Due to DFAS’ reliance on computer systems to carry out its operations, the Year 2000 issue has the potential to impact virtually every aspect of the DFAS accounting and finance mission. Although DFAS is responsible for the majority of DOD’s finance and accounting systems, DFAS is not responsible for all the systems that produce financial data. During the awareness phase, DFAS developed a Year 2000 strategy that adopts the five-phased approach of awareness, assessment, renovation, validation, and implementation. As of April 1997, DFAS had taken the following actions as part of its efforts to address the Year 2000 problem: established a Year 2000 systems inventory, prepared cost estimates for systems to be renovated, instituted a quarterly Year 2000 status reporting process, appointed a project manager to provide Year 2000 guidance and track Year established a Year 2000 certification program that defines the conditions that must be met for automated systems to be considered as Year 2000 compliant. Specifically, DFAS has not identified, in its Year 2000 plan, all critical tasks for achieving its objectives or established milestones for completing all tasks, performed formal risk assessments of all systems to be renovated and ensured that contingency plans are in place in the event that renovations are not completed in time or if systems fail to operate properly, identified all systems interfaces and only a fraction of written interface agreements have been finalized with interface partners, and adequately planned to ensure that testing resources are available when needed. DFAS’ risk in these areas is increased due to its dependence on the military services and other Defense agencies, such as DISA, to ensure that their systems and related operating environments are Year 2000 compliant. No Process for Ensuring COTS Compliance

DFAS has not defined a validation process for ensuring that its COTS applications are Year 2000 compliant. Conclusions

While initial progress has been made, there are several critical issues facing DFAS, that if left unaddressed, may well result in the failure of its systems to operate at the year 2000. Although DFAS managers have recognized the importance of solving Year 2000 problems in their systems, to reduce the risk of failure with its own Year 2000 effort, it is critically important that DFAS take every measure possible to ensure that it is well-positioned to deal with unexpected problems and delays.
Why GAO Did This Study

GAO reviewed the Defense Finance and Accounting Service (DFAS) program for solving the year 2000 computer systems problem, focusing on the: (1) status of DFAS' efforts to identify and correct its year 2000 systems problems; and (2) appropriateness of DFAS' strategy and actions for ensuring that problems will be successfully addressed.

What GAO Found

GAO noted that: (1) DFAS managers have recognized the importance of solving the year 2000 problem; (2) if not successfully addressed it could potentially impact DFAS' mission; (3) to help ensure that services are not disrupted, DFAS has developed a year 2000 strategy which is based on the generally accepted five-phased government methodology for addressing the year 2000 problem; (4) this approach is also consistent with GAO's guidelines for planning, managing, and evaluating year 2000 programs; (5) in carrying out its year 2000 strategy, DFAS has assigned accountability for ensuring that year 2000 efforts are completed, established a year 2000 systems inventory, implemented a quarterly tracking process to report the status of individual systems, estimated the cost of renovating systems, begun assessing its systems to determine the extent of the problems, and started to renovate and test some applications; (6) DFAS also established a year 2000 certification program that defines the conditions that must be met for automated systems to be considered year 2000 compliant; (7) while initial progress has been made, there are several critical issues facing DFAS, that if left unaddressed, may well result in the failure of its systems to successfully operate in 2000: (a) DFAS has not identified in its year 2000 plan all critical tasks for achieving its objectives or established milestones for completing all tasks; (b) DFAS has not performed formal risk assessments of all systems to be renovated or ensured that contingency plans are in place; (c) DFAS has not identified all system interfaces and has completed written interface agreements with only 230 of 904 interface partners; and (d) DFAS has not adequately ensured that testing resources will be available when needed to determine if all operational systems are compliant before the year 2000; (8) DFAS' risk of failure in these areas is increased due to its reliance on other DOD components; (9) DFAS is also dependent on military services and DOD components to ensure that their systems are Year 2000 compliant; and (10) it is essential that DFAS take every possible measure to ensure that it is well-positioned as it approaches 2000 to mitigate these risks and ensure that defense finance and accounting operations are not disrupted.