oversight

Year 2000 Computing Crisis: Challenges Still Facing the U.S. Postal Service

Published by the Government Accountability Office on 1999-02-23.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                          United States General Accounting Office

GAO                       Testimony
                          Before the Subcommittee on Government Management,
                          Information and Technology and the Subcommittee on the
                          Postal Service, Committee on Government Reform, and the
                          Subcommittee on Technology, Committee on Science,
                          House of Representatives
For Release on Delivery
Expected at
10 a.m.
                          YEAR 2000 COMPUTING
Tuesday,
February 23, 1999         CRISIS

                          Challenges Still Facing the
                          U.S. Postal Service
                          Statement of Jack L. Brock, Jr.
                          Director, Governmentwide and Defense Information
                          Systems
                          Accounting and Information Management Division




GAO/T-AIMD-99-86
Ms. Chairwoman, Mr. Chairmen, and Members of the Subcommittees:

Thank you for inviting me to participate in today’s hearing on the
challenges facing the U.S. Postal Service in addressing the Year 2000
problem.1 Although the Postal Service’s main mission is to provide postal
services to all communities, the processes it must employ to meet that
mission make it among the most complex of the public entities we have
examined. The service employs nearly one-third of the federal civilian
workforce and provides delivery services for 650 million pieces of mail a
day to over 130 million households and businesses. Its national network
encompasses 174 processing and distribution centers, hundreds of smaller
facilities, 34 air mail centers, 21 bulk mail centers, and nearly 38,000 local
post offices, stations, and branches. Moreover, information technology is
integral to every facet of postal operations--from sorting,
processing, and distributing the mail to dealing with customers, accounting
for and managing cash flows, communicating with business partners and
other government agencies, and modernizing its facilities.

Clearly, the service faces a mammoth task in fixing not only its nationwide
business systems and related interfaces but the systems and equipment
residing in its facilities. The service has been working hard to address its
Year 2000 problem and has recently revamped its management approach,
which, if successfully implemented, can provide significant support and
oversight to its Year 2000 efforts. However, the service has been running
somewhat behind the Office of Management and Budget’s (OMB) schedule
for system renovation and still must address major issues to complete
system and mail processing equipment correction and testing, ensure the
readiness of hundreds of local facilities, and determine the ability of key
suppliers and interface partners to be Year 2000 ready. Further, the service
needs to complete the “simulation” testing of its business process areas as
well as complete the development and testing of its business continuity and
contingency plans. These challenges are further exacerbated by the fact
that the service anticipates a surge in workload beginning in September
due to the holiday business rush, which typically requires greater
management attention.


1
 The Year 2000 problem is rooted in the way dates are recorded and computed in automated
information systems. For the past several decades, systems have typically used two digits to represent
the year, such as “97” representing 1997, in order to conserve on electronic data storage and reduce
operating costs. With this two-digit format, however, the year 2000 is indistinguishable from 1900, or
2001 from 1901. As a result of this ambiguity, system or application programs that use dates to perform
calculations, comparisons, or sorting may generate incorrect results.




Page 1                                                                           GAO/T-AIMD-99-86
                        It is critical that these challenges be adequately addressed before next
                        January 1. In many respects, the Postal Service provides critical services
                        that are as ubiquitous as telecommunications or electrical power. A Year
                        2000-based disruption in mail delivery would have a serious impact across
                        every sector of the American economy. Further, reliance on the Postal
                        Service is part of the contingency plans for many organizations that require
                        a backup process to electronically delivered transactions and services.

                        Our testimony is based on our review of the service’s conversion strategy
                        and other Year 2000 planning documents and the service’s Year 2000
                        guidance and internal development standards as well as our discussions
                        with U.S. Postal Service officials responsible for overseeing the Year 2000
                        effort. We compared the service’s efforts to criteria detailed in our Year
                        2000 Assessment Guide,2 Business Continuity and Contingency Planning
                        Guide,3 and Testing Guide.4 This guidance offers a structured and
                        disciplined approach to managing the risk of potential Year 2000-induced
                        disruptions to operations. We conducted our work in cooperation with the
                        service’s Inspector General and in accordance with generally accepted
                        government auditing standards from September 1998 through February
                        1999.



Postal Service Relies   For the Postal Service to ensure continuity of operations after the century
                        date change, it must assess, remediate, and validate several interlocking
Extensively on          components of its operating and support infrastructure. These include
Automated Systems       “severe and critical” (mission-critical) business systems that provide
                        essential support for postal operations; “important” business systems that
                        are necessary for continued operations but where failure would not have
                        an immediate, significant impact on business continuity; mail processing
                        equipment; facilities and other infrastructure support activities; and
                        vendors who provide essential goods and services to the Postal Service.




