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House of Representatives,
Subcommittee on Oversight and Investigations,
Committee on Veterans' Affairs,
Washington, DC.
    The subcommittee met, pursuant to notice, at 9:30 a.m., in room 334, Cannon House Office Building, Hon. Terry Everett (chairman of the subcommittee) presiding.
    Present: Representatives Everett, Evans, and Mascara.
    Mr. EVERETT (presiding). The hearing will come to order.
    Good morning. This morning's hearing is a follow-up to the hearing the Subcommittee on Oversight and Investigations had on June 26, on the VA's efforts to achieve year 2000 computer compliance. Our last hearing emphasized the picture within Veterans Benefits Administration, VBA, and this hearing will emphasize the Veterans Health Administration, VHA, with an overview of the Department-wide activities. As some industry analyst predicted, the more the problem is examined, the bigger it appears to be. Cost estimates are rising remarkably and rapidly.
    I stated during the last hearing that time is running out. We again have a real-time computer display, this one new and improved with audio, counting down to the year 2000, which occurs here on the Internet. There are 828 calendar days left, not a lot of time for the amount of work that we have to do.
    Today, we will hear from the General Accounting Office which the subcommittee asked to look at—particularly at VHA. Also, of course, we hear again from the VA, and we'll hear again from the Federal Drug Administration on Y2K impacts on health care delivery and patient safety issues related to non-compliance medical devices and equipment.
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    I look forward to having the hearing. At the outset, let me also thank our full committee ranking member, who will take over the Chair of this hearing. I regret, unfortunately sometimes we serve on more than one committee and I have a bill that I have to introduce in another committee, and our ranking member is not feeling well today and sends his apologies for not being here.
    I appreciate the witnesses turning up, and I'll look forward to reviewing your testimony. At this time I would ask Lane Evans—as I said, our ranking full committee chairman, and who is no stranger to this seat also—to take over. His interests and my interests have parallel on this particular problem for a number of years. So, Lane if you'll take over, I'd appreciate it.

    Mr. EVANS. I am very pleased that Chairman Evans has scheduled this all-important follow-up to this summer's hearing on the VA's efforts to achieve year 2000 compliance. In June, the GAO told us that the VA has a long way to go to solve this problem, but not much time to get there. Time obviously doesn't stand still, at least not in this life, so we've got to do all we can on the committee to ensure that the VA is able to provide high-quality, non-interrupted service to our veterans once the clock turns over to the next millennium.
    I am encouraged that the subcommittee continues to carefully monitor the VA's progress on this issue. I am particularly pleased with the steps that the Veterans Benefits Administration has taken to bolster the management of its year 2000 compliance efforts, and I am hopeful that the Veterans Health Administration will make similar progress in the days and weeks to come. Still there is no doubt that the VA has a daunting management task ahead of itself if it is to meet the year 2000 goals.
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    I believe I also speak for the chairman when I say that this subcommittee stands ready to continue its aggressive oversight on this issue so that the VA will be in the best possible position to ensure that it brings its mission-critical systems into year 2000 compliance.
    Again, I want to thank Chairman Everett for his continued leadership, and I look forward to today's testimony.
    Mr. EVERETT. At this time I would like to have recognition for panel number one: Joel Willemssen, Director, Information Resources Management, Accounting and Information Management Division of the GAO, and ask him to introduce his colleagues.

    Mr. WILLEMSSEN. Thank you, Mr. Chairman. Accompanying me today is Helen Lew, Assistant Director, and L.J. Latham, Technical Assistant Director.
    Thank you for inviting us here today to testify on the progress being made by the Federal Government, and in particular VA, in addressing the year 2000 computing challenge. As requested, I will briefly summarize my statement.
    Regarding the Federal Government's overall efforts to address the year 2000 issue, the progress of many of the major agencies continues to be too slow. Seventy-five percent of the agencies' total number of 8,500 mission-critical systems still need to be repaired or replaced, and the total cost estimate has now increased to $3.8 billion up about $1 billion from the estimate of 3 months ago.
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    Reports of several of the agencies are disappointing, and therefore, OMB is now placing more urgency on this issue and beginning to demand evidence of progress.
    Turning to the VA, it's critical that the Department's systems be made year 2000 compliant to avoid disruption to benefits and services. Our past and current work at VA indicates that the Department recognizes the urgency of its task, and it has made progress. But much remains to be done if it is to avoid wide-spread computer failures. If left uncorrected, the types of possible problems that could occur include: late or inaccurate benefits' payments, lack of patient scheduling for hospital treatments, and misinterpretation of patient data.
    As we testified in June, VBA has responded to the challenge by initiating a number of actions. However, several risks remain. These include: schedules for the renovations of key applications such as compensation and pension being compressed and other renovations schedules being very tight. In addition, although VBA has completed an inventory of its internal and external data-interfaces, it still has not assessed the majority of these for year 2000 compliance. If VBA is to avert serious disruption, it will need to address issues such as these.
    The year 2000 challenge for the health side of VA is enormous. VHA is in the initial stages of assessing the compliance of its mission critical systems. It does not plan to complete assessment until January 1998, and renovations until July 1998. To effectively assess and renovate, it is necessary to understand how local facilities are using National applications. If it is true that some local facilities have customized these National applications, it's important that VHA know where these applications have been changed so as to ensure that they also are year 2000 compliant.
    Physical facilities are another area of concern. VHA has not yet completed an inventory of facilities' related systems and equipment such as: ventilating systems, security systems, and disaster recovery systems. Such elements are vital to providing health care services.
    Biomedical devices could also be affected by the year 2000. The impact could range from incorrect formatting of a print-out to incorrect operation of the device, having a potential to affect patient care or safety. In attempting to precisely determine this impact, VHA has sent letters to manufacturers. Based on the responses received from its first letter, VHA recently sent more detailed letters asking more specific questions. These letters were sent to about 1,600 manufacturers on September 9, with a request for a response by October 3.
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    FDA, in its role of protecting the public from unsafe or ineffective medical devices, also recently began communicating with manufacturers. FDA sent a letter in early July of this year to about 13,000 such manufacturers reminding them of their responsibility to ensure that their products will not be affected by the century change. According to FDA, one response was received to this letter. An FDA official explained that it was not the agency's intention to solicit a specific response because FDA expects manufacturers to report any problems through normal reporting channels.
