ITAA's Year 2000 Outlook
February 26, 1999                      Volume 4, No. 8

Published by the Information Technology Association of
America, Arlington, VA

Bob Cohen, Editor bcohen@itaa.org

Read in over 80 countries around the world

ITAA's Year 2000 Outlook is published every Friday to
help all organizations deal more effectively with the
Year 2000 software conversion.  To create a
subscription to this free publication, please visit
ITAA on the web at https://www.itaa.org/transact/2ko
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visit https://www.itaa.org/transact/2kremove.htm.

ITAA's Year 2000 Outlook is sponsored in part by CACI
International Inc. and Y2Kplus.

In this issue:
· Hearing Suggests Postal Service Must Speed Y2K Delivery
· Opinions Split on HCFA Readiness
· Y2K Taxes IRS
· Bennett Warns of Y2K Inspired Attacks
· Business to Business
· ITAA Y2K Information Center
· Sponsor Advertising

Hearing Suggests Postal Service Must Speed Y2K Delivery

The check may be in the mail, but the ability of the
U.S.  Postal Service to deliver it in the Year 2000 may
be more than a little touch and go.

A joint House subcommittee hearing this week focused
attention on the nation's mammoth postal operation.
Orchestrating a virtual army of automation, the postal
service uses over 100,000 pieces of hardware and
software, almost 600 vendors and suppliers, 3 8,000
nationwide facilities, and 152 "severe and critical"
information systems to move 650 million pieces of mail
a day to 130 million households and businesses.

The good news is that hearing witness Norman E.
Lorentz, senior vice president and chief technology
officer of the U.S.  Postal Service, says there is "a
reasonable level of assurance that the Postal Service
will continue to deliver."  The not so good news is
that the Postal Service is trying to stamp out any Y2K
bugs lurking in its 100 million of lines of code, and
the organization is behind schedule on getting it done.
The bad news is that, as many witnesses pointed out,
the Postal Service is the backst op factored into the
contingency planning of many organizations now using
electronic delivery.

One General Accounting Office official said Postal
Service activities are as ubiquitous as
telecommunications or electrical power.  Even so, Jack
L. Brock, Jr., Director of Governmentwide and Defense
Information Systems, said that the Postal Service misse
d the Office of Management and Budget (OMB) renovation
September 1998 deadline for about 22 percent of mission
critical systems and has pushed only 27 percent of such
systems through validation testing by the January 1999
OMB get-it-done mark.  The Postal Service, Brock said,
did not complete its testing strategy until November of
last year and did not start its contingency planning
until last December.

Brock said delays in Y2K progress "were in part
attributable to the fact the Service was slow to
recognize the severe and pervasive impact of the
problem and lacked sufficient planning processes and
corporate-wide involvement."

Postal Service Inspector General Karla W. Corcoran
provided more specifics.  In 1993, she said, the Postal
Service headquarters Information Systems organization
began providing guidance on the issue but a two-person
Y2K program office was only established in 1995.  In
1997, that number jumped to 12 and an Executive Program
Director took over the operation.  In 1998, the work
expanded to include non-information systems areas,
including suppliers, equipment and facilities.  Last
month, the Postal Service es tablished a Year 2000
Executive Council, she said, composed of the Deputy
Postmaster General and other senior officials.

The slow start was indicated in other ways as well.
Corcoran said that while the organization expects to
spend $607 million to fix its systems, to date the
Postal Service has made Y2K outlays of only $200
million.

The Inspector General said that although the Postal
Service has almost 8000 critical suppliers, as of last
month it knew the Y2K status of just 349.  At Postal
Service headquarters, 661 critical suppliers were
polled for their Y2K status.  Corcoran said n early
half failed to respond and, of the 349 that replied,
"The Postal Service determined that 254 are at high
risk of not being Y2K ready…"

The Postal Service maintains critical data exchanges
with financial institutions, customers, transportation
suppliers, meter manufacturers and the U.S.  Treasury,
Corcoran said.  She noted that just five postage meter
manufacturers generate some $21 billio n in Postal
Service Revenue.  "As of January 1999, the Postal
Service had not completed its inventory of internal and
external data exchanges," she said.  Of the 5700 data
exchanges in place, 4300 have been assessed and about
2000 identified as critical, she said.  "As of now, 123
of the 2000 have been reported as Y2K ready," Corcoran
testified.

