<DOC> [106th Congress House Hearings] [From the U.S. Government Printing Office via GPO Access] [DOCID: f:61629.wais] Y2K MYTHS AND REALITIES ======================================================================= JOINT HEARING before the SUBCOMMITTEE ON TECHNOLOGY of the COMMITTEE ON SCIENCE and the SUBCOMMITTEE ON GOVERNMENT MANAGEMENT, INFORMATION, AND TECHNOLOGY of the COMMITTEE ON GOVERNMENT REFORM HOUSE OF REPRESENTATIVES ONE HUNDRED SIXTH CONGRESS FIRST SESSION __________ NOVEMBER 4, 1999 __________ Science Serial No. 106-61 Government Reform Serial No. 106-67 __________ Printed for the use of the Committee on Science and the Committee on Government Reform __________ U.S. GOVERNMENT PRINTING OFFICE 61-629 WASHINGTON : 2000 COMMITTEE ON SCIENCE F. JAMES SENSENBRENNER, Jr., Wisconsin, Chairman SHERWOOD L. BOEHLERT, New York RALPH M. HALL, Texas, Ranking LAMAR SMITH, Texas Minority Member CONSTANCE A. MORELLA, Maryland BART GORDON, Tennessee CURT WELDON, Pennsylvania JERRY F. COSTELLO, Illinois DANA ROHRABACHER, California JAMES A. BARCIA, Michigan JOE BARTON, Texas EDDIE BERNICE JOHNSON, Texas KEN CALVERT, California LYNN C. WOOLSEY, California NICK SMITH, Michigan LYNN N. RIVERS, Michigan ROSCOE G. BARTLETT, Maryland ZOE LOFGREN, California VERNON J. EHLERS, Michigan MICHAEL F. DOYLE, Pennsylvania DAVE WELDON, Florida SHEILA JACKSON LEE, Texas GIL GUTKNECHT, Minnesota DEBBIE STABENOW, Michigan THOMAS W. EWING, Illinois BOB ETHERIDGE, North Carolina CHRIS CANNON, Utah NICK LAMPSON, Texas KEVIN BRADY, Texas JOHN B. LARSON, Connecticut MERRILL COOK, Utah MARK UDALL, Colorado GEORGE R. NETHERCUTT, Jr., DAVID WU, Oregon Washington ANTHONY D. WEINER, New York FRANK D. LUCAS, Oklahoma MICHAEL E. CAPUANO, Massachusetts MARK GREEN, Wisconsin BRIAN BAIRD, Washington STEVEN T. KUYKENDALL, California JOSEPH M. HOEFFEL, Pennsylvania GARY G. MILLER, California DENNIS MOORE, Kansas JUDY BIGGERT, Illinois Vacancy MARSHALL ``MARK'' SANFORD, South Carolina JACK METCALF, Washington 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-HAGE, 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 Matthew Ryan, Senior Policy Director Bonnie Heald, Communications Director/Professional Staff Member Chip Ahlswede, Clerk Trey Henderson, Minority Professional Staff Member C O N T E N T S ---------- November 4, 1999 Page Opening Statement by Representative Constance A. Morella, Chairwoman, Subcommittee on Technology, U.S. House of Representatives................................................ 1 Opening Statement by Representative James A. Barcia, Ranking Member, Subcommittee on Technology, U.S. House of Representatives................................................ 7 Opening Statement by Representative Debbie Stabenow, Subcommittee on Technology, U.S. House of Representatives................... 8 Opening Statement by Representative Jim Turner, Subcommittee on Government Management, Information, and Technology, U.S. House of Representatives............................................. 9 Opening Statement by Representative Judy Biggert, Subcommittee on Technology, U.S. House of Representatives...................... 82 Opening Statement by Representative Steve Horn, Subcommittee on Government Management, Information, and Technology, U.S. House of Representatives............................................. 85 Witnesses The Honorable John A. Koskinen, Special Assistant to the President, Chairman, Y2K Conversion Council: Oral Testimony............................................... 11 Prepared Testimony........................................... 14 Biography.................................................... 19 The Honorable Joel Willemssen, Director of Civilian Agencies Information Systems, United States General Accounting Office: Oral Testimony............................................... 20 Prepared Testimony........................................... 22 Biography.................................................... 73 The Honorable Barry F. Scher, Vice President of Public Affairs, Giant Food, Inc.: Oral Testimony............................................... 101 Prepared Testimony........................................... 104 Biography.................................................... 108 Financial Disclosure......................................... 110 The Honorable J. Patrick Campbell, Chief Operating Officer and Executive Vice President, The Nasdaq-Amex Market Group, Inc.: Oral Testimony............................................... 111 Prepared Testimony........................................... 113 Biography.................................................... 126 The Honorable Ronald Margolis, Representing the American Hospital Association, Chief Information Officer, University of New Mexico Hospital, Health Sciences Center: Oral Testimony............................................... 127 Prepared Testimony........................................... 129 Biography.................................................... 139 Appendix Booklet: Y2K and You, Prepared by the President's Council on Year 2000 Conversion, Federal Emergency Management Agency, Federal Trade Commission........................................... 157 Y2K MYTHS AND REALITIES ---------- THURSDAY, NOVEMBER 4, 1999 House of Representatives, Subcommittee on Government Management, Information, and Technology, Committee on Government Reform, Joint with the Subcommittee on Technology, Committee on Science, Washington, DC. The Subcommittees met, pursuant to call, at 2:15 p.m., in room 2318, Rayburn House Office Building, Hon. Constance A. Morella (Chairwoman of the Subcommittee on Technology) presiding. Chairwoman Morella. I am going to gavel the joint subcommittees' hearing to order. You just heard the beeper; we're going to have a series of about four, probably maybe even five votes. But I thought I would give an opening statement and then return right after the votes. There is also a markup taking place in Government Reform, which is where our co-chair is right now, and that is why you do not have the members here. They will return. But I will at least comment on what we are here today to listen to and what the topic is of the meeting. I want to welcome all of you to the House's Y2K Working Group, that is comprised of the Science Committee's Technology Subcommittee and the Government Reform Committee's Government Management, Information, and Technology Subcommittee. With the anticipated adjournment of the first session of this 106th Congress looming before us, this hearing is expected to be the culmination of our House Y2K Working Group efforts before the January 1, 2000, deadline. It is sometimes hard to believe that we have focused on this issue ever since the spring of 1996. When our two subcommittees held the first congressional hearings 3\1/2\ years ago on the then little publicized year 2000 computer problem, the millennium bug seemed to be more suited to the realm of exterminators than Congress. But our Y2K review revealed some troubling news. At that time, our Nation was simply not moving forward with the required dispatch to effectively respond to the devastating effects of the ``mother'' of all computer glitches, potentially crippling vital Government functions, critical industry performance, and our robust economy. We in Congress attempted to step up to the plate by raising awareness about the problem and by pushing Federal agencies and private industry toward immediate corrective measures. We did this through a series of comprehensive hearings, vigilantly exercised our oversight authority, and enacted laws that required the creation of a national Federal strategy and prohibited the purchase of Federal information technology that was not Y2K compliant. It was clear, however, that despite our congressional powers, the legislative branch alone was ill-suited to lead our Nation's Y2K efforts. We desperately needed the help of the President's executive powers. We were frustrated by what seemed to be the lack of leadership. It was clear to us that without greater urgency and aggressive agency management, Federal agencies were at risk of being unable to provide services or to perform functions that are critical to its mission and vital to the American public. We spent a year urging the President to personally embrace the need for Federal action and to appoint a Y2K czar to oversee the Nation's public and private sector initiatives, until he finally appointed a very capable man, who is here today, John Koskinen, to chair the Year 2000 Conversion Council. Given the late start in his appointment, John, who was lured out of retirement to take on this herculean task, obviously had his work cut out for him. And while we have not necessarily agreed on all aspects of our Nation's Y2K strategy, I want to say to John that your extremely competent achievements, performed with such a high level of professional dedication and commitment to public service, really do deserve recognition. Since John's appointment, we in Congress have successfully worked together to require greater Federal and private sector disclosures, provide a special Federal appropriation solely for Y2K efforts, raise Y2K awareness throughout the country, and enact laws to improve Y2K readiness, and to curb the number of frivolous glitch-related law suits. Yet, as we now move toward the remaining 50 days before the unforgiving and immovable Y2K deadline, Americans still have a number of questions about how, in the midst of all their millennium celebrations, they will be affected, if at all, by the year 2000 problem. We know the American people are counting on us. This hearing is designed to respond to some of those questions. I am pleased that we have a distinguished panel of witnesses that seek to help us provide some of those answers today. Finally, before I turn to our ranking member of the Technology Subcommittee, I want to thank, on behalf of both of us including Chairman Horn, who will be with us later, to all of our fellow colleagues on the House Y2K Working Group, I want to thank them for their leadership, support, and participation. It is also important to note that our Y2K efforts have been bipartisan. I want to commend our ranking members, Mr. Barcia of Michigan, who is here with us, Mr. Turner of Texas, Mr. Gordon of Tennessee, Mrs. Maloney of New York, Mr. Kucinich of Ohio. And now I would be very happy to recognize the Ranking Member of the Technology Subcommittee, Mr. Barcia, for any opening remarks before we go vote. [The prepared statement of Hon. Constance A. Morella follows:] [GRAPHIC] [TIFF OMITTED] T1629.001 [GRAPHIC] [TIFF OMITTED] T1629.002 [GRAPHIC] [TIFF OMITTED] T1629.003 [GRAPHIC] [TIFF OMITTED] T1629.004 Mr. Barcia. Thank you, Chairwoman Morella. I want to return the compliment and thank you for the leadership and the bipartisan nature in which you have conducted the hearings of this subcommittee, and the tremendous amount of energy and time that you have invested in this Y2K issue and its importance to the citizens across the country. I want to join my colleagues on the subcommittee in welcoming our distinguished panel to this last hearing of the year 2000 computer bug. Over the past 3 years, we have held hearings on almost every aspect of the Y2K problem; on Federal agencies' efforts, international issues, State and local government efforts, the impact on industry, and liability. Although confident with the strides made by Federal agencies, we continue to be hampered in our assessment of the impact of the year 2000 problem on State and local governments and industry because there is still a lack of factual information on Y2K readiness. I urge our panelists today to provide us with as much specific information as possible about the overall level of Y2K readiness in the United States and abroad, if you can. If we are to calm public fears, we must provide the public with facts. This series of hearings has served to educate the public about the magnitude and scope of the Y2K problem. And although it has been my experience that most people are aware of the Y2K issue, they still do not have a good understanding of its potential impact or lack of impact. I am concerned because, unless we get the message out, the level of public fear could rise. What could be the single largest public awareness announcement, a November 21st made for television movie, entitled, ``Y2K: The Movie.'' According to news reports, this movie has the U.S. Government grounding all airplanes, the Eastern seaboard experiencing a major power outage, and even worse problems yet to come. In the absence of facts, what is designed to be entertainment could achieve the saddest effect. As this is the last hearing, I would like to commend Mr. Joel Willemssen and the staff of GAO for the outstanding work that they have done during the past 3 years. I would also like to commend Mr. Koskinen for the coordination role his office has provided in the administration's Y2K efforts. And, of course, finally, I want to thank the witnesses for appearing before us. I look forward to hearing your comments. Thank you, Madam Chair. [The prepared statements of Hon. Debbie Stabenow and Hon. Jim Turner follow:] [GRAPHIC] [TIFF OMITTED] T1629.005 [GRAPHIC] [TIFF OMITTED] T1629.006 [GRAPHIC] [TIFF OMITTED] T1629.007 Chairwoman Morella. Thank you, Mr. Barcia. As you probably know from the timing, we have got to go over to vote. We have got about 6 minutes, if even that, before the vote. There are going to be about five procedural votes. Mr. Koskinen, I know you must leave here shortly. So what I will do is go over and vote and, if there is a 15 minute interval, come back so we can hear some of your oral testimony. Will there be somebody else here who could also respond to any questions we may have when you have to leave? Mr. Koskinen. Well, with all these wonderful witnesses, someone will know. But there is no one else from my office. Chairwoman Morella. And you have a written testimony for us, too, which will be part of the record. So I shall return after our first vote when we have a 15 minute interval. For the rest of you, it will probably be about three-quarters of an hour before we reconvene fully the hearing beyond Mr. Koskinen. Thank you. [Recess.] Chairwoman Morella. I am going to reconvene the joint hearing. I am going to ask Mr. Koskinen and Mr. Willemssen, in the tradition of the Science Committee, if they would please stand and raise their right hands. Do you swear that the testimony that you are about to give is the truth, the whole truth, and nothing but the truth? [Witnesses respond in the affirmative.] Chairwoman Morella. The record will show an affirmative response. Mr. Koskinen, we are delighted that we will have you give us your comments at this very last meeting of the year 1999 of the Joint Y2K Working Group. TESTIMONY OF HON. JOHN KOSKINEN, SPECIAL ASSISTANT TO THE PRESIDENT, CHAIRMAN, PRESIDENT'S COUNCIL ON YEAR 2000 CONVERSION; AND JOEL C. WILLEMSSEN, DIRECTOR, CIVIL AGENCIES INFORMATION SYSTEMS, U.S. GENERAL ACCOUNTING OFFICE Mr. Koskinen. Thank you. Good afternoon, Chairwoman Morella. I am pleased to appear before you today to discuss the year 2000 issue, or Y2K, as it is known. Let me begin by thanking the Chairwoman for her very kind comments which I genuinely appreciate. The subcommittees themselves deserve great credit for their continuing interest in the Y2K issue. Your efforts have helped to increase the visibility of this important challenge within the Federal Government and the country as a whole. With your permission, I will submit my full statement for the record and summarize it here. Chairwoman Morella. Hearing no objections, so ordered. Mr. Koskinen. In keeping with the title for this hearing, let me begin with what I believe are some of the more important myths and realities regarding the Y2K issue. One of the more troubling Y2K myths is the notion that January 1 is a seminal date on which everything, or nothing, Y2K-related will occur. As you know, year 2000 challenges can happen any time a computer that is not Y2K-compliant comes into contact with a year 2000 date, before or after January 1. In fact, a number of businesses and governments have already had to use year 2000 dates in their automated operations. Information technology professionals are well aware that the Y2K challenge is not limited to January 1 and they will be monitoring systems well into the New Year for flaws in billing and financial cycles and possible slow degradations in service. Another important myth deals with the reporting of Y2K readiness data. It goes something like this: Self-reported Y2K information is not valid since people will not voluntarily report problems, so virtually everything we have heard in terms of industry and Government progress reports cannot be believed. This is not true for several reasons. Most organizations have structures in place whereby independent authorities have been reviewing the results of Y2K testing. In some industries, such as electric power, Government agencies have conducted selected audits of the reported information and found no major discrepancies. And, most