    That concludes a summary of my statement, and I'd be pleased to address any questions that you may have Ranking Member Evans or Congressman Mascara. Thank you.
    [The prepared statement of Mr. Willemssen appears on p. 32.]

    Mr. EVANS (presiding). Thank you very much. We appreciate your testimony. The Office of Management and Budget places the VA in the upper-half of Federal agencies as far as year 2000 compliance efforts are concerned. Would you agree with this assessment?
    Mr. WILLEMSSEN. I have a fairly good idea on the progress of the other agencies and I would say, especially in terms of its recognition of the urgency of the issue, its commitment to make it a top priority, and its devotion to put the necessary resources towards it, VA would definitely be in the upper half of the 24 major departments and agencies at this point in time.
    Mr. EVANS. How realistic is the VA's $162 million budget estimate for its year 2000 compliance efforts?
    Mr. WILLEMSSEN. At this point, it's the best we have. Frankly, I would anticipate that you will see it gradually escalate over the next several months as the assessment of VHA is completed. It may not necessarily escalate, but that would be our best estimate at this point.
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    Mr. EVANS. As you indicated, we've seen a $1 billion increase in OMB's estimate for Government-wide Year 2000 operations in the last 3 months or so, up to $3.8 billion. Is that something we can expect as well?
    Mr. WILLEMSSEN. Yes, sir. Until full assessments are done at all the major agencies you can still expect some gradual increases in all likelihood.
    Mr. EVANS. I think almost everyone agrees with the view that the year 2000 compliance problem represents management rather than technical challenges to Federal agencies. Would you agree with such an assessment, and if so, could you specify what additional steps VA must take to adequately address these management issues?
    Mr. WILLEMSSEN. We would definitely agree that the challenge is more managerial than technical. Regarding VHA, it's absolutely crucial to complete, from a management perspective, their assessment and renovation activities as soon as possible. As they begin collecting more information on the health side, including biomedical devices, it is especially important that they disseminate that information as widely as possible so that every one knows exactly what they and others are finding in terms of the compliance of their systems and various medical devices. I think there is also an open question for both the VHA and, more importantly FDA, on the extent to which they may decide to independently assess manufacturer claims that various devices are indeed year 2000 compliant.
    Mr. EVANS. The VA's testimony in June suggested that this problem was not nearly as severe at the Veterans Health Administration as it is at the Veterans Benefits Administration. Your testimony suggests, however, that enormous challenges remain at VHA. Are you satisfied with the steps the VA has taken to address these problems? And how would you compare VHA's efforts to those of VBA's?
    Mr. WILLEMSSEN. I'd say that VHA and VA recognize the enormous challenge they face, but frankly, looking at the statistics, VHA is obviously a little behind its counterpart on the benefits side. And, I think before we can say exactly what the magnitude of the problem is, VHA has to get through the assessment phase as quickly as possible.
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    One of the concerns that we have, and we mention it in our statement, is the extent to which individual hospitals and other facilities have customized National applications software. To the extent that this has happened to a wide degree, it is going to be incumbent on VA to go out and check each of those facilities to make sure they are year 2000 compliant. But whether that is the case right now or not, I don't think anyone fully knows until that assessment has been completed.
    Mr. EVANS. The Veterans Health Administration has sent several letters to manufacturers of medical devices that may not be year 2000 compliant. VHA also intends to rely on the Food and Drug Administration to seek similar feedback from manufacturers in order to better gauge the health and safety risks if certain devices are non-compliant. Is this all the VA can do at this point to address the medical device safety issue? And what would be additional steps you would recommend for the VA and the FDA in this regard?
    Mr. WILLEMSSEN. On the medical device area, I would say number one: it is especially critical that whatever activities VHA has engaged in, that they widely disseminate the data that they are collecting to all affected parties so that everyone knows what the manufacturers' claims are. And then secondly, as I mentioned before, I think VHA and FDA have to think about next steps after they've received all the manufacturers' claims about their products; is there going to be some kind of independent assessment of whether those claims are in fact true. As you know, we have just recently begun our assessment at VHA, and that's an issue that we plan to explore further.
    Mr. EVANS. At this point I yield to the majority counsel.
    Mr. Kingston SMITH. Thank you, Mr. Chairman.
    Mr. Willemssen, at this point, what does GAO believe are the top three issues that Veterans Benefits Administration must aggressively address regarding the year 2000 compliance problem?
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    Mr. WILLEMSSEN. On the benefits side, the top three would probably be: first, regarding the tight and compressed schedules for various key applications, there must be urgent management attention to the progress in actually renovating those applications to make sure that the schedule is met. And to the extent that the schedule starts slipping more, VA management will have to look at other options since we can not have a slip in the schedule.
    Secondly, regarding data exchanges and interfaces, we think it is especially critical that they be assessed for compliance as quickly as possible. To VBA's credit, they have identified about 590 interfaces, but now the next important step is to assess whether those interfaces are compliant; and to the extent that VA can't get the cooperation from other external entities, it needs to raise those issues as quickly as possible.
    And third, we would say it's fairly critical that VBA consider updating the risk assessment that it did earlier this year to take into account its revised strategy in its year 2000 program.
    Mr. Kingston SMITH. Thank you, Mr. Chairman.
    Mr. EVANS. The gentleman from Pennsylvania.
    Mr. MASCARA. Thank you very much, Mr. Evans.
    I have an opening statement I'd like to include in the record.
    Mr. EVANS. Without objection, Frank, it will be entered in the record for this proceeding.
    [The prepared statement of Congressman Mascara appears on p. 28.]

    Mr. MASCARA. I had an opportunity to read over some of the statements last night; and is the problem with the VA unique some how, or does this transcend the VA across the entire government—the problem of 2000 compliance?
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    Mr. WILLEMSSEN. The problem transcends the Federal Government.
    Mr. MASCARA. Do you think perhaps the President or the administration or the Congress should appoint some kind of czar who would be in charge of a coordinated effort to solve the problem? I mean, as I see, and from what I read, you said that the budget, ''The Office of Management and Budget has determined the VA is making much more progress than many other agencies.'' So each agency is dealing with the 2000 problem?
    Mr. WILLEMSSEN. That's correct, Congressman.
    Mr. MASCARA. Do you believe that perhaps some concerted effort by the administration or the Congress to appoint some czar to deal with this problem would be to our benefit and maybe we would solve the problem before we get to the year 2000?
