ITAA's Year 2000 Outlook April 3, 1998 Volume 3, No. 13 Published by the Information Technology Association of America, Arlington, VA Bob Cohen, Editor bcohen@itaa.org ITAA's Year 2000 Outlook is sponsored in part by BDM International, Inc., CACI International Inc., DMR Consulting Group Inc., IBS Conversions, Inc., Softworks, Inc. and Y2Kplus, Inc. HHS Prescribes Greater Latitude to Treat Y2K Bug Testifying before the Senate Committee on Governmental Affairs this week, Deputy Secretary of Health and Human Services (HHS) Kevin Thurm seemed to be making Year 2000 the lever with which to pry loose from Congress greater control over Medicare contracti ng. The Medicare system processes almost one billion claims from over one million health care facilities, physicians, labs and other health care providers every year. Noting that nearly one-quarter of external Medicare contractors have not yet assessed their systems, Thurm said, "we are permitted to exercise little authority regarding the contractors." HHS submitted a proposal to Congress last February to amend the Medicare statute regarding HCFA-contractor relations. Thurm said the Health Care Financing Administration (HCFA) has been proactive in its attempts to gain Y2K compliance from contractors. He seemed to suggest, however, that current law is not working in the agency's favor: "Medicare statutes require HCFA to contract for services with insurance companies only (not computer or transaction processing firms), and only on a cost-reimbursement basis. Moreover, intermediary and carrier contracts provide for automatic renewal wit h no fixed term. Yet, while HCFA may terminate a contract only for cause and not for convenience, contractors may leave the Medicare program with 180 days notice, although it generally takes HCFA six to nine months to transfer a contractor's workload to another contractor organization. "Most importantly, HCFA is required to reimburse its Medicare contractors for allowable costs, thus limiting the ability for HCFA to exert financial control and pressure over the Year 2000 efforts of its contractors," Thurm said. HHS is asking Congress to increase the agency's discretion in contracting for claims processing and payment services, including the authority to contract competitively with any qualified entity to perform the work. "…Greater competition in contracting is an essential tool to ensure that Medicare computer systems are modified to continue processing claims in the Year 2000. Under this authority, the Secretary could award contracts with a substantially larger pool of qualified contractors in order to procu re the highest quality Year 2000 remediation services," Thurm said. Defense Policy Expert Launches Y2K Criticisms Frank Gaffney's name is usually associated with policy on anti-ballistic missiles or landmines. But this week the former Reagan Administration Assistant Secretary of Defense was aiming a few verbal rockets at Washington's efforts to cope with the Year 20 00 software crisis. Gaffney is founder and director of the Center for Security Policy and frequently offers his views on national security topics to publications like the Wall Street Journal and the Washington Times. Speaking at the ComDef '98 "Protecting the Force" confere nce this week in the nation's capital, Gaffney said that, when it comes to Y2K, it's the nation-not just the military-that needs protection. Given the stakes involved, he said, alarm is the order of the day. "[We have] the makings of a national emergency on our hands," Gaffney said. Unless the situation is addressed by the head of state, "I think [Y2K] could have an effect on the nation and national security [comparable] to a deliberate, concerted informatio n warfare attack on the information infrastructure." The defense policy strategist targeted responsibility for national Y2K preparedness squarely at the White House door. President Clinton and Vice President Gore should be under "no illusions," he said, noting that they will be held accountable if an "avoi dable cataclysm befalls the nation." Gaffney said it is "a scandal that we are as exposed as we are." Noting that Y2K is a problem that could be seen coming, he said that if the next 600+ days are squandered "there will be hell to pay." Hitting his stride, the sometimes controversial Gaffney said the nation's first Y2K Czar, Sally Katzen, did a "manifestly incompetent job" and the new Czar hasn't been seen or heard from since being appointed. "I