicate and to integrate our efforts with
others, as other witnesses have said today. We have
participated in depth in utility consortium to exchange
information and strategies and solutions and testing procedures
through the Electric Power Research Institute and other
agencies, EEI, the Edison Electric Institute, and others.
We are in the process of assessing and have really
completed the assessment of our key mission-critical vendors.
There are over 1,200 mission critical vendors and we pared that
down to 20 and have worked with each of those vendors to make
sure that the supply chain will continue on an acceptable basis
through the millennium.
We have been conducting a lot of meetings with the local
and State governments and particularly with emergency
management organizations here in Michigan, including FEMA in
some of the meetings, working with the State police and other
agencies to ensure that everyone in southeastern Michigan is
working together for infrastructure types of things like
electricity and water.
We did participate also in some national tests that were
indicated to be held by the North American Electric Reliability
Council. One was in April, and there is another one scheduled
for September and we will be participating in that. Those tests
are not of the grid, those are tests of communication systems
that are necessary in the case some unknown event occurs and
electronic communications is not available.
Mr. Horn. Let me ask you at this point, are there any tests
for the grid?
Mr. Roosen. The actual electric grid itself is up and
running and the risk of testing it while it is up and running
is too great. Simulation tests have been conducted and we have
high confidence, because of the lack of a lot of computer
operation of the grid, it is basically a manual operation and
has a lot of manual backup, that there is very low risk of any
Y2K induced interruption of the grid.
Mr. Horn. Based on the New York blackout, the regional
blackout, San Francisco had a blackout in the last few months,
what have we learned from that, anything that applies to the
Y2K situation?
Mr. Roosen. Those were all equipment failures. Equipment
fails mainly due to overload. And during the heavy load periods
during the summer, you will have equipment failures, and they
happen every day. In fact, you could not testify today that
there are no customers out in Detroit Edison's territory, there
will be customers out. But we are used to that, that is our
normal operation, and our approach is as fast a response as
possible to restore to normal.
The New York one is a particularly interesting one because
they have an all underground system and they had some cable
failures and it particularly interfered with getting them back
because everything is under the street and it takes a long time
to restore. Those are the only particulars I have.
We have similar systems, although not as extensive as New
York, but we are prepared to respond in a reasonable period of
time. Normally a 3-day outage is what we advise our customers
to prepare for and we have a fairly good track record of
sticking to those 3-day outages. There are the exceptions, of
course.
Mr. Horn. Well, thank you, I just wanted to get that on the
record right now.
Mr. Roosen. Right.
One other thing in terms of integrating our efforts, we
have been hosting forums with our partners in gas, water,
telecommunications, to make sure that we are all well aware of
our remediation status or our compliancy status.
In summary, we anticipate no widespread or sustained
interruptions of service as a result of the turn to the new
millennium. We cannot, of course, give 100 percent guarantee,
like I said, even on a normal day-to-day operation like today,
but we can give the guarantee that we will be prepared to
respond in the manner that we have become accustomed to because
our response systems are well tuned to this kind of an
emergency.
That prompt response to unusual circumstances is really our
day-to-day job. We will be doing continuous monitoring and
coordinating communications with all the emergency management
organizations and we will have an emergency communications
center manned and be participating both with the Federal and
local government.
Mr. Horn. Well, thank you very much, we appreciate that.
Our next witness is Raymond Lozano, the manager of
Statewide community relations for Michigan Consolidated Gas and
he is accompanied by Mr. Tom Motsinger, director, information
and technology management.
[The prepared statement of Mr. Roosen follows:]
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Mr. Lozano. Mr. Chairman, good morning. Thank you for the
opportunity to testify here.
As mentioned, I am Ray Lozano, manager of statewide
community relations.
In summary, MichCon provides natural gas service to about
1.2 million homes throughout the State in terms of factories,
businesses and institutions throughout Michigan. On any given
day, we deliver gas to about 4.5 million residents.
We want to fully assure the committee today that--and all
of our customers, that come January 1st, we are expecting that
natural gas will continue to flow to our homes and businesses
that we serve. Very simply, we are committed to delivering the
gas service that we have been delivering throughout our 150-
year history.
We have been working, in terms of replacing our business
systems, since early 1995 and established a corporate-wide Y2K
office in 1997 that reports to a vice president that in turn
reports to the chairman of our parent company, MCN, and to its
Board of Directors.
We have, in fact, inventoried our systems and developed a
schedule for prioritizing and assessing any concerns. We have
identified all of our partners with whom data is shared, to
prevent the disruption of information flows. And we have worked
with our suppliers and established milestone to track this
progress.
In summary, we have focused on five mission-critical
processes--the incoming calls from our customers, our gas
supply, gas storage and transmission operations, gas leak and
emergency response capability and appliance service requests.
In fact, this effort addresses all aspects of our business,
including our customer information systems, our communications
equipment that includes telephone, radio and emergency systems,
the control equipment that we employ for gas handling, storage
and meter reading, and of course interfacing with our
suppliers, partners and financial institutions.
I would like to report that we are on schedule, we fully
expect to be year 2000--that we will be ready by the end of
September on Y2K issues, and most of our systems already are.
Those that are not currently ready are being modified or
replaced.