    Mr. WILLEMSSEN. We are on record in testimony in July stating that we thought OMB's actions to date at that time had been insufficient and that more urgency needed to be placed on this issue than has been. Frankly, though, we're encouraged by the most recent report of OMB that they are taking this issue more seriously; that they are urging more corrective action; and that, in some cases for certain agencies who clearly haven't made as much progress for their information technology acquisitions, OMB will not necessarily fund those acquisitions unless they are for year 2000 activities. So, I think the bar has been raised as we speak today, even compared to a couple of months ago.
    Mr. MASCARA. How long have you been trying to solve this problem; or someone recognized we had a problem and thought we should do something about it? What timeframe?
    Mr. WILLEMSSEN. The broad recognition of this being a clear Government-wide and National problem; it's probably best to say about Spring 1996 is when it really started to begin to get attention. However, at the same time, I would say that people who program for a living have known that this would eventually hit all along, but when they were programming many of these systems, 15, 20, 25 years ago, they had no idea they would still be around as we approach the year 2000, and that's what in many cases has occurred.
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    Mr. MASCARA. The reason I ask that question, I'm curious because I was a county commissioner in Washington County and under our administration we computerized the county and talked about the year 2000. But even before that, as an accountant who computerized his offices back in the late 1960s and 1970s, we knew there was a problem then. And I'm just wondering why 1996, it took somebody——
    Mr. WILLEMSSEN. I think that's when it really started to get a lot of attention. Beyond, I'd say even a year ago, the individuals who are not familiar with computer technology thought that this was still some sort of a scam by the information technology community to acquire additional funds. There was a denial phase that many had to go through. I think we're beyond that now.
    Mr. MASCARA. How about cost? I read some figures, and I think the last time we had a hearing someone said that it was in excess of $300 billion worldwide in costs to solve this problem. Is there an estimate of what it's going to cost this government to solve the problem?
    Mr. WILLEMSSEN. The most recent estimate for the 24 major Federal agencies is $3.8 billion. That estimate does not include the cost of fixing various State systems which also are frequently helped with Federal funds. It does not include, obviously, the costs of many of the private sector firms that are going to have to make these fixes in order to minimize the economic impact to the country.
    Mr. MASCARA. It seems to me, this is a National emergency. If we can't generate the checks for the GI bill, or health benefits, or VA pensions, and Social Security checks, and across the board, isn't this some kind of National emergency problem that someone should step forward and say, ''Hey, we have a national emergency here. If we don't solve the problem there's going to be chaos?''
    Mr. WILLEMSSEN. We have been trying to sound that message. The year 2000 issue is one of GAO's high-risk areas within the Federal Government that we try to focus attention on and sound the alarm on.
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    Mr. MASCARA. Well then I guess its true that we work best under crisis, so it's not a crisis yet. We'll wait until 1999 and get into November and December and say, ''We have a real serious problem,'' and maybe we'll solve it.
    I don't mean to be cynical, Lane, but someone needs to tell me something—I'm not a computer expert, I don't understand it, at best I'd say let's go back to 1900 and say that that means 2000 and just go forward, if it will accept 1900; I'm not sure if that's the case or not. But someone needs to make a concerted effort, and I don't think all these agencies should be out there running around spending money trying to figure out how we're going to solve it. If one person solved it, would it be across the board that all agencies could use that technology to solve the problem?
    Mr. WILLEMSSEN. No. The difficulty——
    Mr. MASCARA. It is unique in certain circumstances?
    Mr. WILLEMSSEN. Yes, the computing environments are so heterogeneous that there is no single solution. You've got to go into each individual system and you're not dealing just with applications, you're also dealing with operating systems, databases, telecommunications; so it is something you have to go in—and that's why we said earlier, it's not so much a technical challenge, it's a management challenge. It's a lot of tedious work to go in and analyze all that code.
    Mr. MASCARA. Are we hiring outside firms to come in and assist the government in solving these problems?
    Mr. WILLEMSSEN. Many of our agencies are hiring outside firms to help, and I think VA could also attest to that, that they are trying to get outside help also.
    Mr. MASCARA. Thank you.
    Mr. EVANS. Thank you; I appreciate your participation in the hearing today.
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    We want to thank the GAO for their testimony and excellent response to our questions. We may have some follow-up from members that aren't here, and we'll ask that you respond to those in writing and the questions and answers will be made part of the record of this proceeding.
    Mr. WILLEMSSEN. Thank you.
    Mr. EVANS. Thank you. At this time, we would like to welcome Mr. Mark Catlett, the VA's Acting Assistant Secretary for Management, the Acting Chief Information Officer, and the Acting Chief Finance Officer, and ask him to introduce his staff appearing with him today.

    Mr. CATLETT. Good morning, Mr. Chairman.
    Mr. EVANS. Good morning.
    Mr. CATLETT. Accompanying me today are Mr. Dave Albinson, the Chief Information Officer for the Veterans Health Administration; and Mr. Newell Quinton, the Chief Information Officer for the Veterans Benefits Administration.
    Would you like me to go ahead with my full statement?
    Mr. EVANS. Please, if you would at this time.
    Mr. CATLETT. Mr. Chairman and members of the subcommittee, it is my pleasure to testify on behalf of the Department of Veteran Affairs on the status of our information systems for the year 2000. I am accompanied today by the gentlemen I just mentioned. We last met with you on June 26, and today we wish to give you an update on our progress. I have submitted my full statement to the subcommittee, which I ask to be made a part of the hearing record.
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    I would like to take this opportunity to provide the subcommittee with an update on VHA's, VBA's, and the Austin Automation Center's year 2000 accomplishments.
    For the Veterans Health Administration: VHA has prepared and widely distributed a detailed compliance plan, organized in accordance with the GAO's draft year 2000 best practices. We provided a copy of that plan to the subcommittee in June. In the plan, key responsibilities and accountability were assigned to the VHA CIO and associate CIOs; the Veterans Integrated Service Network CIOs, the 22 people there at the networks; and VHA health care facility management.
    VHA's goal is to complete its assessment, including the nationwide assessment of biomedical equipment at all VA medical centers by January 1998. VHA's plan is to complete any necessary renovation by July of 1998, validation by January of 1999, and implementation by October of 1999.
