Fed agencies not making Y2K grade

Several federal agencies are in danger of missing a deadline to fix Year 2000 computer system problems, which will cost millions of dollars more to fix than originally thought, according to a report issued this week by the federal Office of Management and Budget.

The OMB report said the cost to rid the so-called Y2K bug from federal systems will be $800 million more than expected, skyrocketing from an original estimate of $3.9 billion to $4.7 billion.

All agencies show progress but several remain behind, according to the report, which singled out six for poor performance in their efforts to handle the problem. Senate hearings to address the findings of the report open today.

Edward Yardeni, chief economist for Deutsche Morgan Grenfell, warned that the release of this latest OMB report would raise eyebrows within the Beltway. "This was the bomb I was expecting," he said.

The bug has its roots in antiquated hardware and software formats that denote years in two-digit formats, such as 98 for 1998 and 99 for 1999. The glitch will occur in 2000, when computers are fooled into thinking the year is 1900. The glitch could throw out of whack everything from bank balances to elevator maintenance to building security procedures.

The man leading the government's Y2K bug extermination team is John Koskinen. Sitting before one of the many congressional subcommittees looking into the problem, Koskinen said today that the problem is more pressing than typical administrative issues in Washington because neither the president nor Congress can push back this deadline.

The OMB has added the Labor Department to its list of agencies making poor progress on what has become known as the millennium bug, according to the agency's latest quarterly report tracking the progress of Year 2000 fixes.

The report lumped Labor with the Energy, Education, Health, and Human Services, and Transportation departments, as well as the International Development Agency, in the critical, or "Tier One" list. These are the agencies OMB says are not making "significant progress" in converting systems.

On the other hand, the Agriculture Department and the Personnel Management Office were taken off the critical list and added to the group of agencies that are causing concern but making progress (Tier 2). In addition, three agencies--Veterans' Affairs, Interior, and NASA--which were once on Tier 2, have been promoted to those making satisfactory progress, or Tier 3.

In related news, another subcommittee began hearings today looking into the Y2K remediation efforts of the National Credit Union Administration and the Federal Deposit Insurance Corporation.