	Improvements Made But Much Work Remains

Addressing the Year 2000 problem is a tremendous challenge for the federal  government. To meet this challenge and monitor individual agency efforts,  OMB directed the major departments and agencies to submit quarterly  reports on their progress, beginning May 15, 1997. These reports contain  information on where agencies stand with respect to the assessment,  renovation, validation, and implementation of mission-critical systems, as  well as other management information on items such as business  continuity and contingency plans and costs. The federal government's most recent reports show improvement in  addressing the Year 2000 problem. While much work remains, the federal  government has significantly increased the percentage of mission-critical  systems that are reported to be Year 2000 compliant, as figure 1 illustrates. In particular, while the federal government did not meet its goal of having  all mission-critical systems compliant by March 1999, 92 percent of these  systems were reported to have met this goal. While this progress is notable, 11 agencies did not meet OMB’s deadline for  all of their mission-critical systems. End-to-End Testing

To ensure that their mission-critical systems can reliably exchange data  with other systems and that they are protected from errors that can be  introduced by external systems, agencies must perform end-to-end testing  of their critical core business processes. On March 31, OMB and  the Chair of the President’s Council on Year 2000 Conversion announced  that one of the key priorities that federal agencies will be pursuing during  the rest of 1999 will be cooperative efforts regarding end-to-end testing to  demonstrate the Year 2000 readiness of federal programs with states and  other partners critical to the administration of those programs. In particular, on January 26, 1999, OMB  called on federal agencies to identify and report on the high-level core  business functions that are to be addressed in their business continuity and  contingency plans as well as to provide key milestones for development  and testing of business continuity and contingency plans in their February  1999 quarterly reports. Accordingly, in their February 1999 reports, almost  all agencies listed their high-level core business functions. On March 26, 1999, OMB implemented our recommendation by issuing a  memorandum to federal agencies designating lead agencies for the  government’s 42 high-impact programs (e.g., food stamps, Medicare, and  federal electric power generation and delivery); the attachment contains a  list of these programs and lead agencies. OMB directed the lead  agencies to provide a schedule and milestones of key activities in the plan  by April 15. In January 1999, OMB implemented a requirement that federal oversight  agencies include the status of selected state human services systems in  their quarterly reports. Specifically, OMB requested that the agencies  describe actions to help ensure that federally supported, state-run  programs will be able to provide services and benefits. In addition to the state systems that support federal programs, another  important aspect of the federal government’s Year 2000 efforts with the  states are data exchanges.
Why GAO Did This Study

Pursuant to a congressional request, GAO discussed federal agencies' progress in addressing the year 2000 computing challenge and outlined actions needed to ensure a smooth conversion to the next century, focusing on the: (1) status of the federal government's remediation of its mission-critical systems; (2) remaining challenges facing the government in ensuring the continuity of business operations, namely end-to-end testing and business continuity and contingency planning; (3) Office of Management and Budget's (OMB) efforts to identify the government's high-impact programs; and (4) readiness of state systems that are essential to the delivery of federal human services programs.

What GAO Found

GAO noted that: (1) addressing the year 2000 problem is a tremendous challenge for the federal government; (2) to meet this challenge and monitor individual agency efforts, OMB directed the major departments and agencies to submit quarterly reports on their progress, beginning on May 15, 1997; (3) these reports contain information on where agencies stand with respect to the assessment, renovation, validation, and implementation of mission-critical systems, as well as other management information; (4) the federal government's most recent reports show improvement in addressing the year 2000 problem; (5) while much work remains, the federal government has significantly increased the percentage of mission-critical systems that are reported to be year 2000 compliant; (6) in particular, while the federal government did not meet its goal of having all mission-critical systems compliant by March 1999, 92 percent of these systems were reported to have met this goal; (7) while this progress is notable, 11 agencies did not meet OMB's deadline for all of their mission-critical systems; (8) to ensure that their mission-critical systems can reliably exchange data with other systems and that they are protected from errors that can be introduced by external systems, agencies must perform end-to-end testing of their critical core business processess; (9) OMB and the President's Council on Year 2000 Conversion announced that one of the key priorities that federal agencies will be pursuing during the rest of 1999 will be cooperative efforts regarding end-to-end testing to demonstrate the year 2000 readiness of federal programs with states and other partners critical to the administration of those programs; (10) OMB called on federal agencies to identify and report on the high-level core business functions that are to be addressed in their business continuity and contingency plans in their February 1999 quarterly reports; (11) accordingly, in their February 1999 reports, almost all agencies listed their high-level core business functions; (12) OMB issued a memorandum to federal agencies designating lead agencies for the government's 42 high-impact programs; (13) OMB directed the lead agencies to provide a schedule and milestones of key activities in their year 2000 plans by April 15; (14) in January 1999, OMB implemented a requirement that federal oversight agencies include the status of selected state human services systems in their quarterly reports; and (15) specifically, OMB requested that the agencies describe actions to help ensure that federally supported, state-run programs will be able to provide services and benefits.