    As of August 31, 1997, 30 percent of VHA's mission-critical applications are compliant. This percentage represents both the VISTA, which used to be DHCP, and the VHA corporate system applications. I would add that the definition of compliance is the fact that includes those applications that are intended to be retired, as defined by OMB.
    VHA has assigned priorities to and scheduled the renovation of VHA mission-critical systems. VISTA information system applications have been categorized according to their criticality to VHA's mission. To support the detailed VISTA application assessment process, VHA has acquired and is using an automated tool to support code analysis for both the National software applications and for locally developed software applications. VHA has begun to use this tool on some of its larger, more complex applications; code that will require renovation appears to be limited. As of August 31, 1997, 31 percent of VISTA applications have been assessed and 27 percent of VISTA applications are compliant or will be eliminated by the year 2000.
    VHA is currently assessing all of its corporate information systems. System owners have been asked to determine the compliance status of their systems and to establish schedules for completing the process if the systems are non-compliant. To date, 37 percent of the corporate systems have been assessed, 33 percent are either already compliant or, again, will be eliminated by the year 2000.
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    VHA has completed its inventory of commercial-off-the-shelf products for each hospital and has begun to determine the compliance of these products.
    For biomedical equipment, as we testified in June, the potential year 2000 impact on biomedical equipment is a National issue, clearly, affecting both the private sector and Federal health care communities. VA, along with other agencies and the private health care community, is a consumer of biomedical equipment; we do not regulate the industry. Let me bring the subcommittee up to date on the specific actions VA is taking in the area of biomedical equipment.
    VHA formed the Medical Devices Integrated Product Team, a multi-disciplinary oversight committee within VHA, to assist with identifying, inventorying, assessing, and evaluating medical devices at risk.
    A subcommittee of this team created a database listing manufacturers of medical devices currently in use in VHA. Experts from the team were consulted to ensure that manufacturers in all specialty areas were included. A letter requesting more detailed information and plans from biomedical manufacturers was sent on September 10 to all 1,580 manufacturers in the database. Vendors were asked to respond by October 3; thus far, 135 responses have been received. VHA is reviewing these responses and will share the results with the Food and Drug Administration.
    For VBA: significant progress on year 2000 efforts has been made in recent months. As of August 31, 1997, 52 percent of VBA's applications have been renovated and made year 2000 compliant. Two payment applications, Chapter 31, the Vocational Rehabilitation Program; and a small one, the Reinstated Program for Survivors are compliant. Our insurance application is on schedule with its renovation and will begin testing in February of 1998.
    We testified in June that we awarded a task order for oversight support. The oversight team completed their assessment of VBA's year 2000 effort. Their assessment substantiates the attention VBA has given this issue. VBA's year 2000 effort is on track and its schedules and resources are realistic. The oversight team has made suggestions and recommendations that are being incorporated into VBA's year 2000 project plan.
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    Overall, education system milestones are on track for completion within the projected timeframes and well before any application fail date. However, the project completion date provided by our contractor shows a slippage for the Chapter 1606 redesign component of the education system. This slippage has not jeopardized our overall completion date for making education systems compliant.
    As for loan guaranty applications, task orders have been awarded, and will be awarded, to renovate non-compliant applications ensuring that all loan guaranty applications are compliant by the projected timeframes and before any fail date.
    VBA is developing a new application for real-estate property management. That schedule has slipped, but that will not impact the year 2000 schedule because the existing application is already compliant.
    Let me address the compensation and pension application and its status. Forty-six percent of compensation and pension modules are year 2000 compliant. However, year 2000 work is competing with legislative program changes for spina bifida and incorporating Minimum Income for Widows, plus preparing for the annual cost of living adjustments. To minimize the risk that the complexities of implementing legislative changes would jeopardize year 2000 efforts, VBA awarded a contract, very recently, for renovation support of our compensation and pension application. This contract provides an automated year 2000 conversion tool for the application and additional contract support.
    The oversight team that we've mentioned, that we've formed, both with a contract and some of our folks, has identified C&P as our highest risk in VBA in the year 2000. Managing the contract and developing detailed plans for applications testing to be done by the VBA staff in Hines, IL need to be improved. We agree with the team's assessment and are taking action to meet this need.
    VBA has addressed all areas of potential year 2000 problems. They have assessed all of their third party products and have budgeted for their replacements. In addition, VBA is working hard to resolve interface issues. Forty percent of their interfaces are year 2000 compliant as of today.
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    At the Austin Automation Center, we provide VA-wide information technology support for all components of the Department. As of August 31, 1997, 79 percent of the applications they support have been renovated and are year 2000 compliant. The AAC, as I call the Austin Automation Center, plan is to have all systems renovated by September of 1998, validated by October of 1998, and fully implemented by September of 1999.
    VA, VBA, and VHA representatives are actively involved in several interagency efforts to find common solutions to year 2000 issues and are representing VA's interest in several subgroups of the Federal CIO Council Subcommittee on the year 2000. Included are: the biomedical equipment, telecommunications, and building systems subgroups.
    In summary, Mr. Chairman, VA, organizations have prepared detailed systems inventories; and developed testing methodologies, individual project plans, and contingencies. We are monitoring our progress for each application supporting our mission-critical systems. We are also monitoring such key elements as estimated lines-of-code, number of modules, operating systems and COTS packages.
    We are committed to ensuring VA's information systems will provide uninterrupted service supporting the full range of veterans benefits delivery and medical care for the year 2000 and beyond. I thank you for this opportunity to present our progress on the year 2000. Mr. Albinson, Mr. Quinton and I would be happy to answer any of your questions. Thank you very much.
    [The prepared statement of Mr. Catlett appears on p. 51.]

    Mr. EVANS. Thank you, Mr. Catlett. The GAO and your outside oversight team, have strongly indicated that better management is essential to year 2000 compliance. What additional steps will you be taking to solidify year 2000 management efforts?
    Mr. CATLETT. Mr. Chairman, I think the steps that we are now taking are sufficient; and I say that in this way: we meet monthly with these two gentlemen and their staffs to review progress, to look at the tracking that's going on.
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    I'll raise an issue that you mentioned earlier. You noted that we had identified 11 mission-critical systems, and there was a concern—a legitimate concern—raised by you that that may be too few, when there were other departments that listed hundreds. But, within those 11 systems we have over 500 applications. And we have people on my staff and on these two gentlemen's staffs that are looking at those daily to track them. Frankly, we use the 11 systems to make it easier for you and for me to look at and give you a broad overview of what our progress is in terms of dealing with all the complexities and a wide variety of applications that we deal with.