importantly, the industry surveys done for the President's Council have been conducted pursuant to the Year 2000 Information and Readiness Disclosure Act provisions, which the Congress passed at our urging last year. This act guarantees individual companies that their responses to these surveys will be treated confidentially, such substantially increases the likelihood of candid responses. In the interest of time, let me now move to a discussion of the operation of the Council's Information Coordination Center, or ICC, as it is known. The ICC will be the Federal Government's central point for coordinating a wide range of information on system operations and events related to the Y2K transition that will be collected by Government emergency centers and the private sector. The ICC will gather information about system operations in Federal agencies; among State, local, and tribal governments; in critical areas of the private sector; and internationally. To accomplish this task, we are relying to the greatest extent possible on existing structures and expertise. Domestically, information on systems operations will be collected by the States and provided through normal channels to FEMA which will review the reports and pass them on to the ICC. In addition, the ICC will receive reports from national information centers established, many for the first time, by the private sector. The status reports will be provided to appropriate lead agencies. We presently have agreements with the electric power, banking, finance, telecommunications, oil, gas, airline, pharmaceutical, and retail industries to operate information centers during the rollover period and to share information on the status of their members with the ICC. The ICC will receive international status reports from the State Department, the Defense Department, the intelligence agencies, private sector information centers, and national Y2K coordinators around the world. In addition, the ICC will work with the National Infrastructure Protection Center and Computer Emergency Response teams here and around the world to monitor unauthorized intrusions into systems. Information gathered by the ICC will be the basis for complete, regularly updated national and international status reports that will be provided to all Federal agencies and organizations sharing information with the center. These reports will help agency decision makers determine what, if any, Federal actions are appropriate in response to Y2K-related difficulties. Status reports will also be provided on a regular basis to the Congress and to the public. As I mentioned earlier, based on available information, we do not believe the Y2K issue will create significant problems in the United States. But no one can rule out the possibility that there will be temporary disruptions in some services. This week we published ``Y2K and You,'' an information booklet on the Y2K issue as well as a ``Y2K Preparedness Checklist,'' which I am submitting as part of the record. Our suggestions include preparing for the long holiday weekend by having at least a 3 day supply of food and water, keeping copies of important financial records before and after January 1, 2000, and checking with manufacturers to make sure that home electronic equipment is Y2K ready. Perhaps most importantly, whatever people are going to do to prepare, they should do it early. If everyone waits until the last moment to take even modest precautions, supply systems could be overwhelmed. When I appeared before you in January of this year, I closed by saying that overreaction by the public to real or perceived Y2K risks was in some ways our greatest challenge. I still believe that. On the other hand, our goal is not public complacency. All of us need to encourage the public to take the appropriate steps to be ready for the date change. As I said in January, the way to achieve this delicate balance is to provide people with as much information as possible about Y2K readiness efforts, the good and the bad. Thank you for the opportunity to continue this process of information sharing here today. I would be pleased to answer any questions you may have now or in the future. [The prepared statement of Mr. Koskinen follows:] [GRAPHIC] [TIFF OMITTED] T1629.008 [GRAPHIC] [TIFF OMITTED] T1629.009 [GRAPHIC] [TIFF OMITTED] T1629.010 [GRAPHIC] [TIFF OMITTED] T1629.011 [GRAPHIC] [TIFF OMITTED] T1629.012 [GRAPHIC] [TIFF OMITTED] T1629.013 Chairwoman Morella. Thank you, Mr. Koskinen. I am now pleased to recognize Mr. Willemssen. But as I do, I just want to comment on the fact that the GAO mission is to independently audit all Federal Government agencies and we have worked very closely with GAO over the past 3\1/2\ years on the year 2000 computer problem. Just as John Koskinen has demonstrated an exemplary dedication and commitment to public service, so has Joel Willemssen. He has always been ready to assist. His contributions to our House Y2K Working Group's efforts cannot be understated. He has been very much appreciated. And while he may have been a thorn in the side of agencies that required greater congressional attention, he is also one of the reasons that those agencies have redoubled their efforts to comply with the Y2K computer glitch. So, in welcoming Mr. Koskinen, I welcome Mr. Willemssen for his comments. TESTIMONY OF JOEL C. WILLEMSSEN Mr. Willemssen. Thank you very much, Chairwoman Morella. Thank you for inviting us to testify today. And as requested, I will briefly summarize our statement. In early 1997, we identified Y2K as a high risk area for the Federal Government. Since that time, we have observed substantial progress in the Federal Government's Y2K readiness. While this progress has been significant, it has not been uniform among all Federal agencies. Some agencies have long had strong Y2K programs, others have made dramatic improvements, while still others must continue to be monitored carefully. For example, on one end of the spectrum is the Social Security Administration, which started its program 10 years ago, has been very responsive to any issues that have surfaced, and has been a government-wide leader in such areas as contingency planning and day one planning. Departments such as Veterans Affairs and Education have made major strides in readiness after relatively slow starts. Other agencies and departments have also made major progress, but still need to be monitored closely because of the criticality of information systems to their missions and the work that remains outstanding. These agencies would include: the Health Care Financing Administration, the Department of Defense, FAA, and IRS. For example, DOD reports that it still has 31 mission critical systems that are not Y2K compliant, 6 of these are not expected to be compliant until December. Beyond the compliance of individual systems, significant progress has also been made in improving the Government's overall approach. For example, OMB has identified 43 high impact programs as the Government's top priorities. Further, agencies are performing end-to-end testing of multiple systems supporting key business functions, and they have developed business continuity and contingency plans and day one strategies. Regarding State governments, the available information indicates that States have greatly improved their readiness during this year, with only 4 States now reporting less than 75 percent of mission critical systems completed compared to 40 States reporting this status earlier this year. Nevertheless, there is still much work to do for many of these States. For example, as we testified last month, many States were not planning to be compliant for some key human services programs, such as Medicaid, Food Stamps, and Child Support Enforcement, until last quarter of 1999. Y2K is also a challenge for the public infrastructure and key economic sectors. Our work has identified sectors that are clearly leaders on Y2K, while others are lagging behind. For example, banking and finance have clearly been a Y2K leader. Among the areas most at risk, however, are health care and education. For health care, we have testified on numerous occasions on the risks facing Medicare, Medicaid, and biomedical equipment. We remain concerned about the overall readiness of this sector. Regarding education, recent surveys conducted by the Federal Department of Education show that many school districts and post-secondary institutions are not yet compliant. In September, our report on the Y2K readiness of 25 of the Nation's largest school districts revealed that only 7 believed that all their mission critical systems were compliant, and 9 said they didn't plan to finish until December. That concludes a summary of my statement. I will be pleased to address any questions you may have. Thank you. 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Thank you, Mr. Willemssen. I know that Mr. Koskinen is going to have to leave us soon, and we have another vote. Mr. Koskinen. No, I am actually here till 3:30. Chairwoman Morella. Till 3:30. Very good. I guess I will start off with the concept that I have heard from some quarters, that there has been a little criticism from the Y2K community, maybe because you represent the Government, but the criticism has been that you have been overly optimistic about your assessments and that what you say should sort of be taken with a grain of salt. I wonder, how do you respond to those critics? You base a lot of your assessments on self-reporting. I wonder how much faith do you have in these self-reported data, and picking up also on what Mr. Willemssen had said about the areas of education and health. Mr. Koskinen. Well, there are a few things to note. First of all, there is a very small minority of people out there who are in the activist community who do think that, in fact, we are going to confront much greater damage and challenges than the evidence supports. None of those people have any evidence that disputes any of the surveys that have been presented, any of the information provided by the private sector or the Government. So, at this point, our view is, and continues to be, that we have an obligation to the public to provide them all the information we have, the good information and the areas we are troubled about. Those who have been concerned about whether we are too overly optimistic have been unhappy that we think that the critical infrastructure in this country, indeed, is going to work. Power, telecommunications, banking, finance, air traffic systems, all have been demonstrated to be ready. But they have ignored the fact that we have in fact for some time, certainly in the last year, have been pointing to areas where we are concerned. We have been concerned about developing countries abroad, as Mr. Willemssen has noted, we have been concerned about and our surveys have demonstrated the risks involved in smaller institutions in health care and education, in small businesses, at the local government level. So that I think what you have to do is take with a grain of salt those people who are concerned about whether we are over optimistic or under optimistic. The real issue is what are the facts as we know them, what are the facts as industries have them, and then people need to respond accordingly. Our view has been all we are doing is telling you what we know, what we have been told. I talked in my prepared statement and my oral statement about why we have reasonable confidence in the survey data that has been provided because it has been provided confidentially. And as noted, if people were going to make it up, they would have made up total compliance some time ago, and the surveys have not done that. Chairwoman Morella. I do notice that organizations, businesses, and even communities are coming out with their Y2K checklists, and obviously we have yours. I received one recently from an area that I represent. It is a little bit troublesome the list of items that they say one must need. You must change from standard incandescence to compact fluorescence and halogen, replace all appliances' solar panels and wind generators, composting toilets, reflector-powered ovens, crank- powered radio, et cetera. It goes on and on with a whole list of things. Do you think, again on the other side, that there are areas or people that are actually contributing to panic? Mr. Koskinen. Well, there are clearly those from the start, over the last 3 to 4 years, who have for one reason or another been predicting the end of the world as we know it on the ground that this is a massive problem, which indeed it is, but their prediction has been we will never be able to solve it. My disagreement with them has not been that it is a massive problem, it has been with whether we will be able to solve it. I think there are still people pushing that if you do not buy a lot in New Mexico and leave town, at a minimum, you ought to be prepared with three to six months supplies, which I think there is no evidence to support. On the other hand, there are concerned civic groups that think that more than 3 days supplies are necessary. Our view has been, and our brochure talks about, at least 3 days supply. And we stress that people need to take a look at their own circumstances. In the community conversations we have run across the United States, when I was in Miami, there they were talking about preparations of 7 to 10 days because that is their experience with hurricanes. In Los Angeles, their standard is a week. What we have said is everyone needs to take a look at what their own personal situation is, what the situation is where they live. If you are in a rural community and it takes longer to find you, you will have a different approach to it. If you live in Minnesota, your approach will be different than if you are in Florida. And so what we think is important, again, is for everybody to decide in light of the facts as they see them what they feel most comfortable about. Clearly, we think if the whole country decided that they wanted to at the last minute have months of supplies of food and water, or in fact take a lot of other activities, that by itself could create a problem where there is no basis for one. Chairwoman Morella. You have been trying to create a balance, I can see. Mr. Wu, the gentleman from Oregon, who is on our subcommittee, may not be able to return after the next vote. So I am going to let him ask a question. Mr. Wu. Thank you, Madam Chairwoman. I would like to ask the panel, as you all know, the Securities and Exchange Commission has for some time required that private companies which are publicly held make disclosure of Y2K vulnerability in their annual statements on form 10K. How satisfied are you that these publicly held companies have, as they say, made full and fair disclosure of their Y2K vulnerabilities under the circumstances as warranted? Mr. Koskinen. We have not made a judgement about that. We have not reviewed those in any detail. We have been more comfortable and confident with the information we have collected through the industry associations because, again, that is information provided with a guarantee under the statute that it is confidential, it cannot be reached by litigants or even the Federal Government. There is a dispute, some companies are held up as models of disclosure in the SEC filings, others are held up as models of obfuscation. I think it obviously runs across the spectrum. But the judgements about the adequacy of that I think are appropriate judgements for the SEC to make since it is their regulations and their filings. Mr. Willemssen may have a different view. Mr. Willemssen. Congressman, we have not done an analysis of those submissions. So I am not in a position to address that question. Chairwoman Morella. Gentlemen, we are going to recess for probably about 15 minutes and then we will return. [Recess.] Chairwoman Morella. The subcommittee will come to order. I would now like to recognize Mr. Bartlett for his questioning. Mr. Bartlett. Thank you very much. When you listed the items that you suggested people have in preparation, I noticed it was food and water primarily. January 1 is in the northern part of our country very cold. It is also just a few days after the shortest day in the year, with a lot of darkness. A few flashlight batteries probably will not suffice. What advice do you give relative to heat and light? Mr. Koskinen. At this point, we do not advise anybody to take power into their own hands and go buy generators, again, unless you are out in the rural area, if you are at risk in the winter time from long term power outages. If Y2K is the first time you ever decide to deal with that, that is important to do it. But we do not think, in light of what we know, that there is any risk. The power industry will operate that weekend normally at 50 percent of capacity. They will have all of the capacity or most of it spinning that weekend. So we can lose a lot of power companies, which we do not expect to lose any of them, before we will run out of power. The oil and gas industry is basically at close to 95 percent done with