Serial No. 105-150


Printed for the use of the Committee on Education

and the Workforce













Table of Indexes *


The subcommittee met, pursuant to notice, at 11:12 a.m., in Room 2175, Rayburn House Office Building, Hon. Pete Hoekstra [chairman of the subcommittee] presiding.


Present: Representatives Hoekstra, Norwood, Ballenger, and Ford.

Staff present: Deborah Samantar, Office Manager; Rob Borden, Professional Staff; Peter Warren, Professional Staff; Patrick Lyden, Staff Assistant; Kevin Talley, Staff Director, and Mark Rodgers, Workforce Policy Coordinator.


Chairman Hoekstra. [presiding] A quorum being present, the Subcommittee on Oversight and Investigations will come to order.

I apologize for our delay in getting started, but we had important business on the floor of the House. We had to have our picture taken this morning. And after that, we do have some serious business on the floor and a number of the members of the subcommittee had an interest in staying on the floor and either participating or observing the debate on the floor. That doesn't mean that they didn't believe this issue was important that we're covering in the subcommittee.

The subcommittee is meeting today to hear testimony on the year 2000 problem.

Under rule 12(b) of the committee rules, oral statements at hearings are limited to the Chair and the ranking minority member. This will allow us to hear from our witnesses sooner and help members keep to their schedules. Sorry we didn't help you keep to yours. Good morning.

If other members have statements they can be included in the record. Without objection, all member statements will be inserted into the record. Without objection, so ordered.


Chairman Hoekstra.

Mr. Ford, do you have a statement since you're gracing us with your presence and as the ranking Minority member do you want to go with your opening statement first?


Mr. Ford. No, thank you, Mr. Chairman.


Chairman Hoekstra. All right. I will go first with my opening statement.


Some of you were present in this hearing room three weeks ago, when this subcommittee listened to testimony from the Department of Education about the status of Year 2000 compliance. That hearing helped inform many of us about the year 2000 computer problem, and, specifically, about the issues that the Education Department must deal with in striving to make its computer systems compliant in order that student aid delivery will not be interrupted.

The year 200 issue is also the subject of this morning's hearing, but it is not the only subject. This hearing is about accountability. Many Americans lament the lack of accountability under which Federal agencies operate. They do not see Federal officials and bureaucracies being subject to the same sort of oversight that working Americans receive from their employers. Citizens do not see agents of the government being held to specific performance standards.

I was pleasantly surprised a few weeks ago, at our previous hearing on this issue, when Mr. Smith, of the Education Department, who's Acting Deputy Secretary, told the subcommittee that the Department would achieve certain Year 2000 compliance objectives by the end of the month. Mr. Smith, you're commended for putting yourself and the Department on the line. We appreciated that. You said that the Education Department would make 163 of its 168 non-mission-critical systems Year 2000 compliant by the end of the month. You also stated that the Department would also achieve the repair milestones for its mission-critical systems that it had set for September 30.

Since that was the kind of testimony that we don't always get here, I thought that perhaps the Department was biting off more than it could chew. So I invited Mr. Smith back at that hearing and said that we'd love to find out whether the Education Department would meet the targets that Mr. Smith had talked about. And, indeed, you're back with us this morning.

I also asked the General Accounting Office to independently assess the Department's performance to see if it had attained the goals set by the Department. The GAO informed me that this was the first time it has been called in to do a real-time audit of the self-reported Year 2000 status of a Federal agency. I hope it turns out to be a useful exercise.

As we enter and move through the year 1999, I expect that many other Federal agencies will receive similar scrutiny. There is simply too much at stake in this instance for Congress or the American people to take the word of Federal officials charged with the responsibility of ensuring Year 2000 compliance in the government computer systems that we all rely on to some extent or another.

So this morning we find out the results of our test. It is the only a trial run, of course. The Department is only subject to the censure of this subcommittee. But if the Department fails to prepare adequately for the arrival of January 1, 2000, the repercussions will be felt far beyond this hearing room. Millions of students across America may suffer.

Our second panel this morning will examine the Year 2000 compliance efforts of the Corporation for National Service. The Corporation has an operating budget of approximately a half a billion dollars. Its computer systems track, for instance, the service hours of AmeriCorps volunteers and the grants that go out to service organizations nationwide that participate in the AmeriCorps program.

The Corporation's Inspector General's office, which will be represented here this morning, reported this June that the Corporation is in serious danger of not achieving Year 2000 compliance in its most critical computer system -- the system that performs, among other things, its core accounting functions. As of today, the effort to repair or replace this system has yet to get underway.

Beginning in January 1999, as a result of this negligence, Corporation employees will be forced to perform the costly and time-consuming task of manually changing the dates for new grant projects that extend into the Year 2000. This process may go on throughout 1999, involving the manual processing of several thousand grants. If the accounting system is not up and running, and Year 2000 compliant by October 1, 1999, the effects will be much more serious. The Corporation may be unable to process or access any financial or grant information.

A representative from the Corporation will testify on our second panel, and I hope she can provide us with some assurance that the accounting system and the other critical computer systems at the Corporation will be Year 2000 compliant at the earliest possible date.

See Appendix A for the Written Statement of Chairman Pete Hoekstra, Congressman from Michigan


Chairman Hoekstra. Mr. Ford.



Mr. Ford. Thank you, Mr. Chairman. I certainly thank the witnesses as well for coming and ask your forgiveness for us being tardy this morning. I think the chairman touched on it eloquently. I think he understated somewhat the importance of what we're doing today, and it is our hope that all of us in this body recognize the gravity of the responsibility that we have and that we allow all members an opportunity to weigh-in.

I hail from Tennessee, the ninth district in Tennessee, and have a great relationship with your Secretary and other Assistant Secretaries at the Department, and congratulations to all of you on the good work you've done to help educate kids throughout this Nation.

Three weeks ago, as the chairman said, we learned that significant risks remain - let me apologize. Mrs. Mink, as a freshmen member, I'm delighted to be able to sit next to Mr. Hoekstra because generally I sit at the other end of the table here, as the most junior member on the subcommittee. In Mrs. Mink's absence, I have an opportunity to sit next to my good friend and Wolverine fan, Peter Hoekstra.

Three weeks ago, we learned that significant risks remain with the Education Department's year 2000 computer readiness, as the chairman mentioned, particularly those computer systems supporting critical student financial aid activities. According to the Department's own assessments of the severity of its Y2K problem, failure to achieve compliance in time could compromise the Department's ability to control the award process, with cascading effects reaching schools, students, guaranty agencies, and lenders. At that recent hearing, Acting Deputy Secretary Mr. Smith acknowledged that meeting OMB testing and validation deadlines would be difficult. However, Mr. Smith testified that the Education Department would exceed OMB deadlines and complete all but 5 of 168 mission-important and mission-supported systems by September 30.