hope it means he's hard at work," Gaffney said, "but it's not evident." Gaffney said it's really up to the President to put the nation on notice of a pending economic and security calamity. A nationally recognized proponent of the Strategic Defense Initiative, Gaffney said that a national response on the order of a Manhattan Project is needed. He called for the government to sponsor a highly publicized competition to determine best of bre ed automated solutions. Gaffney said that Y2K breakdowns could make it difficult to move troops to the Persian Gulf, much less fight a war there. Even the Air Force, what he suggested was the most technologically astute of the military service branches, seems to be flying in a Y2K fog. "Even people seized with and working on the problem" are worried about the absence of a coordinated approach, he said. Why can't the DoD field a crisp plan of attack on this issue? Gaffney said it's an issue of concern to those getting least a ttention within the military mindset. The Year 2000 is perceived as "computer geek stuff…not what real men do at the Pentagon," Gaffney said. Software Vendor Draws Lawsuit Macola Inc., a software publisher, is the latest defendant in a class action lawsuit alleging Y2K related defects. Milberg Weiss Bershad Hynes & Lerach filed the complaint this week in the Marion County, Ohio, Court of Common Pleas on behalf of persons a nd entities who purchased Macola Progression Series Software, Version 6.0. Macola is a 260-employee, privately held firm with a customer base of 175,000 users in 16,000 installations worldwide. The company’s product offerings target the financial, distribution, manufacturing and enterprise resource planning markets. The complaint alleges breach of warranty and fraud in the inability of the defendant's software to recognize and process Y2K dates in versions of its product prior to 6.200 and 7.0. According to a statement issued by Milberg Weiss, "In contrast to many o ther software companies, which are correcting 'Year 2000' problems and providing those corrections free of charge to their customers, defendent Macola is improperly requiring its customers to pay substantial fees to purchase upgrades in order to remedy th e Year 2000 defect contained in the Macola Progression Series Software." The Macola suit brings the total number of Milberg Weiss class actions to three, all centered around the software vendor’s decision to include the Y2K repair in subsequent and functionally enhanced product versions. Some software firms may opt to make th e date fix available to customers at no charge. The question of fixing free versus charging for the subsequent, enhanced version does not come with easy answers. That does not mean, of course, that legal observers are lacking for a point of view. Attorney Stephen Hollman, a partner with the San Jose and San Francisco offices of Arter & Hadden, says he is not wholly unsympathetic with the plaintiff in such cases. "If I buy a television and the tube has a defect, the manufacturer doesn’t tell me t o buy a new television with a more advanced picture tube. They fix it. That’s the way of the world." To Hollman, software purchased by consumers for personal, family or household use, have a right to expect that the software packages they buy will work well into the foreseeable future, disclaimers and limited warranties notwithstanding. According to Hol lman, companies seeking to in effect compel their consumer customers to buy new and enhanced software products to gain Y2K inoculation may be making a costly mistake. The courts, he said, may set aside such warranties and disclaimers, finding that Y2K in teroperability constitutes a latent defect and determine that such contractual provisions are unconscionable under the circumstances. But circumstances may be exactly what settles such class action lawsuits. According to Lino Lipinsky, counsel with the Washington, D.C. firm of McKenna & Cuneo, it’s the representations made about a particular product or service which determine whether f raud or breach of warranty are involved. Fraud requires misrepresentation or material misstatement of facts in order to induce certain actions. A software package, Lipinsky says, may have been purchased with the expectation that it would be replaced pri or to the Year 2000 or that no fix was ever anticipated. In a class action suit it is particularly hard to demonstrate the state of mind and expectations of each purchaser. Shrink wrap