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  A Glitch That Won't Steal New Year's? Big Corporations, U.S. Agencies Predict Y2K Disruptions Will Be Limited and Local

By Rajiv Chandrasekaran, Eric Lipton and Stephen Barr
Washington Post Staff Writers
Wednesday, September 22 1999; Page A1

With 100 days to go until the world's computers face their long-awaited moment of electronic judgment, most large U.S. corporations and government agencies say they have almost completed the painstaking and costly chore of inoculating their machines against the "millennium bug."

As a result, technology specialists, industry executives and government officials alike now are increasingly confident that ordinary Americans will enter the new year with few electronic disruptions in crucial public services, including electric power, water, telecommunications, transportation, banking, food distribution and important government operations.

The primary remaining doubt concerns one element technicians can't fix: human nature. A rush to withdraw large amounts of cash or to fill cars with gasoline or pantries with food could temporarily deplete grocery-store shelves, automated teller machines, pharmacies and gas stations.

Overall, everyone from White House Y2K czar John A. Koskinen to workers who have spent the past three years in windowless cubicles, trolling through million-line computer programs for potential date glitches, continues to compare the impact of Y2K to that of a powerful winter storm: severe -- but short-term -- disruptions for a limited number of communities.

A Senate report scheduled for release today predicts that "the Y2K problems will hit sporadically . . . and will cause more inconveniences than tragedies." The report goes on to say that "no one knows for sure exactly where those outages will be or how long they will last." But it points out that many small companies in the United States, as well as foreign businesses and governments, have been slow to address the year 2000 glitch.

As far as the Washington area is concerned, corporate leaders, federal officials, and state and local governments say they are largely prepared.

"We can handle Y2K today," said Bill Mistr, Virginia Power's Y2K coordinator, noting that 81 of the company's 84 power-generation facilities are ready -- enough to provide electricity for all of the utility's customers.

Potomac Electric Power Co. says it has completed repairing and testing all of its critical computer systems. Bell Atlantic Corp. says it, too, is finished with fixing its "mission-critical" systems and plans to spend the remaining 100 days working on other, less important computers. The region's two largest banks, Bank of America and First Union Corp., have wrapped up Y2K repairs on crucial systems and are devoting the rest of the year to additional testing. Metro and the region's largest water utilities also say they are essentially Y2K-proof.

"We're ready to go," said Skip Patterson, executive director of Bell Atlantic's Y2K office. "And there's nothing we're seeing in all the tests we've been conducting that diminishes our confidence."

Virginia and Maryland and the region's 14 major local governments also profess a growing degree of Y2K bravado. Only Alexandria, the District, and Anne Arundel and Fauquier counties report being less than 90 percent complete on their critical Y2K work. Even in the District, where the repair effort did not begin in earnest until 15 months ago, officials say the new year should come without chaos.

Even if everything isn't finished on time, the city has built an extensive web of backup systems. Police officers, for example, will be stationed at 120 locations across the city to take emergency requests for service in person, in case the dispatching system or telephones fail.

"There will be a climax at midnight, when we go, `Five, four, three, two, one,' " said D.C. Mayor Anthony A. Williams (D). "But it won't be a climax of all the lights going out and utter chaos. . . . All the processes, services and systems people expect in our modern society here in the District are going to continue."

Years-Long Effort Predictions that New Year's Day 2000 will pass without widespread disruptions across the nation come only after an unprecedented mobilization of people, money and executive attention. For the past two years, large corporations have each reassigned hundreds of workers to test systems, hired dozens of technical consultants to reprogram machines and purchased millions of dollars' worth of new electronic equipment.

The year 2000 problem, commonly known as Y2K, stems from the fact that millions of computers, as well as microchips in many electronic devices, were programmed to recognize only the last two digits of a year, assuming that the first two would be 1 and 9. On Jan. 1, unprepared machines will understand the year "00" not as 2000 but as 1900, potentially causing them to shut down or stop working properly.

