the year y k technology problem started as an innocuous short term solution to the oppressively high cost of computer memory in the s and s programmers expected that the problems created by the limited two digit method of date storage would solve themselves as companies governments and other computer owners updated their hardware and software fifty years after the introduction of the computer the y k problem has the potential to develop into a worldwide crisis two common human failings contributed to the crisis the tendency to follow a path of least resistance and the reluctance to champion difficult and complex issues the y k problem does not have to be a story of failure however if addressed successfully y k may encourage political and corporate leaders to better understand and protect the critical infrastructure as memory costs fell dramatically software writers and hardware manufacturers did not immediately expand date variables newer versions of hardware and software needed to interface with older versions while some programs were modified so that a new system could accept four digit years and still exchange information with two digit based systems the extra effort required slowed the changeover process additionally the equipment that earlier computer experts predicted would fall into obsolescence long before survived through layers of programming updates and modifications instead of solving itself the y k problem self propagated around the globe just as programmers found it easy to follow the tradition of using a two digit date field management and leadership have found it easy to defer addressing the y k problem y k competes poorly against issues such as trade agreements military operations market share and product development it lacks familiarity and in a results driven economy y k remediation costs are difficult to justify to taxpayers or shareholders additionally few wished to be associated with the potential repercussions of a failed y k remediation attempt at the heart of the problem lies a serious disconnect between those who use technology and those who create it on a worldwide scale leaders of corporations and countries are struggling to understand the y k problem in the process they are receiving a crash course in the fragile mechanics of information technology the committee feels strongly that y k as the first widespread challenge of the information age must leave a legacy of increased awareness and appreciation of information technology s role in social and economic advancement understanding the problem the goal of this section is to provide background on the y k problem and answer common y k questions what is the year computer technology problem the phrases the year computer technology problem the millennium bug the century date change or simply y k all refer to the same problem a defect that exists in millions of computer programs worldwide that causes erroneous handling of date i e day month and year information if not corrected the effect of the y k flaw on computer systems is not easily predictable it may bring a computer to a crashing halt it may cause the computer to generate obviously incorrect outputs or alternatively it could allow the computer to produce invalid data that will not be detected until much later forcing users to correct a range of accumulated errors while searching for the source of the problem why is two digit notation defective to save memory in the early days of computing programmers represented four digit years with only two digits for instance or would be stored and processed as and respectively the number indicating years in the s was implied much as personal checks once had the number preprinted on the dateline this worked smoothly until users started to input dates occurring after december computers ran into problems when required to calculate a number based on the difference in two dates such as the interest due on a mortgage loan computers continued to assume that the prefix was implied so dates such as or were treated as or consequently computers could not correctly calculate the difference between a year in the th century and a year in the st century for example we know that the time between july and july is exactly years however a computer with a y k problem could calculate an answer of either years or years depending on the specific program calculations that used either of these results would be in error and may themselves cause subsequent problems another y k problem occurs in the storage of information many kinds of data are organized and processed by date such as driver s license records and credit card accounts computers have had problems processing credit cards that have expiration dates after december due to two digit dating computers have thought that cards expiring in or later had expired almost a century ago what is the scope of y k problems the y k problem affects two general classes of equipment the first class comprises business systems or mainframe systems these computers perform a variety of data intensive calculations balancing accounts making payments tracking inventory ordering goods managing personnel scheduling resources etc the second class of equipment has several common names including embedded chips embedded processors and embedded control systems many aspects of modern society rely on microchip enhanced technology to control or augment operations examples are ubiquitous automatic teller machines toll collection systems security and fire detection systems oil and gas pipelines consumer electronics transportation vehicles manufacturing process controllers military systems medical devices and telecommunications equipment all depend on embedded chip technology y k related failures in business systems will generally cause an enterprise to lose partial or complete control of critical processes in the private sector loss of business systems means that a company may have difficulty