    So again, I'd say that, as we have attention brought to us both by GAO and our own contractors that we're hiring to identify problems in the schedules that we have developed, we'll react to those within this framework that we've set up.
    One thing I would add, again it's nothing new based on this GAO report—the GAO has been very helpful in the things they have identified, but as we did last year we will have an independent assessment of our efforts again in the December to March timeframe. Actually, I would like to have it a little sooner, but we're going to wait for the VHA assessment to be completed and then we're going to have an independent contractor come in and look at what we're saying both in those plans and also the work that's been identified as completed, both in VHA and VBA, and at the Austin Automation Center.
    So, we understand the urgency, we understand it's a lot of work and we're putting forth a good effort and we'll continue that and certainly intensify it as indications come, both from ourselves, from our contractors, and from GAO.
    Mr. EVANS. During your testimony in June you downplayed the seriousness of the problem within the Veterans Health Administration. Do you still have that same level of optimism with regard to the year 2000 challenges faced by VHA.
    Mr. CATLETT. I'm going to quibble with your words there in terms of ''downplaying.'' We have a schedule. I still define the problem of VHA as one that's broad but not very deep. As we know, the size of that system and the number of applications and the number of specific activities out there are numerous, huge in number. And, we have to look at all of those. VHA is on the schedule that they had projected and we had submitted to you in June; and as I said, I'm sure, that as we have had with VBA to date, we'll find areas where we will have to intensify our effort. I think the resources are there within VHA to do that, both in terms of the personnel that will be needed to do it and the dollars that will be necessary to do that.
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    The one thing I would add, is that in terms of biomedical equipment, 1999 is the year of concern for me for biomedical. In terms of systems work, that has to be underway now; and particularly through 1998. For biomedical equipment, it's largely going to be funding, if its non-compliant, the replacement of that equipment. We at this point, don't expect that to be a huge number. But we will want to have that information in time to make an adjustment to our 1999 budget request, if necessary, for biomedical equipment.
    Mr. EVANS. Because of a pending vote, I'd like to yield to the gentleman from Pennsylvania, in case he might not be able to make it back. If there are any questions?
    Mr. MASCARA. My question is, deals with the possibility of not solving the problem entirely, and what could happen then. Do you have a back-up plan? If all else fails, the worst possible scenario not being able to solve the problem entirely by the year 2000?
    Mr. CATLETT. Well, Mr. Congressman, as GAO noted, there are a lot of negative consequences for not getting it done. We will—we do have plans, and as GAO says, we need to update our risk assessment, which we agree with and will do. But, I don't believe this is an issue of not getting the checks out. We could be late getting the check out; we may get the wrong amount out; and that's a problem, I'm not minimizing that. But it is not a question of veterans not getting paid. If we have to do it by paper and pencil, we'll do it. But again we don't think that we're in that mode of a crisis.
    I agree with some of the things that you had to say in the sense that this is a huge problem. But again, we think we're on top of it, and fully expect in that there will be problems that come up that we haven't anticipated; but we think we have the resource levels required. Much of the resources we need, we already have. It's not a question of getting contractor help for the first time, as VBA already has. But a lot of the work in VHA that's going to be required, will be done by their own staff. It's a matter of making sure within the staff that deals with information technology systems, that they get a focus. And, Mr. Albinson has it under way. And I'm very confident that we are paying attention to this and tracking this monthly so that when problems do arise, as they will, we will respond quickly. Our cost estimates will probably go up, but we are a very, very tiny part of that billion dollar increase that's been talked about here today; I want that on the record. We've increased our estimate by $18 million on a base of $144 million over this three year period. I expect that they will go again.
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    And as I said in June, in biomedical equipment, we haven't estimated the impact there. We expect it not to be large; but not to be large is in the sense of a $17 billion a year operation that the health care system is. So we will be seeing our prices go up as we get the information on biomedical that we expect.
    So, again, we are tracking the problem, we are watching the problem, and as issues rise that we haven't anticipated, I am confident that we have the resources to address those.
    Mr. MASCARA. Thank you, Mr. Catlett. Thank you, Mr. Chairman.
    Mr. EVANS. Thank you. We're going to go to recess now because of a pending vote which may be followed by another vote, as I understand it. So, we're going to recess and try to get back by about 10:30 or so.
    Mr. CATLETT. Sure, Mr. Chairman, we'll be here.
    Mr. EVANS. We'll recess at this time.
    Mr. EVANS. The hearing will now resume, and we'll yield to majority counsel.
    Mr. Kingston SMITH. Thank you.
    Mr. Catlett, the VA has some significant computer interfaces with other agencies and departments of the Federal Government. What are those interfaces, and what is the status of Y2K compliance for those interfaces?
    Mr. CATLETT. I'm going to ask Mr. Quinton to give you some information on that, and we'll probably need to provide some specifically for the record, to get more detailed information on it.
    (Subsequently, the Department of Veterans Affairs provided the following information:)
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    Mr. CATLETT. But, as you noted or implied, clearly, with the major departments and agencies throughout the government, we have a lot of interfaces as we move payments and move information back and forth. The one I'm most concerned about now is the Department of Treasury. I've had preliminary discussions with the CIO there. We have met. We have a list of the interfaces with Treasury that affects primarily our payments to veterans, which is the first focus that we all have. We'll be meeting with them soon at a staff level, including the Financial Management Service, FMS, as they call it, and their CIO. We will review our roles and responsibilities and reach agreement on the list of interfaces.
     And as I said, Mr. Quinton's office has put together a comprehensive list of the interfaces that VBA has with Treasury. We have done some work at our Austin Automation Center for the same thing, and we will be meeting with them in the next several weeks.
    Mr. QUINTON. Sir, our inventory of interfaces shows a total of 731, and that includes interfaces to all of our mission-critical systems at our Hines facility, Philadelphia and Austin. Of the 731, 342 involve the Hines Data Processing Center and reflect the interfaces which provide information to or from our payments system. I think it is important to note, when we speak of interfaces, a significant amount of these are for information and are not payment-related.
    As we said earlier this morning, 40 percent of those interfaces are compliant; 33 percent are not compliant, and our approach right now is to continue to look at every single interface to make a determination of whether it involves a date field and then to get it resolved. A significant percentage of the 731 interfaces are internal to VA, as opposed to sharing information with other Federal agencies, as Mr. Catlett indicated.
