Federal spending on fixing the year 2000 computer problem will not increase dramatically above current estimates, the Clinton administration's year 2000 czar predicted Wednesday.
In February, the Office of Management and Budget estimated that federal agencies will spend $4.7 billion from 1996 through 2000 on the year 2000 computer snafu, which may cause information systems failures throughout the world at the turn of the century.
In an interview with reporters Wednesday, John Koskinen, recently appointed as President Clinton's special adviser on the year 2000 problem, said that estimate will be revised as agencies continue to work on the problem, but "I think it's very unlikely that it will double."
"I think it will continue to incrementally increase," Koskinen said, "as people discover there are new things they run into. Those increases may be 20 or 30 percent over time--and that's not to say that's a small amount of money--but if you have to add another billion or two to [the $4.7 billion estimate], that's not a constraint. In the present situation, financial constraints are not our problem. Our problems are time and personnel."
Whatever costs the century change imposes on federal agencies, Koskinen stressed that federal executives face no more important management issue than solving the Y2K problem. He also described how the President's Council on Year 2000 Conversion, which he chairs, plans to prepare the government and the nation for the century change. The council includes senior executives from across the government.
Here are excerpts from the interview with Koskinen.
On how much the federal government needs to add to its Y2K budget:
The administration's budget for 1999 has a $3.2 billion emergency contingency for everything from Bosnia to the year 2000. One of the questions has been how much of that would be available, if necessary, for the year 2000. The answer is, nobody knows, because we're not in 1999 yet.
Last week in the Senate, in the Senate Appropriations bill, Sen. [Ted] Stevens [R-Alaska, Senate Appropriations Chairman] with Sen. [Bob] Bennett's [R-Utah, head of the Senate's special committee on the year 2000 problem] support, put in a $2.2 billion emergency fund designated for the year 2000, which could be used if the President declared an emergency for the year 2000. We think that would be an appropriate backup consistent with the administration's proposal in its budget.
On the federal government's overall plan to combat the Y2K problem:
Think about this as a three-tiered problem.
The first tier, which we have the most control over, is our own systems. We have an ongoing process to deal with that. OMB monitors that on a quarterly basis. [Rep.] Steve Horn [R-Calif., chairman of the House Subcommittee on Government Management, Information and Technology] gives his reports. OMB tells people where they are. Then everybody argues.
The second tier is the data exchange points. As I told the agencies, they need to be very conscious of the fact that we have to have not only our systems working, but we have to be able to exchange data and information with our partners in the state and local governments and in the private sector. For instance, we have now provided to chief information officers in each state a detailed list of every data exchange between the state and the federal government.
Tier three is this: Information technology is wired into everything, so in some ways the world is linked now by information technology. The good news is it allows increased productivity and communication and an improvement in the standard of living. The bad news is if a system goes down anywhere, it probably affects everyone. This is an international, global problem. If the Singapore stock market can't open on Jan. 3, 2000--we don't have anything to do with its operations--it has, obviously, a significant impact on the American economy. The biggest exposure to us is international. At least 70 percent of the world hasn't done anything.
On the year 2000 council's progress after two meetings:
We have created working groups in the energy area, telecommunications, financial institutions, emergency preparedness, and workforce issues. The creation of those work groups represents a judgment on our part that there are a number of agencies that are very active in those areas. They also are areas that are critical parts of the preparation.
Our overall concept in these areas is to work through logistics, trade or national organizations that are umbrella organizations with working relationships with individual companies. One of the things I try to remind people is that we don't have authority or responsibility over a lot of these activities. What we're trying to do in all these areas beyond worrying about the federal systems and their interfaces is primarily trying to play a leadership role in coordinating and encouraging private sector and state and local government organizations to make sure there's awareness among their members about this problem, to encourage them to share information across organizational lines and to facilitate their own solutions to the problem.
We have to figure out how we can help people organize themselves. There's no way for me or the federal government to manage this problem. What we can do is be a catalyst to help people organize themselves.
On President Clinton's involvement in the Y2K issue:
The President will address this problem in the next few weeks. We're still reviewing what the appropriate way for him to do that is, in light of the state of knowledge and where we are. The question is what the appropriate forum is with balancing the need to raise awareness, without unnecessarily causing people to think there's a problem out of control.
We're very anxious to make sure we give accurate information to people if there are going to be issues and areas of difficulties and complications. We need to be candid about that with people. If we're not, we'll lose our credibility. So if we say that Social Security checks are going to go out, they're actually going to go out. We're not just saying that to make people feel good.
On the idea of a nationwide study of the Y2K problem:
There's been some suggestion that what we ought to do is somehow do a national assessment. But when you start thinking about what that entails, that would mean a phenomenal volume of detailed questionnaires going out across the economy and then trying to figure out how to get people to give you back real information in real time. I just don't think we have time to set up that kind of system and then figure out how to make it work. So I think we'll do much better having a working partnership with the industries, in which the umbrella organizations that are created for this purpose are, in effect, the active bodies providing us with that information.
On the problem of embedded chips:
The growth industry in this problem are embedded chips. When people first started thinking about it, they thought about it in terms of hardware and software applications. Only in the last year have people begun to understand the magnitude of the number of chips out there that may have difficulties. It's a small percentage of chips. We shipped, give or take a little, 5 billion chips in 1996. Nobody knows for sure, but the estimates are that of the billions of chips out there two to three percent have a date sensitivity. But you know, two percent of 5 billion is 100 million chips. They're all over the place. They're in manufacturing processes, oil refineries, waste treatment plants, power plants.
On measuring agencies' progress toward meeting the Y2K deadline:
To the credit of the agencies, with the D- or F grades they've gotten, they've continued to try to provide accurate information. You would think the natural inclination of an agency would be to fill out the forms so that they at least get a C. But when I met with the heads of 42 agencies, they were all clear that they weren't happy with the low grades, if they had a low grade. They were focused on solving the problem. We'll see progress being made but we're not going to see suddenly everybody producing reports that don't reflect reality.
Our goal is not to have the better of the argument. Our goal is not to have nice documents. Our goal is to have the systems actually function. The great advantage of this problem is it has a simple performance measure and that is what works or doesn't work on Jan. 1, 2000.
On who will be most prepared for the century change:
I feel really good about people who are still operating in the Stone Age, who don't have computers.
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