Estimates of what U.S. corporations have spent to deal with Y2K vary widely, but most agree it is the largest single technology investment in history. The Federal Reserve has placed the price tag at $50 billion, and some industry analysts believe the actual figure is more than twice as much. All told, some analysts predict the global repair bill will reach $500 billion. The federal government, which has scores of antiquated systems that needed intensive repair work, now estimates its bill will total $8.3 billion.

"This has been an enormously costly, complex and time-consuming effort," said Dan Zivney, Y2K director at Fairfax-based Mobil Corp., which has devoted $185 million and 250 employees since 1997 to its date-repair project. The task included testing and fixing thousands of computers and electronic devices -- such as digital temperature controllers in oil refineries -- at more than 150 locations around the world. Then there was the challenge of monitoring the progress of 5,000 other firms that supply products to Mobil.

The petroleum giant has now finished its repair work and is focusing on "contingency plans" -- what to do if, despite all the testing, some computers fail in the new year," Zivney said. "With the myriad elements of the Y2K problem, it would be foolish on my part to say that we've captured and fixed every single thing. But the task now is to ensure that if we have a blip on the screen, it's not going to cause a disruption."

Zivney said Mobil, like many other corporations and government agencies, plans to spend the next 100 days conducting additional testing and drills to simulate problems and run through manual override procedures. "We feel very confident about where we are," he said. "But we're not going to stop preparing."

The same sort of progress is being reported by firms in every corner of corporate America. In the grocery industry, Giant Food Inc. and Safeway Inc. largely have finished their Y2K repairs and also now are focusing on contingency planning. So are CVS Pharmacy Inc. and Wal-Mart Stores Inc. In the telecommunications industry, AT&T Corp. and MCI WorldCom Inc. have completed the technical work and are concentrating on "business resumption plans" in case of unanticipated problems. And in the financial services industry, brokerage houses including Merrill Lynch & Co. and Salomon Smith Barney have told federal regulators that they are done with reprogramming and testing their computers.

Industry analysts say they are heartened that so many companies actually have met their targets, particularly because computer-related projects have a reputation for missing deadlines.

"The results are very reassuring," said Ann K. Coffou, an analyst with the Giga Information Group, a consulting firm in Cambridge, Mass. "This gives them more time to find and prepare for anything they may have overlooked."

Quick Turnaround

Eighteen months ago, congressional investigators and technology experts figured the Federal Aviation Administration, long known for botching computer projects, would never finish its Y2K work in time. The agency's repairs were so far behind schedule and so mismanaged, congressional auditors warned in early 1998, that many airline flights in the year 2000 would be delayed or canceled.

This summer, the FAA silenced its critics. The agency wrapped up its Y2K repairs in June and staged a public test to show that air-traffic control systems would work in 2000. The story has been the same throughout most of the federal government.

With more than 6,340 mission-critical systems to fix and repairs to vital programs, such as Medicare, off to a late start, congressional Republicans last year gave the Clinton administration a "D" for its Y2K efforts.

But the government mounted a late rally, finishing the bulk of its work in March, months ahead of many large corporations. Earlier this month, the White House budget office reported that 97 percent of the government's critical systems were Y2K ready. The Senate report released today notes that "most of the federal government is crossing the finish line."

The government's mobilization has been led by Koskinen, a presidential assistant who is chairman of the President's Council on Year 2000 Conversion. Koskinen created 25 working groups that included executives from corporations and trade associations to identify and encourage Y2K repair work not only inside the bureaucracy but also with states and localities that electronically exchange data with the government.

"While we're not guaranteeing perfection anywhere, we are very confident that whatever difficulties are generated by the Y2K problem won't be the result of the failure of federal systems," Koskinen said yesterday.

'A $10,000 Bet'

Assuming power, telephone and other major utilities do not falter, the region's state and local governments are nearly unanimous in their high level of confidence that there will not be major disruptions in their operations as a result of the Y2K bug.