their work. They will, in fact, have oil and gas readily available. So, at this juncture, we do not see any indication that we are going to have any outages, there will be glitches, that will last more than a few minutes. So the question about what happens if the power goes out in the winter time is a long term question people need to address regularly. We have ice storms and blizzards and your chances of having power outages are, in fact, greater I think because of an ice storm or a blizzard than Y2K. And the question is ``What do you do in those circumstances in your communities?'' There have been places in the United States in the northeast in blizzards and ice storms that have had power outages for days rather than hours. And the answer is whatever their emergency plans and backup systems are for those situations obviously would be applicable here. We do not think there is a Y2K necessity to change to deal with those issues beyond what you normally deal with. Mr. Bartlett. My personal feeling is that it will come and go and we will hardly notice it. But I also think that tonight will come and go and my house will not burn. But still I have fire insurance on my house. So as a prudent person, I think it is incumbent on us to have the equivalent of fire insurance for this possibility. Looking at it that way, what would you say would be the equivalent of the fire insurance policy you have on your home for Y2K? Mr. Koskinen. We think the equivalent of fire insurance on your home is the checklist we have put out. Again, as I say, if you think you are at risk of power going out, I think your greater risk is in an ice storm and you ought to be prepared for this weekend the same way you are prepared for the possibility of an ice storm. What happens in ice storms is people go to shelters, power is usually not out everywhere and they go to places where there is power. We have not had a problem from any of the great blizzards or ice storms in this country with people suffering because of the lack of heat or power. And whatever those processes are, the emergency managers around the United States are prepared with their normal precautions. We have, in fact, been in close contact with them and they are prepared to respond as they always do in the winter time if there are any outages. Mr. Bartlett. What concerns many people about the power grid is that it tends to fall back on itself. A minor problem in one place can, like dominoes, cause major problems in other places--the great northeast blackout and subsequent blackouts that were supposed to be fixed and could not happen, yet they did happen. Do we have contingency plans so that this kind of thing will not happen? Mr. Koskinen. The power industry is prepared. As I say, first of all, we will have substantial excess capacity. In fact, if there is any challenge to the grid, it will be lowered load demand rather than increased load demand to make sure we have stability. They, as I say, will have most of their systems spinning, not producing power on the grid but basically available to fill in if need be. They will make sure that there is room on the transmission lines to transmit power from area to area in case there is any need for that to be done. So they, in fact, have run two national contingency plan exercises testing how to run power plants without telecommunications, what their other contingency plans are, and they have gone through all of that with virtually every major power company in the United States in April and September. They are extremely confident. Their business is reliability. Their responsibility is responding to emergencies. And they are prepared to do that. Mr. Bartlett. How do they simulate the embedded chip problem? I understand with computers, we should be having some problems now because of Y2K because many computers are looking ahead several months. Mr. Koskinen. Right. Mr. Bartlett. I am not seeing any problem, so I suspect that in terms of the programming that has been pretty well fixed. But what about the concern about embedded chips where there is no way to test them ahead of time? If it is a generic chip and you are not using the time function, that if it has a date code in it, the chip, as I understand, could shut down anyhow. How are they testing for embedded chips? And are they prepared to wire around these tens of thousands of embedded chips that are in components that they really cannot test for? Mr. Koskinen. Embedded chips have been an issue that the industries generally, in addition to electric power, have been focused on. At this point, no one has found an example even though the web pages and the doomsayers continue to say there are functions in there for clocks that even if you are not using them are going to shut you down. No one yet has been able to provide a case where functionality not being used actually shut the production down. And in fact, the power companies have not found a Y2K problem failure that would shut down production. But what they are all doing is they have reviewed those chips, they know where they are. They have reviewed them with manufacturers. Wherever they can, they have rolled the control systems and other systems forward to see what will happen. But the bottom line is, the reason we are all talking about nobody can guarantee perfection, is until we actually roll through either Greenwich Mean Time--some are set by Greenwich Mean Time, some are set on midnight--until we roll through those, we will not be able to conclusively demonstrate there is no problem. But at this point, I would stress no one has reported a problem where you could track it to a system that had that hidden clock problem that you are talking about. Mr. Bartlett. Greenwich Mean Time is 7 p.m. here, is that correct? Mr. Koskinen. It is 7 p.m. New Year's Eve. Mr. Bartlett. So if there is going to be an embedded chip problem, you will expect it at 7 p.m., and not midnight? Mr. Koskinen. No. It depends on how the systems are structured and where they take their time derivation. Mr. Bartlett. But for all of those chips that have Greenwich Mean Time, it will be 7 p.m.? Mr. Koskinen. It will be 7 p.m. So, 7 p.m. New Year's Eve we will know a lot. We will actually know a lot starting at 7 a.m., New Year's Eve because New Zealand will go into the Year 2000 at 7 a.m., Australia will go at 9 a.m., and we will monitor how the world is doing. And if there are going to be systemic problems, we will have plenty of warning in terms of whether they are systemic and occurring. Mr. Bartlett. My last question. Several months ago the power industry testified before this committee. They told us then that because of the tens of thousands of embedded chips that they probably would not be ready, but they were sure they could wire around it. Has that changed? Mr. Koskinen. All I know is what the public information surveys from them are, and that is that they are prepared. They think that they have done now 100 percent of their work, including looking and working on embedded chips and being able to respond. And we have no information that any power company is not prepared for the rollover. Mr. Bartlett. Thank you very much. Chairwoman Morella. Thank you, Mr. Bartlett. I now want to ask Mr. Baird from the State of Washington if he wants to ask any questions. Mr. Baird. Mr. Baird. Thank you, Madam Chair. One of the concerns I have is I sort of did a mental checklist of my district and said what are the various potential problems. For example, we have large chemical manufacturing plants not that far away from residential areas. And one of the questions I had was let us suppose the worst case scenario; let's suppose a power outage comes along that impairs certain procedural machines or something within the chemical processor, they begin to have a breakdown, dangerous chemicals are released into the environment, we have got communications problems and transportation problems. I am not a doomsdayist by any means, but if I were a local community, I would like to have run through those various scenarios. To what extent do you believe local communities have done that? And what should we do if they have not done it yet? Mr. Koskinen. I think some communities have and, unfortunately, some communities have not. We held a White House Round Table on chemical manufacturing. We had a press conference, it produced a lot of information. We are trying to reach out. I have written a personal letter to every Governor in the United States drawing their attention to the problem, to the programs that California and New Jersey have for reaching out to the local levels. But, clearly, it is exactly as you note, an emergency preparedness problem at the local level. We have encouraged the companies to be in touch with their local emergency planners. But the local emergency managers and public officials need to make sure that they know, they should know beyond Y2K purposes, where those plants are, what the emergency preparedness is, and, most importantly I think, is to ensure that people are on alert over that weekend and people know immediately how to get in touch with each other and what the plans are if there are any difficulties, whether, again, it is from Y2K or for some other purpose. Mr. Baird. I personally see Y2K as a potential benefit in the sense that it helps us improve our emergency readiness. Are there particular checklists or steps they should go through, for example, a community working with the chemical industry and how would we get hold of that for our own districts? Mr. Koskinen. EPA and the chemical manufacturers produced a manual of the items that are at risk for a smaller chemical facility that they should be checking. That is available on the EPA web site. I am sure you can get that through the Council web site of www.Y2K.gov. That material has been provided to every State. FEMA and the emergency managers have it. So I think my suggestion to a community would be their local emergency manager should contact their State or FEMA to get any additional scenario development or testing that should go on so they can ensure that they are ready for that particular kind of problem. And I think you are right, the emergency managers across the United States think that Y2K is a great opportunity for individuals as well as organizations to review their emergency planning and preparedness and, in fact, to be better prepared than they may have been generally. Mr. Baird. Thank you very much. Thank you, Madam Chair. Chairwoman Morella. Thank you, Mr. Baird. Mr. Ose, do you have any questions? As a matter of fact, before we ask that question, I was on a panel with a Red Cross representative who said, and you reminded me of it, Mr. Baird, is that what we should have on hand is what we should always have on hand. Mr. Koskinen. Right. Chairwoman Morella. I think that is something that makes us take inventory. Mr. Ose from California. Mr. Ose. Thank you, Madam Chair. A couple of questions. Some weeks ago we had a hearing, I think Mr. Willemssen was there, regarding the FAA and the relative responses we have had from some of our international partners. At that time, we were able to ferret out information about a number of countries that had not yet responded to our Y2K circular questioning their preparedness or inquiring of it. I think the total number of countries at that time was 34 or 35. I am curious whether or not there has been any update to that list of 34 or 35. Mr. Koskinen. There has been. The Department of Transportation and the FAA both have web sites now listing the information they have about preparedness internationally as well as domestically. I do not know what the number now is, but there has been an increase in the response. Transportation has now been able to categorize the nature of those responses and any concerns they have about particular airports so that the public or travel agents have direct access to that. Mr. Ose. Madam Chair, the reason I bring this up is I want to take a moment, and I hope no one falls over here in shock, I want to take a moment to express my appreciation to Mr. Koskinen and Mr. Willemssen and the others who work in the Federal Government because we had this hearing on like a Tuesday or a Wednesday and we were asking for this information, and the agencies of the Federal Government, in response to the requests from Members of Congress, were able by Friday to refine the list from approximately 110 countries to 34 or 35 that had not responded. The reason that is important is that, as with many people, my wife and I travel a great deal, and people in the United States travel a great deal. And the uncertainty that existed prior to the refinement of that list relative to these 70 or 80 other countries that were on the list were creating quite a bit of havoc relative to people's travel plans because they need to plan ahead, sometimes as much as 90 to 120 days. So I want to take this moment to express my appreciation to these two gentlemen and to the others who could not join us today for making that list public, for helping the American public define where it might be safe to go and where it might not be safe to go. They really did the people's business and they deserve our applause, wherever you call it. The FAA does have a web site on which this data is posted. If I understand correctly, it is fly2K.gov? Mr. Koskinen. Correct. Mr. Ose. I would encourage everyone to visit that who is planning on traveling over the turn of the millennium. And, finally, one little tidbit, Madam Chair, if I could. The businesses that I used to run before I came to Congress, we have any number of security features in each of those businesses. We did a little test of our own about our Y2K preparedness. We, in effect, took the calendars on our computers and rolled them forward to where they were like five minutes prior to midnight on the 31st and we were essentially doing our self-testing. And to those people who have not done that, I would encourage you to do that now rather than wait until the last week of December. We were fortunate. We were in compliance. But it is just a little self-test everybody might engage in. With that, I yield back. Chairwoman Morella. Thank you, Mr. Ose. And you reflect the views of both subcommittees in commendation to the agencies, Mr. Koskinen, and Mr. Willemssen, and all of the others that responded so promptly. I think we have all found that to be the case. I am now pleased to recognize Ms. Rivers, the gentlewoman from Michigan. Ms. Rivers. Thank you, Madam Chair. I have only a very brief question. There are a number of materials that are interesting and useful here in preparation and also the GAO information on evaluating how things are going. Most of us have web sites that our constituents visit on a regular basis. Are we free to link to your web sites or to use any of these materials on our sites? Mr. Koskinen. We would be delighted to have you link. We would be delighted to have you take anything on the web site and put it on your web site. Ms. Rivers. Okay. Mr. Willemssen? Mr. Willemssen. Certainly. Ms. Rivers. Great. Thank you. Chairwoman Morella. Thank you, Ms. Rivers. I am now pleased to recognize Mrs. Biggert, the gentlewoman from Illinois. Mrs. Biggert. Thank you, Madam Chair. If I might ask unanimous consent to enter my statement into the record. Chairwoman Morella. Without objection, so ordered. I am also going to, without objection, have Chairman Horn's opening statement included in the record. [The prepared statements of Hon. Judy Biggert and Hon. Stephen Horn follow:] [GRAPHIC] [TIFF OMITTED] T1629.066 [GRAPHIC] [TIFF OMITTED] T1629.067 [GRAPHIC] [TIFF OMITTED] T1629.068 [GRAPHIC] [TIFF OMITTED] T1629.069 Mrs. Biggert. This has been an unusual day. I apologize for missing your statements. I would like to ask, have you heard rumors about Y2K that you would like to dispel? Is there something that you hear out there that you would have concern about? Mr. Koskinen. I appreciate that question. In my formal statement, we have listed the myths and the rumors that generally we are concerned about. I suppose, and it goes back to the Chairwoman's question, the ultimate rumor I would like to dispel is that somehow we have information in the Federal Government or in the President's Council that we are not sharing with the public. There is no evidence, nobody has ever established something we know that we have not told. And, in fact, our strategy for now going onto 2 years has been to share with the public everything we have as we get it. So, as I say, I think the rumor that there is this secret information that we are somehow afraid to release is just that, a rumor. Our goal in life is to have the American public feel they know everything I know and can then decide how to respond appropriately. Mrs. Biggert. Okay. Mr. Willemssen? Mr. Willemssen. I would also echo Mr. Koskinen's comment. Obviously, we come at this from an audit and evaluation perspective. We have seen all the data as best as I know that Mr. Koskinen has available. To the extent that we identify that data, we take the opportunity to publicize it in our