software is often sold with a 90 day warranty; customer remedies for defective products are generally limited to return of the price paid, product replacement or repair, at the publisher’s discretion. Michael Aisenberg, Galland, Kharasch & Garfinkle, Washington, D.C., says that while some software vendors may be offering a free fix to their customers, other vendors may justifiably decide to charge for a newly enhanced version which also includes the Y2 K correction. "As a general principal, I would look for whether the release includes other functionality and what the frequency pattern of updated releases may be for that particular vendor. It will be difficult for the customer of a vendor who frequent ly updates a software product to claim that the Y2K compliant version has been produced to perpetrate a fraud." Aisenberg also dismisses the notion that two digit dates are a latent defect. Rather, he calls the practice a product feature, in keeping with standard programming practice and assuring backward compatibility among automated systems. Closer to Home Mastech Corporation of Pittsburgh (NASDAQ: MAST) and Jack Henry and Associates, Inc., corporate headquarters, Monett, Missouri, have received ITAA* 2000 certification. ITAA* 2000 is the industry’s century date change certification program. The program ex amines processes and methods used by companies to perform their Year 2000 software conversions. Both firms participated in a rigorous, voluntary evaluation of their respective approaches to date conversion. The process included extensive analysis in 11 di screte process areas deemed necessary to a successful Year 2000 conversion. Certification indicates that these companies have the core capabilities needed to address the Year 200 challenge. Business to Business Alydaar Software Corporation, Charlotte, NC, has won Y2K contracts with the State of New Jersey, United Guaranty Corporation and the Teacher Retirement System of Texas (TRS). WRQ, Boston, MA, has announced the release of the WRQ Express 2000 Suite, Y2K software for desktop applications. Computer Horizons Corp., Mountain Lakes, NJ, through their partnership with ISI, has won a Y2K contract with the U.S. Army, Military District of Washington. Commercial Data Servers, Sunnyvale, CA, has selected Charles Roedel as Vice President of Product Development. C2I Solutions Inc., San Diego, CA, has entered into a Master Services agreement with United Guaranty Corporation. CTA Incorporated, Rockville, MD, has been awarded a Y2K contract to develop a statewide Y2K embedded systems program for the California Department of Information Technology. Sponsor Advertising BDM International (TRW Systems and Information Technology Group) Do you need help juggling all your Year 2000 responsibilities? With BDM and our SMART/2000+SM solutions, you have a partner to help address your most critical business priorities and technical requirements – from risk assessment, program management, and conversion, to independent test and compliance validation. We deliver project tracking, configuration management, and control metrics that help ensure enterprise-wide integrity and minimize your risk from start to finish. We have a mature process, a dedicated team, and experience that demonstrate the strength of our solutions. Gain the upper hand now by calling BDM: (800) 794-6085 e-mail: year2000@bdm.com http://www.bdm.com. e-mail: year2000@bdm.com http://www.bdm.com. CACI International Inc. -- Restore 2000 CACI leverages 35 years of information technology experience and over 10 years of reengineering systems - solving the same problems Y2K poses - to offer a total solution to the Year 2000 challenge: Restore 2000SM. The Restore 2000 methodology applies a comprehensive three-phase process to your information systems: Assess, Plan, and Remediate. Furthermore, we give you the option of buying our methodology or our services - both backed by CACI experience and Y2K expe rts. The Restore 2000 methodology is ITAA*2000 certified. In addition, software development processes at CACI have been independently certified as being at Level 3 of the Software Engineering Institute (SEI) Capability Maturity Model. Achieving SEI Level 3 p rovides clients further assurance that CACI solutions successfully and effectively deliver Year 2000 compliance while allowing you to save money, reduce risk, and minimize systems disruption. With approximately 3700 employees worldwide and FY97 revenues in excess of $270 million, CACI provides a depth of experience and expertise you can rely on. We've performed Year 2000 conversions for many of America's biggest enterprises, including major he alth insurance providers, retail clothing manufactures, gas companies, airlines, and government agencies. Superior functionality backed by decades of experience - CACI's Restore 2000. Worldwide Headquarters 1100 North Glebe Rd. Arlington, VA 22201 http://www.caci.com e-mail:npeters@hq.caci.com DMR Consulting Group Inc. DMR Consulting Group Inc.