One participant, who requested anonymity, said a number of officials at a July 1995 meeting insisted their computers had no date conversion problems. As late as last year, some agencies continued to write new code that will not work in 2000, and two years ago one agency bought a new security system that will not recognize employee passes in 2000, according to federal officials. The officials declined to identify the agencies.

Even as word of the Y2K problem spread, the Defense Department last year continued to buy commercial electronic products through contracts that did not require Year 2000 compliance, the Pentagon inspector general found.

"There is a certain sense of denial about some of these problems. I had it myself," said Nancy-Ann Min DeParle, the head of the Health Care Financing Administration, which oversees Medicare and Medicaid.

The Y2K "date conversion" problem stems from the use in many computer systems of a two-digit dating system that assumes the first two digits of the year are 1 and 9, a convention adopted years ago when coding space was at a premium. Without specialized reprogramming, the systems will recognize "00" not as 2000 but as 1900. That misinterpretation could cause the computers either to shut down or malfunction.

As with many large-scale projects, the government's Year 2000 mobilization has been defined by phases. Federal officials speak of moving from "awareness" of the problem to "assessment" to "renovation." Now the government also appears to be moving into a season of contingency planning – just in case the best laid plans still lead to chaos.

Still to come are months of testing to determine whether computer systems work with their internal clocks intentionally moved forward. Any enduring trouble likely will send agencies into another round of contingency planning in late 1999.

John A. Koskinen, who was appointed White House Year 2000 czar in March, said agencies should plan for two scenarios: predictable problems, such as programmers falling behind schedule, and unpredictable problems, such as breakdowns beyond an agency's control.

"There may be a power brownout or blackout. There may be telecommunications problems. There may be transportation problems in some areas," Koskinen said. "We don't expect at this stage that the government will need to exercise those contingency plans, but it would be a mistake not to have them."

Risk Management

At IRS headquarters on Constitution Avenue, for example, Rossotti convenes regular meetings to resolve problems that might disrupt the agency's Y2K schedule.

Rossotti works from a chart listing major Y2K areas – such as mainframes, telecommunications and field-office systems – and the status of their respective fixes. The chart is divided into green, yellow and red zones, reflecting levels of progress. At the moment, yellow and red have an edge over green.

The colors change, as new information surfaces. At virtually every meeting, something that has been overlooked pops onto the chart. One weekend, IRS discovered an additional 1,400 software programs that will not function in 2000.

"Went from yellow to red right there on the spot. Every week there's a crisis, often every day," Rossotti said. "But the real key to making any project successful is to identify them. There's virtually nothing you can't fix if you identify it soon enough. ... If you wait until the end, you're dead."

The IRS efforts are typical of those underway throughout the government. Dozens of computer specialists make printouts of software code, then work through it line by line, using red pens to circle suspected problem areas. Armed with the paperwork, the specialists then call up the code on their computer screens and make necessary fixes.

"It's a tedious problem and requires very close attention to detail," said Cecil Day, an IRS computer specialist who has been doing such work for months. "Obviously, if you miss a line and assume it is going to function correctly, then you're really just sitting waiting for the day when it hits that condition where it won't function correctly."

Mass mobilization for Y2K has delayed other government priorities at virtually every agency to one degree or another.

Medicare, for instance, has postponed some program and budgetary changes authorized last year by Congress because contractors need to focus exclusively on Year 2000 repairs and subsequent testing of the fixes. At the IRS, Y2K preoccupation has slowed long-term computer modernizations and the overhaul of internal agency operations.

John A. Koskinen is special assistant to the president for the Year 2000 bug. (By James M. Thresher – The Washington Post)

Uncertainty Rules

Increasingly, Koskinen's focus has shifted from federal agencies to worries about the readiness of small and medium-sized companies, as well as towns and counties and foreign governments.

"We'll be able to make Social Security payments in the year 2000. And it's important for the public to be notified of that so that people will be comfortable and confident about it," Koskinen said. "At the same time, it's very helpful for them to understand that perhaps they ought to check with their bank and others to see that, for instance, their bank is going to be able to process the electronic funds transfer or the deposit."

Koskinen has set up 34 working groups, drawn from various federal agencies, to reach out to private-sector trade groups and industry associations. He also has proselytized the United Nations and leading industrialized nations in an effort to highlight the problem.

Any success by the federal government in fixing its computer systems could be undone by haywire systems in crucial sectors of the nation's infrastructure. The government's nearly 2 million civil servants rely on the same electricity, water, telephones and transit that private-sector employees do.

"If the telecommunications network doesn't function, it doesn't matter what your systems do," Koskinen said. "So everybody from the Federal Reserve on to insurance companies and the securities industry, everyone is concerned about making sure that the telecommunications system works."

Federal systems also may be vulnerable if their business partners cannot electronically exchange information on Jan. 1, 2000. The Defense Department, for example, "interfaces" with thousands of systems belonging to private contractors, foreign buyers, other federal agencies and international groups such as the North Atlantic Treaty Organization, the GAO recently noted.

Not until next year – after a stout round of tests – will government agencies and private-sector companies alike really be able to assess the extent to which the Y2K challenge threatens to become the Y2K disaster.

Until then, uncertainty rules.

"You've either got people saying that the world is going to come to an end, or people saying everything's going to be fine," Koskinen said. "Nobody knows."

Tuesday: From lotteries to Metro to prisons, the Washington region girds for 2000.