Even though we had expected everything to be ready by the
end of September, we developed contingency plans also and we
have been testing these plans since last December. As with
Edison, we are working in coordination with other utilities and
the Michigan State Police Emergency Management Division and
other EMD departments throughout the State. Also involved with
the AGA and its member utility companies in terms of the DOE
coordination of member utilities.
Probably nowhere have we sensed more a sense of partnership
than with our major gas suppliers and transmission pipelines.
The cooperation that we have had from them in this effort is
dedicated to keeping adequate supplies of gas flowing in our
system. The safety of our customers and our employees is our
major concern and we think with this sense of partnership, we
have even more ensured this capability.
Our goal, of course, is to keep gas flowing to our
customers and continue to dispatch technicians, even if we are
to lose all commercially provided electricity, even if every
piece of electronic control and measurement equipment in our
transmission and distribution system, and even if our current
telecommunications links were to be interrupted. Right now, we
fully expect that we will be able to maintain critical services
even in the event of the loss of those scenarios.
Even in the unlikely event of this kind of a system
failure, we are prepared to operate our systems manually. In
fact, our major gas handling systems are designed to function
in emergency situations without electricity or computer
controls. In this AGA combined effort that we have doing, it
has been reported that less than one in five Americans think
that the Y2K problem will affect their natural gas service and
we think that is a remarkable level of confidence.
We would like to thank you again for this opportunity to be
here and invite any questions.
[The prepared statement of Mr. Lozano follows:]
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Mr. Horn. Well, we appreciate you coming.
Let me just ask you a question before I forget it. We have
been worried about what is happening in eastern Europe with the
Russian natural gas supply and a lot of that is what keeps the
industry and the homes warm in January in particular when this
date situation is going to occur, and the problems they have
found in east Europe is some microchips in the refineries'
operation, in the ships' operation if they are bringing
anything in to a refinery and in the pipelines. And I just
wondered, your source is really domestic United States, I take
it, in terms of natural gas, so you do not have any of those
worries that the Russians might be having?
Mr. Lozano. Right. Most of our supplies are domestic, and
even Michigan provides a source and we have over 40 billion
cubic feet in our own storage reserves that fully can take us
through a normal winter.
Mr. Horn. How long would that last if it was run down for
one reason or the other?
Mr. Lozano. I am sorry?
Mr. Horn. How long would that supply you have in your
inventory right now--how many days would that give everybody in
Michigan a chance----
Mr. Lozano. That normally takes us through a normal
winter.
Mr. Horn. A normal what?
Mr. Lozano. Winter season.
Mr. Horn. Normal winter. So you could last with that
inventory over a month?
Mr. Lozano. An extended period of months, yes.
Mr. Horn. When does it run out?
Mr. Lozano. It depends really on weather conditions and
the usage that customers are using, but it--40 billion cubic
feet takes us through our normal heating season which begins in
October and runs through April.
Mr. Horn. So you really could do it without further
supplies between October and April?
Mr. Lozano. I think we could take it through a critical
period. I cannot say that we are not getting additional
supplies during that time period, there are purchases on the
spot market.
Mr. Horn. Well, that is interesting to know, you have a
very long span then, just based on what is in the pipeline and
everything else.
Mr. Lozano. Yes.
Mr. Horn. OK. Well that thought had not really reached
Washington, DC, so it is going to reach it now. We thank you
for that.
Mr. James Johnson is the vice president of computing and
information technology for Wayne State University. Glad to have
you here.
Mr. Johnson. Thank you very much, Mr. Chairman, for the
opportunity to testify today. I would also like to thank you
for holding these hearings. I think it is very critical that we
have an awareness of the year 2000 problem through our
institutions and through our society.
Wayne State University has been dealing with the year 2000
problem for approximately 4 years. Universities are not
notorious for being early to the game, but in this case, we
have been fairly early to the game.
We have gone through a metamorphosis of probably three
stages, I would say. The first stage was awareness that we had
a computer problem with large administrative systems. The
second awareness was the awareness that we have embedded
systems throughout the University running the gamut from
building heating systems and elevators to distributed
laboratory equipment in the medical school. I think the third
stage of awareness has been our concern about critical
suppliers. I would like to just mention briefly where we are in
each of those three areas.
We have been at the administrative game with the large
administrative systems for registering students, handling
financial records and handling human resource records, for
about 3 years. We did our last test over the July 4th weekend.
We did encounter a problem, even though we had tested
extensively when we put the system into production; we had one
glitch that caused us to be unable to register students for 3
days. The lesson there is you can test all you want, but until
you put something in actual production, there is always
something that is going to catch you somewhere.
In embedded systems, we have identified about 10,000 pieces
of laboratory equipment, about 2,000 of them have date-
sensitive chips in them. We have already tested and evaluated
1,000 of them and we are finding about 1 percent of the
embedded chip systems have year 2K problems that are going to
have to be remediated or overlooked, as the case may be. We
have 9,000 personal computers throughout the campus, 90 percent
of them are compliant.
One area we have been surprised in as we have looked at the
core administrative system is that a lot of our departments
have their own spreadsheets and systems as well. We have
identified 3,300 departmental systems and of the 3,300, 56
percent are non-compliant, and so we are in the process of
remediating those at this time.
