The total estimated cost for agencies to fix the Year 2000 problem in their computer systems has risen to more than $8 billion, according to the Office of Management and Budget-$1.3 billion more than the Clinton administration had previously projected.
In February, OMB reported that agencies would have to spend $6.75 billion fixing problems related to the Y2K bug, but yesterday OMB increased that estimate to $8.05 billion in the agency's ninth quarterly report to Congress on the government's Y2K progress. The $8.05 billion estimate is for Y2K-related work from fiscal 1996 through fiscal 2000. Of that amount, $3.5 billion was already spent from 1996 to 1998. The remaining $4.5 billion is based on agency estimates of what they'll spend this fiscal year and next.
"This increase of $1.3 billion over last quarter is due largely to the Department of Defense's use of contingent Y2K funding provided by Congress last fall for fixing DOD systems," said Deidre Lee, OMB's acting deputy director for management .
DoD increased its Y2K cost estimate by $1.05 billion. Another $250 million in the added cost is due to unforeseen requirements by nondefense agencies, the report said.
The Defense Department is expected to spend a total of $3.7 billion from 1996 to 2000 on Y2K efforts. The next-biggest federal spender is the Treasury Department, which estimates it will spend $1.6 billion to fix its systems. The Department of Health and Human Services comes in third place, with $817 million in Y2K spending.
Included in OMB's overall estimate are costs for identifying Y2K bugs, deciding whether or not to fix affected systems, making changes, testing systems and preparing contingency plans. Fixes for mission-critical and non-essential systems are included. Although the federal government will help states pay for fixing computers that support federal programs, the costs of correcting those Y2K problems are not included in the federal estimate, the report said.
Y2K cost estimates keep climbing as the Jan. 1, 2000 deadline approaches. So far, OMB has announced the following estimates for total Y2K costs between 1996 and 2000:
- February 1998: $4.7 billion
- August 1998: $5.4 billion
- December 1998: $6.4 billion
- June 1999: $8.05 billion