Report: DFAS Y2K problems could affect millions

Millions of active and retired military and civilian personnel contractors and other parties could face financial hardships if the Defense Finance and Accounting Service (DFAS) does not fix its Year 2000 computer problems according to a report issued last week by the General Accounting Office.

In a report titled "DFAS Faces Challenges in Solving the Year 2000 Problems " GAO said that if DFAS is unable to ensure that computer programs will interpret Year 2000 dates as the correct century the "impact of these failures would be widespread costly and potentially debilitating to DFAS' accounting and financial reporting mission."

GAO last week also published its findings of similar Year 2000 problems at the Defense Logistics Agency and DOD-wide looking at efforts by the assistant secretary of Defense for command control communications and intelligence and the Defense Intelligence Agency.

The problem is even more pressing at DFAS because the agency annually pays nearly four million active military and civilian personnel two million retirees and annuitants and about 23 million invoices to contractors and vendors. DFAS may be unable to make these payments "accurately and on time" or to otherwise "account DOD's worldwide operations " the report stated.

Solving the Problem

"They have a monstrous amount of work to do " said Ron Bageant assistant director of Defense information and financial management at GAO. Although there are problems however Bageant still feels DFAS can solve the problem but he also noted that DFAS has been talking about a contingency plan.

"They have other options and that's exactly what we were talking about " Bageant explained. "With the paychecks they may have to go to manual processing. I think knowing the severity of the problem and the magnitude of the numbers they probably are taking a lot of time to try to make sure that does not happen."According to DFAS' own calculations it will cost $33.7 million to renovate its systems which contain about 63 million lines of code.

Added to this problem is the fact that while DFAS is responsible for the majority of DOD's finance and accounting systems there are other systems that support such areas as acquisition medical logistics and other financial data. These systems which need to interface with DFAS systems are "just as vulnerable to the Year 2000 problem " according to GAO.

The GAO report also criticizes DFAS' inability to develop a comprehensive plan that "established schedules for all tasks and phases of the Year 2000 program." GAO also found a number of systems that DFAS declared Year 2000-compliant but were not.

In a letter to GAO DFAS agreed to take several steps on its way to making its systems Year 2000-compliant. These include updating its existing plan to establish schedules for completing each phase of the Year 2000 program updating its corporate contingency plan to require risk assessment and business impact analysis of all mission-critical systems and obtaining written agreements with interface partners by Sept. 30 1997 which will ensure compliance of all systems. Begeant said DFAS has a tough road ahead.

"What we tried to convey in that report is that although they had worked very hard there is still a lot of major effort ahead of them and some things are not 100 percent under their control " he said.

According to the GAO report "Defense Computers - Issues Confronting DLA in Addressing Year 2000 Problems " DLA is ahead of many DOD organizations but more work needs to be done.

In particular DLA like DFAS needs to work with its customers who have system interfaces with DLA systems. The agency also needs to prioritize its 86 computer programs "to ensure that the most critical systems are corrected first " and develop contingency plans should such corrections not occur GAO found.

At the Pentagon level GAO is concerned that DOD will not have an adequate inventory of its systems making it difficult to gauge "departmentwide progress toward correcting the Year 2000 problem and address cross-cutting issues " according to the report "Defense Computers - Improvements to DOD Systems Inventory Needed for Year 2000 Effort."