	Reliance on Computers and Interdependencies Among Sectors Create Risk of Service Disruption

The public faces a risk that critical services could be severely disrupted by the Year 2000 computing crisis. Risk of Disruption to Government Services Is High

The federal government is extremely vulnerable to the Year 2000 issue due to its widespread dependence on computer systems to process financial transactions, deliver vital public services, and carry out its operations. In addition, the year 2000 also could cause problems for the many facilities used by the federal government that were built or renovated within the last 20 years that contain embedded computer systems to control, monitor, or assist in operations. Key economic sectors that could be seriously impacted if their systems are not Year 2000 compliant are information and telecommunications; banking and finance; health, safety, and emergency services; transportation; utilities; and manufacturing and small business. Setting Priorities Is Critical

Agencies have taken longer to complete the awareness and assessment phases of their Year 2000 programs than is recommended. This leaves less time for critical renovation, validation, and implementation phases. Reporting on Agency Progress Needs to Be Improved

OMB’s reports on agency progress do not fully and accurately reflect the federal government’s progress toward achieving Year 2000 compliance because not all agencies are required to report and OMB’s reporting requirements are incomplete. Contingency Plans Imperative

In January 1998, OMB asked agencies to describe their contingency planning activities in their February 1998 quarterly reports. Accordingly, in their February 1998 quarterly reports, several agencies reported that they planned to develop contingency plans only if they fall behind schedule in completing their Year 2000 fixes. Independent Verification of Progress Needed

OMB’s assessment of the current status of federal Year 2000 progress has been predominantly based on agency reports that have not been consistently verified or independently reviewed. Success of the New Presidential Council Is Critical

Given the sweeping ramifications of the Year 2000 issue, other countries have set up mechanisms to solve the Year 2000 problem on a nationwide basis. HUD officials recognize the importance of ensuring that its systems are Year 2000 compliant; system failures could interrupt the processing of applications for mortgage insurance, the payment of mortgage insurance claims, and the payment of rental assistance. HUD established a Year 2000 project office in June 1996. To better ensure completion of work on mission-critical systems, HUD officials have recently decided to halt routine maintenance on five of its largest systems, beginning April 1 of this year.
Why GAO Did This Study

GAO discussed the nation's year 2000 computing crisis as well as the year 2000 program being implemented at the Department of Housing and Urban Development (HUD).

What GAO Found

GAO noted that: (1) the public faces a risk that critical services could be severely disrupted by the year 2000 computing crisis; (2) the federal government is extremely vulnerable to the year 2000 issue due to its widespread dependence on computer systems to process financial transactions, deliver vital public services, and carry out its operations; (3) in addition, the year 2000 also could cause problems for many of the facilities used by the federal government that were built or renovated within the last 20 years that contain embedded computer systems, to control, monitor, or assist in operations; (4) key economic sectors that could be seriously impacted if their systems are not year 2000 compliant are: information and telecommunications, banking and finance, health, safety, and emergency services, transportation, utilities, and manufacturing and small business; (5) agencies have taken longer to complete the awareness and assessment phases of their year 2000 programs than is recommended; (6) this leaves less time for critical renovation, validation, and implementation phases; (7) the Office of Management and Budget's (OMB) reports on agency progress do not fully and accurately reflect the federal government's progress toward achieving year 2000 compliance because not all agencies are required to report and OMB's reporting requirements are incomplete; (8) in January 1998, OMB asked agencies to describe their contingency planning activities in their February 1998 quarterly reports; (9) accordingly, in their 1998 quarterly reports, several agencies reported that they planned to develop contingency plans only if they fall behind schedule in completing their year 2000 fixes; (10) OMB's assessment of the current status of federal year 2000 progress has been predominantly based on agency reports that have not been consistently verified or independently reviewed; (11) given the sweeping ramifications of the year 2000 issues, other countries have set up mechanisms to solve the year 2000 problem on a nationwide basis; (12) HUD officials recognize the importance of ensuring that its systems are year 2000 compliant; systems failures could interrupt the processing of applicants for mortgage insurance, the payment of mortgage insurance claims, and the payment of rental assistance; (13) HUD established a year 2000 project office in June 1996; and (14) to better insure completion of work on mission-critical systems, HUD officials have recently decided to halt routine maintenance of five of its largest systems, beginning April 1 of this year.