Suppliers, we are in a little different position than the
large automakers in the sense we do not have this same level of
clout with suppliers. And I think that that concern runs from
utility service--we have been tested last week in that arena,
having on successive days lost power and the lost water. We
call that pre-year 2000 planning.
With the suppliers, we have had a lot of difficulty getting
them to indicate whether they were compliant or not. In some
instances where they have said they have been compliant, they
have not when we have tested the system. In other cases where
they said they would become compliant, they come back to the
table and say ah, but you have to get a new version of our
software at a cost of $100,000 or something like that. So that
is our concern right now is in that area.
Last, but not least, we do expect problems and therefore,
we have a contingency plan in place. Our employees will not
have vacations as with most IT employees. We have also involved
public safety in the program as well.
We have carried out a lot of the practices that have been
recommended by the General Accounting Office in terms of
getting compliance throughout the University. As you well know,
universities are very decentralized with people having
different sources of funds and they do not always respond well
to orders. We have had a lot of success with report cards, with
holding individual departments responsible rather than the IT
area responsible, by having sponsors in every department, in
every school, and by having training and workshop programs.
One innovative program we have put in place is a student
awareness program, which makes our students aware of how year
2K may affect their lives and their interactions with the
university. I do not know of other schools that have done that.
What has been a large help to us has been publicity,
through efforts such as yours, which has made the campus aware
that there is a problem. And the other thing that has been very
helpful, are tool kits that we used, particularly from the
Department of Education. Which was surprising.
In closing, I would like to say there is a bright side to
this. I think we have really sharpened our skills in dealing
with crisis and recovery. We have really improved and enhanced
communication between areas of the University. We have been
forced to put new systems and processes in place sooner rather
than later, from which we will gain benefits in efficiency down
the road.
That concludes my comments, thank you.
[The prepared statement of Mr. Johnson follows:]
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Mr. Horn. Well, we thank you for that. Let me just ask a
couple of questions. On the 3,300 systems at the departmental
level, are a lot of those faculty personal computers that can
tie into the University in one way or the other?
Mr. Johnson. No, those are mainly the PCs, individual
systems. What I was talking about was essentially business
systems such as spreadsheets in departments. We have used Focus
as a report generator, so there are a lot of Focus programs we
have had problems with and so on down the line.
Mr. Horn. You have a very fine medical school, have you
got a hospital that goes with that?
Mr. Johnson. No, the hospital is separate, that is the
Detroit Medical Center, which has the affiliation with Wayne
State University.
Mr. Horn. So you do not have a problem on worrying about
an emergency room or anything.
Mr. Johnson. No, I have had that in a previous
incarnation, but fortunately not in this one.
Mr. Horn. And you got into another incarnation fast, huh?
Mr. Johnson. That is right.
Mr. Horn. I can understand that.
Mr. Johnson. Actually, before we looked at like the
operating room and we found 320 embedded devices in there.
Mr. Horn. Yeah. Well, my impression is, and we will hear
from Mr. Potter, to see if my impression is right, is that
there has been very good cooperation in terms of a national
Website and all that in equipment. So Don Potter, Southeast
Michigan Health and Hospital Council, you are going to bring
all the knowledge to us in this area.
Mr. Potter. I will be glad to do so, Mr. Chairman, thanks
very much for having me here this morning and thank you for
coming to town to gather the information that hopefully will be
helpful to you and your colleagues in Washington as we tackle
this challenge together.
Mr. Horn. It will be.
Mr. Potter. My hope this morning is to provide a sense of
what our hospitals and health systems in southeast Michigan
have done, are doing and will do to combat the dreaded
millennium bug to ensure that their operations are
uninterrupted come New Years Eve 1999. I would also like to
provide thanks for what you and your colleagues in the Congress
have done to date to ease this effort and to provide
recommendations on what you can and should consider for future
assistance to our hospitals as they complete their efforts on
this major issue.
By way of background, you should know that the hospitals
and health systems in southeast Michigan are a relatively
consolidated group with more than 90 percent of our 55
hospitals as part of broader health systems, so that
centralized talents and capabilities have assisted in
developing consistent programs, able to deliver consistent
results with inherent economies in the Y2K issue.
Our hospitals are all organized as not-for-profit entities
with community service as their primary missions. And they have
been involved in Y2K planning from about 1997 forward, is our
information at this stage, and feel very confident that things
have been moving along well.
The focus of their activities of course has had to be
internal on the information systems they have, their medical
equipment and devices and their facilities, with the external
focus on suppliers and device manufacturers, insurance
companies, certainly the Medicare program at the Federal level
has been a concern just in terms of basic cash-flow for our
hospitals to make payroll, and we are confident that you have
taken care of a number of those concerns at the Federal level.
We have heard and had some meetings locally with our
utilities, collective activity on the part of all of our
hospitals and health systems through our hospital council, but
we of course have police and fire and ambulance services and
other external publics that are important as well.
By way of contingency plans, please know that our hospitals
and health systems are in the business of dealing with emergent
conditions and the unexpected on a routine basis. They are used
to mobilizing quickly in the face of natural disasters and
human carnage. They routinely hold drills to ensure that such
mobilizations are successful and that no stone is left unturned
in appropriate preparation for disasters that seldom happen.
