As Y2K Fixes Continue Apace, Experts See Less Cause for Alarm

With one year to go until the world’s computers confront their electronic day of reckoning, a growing number of technology experts say, large U.S. corporations and government agencies have speeded their repair work dramatically and now appear to be on track to head off the year 2000 problem.

Many analysts still caution that next New Year’s Day won’t be problem-free--many small companies, and also foreign businesses and governments, have paid only scant attention to the date glitch. But the specialists are dismissing doomsday predictions of widespread power outages, telephone failures and grounded jetliners in the United States.

John A. Koskinen, President Clinton’s chief year 2000 advisor, predicts the effects will be similar to those of a powerful winter storm: minor inconveniences for many, and severe but short-term disruptions for some. “We still don’t know how many storms there will be, but the risk is localized storms, not national debacles,” he said.

“I’m very optimistic,” said Sen. Robert F. Bennett (R-Utah), who heads a Senate committee examining the issue, “that this is not the end of Western civilization as we know it.”

The year 2000 problem, known colloquially as Y2K, stems from the fact that millions of electronic devices--from mainframe computers that send out mortgage bills to silicon chips in thermostats that control temperatures in office buildings--were programmed to process only the last two digits of a year, assuming the first two would be 1 and 9.

If not fixed before the millennium, they may interpret the year “00” not as 2000 but as 1900, which could in turn cause shutdowns or malfunctions in traffic lights, automated teller machines, air traffic control radar, nuclear power plants and myriad other systems essential to modern life.

Early last year, Ann K. Coffou of the consulting firm Giga Information Group was among the many experts warning that most businesses and government agencies were far behind in making the needed corrections, many of which require programmers to painstakingly pore through reams of computer code to identify and revise dates.

But Coffou has thought better of her pessimism, based on the progress reports businesses are releasing.

Her newfound sense of hope stems not only from faster-than-expected repairs at large organizations but smaller-than-expected problems with “embedded chips”--the silicon circuitry buried inside heart monitors, temperature gauges and other electronic devices.

Identifying and testing embedded circuitry has proved a Herculean task. Specialists say most organizations have found only a small fraction of devices to be fixed or replaced.

Across the country, executives at businesses and government agencies say much of their confidence is based on recent progress in three critical sectors of the economy--telecommunications, energy and transportation--as well as in the federal government.

AT&T; Corp., the nation’s largest long-distance carrier, says that it soon will have fixed and tested all systems that handle phone calls and data transmissions. The company plans more tests this year with local phone companies. Any unforeseen glitches will probably be limited to billing foul-ups and network-management problems, not calling or receiving problems, said AT&T;’s Y2K chief A. John Pasqua.

Forty-seven percent of Americans in a recent poll said they would avoid air travel around Jan. 1, 2000.

However, Boeing Co., the largest manufacturer of commercial aircraft, said it has found just three Y2K glitches on its planes.

The problems, which relate to navigational equipment, will not affect aircraft operation, spokeswoman Mary Jean Olsen said. Other manufacturers of transportation equipment, including the Big Three auto makers, report similarly small or nonexistent Y2K problems.

The federal Health Care Financing Administration, which runs Medicare, said this week that its 25 most critical computer systems have been renovated, tested and validated by outside experts. HCFA contractors, who process Medicare claims, have finished fixing 95% of their software, and most will have completed their third round of testing this week.

In September, congressional auditors had warned that HCFA was “severely behind schedule” and that it was “highly unlikely that all of the Medicare systems would be compliant in time to ensure the delivery of uninterrupted benefits and services into the year 2000.”

“Believe me, I have had plenty of sleepless nights over this, but I’m feeling good about it,” said HCFA administrator Nancy-Ann Min DeParle. “I believe we will make it. In fact, I’m convinced we’ll make it.”

For the entire federal government, Y2K advisor Koskinen projects that 85% to 90% of the conversion work will be completed by a White House deadline of March 31. As of Nov. 15, the government had finished fixing 61% of its systems.

The Defense Department has completed only 57% of its work, but Pentagon project director William A. Curtis predicts that 95% of its critical systems will be fixed by June. Curtis said recent weapons tests have gone well and that the department has had meetings with Russia on possible problems with early-warning systems.

Still, computer specialists and project executives are quick to point out that much work remains to be done and that even the smallest glitch can bring a system to a halt.

Analysts caution that computer failures abroad could affect ordinary Americans too. These could, for instance, disrupt imports of raw materials and finished goods.

Those who are skeptical of corporate Y2K claims point to recent disclosure statements that publicly traded firms have filed with the Securities and Exchange Commission.

As of Oct. 1, the 315 companies in the Standard & Poor’s 500 index that have detailed their Y2K costs had spent, on average, only 42% of the money they budgeted for repairs, according to an analysis by Edward Yardeni, chief economist for Deutsche Bank Securities.

“There’s a correlation between the percentage of money spent and progress in fixing the bug,” Yardeni said. “There’s still a lot of work to do in the next 12 months.”

The SEC filings also show a big jump in the price for Y2K fixes. The 315 companies--which include such well-known names as Amoco Corp., General Motors Corp., Citigroup and Xerox Corp.--now predict spending 26% more than they had estimated in early 1997.

Chase Manhattan Corp. said its spending jumped from $300 million to $363 million. DuPont Co., which had earmarked $200 million, now expects to spend $400 million. And Aetna Inc., the country’s biggest health insurer, said recently that bigger-than-expected Y2K bills--$195 million instead of $139 million--contributed to a 6.1% drop in third-quarter profit.

All told, industry analysts predict that the total worldwide bill for making date-related repairs will come in somewhere between $300 billion and $600 billion. If litigation over who should pay and insurance costs are added, the estimates jump past $1 trillion.

Industry experts have differing views of the cost increases. Some say these show corporations are taking the problem more seriously and are spending more to test important systems. Others say it points to discovery of ever-more problems that make on-time fixes unlikely.