reports and testimonies. That is why one thing we wanted to do today in our testimony was reflect the broad nature of everything we have done and the kind of progress that has been made, while at the same time pointing out some residual risks. Mrs. Biggert. Certainly, we have spent a lot of time, had a lot of hearings. I would like to commend the two chairmen of these two committees for everything that they have done, and certainly started long before I got here this year, working on this. Is there anything that you think we as the Congress have missed doing that we should have done on the Y2K problem? Mr. Koskinen. I do not think so. We have had, I think the Chairwoman was right, this has been a very bipartisan issue. We have not had any concern in either house of Congress about any kind of political issues entering into this. We have had great support. We have obviously had a very good working relationship with GAO as well working on behalf of the Congress. So if we had to do it again, there is nothing that we have asked of the Congress that has not been granted to us. I think it has been a very good example of the cooperation between the legislative and the executive branch dealing with what is a serious national challenge. Mrs. Biggert. Mr. Willemssen? Mr. Willemssen. Looking forward, I would say the one thing that the Congress can still be of great benefit to the citizenry is reminding the citizens what the facts are. I think as we are into November and we turn into December, there is going to be the opportunity for some to view this in survivalist terms, if you may, that it really is going to be much worse than it actually will be. So I think the Congress can still serve a very useful role in informing the public of what the facts are, what the readiness is, where we do have some risks, but the overriding fact is we are in a much better prepared state today than we have been. Secondly, to the extent that problems do occur, major Federal agencies and most private organizations are planning detailed day one strategies to be prepared in the event that disruptions occur. Mrs. Biggert. I think there was something in the paper the other day that everyone should not get on the phone at 12:01 to say everything is okay because it is going to jam the telecommunication lines. Mr. Koskinen. That is right. We refer to it in our checklist, too. There is likely to be Mother's Day by multiples if everybody both celebrating the millennium and also just checking in does that at one time. At a minimum, what people should understand, if you do not get a dial tone immediately or you get a rapid dial, it is very likely not to be a Y2K problem but to be the fact that your neighbors and everybody else have joined you on the phone at the same time. Mrs. Biggert. Right. Thank you very much for all your hard work. Thank you Madam Chairman. Chairwoman Morella. Thank you, Mrs. Biggert. Mr. Koskinen. Madam Chairman, I am afraid I have over 50 people on this conference call that I noted I need to join. I hate to deprive your co-chair here of his chances---- Mr. Horn. I do not think you are going to deprive me. Mr. Koskinen. But I am going to have to leave. I would be happy to take a question or two, and then I am going to have to go. Mr. Horn. Fine. All right. If you had to do it over again, when you were appointed in February 1998 and you started in April 1998, what would you advise Congress and a President to do in terms of the type of structure or communications or whatever? Say we had something similar to this where all of our computers were crashing because of people that were using sort of economic terrorism, if you will, how would you deal with that, and would you deal any differently than you have done? Mr. Koskinen. I would not change, certainly for the Y2K issue, anything that we have done. I think, again, we have had great cooperation with the Congress. I think our basic approach has been validated by the amount of progress that has been made. I think there is no way, as some suggested, that we could legislate our way out of this problem, to in fact start telling everybody how to do it. What we needed to do was marshall the expertise and the energy of the people in the private sector as well as the public sector. I think your point is well taken in terms of going forward; and that is, we are going to become more reliant, rather than less, on information technology in the future, which means we will be more vulnerable, rather than less, to terrorists, to hackers, to others who want to in fact disrupt our systems. And, therefore, I think we do need to be prepared for that. But at this juncture, I do not have a proposal as to how we ought to move from this issue to that in terms of structuring to deal with it. All I can tell you is I think the structure worked very effectively for the crisis we knew we were facing when I took on this role. Mr. Horn. Well, in terms of getting the work done in a timely way, do you think February 1998 was a little late? And shouldn't the early Clinton Administration and the Bush Administration been involved in this? After all, Social Security showed the way and they did 100 percent. Mr. Koskinen. Well as I said when you asked me that question over a year ago, we will know the answer to that in terms of how we get through this process effectively. As I say, at this point, the Federal Government is over 99 percent done. I do not think there are any risks in the Federal processes that would have been avoided otherwise. As you know, when I was in the Government before, we started a cross-government issue dealing with this in 1995. So that hindsight is always interesting, but at this point we do not have a view that we would be in a whole lot different shape. It might have been a little less hectic if we could have gotten people's attention. But you have to understand, as you remember when you were one of the lone voices raising this issue back when we were working on it---- Mr. Horn. April 1996. And nothing much happened until February 1998. Mr. Koskinen. Yes, 1998. Well, what we both had, and I had that same experience, is in 1995 and 1996, even for people who should have known better, the year 2000 seemed like a long way off. And it was our biggest challenge, even when we all started working together in February 1998, the biggest challenge was getting people to understand they needed to pay attention to this, not just as another issue, but as their top priority in terms of the threat it made to their ability to operate. And I think you started early, the Government started early, but I think it is human nature not to focus on things any earlier than you can make people do that. Mr. Horn. Well I know a lot of Government operates just like universities do--your neck has to be in the guillotine or you are pushed against the wall and then finally something happens. Mr. Koskinen. A lot of people in the private sector still have not even gotten there yet. So it is not just a Government or university problem. Mr. Horn. That is my next question to you. Mr. Koskinen. This will have to be the last one. I really am late. Mr. Horn. All right. In August, you reported confidence and concerns in various public and private sectors. For example, the Council expressed ``High degree of confidence'' in major domestic areas like financial institutions, electric power, and the Federal Government. However, the Council expressed concerns with local governments, health care, education, and small businesses. The President's Council plans to issue its final Y2K report next Wednesday. I guess I would ask you, in foreshadowing your forthcoming report, what domestic and international areas are you still concerned with? Mr. Koskinen. Again, we are pulling that report together and we still have some information being provided by some---- Mr. Horn. Just whisper me---- Mr. Koskinen. Just whisper any. Basically, we do not have new sectors that we are now any more concerned about than we were. What is hardest for us to measure is how much progress is being made in the areas we are concerned about. Last week, we had an event with the Department of Education in which it was noted that educational institutions, for instance, have made substantial progress. They have gone from about a third readiness of the organizations to two-thirds, which is the good news. The bad news is that still means a third of them are not prepared at this time, both higher education and elementary and secondary. So that I think the best way to summarize the difference between August and November will be that progress continues to be made but there are still going to be organizations that are at great risk because they are going to be talking about finishing their work in December and that does not give them any margin for error. Which means that they, of all people, need to have contingency plans and backup plans because, if you are planning to finish your work in December, there is a reasonable chance something will not work well, you will not have time to test adequately, you need to be prepared with a backup plan. Mr. Horn. Will the Council be pushing for that right up to December 31st? Mr. Koskinen. We will push testing. Our view is you need to keep working on remediation, on testing, re-testing, and on contingency plans with every day and every hour you have left in this year, even if you think you are done today. Mr. Horn. I think you will recall a couple of months ago I sent a letter to the Secretary of Education, copied you, and talked to you about it. I have not heard much action. Is anything happening? I heard some press release or something the Secretary did that, gee, it is tough with K-12. Mr. Koskinen. We have written, the Secretary and I, to every superintendent of education, every State department, we have written to local superintendents. We have had meetings since then. We have provided technical information. The Department since then has done another telecommunication to sites all around the United States. Again, at some point it is a little like our problem with some small businesses--you can lead them to water, but you cannot make them fix their systems. Mr. Horn. Well, I was looking for the Secretary to say, look, it is going to take X amount to help K-12. Let me reprogram the money. I think Congress would have permitted him to reprogram the money. So that is what has bothered me. It just seems like a little bit of drift. I will let you off on that happy note. Mr. Koskinen. Thank you. Thank you all very much. I apologize. Mr. Horn. We appreciate your work. Chairwoman Morella. Mr. Turner will be asking his question of Mr. Willemssen. Are you going to be the media spokesperson in the ICC? Mr. Koskinen. I am going to be the media spokesperson. I will be there. Chairwoman Morella. You will be the one that will contact us. We will be in touch. Thank you very much. Mr. Koskinen. I get all the good jobs. Thank you all very much, and I apologize for having to leave. Mr. Horn. Thank you, John. Chairwoman Morella. Thank you for the good work that you have done. We look forward to staying in touch with you now. Mr. Willemssen, do you mind staying here with the next panel? Would that be all right? Mr. Willemssen. Certainly. Chairwoman Morella. Excellent. Thank you. You have been very patient from the beginning to the end. Great. I am going to ask the next panel if they would come forward. We have Mr. Campbell, Mr. Scher, Mr. Margolis. Mr. Robert Kringley, unfortunately, could not be joining us today. And so, leading off on the second panel is Mr. Pat Campbell, the chief operating officer of the NASDAQ stock market, the largest stock market in the world in terms of dollar value of shares traded, and whose composite index hit an all time high, cresting at over 3,000 just yesterday. Mr. Campbell is going to discuss with us some of the concerns affecting investor confidence in the stock market. Next on our panel is Mr. Barry Scher, who is the vice president of Giant Food, the largest retail food/pharmacy chain serving the mid-Atlantic region. We have asked Mr. Scher to talk about Y2K marketing and what Americans can expect as they go to the stores before and after January 1, 2000. And rounding out our second panel is Mr. Ronald Margolis, the chief information officer of the University of New Mexico Hospital in Albuquerque. Mr. Margolis is also speaking on behalf of the American Hospital Association that represents nearly 5,000 hospitals, health systems, networks, and other providers of care. Mr. Margolis will discuss with us some of the strong Y2K collaborations with hospitals, emergency services, and the government that he helped to create in Albuquerque. He will also help us to review some of the concerns dealing with hospitals and whether Americans can expect to receive necessary medical treatment as we begin the new millennium. Additionally, the American Medical Association has submitted written testimony. I seek unanimous consent to insert it into the record. Hearing no objections, so ordered. [The prepared statement submitted by the American Medical Association follows:] [GRAPHIC] [TIFF OMITTED] T1629.070 [GRAPHIC] [TIFF OMITTED] T1629.071 [GRAPHIC] [TIFF OMITTED] T1629.072 [GRAPHIC] [TIFF OMITTED] T1629.073 [GRAPHIC] [TIFF OMITTED] T1629.074 [GRAPHIC] [TIFF OMITTED] T1629.075 [GRAPHIC] [TIFF OMITTED] T1629.076 [GRAPHIC] [TIFF OMITTED] T1629.077 [GRAPHIC] [TIFF OMITTED] T1629.078 [GRAPHIC] [TIFF OMITTED] T1629.079 Chairwoman Morella. Gentlemen, will you also rise and raise your right hands and I will administer the oath. Do you swear that the testimony you are about to give is the truth, the whole truth, and nothing but the truth? [Witnesses respond in the affirmative.] Chairwoman Morella. Again, the record will show an affirmative response. What we traditionally do is allow about 5 minutes for any opening statement that you may have, recognizing the fact that any written statement you have given us in its entirety will be included in the record. So we will then start off with, if you have no particular preference, Mr. Scher. TESTIMONY OF BARRY S. SCHER, VICE PRESIDENT, GIANT FOOD, INC., WASHINGTON, D.C.; J. PATRICK CAMPBELL, CHIEF OPERATING OFFICER AND EXECUTIVE VICE PRESIDENT, THE NASDAQ-AMEX MARKET GROUP, INC.; AND RONALD MARGOLIS, CHIEF INFORMATION OFFICER, UNIVERSITY OF NEW MEXICO HOSPITAL, HEALTH SCIENCES CENTER, REPRESENTING THE AMERICAN HOSPITALS ASSOCIATION TESTIMONY OF BARRY S. SCHER Mr. Scher. Thank you very much. My name is Barry Scher and I am vice president for Giant Food. We operate 175 stores in Virginia, Maryland, the District of Columbia, New Jersey, and in Delaware. We are also a part of the Royal Ahold family---- Chairwoman Morella. Mr. Scher, I think that we had already said that Mr. Campbell would go first. I was simply looking at the manner in which we were seated. Would you prefer to go first, Mr. Campbell? Mr. Campbell. No. Let him go. Mr. Scher. Either way. Chairwoman Morella. Thank you very much. He is a good friend; he understands. Thank you. Mr. Scher. Giant is a part of the Royal Ahold family, a Netherlands-based international food retailer. In the United States alone, Ahold owns, aside from Giant Food, Stop & Shop based in Boston; Tops based in Buffalo; BI-LO from Maulden, South Carolina; and Giant Food Stores in Carlisle, Pennsylvania. Our preparations for Y2K at Giant have been going on since 1996. We have been checking our numerous systems, one-by-one, to certify them as Y2K compliant. Although our administrative tests have given us a very high level of assurance that we will enter Y2K without system failures, our certifications test could not test how the systems would work together, as they do every day at Giant, when we enter the new year. These early Y2K certifications were performed on system environments that were virtually identical to those that we use every day. In August, these Y2K workhorses took on a new role at Giant. We ran our systems in a computer lab that simulated all the computer systems in a real store environment. There, our team moved the test systems' clocks to December 31st. As the minutes and hour ticked away, the systems were used and monitored as they would be in a real store to see how they would operate as we entered the new year. We also wanted to see how they would handle the leap year day, February 29, 2000. In the lab, everything worked just fine. We could place orders, ship, select, receive, weigh, and scan product, keep track of everyone's time and attendance, process prescriptions, and so on. Yet, there still loomed a larger question: Would all of these systems--stores, security, non-store environments-- work together when the clock struck midnight and the new millennium began? We decided that what we needed at Giant was a fully integrated test, doing exactly what we did in the lab; that is, advance the clock to the end of the year in an actual working store, while all of the systems were being used. Our concern was the potential impact that we would have on our business and the inconvenience to our customers if we field tested as customers shopped. Then, as