The Postal Service may be looking for more than just
date fields.  Corcoran said that the organization has
120,000 personal computers and about 14,000 servers and
has categorized 2000 unique types of hardware and
software.  While Y2K solutions have been d eveloped for
1600 of the 2000, Corcoran said that "Deploying the
solutions will be a challenge because the Postal
Service does not know which specific personal computers
and servers are not Y2K compliant."

Opinions Split on HCFA Readiness

The House Ways and Means Committee held a hearing this
week to assess Y2K efforts and the remaining challenges
that agencies must overcome to ensure seamless
continuation of services to beneficiaries and
taxpayers.  The hearing addressed programs within t he
jurisdiction of the committee, with much of the focus
directed at one of the Federal government's Y2K
waywards, the Health Care Financing Administration
(HCFA).  HCFA is responsible for administering
Medicare, Medicaid and the Children's Health Insuran ce
Program.  In a September 1998 report issued by the
General Accounting Office (GAO), HCFA and its
contractors were severely behind schedule for Y2K
compliance in the areas of repair, testing and
implementation.

According to HCFA Administrator Nancy-Ann DeParle, a
witness at the February 24th hearing, the agency got a
late start on addressing their Y2K problems.  However,
Deparle testified that HCFA claims processing and
payment systems would work after the mille nnium date
change.  DeParle outlined the steps HCFA had taken to
address Y2K concerns since the GAO report was issued.
The agency has made compliance the top priority,
setting up a "war room" to oversee efforts on a daily
basis, hiring outside contractor s to test systems and
monitor Y2K procedures, and educating providers through
an outreach campaign.

GAO conceded that HCFA is making progress in addressing
Y2K compliance.  According to the hearing testimony of
Joel C. Willemssen, Director of GAO's Civil Agencies
Information Systems Accounting and Information
Management Division, the agency has demonstr ated some
improvement.  However, GAO views its progress on
external mission-critical systems as overstated.  As an
example, Willemssen reported that none of the 54
systems that HCFA has reported as compliant were in
fact Year 2000 ready.  All have qualifi cations, which,
according to HCFA, are "minor problems."  GAO is not so
sure.

"A specific example of a system reported as compliant
with qualifications is the Florida standard system,
used by 29 contractors.  This system had one
qualification that consisted of 22 test failures,"
Willemssen reported.

The problem, says HCFA, is not with the agency but with
the service providers who administer health services to
the patients and then bill the government.  "We do not
have the authority, ability, or resources to step in
and fix systems for others, such as States or
providers.  And that leads to a rather substantial
concern for which we need the assistance of Congress
and others to address," said DeParle in h er testimony
before the committee.

HCFA has made efforts to target and educate providers
about Y2K compliance.  Last month, the agency issued
instructions to healthcare providers, including doctors
and suppliers, that claims received after April 5, 1999
which are not Y2K compliant will be rejected and
returned.

Dr.  Donald J. Palmisano, a member of the American
Medical Association's Board of Trustees, testified that
the AMA hopes that the agency will aid health care
providers who are unable to meet the April 5 deadline.
Furthermore, he stated, "HCFA must not wit hhold
reimbursement to, in any sense, punish those relatively
few health care professionals who have lacked the
necessary resources to meet HCFA's Y2K criteria."

Fred Brown, chairman of the Board of Trustees of the
American Hospital Association, recommended in his
testimony that Congress should go so far as to
authorize advance payments to Medicare providers as a
contingency plan.

"These payments, based on past payment levels, should
be implemented to ensure adequate cash flow for
providers in case carrier and fiscal intermediary
payment systems fail due to the date change.  Congress
should also ensure that HCFA has adequate fundin g to
ensure Y2K compliance, including the testing needed to
demonstrate that the claims processing and payment
systems work for the government, providers,
contractors, and beneficiaries alike," Brown testified.

A tall order by any standard.

Y2K Taxes IRS

Testifying before the House Ways and Means Committee
this week, a General Accounting Office official
indicated that pressures are mounting on the Internal
Revenue System (IRS) to complete successfully its Y2K
conversion.  Tax Policy and Administration Iss ues
Director James R. White said "If IRS' Year 2000 efforts
are unsuccessful, the impacts on taxpayers could
include millions of erroneous tax notices and delayed
or erroneous refunds."