                        2
                         Year 2000 Computing Crisis: An Assessment Guide (GAO/AIMD-10.1.14). Published as an exposure
                        draft in February 1997 and finalized in September 1997.

                        3 Year 2000 Computing Crisis: Business Continuity and Contingency Planning (GAO/AIMD-10.1.19).
                        Published as an exposure draft in March 1998 and finalized in August 1998.

                        4
                         Year 2000 Computing Crisis: A Testing Guide (GAO/AIMD-10.1.21). Published an exposure draft in
                        June 1998 and finalized in November 1998.




                        Page 2                                                                       GAO/T-AIMD-99-86
• The service has 152 “severe and critical” business systems that it must
  assess, correct, and verify to ensure Year 2000 compliance. These
  include the Postal Metering System, Money Order System, Mail
  Distribution Requirements System, Air Contracting Support System,
  Vehicle Tracking and Performance System, as well as critical financial
  management systems. Many of these systems have no workarounds and
  their failure would significantly disrupt postal operations. The service
  has reported that it has finished renovation work on 106 of its 152 severe
  and critical business information systems, and it expects to implement
  all but 11 systems by OMB’s target March 31, 1999, deadline. Ten of the
  11 remaining systems are expected to be done by July 1999 and the 11th
  by mid-November 1999.
• The service also owns 349 “important” business systems—systems for
  which workarounds exist and whose failure will result in an
  inconvenience, but not significantly affect core business activities.
  These include the Worker Compensation Information System, the
  Resource Management System, the Customer Satisfaction Measurement
  System, the Consumer Affairs Tracking System, and the Relocation
  Payment System. The service reports that 215 of these systems have
  been renovated with most of these scheduled for completion this
  quarter. Unlike the “severe and critical” systems, the “important”
  systems are not required to undergo independent validation and
  verification to provide additional assurances of Year 2000 compliance.
  However, a number of these systems will go through such a process
  upon the request of business process owners.
• In addition to business systems, the service relies on a broad range of
  equipment to sort, deliver, and process mail. This equipment includes
  small parcel and bundle sorter equipment, flat mail sorters and optical
  character readers, and priority mail and bulk mail processing
  equipment. The service has 43 types of equipment that are deployed in
  various locations across the country. It reports, as of December 31, that
  37 types had been renovated and the remainder are on schedule for
  remediation by August 1999.
• The service has estimated that it has over 100,000 pieces of hardware
  and software to assess and correct when necessary, including
  mainframe computers, personal computers, networks, and operating
  systems. It also must assess and fix a wide range of infrastructure-
  related assets installed in hundreds of its facilities and tens of thousands
  of post offices. This includes building access control systems, safety
  systems, air conditioning and heating systems, as well as elevators. The
  service is still in the process of assessing this equipment.




Page 3                                                        GAO/T-AIMD-99-86
• Service systems interface with computer systems belonging to federal,
  state, and local governments and hundreds of private businesses.
  Because of these interdependencies, postal systems are also vulnerable
  to failure caused by incorrectly formatted data provided by other
  systems that are noncompliant. According to the service, about 1,600
  external interfaces have been identified to date. Of that number, over
  800 are considered to be severe and critical. The service is in the
  process of contacting each external interface partner to assess the work
  that needs to be done with these interfaces.
• The service is heavily dependent on almost 600 key vendors and
  suppliers (such as airlines and railroads) that provide goods and
  services necessary to mail delivery. If key supplier systems are not Year
  2000 compliant in time, postal operations could be severely disrupted.
  In late 1998, the service surveyed critical suppliers as to their Year 2000
  readiness. Sixty percent of the suppliers responded. Of these, only 31
  percent affirmed that they would be Year 2000 compliant in time.
• The service, like most organizations, depends on public infrastructure
  systems, such as those that provide power, water, transportation, and
  voice and data telecommunications. Given the scope and intricate
  nature of the service’s national network, even localized disruptions in
  infrastructure-related services could seriously affect postal business
  operations.

While the Postal Service’s progress in renovating its systems has picked up
in recent months, the service has lagged behind OMB- and GAO-
recommended milestones for assessment,5 renovation,6 and validation.7
For example, the service reported that as of the OMB renovation deadline
of September 1998, about 22 percent of its mission-critical systems had not
been corrected. As of the OMB validation deadline of January 1999, only
27 percent of its mission-critical systems had been validated. Moreover, the
service has been late in undertaking important related tasks. For example,
the service’s testing strategy was not completed until November 1998 and


5
 During the assessment phase, organizations determine the Year 2000 impact on the enterprise, identify
core business areas and processes, inventory systems supporting core business areas, and prioritize
their conversion or replacement. They should also develop contingency plans and identify data
exchange issues. This lays the groundwork for the ensuing phases of the program.