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    Another effort that we will take with interfaces is to separate those that result in the generation or execution of a payment from those that would involve information for report purposes. This will provide a focus for us to address the payment issues first.
    Mr. Kingston SMITH. Thank you. It's our understanding that the VA is planning to take $5 million from VETSNET funding to help fund the increased financial requirements of the year 2000 compliance. Is that correct?
    Mr. CATLETT. I'm glad you raised the question. We had a hearing last week on GPRA, and that issue came up as a side item. As we discussed with you, this committee, over this past year, we've made the commitment; the Deputy Secretary and now the Secretary-designate made the commitment that, if we have a funding need for year 2000 purposes, that is more than other sources can produce, we would use our VETSNET money. But that's different than what folks are looking at now in terms of an Appropriations Committee report, a Senate report, that said, shift that $5 million. The $5 million I think you're referring to is in a Senate Appropriations subcommittee report that says, for 1998, to move the VETSNET money. I think they've reached that conclusion, based in part at least on the NAPA report.
    We have expressed our opinion that it's important to move forward with VETSNET. We understand the concerns about the timing and the schedule for VETSNET, but, nonetheless, we support the VETSNET effort, and will continue to move with that. So, as I said, the distinction is we may have to take some money off VETSNET for year 2000. As stated last spring, we're still committed to that. Right now we don't think we'll need to, but, again, it all depends on what happens in the conference the next few days for the 1998 budget. That same commitment stands; if we need it, we will move it. At this point, making an assumption about the amount of money we expect to get for 1998, we don't think that will be necessary.
    Mr. Kingston SMITH. Thank you.
    Mr. EVANS. Your testimony and the testimony of GAO indicates that the renovation of VBA's compensation and pension application appears to be a major hurdle. Can you describe in detail what the oversight team recommended in this regard and outline what steps you will be taking to address this issue?
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    Mr. CATLETT. Yes, sir, I'd ask Mr. Quinton to give you those details.
    Mr. QUINTON. Yes, sir, Mr. Chairman. We agree that the compensation and pension program is certainly our most critical system, and it is also one that we must pay closest attention to. In essence, the oversight team focused on the issue of increased management of the conversion effort, and that effort is focused on a change in approach with our in-house staff at Hines. Their experience truly is in the development and maintenance of the compensation system, where they have the expertise developed over some 20 to 30 years. We have accelerated our effort to make the systems compliant, and in that process we have added a significant contractor effort.
    The concern raised in oversight is whether or not our staff, who over the years have been developing and maintaining that system, had the contract management expertise, and we recognize that that is a shortfall. So we have to provide training and provide onsite support to manage a contract. We do not believe this is insurmountable. In essence, with the contractor actually being onsite, working hand-in-hand with our developers, it becomes more manageable than it would be if the contractor was offsite and we were looking for a deliverable. So the focus truly is one of adding an extra task to our staff at Hines to say; in addition to doing the work that has been done for the last 25 or 30 years, also manage the day-to-day activities of a contractor. It is our intention right now to provide additional management support to the staff, as I said earlier, and to provide immediate training to our project management staff at Hines.
    Mr. CATLETT. Mr. Evans, I would add, I think as I noted earlier, this obviously will be an item that we will review in our monthly status reports with Mr. Quinton, and we'll be glad to keep the committee informed of our progress there.
    Mr. EVANS. All right. With regard to the medical device issue, are you satisfied with the feedback you've received to date from the manufacturers? Do you believe that the Food and Drug Administration has conducted sufficient outreach to accurately determine the severity of the problem among medical device manufacturers?
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    Mr. CATLETT. The answer to your first question is yes, and I'm going to ask Dave to speak to the second because I think he's had more direct communication and involvement than I have with the FDA.
    Mr. ALBINSON. Thank you, Mark.
    Earlier this month we sent a letter from the VA to the 1,580 manufacturers of medical devices actually in use at our facilities. We have been very encouraged by the response of industry to this letter, and over the past 3 weeks we've already received nearly a 15 percent response rate. Of those who have answered back, 70 percent have indicated that there is no time clock involved in their particular medical device; approximately 15 of the remaining 30 percent, were almost half, have indicated that they do use a clock; it is compliant, and the remaining 15 percent have indicated that they need to check further into the problem.
    Working through the numbers, that means that we have somewhere between 200 and 300 manufacturers of biomedical devices which may produce an issue for us. We feel this is a manageable number, and we're addressing it directly, and we've been very encouraged by the cooperation we've received from industry.
    Mr. EVANS. Can I get you to submit that data for the record, please?
    Mr. ALBINSON. I certainly will.
    Mr. EVANS. Thank you.
    (Subsequently, the Department of Veterans Affairs provided the following information:)

    Mr. EVANS. All right, I yield to majority counsel.
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    Mr. Kingston SMITH. Thank you.
    What action does the VHA plan to take on those manufacturers who have not responded to your September 9, 1997 letter?
    Mr. ALBINSON. Well, we're going to give it a little more time. It's been 2 weeks. At some point we will follow up with them directly, and the letter was couched such that it required a response whether or not they thought there was a problem. So we intend to get a response from all 1,580 manufacturers eventually.
    Mr. Kingston SMITH. At this point does VHA have any indications of Y2K compliance problems with any of its biomedical equipment?
    Mr. ALBINSON. Our current indications are that 15 percent of the respondents have indicated that they need more time in order to get back to us, and we're assuming that there may be problems with those manufacturers. They have been highlighted in our efforts.
    Mr. CATLETT. Kingston, I'd add that we would, if we have difficulty with manufacturers corresponding with us, this is an issue that we'll raise back through the CIO council committee on this that I believe FDA has. I know it's an HHS-led effort, and we will make sure that that committee and OMB, if necessary, are involved with that, to bring some leverage to getting that attention on this issue. So it's something that, as Mr. Albinson said, we will follow up ourselves this fall, in the month of October, and if there's continued lack of correspondence, then it's an issue that we'll raise within the administration with the OMB-led effort to make folks aware of that, to try to bring some more leverage on the issue.
    As we testified, we're not probably—for many of these companies, we do a lot of business from our view, but from their view we may not be a large customer. So we wanted to bring all the leverage we can with the Federal Government effort, not just our own.
