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Will federal regulators meet the Y2K deadline?

ALSO: Clinton's 2000 budget pours millions into civic technology Spot & fix Y2K problems in Windows 9x & NT

Users fear impact on business if federal watchdogs aren't as ready as they are.

February 9, 1999
Web posted at: 4:11 p.m. EST (2111 GMT)

by Thomas Hoffman

(IDG) -- Your business is year 2000-ready. Your suppliers and business partners are on board. But what happens if the federal regulators you depend on for clearances and approvals don't meet the big deadline?

That thought has executives in several industries running for the cover of contingency planning. Yet if regulators' systems fail, companies say there's not a whole lot they can do to create work-arounds. For example, in the drug industry, "If the FDA's entire [transaction processing] systems are out, a fax or next-day letter isn't going to make much difference," said Ed Topor, president of T/K Methods Inc., a Lake Bluff, Ill., supply-chain consultancy and member of the Chicago Area Year 2000 Supply-Chain Users Group.

Players in the U.S. shipping industry "are scared to death" that the U.S. Customs Service isn't going to meet its year 2000 deadline, said David M. Goodwyn, founder of the Acadiana Y2K Awareness Group and a consultant at The Solution Set Inc., both in Lafayette, La.

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The Customs Service is critical for U.S. companies that rely on foreign manufacturers that export goods to America. "Your supply chain could be fine, but if products can't come through customs, there's no contingency," said Goodwyn, who's working with several shipping companies on the issue.

Worries abound

Despite recent assurances from government officials that most federal agencies -- including much-criticized regulators such as the Federal Aviation Administration -- will meet the deadline, many executives in the private sector remain worried.

Analysts said they have good reason to be. "This is a very big deal for regulated industries," said Howard Rubin, a research fellow at Meta Group Inc. in Stamford, Conn. Regulators "need a holistic plan showing a timetable for systems contingency planning," he added. Some agencies are publishing timetables, but users are worried about how realistic they are.

Regulators' readiness "is a valid concern. Other than Social Security, it seems like most of these federal agencies are receiving D and F ratings," Topor said.

The year 2000-preparedness of the Food and Drug Administration is critical to pharmaceutical companies that require approval for marketing new drugs, and that of the Federal Reserve Board is crucial to banks that need to clear big-dollar transactions through the FedWire.

"I'm not as comfortable as I'd like to be with the FAA's state of readiness," said Sandy Gieber, year 2000 program manager at Cessna Aircraft Co. in Wichita, Kan. Gieber said she would like to see the FAA's own contingency plans in the event of a systems failure.

Persuading regulators to comply with those requests might not be easy. "You can't build a contingency plan for everything, but you can try to request audits with the government if they'll permit it," said Joan Budzinski, a member of the Central New York Y2K User Group in Syracuse.

"If the FDA systems aren't compliant, that's going to put a big kink in the manufacturer's processes," agreed Cherise Vaughn, president of C-Coe People Tech in Charleston, S.C. Her firm handles Y2K communication for C.R. Bard Inc., a medical device manufacturer in Murray Hill, N.J. "But I'm also very worried about the fact that the FDA doesn't guarantee any of the Y2K compliance information on its Web site."

Vaughn said many companies are posting "sweeping statements" on the FDA site, claiming that none of their products are affected by year 2000 issues. But she pointed out that if a medical device is past its five-year warranty -- or has been sold to another manufacturer over the years -- that FDA posting may be meaningless.

"A lot of manufacturers are making the false assumption that hospitals aren't using equipment that's old or out of warranty, but they really have to investigate those older products on their own," she said. "The FDA should put up there in big bold letters that people need more in-depth information than is posted on that site."

Users recommend close communication with regulators in order to share contingency plans among all affected parties. And if regulators don't cooperate, users "have a duty to inform those regulators" and to contact lobbyists within their industries to warn the Clinton administration about their status, said Fred Talbott, a professor at The Owen Graduate School of Management at Vanderbilt University in Nashville.

Federal agencies such as the FAA must disclose regular status reports to Congress and to watchdog groups such as the General Accounting Office.

The Federal Reserve Board, which clears bank-to-bank payments and automated payments such as electric bills, has certified 98% of its mission-critical systems as year 2000-compliant, with the rest due to be completed by April 1, a spokeswoman for the Washington-based agency said.

Computerworld senior editor Carol Sliwa contributed to this report.