Virginia's Century Date Change Initiative office reports that as of the beginning of August -- after an estimated $200 million in work -- repairs were complete on 99 percent of the systems needed to support 319 essential state services. From the state police to the Department of Motor Vehicles, Virginia has completed its repairs and testing and returned most of the now Y2K-ready systems to service, state officials said.

Maryland's self-assessment suggests that it remains somewhat behind Virginia: Ninety-four percent of its critical software systems were rated as "compliant" as of the start of September, after an estimated $106 million investment by the state. The remaining work includes items such as a vendor-payment system, backup generators on emergency radio towers and building fire alarms.

But overall, Maryland officials are extremely optimistic.

"I will make you a $10,000 bet that the state of Maryland will not have a major outage of services that will cause a loss of life or major property damage," said Frank J. Stech, deputy director of the Maryland Year 2000 Program Management Office. "That is how confident I am."

Local government officials are similarly sanguine. Fairfax reports that 98 percent of its central computer systems are fixed, tested and back in service. Prince George's County puts the figure at 99 percent; Montgomery, 98 percent.

The District, which began its Y2K repair effort years after neighboring state and local governments, is convinced that residents and visitors -- including the thousands expected on the Mall for the millennium party -- will not be affected.

To date, about 77 percent of the city's computer systems have been fixed, with a smaller portion also tested. The remaining repair and testing work -- in areas such as Medicaid and unemployment insurance -- is scheduled to be completed by the end of November.

The District may have "a handful of short interruptions" in its computer systems, said Chief Technology Officer Suzanne J. Peck. But because it is on such a tight repair schedule, the District has also developed one of the nation's most extensive sets of contingency plans, meaning there will be a backup system ready to kick in. D.C. General Hospital, for example, will have as many as 175 extra staff members on site in case computer functions need to be handled manually.

"No matter where this slender handful [of failures] occurs, we will be ready for it," Peck said.

Man and Machine

Despite all work -- from the private sector to federal, state and local governments -- officials offer no guarantees.

Overseas, particularly in Russia, China, Eastern Europe, and developing nations in Africa, Asia and South America, severe disruptions are considered likely. In the United States, concern remains about some of the nation's local governments and small and medium-size businesses that may have failed to take the Y2K threat seriously.

Such failures could gradually slow the supply of goods to large corporations, said Edward Yourdon, a software engineer, consultant and author of several Y2K books. As a result, he still predicts Y2K will have an effect on the U.S. economy over the coming year.

The consumer-reaction question also remains, although many large retail businesses, anticipating a surge in demand at the end of the year, are planning to keep extra inventory in their warehouses.

"Our biggest concern at this point isn't technical, it's human," said Lisa McCue, spokeswoman for the Grocery Manufacturers of America, a Washington-based trade group that represents food producers. "It's difficult to predict today what consumers will do -- just how much extra bottled water and milk and bread they will want -- at the end of December."

Sen. Robert F. Bennett (R-Utah), chairman of the Senate's Y2K committee, said he was "optimistic about the huge national systems" but remained concerned that individual companies, local communities and "the stand-alone hospital that doesn't have the money or muscle to get its problems under control" could be at risk of Y2K disruptions. He also noted that much of the information available regarding Y2K preparedness is based on self-reported data.

Still, Bennett said, "the Y2K problem is not going to be across the country but across the street."

Businesses and governments generally are spending the remaining 100 days checking and rechecking their systems and backup plans. And they are walking a fine line -- urging consumers to behave rationally while also suggesting that they make modest preparations in the event of any problems.

Thousands of executives and technology specialists will be at work across the nation on New Year's Eve, monitoring computer systems as they enter the new year. Even without severe Y2K glitches, trouble could sprout: A surge in telephone calls just after midnight to see if the phones work, for example, could translate into busy signals that are unrelated to the Y2K bug.

To some extent, if the Y2K mobilization proves to be as successful as some predict, the final reaction may be a public questioning what all the hype was about.