    Mr. EVANS. I want to thank the panel for testifying today, and we'll excuse you right now.
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    Mr. CATLETT. Thanks.
    Mr. EVANS. And at this time we'll bring our third panelist forward: Tom Shope, Acting Director of the Division of Electronic and Computer Science, Office of Science and Technology, Center for Devices and Radiological Health, of the Food and Drug Administration.
    Doctor, you may proceed when you're ready.

    Mr. SHOPE. Thank you. Good morning, Mr. Chairman and members of the subcommittee. I'm Thomas Shope. I'm the Acting Director, as the chairman said, of the Division of Electronics and Computer Science in the Office of Science and Technology of the Center of Devices and Radiological Health of the Food and Drug Administration.
    Having previously testified before this subcommittee at the June 26th hearing, I'm pleased to be here today to provide further information about the year 2000 date issue and its impact on medical devices. Although FDA has not received any significant information since the previous hearings to indicate that there will be any major impact on medical device safety, I am here to assist the committee in its efforts to examine the issue.
    FDA is responsible for protecting the public health by helping ensure that medical devices are safe and effective. Any computer software that meets the statutory definition of a medical device is subject to applicable FDA medical device regulations. An issue that has been identified as warranting review is the impact of the year 2000 on some medical device computer systems and software applications. These products could be impacted by the year 2000 date problem only if they use a date in their algorithm or calculation or function or in recordkeeping and if a two-digit year format for the date was used in their design.
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    At the last hearing, I described some of the technical issues associated with the types of products that we regulate. I'll not go into that in detail today. It is in our written testimony.
    In July, the Center sent a letter to all medical device manufacturers, approximately 13,000, both domestic and foreign, to ensure that manufacturers were addressing the year 2000 issue, and we reviewed both embedded and non-embedded software product issues in that letter. In addition, we asked manufacturers to review any computer-controlled design, production, or quality control processes for the possible impact of a two-digit date in any of these computer applications.
    This letter reminded manufacturers that, pursuant to manufacturing regulations, they have a legal obligation to investigate and correct devices that fail to operate according to their specifications because of an inaccurate date-recording or calculation operation.
    Our letter did not require a response from the manufacturers. We have regulations already in place that require manufacturers to notify us, FDA, of problems with devices that could lead to a significant risk to public health.
    For devices that are already on the market, we requested manufacturers to conduct hazards and safety analyses to determine whether device performance is affected. We expect manufacturers who identify products which have a date-related problem that could affect safety or effectiveness of a device to take the necessary action to remedy the problem. It is the obligation of the manufacturers to notify FDA of problems with devices that present a risk of serious injury, and of corrective actions taken to reduce a risk to health. Again, let me stress that we do not anticipate a large number of devices to be impacted or a large number of significant problems which would affect patient safety with individual medical devices. We want to ensure the continued safety and effectiveness of these devices by addressing the issues before they arise.
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    Currently, and for future medical device pre-market submissions for new products, FDA will review device design and function to assure that the products have been designed to perform date recording and computations properly and safely. We will also be working with manufacturers on any reported problems with the devices that are currently on the market and in monitoring their activities.
    Thank you, Mr. Chairman, for the opportunity to tell you about the issue of the year 2000 in medical devices. Let me assure you that we at FDA take this issue very seriously, as we do all problems that could affect public health. We have been evaluating the possible impact on devices since early last year. We are committed to a scientifically-sound regulatory environment that will provide Americans with the best medical care. FDA has looked at this issue and does not see any major problem with medical devices that cannot be addressed satisfactorily. It is the manufacturer's responsibility to meet high standards in the design, manufacture, and evaluation of their products. They are ultimately responsible for these products, but FDA will provide the regulatory framework to ensure that the collaborative efforts of both the FDA and the manufacturers result in the best medical device products.
    That's all my oral statement, sir.
    [The prepared statement of Mr. Shope appears on p. 58.]

    Mr. EVANS. Thank you, Doctor. Your testimony indicates that the FDA has sent a letter to all medical device manufacturers reminding them of their obligation to advise the FDA, should there be any serious safety risk associated with the year 2000 problem. Given the FDA's ultimate responsibility to address the year 2000 problem, what additional steps will you be taking to ensure the safety and effectiveness of such devices?
    Mr. SHOPE. There are a number of steps that we are involved in or that we are contemplating taking to further our activities in this area. For one thing, we'll be stressing with our inspectional force that visit the manufacturing plants to raise this issue with the manufacturers during those inspectional visits. We will be carefully monitoring any reports of corrections or recalls that manufacturers are required to give us about products that could present a significant risk when they take an action to either correct a problem or to recall their product, and particularly we'll monitor those for any year 2000-type problems.
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    We are probably most active with the Chief Information Officers' Subcommittee on the Year 2000 Working Group which is dealing with medical devices and scientific research instruments. These are two types of products for which the Federal Government has a large interest in the year 2000 compliance issue, as purchasers and users of those kinds of products, as well as an interest in making sure that the public users of those kinds of products have information on the possible year 2000 impact.
    This group is looking at ways to provide information to the Federal purchasers of these products, as well as to the public, on those products which will have problems due to the year 2000 date problem, and the steps which the manufacturers of those products plan to take to deal with the problem.
    Our current approach to this is probably going to be the establishment of a website, hopefully in conjunction with the current GSA year 2000 website, and to provide the opportunity for manufacturers to provide information on that site regarding the year 2000 status of their products. We would expect that this would be a mechanism where by the manufacturer could either provide the information which would be posted there or provide a link to their own web site, where they could provide the detailed information themselves on the status of their products. This would provide a central facility for anybody who's concerned about their product status to check and verify.
    We will continue to look at new products coming to market to make sure they're compliant, and we'll investigate any reports, as we have been doing this summer, about products that may have a problem. We have seen in the public press and in other venues reports of products that have problems. We've actively investigated any of those that have come to our attention. Most of those—in fact, all of them that we have looked into—have turned out to be unfounded reports. It is not the defibrillators that are going to have problems as far as we can determine. Pacemakers are not going to have problems. Our last episode was looking into the infusion pump issue. We contacted all the U.S. manufacturers of infusion pumps, and were not able to determine a date problem associated with the operation of infusion pumps from those contacts.