Well, we know that Mr. Smith was a little optimistic, and we even applaud him for that. Twelve, rather than five, systems are incomplete. Of course, September 30 was a self-imposed deadline. However, it is clear that the Department must continue rigorous Y2K program management in order to avoid major problems in delivering financial aid to students all across the Nation in the 21st century.

Today, we will also hear from the Corporation for National Service about their efforts in Y2K computer preparedness. Unlike the Education Department, the Corporation does not administer a billion-dollar student loan program. Nevertheless, failure to achieve Y2K compliance on time will result in their inability to perform mission-critical processes, processes such as reviewing and processing grants, recording financial information, ensuring employees are paid, which I'm certain is important, and paying vendors.

The purpose of these hearings is not to criticize or place blame, but rather to take all necessary steps to mitigate risks of major disruptions. I look forward to the testimony from today's witnesses. And I apologize in advance to the witnesses if I leave a little bit early, as I want to get back to the floor to listen to some of the debate on what promises to be an historic, if not sad, day for America.

Thank you, Mr. Chairman. I thank the witnesses again for being here.

See Appendix B for Written Statement of the Hon. Harold Ford, Congressman from the State of Tennessee


Chairman Hoekstra. Thank you very much.

Let me introduce the first panel. We welcome back Mr. Smith. We have Marshall Smith, who is the Deputy Secretary, U.S. Department of Education. And we have Joel Willemssen, who is the Director, Information Resources Management, Accounting and Information Management Division, of the U.S. General Accounting Office. Do you get that all on one business card?


Mr. Willemssen. No, sir.


Chairman Hoekstra. Oh, all right. Welcome back. We'll begin with you Mr. Smith, for your testimony.



Mr. Smith. Mr. Chairman, I appreciate this opportunity to update the subcommittee on the Department's progress toward achieving full Year 2000 compliance.

I am pleased today to report today that we completed renovation for 12 of our 14 mission-critical systems by September 30, including the FFEL and the Multiple Data Entry System. We've completed validation of our Direct Loan Central database and our Direct Loan Servicing System, as well as fully implemented the Impact Aid Payment System.

The schedule I provided on September 17 slipped for one critical system: the National Student Loan Data System. Some testing remains to be completed for NSLDS to ensure compliance. In addition, as part of the continuing modernization of our systems, over the next two weeks, we will regenerate the compliant code on a new computer-assisted software engineering tool, and we will continue to test this and all subsequent modernization changes for Year 2000 compliance. We remain on schedule for implementation of a compliant NSLDS by the end of October.

With regard to our non-critical systems, we did not hit the ambitious target that I gave at the last hearing of completing work on all but five systems. Of the Department's 168 non-critical systems, 156 are either Year 2000 compliant, or fully implemented, or retired. This leaves 12 systems. We are completing work as expeditiously as possible on the five remaining non-critical systems under our control, and we are monitoring progress on the seven non-compliant systems operated by other Federal agencies.

Our biggest concern in this area continues to be systems operated by other Federal agencies. With the Department, we have fallen behind on some components of two systems operated by the Office of Educational Research and Improvement. We are still waiting for contractor validation documentation for the web-access subsystem of the Education Resources Information Centers. And the major data system administered by the Educational Testing Service lacks validation for some of its servers.

We also have changed plans for one non-critical system. We have decided to add the Federal Student Aid Information Center, also known as the PIC, for Public Inquiry Contractor, to our inventory as a mission-important system. That is why we are now reporting 168 non-critical systems instead of the 167 I discussed at the last hearing. A competition is currently underway for a new Year 2000 compliant center, expected to be operational by the end of March 1999. We had planned to add this facility to our inventory when the new contract was signed. We now believe that it is advisable to renovate the existing center so that we can be sure of meeting the March 31 OMB deadline, even if the new center is delayed. The Department expects to complete work by the end of the year on this system.

Ensuring timely and successful Year 2000 compliance demands more than the usual level of accountability from everyone involved, as the chairman just mentioned. As the chairman and others have noted, the arrival of the new millennium cannot be postponed. The Year 2000 tracking processes set up by OMB and the Congress are part of this accountability.

Within the Department, we are emphasizing accountability for everyone involved in our Year 2000 project. Agency program officers, staff, and contractors all must understand that commitments to complete Year 2000 tasks by assigned deadlines cannot be breached lightly. One way to get this point across is by including Year 2000-related performance standards in individual employee agreements. Last spring I asked all Department senior officers to add a specific standard related to Year 2000 compliance to the performance agreements of these managers with Year 2000 responsibilities.

It is also important to verify that systems declared compliant are actually compliant. For our mission-critical systems, we are providing this assurance through the IV&V process, under which independent, experienced contractors confirm Year 2000 compliance. IV&V is part of our validation process and timeline.

In addition, all of our systems critical and non-critical --


Chairman Hoekstra. Excuse me for just a sec, okay?


Mr. Smith. Yes, sir.


Chairman Hoekstra. Excuse me. Go ahead. Thank you.


Mr. Smith. Okay.

In addition, all of our systems critical and non-critical must go through a two-part closeout process. First, we conduct a system closeout once the Year 2000 compliant version of a system is implemented. The system manager, principal office coordinator, Year 2000 Project Management Team liaison, and an outside consultant meet to verify that all compliance activities have been completed. A Year 2000 System Closeout Form must be signed by all key personnel.

Second, once all Year 2000 compliant systems in a principal office are implemented, and after contingency plans have been developed, the responsible senior officer must provide the Year 2000 Project Director with a signoff letter of certification.

Since September 30, we have been engaged in a review of the documentation prepared by the principal offices as part of the closeout process for individual systems. Last week the General Accounting Office visited the Department in the middle of this review to conduct its own examination of our system documentation. GAO provided a thorough and useful review, and we are following up vigorously in those areas in which GAO auditors indicated that documentation should be augmented.

While the Department did not meet the aggressive deadlines I provided at the September 17 hearing, we did make solid progress toward full compliance for all of our systems. We understand that much remains to be done to complete renovation of our own systems, to coordinate testing across systems, and to carry out contingency planning for core business processes. We agree with GAO that the latter must be a high priority over the coming months.

I remain confident that we will achieve full Year 2000 compliance and implementation of all of our systems by the OMB deadline of March 31, 1999. One benefit of the deadlines in our Year 2000 project plan is that they help us focus on problem areas and make appropriate changes to get the job done.

I note, parenthetically, Mr. Chairman, that I intend to continue to have very aggressive timelines in all of these efforts, and aggressive timelines occasionally get slipped. But I will hold my people as accountable as I can under these circumstances and to have them work just as hard as they can in order to meet those deadlines. This includes not just completion and implementation of our systems, but also an aggressive effort to work with our customers to assure that services are not disrupted.

I'd be glad to respond to all questions you might have or that Mr. Willemssen raises in his testimony.

Thank you.

See Appendix C for Written Statement of Marshall Smith, Deputy Secretary, U.S. Department of Education


Chairman Hoekstra. Good. Thank you very much.