"We are already starting to hear, `You spent millions of dollars and nothing happened, what were you doing,' " said Bette H. Dillehay, Virginia's Y2K chief. "Well, that is only because we spent the millions of dollars. It is no mistake."

Are We Ready for Y2K?

Percentage of government computer systems that are ready for Y2K

Virginia 99%

Maryland 94%

D.C. 77%

100 Days to Y2K

Y2K preparedness by sector. Rankings provided by the Senate Special Committee on the Year 2000:

Low risk for problems *****

Below average ****

Average ***

Above average **

High risk *

Utilities

The nation's electric industry has fixed and tested 99 percent of its critical computer systems. In the Washington area, Potomac Electric Power Co. and Virginia Power say their computer systems are ready to handle Y2K. Washington Gas says it has finished repairing its critical systems.

Electric utilities *****

Water utilities ****

Telecommunications

At the end of June, more than 98 percent of the major U.S. local and long-distance companies said they were Y2K compliant. Efforts should be completed by the end of this month. There is some concern about the ability to call other countries, particularly those in Central and South America, Africa, Eastern Europe, and Southeast Asia, where fewer resources have been devoted to Y2K issues. In the Washington area, Bell Atlantic says it has completed fixing its mission-critical systems.

Telecommunications *****

Banking

The financial services industry is regarded as one of the best-prepared sectors of the U.S. economy to tackle Y2K. The Federal Deposit Insurance Corp. says that only 27 of the 10,273 banks it insures have been found to have "less than satisfactory" preparations. The Securities and Exchange Commission says all of the stock brokerage firms it regulates will be ready by mid-October. The Federal Reserve has arranged to have an additional $50 billion in cash on hand, should banks need extra money to fulfill withdrawal requests. In the Washington area, the two largest banks, Bank of America and First Union Corp., have finished their Y2K repairs.

Financial services *****

Petroleum

Ninety-four percent of oil and gas firms that responded to a Federal Energy Regulatory Commission survey said they will be fully Y2K ready by the end of the month. The Senate committee says that projection seems unrealistic given that only 20 percent of companies reported being ready as of late June. Some analysts warn that gasoline prices could increase slightly at year's end because of minor disruptions in oil imports. Fairfax-based Mobil Corp. says it has completed its Y2K fixes and is making plans to quickly replenish service stations in late December.

Oil and gas utilities ***

Food Industry

Grocers and food manufacturers say they are on track to complete computer repairs by this fall. Several individual manufacturers and retail stores plan to increase their inventories of products such as bottled water and canned food. In the Washington area, Giant Food and Safeway say they have finished all their Y2K repairs and are planning to have extra food and staff in stores.

Food supply ****

Small to medium-size businesses ****

Health Care

Most large hospitals have adequate plans in place to test and repair medical devices, but regulators worry that small facilities are not paying as much attention to the problem. The Senate committee is warning people not to schedule elective surgery around the new year. Experts say there should be no major problem with the manufacturing or distribution of prescription drugs. They advise people to maintain their usual quantity of drugs and get refills a week ahead, but not to stockpile. In the Washington area, the Inova Health System, which operates four hospitals in Northern Virginia, says 97 percent of the electronic medical equipment used for patient care is compliant; the remainder will be fixed or replaced in the next two months.

Prescription drugs ****

Urban/suburban hospitals ***

Rural/inner-city hospitals *

Health claims billing ***

Physicians' offices *

Nursing homes *

Federal Government

The White House budget office reports that 97 percent of mission-critical systems are ready. The major benefits systems -- Social Security, veterans and federal retirement -- are fully compliant. The Medicare program is expected to function, but critics worry that hospitals, insurance companies that process claims, and doctors' offices will not have completed their repairs and tests. Computers that handle some federal programs administered by the states, such as food stamps, child support, Medicaid and welfare, will not be fixed until November or December, leaving little time for testing.

