The Year 2000 Gap

Computer industry experts and the Office of Management and Budget have a rather substantial difference of opinion when it comes to estimating how much it will cost the federal government to keep its computer systems from crashing when the clock strikes midnight on January 1, 2000.

According to industry estimates, the figure could be as high as $30 billion. But in a report released Feb. 6, the Office of Management and Budget estimates it will only cost $2.3 billion.

Both groups agree that the Year 2000 problem is serious. Because computer applications developed in the 1960s and 70s use six digit date codes, when the date hits 01-01-00, the applications will read that as 1900. Some computer systems will simply freeze up or shut down when that happens. Others will continue to function, but the data they work with will be corrupted, a potentially disastrous problem for large databases like the ones at the Social Security Administration.

Some agencies, like the Small Business Administration, are replacing or upgrading their systems anyway, so becoming Year 2000 compliant will not require additional funds. SBA's new system will be up and running by the end of 1998.

While most agencies will at least begin renovating their systems by January 1999, many will not fully implement Year 2000 compliant systems until the waning months of the century. The longer agencies wait, the more expensive it will be to fix their systems, experts say.

Capers Jones, chairman of Software Productivity Research Inc., who pegged the government's Year 2000 costs at around $30 billion, says OMB's estimates are far too low.

"I don't think they have a clue how much software they have," Jones says.

In a report on the global impact of the Year 2000, Jones argued that "the United States Department of Defense will be facing one of the largest military expenses in history." While admitting a large margin of error, Jones estimated the data repair costs for the military to be about $25 billion.

OMB's estimate for the Defense Department's Year 2000 costs, however, is $969.6 million.

Rick Rineer, who spearheaded the Education Department's Year 2000 preparations until last fall, estimated last year that the department would spend about $60 million on Year 2000 compliance.

But the estimate for Education has been reduced to $7.2 million, Leo Kornfeld, the department's Chief Information Officer, now says.

"The $7.2 million figure comes from a very careful assessment of the software," Kornfeld says. He said their systems are rebid every three to five years, so most upgrade costs will be included in new contracts.

Sally Katzen, administrator of OMB's Office of Information and Regulatory Affairs, said last week that the government's figures may increase modestly because agencies are still assessing the problem.

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