so often happens, out of adversity, opportunity knocked. In early September, we closed a store in Valley Forge, Pennsylvania. With no buyers available, the store was vacated and all the remaining product was shipped to a neighboring store. But before tearing out the computer systems and scales, our Y2K team was able to utilize this empty, but fully operational store to test our company's IT systems. On September 28th, Giant put the computer systems to the ultimate Y2K test. They all passed. All of them, from EBT to DSD to POS, and these are food industry terms meaning such things as electronic benefit transfer, direct store delivery, and POS, which is point of sale or the front-end checkouts. The whole alphabet passed with flying colors. While we are very confident in our own IT systems, we realize that there is always a chance that something could go wrong on January 1, 2000. As a result, we have developed a very comprehensive set of Y2K contingency plans that have been distributed just today, as a matter of fact, to all of our store and non-store management associates. Now, in anticipation of peaks in consumer demand for certain products, we are also developing specific merchandising plans that include buying and distribution strategies. The focus will be on spreading the expected increased demand across the next few months by offering exciting promotions for certain products prior to the holidays. And when the holidays arrive, Giant's support system will not go on vacation. An expanded team of support associates will be on hand at Landover, where we are headquartered, and others will be on-call to address any and all issues that might arise come January 1, 2000. We have also developed an internal and external communications plan. Our objective has been to inform and educate a number of stakeholders about our Y2K readiness. Just to cite some of the examples of our educational and informational activities: We have developed a Y2K brochure, you should have it in front of you, I will hold it up in the event you do not. This brochure was given to all of our stores and distributed free to our customers. We have also been asked to send it to area schools and other institutions. We have done so. We have also placed newspaper advertisements in the Washington Post and Baltimore Sun. This is a copy of one. This was also placed in other major weekly newspapers throughout our marketing area. We also decided to send personal letters to business, civic, and government leaders to inform them about our Y2K readiness. And, finally, we addressed business and civic groups, as we were often requested to do. Plus we have done a great deal more--all with the objective of informing our customers and the general public that at Giant Food we are ready for Y2K. And I mentioned earlier, Mrs. Morella, that I am speaking on behalf of the Ahold companies. All of the other Ahold companies are also ready. We are a member of the Food Marketing Institute, which is an international association representing food retailers. They have also testified before Congress. The food industry is, indeed, ready. Thank you. [The prepared statement of Mr. Scher follows:] [GRAPHIC] [TIFF OMITTED] T1629.080 [GRAPHIC] [TIFF OMITTED] T1629.081 [GRAPHIC] [TIFF OMITTED] T1629.082 [GRAPHIC] [TIFF OMITTED] T1629.083 [GRAPHIC] [TIFF OMITTED] T1629.084 [GRAPHIC] [TIFF OMITTED] T1629.085 [GRAPHIC] [TIFF OMITTED] T1629.086 Chairwoman Morella. Thank you very much, Mr. Scher. I do think this is an excellent pamphlet. It is colorful, it is accessible, it is understandable. And I commend you for it. I am now pleased to recognize Mr. J. Patrick Campbell, chief operating officer of the NASDAQ stock market. Thank you, Mr. Campbell. TESTIMONY OF J. PATRICK CAMPBELL Mr. Campbell. Thank you, Madam Chair. I am pleased to be here. The SEC, the National Association of Security Dealers, the securities industry associations, and other firms, exchanges, and utilities have been leading the way in an industry-wide effort to be Y2K ready. The NASD and each of its companies are prepared to transition successfully into the 21st century, along with the rest of the securities industry. We are confident that our business systems, infrastructure, vendors, contingency plans, and transition command centers are ready. Investors should know that we have invested heavily to ensure that we are ready for the year 2000. In fact, the U.S. Senate and the GAO has given our industry its highest rating for Y2K preparedness. The NASD began in 1996 to ensure that the business systems of the NASD companies will transition to the year 2000 successfully. We believe that our capital markets in the United States, our national treasures, and their integrity is paramount. The NASD has spent $55 million, dedicated more than 100 staff to the effort. The NASD's year 2000 program has remediated over 300 applications, 11 million lines of code in mainframe, mid-range, and desktop systems. The securities industry has treated the problem just as seriously and has spent billions of dollars to meet the challenges that it poses. Our programs have been focused in three areas: The readiness of NASD internal and market systems, the readiness of our 5,600 member broker-dealers, and, as important as anything, keeping investors well informed. The first aspect of the NASD's year 2000 program deals with its internal systems, especially its market systems. The NASDAQ stock market and the American Stock Exchange, as well as all the other exchanges, participated in a series of successful Year 2000 industry-wide tests conducted over four weeks in March and April of this year. These full-cycle tests simulated the securities transactions process for the dates of December 29, 30, and 31, 1999, and for January 3, 2000. The NASD tested its services with other participants, all the way from our NASDAQ workstation terminals through our network into our data center and back, end-to-end. The systems executed more than 170,000 simulated transactions for nine different security products over the tested dates. After this rigorous testing, we are confident that there will be no serious disruptions in our services and our markets, and that investors will be protected. In addition to systems testing, we have also made extensive contingency plans to ensure business as usual, and to protect our computing and communications systems as well as our physical facilities. As part of these efforts, the NASD has established corporate and business line command centers that will operate from late December through the first week in January 2000. We will pre-position staff, resources strategically in each of these centers, as well as around the country, to ensure rapid, fast response to protect investors' interests. These centers will be linked to the SEC and other industry organizations. A second major area of NASD focus has been on its broker- dealer members. In 1998, the Securities and Exchange Commission adopted a rule requiring all broker-dealers to report their readiness through two successive filings. We use this information to help our firms meet the Y2K challenge. We have held over 90 educational workshops, coordinated with extensive update materials. A year 2000 help desk has responded to member questions, approaching 20,000 in the last 2 years. We also have allowed firms to post letters dealing with their readiness on our web site to assure their investors that they can keep their money and assets safe. The third major area of NASD Y2K focus has been on investor education. A comprehensive investor education program has resulted in a coordinated campaign with all the major markets, the SEC, the Securities Industry Association, and the President's Council on Year 2000. This coordinated campaign has communicated the readiness of the industry, as well as practical tips for investors preparing their personal finances for the transition. Examples of these effort include a year 2000 investor kit, which has been made available to the members of the committee, and is also posted on our world-wide web, as well as an open investor letter, that ran today, by coincidence, in the Wall Street Journal. We will continue to run these letters by all the markets in the country basically expressing our Y2K position. This open letter outlines the industry's preparations and repeats the advice to investors found in our investors kit. We appreciate this opportunity to testify. And you should take comfort that we have since 1996 exercised I think our fiduciary responsibility to the Nation and the people who are investors in our capital markets. Thank you. [The prepared statement of Mr. Campbell follows:] [GRAPHIC] [TIFF OMITTED] T1629.087 [GRAPHIC] [TIFF OMITTED] T1629.088 [GRAPHIC] [TIFF OMITTED] T1629.089 [GRAPHIC] [TIFF OMITTED] T1629.090 [GRAPHIC] [TIFF OMITTED] T1629.091 [GRAPHIC] [TIFF OMITTED] T1629.092 [GRAPHIC] [TIFF OMITTED] T1629.093 [GRAPHIC] [TIFF OMITTED] T1629.094 [GRAPHIC] [TIFF OMITTED] T1629.095 [GRAPHIC] [TIFF OMITTED] T1629.096 [GRAPHIC] [TIFF OMITTED] T1629.097 [GRAPHIC] [TIFF OMITTED] T1629.098 [GRAPHIC] [TIFF OMITTED] T1629.099 [GRAPHIC] [TIFF OMITTED] T1629.100 Chairwoman Morella. Thank you, Mr. Campbell, for your testimony and for what has been done. And thank you for being such a great constituent. Mr. Campbell. Thank you. Chairwoman Morella. I am now pleased to recognize Mr. Ronald Margolis, chief information officer at the University of New Mexico Hospital in Albuquerque, and also representing the American Hospital Association. Mr. Margolis. TESTIMONY OF RONALD MARGOLIS Mr. Margolis. Thank you, Madam Chair. I am Ron Margolis, chief information officer at University of New Mexico Hospital in Albuquerque. I am here on behalf of the American Hospital Association and their 5,000 hospitals, health systems, networks, and other providers. I would like to focus on four questions about year 2000 and hospitals: Will hospitals be ready? How have hospitals been preparing over the past few years? What if something goes wrong? Finally, how are hospitals reassuring the public at this last 55 days? Will hospitals be ready? In a word, the answer is, yes. An AHA survey last spring found that 95 percent of hospitals expected that their medical devices, computerized information systems, and infrastructure to be Y2K compliant or to operate without a problem on December 31st. A report issued last month by the Health and Human Services Office of Inspector General also indicated high confidence in hospitals' Y2K readiness. For example, in New Mexico, our State Hospital Association survey very recently found that all systems directly related to patient care were expected to be compliant by the year's end, and right now are greater than 96 percent prepared. It is reasonable to infer that since these surveys were conducted earlier in this fall season, readiness among all hospitals has increased. How are hospitals preparing? Hospitals have taken inventory of all of our equipments--that's medical devices, computer systems, hardware and software. From that inventory, a remediation or repair plan was developed and is now being completed. We have tested, using rigorous means, all of our computer systems with a special priority toward patient care systems to ensure that they will work well into the next millennium. We have developed and acquired software that allows us to warp the time ahead so that we were able during the summer to test systems for the period December 27th through April 1st, which includes the leap year which is unusual this next year as well as January 1st. Also, through manufacture and vendor contact, we have determined other systems in medical devices which may be affected and how they will be affected. We are following up as required, which could mean anything from repairing a device, loading new software, or taking a device out of service for the period of the date change. Also, all hospitals plan to increase the level of staffing during the days surrounding the millennium date change. Hospital personnel will be on hand during the date change to make sure equipment is safe and working properly before being used on any patients. Let me point out that hospitals are somewhat unique in their use of technology. It is used as a clinical efficiency aide. Clinicians, of course, are fully able to perform nearly every function that patient support devices provide. We do not under any circumstances hook patients up to computers and then ignore their humanness; we certainly will not on December 31st. To paraphrase the slogan of a telephone company: In the medical world of technology, people make a difference, and we truly believe that is a major differentiator. Nationally, the American Hospital Association is working with the President's Council on Y2K Conversion and with other associations to make sure the availability of drug products, pharmaceuticals, and medical supplies will continue as needed into the new year. In New Mexico, hospitals are working closely with the two major drug houses to assure uninterrupted distribution of pharmaceutical supplies. What if something goes wrong? Here in Washington, members of the District of Columbia Hospital Associations have pledged to back each other up in case of any kind of trouble or high demand for patient services. A Memorandum of Understanding provides a blueprint for inter-hospital support. This kind of cooperation is happening in communities all across America. In my State, hospitals are sharing information on medical devices, contingency plans, and performing readiness drills. We have emergency preparedness procedures in place at the State, county, and the local levels. We have emergency power generation capabilities that support all of our critical care and emergency care facilities. Finally, how are hospitals reassuring the public? As hospitals continue to perform their inside preparations, they are also reaching out to the communities. They are holding town meetings to ensure the people they serve are aware of what is being done. For example, New Mexico hospitals are taking part in Y2K community conversations. In Albuquerque, local hospitals are participating in the Mayor's Millennium Committee which has provided a public forum for citizens' concern and input. In summary, the AHA distributed to all of its members ``Health Care and Y2K: What You Need to Know About Health Care and the Year 2000.'' This booklet was developed jointly by the President's Council with the help of the American Hospital Association and other affiliated organizations to focus on consumer questions about Y2K. We encouraged all our members to make this easy to read booklet available to their communities. To conclude, Madam Chairperson, the year 2000 issue will affect every aspect of American life, but few, if any, are as important as health care. What I have outlined today is merely a snapshot of a much more in depth and thorough and united effort to ensure patient safety at midnight on January 1st and beyond. Hospitals and health care systems, their State associations, and the AHA are working together toward a smooth and healthy transition into the new millennium. Thank you. [The prepared statement of Mr. Margolis follows:] [GRAPHIC] [TIFF OMITTED] T1629.102 [GRAPHIC] [TIFF OMITTED] T1629.102 [GRAPHIC] [TIFF OMITTED] T1629.103 [GRAPHIC] [TIFF OMITTED] T1629.104 [GRAPHIC] [TIFF OMITTED] T1629.105 [GRAPHIC] [TIFF OMITTED] T1629.106 [GRAPHIC] [TIFF OMITTED] T1629.107 [GRAPHIC] [TIFF OMITTED] T1629.108 [GRAPHIC] [TIFF OMITTED] T1629.109 [GRAPHIC] [TIFF OMITTED] T1629.110 [GRAPHIC] [TIFF OMITTED] T1629.111 Chairwoman Morella. Thank you, Mr. Margolis. I am going to turn for questioning now first to a gentleman who has not had a chance to ask questions, the distinguished Ranking Member of the Government Management, Information, and Technology Subcommittee of the Government Reform Committee, Mr. Turner, the gentleman from Texas. Mr. Turner. Thank you, Mrs. Morella. I want to commend each of our three witnesses on this panel. I can tell you have invested many hours and many dollars in trying to be ready for Y2K. I have always held the opinion, at least after our many months of study on this committee, that it is the myths about Y2K that could hurt us rather than the realities. I did not get the chance to ask Mr. Koskinen a question that I really think I will direct at Mr. Willemssen. He in his work with the GAO probably knows the answer as well as Mr. Koskinen. The Council that Mr. Koskinen has an Information Coordination Center which, as I understand it, is designed to be a place that is kind of a central point for coordinating all information about Y2K problems, about events that surround the new year. It seems to me that our emphasis at this point, after months of preparation, which I feel very good about, both in the public and the private sector, that we need to rethink a little bit about what we are doing to prepare to address the rumors and the myths that may surround the New Year. At one of our recent meetings, I even suggested that perhaps Mr. Koskinen's council should bring aboard some high profile, credible personality to