Federal agencies ****

Transportation

All Federal Aviation Administration systems, including air traffic control computers, are Y2K compliant. Major U.S. and Canadian airlines have completed 95 percent of the repair work and are expected to be finished by the end of the month. In the Washington area, Baltimore-Washington International, Dulles International and Reagan National airports are compliant. Metro is still working on the issue but has determined that Y2K will not pose a safety threat to bus or rail operations.

Aviation ****

Railroads **

Public transit **

Automobiles, trucks *****

Defense Department

Four major systems, including a command-and-control war-fighting system and a space and weather sys-tem, will not be finished until December. The department has successfully tested its major weapons systems and conducted a comprehensive test of its European supply channels. U.S. and Russian defense officials will set up a joint center to watch for any false alarms of missile attacks.

Outside the United States

Canada, Australia and Britain are regarded by analysts as the best-prepared countries. Problems such as power failures, telephone outages and water shortages are more likely in Russia, China, Eastern Europe, and developing nations in Africa, Asia and South America. The State Department has compiled country-by-country Y2K advisories for Americans planning to travel overseas. The advisories are posted on the Internet at www.state.gov.

Working Toward Local Compliance

All of the region's major local and state governments report confidence that services will not be disrupted Jan. 1 as a result of the Y2K computer problem. Some are farther along with repairs and testing than others, with only the District, Alexandria, and Anne Arundel and Fauquier counties reporting to be less than 90 percent complete.

VIRGINIA

99% of repairs on the state's priority business functions are complete. Among the agencies that are lagging are the departments of environmental quality and transportation, although they remain on track to be ready by year's end.

ALEXANDRIA: 87% of the city's 15 mission-critical systems have been repaired, tested and returned to service, with the remainder to be completed by this fall. The police and fire computer-aided dispatch system is set to be prepared by October.

ARLINGTON: All mission-critical systems have been tested as Y2K ready, but work continues on real estate tax assessment and utilities billing , which should be completed by December.

FAIRFAX: 98% of central computer applications have been fixed, tested and put back into service. All critical devices with embedded chips have, if necessary, been repaired or replaced.

FAUQUIER: 85% of computer systems are considered Y2K ready. The public safety computer-aided dispatch and records management systems have been replaced, but the systems will not be fully implemented until November. The tax system is also awaiting a fix.

LOUDOUN: The county is about 95% complete. Work continues on the tax admini-stration and building inspec-tion systems, to be finished by October.

PRINCE WILLIAM: 91% of the computer systems are repaired, tested and back in service. The public safety computer-aided dispatch is set to be ready by the end of the month and code enforcement by the middle of October.

DISTRICT

77% of the city's large computer systems have been repaired, meaning the city government remains well behind the region's other state and local governments. City officials have developed extensive backup plans and expect to finish repairs by November.

MARYLAND

94% of the state's critical software systems for its top 31 agencies are considered Y2K compliant, and all of the state's mainframe data centers have been repaired. Work remains on several critical state functions such as its vendor payment system.

ANNE ARUNDEL: With a late start, the county is only about 88% complete with its Y2K repairs. The county's police and fire computer-aided dispatch system is ready, as are the water and waste-water systems. The remaining systems should be ready by October.

CALVERT: Repairs and testing on nearly all computer systems have been completed, with the exception of the purchasing, accounting and human resources system, which should be completed by October.

CHARLES: About 99% of the mission-critical computer systems are ready, excluding the school board and sheriff's office, which are handling their own Y2K efforts. The sheriff's office testing should be completed by November.

HOWARD: All mission-critical computer systems are considered Y2K ready, with some internal database systems still undergoing repairs that will be completed within the next several weeks.

PRINCE GEORGE'S COUNTY: 99% of the major com-puter systems are fixed and tested, and less than

1 percent of devices with embedded chips still need repairs.

MONTGOMERY: 98% of repairs are completed, including all mission-critical systems.

ST MARY'S: 98% of the repair effort is completed, including all critical systems.

SOURCES: Company reports, local governments, Office of Management and Budget, Senate Special Committee on the Year 2000 Technology Problem

© 1999 The Washington Post Company

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