Year 2000 Computing Crisis

The cost to deal with the Year 2000 crisis totaled $7.5 billion at 24 major federal agencies, according to a recent quarterly status report to the Office of Management and Budget. This estimate has more than tripled since February 1997. Of the 24 major agencies, only seven reported that they separately tracked actual costs of Year 2000 activities and five indicated that they tracked some actual costs and estimated others. The estimated Year 2000 costs reported by the 24 major federal agencies for fiscal year 1999 have risen from about $1.1 billion in February 1998 to $2.8 billion in February 1999. Beginning late last year, the agencies requested emergency funds to cover some of these costs. The civil agencies plan to use the money for various activities, including renovation, validation, and implementation of systems; replacement of personal computers; outreach; and independent verification and validation. The Defense Department plans to use the funds for testing, operational evaluations, and contingency planning. For fiscal year 2000, the major agencies estimate that Year 2000 activities will cost about $1.1 billion. Only one major agency--the Department of Health and Human Services--anticipates Year 2000 costs beyond those projected in its budget submission.

GAO noted that: (1) the estimated year 2000 costs by the 24 major federal agencies have more than tripled during the last 2 years to a total of about $7.5 billion, according to the agencies' February 1999 quarterly status reports to the Office of Management and Budget (OMB); (2) the agencies reported that less than half of these costs had been incurred prior to FY 1999; (3) however, these reported costs were generally estimates and not actual costs; (4) of the 24 major agencies, only 7 reported that they separately tracked actual costs of year 2000 activities and 5 reported that they tracked some actual costs and estimated other costs; (5) the lack of tracking was also reflected in the reported obligations for the first quarter of FY 1999; (6) obligations of $68.4 million for year 2000 costs were reported by 24 organizations, including 2 organizations that reported only obligations of emergency funds; (7) however, 8 organizations did not know what their obligations of appropriated and emergency funds were for the quarter and the remaining 9 organizations, including 5 major agencies, did not provide obligation information; (8) the estimated year 2000 costs reported by the 24 major agencies for FY 1999 have increased during the last year from about $1.1 billion in February 1998 to $2.8 billion in February 1999, according to their quarterly reports to OMB; (9) beginning in November 1998, the agencies requested emergency year 2000 funds for some of these costs; (10) the civil agencies plan to use the emergency funds for a variety of activities, including renovation, validation, and implementation of systems, replacement of personal computers and network hardware and software, outreach, and independent verification and validation; (11) the Department of Defense plans to use emergency funds for testing, operational evaluations, and contingency planning; (12) according to their justification submissions, organizations requested emergency funds because they identified new requirements such as outreach activities and decisions to replace personal computers and networks; had increased costs of ongoing year 2000 activities; or regular appropriations were not available for planned year 2000 activities; (13) for FY 2000, the major agencies estimate that year 2000 activities will cost about $1.1 billion, according to their February 1999 quarterly reports to OMB; and (14) only one major agency--the Department of Health and Human Services--reported to GAO that it expected to have year 2000 costs beyond those projected in its budget submission.