Mr. Willemssen.



Mr. Willemssen. Thank you, Mr. Chairman. Thank you for inviting us to testify today.

As requested, I'll briefly summarize our statement. At last month's hearing, Education pledged that the five mission-critical systems with September 30 milestones would meet those deadlines and that all but five of the mission-important and mission-supportive systems would be Year 2000 compliant by September 30.

On October 1, we obtained from the Department its conclusions on whether the systems met those deadlines and also obtained the supporting documentation for those systems. We reviewed the documentation provided to identify whether the Department had evidence behind its conclusions. Let me begin with the five mission-critical systems.

Education said that it made their deadline for four of the five systems, and missing the deadline for NSLFS. For the four systems that it said it met the deadline, we found the following:

On the Federal Family Education Loan System, the Department and contractor officials provided us with numerous document supporting that renovation activities had occurred. Two issues, however, were outstanding: one, whether additional software needed to be unit-tested before beginning with more extensive software testing; and two, Education had not yet approved the renovation phase documents.

On the Multiple Data Entry System, we were also given documentation supporting the fact that renovation activities had occurred. Again, however, outstanding on this system was departmental acceptance of renovation documents. In addition, a contractor's signature confirming completion of renovation activities was lacking.

For the other two systems, the Direct Loan Central Database and the Direct Loan Servicing System, we were provided documentation again supporting validation activities. An outstanding issue for these two was that the system test report was submitted to the Department on October 2, and was awaiting approval.

Next, let me turn to the 167 mission-important and mission-supportive systems and the 162 of those that Education pledged to have compliant by September 30, consisting of 20 mission-important and 142 mission-supportive.

For the 20 mission-important expected to be compliant, Education reported that 17 made the deadline. Two systems were retired. And one did not make the deadline.

For the 17 reportedly making the deadline, we found supporting documentation for 16 of those. One, however, we only found partial documentation, in that it did not have a checklist indicating what kind of testing and validation had been done to reach the conclusion that it was compliant.

For the 142 mission-supportive systems, Education reported that 117 made that deadline; 20 were retired, and 5 did not make the deadline. For the 117 reportedly making the deadline, we found that 12 did not have any documentation supporting that conclusion and that 3 had partial documentation.

Summing up, Education did not achieve its goal completely. However, it did make clear progress and had documentation supporting its conclusions in the majority of cases. Nevertheless, Education still faces a huge challenge. Beyond getting all of its systems compliant and in addressing all of its data exchanges with other organizations, the Department has a major task in conducting thorough end to end testing of multiple systems. That is to say, it's one thing to say an individual system is compliant. It's quite another to put multiple compliant mission-critical and non mission-critical systems together and thoroughly test those to make sure that the entire process is Year 2000 compliant, and that will still be a major job ahead for the Department.

That concludes the summary of my statement, and I'd be pleased to address any questions that you may have.

See Appendix D for Written Statement of Joel Willemssen, Director of Information Resources Management for the U.S. General Accounting Office


Chairman Hoekstra. Can you take me through the mission-critical documents? There were going to be what? Five were not going to be compliant, correct? Or were what?


Mr. Willemssen. On mission-critical, there were five systems that had September 30 milestones committed to, either renovation completed or validation completed. And one of those five, NSLDS, did not make that deadline.


Chairman Hoekstra. And you indicated for the other - for at least two or three of the others, there was not appropriate validation or documentation?


Mr. Willemssen. Well, for the others, there were, for the other four, there were some outstanding that we had identified. For example, on one a contractor signoff indicating that they agreed that the activities had been done. While that might seem somewhat minor to some, we think that's fairly important that the contractor signoff that they did the work.

In addition, there are a couple other cases, I believe, where Education has the documents and has not yet approved them, confirming that, yes, indeed, these activities did happen. And my understanding is they plan to make that decision by mid-October. If at that time, they so approve them. Obviously, though, one thing to keep in mind is the renovation activities would be completed as of September 30, since that is when the work was done.


Mr. Smith. May I comment on this?


Chairman Hoekstra. Yes.


Mr. Smith. On the point about the missing signoff, that was from an organization that is in Iowa, and this is a copy of their signed verification, or confirmation that renovation of the MDE system, including MIS, was completed on September 28, 1998.

On the other signoffs that Mr. Willemssen just mentioned, I signed for FFEL, the staff signed off on the seventh. For the data system, the Department accepted it also on the seventh, and actually it's the seventh on all of them - on the Direct Loan Database and on the Direct Loan Servicing, the Department signed off on the seventh.

We're motivated, Mr. Chairman, to have people look closely at this in a short period of time, and they did.


Chairman Hoekstra. Great. Thank you.

And then under the non-mission-critical systems, you had what? Roughly, I think, you talked about 17 - I think the chart that I have shows that roughly 21 were not complete; either they lacked the documentation, not documented or were reported as non-compliant, is that correct?


Mr. Willemssen. What we have is reported non-compliant in addition to the ones that were previously planned not to make it was an additional six in total. And then, of the ones that were reported compliant from a documentation standpoint, in total we didn't see documentation at all on 12 of those, and partial documentation on four.

One thing I'll point out, it could be as of yesterday, the day before, or today that documentation maybe exists now, but our approach was we wanted to know as soon as possible after September 30, since those were the deadlines, where you are. And so we took all that documentation, all the documentation in on October 1, and made our determinations at that point in time. So, I think similar to what Mr. Smith said on the contractor now coming in, I believe that letter was dated October 7. And again, we just tried to be as close to the September 30 milestone as possible.


Chairman Hoekstra. For the 16 programs that are not completely documented or not documented at all, Mr. Smith, do you have new targets or are you expecting those to be there?


Mr. Smith. We are - we have been working hard to move all of these systems to closeout situation. And we've closed out in the partially documented or in the fully documented 14 systems. Sixteen is a different number than I have. So, I mean, numbers jump around on this a little bit. But let me make a commitment to you that by the end of the month, we're going to have what we call closeout on all of the documents, on all of the systems that GAO said that we had not sufficient documentation on. And we'll close it out by ourselves examining those documents and assuring ourselves that, in fact, the information is there to the extent that if GAO came in again, they would approve it.


Chairman Hoekstra. Okay. Mr. Willemssen, is this documentation in the tracking process easy for you to gauge progress when you go over to the Department of Education?


Mr. Willemssen. Documentation supporting Education's determination is an important measure of exactly where the Department stands on compliance of individual systems. It's not the only measure and shouldn't be the only measure. Beyond that, especially for the more critical systems, validation activities also have to happen. And what I mean by that is somebody independently coming in and running, for example, the same tests that this other organization said they ran and came out with these results. Validation would be actually going beyond paper review and doing that kind of testing and seeing if, indeed, the same results occurred.