be a spokesperson, someone who could answer press inquires and someone who could pass along the realities and dispel the myths, someone of the caliber of Walter Cronkite. But it seems to me that is our real fear. I can sense, Mr. Campbell, that you and the securities market would be particularly sensitive to the rumors and the myths that may float around the new year. I come from a small town and in a small town we used to all understand that there were a lot of rumors that started at the bridge clubs and at the coffee shops, and if you circulated in the right groups you could pick up on those rumors, and they would pretty quickly get around town. With the advent of mass media, television, radio, obviously, information spreads much faster all across the country. But at least there, there is responsible journalism to kind of screen the information that comes across the airwaves. But on the Internet, you can put anything on there you want to and spread that story to tens of thousands of people in a matter of hours. Most of us on this committee have experienced in our own offices receiving large volumes of mail on subjects that our constituents heard about over the Internet that we turn around and have to write letters back to them and tell them what they read is absolutely false, there is no such proposal in Congress to tax the Internet, or whatever the issue happens to be. And I am fearful that Y2K offers the opportunity for pranksters and for outright frauds to run rampant on the Internet, and that we need to be very careful about how we structure Mr. Koskinen's Information Coordination Center to be sure that it is going to not only be able to process all of the myths that may surround the new year, but be able to speak with credibility to dispel those myths. Mr. Willemssen, do you know what Mr. Koskinen has done to ensure that we are going to have that kind of response in place? Mr. Willemssen. I was over at the Information Coordination Center on Monday. They are located on about 18th and G. We got a tour, my staff did, of the facility. They do have a press briefing room set up I think for about 60 people. And as I recall, General Kind, the head of the ICC, mentioned to me that the plan was for Mr. Koskinen to provide press briefings approximately every 4 hours during that rollover period. Secondly, echoing back to one of the comments you made earlier, as one of the ideas that we have suggested before, especially now that we are in November and entering into December, is the executive branch may want to look at opportunities to use public service announcements now and in December rather than waiting for just the rollover period, especially to the extent that some may start to view Y2K as entertainment opportunities, as opportunities to show worst case scenarios. I think given that, it is best to combat those kinds of announcements with facts, the facts that we have discussed here today. So I think there still is an opportunity prior to that rollover period to come out with those kind of announcements. Mr. Turner. Mr. Campbell, do you have similar plans for the securities industry to be able to speak with credibility to dispel rumors? Mr. Campbell. Congressman Turner, yes, we do. We expect fully to have our command centers staffed from the 28th of December on. We have hot links, hot lines, satellite communication, et. cetera, with our vendors, with the news media, with the President's working group, with the Securities and Exchange Commission. We have a broadcast facility at which we expect to have Frank Zarb, our chairman, available. We will close our markets on December 31st at 1:00 in the afternoon. We have that afternoon, that evening, and the entire weekend. The way we dispel the myths is that Monday at 9:30 a.m. the capital markets in the United States open and they trade. Mr. Turner. Thank you. I think we might could sustain a run on the grocery store, Mr. Scher, but I do not think we could sustain a run on the banks or the security market. Mr. Scher. Well, as I said earlier, on behalf of the food industry, we have been in an offensive manner of working with our customers and our vendors ever since earlier this year. The food industry has done a very good job of communicating to the consumer that there is no need to panic. We are saying in ads and in a brochure, and the whole food industry is, if you are really worried, we advise you to stock up as if it were going to be a snowfall, no greater, no less. But if you are worried, get items like batteries and perishable and non-perishable items. Of course, the perishable items the day or so before, the non-perishable, we are telling people if you are really worried, you can stock up now. But we are telling people there is no reason to do so. We think we have done a good job of informing the public that you do not have to panic. Mr. Turner. Thank you. Thank you, Mrs. Morella. Chairwoman Morella. Thank you, Mr. Turner. Mr. Scher, you spoke on behalf of Giant Food. But how about other food distributors, are they in the same situation, do you know? Mr. Scher. The Ahold family, I mentioned earlier all the companies that are part of the Ahold family, over 1,000 stores along the East Coast. Dr. Tim Hammonds is president and CEO of the Food Marketing Institute, he has appeared before Congress, and I know that other food chains have also appeared. And the message has been one of that the industry has worked on the issue, that we are ready for Y2K, and we will, indeed, be ready. I might add that also goes for the vendors, the companies that supply the food retailers. We at Giant have contingency plans, but we also know that they have worked with other food chains around the country. So the manufacturers, the vendors, the people that supply us within the food industry, they are also ready. Chairwoman Morella. Mr. Campbell, in your testimony you outlined some categories of potential Y2K events. I am curious about an example that you might want to give with regard to Y2K problems that would affect business processing and be visible to the public. Mr. Campbell. We start off with protecting our infrastructure and our technology with very basic starts, where all of our computer facilities, including the one in Rockville, are fully self-contained entities starting with the electric power. Our generator facilities have the capability of operating our operations stand alone. Our biggest concern has always been the fear that people will make decisions about economics and buying or selling their securities based on a rumor. And it is our hope that our education has really been at the forefront and that people should not make economic decisions based on non-economic rumors or baseless fact. We expect fully that all of our systems, we have done the end-to-end testing, we have contingency plans that have addressed every area that we can humanly comprehend or think up, we have prepositioned technology response teams across the country, and will do so. To our way of thinking, the worst part of any of the Y2K issues that we confront is the lack of investor education. And we continue to do that every day. Chairwoman Morella. Where are you going to be on January 1, 2000? Mr. Campbell. I will be in my command center at K Street here. We will have a lot of our folks in Washington as well as both our primary and backup computer facilities in Connecticut and in Rockville. Chairwoman Morella. Mr. Scher, are you going to be walking through the grocery store at that time? Mr. Scher. We will be ready. Chairwoman Morella. Mr. Margolis, you mentioned that an inventory that had been done had something like 95 percent of the hospitals were compliant, but you assume there would now be more. Do you want to speculate on how many more? And of those that are not compliant, are they rural hospitals? And what will you do about that? Mr. Margolis. Thank you. I think they would not be differentiated as being just rural or just urban hospitals. The process of remediation with the thousands of medical devices is a process of working with vendors and testing equipment. And I feel confident that process continues to go on. Many vendors early on, and this is back in the spring of this year, were not even certain about their equipment and what impact it would have on Y2K. So that it took them some period of time to check with their own chip processors that made the embedded chips and the other circuitry contained within the equipment. The remediation efforts are nearly complete. That 95 percent, which is actually more recently in our State of New Mexico 96 percent, is that equipment which has completely been remediated. And it is for that reason that I am confident that the remaining 4 percent is in the last few days of checking out and finally getting its Y2K compliance sticker, or that pieces of equipment that should not be used because it questionably may fail, it will be locked in a closet as not Y2K compliant and then could be pulled back out after January 1st. Chairwoman Morella. And where are you going to be on January 1st? Mr. Margolis. Well, we have a command center in the hospital. It is a conference room with about 25 telephone lines in it which connects to the various departments. So I will not be partying. Maybe we will have some non-alcoholic punch available for 1 a.m. But in the Mountain States Time Zone we will be watching closely what happens here on the East Coast, and, of course, jointly with the AHA and the President's Y2K task force, we will be watching what happens to medical institutions and health care facilities in New Zealand, which is about 19 hours earlier than the Mountain States, should specific pieces of equipment be affected. Chairwoman Morella. Thank you. Mr. Willemssen, you have been very patient. I know that my time personally has elapsed, but I just wanted to quickly mention that I was alarmed when I read that in education 56 percent of the elementary and secondary schools in the United States were not compliant. I am just wondering what that can mean and what is it that we can do about it. This was like heating, security, telecommunications. Mr. Willemssen. The education sector is one that you should be concerned about. Education has gotten a late start. As Mr. Koskinen mentioned, they have made excellent progress. But when your starting point is relatively so late, there really is reason for concern. And one of the things that we have been emphasizing is the need for contingency plans for those educational institutions. Our survey of 25 of the largest school districts found many of them planning on December compliance dates. And as you know as well as anyone, information technology-related projects are often late. So that when you are planning on a December compliance date, it is going to be very difficult probably to make that date for all of those school districts. So I think there is reason for concern. And I think it is therefore incumbent upon all of us to continue sounding the alarm for this particular sector, as Mr. Koskinen and the Department of Education have done in the very recent past. That needs to continue. Mr. Margolis. Madam Chair. Chairwoman Morella. Yes, Mr. Margolis? Mr. Margolis. Thank you. I just wanted to comment on higher education particularly as it pertains to medical schools. One issue has been, and we have talked about it collaboratively, the safeguarding of research projects, research specimens that are refrigerated that could be affected if power is lost. At most major academic centers, which certainly includes the University of New Mexico at this point, emergency power is in place to assure that both clinical laboratory specimens as well as long term research specimens, such as tumors, are under emergency power for continued refrigeration. Chairwoman Morella. That just shows the tremendous implications that one has to think of. You cannot take anything for granted. I am now pleased to recognize Mr. Bartlett. Mr. Bartlett. Thank you very much. I do not know what the estimates are of the total amount that it has cost our country to get ready for Y2K. My question is, we knew a long time ago that this problem was coming. We started very late. Had we started in 1990 rather than in 1997 or 1998 or 1999, whenever we started, how much less in your judgement would we have paid to solve this problem? Obviously, the longer we waited, the more technology was there that needed to be fixed and assessed and it was going to cost more. How much less would it have cost us, you may give it as a percentage, in your judgement, if we had started this in 1990 rather than when we did? Mr. Margolis. Mr. Bartlett, I believe that the costs would probably be insignificantly less because in the case of hospitals, and I am sure in the case of financial institutions, there are so many interdependencies with other trading partners. Hospitals themselves could very well have upgraded their systems, checked their devices. But without input from the manufacturers of certain components, they would have been waiting until the present time until a lot of information was made available. I think it is human nature to think of things in the future when the future gets a little closer. I speak from my own personal experience. I started out in computer programming and development myself in the 1970s and we talked many years ago about Y2K and no one believed that the computer programs that we were writing then would even be remembered by the time 1999 came along. Mr. Bartlett. But they have been remembered and we still use them. And when did we stop using a two-digit code in programming, which would tell you when the cost of fixing would be stabilized. Mr. Margolis. I could not answer that question directly. I know that at our hospital we stopped during the development of our current generation of client information systems. But I do know we have heard from other sectors that other software manufacturers have even introduced operating systems as recent as this year which had year 2000 defects. But they are easily correctable because they are upgraded with a later version of the software. That is not to dispute why they were introduced as being deficient to begin with though. Mr. Bartlett. Which is the basis for my question. If starting in 1990 we had produced no programs with a two-digit date code, would not the problem have been a simpler fix? Mr. Margolis. I think it would have, but the interfaces between the systems would still be at issue. And in hospitals, that is the largest issue that we have. In our specific hospital, we have 80-some systems that speak to one another, that transfer data between one another. So it is not only the interface programs that hand off that data, but each of the programs that have to be Y2K compliant in the same way or in a way that you can understand so that the data is properly translated. So that what you suggest would be the ideal. I am not sure that the cooperation of all the trading partners would have been achieved until the pressure of Y2K, the President's Council, and the Congress had been felt. Mr. Bartlett. Of course, if we had started with a four- digit date code, there would have been zero fix; is that correct? Mr. Margolis. That is absolutely correct. Mr. Bartlett. Okay. Mr. Campbell, our procrastination has cost us nothing? Mr. Campbell. Whenever you procrastinate, it costs you something. I would say that the greatest time that we have spent has been on our legacy systems, our older systems. As you build a one-of-a-kind computer system in the world and you start back many years ago, it is the legacy systems that take so much time to recertify. We would have also, Congressman Bartlett, had to certify all new systems that we put in place also. While it has cost us something, I think it is very difficult to place a percentage on it, and I do not think that percentage is a big percentage because of the integration testing and the certification of all systems across all vendors, across all different legacy and new systems. So even the systems that we put in today, we still make sure that we certify them as Y2K. Mr. Bartlett. Mr. Scher? Mr. Scher. Within the food industry, most major retailers started working on the problem 2 or 3 years ago. We do not believe there would have been significant cost-savings. Time is money, as they say, and there probably would have been some better flexibility with time scheduling in advance. But 3 years back the industry looked at the situation and worked aggressively, and the retail industry is ready. Most people think of the food industry as a rather simple business--you go in, you buy groceries, you go home. Looking at what we have developed as far as contingency plans, it is mind- boggling. Things that we within the food industry, not just Giant Food, have had to be cognizant of include such things as advertising, direct store delivery, front-end operations, fuel operations, gas, getting products to our stores from our various vendors, perishables, areas of payroll, what happens if there is a power failure, if we cannot get store supplies, transportation, water and sewage. These are major