As SBA finishes date code work, OMB lauds federal 2000 progress

The Small Business Administration crossed the year 2000 finish line first, the Office
of Management and Budget reported last week as it released agencies’ latest date code
status reports.

The Social Security Administration is right on SBA’s heels and will finish a close
second, OMB said.

After reviewing the quarterly reports, the administration has an optimistic view of the
government’s year 2000 status, senior OMB officials said.

“Agencies have made significant progress since the last quarterly reports,”
OMB deputy director for management G. Edward DeSeve said. Overall, about 61 percent of
mission-critical systems are now year 2000-ready, up from 50 percent when the 26 largest
agencies filed their last reports in September.

The number of agencies on OMB’s red-flag list, which it calls Tier 1, dropped by
one, as the Education Department moved to Tier 2.

OMB now lists six agencies at the Tier 1 level: the Agency for International
Development and the departments of Defense, Energy, Health and Human Services, State and
Transportation.

Besides Education, the Tier 2 agencies are the Agriculture, Commerce, Education, Labor,
Justice and Treasury departments, and the Office of Personnel Management.

The Housing and Urban Development and Interior departments moved to Tier 3, which OMB
calls its Y2K-OK list. The other agencies on that list are the Environmental Protection
Agency, the Federal Emergency Management Agency, the General Services Administration,
NASA, the Nuclear Regulatory Commission, the National Science Foundation, SBA, SSA and the
Veterans Affairs Department.

“Overall, the grade point average is improving. This is good,” said Bruce
McConnell, chief of OMB’s Information Policy and Technical Bureau.

But the report was not all rosy. The overall cost estimate for completing year 2000
work shot up by another $1 billion to $6.4 billion. And as of Nov. 15, systems testing had
not been finished on nearly 40 percent of systems. The deadline is January. What’s
more, 10 percent of systems had missed the September deadline for finishing fixes.

Lawmakers continued to call for faster progress. Rep. Steve Horn (R-Calif.) this month
issued his latest report cards to agencies and gave the government a D overall. That is
the same grade he gave the government in August.

The quarterly reports showed that agencies are focusing on their most important
systems. Agencies now identify 6,696 systems as mission-critical, a drop of 647 systems
from September.

“Changes at this time are usually the result of recategorizing and reprioritizing
of systems,” OMB said.

Of the 39 percent of systems that are not ready, 30 percent are in repair, 7 percent
are being replaced and the rest are being shut down.

OMB reported that agencies have completed fixes on 90 percent of the systems tagged for
repairs—an increase from 71 percent in August.

Of those systems, agencies have tested 60 percent and deployed 52 percent.

McConnell said there is no mystery to why cost estimates are rising even as the number
of mission-critical systems is dropping. Agencies demonstrated an increasing need for
independent validation of their fixes, McConnell said last week at the monthly GCN Forum
luncheon in Washington.

Much of the increased expense comes from three agencies: DOD, where the estimate jumped
by $591 million; HHS, where it rose $165 million; and Treasury, where the estimate went up
$53 million.

Last month, OMB started distributing $891 million of the $3.35 billion year 2000
emergency funds approved by Congress. OMB handed out its second distribution of emergency
funding with the release of the quarterly report last week, McConnell said. There is also
year 2000 money in the fiscal 2000 budget proposal, he said.

McConnell suggested that agencies are doing as much as they can with current employees
and contractors. “We’re probably maxed out at the level of effort we can
do,” he said. Agencies that want to meet OMB’s March deadline to finish all
2000 work will probably have to either hire more people or contract out that work, he
said.

Agencies also are doing more work on contingency plans, OMB said. “Despite uneven
progress, agencies are now focusing their efforts on developing solid contingency plans
and continuity of business plans,” the agency concluded.

For the first time, OMB included a list of agency systems that are behind schedule.

Defense, for example, reports that 65 of its 2,581 mission-critical systems are more
than two months behind schedule, an increase of 14 from the previous quarter, the OMB
report said.

State, which has had one of the worst readiness records among cabinet departments,
reported that it will have 98 percent of its 59 mission-critical systems ready by March
31. It plans to finish the remaining 2 percent by August.

The department had 46 percent of its systems ready by last month, but Horn gave State
its fourth F for the year.

One State official said that part of the problem is that the department refuses to
consider all systems ready until systems running at offices abroad also are ready, which
makes it very difficult for State to show much progress.

Agencies officials, as they have previously, called Horn’s report cards beneficial
but not necessarily accurate.

“What was not looked at was what I call under the curve,” Interior chief
information officer Daryl White said. Because the grades reward only completed work, an
agency that finishes two systems out of 100 but has not started work on the other 98 gets
a higher grade than an agency that has 90 percent of the work done on 90 out of 100
systems, White said.

The latter scenario has been the case with several agencies that have jumped to higher
grades when entire systems were ready. Interior went from a D to a B this quarter because
it completed 82 systems in August. Before that, only 29 systems had been completed, which
earned the agency a D.

“It wasn’t like we just got interested in it,” White said. Part of it
was a planned delay, he said, because Interior did not want to implement new financial
systems until after the 1999 fiscal year started and there was less data at risk if things
went wrong.