Senate Y2K report raises flags despite progress

Despite major gains in preparation by some private and public entities, the U.S. Senate says the Year 2000 technology problem still has the potential to disrupt world trade.

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Despite increased awareness and major gains in preparation by some private and public entities, the year 2000 technology problem still has the potential to disrupt world trade and economic growth, according to a U.S. Senate report expected today.

In its last report, marking 100 days before the year 2000 arrives, the Senate Special Committee on the Year 2000 Technology Problem says the country has made "remarkable progress" and that Y2K problems will cause "more inconveniences than tragedies."

"In the past 14 months, companies and nations, large and small, have taken the Y2K problem seriously. The increase in worldwide public awareness, remediation, and contingency planning since the committee's February report...has been remarkable," the committee states in the report.

The report goes on to say, however, that hearings, interviews, and research conducted by its staffers "reveal that many organizations and industries remain unprepared."

The year 2000 problem, also known as the millennium bug, stems from an old programming shortcut that used only the last two digits of the year. Many computers now must be modified, or they may mistake the year 2000 for the year 1900 and may not be able to function.

Although committee members are increasingly confident about Y2K preparedness in the United States, they are concerned about international progress on the problem.

"Some of our important trading partners are months behind in addressing the Y2K problem and are not likely to avoid significant disruptions. These disruptions could have adverse economic effects here at home and, in some developing countries, result in requests for humanitarian assistance," according to the report.

Severe long- and short-term disruptions to supply chains are likely to occur as a result of Y2K-related system failures, according to the 288-page report. Such disruptions may cause a low to moderate downturn in the economy, particularly in industries that depend on foreign suppliers, it said.

Local service sectors unprepared
Although sectors critical to the safety and well-being of Americans, as well as to the economy, have made significant progress in the last eight months, panel member concerns remain in the areas of health care, local government, small business, and education.

"Most physicians' offices, many inner-city and small rural hospitals, and numerous nursing homes have not fully addressed the Y2K problem. In general, larger firms have grasped how a Y2K failure could severely impact their businesses and are taking steps to remedy the problem. Unfortunately, nearly half of small and medium-sized businesses across all sectors are taking a wait-and-see approach to Y2K," the panel stated.

The committee is concerned about organizations and industries that project readiness dates in the last quarter of 1999. For example, approximately 500 of the 8,000 oil and gas companies--and 30 of the 103 nuclear power plants--project completion dates after September 30, 1999.

Organizations with late completion dates are not leaving sufficient time to address unexpected problems, which also heightens the importance of adequate contingency planning, the committee warned.

Globally, the committee listed its greatest concerns as China, Russia, and Italy plus a handful of U.S. oil suppliers: Venezuela, Nigeria, Saudi Arabia, Colombia, and Kuwait.

"The Y2K problem has highlighted the economic interdependence of nations. A significant potential exists for the Y2K-induced problems of other nations to wash up on our shores--whether in the form of recession, lost jobs, or requests for international assistance," the committee said.

The report also said the technology problem highlights the vulnerabilities in America's high-tech infrastructure. Millions of lines of computer code have been sent overseas for Y2K repair. This creates the possibility that those wishing to commit acts of terrorism or political and corporate espionage could use "trap doors" or "logic bombs."

If a "trap door" were inserted into key network software, for instance, an adversary could gain access for years without anyone being the wiser, the panel said.

"It is this long-term unnoticeable access that enables key information to be lifted without a trace," the report said.

Although this is the last report to come out of the Senate special committee, hearings on Y2K will continue to be held, a committee spokesperson said.