There is no reason to believe they will not be ready for the
year 2000, whether or not every medical device in their
facilities is Y2K compliant. Further, patient safety is the
highest priority for our hospitals and health systems and their
ultimate contingency plan is to have caregivers at the bedside
of all patients as they do 24 hours a day, 7 days a week, 365
days a year.
Should a medical device turn out to be non-compliant even
after testing, it is very likely that the ramifications will be
limited, because it is the hospital's people who take care of
patients, not a hospital's medical devices.
In many ways, it is fortuitous that the Y2K millennium bug
dilemma is focused on New Years Eve 1999. This is a time of the
year when the hospital census is the lowest and only the
sickest patients remain in our hospitals. All of our hospitals
and health systems have advised our office that they are
examining a range of options, but all have told their
employees, as others you have heard from this morning, not to
plan vacations for this coming holiday season, as they have in
the past. They are planning to have staff at the bedside of
every patient where a medical device is in use and the manpower
pool will be significant.
Remaining concerns that our hospitals have in becoming Y2K
compliant include a reliance on manufacturers of products and
the role of the FDA in assisting them. Our hospitals have
historically and continue to rely on manufacturers for
representation of the fitness and safety of their products. The
FDA's Y2K guidance to manufacturers emphasizes the
responsibility of manufacturers for their products' Y2K
compliance and safety. The FDA has also stressed that the
technical know-how for determining the compliance status of
devices rests with the manufacturers.
A challenging question that hospitals face is whether to
undertake independent testing of their medical devices and
equipment. And this is a decision that must be made with the
judgment of those at each hospital and health system, based on
whether clear and complete information on the device's Y2K
compliance status has been obtained from the manufacturer.
External guidance from national resources suggests that the
testing a provider can accomplish is superficial and may
provide false assurances about compliance in a wholly different
set of problems.
Although a few hospitals nationally have identified
discrepancies between what some manufacturers have reported in
their own tests of medical equipment, the numbers of these
occurrences is reportedly very small and none are mission
critical.
The FDA has taken a leadership role nationally in working
with the manufacturers to encourage their provision of complete
lists of individual products that are Y2K compliant. It is
critical that the FDA continue to monitor the reporting of
manufacturers about these devices and equipment because they
have the expertise, resources and authority to ensure that
their products are safe and reliable.
At the same time, our national association is encouraging
the FDA to play a rumor-control role, monitoring such arenas as
the Internet and the media to make sure that information that
circulates about the effects of Y2K on medical devices and
equipment is accurate and corrected when it is wrong.
Liability matters are another concern for our hospitals. A
dubious distinction that has haunted our hospitals and health
systems in southeast Michigan for a number of years is that
they pay some of the highest, if not the highest, medical
liability insurance premiums in the country. The history and
the culture of Detroit as the home of the auto manufacturers
has resulted in an extremely active plaintiffs' bar and a very
high propensity of the public to bring suit to seek redress for
any wrong they perceive to have occurred.
Our hospitals are not able to ultimately face the Y2K
challenge alone, they rely on medical device manufacturers as
well as vendors and suppliers who have ultimate influence over
the manner in which their services are provided to the people
they serve.
Our hospital Y2K compliance programs have resulted in
thousands of letters being sent to manufacturers, vendors and
suppliers to ascertain whether their services and equipment are
Y2K compliant. Unless the hospitals are provided the necessary
and truthful information from these external sources, they will
be in a position of facing uncertain circumstances, which could
result, unfortunately, in patient harm, though that is clearly
not a high probability.
Nonetheless, in spite of all that is being done, problems
could still arise and our hospitals understand and appreciate
the desire to avoid litigation. Resources diverted from serving
patients are resources lost to the mission of our hospitals.
That is of utmost importance. It is therefore important that
our hospitals remain on a level playing field when defending
personal injury cases. They must retain all of their current
rights to take legal action against a vendor or a manufacturer
whose product is involved in a claim. It is our hope that
proposals entertained by Congress to address the liability
matter relative to Y2K issues not create a disadvantage for our
hospitals because it is essential that if a hospital is sued by
a patient for a Y2K-related event, explicit language must be
included in any congressional proposal to ensure that the
hospital has the same recourse against a vendor or a
manufacturer that it has today. H.R. 775 recently passed by the
House does this and we encourage you to maintain that posture.
Our third concern is the issue of costs. Our hospitals in
southeast Michigan have expended close to $150 million thus far
on Y2K compliance. It appears that nearly half of those
expenditures have been devoted to upgraded equipment, which
will result in enhanced efficiency on their behalf.
Nonetheless, the unplanned nature of this expenditure at a time
when our hospitals are facing unprecedented challenges from all
who purchase and pay for health care is presenting great
challenges.
With respect to the role of Congress, we would like to
thank you and your colleagues, Mr. Chairman, for the passage of
the good samaritan legislation that has shielded from liability
those who would work together, and we have competing hospitals
and health systems working together locally on this in part as
a result.
As I have previously alluded, we would encourage you to
provide the FDA the resources and impetus necessary to enforce
its requests for information from medical device manufacturers
and to serve a rumor-control function regarding those devices.