(formerly DMR TRECOM), an Amdahl company, is a global consulting organization of over 7,000 employees providing a comprehensive range of information technology services. Our Year 2000 Practice comprises a comprehensive offering of consulting, assessment, remediation, testing, and implementation services utilizing a formal methodology (APM/2000), best-in-class software tools, and six global conversion centers. We have mul ti-disciplinary experience in most mainframe, mid-range, and client-server/desktop environments. APM/2000 includes: · Program Management · Enterprise-Wide Assessment · Impact Analysis · Conversion Delivery · Testing and Implementation Year 2000 Risk Management Consulting Services include: Program Review, Stakeholder Readiness Assessment, Risk Management and Vendor Compliance Research. Contact: Stephen Frycki Managing Director, Year 2000 Services - US Phone: 201-200-3923 Fax: 201-200-9046 Email: fryckis@dmr.com Websites: http://www.dmr.com IBS Conversions, Inc. IBS Conversions, Inc., founded in 1982, is the first service organization to receive ITAA*2000 Certification. IBS is a recognized leader in automated conversion/migration software and consulting having translated millions of lines of code for companies worldwide. IBS/Solution 2000 IBS/Solution 2000TM is a full suite of Year 2000 services and products: Full project Analysis, Pilot Project and Repair, staffing and management/methodology Scan/Repair Conversion Factories for Mainframe and AS/400 environments Project Methodology Qwik-Sizer Analysis Licensing Scan/Repair Tools for AS/400 Y2K Projects License Conversion Factories/Tools to other Consulting Firms http://www.ibs2000.com SOFTWORKS, Inc. HOT DATE 2000/SIMULATE Preparing for the new millennium isn't easy, especially in the data center. Ensuring an accurate conversion could be a daunting task. That's why SOFTWORKS has created HotDate 2000/SIMULATE. HotDate 2000/SIMULATE is a comprehensive identification, testing, and simulation utility created to locate the programming changes needed to prepare for the Year 2000. Using a simulated Year 2000 environment, HotDate 2000/SIMULATE locates and tests poten tial date problems the Year 2000 will cause to your individual programs, applications, and entire system. HotDate 2000/SIMULATE is transparent to your applications and supports all programming languages. For more information about HotDate 2000/SIMULATE, call SOFTWORKS at 800-727-4422. Http://www.softworkscc.com Y2Kplus, Inc. Y2Kplus provides a portfolio of "best of class" software products and outsourcing services that address Year 2000 issues. These offerings are available both to IT Solution Providers and IT organizations. Y2Kplus has offerings that address the following needs: Our offerings include: * Year 2000 risk assessment * Mainframe inventory verification & code remediation (COBOL, Natural, Assembler & PL/1) * Midrange COBOL remediation (DEC, HP, UNISYS, Wang, DG, NCR, Bull & Tandem) * AS/400 remediation (RPG & COBOL) * Networked PC Year 2000 Analysis tools Applications: Access, Excel, Foxpro, Lotus 1-2-3 Languages: Basic, Visual Basic, C, C++, dBase, Clipper, Paradox PC Hardware, BIOS & Operating Systems * Testing: Tools: Data Commander for future date testing, TCS (Test Control System), Services: Test management & execution, Facilitated Test Planning, Test strategy. For more information, please send email to info@y2kplus.com, visit our web site at www.y2kplus.com or call Dave Ehlke at 781-863-8111. Calendar http://www.itaa.org/y2kcal.htm ITAA's Year 2000 Outlook is published every Friday to help all organizations deal more effectively with the Year 2000 software conversion. If you would like to receive this free publication, please sign up on the web at https://www.itaa.org/transact/2kout looksub.htm. Copyright ITAA 1998. All rights reserved. The Information Technology Association of America, 1616 N. Fort Myer Drive, Suite 1300, Arlington, VA 22209. Internet: http:\\www.itaa.org