6During  the renovation phase, organizations convert, replace, or eliminate selected platforms,
applications, databases, and utilities as well as modify interfaces.

7
 During the validation phase, organizations test, verify, and validate converted or replaced platforms,
applications, databases, and utilities.




Page 4                                                                             GAO/T-AIMD-99-86
                          contingency plans were not begun until December 1998. Our Year 2000
                          Assessment Guide recommends that both of these tasks be initiated before
                          August 1997, toward the end of the assessment phase.



Positive Steps Taken to   The delays in the service’s Year 2000 progress were in part attributable to
                          the fact that the service was slow to recognize the severe and pervasive
Strengthen                impact of the problem and lacked sufficient planning processes and
Management of Year        corporatewide involvement. Until recently, the burden of ensuring Year
                          2000 readiness largely resided in a program management office under the
2000 and Ensure           general direction of the Vice President of Information Systems. The
Continuity of             program focus was more directed at systems and processes that supported
Operations                business operations rather than on the readiness of business processes,
                          which typically involve a number of activities and support mechanisms
                          outside the systems realm.

                          In December 1998, the service reorganized its program management to
                          better reflect Year 2000 efforts in terms of its business operations. The new
                          organizational structure represents a matrix approach to managing ongoing
                          efforts. Senior vice presidents have responsibility within their functional
                          areas (e.g., mail operations, finance, marketing, and national systems) to
                          ensure that individual business processes are decomposed and that each
                          process undergoes “simulation” testing8 and that contingency plans are
                          developed for each process. The Vice President for Information Systems
                          still has responsibility for system remediation across the business areas.
                          To better ensure that these individual business processes will support
                          overall operations, the Service’s Chief Operating Officer will be responsible
                          for developing business continuity plans. The overall management
                          approach is managed by an executive council under the direction of the
                          Deputy Postmaster General.

                          This new management approach offers the Postal Service an improved
                          opportunity for linking business processes to Year 2000 problems and
                          solutions. We recommend this linkage in our Year 2000 guidance.
                          However, as with most new management models, there is little basis for
                          assured success without sustained follow-through to ensure effective



                          8
                           The purpose of this testing is to verify that a defined set of interrelated systems, which collectively
                          support a core business area or function, interoperate as intended in a simulated operational
                          environment.




                          Page 5                                                                               GAO/T-AIMD-99-86
                            implementation. Accordingly, this new approach will require close
                            oversight to ensure results.



Significant Challenges      Even with a stronger management structure now in place, there are
                            substantial challenges still facing the service. If they are not addressed
Still Face the Service in   adequately, these challenges will threaten the Postal Service’s ability to
Months Ahead                deliver the mail—on time—next January.

                            The primary challenge, of course, is time. Because the service has been
                            behind schedule, it is now playing catch-up. Exacerbating the time issue is
                            the anticipated holiday business rush, which typically starts in September.
                            This surge in workload will require service management to split its
                            attention and resources.

                            Second, there are still many unknowns about the Postal Service’s core
                            business processes. The service does not yet have complete inventory and
                            status information on its information technology infrastructure, internal
                            and external interfaces, and field equipment and systems. Nor does the
                            service yet know whether the majority of its critical vendors will be ready
                            in time or have assurance that public infrastructure systems, including
                            power, water, transportation, and telecommunications will be compliant in
                            time. Finally, until the simulation testing is complete and contingency
                            plans and business continuity plans are developed and tested, the service
                            will not have reasonable assurance on its readiness.

                            These two factors make it imperative for the service to develop a
                            comprehensive plan to guide existing efforts for testing, contingency
                            planning, quality assurance, risk and issue management, interface
                            management, and certification and validation; provide a master Year 2000
                            schedule; and identify priorities. They also make it imperative for the
                            service to ensure that attention to the problem is sustained by the Deputy
                            Postmaster General, the senior vice presidents, the Chief Operating Officer,
                            Chief Financial Officer, Chief Management Officer, Chief Technology
                            Officer, and other top executives. That is, these stakeholders should
                            (1) ensure that the overall management plan is developed and followed,
                            (2) participate in making critical decisions in all phases of the project,
                            (3) continue to provide resources and support for the program, and
                            (4) ensure that all components and business areas fully support and
                            participate in the process.




                            Page 6                                                        GAO/T-AIMD-99-86
                   This concludes my statement. I will be pleased to answer any questions
                   you or Members of the Subcommittees may have.




(511132)   Leter   Page 7                                                   GAO/T-AIMD-99-86
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