Further, we support a recent proposal by John Koskinen,
chairman of the President's Council on Y2K Conversion, that
mentioned the possibility of creating a contingency fund which
States, in the case of Medicaid programs for example, or
hospitals, could draw moneys needed to continue operating in
case of Y2K disruption.
And finally, Medpac, the congressionally developed
oversight body for the Medicare program, has included in its
recommendations for fiscal year 2000 funding an additional one
half of 1 percent payment increase to hospitals to cover their
Y2K compliance costs. We would encourage you and your
colleagues in Congress to support that as well.
Thank you very much for the opportunity to be here. I think
I can convey that our hospitals and health systems have been
aggressively working on this problem for at least 2 years and
are feeling relatively confident about their positions today.
[The prepared statement of Mr. Potter follows:]
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Mr. Horn. Now the hospitals have a Website, do they not,
where they can check out equipment against it in terms of the
manufacturer's name, the model number and all that, so they do
not have to be repeating this all over America?
Mr. Potter. This is being assisted by the FDA in their
gathering of information from the manufacturers, but also by
the American Hospital Association as well. My information is
that about 70 percent of that equipment is easily accessible in
terms of information right now.
Mr. Horn. That is very helpful.
Our last witness on this panel is Dan McDougall, who is the
director, southeast Michigan information center for United Way.
Mr. McDougall. Thank you for the opportunity to speak
today, and especially today on the last panel, because I think
I represent an industry that is very different than the
industries you have heard from earlier today, and that of
course being the human services sector that provides support
services to people in our community.
I thought what I would do today is talk to you not so much
about how our individual United Way is dealing with Y2K
internally, but how the human services sector in southeast
Michigan is dealing with the Y2K issue and kind of what we see
as some of the possible solutions, and I will try to summarize
my report.
Clearly, the non-profit sector does not have the dollars
and the resources behind it that some of the corporations that
we have heard from today do. Our first--at United Way, our
first attempt at addressing the issue among the smaller non-
profits in our area was to send a letter out to non-profits in
September of last year, kind of outlining the Y2K issue and
asking folks to start looking at it in their individual
organizations.
In addition to that, we worked with George Surdu from Ford
Motor Co., who was here earlier today, to develop a Y2K
handbook for non-profit organizations. We have heard a lot of
people talk about the Good Samaritan Act and I keep thinking of
that when I talk about our relationship with Ford Motor Co.,
because it is only because of Ford Motor Co. that we have been
able to address the Y2K issue in the non-profit sector locally
here.
Since September though, unfortunately what we have found is
that non-profits just are not looking at the issue serious--the
Y2K issue seriously. And part of this has to do with the
culture of the small non-profit community. Non-profits are
expected to operate with budgets far less than the for-profit
sector, and very often the funding distribution to non-profit
organizations stipulates that money cannot be spent on capital,
things such as computer equipment. The result is that most non-
profits are operating with computer systems that are the
castaways from the for-profit sector. So although we love it
when the big corporations give us their old computers, what is
happening now is that the corporations are giving us their
computers that are going to crash in January. [Laughter.]
We like to take things from everybody, but unfortunately,
this one is not helping.
So unfortunately, we have this cyclical nature of the non-
profit sector not getting the funding to deal with the issue
and then also non-profits just being too burdened by the day-
to-day tasks that they have to really look at the Y2K issue. It
is just not in our culture to deal with technology very much.
Late last year, the Nonprofit Times and Gift in Kind
International did a national survey of the non-profit sector in
technology, with a little bit of focus on the Y2K issue and
what they found is that non-profit organizations with an annual
budget of less than $1 million are the most susceptible to
issues with respect to Y2K and that is because most of these
organizations are dealing with this loaned equipment or donated
equipment and they are usually processors that are 386 level or
below. Sixty-three percent of the non-profits in that survey
said that they have absolutely no money budgeted for technology
or technology training, no budget at all. So they are really
depending on Board members who give their old computers and who
come and teach classes to their staff.
And then also, 40 percent of the respondents in that survey
stated that their biggest roadblock to Y2K issues was money.
And of course we always want to focus on the equipment aspect
of the Y2K issue for non-profits but it is also training and
technology planning. So we are really seeing that the problem
is more than just hardware for us.
In terms of our local picture, in the seven-county area
that we call southeast Michigan for the purposes of United Way,
there are a little over 6000 registered non-profits and those
are of the size that they are a million budget or less, which
is the focus that we have. If we were to say that one--if we
looked at the trends in terms of the kinds of computers that
smaller non-profits have, replacing one computer for each
organization would cost a little over $1.3 million and that
does not include training and updating of software and things
like that.
So in our mind, it is really an issue of focusing on a
cadre or a mosaic of services and hardware issues that non-
profits have. And so what I would like to do is talk about a
program that we have locally that we think works, but of course
is not big enough.
We work with a national project called Team TECH which is a
collaborative arrangement between IBM, United Way and the Corp.
for National Service. We use AmeriCorps volunteers at United
Ways throughout the country to distribute IBM hardware and also
provide technical training and technical planning. In Detroit,
this has made a huge impact on the ability of small non-profits
with one and two staff members to start looking at technology
in new ways and to address the Y2K issue in their organization.