Chairman Hoekstra. What's the best way for us to keep a track on this over the coming months? To, you know, gauge - and this isn't, it's not a ``gotcha'' thing. I mean, if you get into trouble, I think we'd like to know about it and figure out how we can help to solve it. Because I don't think any of us would look at any kind of glee at all at getting to, you know, some time in 1999 or the Year 2000 and running up against the wall. But, you know, how would we know if we're getting close to that, or if that's a real possibility. What's the best way for us to maintain this dialog over the coming months?


Mr. Smith. You mean other than meeting every month like this?



Chairman Hoekstra. Well, I mean, you know, I'm waiting for you - I mean, I've seen you make some commitments now for the end of this month, and I'm thinking, do I really want to come back?


Mr. Smith. Right. We'll wear you out. Sure.


Chairman Hoekstra. I won't be here. I'll come back in town on November 5 or 6, so, you know, maybe we ought to get together again. I don't know. I don't think so.


Mr. Smith. Well, we could, you know, we could do this without - obviously, without having it in a formal setting like this. And we'd be glad to, you know, debrief your staff or debrief you once a month. I believe actually we're getting together with GAO again in a couple of weeks to go over some issues, and we can't ask GAO to do our work for us, but we could use all the help we could get. And we are relying on groups like GAO, we're going to rely on our IG to do some independent verification on some of the non-critical systems. We already have in IV&V, and actually Mr. Willemssen and I were just talking about ways that we might even strengthen the kind of work that they do.

This is a, you know, this is a process where we're learning at the same time as everybody else in some ways about how to make the process stronger and more stringent. And we'll just, you know, we're going to continue to learn; we're going to continue to improve as we go along.


Chairman Hoekstra. Right. See my problem with this is I look at the chart and I see we, you know, we missed the date on one of the mission-critical projects. And then under the mission-important or mission-supportive, you know, whether it's 16 or 20, but, you know, somewhere around one-sixth, one-seventh of those programs, we missed the target. And I don't know whether that's a problem or not. I mean, you tell me it's an aggressive schedule.


Mr. Smith. Yes, I think we missed it. Excuse me, Mr. Chairman. Go ahead.


Chairman Hoekstra. I was just going to say, I mean, it's an aggressive schedule, and it's kind of like, you know, I've worked on project teams, and we've sometimes had aggressive schedules, and you got a critical path, and you say, man if we mess up on this critical path the end date moves. I don't know whether these are on a critical path. And whether you slip on these and this schedule, you know, it's no harm no foul, or whether it's like, whoa I should be sitting here saying, hey, you missed, sixteen of these things aren't done. These are on the critical path. We're in big trouble. What are you going to do to catch up versus you saying, well these were aggressive schedules and so I'm having difficulty gauging whether this is a problem or not.


Mr. Smith. I actually don't believe that, for the most part, the non-critical systems that slipped are a problem. They are not a critical path to the kinds of business processes that we need to ensure are in place in the Year 2000. And that's why they're not critical systems. But I mean, I believe we don't - I don't believe we slipped 16. I think we slipped closer to seven or so, and of those, four, as it turns out, are sister agencies that we'd hoped would have their systems ready by the end of September and don't. And we are talking with them. And we're beginning in certain instances to begin to look at alternative ways of providing the kinds of services that they provide.

You know, I think, just in terms of keeping you up-to-date, that the simplest way to do it would be just to meet with your staff once a month. NSLDS, and here I, you know, fully acknowledge we slipped. I believe, though, we were still on target for the end of this month. And we'll be glad to come up here and talk to you, formally or informally, about it.


Chairman Hoekstra. Okay, I mean, you got a number of critical dates coming up again on your mission-critical systems.


Mr. Smith. Right.


Chairman Hoekstra. I think there's at least, you know, three or four that are targeted for the end of October.


Mr. Smith. Actually, six, Mr. Chairman. Six dates.


Chairman Hoekstra. Six dates. One, two, three, four. Are you going to hit those?


Mr. Smith. I fully expect to. Yes. We have been scrambling every day.


Chairman Hoekstra. Okay.


Mr. Smith. And those are the targets. Those are what's agreed upon with the contractors. In every one of these, there are contractors, outside contractors.


Chairman Hoekstra. Yes. And when, either for Smith or Mr. Willemssen, when you hit these dates, I think I remember from the last hearing, it means that what? That these systems independently are 2000-compliant? It doesn't cover the interface between these systems or the interface with vendors, or your customers? Is that correct?


Mr. Smith. It depends a little bit. But, by and large, you're right. We have number, we've independently verified it. Number one, we've independently verified it. That's part of the validation process for the critical systems. Number two, we have it up and running. It's actually being implemented. That is, you know, the stuff is processing through it. So, to that extent, it's working. Now, it doesn't - it's not working in connection with the other systems in a Year 2000 environment; that is, that, you know, we don't - we haven't turned all the clocks ahead for the connections to the systems. The next phase of all this has to be to test the business processes; that is, the clusters of systems that work together and to test, as you said, the connections or the gateways or the, you know, the relationships between our systems and other systems in the government and some of the systems outside the government. We talked a little bit about those last time. And there are a variety of different ways that our customers interact with this, some of them more difficult and more problematic than others. The ones with the big mainframe systems, for example, have to do some programming on their end in order to get their data ready for us. We've told them exactly the nature of the data, what it will look like, and so on. So they have to get to work and do that.

A lot of others that don't use big mainframe systems actually use software that we developed for them. Put it on their PC-compliant or some other system and use that software. So, that we're a little more secure about and we're continually testing, but as I mentioned again last time, we expect to have testing windows open during the entire year from March 31 on, opening and closing depending upon the needs.


Chairman Hoekstra. Mr. Willemssen, do you have any comments on that?


Mr. Willemssen. I would say, Mr. Chairman, going back to your original question in this area on what you should be concentrating on. First and foremost, are the target dates for those mission-critical systems. And secondly, related to what Mr. Smith just mentioned is looking to the Department on where they're at on their end-to-end testing plan, and where that plan is, when the Department is going to start implementing those kinds of tests with schools, banks, and other organizations that they exchange data with. Because, again, it's, as I've mentioned before, it's one thing to say this individual mission-critical system is compliant; it's quite another to say it's going to work in the overall, for example, student loan area. And so, I would concur with the comments that Mr. Smith has made and emphasize that that would be the area I would be most concerned about, as opposed to whether the many mission-supportive systems made it or not. That would be a definitely a lower priority from my point of view. And I'd be more concerned about looking at the entire student financial aid environment.


Chairman Hoekstra. Have you seen a plan from the Education Department about their cluster or customer?


Mr. Willemssen. We understand that - the latest information I have is that we understand they are drafting such a plan.


Chairman Hoekstra. So that plan does not exist yet, Mr. Smith?


Mr. Smith. Not fully, that's right.


Chairman Hoekstra. How do we know whether you've got enough time in the system to - have you talked with your customers about this? And do you -how do you know, if you don't have a plan yet, how do you know if you have enough time in?