issues that most people say, ``Gee, I had no idea that is what was necessary to run a food store''. Again, I do not think it would have saved a great deal of money. Time, yes, if the industry would have worked a few years earlier. But, again, most retailers that I am familiar with have tackled the problem starting about 3 years ago in 1996. Mr. Bartlett. Madam Chair, I would like to ask Mr. Willemssen just a simple question. Do you concur, sir, that the major liability that we have in starting late is that we might not finish rather than it cost us more? Mr. Willemssen. I think the major liability is exactly that, that we may not finish in time. But I would also add that because we did get a late start, the pace, for all intents and purposes, was more frantic than it would have otherwise been. And you have to pay for that more frantic pace. Speaking from the Federal Government perspective, the most recent estimate we have, the 24 major Federal departments and agencies, is about $8.9 billion that it will cost overall. One could argue that if that had been stretched out over a longer period of time, it may have been less. Indeed, there was a $3.35 billion emergency supplemental that was just for Y2K. One could argue that if the effort had been stretched out over time, agencies could have funded these activities through their normal budgeting process. Mr. Bartlett. Thank you all very much. Thank you, Madam Chair. Chairwoman Morella. Thank you, Mr. Bartlett. I am pleased to recognize Mrs. Biggert. Mrs. Biggert. Thank you, Madam Chairman. One of the rumors that I have heard lately, and I do not know if it is rumor, but so many of the hotel rooms in major cities have been booked, not for the celebrations of the turnover on New Year's Eve, but the fact that so many companies are having so many staff having to man the offices that they actually are having their families come into the cities and celebrate there because they will be involved with the turnover. Is that true, Mr. Campbell, from your standpoint? Mr. Campbell. We have scheduled, in Washington, 10 rooms at the Mayflower. We have scheduled rooms across the country because our staff needs to be there prior to the date, as well as the holiday traffic. So we have booked a considerable amount of room in the hotel industry around this country. You are absolutely right. Mrs. Biggert. I think it will certainly be well-spent if we have those glitches that somebody will be there. I would also like to commend you on your brochure and I guess this postcard. Is this something that was put into store bills, or is this something that was sent out through information? Mr. Campbell. It was sent out by our member broker-dealers across the country in the statements which they send to their customers every month. Mrs. Biggert. Have you had response from the customers? Mr. Campbell. We have had quite an active session on our web sites with customers. And many of those customers would directly ask the broker-dealer that they deal with on a day-to- day basis many of the questions that they would ask us, and then we would respond either directly or to the member firms themselves. But our help desk has responded to over 20,000 requests over the last period of time. So it has been very active, which is why we have really thought that education was probably the most important thing that we do. Mrs. Biggert. I know one of the concerns about this has been fraud and that people were coming out with schemes to try and make money from this or take away money from people, particularly seniors, with scare tactics. Have you heard of anything where people have called your offices saying that somebody has tried to perpetrate something? Mr. Campbell. Not that I am aware of. The one issue that we have heard about is inducing people to withdraw money from their bank in cash form and then defraud them of that in one form or another. By and large, the securities industry is either book entry or by certificate, and the ability for somebody to walk into an office and demand ready cash is generally not the same as a bank. Mrs. Biggert. And then Mr. Scher, I know that we have had concerns that there will be people who will decide at the last minute that they need to ensure that they have those supplies that they had not thought about until the last day or so. Do you think that still is going to happen? I do know that in a snow storm, coming from an area where we do have a lot of snow at that time of the year usually, that this happens--even in a major snow storm--where people rush to the grocery store at the last minute. Mr. Scher. We have extra merchandise that will be available in the stores and in our warehouses, both perishable and non- perishable, to ship. And we can do that in a matter of hours if need be. I do not think you will be seeing that. Early in 1999, the news media was hyping this, and there was, indeed, a lot of interest on the part of consumers about what is going to happen. People were worried. We were getting dozens of media calls and consumer inquiries. Let's advance to November 1999. We are getting about six customer calls or letters a month, which is nothing, and all the news media calls to date have died down significantly. I think they will probably heighten slightly the last week of December. But the message has changed from the news media's perspective, because of good reporting, to there is no need to panic. The message today is that the industry is ready. And that includes the banking industry that I have read about, the food industry, the airlines. So I think the apprehension on the part of the consumer is a lot less today than it was at the beginning of this year. Mrs. Biggert. Good. Great. Thank you very much. Thank you, Madam Chairman. Chairwoman Morella. Thank you, Mrs. Biggert. I am now pleased to recognize Mr. Ose. Mr. Ose. Thank you, Madam Chair. I first want to commend Mr. Scher's organization for this helpful pamphlet which on the back lists any number of web sites down at the bottom that folks can visit for additional information, and if they do not have access to the Internet, there is a phone number that they can call for information on this, a toll-free number, 888-USA-4Y2K. So my compliments to your organization for putting this together. Mr. Scher. Thank you. Mr. Ose. I cannot let the occasion pass, Mr. Campbell, without expressing my compliments to you and your organization. Mr. Campbell. Thank you. Mr. Ose. If I understand correctly from listening to each of you, the manner in which your business transacts is an increasing amount of its commerce is electronically. The hospital folks are ordering supplies electronically, you are exchanging shares electronically, you are buying food and produce electronically, probably paying your people electronically with direct deposit, et cetera. Each of those transactions goes over the telephone lines, in effect. It is a telephone conversation. Which brings me to my question, and I regret we do not have the opportunity to visit with someone today on that. Mr. Willemssen, as far as the telephone companies, it is my understanding they are perhaps the most ready of all the various organizations in the country for this rollover. Mr. Willemssen. I would probably not go along with they are the most ready. I am much more optimistic today than when I testified in the summer of 1998. I would continue to say that the banking and finance sector is probably the most ready. Within the telecommunications area, I think among some smaller local exchange carriers there is still some level of concern about their readiness. So bottom line for me on telecom, much more optimistic, but I would not put them at the absolute top of the heap. Mr. Ose. Well, that brings me exactly to my question, and it relates primarily to Mr. Campbell's area of commerce. On Friday, December 31st, at 1 p.m., the exchanges are going to close, and at 9:30 a.m. on Monday, January 3rd, they are going to open. What is plan B if on Monday the 3rd there has been a problem? Mr. Campbell. Essentially, we operate one of the largest private communications networks that there is. We have paired T-1s to every server that we have across the country and across the world. All of those private, secure T-1 lines have been tested and tested and tested. The servers which they interface with have been tested. We have not only had physical on site presence to those servers, but the end-to-end testing that we have been involved in for quite some time leads us to believe that we know that our telephonic lines are operable in a Y2K environment. We also have the ability to do many tests over that weekend, which we will. We do not quit testing. We do believe that the communications that transact share volume in the NASDAQ stock market are ready and operable, and will be, as they have throughout all of our end-to-end testing. We have transacted business coming in, we have compared trades, the clearing organizations have vented the transparency of that trade back out at the price that it took place. We have gone through the order entry, to the transaction, all the way through the settlement and clearing process in a year 2000 environment, having rolled on numerous times our calendars forward. We believe that we are ready. If we have issues to deal with, we will deal with them. But we believe that with the integrated testing end-to-end that we have done, we are ready and we will be ready. Mr. Ose. Thank you. Chairwoman Morella. Thank you, Mr. Ose. It is now my pleasure to recognize the co-Chair of the House Working Group on Y2K, the gentleman from California, Mr. Horn. Mr. Horn. Thank you, Madam Chairman. Let me start with NASDAQ. It established a record high, as we all know, surpassing 3,000 in closing yesterday. And technology stocks really dominate that board. Last week, IBM announced that mainframe computer customers are waiting to buy new equipment until after January 1st as they grapple with their own Y2K problems. What is the danger that Y2K could adversely affect the stock exchanges and investors' interests? Mr. Campbell. First of all, I think that whenever you approach year end, you either speed up your purchasing or you delay your purchasing, depending upon where you are with your budgets or the issues that you are dealing with. We do that at NASDAQ and I know the Federal Government does that. Essentially, in IBM's case, I believe that it was a postponement, obviously, is what you said, and deferral of major purchases while they concentrated on making sure they were Y2K compliant. The SEC has been very diligent in requiring the disclosure of the Y2K risk that firms have. They have gone back and back, and those firms they felt had not been as forthcoming as they would have desired, they have gone back to them and asked them for more specificity with respect to their risks. I think that the technology companies are more aware of Y2K and as sophisticated in the remediation because they are either the problem or they have been the solution. So relative to the damage that it would pose across the country, I think that it will be very limited in scope. Mr. Horn. In terms of contingencies, what things do you have on Y2K problems that affect businesses? What is the contingency plan? Mr. Campbell. Our contingency plan deals with many different levels of issues; whether or not somebody has telephone issues, whether or not they have order entry issues, whether or not they can operate their systems. We have it tiered in many layers. We have very specific reporting requirements over the weekend from December 31st to January 3rd. Those very specific reporting requirements go to the different capital markets and the regulators. The Securities and Exchange Commission has very specific reporting requirements over that weekend. We will be, and have been, linked in terms of all the communications that will take place. So there are checklists for as many contingencies as our creative minds have been able to think up over the last couple of years. They are quantified, they are in books, they are in our command centers. We practice, we will continue to practice, and we will have basically triaged as many different contingencies and unexpected kinds of issues that we know how to create. Mr. Horn. A number of us have said from the very beginning that this is a management problem, not just a technological problem. What have you learned out of this experience that might be useful should some similar circumstance ever occur? It might be the encryption bit and how little bright kids break through computer security and all the rest of it. Mr. Campbell. We deal with security issues every day. From a management perspective, my best training is probably as an Air Force pilot and knowing what to expect that nobody has ever trained you for. Essentially, not only from our web sites, but our private communications systems, to our computers, to our people issues, I think that it has continued to make us more aware that it has to be done on every facet every day from a security perspective. So I think that it has been, at least from my perspective, a very broadening experience. Hopefully, I have learned something from it. Mr. Horn. Would any of you other witnesses like to comment on that? What have you learned from this that might be worthwhile knowing as a management problem when we ever get into something like this again? It obviously will not be this particular thing, hopefully, but it could be other things that relate to computers. Mr. Scher. That is a very good question, Mr. Horn. We are looking at Y2K as an opportunity. We think we will not miss a heartbeat; it will pass us by. But your question is a good one. In the event of a natural disaster within the food industry, let's take just one segment, people on welfare, people who receive Government benefits from the State and Federal levels, if the phones go down, for example, people that are on the electronic benefit transfer program, which is almost throughout the United States today, they would go into a food store and not be able to access their benefits. So what have we learned? We have learned that, aside from Y2K, we should indeed have good contingency plans in the event of, for example, telephones go out. A large segment of our customer base would not be able to shop for something they need to survive--food. So we have to look at alternative plans to handle a situation if, for example, the telephone lines go down again, how do we serve that customer. It is a question that we discuss today with one of our other owners, one of the other members of the Ahold family, Giant Food Stores of Carlisle, and we do not have the answer. It is a very good question. Aside from Y2K, if the phone lines go down, how do we serve this important segment of our business. We are going to be addressing that also. So it has widened our horizons. It has opened our eyes to look at possible other disasters that could occur within a retail business, how do we solve those problems. Some of those solutions are inherent with what we have found out with Y2K. Others we will be exploring over the next few months. But it has, indeed, opened our eyes to potential other disasters that could occur. Mr. Horn. Would cellular phones be one of the options for your major customers, a direct line? Mr. Scher. Possibly. If phone lines go down and a welfare individual or family is in a food store, they are at the checkout, we would have--currently, if the computer does not work today, we have a number that we can call within the State government to make sure that the benefits or their so-called account has funds in it. A cellular line would work perfectly for that. It is a little cumbersome, but we would have to resort to something other than telephone lines and that is what we would use. Mr. Horn. Mr. Scher, in terms of the food situation, is there a concern within the food retail distribution industry about transportation being available to get the products you need on a regular basis? I assume a lot of the stores use what we call the Japanese inventory approach; on a timely basis, it gets there based on the demand. Is there going to be stockpiling in some cases in the back of particular stores if they do not have the space? Mr. Scher. Mr. Horn, for certain commodities within the food industry, yes, the food stores, to the best of their ability, have small back rooms that they will stock up with extra merchandise. Our warehouses will also have certain items that we know that, for example, if there is a snow storm, people would normally buy, including such items that are non- perishable like batteries, candles. We will have our truck fleet standing by. In the event that we see panic buying occurring, we will be able to ship merchandise to the stores. But with certain commodity groups, we will have excess product in the store just to be safe. Mr. Horn. Let me ask the gentleman from New Mexico. I have long admired the medical school at the University of New Mexico. I am curious, they were the ones that in the freshman year of medical school mixed the students studying medicine with