And so one of the things that we are looking at is because of
the Y2K issue, we have had organizations like Ford and IBM come
to us and want to provide us technical assistance so that we
can help non-profits do things better. And so for us, coming
from a culture of not using technology very much, we are seeing
this issue as an opportunity and we would like to say that we
would like to take the Y2K lemon and try to make some
technology lemonade out of it for non-profits.
So what we are looking forward to is the results of this
hearing helping us bring together some of the other good
samaritans in our community to help the non-profit sector.
I will conclude my testimony there.
[The prepared statement of Mr. McDougall follows:]
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Mr. Horn. Well, thank you very much. Let me ask the panel
generally a couple of questions. Let us just say when did it
start, some of you told me and I just want to get it on the
record. Mr. Roosen, when did you start this Y2K adaptation and
awareness and all the rest of it?
Mr. Roosen. 1996.
Mr. Horn. 1996? And then when, early in 1996 or later?
Mr. Roosen. We started, as I recall, in our Information
Technology Department somewhere in mid-1996.
Mr. Horn. OK, we will say June then.
Mr. Roosen. That would be fair.
Mr. Horn. When did the gas company find time to start on
it?
Mr. Lozano. We started replacing our business systems back
in 1995, but instituted our Y2K office corporate-wide in 1997.
Mr. Horn. 1997, 1995.
And then how about the Wayne State University, when did you
start?
Mr. Johnson. We started in 1996 with awareness and we were
budgeted in fiscal year 1997 which starts October 1st.
Mr. Horn. And then how about the Health and Hospital
Council, when did they start on this, roughly?
Mr. Potter. Speaking collectively on behalf of all the
hospitals in the region, Mr. Chairman, we are seeing late 1997
and early 1998 for the system-wide formation of steering
committees to actually take on the matter.
Mr. Horn. How about the non-profits with the United Way?
Mr. McDougall. Well, it varies from non-profit to non-
profit. Our United Way started focusing on our internal systems
in late 1996, but we just started working with assisting other
non-profits in middle to late 1998.
Mr. Horn. Now that you have a lot of experience in this
area, we can start down the line again, what do you wish you
had done that you did not do and what would be No. 1 for you
next time around, if we ever had this experience? Mr. Roosen,
what do you think?
Mr. Roosen. I think as one of the earlier witnesses said,
the inventorying your assets and knowing what you have makes it
a lot easier to do something with them and I would say that
would be the one large learning if you had to do it over again.
Mr. Horn. How about you, Mr. Lozano?
Mr. Lozano. With me is Tom Motsinger, director of
technology and information systems, and we had a discussion
about this and we just echo that sentiment, that inventorying--
--
Mr. Horn. Well, you are the expert, Mr. Motsinger, what do
you think?
Mr. Motsinger. That is correct, the inventory has been our
biggest issue. As was said earlier by the auto industry, the--
you are definitely surprised by the number, the count of pieces
of equipment and how much is out there that you really do not
know about.
Mr. Horn. Does that mean that sort of in the future
everybody is going to have a going, running inventory.
Mr. Motsinger. Ongoing.
Mr. Horn. Yeah, ongoing. How about it, Mr. Johnson, what
has been Wayne State's experience with----
Mr. Johnson. Well, first, I would replace probably another
core system rather than remediate it. I would echo what
everyone else said; the other factor I would mention is keeping
up to date with software because when you bring in the
compliant software, if you are not up to date, you have got to
bring it up to date and then go from there. And the third I
think would be a broader national awareness. It has been pretty
late for people to discover the year 2K problem is a much
broader problem than an information technology problem. And it
has only been recently that we have really been able to get the
attention of the skeptics that there is a problem and they need
to do something about it.
Mr. Horn. Yeah.
Mr. Johnson. One thing fueling that was obviously some
Federal agencies saying you have to assure compliance for
funding.
Mr. Horn. We urged the President to do just that in 1997
and he did give the speech to the National Academy of Sciences
in the summer of 1998, I believe, and of course they were the
last people that needed to be educated, they already knew about
it. And I think there are three speeches that have been given,
so the bully pulpit has not been used very much, as Theodore
Roosevelt called the Presidency, and it is too bad. But you are
right, general awareness.
And what would you say on the issue that you would rather
do first next time and you did not do it for one reason or the
other?
Mr. Potter. I think our inventory has turned out to be
relatively solid, thank goodness, in our hospitals and health
systems. The big issue that jumped up was really the cost
issue. Health care reform did not die in Congress in 1995, it
switched its colors and our hospitals here in Detroit have had
5,000 layoffs in the last year just to live with the dollars
they have. So to factor $150 million out of their patient care
dollars has not been an easy proposition, to be spending money
on upgrading information systems when they could be taking care
of patients.
So probably the surprise, at least in the short run, was
what it did cost ultimately for them to update their systems
and how to accommodate that in the short run.
Mr. Horn. That is a very interesting point. In terms of
Medicare, is there sort of an administrative base that is
recognized as part of your cost structure?
Mr. Potter. Yes, we are under Federal price controls and
Medicare pays hospitals a given amount to take care of a
patient of a given diagnosis and that amount is updated on an
annual basis. In my testimony, I alluded that there is this
group called MedPac that Congress appoints to make
recommendations through the appropriations process to determine
what should be the annual change, if any, in prices.