Mr. Smith. Well, a lot of what we've been doing is actually we've been holding focus groups with customers and talking a lot with the major agencies that connect to us and so on. We believe that we will have time. We believe we're going to get our last system fully, that is the FFEL system, in March, and that we'll have the entire rest of the year in order to carry out that kind of end to end testing.

Part of that depends upon, of course, when we will have, we have it now for the most part, the software that's going to be Year 2000 compliant that people on the outside will be using. So, you know, what you've got is a kind of a mixture of things that we need to get into place in order to go into the end to end testing. And, as I mentioned, you know, it's - you kind of work up to end to end testing. You test a cross a system or two. You test the business process and so on, and then you open it up to the outside. So, you take this in small steps, so you have some control over where the problem will come up if a problem does come up.


Chairman Hoekstra. And when will you have the plan ready for the dates and for the cluster and the customer type of focus?


Mr. Smith. Let me see if we have a date.


Chairman Hoekstra. End of this month, right?


Mr. Smith. No, no.


Everything's at the end of this month. Let me say November 15.


Chairman Hoekstra. I'll be back on the 18th, too. So, on the 15th you'll have a better idea of as to the length of time that you believe that it will take to do the cluster and the customer testing and interfacing. And you'll have an idea as to whether you got enough time or you'll develop a schedule that will enable you to get it done by the time your customers need it done?


Mr. Smith. Yes, sir.


Chairman Hoekstra. You will have that feedback from your customers?


Mr. Smith. We've had, I hope so. I'll check on that in just a second. But we've had it, as I said, a number of focus groups to try to begin to think about how to put this plan together. Does November 15 give us enough time to? Right, right. Of course.

There are two answers here: one is that the partners need to be ready obviously in order to do the testing. So we will have the plan. We won't necessarily have done the testing. And that's clear. I am sure it's clear to you.

I think the implication, though, of what you asked was how will have vetted that plan with our customers? And I don't know the answer to that, but we certainly intend to do that.


Chairman Hoekstra. Mr. Willemssen, as you've taken a look at other agencies that are, you know, working through this process, some whom who may be further along, others that are maybe not as far along, I mean, the job that is being scoped-out here in the time that is available, is it a reasonable time to get it done?


Mr. Willemssen. Given where we stand today, given the magnitude and complexity of the environment that the Department works in, I'd be very pessimistic that there's enough time to get everything done. In fact, I would expect the Department to continue testing up to December 1999, in order to give itself as great assurance as possible that no major impediments will occur. But I think it's likely that there will be some problems. And I give credit on the other hand, to the Department. They've really moved aggressively recently and made this a priority. And we've seen it at other agencies. When congressional oversight on Y2K becomes evident, agencies move. And that's what's happened in my opinion with this. The Department's moving out. This is clearly a priority. But given where we stand today, the limited amount of time left and the magnitude of the task at hand, it will be very tough.


Chairman Hoekstra. When is the first time that we could actually hit the wall? I mean, recognizing from what I've read and studied on this, it doesn't all happen on January 1, 2000.


Mr. Smith. Right.


Chairman Hoekstra. I mean you deal with student loans that are going to young people that are going to be applying for them in early and mid-1999. You're going to be granting them in the summer of 1999. And, I mean, are we - is there any potential that that process is in jeopardy?


Mr. Smith. We're already carrying dates that go in obviously on loans.


Chairman Hoekstra. Right.


Mr. Smith. Because they, you know, they've been given recently. So, we're already carrying a number of dates. Let me just check and see when we expect the first big rush to hit.

I'm informed that the beginning of this coming year we'll get a large number of records that contain dates that go into the next millennia. We've already got records like that, so we're already processing them. We'll just get a lot more then.

I mean, of course, our biggest fear and in some ways what we're doing is, we have to think strategically about this. And I think that's what, exactly what, you're doing right now. You're saying, all right, what are the dates that we're going to hit. What are the times that we're going to hit, depending upon our business processes, where we'll start to feel this. And I think that's been a big part of - a big part of our thinking. And so, we have looked at the kinds of processes that we've gone through on the systems which are now carrying out on daily basis, processing records that have four digit dates to see if there's any effect on the system and what's happening and so on. And, you know, knock on wood, by and large, it's been all right. So, you know, our hope is that we can move into this, and get ourselves entirely compliant.

There are other dates that pop up. There's this 9-9-99 date, which people worry about. We're testing for all of those specific dates, as well as, of course, the January 1st of the Year 2000.


Chairman Hoekstra. Mr. Willemssen?


Mr. Willemssen. I believe the Pell system has failure dates in spring of 1999. And also, there is, as the school years go, 9-9-00, obviously before January 1, 2000, you'll have some triggers with those also.


Chairman Hoekstra. Okay. All right. I think those are the only questions that I have today. We will stay in touch, and whether it's informal meetings or whether it's more formal, a more formal process, but we're very interested, and I think as Mrs. Mink said last time, we're all here to try to do whatever we can to help you through this process; number one, to monitor the process. But, you know, if you run into a problem, we'd appreciate it if you'd let us know rather than -this is not a gotcha game.


Mr. Smith. Right.


Chairman Hoekstra. This is to work through this process and get it done constructively.


Mr. Smith. Great. I appreciate it, Mr. Chairman.


Chairman Hoekstra. Great. Thank you very much.


Mr. Willemssen. Thank you, Mr. Chairman.


Chairman Hoekstra. Welcome. Let me introduce the second panel.

We have Mr. Bill Anderson, who is the Assistant Inspector General for Audit at the Corporation for National Service, and Wendy Zenker, who is the Chief Operating Officer of the Corporation for National Service. Welcome to the two of you.


Mr. Anderson, we'll begin with you.



Mr. Anderson. Good morning, members of the committee and Mr. Chairman. I am here today at your request to testify about the results of the June 30,1998, OIG assessment of the Corporation's efforts to become Year 2000 compliant. I would like to highlight at the outset the report discusses the Corporation's efforts as of the end of June 1998. We plan to begin a follow-up assessment of the Corporation's corrective actions during the second quarter of Fiscal Year 1999. At that time, we will examine the Corporation's efforts to test and validate Year 2000 compliance and may perform independent testing of the corrective actions taken by the Corporation. Today I will limit my remarks to the results of the June 30, 1998, OIG report.

Our assessment included an evaluation of the Corporation's actions to address Year 2000 compliance issues in its mission-critical applications and systems. We also reviewed the Corporation's policies and procedures to monitor Year 2000 project milestones. We concluded that, although the Corporation had begun efforts to achieve Year 2000 compliance, several high-risk areas existed.

First, the Year 2000 effort was being carried out solely by the Corporation's Office of Information Technology. The effort did not include representatives from other operational units within the Corporation, planning was inadequate, and no formal risk assessment or business impact analysis had been performed. Without such a systematic assessment, the Corporation might not have a realistic picture of the scope, nature, and cost of needed remediation activities. Additionally, remediation efforts might not be focused on the areas having the greatest potential business impact in the event of a failure.

