SBA works on Y2K internally, with small biz

Although the Small Business Administration is making strides in fixing its own internal year 2000 problem, the 23 million small businesses the agency serves are much farther behind, according to witnesses who testified at a congressional hearing last week.

As of May, SBA has renovated, validated and fixed more than 80 percent of its mission-critical systems and plans to begin testing by the first quarter of fiscal 1999, said Fred Hochberg, deputy administrator of SBA.

"Nonmission-critical systems also have been identified, and we are working with our field offices to continue corrections of local systems in these offices," said Hochberg, who was speaking before the House Committee on Small Business.However, many of the 23 million small businesses SBA serves, some of which do business with the federal government, are still not aware how the Year 2000 problem will affect them.

"Although programmers have known about this [Year 2000] problem since at least the late 1960s, many small-business owners are not aware of the...effects that it can have on their operations," said Rep. Jim Talent (R-Mo.), chairman of the Committee on Small Business. "Although many small businesses may think they have time to correct their Year 2000 problem, that might not be true. Depending on the size of the company, finding date-related code, replacing it and then testing it can consume a lot of time, energy and money."

According to a recent study conducted by the National Federation of Independent Business (NIFB) and the Wells Fargo Bank, of the small businesses aware of the Year 2000 problem, only one in five has started to identify and fix computers that are affected by the bug. And two in five of those small businesses plan to do nothing.

However, small technology firms that do business with the federal government may be an exception to the rule. "The clients I work with are very aware of the Year 2000 problem and are working on resolving it," said Alex Tomaszczuk, a partner at Shaw, Pittman, Potts & Trowbridge in McLean, Va. "If you look at all small businesses...they might be less sensitive [to the Year 2000 problem] than small businesses in this area that are selling to the federal government."

For example, Yong K. Kim, president and CEO of User Technology Associates Inc., which graduated from the 8(a) program last year, said awareness is key to addressing the Year 2000 problem. "I don't think small and medium-size businesses realize the Y2K problem is so significant to them," Kim said. "If they don't worry about it now it will become a big problem next year."

In addition, most government information technology contracts state that businesses must provide products that are Year 2000-compliant, Tomaszczuk said.

For most small businesses, however, "if nothing changes, more than 3.5 million small employers will enter the millennium without having taken any preventative measures," said William Dennis Jr., senior research fellow at the NFIB Education Foundation. Dennis maintained that it is the responsibility of businesses to fix their Year 2000 problem.

However, Harris Miller, president of the Information Technology Association of America, called for Congress and the Clinton administration to introduce legislation to prevent the widespread affects of the Year 2000 glitch on small businesses.

"The year 2000 is a serious threat to the small-business community," he said. "If you are not vigilant, if you do not identify your risks and take steps to avoid them, the Year 2000 may take your business away— permanently."

Miller said many small-business owners may be fooled into thinking because they do not have a mainframe or dedicated telecommunications network they are immune from the Year 2000 problem. Any business that uses computers, software, databases, electronic funds transfer, credit cards, local-area networks and even office security systems can be affected, he said.