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    So we will continue to actively follow up on any reports that we have. We expect that as manufacturers assess their products and determine that there may be a product that contributes a risk, we'll get that information from the manufacturer and we'll monitor their efforts to correct the problem.
    Mr. EVANS. Apparently, the FDA regulations require that manufacturers alert the agency if they think a medical devise poses a safety threat, but don't require manufacturers to provide feedback if they do not anticipate a safety. Put in fairly simply terms, how do we know whether the manufacturers are up-to-speed on possible year 2000 issues? How can we be sure that these manufacturers are properly addressing possible year 2000 issues?
    Mr. SHOPE. Well, I think we have taken a number of steps to make sure manufacturers are aware of the issue. I think our letter is the first step. We have had conversations with the major associations that represent the medical device manufacturers, the Health Industry Manufacturers Association, National Electrical Manufacturers Association, and the Medical Device Manufacturers Association—to bring it to their attention and to encourage their communication with their membership as to the problem and the need to take actions here, and to discuss with these groups the usefulness and receptivity of the industry to the website idea of a way to centralize and post the information. That's one of the areas where we've taken steps to try to make manufacturers aware of the issue. We'll continue to follow up on any voluntary reports and reports from user facilities that we obtain that would indicate a problem with a device.
    I think manufacturers, though, outside our regulatory scheme, have the desire to satisfy their customers and some liability issues that would probably be more influential in their actions, perhaps, than some of the FDA inquiries that we might be making as to the status of things. So I think there are a number of things that push the manufacturers to deal with this problem and to deal with it in an upfront manner.
    Mr. EVANS. From a policy perspective, do you believe your agency has the necessary tools to adequately survey and receive useful feedback from manufacturers on the year 2000 compliance issue? And given the unique nature of this issue and the limited amount of time left to address it, is there anything Congress can do to assist you in getting a better handle on this situation?
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    Mr. SHOPE. Well, I think we have done the things that the current law and regulations give us in the way of tools to explore these issues. I think if Congress has some other ideas on things that might be done to assist us in gathering information, we'd certainly be glad to discuss those with you and see what could be worked out there.
    We are different than, say, the Veterans Health Administration, who can go to a manufacturer and ask questions because of the contractual relationship they have as customers, and prospective customers, to be asking for information on things they may be buying. We, as a regulatory agency, have to make sure we don't impose reporting burdens on manufacturers or the public that aren't appropriately consonant with our OMB reporting requirements, information request requirements. So we work within the existing framework. There might be some things that could be done to that framework that would give us additional flexibility, but I personally think that we have the tools that we need to address this problem. The manufacturers will be responsible, will take the necessary actions.
    One of the things about medical technology is it's a very fast-moving kind of technology, so it wouldn't be unusual to find that only very old products are the ones that are affected here, and those are likely to be on a replacement schedule.
    Mr. EVANS. Your testimony indicates there are a very limited number of devices that will probably have year 2000 problems. Can you give us a list of devices that might have those kinds of problems that you're aware of at this time, and submit that to us for the record?
    Mr. SHOPE. We could attempt to put together such a list, I think. That will be based on our internal expertise of our medical device review staff as to the technologies involved and which ones of those could have a potential problem. Again, without knowledge of the actual algorithms that manufacturers have implemented, it's a little difficult to know exactly which products will or will not have problems.
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    (See p. 72.)

    Mr. EVANS. At this time I recognize majority counsel.
    Mr. Kingston SMITH. Dr. Shope, what happens if manufacturers do not live up to their legal obligations and public responsibilities? What harm could come to members of the public and to veterans?
    Mr. SHOPE. If there is a product that somehow encounters a year 2000 problem, I think there's a possibility for either failure of diagnosis or failure of treatment, based on that failure.
    Mr. Kingston SMITH. Has the FDA done any systematic analysis of the types of risks that might be posed to the public?
    Mr. SHOPE. As I say, when we started looking at this problem about a year-and-a-half ago, we had discussions with all the medical device review staff, basically polled and did a consideration of in what kinds of devices could a year 2000-associated problem lead to a significant risk to the patient or to public health, and I have to tell you that, from our internal discussions of our knowledge of the various technologies and the way devices function, it was a rather short list of those that came up that could be potential problems. We don't know for sure whether there are problems with those products because of not knowing the intimate details of the algorithms that were used, but we do have a list of a few kinds of products for which there is a potential for risk. Followups with some manufacturers of those products, however, have indicated that they are not subject, typically, to date problems because they didn't use a two-digit date format.
    Mr. Kingston SMITH. If a manufacturer doesn't live up to its obligations to make information available to the FDA, how will the FDA know there's a problem until after it's occurred?
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    Mr. SHOPE. I think there will be a lot of commercial pressure to satisfy customers, and so I think manufacturers are unlikely to not live up to their obligations. There are, of course, penalties for failing to notify FDA of problems that come to the attention of the manufacturer. We've put the manufacturers on notice that this is a potential problem with our letter. That means that they're obligated to investigate and to deal with any potential problem. Failure to do that is a violation of the regulations and would subject the manufacturers to sanctions.
    Mr. Kingston SMITH. Thank you.
    Mr. EVANS. Thank you, Doctor. We appreciate your testimony today.
    This concludes our hearing. Without objection, I will include Chairman Everett's closing statement in the record.
    [The statement of Chairman Everett follows:]
Closing Statement
    I appreciate the attendance and testimony of our witnesses this morning.
    It does appear that VA, particularly the Benefits Administration, is making progress on Y2K compliance. But, as GAO points out, substantial risks remain for the VA, and that means substantial risks remain for our veterans. So we're not out of the woods yet.
    I remain concerned about the biomedical equipment situation. It's a much bigger problem than just the VA. FDA's rather relaxed approach strikes me as inadequate and I do not see the kind of leadership within the administration that is necessary to assure the American public that the biomedical equipment used in this country is going to be safely and effectively operating on January 1, 2000. The basic approach of leaving it up to the equipment manufacturers does not inspire confidence—at least not my confidence. I intend to continue my interest in this subject.
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    This has been hearing II on these issues. In the next session, or sooner if need be, the subcommittee will have more hearings, and we will maintain our focus until the VA has achieved full Y2K compliance and we can tell our veterans that.

    Mr. EVANS. I thank all the witnesses and interested citizens for being here today, and we now conclude the hearing.
    [Whereupon, at 11:05 p.m., the subcommittee adjourned subject to the call of the Chair.]