Second, the Corporation's financial management system is not Year 2000 compliant. At the time we performed the assessment, no efforts were planned to remediate this application. Instead, the Corporation planned to replace this system with a new financial management system, but the Corporation was still in the process of identifying a system that would meet its needs. After the issuance of our report, the Corporation began exploring alternatives to replacing the system, including making the current system Year 2000 compliant. The implications of the failure of the Corporation's financial management system are numerous, since the Corporation relies on this system to perform many of its key processes, such as recording financial information, paying vendors, and processing grants.

The third high-risk area identified in the report was that the Corporation had not developed contingency plans for its mission-critical applications. The lack of contingency planning increases the risk that the Corporation may not be able to perform mission-critical processes if some, or all, of its applications experience Year 2000 problems. The vulnerable mission-critical processes include paying grants, ensuring employees are paid on time, and paying vendors.

Finally, we found that the Corporation had not created detailed testing plans to test each application, database, computing platform, and operating environment for Year 2000 compliance. In addition, the work was not being validated by a quality assurance function. If thorough testing is not performed using a defined methodology, there is a risk that the remediated applications, databases, computing platforms and operating environments will be erroneously validated as Year 2000 compliant. Moreover, there is a risk that the Year 2000 Project could be behind schedule without the Corporation's knowledge.

Since we issued our report, OIG has attended Corporation system user group meetings designed to identify all vulnerable systems and applications in use at the Corporation and to disseminate information on the Corporation's Year 2000 Project. We are also aware that the Corporation has formed a steering committee to oversee its Year 2000 Project.

Because we have not yet begun our follow-up assessment, I cannot comment on what has been accomplished by the Corporation on Year 2000 matters since the issuance of our report. Further, we will be unable to define the scope of our follow-up work until the Corporation has decided on, and implemented, its corrective actions. Therefore, I would defer to Ms. Wendy Zenker, the Corporation's Chief Operating Officer, to discuss the current status of the Corporation's efforts.

This concludes my prepared statement. I will be pleased to answer any questions you might have regarding our report.

See Appendix E for Written Statement of William Anderson, Assistant Inspector General For Audit, Corporation For National And Community Service

Chairman Hoekstra. Thank you.


Ms. Zenker.



Ms. Zenker. Mr. Chairman, I appreciate the opportunity to appear before you today to review the Corporation's efforts with respect to our Year 2000 problem.

At the outset, I want to emphasize that the National Service Trust System is Year 2000 compliant and that the educational award of every AmeriCorps member is safe and secure.

I assure that the Corporation takes the task of making our systems Year 2000 compliant very seriously. Let me share with you the status of our efforts.

The Corporation has identified 26 mission-critical systems, including hardware platforms, system software and application systems.

Our hardware platforms, the workstations, the wide area network, the local area network are compliant or will be with minor changes.

Our client office software standards are almost totally compliant. We may need to upgrade our mail system to be fully compliant. This is a straightforward, but labor intensive task.

With respect to system applications, all of our mission-critical systems are Year 2000 compliant, with the exception of the financial management system. We have confirmed that the National Trust System and the VISTA management system are Year 2000 compliant. The grant system for programs under the National Community Service Act is compliant.

Further, the external systems upon which we depend, run by the U.S. Department of Agriculture, the National Finance Center, for payroll purposes, the Department of Health and Human Services, for grant payment purposes, and the Treasury, for our basic check writing purposes, are either compliant now or expected to be compliant shortly.

However, the Corporation will need to build interfaces to those systems. And that work cannot be started until we've made our financial management system decisions.

That brings me to our major concern: the Corporation's financial management system.

The current system, Federal Success, is not compliant. It's outdated and needs to be replaced. We plan to implement a new financial management system by entering into a cross-servicing arrangement with another Federal agency that is already Year 2000 compliant. We're conducting a study to determine the time frame and cost estimate to migrate to the National Science Foundation's financial management system. The study will be finished in 30 to 45 days.

Because the experience of other Federal agencies has shown that implementing a new system can take longer than originally planned, as a contingency we are reviewing the possibility of converting our current financial management system to make it Year 2000 compliant. Our initial review suggests that this could be accomplished in about six months.

By mid-November, we will have the results of the NSF cross-servicing study and the analysis of the conversion of the current system. At that time, we will decide on our final action plan.

As you know, a report on the Year 2000 by the Corporation's Inspector General identified a number of important issues. We have already acted on many of the IG's recommendations. These actions are detailed in our response, which was provided to the committee. For instance, we established a Year 2000 Steering Committee to oversee the work of our project team. We've put in place a Year 2000 Users Group to help expedite compliance effort.

The IG report stresses the need for independent verification and validation. We believe that our testing of compliance has been adequate. But we've not had the resources to follow up with independent quality assurance reviews. We plan to conduct independent verification of our mission-critical application systems based on a risk analysis in Fiscal Year 1999. I'll continue to work with the Inspector General on this and other Year 2000 issues.

In summary, we have accomplished much, but still have major challenges before us in 1999. Most, but not all of the systems listed as mission-critical are now compliant. Major challenges include moving our core accounting functions to a cross-servicer; replacing the current DVSA grant award module; completing known upgrades for software and communications equipment; completing minor corrections to vendor-supplied software; and resolving minor problems with local applications. To address these issues, our Fiscal Year 1999 budget requested program administration funding for the Year 2000 effort. With these resources, we will be able to complete the tasks set before us.

Thank you, Mr. Chairman, for the opportunity to provide you with a status report, and I'd be happy to answer questions or any other members might have.

See Appendix F for Written Statement Of Wendy Zenker, Chief Operating Officer of the Corporation for National Service

Chairman Hoekstra. We only wish there were other members here.


Ms. Zenker. I know. But I look around at counsel and staff.


Chairman Hoekstra. That's right. All right. Ms. Zenker, according to your testimony, most of the Corporation's systems appear to be Year 2000 compliant. Correct?


Ms. Zenker. Our mission-critical and much of our hardware.


Chairman Hoekstra. And has that been validated or tested by outside resources or is that based on internal resources? I mean, who certified that for you?


Ms. Zenker. Up to this point in time, it's been our own in-house resources and contractors, who are working for us. We've recognized recently the need to have independent verification of some of that information. And we will be contracting for independent verification in 1999.


Chairman Hoekstra. Not before that?


Ms. Zenker. I cannot give you an estimate or a guarantee that we'll be doing independent verification of all of our systems. We think that that might not be necessary.


Chairman Hoekstra. Okay.


Ms. Zenker. The reason I say that is simply because much of our equipment was purchased in the 1990's.


Chairman Hoekstra. Okay.

The OIG report was fairly critical. You started late. No chief information officer. Are you still looking for one of those as well?