actual patients, and not just the dull bio-chem or whatever courses, anatomy, so forth, but relating them to real human beings. Is that still going on at New Mexico? Mr. Margolis. Yes, sir, Mr. Horn, it does. It is the encounter or problem-based medical training. They were pioneers in that area. Mr. Horn. Well they were No. 1, but Harvard got the publicity because it is Harvard. Mr. Margolis. I am glad that story has travelled back east. Mr. Horn. And having headed a State university and been a head of a lot of those people, but you never get publicity because you do not have 35 people on your staff. Mr. Margolis. That is right. Mr. Horn. So I was just wondering if that kept going, because I have had a great respect for that institution for 20 years. Mr. Margolis. I will let the dean know. He will be very glad to hear that. Mr. Horn. Well, it is a very interesting situation. Let me ask you, with the AHA, when we were in Cleveland the representative of the Cleveland Clinic, a very distinguished group of hospitals, was our witness and noted that there was a common web site where you could check out the equipment as to machine number, patent, and all of the rest of it and you did not have to reinvent the wheel if you were checking your various pieces of equipment in the emergency room. Has that worked pretty well? And has the hospital profession been able to get and share information with each other so they do not have to reinvent the wheel? Mr. Margolis. Yes, that has worked very well. Actually, through the leverage of the State Hospital Associations and the American Hospital Association, we have shared a lot of information like that. The FDA, as you know, has a site for medical devices where you can check serial number, manufacturer, and other information to rely upon the piece of equipment being tested by the manufacturer, which is often the safest reliance you can have. In addition, the American Hospital Association has put together a monthly telephone conference line, one for rural hospitals and one for large urban hospitals, where on a monthly basis for the last 11 months we have shared information regarding what we have found with our vendors, what we have found in our own institutions, and how our remediation plans have been going, which has been an excellent forum for learning from one another and avoiding that issue of reinventing the wheel. So, although in many ways we are competitive with other hospitals in our community, it is important to share certain levels of data because we are community service-based providers and it is critical that we be able to respond as a team and not as a single hospital island. Mr. Horn. Now a lot of the manufacturers of some of that emergency equipment probably were out of business. Did you find there were ways to get replacements for some piece, or did you just have to go and let's buy something new? Mr. Margolis. In some cases. I can think of three or four pieces of equipment, and that was I believe EKG pieces of equipment, that had to be replaced because the manufacturer had in fact been out of business for something more than 10 or 12 years and there was no successor to that manufacturer that could provide the upgrade. The reality is a piece of equipment like that has a useful life of 8 to 10 years. So, on the one hand, it was probably time to replace it, but, as you know and commented about New Mexico, we probably did not have the money to budget to replace it and so we would have liked to have kept it running. But, for the most part, there has been successor companies who are able to provide the upgraded software, and in many cases the upgraded computer processing board, which will allow that piece of equipment to operate beyond January 1st. Most of that was done under warranty or maintenance service agreements that we have. It is a large challenge for hospitals to have identified all that. But that is part of their remediation plan and, as you pointed out, much of that information has been shared over various web sites. Mr. Horn. Now in going through this exercise, which nobody wanted obviously to do, but you had to do it for your own computer systems, have you learned something that will help you in better arranging new computers which are needed in terms of a new generation? We are always out; the minute we have bought one, it is 3 years out of whack anyhow. But what have we learned from that in terms of did we need all those programs, could you get rid of some, could you merge some? Did anybody use that as an exercise to say why are we doing this? Mr. Margolis. I think a valuable lesson that we have learned is the compatibility between equipment and the need when procuring equipment or software, which is mostly what hospitals do rather than develop their own software, to use common standards in data communication to insist that vendors can provide that common interface. There are committees of HCFA I believe that have defined something called HL-7, which is a standard of data interface, and that has become very popular in the last 2 years, to insist that vendors provide software that can communicate using this HL-7 interchange. I think that is probably the most valuable lesson because that will ensure not only for year 3000, which is quite a distance off, but for various things that happen in terms of Federal programs and insurance programs, that various pieces of the data process share the same codes for the same meaningfulness of the data. Mr. Horn. The way you are getting the new replacements for some of us, we might be around in the year 3000. Mr. Margolis. I hope I am. Mr. Horn. You gentlemen really did a great job and in your written presentations. I think it is one of the best panels we have ever had before us. It was very useful as to what you have gone through. I am going to ask Mr. Willemssen, who has followed us everywhere in the United States, overseas, you name it, and we usually ask him, because he has got all this knowledge, to say what have we missed. And what would you suggest? Ask some questions that make sense to you. Mr. Willemssen. I think you have really touched on some of the key points that you would want to hear from these witnesses. The only thing that I might add from a lessons learned perspective that maybe these sectors have learned, that we have definitely learned in the Federal Government, is going into this, and going into future information technology problems such as this, you need to focus on the business function first and the system second, instead of thinking systems and then how do they work for the business. That is one lesson learned in the Federal Government is focusing on the programs and then looking at the supporting systems rather than the other way around. Mr. Horn. Anybody want to add something that came to mind that we did not ask you? This is your chance. [No response.] Mr. Ose. Mr. Chairman, I have one thing I want to make sure that Mr. Scher addresses, because come January 1st, if there is not an adequate supply of Oreo cookies in his store, he is going to have trouble. Mr. Scher. They will be there, I promise you. Chairwoman Morella. You are talking to a Marylander, we believe in the Oreos, however you spell it. Mr. Horn. Well, if the Chair would indulge me, there is a few closing remarks I would like to make that I did not make because I was not here. I was in a markup of my subcommittee earlier. Chairwoman Morella. Mr. Chairman, before you make the closing remarks, may I just ask one other question. We are also going to open it to members of the committee of both subcommittees to be able to present any other questions to you, if that is amenable. But I just had a question that dealt with an article that I saw in USA Today. It was an article that indicated that a number of companies have failed to comply with SEC regulations requiring full disclosure of a company's vulnerability to Y2K. I just wondered if any of you wanted to comment on is this a widespread problem? Does this imperil investor confidence? Because I think it would affect all of you and I just wondered if you wanted to make any comment on that. Mr. Campbell. It is my understanding, Madam Chair, that it is a very small contained group of companies that the SEC has gone back and asked for further information. Obviously, the most important thing that the management of a company can do is maximize and protect their shareholder value. And those companies that do not have full disclosure obviously risk that. Chairwoman Morella. Anyone else, because it actually would affect all of you. Mr. Scher. No problem. Chairwoman Morella. Are you okay with, I know NASDAQ is going international, but the Asian markets, the interoperability concept? Mr. Campbell. We are moving forward relative to globalization of our markets. The links at this present time do not provide major risk to the U.S. capital markets. Essentially, we will know early whether those markets operate, how they operate. But the connection between the markets is not there at this point in time. So at least to U.S. citizens, the issue relative to their domestic securities is not at issue, it is their foreign owned securities. We have not had any direct conversation with the foreign markets except in terms of exchanging information about Y2K from a technology perspective. So I really cannot address that. Chairwoman Morella. If there were a run on the Asian markets and you found out before it happened here, how would you react? Mr. Campbell. I think our reaction would be to address the confidence issue in our domestic markets. I think all of our markets, all the regional markets, the national exchanges would address those in concert along with the SEC. The most important facet, we believe, of our markets is there is confidence in them; they are well-regulated, they are transparent, and they do protect the investor. That happens no where else in the world like it happens here. So we would address that very openly and very directly and we would share with the investing public exactly what is happening. Chairwoman Morella. Mr. Willemssen, do you want to comment on that issue at all? Mr. Willemssen. We have not done an analysis of that particular issue, so I am not in a position to comment. Chairwoman Morella. Thank you. I want to thank all of you, too. Now I am going to defer to Chairman Horn, the co-Chair. Mr. Horn. Thank you very much, Madam Chairman. No one really knows what is going to happen on January 1 and December 31 in terms of what happens when we switch over. We have got predictions that are springing up like wild flowers about this. We have eager entrepreneurs promoting their year 2000 survival kits. We have some of the people in the county jail have already talked to the warden and the captain of the guard to say could you let me off for December 31st and January 1st because they think everybody will take money out of the bank and put it in their homes. That is the stupidest thing an American citizen or anyone here could do is take money out of the bank and put it in their homes because that is just where the robbers and burglars and all the rest of them will be looking. Already, I read into one hearing a letter to Ann Landers on the scams already happening to elderly citizens. And all I can say is it needs to be ``buyer beware'' in those last few days in terms of people selling you things you really do not need. A lot of them just might collapse on you anyhow. I have been looking at probably 100 different magazines over the last couple of weeks and have seen these ads that are the kinds of things you would see in the National Inquirer or something that want to scare your wits out of you. But we do have some real problems. Of course, some of this is just amusing in a way, but it certainly is upsetting people. For example, in 1993, Minnesota officials instructed 104-year old Mary Bandar to report to kindergarten. Now it turned out that the State computers had misread Ms. Bander's 1889 birth date as 1989, placing her at age 4. Recently in Maine, several hundred car owners were dismayed to find the titles to their new year 2000 model vehicles categorized as ``horseless carriages.'' State computers has misread the year 2000 as 1900. Well, we can get by those things. But some of the more serious ones obviously worry us; and that is, how you get gas from Russia to Eastern Europe, Central Europe, would that affect the United States in any way? Will the electricity fail? So forth. Now both the administration and the Congress have looked at a number of these questions around the country and I think people have been very prepared. When we had a problem on nuclear reactors, we asked the Nuclear Regulatory Commission to look at all of them, not just 10 percent; they were only going to look at 10 percent. They have looked at all of them and presumably that situation which generates electricity is okay. But we really will not know until you get it all in an operational sector where you have all of these different factors coming together in a typical operational day. And that is the main thing we really have to care about. We will have two more things in terms of these two subcommittees. One, we will hold the final grade release to the press on November 22nd, a Monday, and the staffs and the GAO team that has worked very closely with us will be doing the work of analysis that week. We think that should tell us a little bit about at least the executive branch. I think Mr. Koskinen and his team have done a fairly good job. The question is could it all have been done earlier, and would it have cost less. We still have shades of panic even in the executive branch as well as in private industry when a lot of their talented people have been bought out from under them by other industries who want talented people. The question will be did we have enough human resources in the right place at the right time. Again, that is a management question. So, Madam Chairman, I think we hope you will be there on November 22nd. And then your committee and mine, after this is all over, we will have a retrospect summing up, and if something has gone wrong, what could we have done to get the administration to do it the right way then. I was worried for several years over the procrastination. I think they have played catch-up and I hope they make it. That is what we need. We should not have to do things that are just fouled up and not run on a steady track of some sort of management approach to solving the problem. And so that is where we are. We do not know what is going to happen on January 2nd and December 31st. But you certainly give us some heartening hope in major industries that you represent, the hospitals, the grocery industry, the stock markets. I know the stock markets were one of our first witnesses when we started and I think they have done a splendid job. So thank you all for coming. Mr. Horn. Mrs. Morella, I think we have the tributes to the staff. Chairwoman Morella. And as he gives the tributes, I want to indicate that I would agree that the cost has escalated, maybe it would not have had we started earlier. I remember the first submission by the President was $2.3 billion. Remember that, Mr. Willemssen? Now it is $8.9 and probably continuing. But we will be continuing to monitor, and we appreciate very much your being here and for your patience for being here all afternoon. Mr. Horn. I might add that the GardnerGroup, when they testified before our subcommittee, said it will be about a $30 billion cost in the case of the Federal Government. We think, and we thought as it went along, and we simply pulled it out of the air, but that is the way they sometimes build budgets around here, we thought it would be $10 billion. And that is about where it is I believe. So we are going to thank our staff that has stuck with this now since 1996. Russell George, the staff director and chief counsel, is standing against the wall there. Don't worry, we are not some Latin American banana republic where people that stand by walls are in trouble. You are in good shape. Matt Ryan, senior policy director, is right behind me here. Bonnie Heald, communications director, is probably working with the press. Chip Ahlswede, our clerk, is right there with them. Rob Singer, the staff assistant; P.J. Caceres, intern; Deborah Oppenheim, intern. That is all of our staff. And then Mrs. Morella's staff of the Subcommittee on Technology of the Science Committee: Jeff Grove, the staff director; Ben Wu, behind us, counsel; Joe Sullivan, staff assistant. The minority staff on the Government Management, Information, and Technology Subcommittee team is Trey Henderson, minority counsel; Jean Gosa, the minority staff assistant. On the Technology Subcommittee, Michael Quear, the professional staff member; and Marty Ralston, staff assistant. And the court reporter is Ruth Griffin. We thank them all for all they have done. They have worked overtime many a night, many a weekend to get the job done, and we appreciate it. Chairwoman Morella. We will now adjourn the committee meeting. 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