White cited the method by which the IRS reports its Y2K
status information, the extent to which the agency met
its January 31, 1999 deadline for converting
application and system software, hardware and
telecommunications networks; the time remaining to im
plement end-to-end testing and core business process
contingency planning; and the demands placed on IRS
staff by competing projects.

"IRS' Year 2000 status reports do not provide a
complete picture of the status of IRS' mission-critical
systems because IRS does not monitor Year 2000 status
for its mission-critical systems in their entirety,"
White said in his statement.  White said the agency
tracks status information on components of an
information system but does not collect this data on a
system by system basis.

White recognized the agency's progress in correcting
mission critical application software but said the IRS
missed its target date for upgrading systems software
and hardware for mainframes, minis and personal
computers.  Delays on the mincomputer/file se rver
upgrade will push testing to October 1999.  On the
personal computer front, White said the IRS plans to
reduce its number of commercial software and hardware
products from 4000 to 60.

The IRS is also squeezed by the need to perform
end-to-end system testing on 97 of its 133 mission
critical systems.  White said the test must reflect
both the 1999 filing season application software, and
software changed to reflect Year 2000 tax law modi
fications.

"Under this compressed schedule, instead of having
until January 2000, IRS must program and test all tax
law changes that are to take effect in the 2000 filing
season before September 30, 1999," White said.

On contingency planning, White said the agency has
slipped its schedule for 36 different plans, originally
due for completion last December.  Instead, the agency
has staggered its approach to plan completion with
several due by the end of March and the ba lance by the
end of May.

The GAO official cited several instances where IRS
business initiatives are competing for the time and
attention of technical and business staff.  These
include data center consolidation, agency
restructuring, and taxpayer service activities.  "While
we d o not question the importance of these
initiatives..the need to make a significant number of
tax law changes for the 2000 filing season introduces
an additional risk…"

IRS Commission Charles O. Rossotti said that the
agency's next 90 days represent its "riskiest period."
"While the picture is generally positive," he said,
"there is still a great deal of risk and some trouble
spots."  Rossotti said localized problems fo r the IRS
are possible.

Bennett Warns of Y2K Inspired Attacks

Predicting problems, Sen.  Robert Bennett (R-UT) told
the Senate Armed Services Committee this week that
political instability overseas could be made still
worse by computer breakdowns.  As first reported by
Newsbytes, Bennett said the U.S. must respond wi th
tactical warning of military operations, "process and
fuse" sensor data from command and control networks and
maintain "positive control" over ballistic missile
forces.  He said U.S. adversaries could seek to take
advantage of the situation by using th e date
distraction as cover to attack infrastructure assets.

Department of Defense Deputy Secretary John J. Hamre
also testified and said the nation's command and
control systems have been thoroughly tested and
performed "superbly."

Business to Business

Keane, Boston, MA, has won a five-year, multi-million
application management outsourcing contract with The
Dominion of Canada General Insurance Company.

AnswerThink Consulting Group, Inc., Miami, FL, has
acquired Group Cortex.

TAVA Technologies, Englewood, CO, has been awarded a
Y2K contract by the U.S.  Postal Service.

ITAA Y2K Information Center

Solution Providers Directory
http://www.itaa.org/script/2000vend.cfm

ITAA*2000 Certification Program
http://www.itaa.org/2000cert.htm

Outlook Archive
http://www.itaa.org/script/get2klet.cfm

Legislative and Litigation Table
http://www.itaa.org/year2000/legis.htm

Calendar
http://www.itaa.org/y2kcal.htm

Vendor/User Status Questionnaires
http://www.itaa.org/questmain1.htm

Alternate Dispute Resolution (ADR)
http://www.itaa.org/year2000/adr.htm

Statement of Intention to Use ADR
http://www.itaa.org/year2000/soi.htm,

Y2K Mediators Seminar
http://www.technologymediation.com/Y2K_seminar.htm


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Information Technology Association of America, 1616 N.
Fort Myer Drive, Suite 1300, Arlington, VA 22209.
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