Joel Willemssen is the General Accounting Office's y2k specialist. His May 7 testimony to the House Ways & Means Committee highlighted just how far behind the U.S. Treasury is.
He did not say the government is going to collapse. But two things are obvious from his testimony: (1) if the Treasury doesn't make it, the U.S. government will collapse; (2) the Treasury is not going to make it.
Here's why. The assessment phase is 5% of any y2k repair project, says the
California White Paper. Before assessment comes awareness (1%) and inventory (1%). The Treasury has not completed its assessments. Willemssen said:
"Despite these actions, Treasury and its bureaus face other major risks that must be managed effectively if key systems are to be ready in time. For example, the assessment phase -- during which the compliance of mission-critical systems is determine -- has not been completed. This is worrisome because it reduces the amount of time left for critical renovation, validation, and implementation activities. Treasury's milestone for assessing all mission-critical systems was July 1997. However, as of the end of March 1998, FMS still had not completed assessing the compliance of five of its mission-critical systems."
(In testimony offered at the same hearings, the Treasury spokesman said that
something under 40% of the Treasury's mission-critical systems have been renovated. Obviously, Congress is being given conflicting testimony, or else -- what appears likely -- Treasury is fixing some systems before it has finished its assessment of how the repairs will fit together. The problem is, it is
the last 10% of the project that may prove impossible to complete because the systems don't fit.)
To meet the deadline, Treasury must: (1) get its own systems compliant; (2) integrate them successfully with each other; (3) get its vendors to supply compliant software; (4) integrate these updates with the core systems; (5) find a way to lock out noncompliant data from its 6,800+ partners; (6) get its telecommunications systems compliant.
It's over. No matter what the media say, the brokerage houses say, the politicians say, or your wife's brother-in-law says, it's over. The U.S. government will collapse in 2000. T-bills: dead. T-bonds: dead. Money market funds: dead. Retirement programs: dead. U.S. dollar (electronic version): dead. Foreign central banks that allow the Federal Reserve to store their gold, and who buy T-bills instead of holding gold: dead.
The end of the 300-year-old central banking experiment is at hand. We're going back to an all-cash society.
I know. It can't be true. It just can't. Can't, can't, can't.
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With respect to the Department of the Treasury, we must first point out that -- unlike with Social Security and Medicare -- we have not completed a thorough assessment of the Department's Year 2000 readiness. However, we can describe some of what we have seen, and what Treasury officials themselves report. In addition, we have undertaken detailed work at the Internal Revenue Service (IRS), which will be discussed in a separate statement today.
Treasury's role in delivering government services, such as Social Security and Medicare payments, is vital. Treasury's Financial Management Service (FMS), for instance, as the government's cash receipts and disbursements agent and financial manager, represents the crossroads of financial activity for the federal government. However, the Department's progress in making systems Year 2000 compliant has been mixed. Bureaus such as its Office of Thrift Supervision are making good progress in converting their systems and in overseeing the conversion activities of the financial institutions that they regulate and inspect. In contrast, FMS is falling seriously behind schedule in converting some of its systems. Treasury Year 2000 program officials are aware of these and other related risks facing the Department, and have established program management structures and processes to address them, which we are presently evaluating.
To perform their core business functions, Treasury and its bureaus rely on a vast--and in many cases antiquated--collection of systems, thereby complicating Year 2000 renovations. To integrate many of the bureaus' systems and permit them to interact and exchange information with a wide assortment of federal, state, and local government and private-sector data exchange partners (over 6,800, according to the Department), Treasury operates and maintains the largest non-Defense telecommunications network in the federal government.
The responsibilities of Treasury's Year 2000 program office are basically twofold: guiding, monitoring, and reporting on the conversion activities of its bureaus; and converting and reporting on Departmentwide telecommunications systems that support its bureaus. To guide, monitor, and report on bureau activities, Treasury has (1) established a departmental program office and designated a program manager within the CIO organization, (2) established Year 2000 working groups and designated work group project managers to focus on major categories of systems, (3) issued a departmental Year 2000 conversion strategy, guidance, and standards, and (4) established monthly progress reporting requirements. Additionally, it used its existing CIO Council as a forum for Year 2000 information exchanges between the Department and bureau CIOs, hired a contractor to validate the information being reported by its bureaus, and developed draft guidance governing the process to be used in certifying systems as compliant and for verification and validation of certification determinations.
As a result of this program office oversight, Treasury has a good appreciation of where its attention must be focused. Program officials recognize that progress among the bureaus has been uneven, as has progress within individual agencies for certain categories of systems. For example, they stated that FMS is Treasury's highest priority because of its slow progress to date and the criticality of its role in managing the government's finances. As a result, according to the Department's Year 2000 program manager, FMS progress and activities are tracked on a daily basis and, consequently, FMS Year 2000 management effectiveness has improved.
Department Year 2000 officials further report that telecommunications systems and non-information technology (IT) areas, such as systems embedded in facilities and equipment, are not as far along as other IT areas, such as financial and management information systems, because work in these areas started late. To address this risk, Treasury has established working groups and project managers for both telecommunications and non-IT systems, along with formal processes for guiding, monitoring, and reporting on these areas.
To address the conversion of its telecommunications systems, the program office has established a telecommunications working group and designated a project manager. A risk management plan has also been established, as has a test facility to permit all telecommunications systems components to be tested before being placed in operation. In addition, a contractor has been hired to perform independent verification and validation of telecommunications conversion activities.
Despite these actions, Treasury and its bureaus face other major risks that must be managed effectively if key systems are to be ready in time. For example, the assessment phase -- during which the compliance of mission-critical systems is determine -- has not been completed. This is worrisome because it reduces the amount of time left for critical renovation, validation, and implementation activities. Treasury's milestone for assessing all mission-critical systems was July 1997. However, as of the end of March 1998, FMS still had not completed assessing the compliance of five of its mission-critical systems. For example, according to Treasury's latest status report, FMS is awaiting a contractor proposal for renovating a system called GOALS I--for Government On-Line Accounting Link System I. This system plays a critical role in processing interagency payments and collections. Of particular note is that the need to assess GOALS I for renovation arose only recently, when it became apparent that GOALS II, intended to replace GOALS I, will not be ready in time.
For non-IT systems, Treasury's components are farther behind. As of mid-March, systems in 3 of Treasury's 14 bureaus had still not been inventoried. Of the systems in the 11 inventoried bureaus, about one quarter remain to be assessed.
A final risk area is that contingency plans for ensuring continuity of business operations have not yet been developed. As our guidance points out, business area priorities and system dependencies must be examined in light of possible Year 2000-induced failures; contingency planning to help ensure continuity of business operations must then be developed and tested.
Although Treasury's Year 2000 program office recognizes the importance of business continuity planning and has issued guidance in this area, bureaus have not yet completed such plans, and are at risk of being unable to complete them in time. For example, IRS plans to develop contingency plans only for those business areas relying on systems whose conversions are behind schedule. With this approach, IRS will have no ready response to unexpected Year 2000-induced problems. Further exacerbating this problem is that devising and activating manual or contract processes to ensure continuity of operations could be a daunting task. According to a Treasury contractor, it may be difficult for some Treasury components, such as FMS, to formulate an approach to operating in a nonautomated environment.