Unfortunately, it is going down rather than up right now, by
virtue of the Balanced Budget Act of 1997.
Mr. Horn. Yeah. Well, it is interesting because you have
had an extra expense you did not know several years before, you
would have, because very few people did. And has there been an
adjustment in that base?
Mr. Potter. The recommendation has been made, but it is not
clear to me that the appropriations process has accommodated it
this year. There is a lot of reluctance in Congress, as you
well know, to tamper with anything that came out of the
Balanced Budget Act, but the Balanced Budget Act, if you may
recall, cut Federal spending by $122 billion over 5 years and
$116 billion of that came from Medicare, which is only 13
percent of the budget. And 95 percent of that came from health
care service providers, not in cuts of eligibility or benefits
to Medicare enrollees. So it is the providers who have got the
problem.
Mr. Horn. You have made a good point and I will ask the
staff to follow it up and see what is happening with the
Appropriations Committees on this.
Mr. Potter. I appreciate that.
Mr. Horn. This point has not really been raised before and
so I think that is a real contribution.
Now let me ask those of you that represent various
utilities, you send out sometimes monthly billings to large
clientele. To what extent have you used some of that sheet that
tells them what they have got to pay to educate them on the Y2K
situation and to sort of reassure the citizenry that you are on
top of these things, because there is a lot, as I have said
numerous times, a lot of scare-mongers out there for their own
delights and their own moneymaking, who will try to scare a lot
of your customers that gee, we are not doing this, we are not
doing that. You have got a lot of tort lawyers also that are
sitting there salivating. And I was just curious, to what
extent have you tried to educate your clientele, our fellow
citizens, with this information. Mr. Roosen.
Mr. Roosen. Well, from Detroit Edison's standpoint, there
are really three approaches. You are right, the bill stuffer is
one approach, but as we all know, when we are paying our bills,
a lot of times we throw that stuff away. I know I have that
habit.
We have used the bill stuffer and we have done it, I
believe, three times since last summer. Annually, we send out
notices to our customers, we have a lot of storms in the
spring, starting in about March, so we took advantage of the
early storm tips to also put in a Y2K twist.
And then we have 18 offices and we have some advice to
customers on preparation. We have booklets that we have made
available to them.
And then third, we have a speakers corps and any time any--
whether it be a garden group or a church or whatever, any time
that they ask us, we volunteer a speaker to go out and do
something on Y2K.
Mr. Horn. How about it, Mr. Lozano, what has been the
approach?
Mr. Lozano. Mr. Chairman, we have similar efforts as does
Edison. We have had one bill stuffer that has gone out to
customers and most of ours has been more responsive to the
community groups and the individuals that call either through
our public affairs offices or through the Y2K office,
responding to individual requests for information or just
verbal information or speaking before groups. As we are located
throughout the State, we have been involved in multiple
presentations throughout the entire State and usually in a
panel type of situation involving the communication industry
and local municipalities.
Mr. Horn. I do not think--let us see, did the rest of you
really have that kind of communication going on? Well,
hospitals send bills too, but I do not know if they want it
read on anything but the bottom line when the poor patient gets
it. Was that not the reason we always get rolled out of a
hospital in a wheelchair, because they show you the bill on the
way out? [Laughter.]
Mr. Potter. We really do have a problem, Mr. Chairman, on
this one. I learned it just a couple of weeks ago when my 73
year old mother-in-law told me there are two places she was not
going to be on New Year's Eve, one was on an airplane and the
other was in a hospital. And I asked ``Where does this come
from that it is part of the public thinking?'' Whether she
watches day time television or what, she at the same time asked
me if I would like to go halves with her on a generator after
she had purchased three cases of canned goods to put in her
basement.
So we have got a real problem with the general public that
needs to be dealt with and it is something that we are kind of
looking at collectively in our hospital council to see what we
can do as an industry.
Mr. Horn. Did you ever find out where she got her
information?
Mr. Potter. It turns out there is a--she lives in west
Michigan and there are some very high profile kooks out there
stirring up the pot and holding meetings and individuals are
going, almost like the old time revivals. And there is this
cult that has developed, of which I am afraid she is on the
fringe, and Lord knows what it is going to take, but she wants
to know everything I know about Y2K. And I will even give her a
copy of my testimony today and see if that will help, but it
has not thus far.
Mr. Horn. When we were in Topeka the other day holding a
hearing our staff director happened to pick up the Kansas City
Star and Ann Landers had a column in there on the scams that
are being worked on senior citizens with the Y2K being it. They
phone up the senior citizen and say we are the bank and we need
to move your money from your account to this bond account and
all. And you know, utter baloney. But people are going to be
hurting senior citizens just like they do on other scams. So we
need to help head that off, and the Attorney General of each
State needs to really be leading that front.
Mr. Willemssen, why do you not sit in one of the
Commissioners chairs here, it is a cushy one, better
accommodations than you have had in most hearing rooms.
What do you make of all this and what should we discuss to
get it on the record?
We are going to have to wire you for sound wherever you go.
Mr. Willemssen. Thanks, Mr. Chairman. A couple of thoughts
that I thought I would raise to you that may be a little bit
unique that we had not talked about at the other field
hearings. One having Wayne State here, you may want to inquire
about the extent of coordination that they have had with the
Department of Education on their data exchanges on student
loans and student grants.
