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Study Says Y2K Risks Widespread Firms, Many Nations Termed Unprepared By Stephen Barr Washington Post Staff Writer Wednesday, February 24, 1999; Page A01

A report on the Year 2000 computer problem prepared by a special Senate panel warns that a number of foreign countries and U.S. economic sectors, especially the health care industry, appear at significant risk for technological failures and business disruptions.

The report, scheduled for release this week by Sens. Robert F. Bennett (R-Utah) and Christopher J. Dodd (D-Conn.), includes a letter to Senate colleagues describing the problem of computers' ability to recognize dates starting on Jan. 1, 2000, popularly known as Y2K, as a "worldwide crisis" and as "one of the most serious and potentially devastating events this nation has ever encountered."

The prospect of widespread computer glitches and lobbying by industry groups have galvanized bipartisan groups in the Senate and House to press for legislation protecting companies that fail to deliver goods and services on time because of Y2K problems.

Rep. David Dreier (R-Calif.) estimated yesterday there might be $1 trillion in lawsuits filed because of the glitch and urged adoption of an industry-backed House bill to allay "a great deal of fear regarding out-of-control litigation."

A draft copy of the Senate report, provided by staff aides to The Washington Post, describes in vivid detail the scope of the potential Y2K problem and the frustrations that Senate investigators encountered as they tried to gather information from industries reluctant to describe what progress they have made in fixing computer and telecommunication systems.

But the report represents the most comprehensive assessment of the Y2K problem to appear as companies and governments scramble to fix their computer systems. In addition to health care, the report portrays the oil, education, farming, food processing and construction sectors as seriously lagging on computer repairs.

Among the report's findings: More than 90 percent of doctors' offices and 50 percent of small- and medium-sized companies have not addressed the Y2K problem; telephone systems are expected to operate; and planes will not fall out of the sky. The Senate panel also worries that communities will not be able to provide "911" and other emergency services.

Even though governments and corporations have mobilized technology staffs and consultants to sift through millions of lines of software code looking for Y2K glitches, the 161-page draft also underscores how little experts know about the potential impact of the so-called millennium bug.

"The interdependent nature of technology systems makes the severity of possible disruptions difficult to predict. Adding to the confusion, there are still very few overall Year 2000 technology compliance assessments of infrastructure or industry sectors. Consequently, the fundamental questions of risk and personal preparedness cannot be answered at this time," the draft said.

Clinton administration officials have portrayed the Y2K problem as similar to a severe winter snowstorm that causes inconveniences but little lasting harm. Yesterday, Federal Reserve Chairman Alan Greenspan assured Americans that they can keep their money in the bank over New Year's 2000 without fear.

"There's almost no conceivable way . . . that computers will break down and records of people's savings accounts would disappear," he told the Senate Banking Committee.

Still, almost all government agencies are drawing up emergency plans, including the Fed, which plans to stockpile an extra $200 billion in cash for banks, about a third more than usual.

The Senate report, which grew out of a series of hearings last year by the Senate Special Committee on the Year 2000 Technology Problem, concludes "that the biggest Y2K impact will occur internationally."

Two important trading partners, Japan and Venezuela, seem to have miscalculated the time and money needed to fix the computer glitch, according to the draft report.

Relying on surveys by consultants, the report suggests that Japan "may have underestimated the resources needed to address the problem," noting that major Japanese banks have indicated far lower repair costs than U.S. banks.

Venezuela and Saudi Arabia lag from a year to 18 months behind the United States in Y2K preparations, raising concerns about the availability of oil and other critical imports, the report said.

International ports are widely described as far behind in their Y2K efforts, prompting worries that the maritime industry will face shipping problems that could interrupt commerce, the report added.

International aviation and foreign airports also appear at risk, and "flight rationing to some areas and countries is possible," the report said.

Overall, the report said, "the least-prepared countries are those that depend heavily on foreign investment and multinational companies to supplement their economies. Panic over Y2K concerns may cause investors to withdraw financial support. Lack of confidence in a country's infrastructure could cause multinational companies to close their operations."

The Y2K problem exists in millions of lines of software code that uses two digits to represent four-digit years. Unfixed, computers will assume that dates occurring after Dec. 31 use the prefix "19," leading software programs to read "00" not as 2000 but as 1900. That defect could cause computers to crash or spew out incorrect data.

In assessing U.S. preparedness, the draft report reserved some of its strongest language for the health care industry, concluding it "is one of the worst-prepared for Y2K and carries a significant potential for harm."

The industry relies on computers for patient treatment, insurance claims and pharmaceutical manufacturing and distribution. While large hospitals are pushing to fix their computers, the report described hospital management as "playing a catch-up game."

Many hospitals are relying solely on medical device manufacturers to certify products as Y2K-compliant, which the report said "could be a serious mistake."

The report cited rural and inner-city hospitals as at special risk because they do not have the staff or money to find and fix Y2K glitches.

In an effort to head off a potential avalanche of lawsuits caused by Y2K glitches, a bipartisan group of House members yesterday introduced a bill to address litigation issues. Sen. John McCain (R-Ariz.) has introduced a similar bill, and Sens. Orrin G. Hatch (R-Utah) and Dianne Feinstein (D-Calif.) plan to announce their version today.

Although the House bill has the support of major business organizations, Rep. Thomas M. Davis III (R-Va.), the measure's principal author, stressed that the measure was "pro-consumer" because it will "encourage businesses to come in and fix their problems."

The Year 2000 Readiness and Responsibility Act would require plaintiffs to give notice to potential defendants about their difficulties, wait 30 days for a response and give the defendant an additional 60 days to fix a glitch before suing.

Under the bill, plaintiffs may recover actual damages, but punitive damages would be capped.

Staff writer Guy Gugliotta contributed to this report.

Don't worry be happy.....

-- STFrancis (STFrancis@heaven.com), February 24, 1999

Answers

This was posted last night. See below.

-- none (none@none.none), February 24, 1999.

Minor point: This article did not make the front page of today's Washington Post, at least not in the edition that I got ("FINAL") -- it appears on page 4 of the front section. A reference to the article appears on the front page (under the heading, "INSIDE"), directing readers to it, along with others: 1) "Lauryn Hill's Winning Ways", about a "hip-hop indenue ... goes to the Grammys..."; 2) "Worldwide Glitch", with the Y2K article described as "A Y2K report warns that many foreign countries and U.S. economic sectors appear at significant risk."; and 3) "Counsel Fire", described as "Congress is ready to curb -- or even scrap -- the law that authorizes an independent counsel."

Stories that literally appear on the first page include one about the growth of girls wrestling teams in a local high school.

-- Jack (jsprat@eld.net), February 24, 1999.