Ms. Zenker. We plan to hire a chief information officer as soon as we can find someone who can come to the Department - Corporation, excuse me.


Chairman Hoekstra. Yes.


Ms. Zenker. With the kinds of issues that we have before us. It's a difficult time. We've -

Chairman Hoekstra. Those people are probably not that easy to find.


Ms. Zenker. Not easy to find, not easy to find walking into uncertainties of the year 1999.


Chairman Hoekstra. Yes.


Ms. Zenker. But we will find someone.


Chairman Hoekstra. You will find someone. The key is finding somebody that has the skills necessary to do the job in the right way. I'm concerned about the accounting system. You're going to have a review done by mid-November. I know this is only about Year 2000, but since you're here and I'm here, and the Office of the Inspector General is here, we still don't clean audits. Is that correct? We've got audits with qualifiers on them?


Ms. Zenker. Yes, we have significant weaknesses still in our management systems. But we did receive a qualified opinion on our Fiscal Year 1997 balance sheet, which is a step forward.


Chairman Hoekstra. Yes. It's a step forward, which makes me cautious about accepting the statements that everything is okay on Year 2000, because I didn't go back and check on what Mr. Walker has told us about when the accountability, when we would actually have auditable books. But I think we're about a year or two behind on when we thought we'd have auditable books, which makes me a little bit nervous about the ability of the Corporation to meet the operational targets that it has established for itself.

So, in light of that, how credible is the Corporation on this Year 2000 status report? I mean, I'm very nervous about it. Okay? If you had come in and said, you know, our books are auditable; you know, we don't have the qualifiers on it, and, you know, we got that done. What I hear us doing is trying to take a Year 2000, or taking a financial system right now that doesn't work to give us good audits, or give us auditable books, and we're talking about making that Year 2000 compliant. I would question why we're doing that, and, you know, how you're going to - why are we taking a system that doesn't work and trying to make it Year 2000 compliant?


Ms. Zenker. That's not our preferred option. Our preferred option is to be able to enter into this cross-servicing agreement with the National Science Foundation and be able to use their accounting system. We, over the summer, looked at several different alternatives. One was the strategy the Corporation had been pursuing, which was to look at commercial off-the-shelf software, a COTS package, as it's referred to. We also looked at several other Federal agencies as potential cross-servicers; the Department of HHS, and the Department of the Treasury Financial Management Service.

In looking at those COTS packages and other potential cross-servicers, I came to the conclusion that our best alternative was to go with the National Science Foundation, which is something we'd like to do. They're running an integrated system. It's Year 2000 compliant now. To a certain extent, it's state-of-the-art. There will be some features that we can't take advantage of, in terms of electronic transmission of documents between grantees and the field. But I think that it is our best alternative for bringing up a financial management system in a timely manner that will help us achieve the audibility that we want on our full set of statements that we'll be producing for 1998.

As an alternative, a backup contingency, we're looking at possibly having to convert Federal Success, our current outdated system to Year 2000 compliance. We don't want to do that, to tell you the truth. It's an expensive option, and it's money that we would rather spend on other alternatives. The reason we're doing the 30-day study now is to find out if we can bring up the National Science Foundation's system on October 1 of 1999 or potentially earlier.


Chairman Hoekstra. I guess my question on this is it really does trouble me that it's the financial system that is the one that's behind, because if there's been any oversight of Congress on the Corporation for National Service, it's been on the financial area. And, to now hear that books still are not auditable, we're in 1998, and that we're going to have a study that's going to be done in November to outline a direction, and that direction is going to give us a new system that may be online sometime in 1999, tells me that we're not any closer to getting auditable books today than what we were two or three years ago.


Ms. Zenker. I don't think that that's the case, Mr. Chairman.


Chairman Hoekstra. Well, convince me the other way.


Ms. Zenker. Convince you the other way?


Chairman Hoekstra. Yes.


Ms. Zenker. One step in convincing you is that, indeed, we got a qualified opinion on our 1997 balance sheet. Although I refer to that as a next step in our path to auditability, it really is a considerable next step. We're not getting disclaimers any more. The IG is not walking in and saying that she can't audit us. We've been - our balance sheet has been audited. It's been qualified. Major weaknesses have been identified. But for the past several years, and in particular activities I'm familiar with in the past year alone, we've taken significant steps to fix the systems that cause the disclaimer or the lack of auditability in the first place. We got audited for the 1997 balance sheet. We are prepared to be audited for a full set of statements for Fiscal Year 1998.

And our goal is to achieve an unqualified opinion on those full sets of statements. We'll do it with our current legacy, outdated accounting system. There are a significant number of manual activities that we have to undertake to be able to produce those financial statements and to prepare them for the Inspector General to audit. But we are continuing to work on auditability in the current environment that we are living in, while, at the same time, looking to buy the new financial system that will make auditability easier in the Year 2000.


Chairman Hoekstra. Mr. Anderson, the report that you described in your testimony, it highlights the problems with Year 2000 efforts. But you also talk about the danger of not having a compliant accounting system in time for the Year 2000, correct?


Mr. Anderson. Yes.


Chairman Hoekstra. Can you give me a little bit more background on what you see happening in that area?


Mr. Anderson. In what regards? I think our major concern with the accounting system is that it drives many of the Corporation's processes. It has an impact on the DVSA grants processing and award process. It is where the Corporation derives all its financial information. If it is not Year 2000 compliant, obviously, and it fails and they have not replaced it, the Corporation will have difficulty carrying on some of its operation. I think the biggest concern at this point in time is that in June, when we issued the report, we stressed the need for the Corporation to either replace the system or begin remediation of the system at that point in time, because the Year 2000 is getting closer and closer. My concern is that we still haven't taken the next step to deciding which system we're going to go to. We haven't really begun to our remediation efforts for that system.


Chairman Hoekstra. Have there been any costs that we have identified or that you have, I mean, has the Corporation started late on this? Did the Corporation start in a timely way?


Mr. Anderson. I think as the June report pointed out, the Corporation has been a little bit slow getting involved with remediating its systems and applications for the Year 2000. Had it started earlier in replacing Federal Success and some of its other systems, it might not be in the position at this time where it has to spend extra money trying to fix a system that it plans on replacing, if that's the case that it turns out.


Chairman Hoekstra. What kind of costs, duplicative costs or excessive costs, are we potentially facing? Do you have any idea?


Mr. Anderson. We don't have an estimate of the costs, the additional costs, at this time. I would defer to-


Chairman Hoekstra. Ms. Zenker, do you have any costs?


Ms. Zenker. Our estimate for having to convert Federal Success, the current system, on a contingency basis would be about $400,000. We expect it will be less than that, but that's an upper limit on what we imagine the cost would be.

If I may, if I could respond to-

Chairman Hoekstra. Yes. Go ahead.