And also with a representative from the hospital
association, I think it is useful to point out that beyond the
Website that the Food and Drug Administration has, they also
plan to begin some independent efforts on a sample of critical
care life support biomedical equipment items, to independently
check behind the compliance certifications of the manufacturers
and see what evidence is behind that, for those critical care
and life support items.
So I thought I would just raise those couple of points.
Mr. Horn. Well, those are excellent questions. Let us deal
with the student loan one and student grant, the Pell grants.
We are the first Congress that ever got them paid to the
highest mark you possibly could have in Pell grants. So I am
curious what the Department of Education is doing in relation
to Wayne State University.
Mr. Johnson. They have an awareness program and they are
one of our suppliers that assures compliance with the year
2000. We have not tested it yet.
Mr. Horn. Now they have intermediaries, do they not, that
do a lot of the----
Mr. Johnson. Yes.
Mr. Horn. It is not directly Department of Education.
Mr. Johnson. It is not always done directly, the transfers,
that is right.
Mr. Horn. And it is the same as Medicare in that sense,
they have intermediaries between the hospitals and Medicare
providers.
Mr. Johnson. Right. It is a very dispersed problem.
Mr. Horn. Yeah. So what has been your experience then on
this situation with grants and loans, I did not quite hear
that.
Mr. Johnson. I am not aware of a problem of non-compliance.
I will not confess to being infinitely wise in this area.
Mr. Horn. Yeah, if you would ask your director of financial
aid, it might be interesting and we will put it in the record
at this point, if you want to write us a letter as to what the
experience is.
Mr. Johnson. OK, I will do that.
Mr. Horn. That would be very helpful.
[The information referred to follows:]
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Mr. Horn. OK, Mr. Potter, on the Medicare/Medicaid
intermediary, is there a problem there at all with the
hospitals and the interactions on the computing with the State
government and the Federal Government and its intermediaries?
Mr. Potter. We have just solved another problem because we
have the third intermediary----
Mr. Horn. You want to move the mic a little closer, I
cannot----
Mr. Potter. I am sorry. Our hospitals in Michigan are
dealing with the third Medicare intermediary that has been used
for the last 5 years. So we have just worked through another
change, it is now in Wisconsin, but the technology of the day
has made life a lot easier and although Medicare does not pay
enough, the dollars are flowing and there are no major concerns
at this point.
Mr. Horn. How about on the Food and Drug aspect of
equipment that Mr. Willemssen mentioned?
Mr. Potter. I appreciated that insight, that is new news to
me and it is good news, because we do have some manufacturers
that have been reluctant to even respond to mailings, and if
they have, they have done so in such a manner so as to
guarantee absolutely nothing. And the FDA's control over these
device manufacturers is an extremely important tool to our
hospitals because as I said in my testimony, they do not have
the expertise to go into this machinery and remediate it and if
you really do get to the point where you cannot do that and no
one is responsive, then once again, you have to go buy a new
piece of equipment, perhaps unnecessarily. So I am very glad to
hear that.
Mr. Horn. Yes, it is a very important point and between GAO
and our staff, hopefully we can get that sorted out with FDA as
to what degree is this a problem, because I think that is an
excellent point that Mr. Willemssen has made.
Any other thoughts, Joel?
Mr. Willemssen. I think you summed it up very well, Mr.
Chairman.
Mr. Horn. Well, I want to thank each one of you. Do you
have any comments you might want to make based on your
colleagues' testimony?
[No response.]
Mr. Horn. It does not look like you do, so I want to thank
you very much. We really appreciate it.
And I thank all that have been involved in preparing this.
On our own side, we have got J. Russell George, our staff
director and chief counsel is here. He is holding up that
Corinthian column there that I am looking at. And Matthew Ryan
is to my left and your right. He is the senior policy director
involved in this type of hearing. And Grant Newman, our
faithful clerk, who has probably broken his back lugging stuff
around this country. Where are you, Grant? There you are in the
back, the well-dressed young man. I do not think our interns
are here, but they helped, and that is Lauren Lufton and John
Phillips, Justin Schleuter, they are back at the office.
And then for Wayne County, we particularly appreciate the
cooperation we have had from your Assistant County Executive,
Suzanne Hall, she was an excellent witness a few weeks ago in
Washington; and Sue Hanson, deputy director, Y2K Program
Office; Al Montgomery, clerk of the Commissioners; and Mr.
Cavanaugh, county commissioner, and--Mr. Chrisopher Cavanaugh.
We really appreciate them, and we appreciate, as we said
earlier, George Cushingberry, Jr., county commissioner, and his
help.
And then we had also your Wayne County manager of
information technology for the Commission, and that is Orlando
Gloster, and we appreciate all that he has done.
And last but not least, because he has got the big workout
in one of these hearings, is Bill Warren, the court reporter
that took all this down. I still do not understand how they can
do it that fast and listen to the next word, but that is OK,
the transcript comes out fine and we appreciate it.
So with that, this committee, which began in Topeka and was
also in Naperville, IL outside of Chicago in recess, and it was
recessed to Detroit and it is over now and so we will adjourn
this meeting. Thank you.
[Whereupon, at 12:14 p.m., the subcommittee was adjourned.]
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