Mr. Zenker. One of the statements that Mr. Anderson made, in terms of a statement that we haven't done anything yet, we've done, I believe, quite a bit in the last several months. Deciding to convert Federal Success isn't simply a matter of issuing a contract and hoping that a contractor is going to be able to do what we've asked them to do. We are working with a contractor. We've identified them in earlier responses to documents that you shared with us, RCG, the Reston Consulting Group. They, in August, looked at 5,000 lines of Federal Success code, to determine whether or not the software product that they were using to make systems Year 2000 compliant would work with Federal Success. Doing that test took several weeks of time.

In addition, that system, Federal Success, runs at the Department of Transportation, on a computer over there. We have found additional information out in the course of the last, again, four to six weeks regarding changes that would have to be made in the Department of Transportation hardware environment in order to convert and bring Federal Success into a Year 2000 compliant mode. When you add up those different pieces, the actual physical to make Federal Success compliant and to make the operating environment, the hardware that it's operating in, compliant, that comes to an estimated total cost.

That's why when I speak to you of that as a fall back contingency, our preference will be to put our resources and our energy into bringing up the National Science Foundation system as a cross-servicer for us.

I think the cross-servicing, _I think, with a strong degree of confidence, I can tell you and I can tell myself, and I can tell Harris Wofford that a cross-servicing arrangement has a much higher likelihood of success than bringing in the COTS package or trying to custom design a system for our needs. The Corporation already cross-services. When I mentioned our external system providers, we go to the National Finance Center to pay our employee payroll. We go to the Department of Health and Human Services to pay a portion of our grants. We go to the Department of Treasury to issue checks for another set of our grantees. Those cross-servicing arrangements permit us to take advantage of the skill and expertise that exists at larger corporations that we can't build in-house at the Corporation.

I think the same rationale applies when we look at buying and building a new core accounting system. Instead of trying to do it in-house by ourselves, with a contractor in a COTS environment, we're going to be able to take advantage of a larger agency that has already successfully implemented a financial system for their own environment.

To the extent that we have to, we're going to change our business processes to mimic that environment, so that we can guarantee, or give ourselves a higher level of guarantee, that we'll have a successful conversion.

The study that was referred to, the 30-day study is to let you know, we're going to the National Science Foundation's contractors, and saying, you know that NSF system best. Come into the Corporation. Look at our work environment. Look at the processing that we do. Look at the paper that moves from this point to this point. And tell us what a reasonable estimate is for both time and costs for the Corporation to move to the National Science Foundation.

Once we get that estimate, again within 30 days, we'll know where we stand. The best-case scenario will be an estimate that we can bring up core accounting in the spring of 1999. If that's the proposal that we receive from - KPMG is the firm that will be doing the work for us, if that's the proposal we receive from KPMG, then we won't, in all likelihood, would not implement the contingency plan.

If, on the other hand, KPMG comes back to us and says, we don't think we can reasonably give you assurance that we can bring core accounting up by the spring, it won't be until next October, then we'll be forced to look more seriously at the contingency plan of converting the current Federal Success system.

So we will, in 30 to 45 days, know the direction that we're going to take and whether or not we'll have to implement the contingency.


Chairman Hoekstra. I think you're in trouble. I mean, I just got the charts here from the Education Department, and, you know, you go through the different steps of updating the system, and I think it's a pretty lengthy process. And if you're just getting, you know, identifying your strategy in the middle of November or the end of November, and then need to go through and implement it, I think that's going to be tough. I hope I'm wrong.


Ms. Zenker. I think it is going to be tough. But I do think it's doable for a couple of reasons.

The first I've already mentioned. We're going to change the way we do business. We're not going to try to change the system that NSF is operating. We're going to change the people at our end and how we process paper. That's a big difference in terms of bringing up systems. We're going to try as best we can not to make any system changes so that we can just walk into that environment as another user.

The other reason I believe that we have a high degree of successful outcome is that we've brought some very good people onboard, again in the last two months, who can help us make that system transition. We've hired a new Director of Accounting, who's got, you know, 34 years of federal experience in bringing up systems.

We've hired a Systems Project Manager, again, who's got over 15 years of experience, 11 at DOD, 4 at the Patent and Trademark Office, bringing up a federal CAN accounting system within PTO, and more recently at the Department of Education. I think we're building a project team that's got deep experience and we're trying to move into an alternative that will give us a high guarantee of success.


Chairman Hoekstra. Having come out of the business world, I'm very skeptical of the strategy of changing the way you do business to fit the system at National Science Foundation. It's kind of like we always spent our time in the business world focusing on our business and trying to meet the needs and structuring it to meet the needs of our customers and the people that we serve. I just worry that your business is as similar to what goes on in the National Science Foundation that you can take a system that exists to service them and believe that with little or no change, you're going to be able to meet the needs of what you do in your business. I'll be interested in reading an assessment of that, because I've got to believe the work is considerably different. But maybe not, maybe it is that similar. I've always found that those things sound a whole lot better than what they actually are.


Ms. Zenker. I think they are similar. I think we are very similar to NSF in the sense that the bulk of our business is making grants. We also have a contract workload, and we have our employees on travel. So there, I think, enormous similarities between us. As well, in many instances, we don't have a system right now supporting what we do. So, to a certain extent, we're not changing people from one system to another system, but almost introducing a new system environment from scratch, which I think makes the job of changing the way people do work somewhat easier.

The National Science Foundation system, for example, has embedded funds control, so that when you start committing money for a project, you do it once. It's followed all the way through to obligation, to payment, et cetera. We don't have a single system that does that for us right now. We've got different people with cuff records; we've got our core accounting system. We've got a payment system. I think it will be easier to implement the NSF system because we'll be introducing something new to people, in an integrated whole, that will make their jobs easier and they'll become more efficient. I believe it.


Chairman Hoekstra. Well, I'll tell you then_


Ms. Zenker. I believe it strongly.


Chairman Hoekstra. What's that?


Ms. Zenker. I believe it strongly.


Chairman Hoekstra. I mean, I just look at it. I mean, you know, a good portion of the Corporation was new with AmeriCorps. One of the justifications that we had heard for years for why the books weren't accountable was because, you know, we got all these other old programs that are still on the books. And maybe you'll take this as the opportunity to finally get this whole thing straightened out. But I'll tell you, it's taken a long time and it's been a frustrating process for those of us that voted for the program initially to see exactly where it's gone and how it has never come together. And if the Year 2000 is the thing that provides the catalyst to bring it together, hallelujah, because it appears that nothing else has. So, you may be right. I'm just skeptical.

That's all the comments that I have. Either one of you have anything else you'd like to add?


Ms. Zenker. No, sir.


Chairman Hoekstra. We will stay in touch and follow up on this process and, you know, like I said, track, and if we can be of any help as to how you go through this process, we'd be interested in doing it.

So, with that, the committee will be adjourned.

Thank you.


Ms. Zenker. Thank you.

[Whereupon, at 12:30 p.m., the subcommittee adjourned subject to the call of the Chair.]