managing its finances making or receiving payments and tracking inventory orders production or deliveries in the public sector government organizations may be severely hindered in performing basic functions such as paying retirement and medical benefits maintaining military readiness responding to state and local emergencies controlling air traffic collecting taxes and customs and coordinating law enforcement efforts y k problems in embedded systems have the potential to affect public health and safety problems that need to be fixed have already been detected in medical treatment devices water and electricity distribution and control systems airport runway lighting and building security systems other suspect areas are pipeline control systems and chemical and pharmaceutical manufacturing processes how was the y k mistake made several factors explain the creation of the y k problem in the early days of computers computer memory was very expensive in the ibm of the early s core memory cost around per byte today s semiconductor memory costs around per million bytes thus there was a very strong economic incentive to minimize the amount of memory needed to store a program and its data in the computer s memory additionally early computer programming was highly time consuming programs and data were recorded and entered into computers via column punch cards each of the columns could contain exactly one byte of information which corresponded to one of the four digits needed to represent a year the cumbersome nature of punched cards encouraged using as few of them as possible although programmers and managers knew they had built software with latent defects in it no one thought that software written in the s and s would survive to the year compounding the problem newer software had to interface and share data with the older software although the new software could have handled dates internally in four digit formats and swapped data in two digit formats with the older software to do so added complexity and hence added cost to new software the net result was that the two digit standard for representing years continued much longer than anyone would have guessed when will y k problems start y k problems have already surfaced in many places cap gemini a technology consulting firm reported that as of december of a group of large u s companies had experienced y k related problems by march that number leaped to the gartner group an information technology research company has developed a model to predict the rate of occurrence of y k problems this prediction is based on data collected quarterly from over firms and government organizations in countries gartner estimates a rapid increase in problems in with a peak sometime after january problem occurrences will drop off after but will still occur for another to years at a lower level finally the information technology association of america has reported that about half the major corporations in america have already experienced some form of y k disruption as of march how can we fix y k and how long will it take it is beyond the scope of this report to cover the technical nuances of these various solutions however various techniques are briefly described in appendix iii how much are y k fixes going to cost there is no generally agreed upon answer to this question the gartner group s estimate of billion worldwide is a frequently cited number another number from a reputable source is that of capers jones software productivity research inc of burlington ma jones worldwide estimate is over trillion part of the difference is that jones estimate includes over billion for litigation and damages but gartner s does not a sense of the scale of the cost can be gained from looking at the y k costs of six multinational financial services institutions citicorp general motors bank america credit suisse group chase manhattan and j p morgan these six institutions have collectively estimated their y k costs to be over billion additionally the estimated cost of y k repairs is increasing as shown in figure figure y k repair estimates company past est millions new est millions aetna att bankers trust cendant chase manhatt general motors mcdonald s merrill lynch sears xerox can t we develop an easy y k fix popular sentiment suggests that a technological quick fix will appear just in time to kill the millennium bug so far quick fix claims have proved to be claims for a particular product that may show promise in one particular application for example finding where the actual dates and date processing routines are hidden in a program software programs and computer hardware vary too greatly to be fixed by one solution currently there are over programming languages in use a universal or broadly applicable y k solution would have to be compatible with many or most of these languages additionally finding all the dates and date processing in an estimated programs is an enormous task difficult to automate the embedded processors pose another problem although the percentage of embedded chips with a y k problem is estimated to be relatively small potentially millions of chips exist that may have to be replaced unfortunately most of them are not readily accessible or easily modified where can i learn more about the y k problem many solid references can be found in the endnotes of this section and elsewhere in this report an enormous amount of y k information resides on the internet however legitimate information is buried among overstated rumors and half truths as with most other information derived from internet sources y k information must be verified for accuracy additional information can be obtained through the committee s website at www senate gov y k and the president s council on year conversion s website at www y k gov critical infrastructures critical infrastructures can include both computerized services and physical services essential to minimum functioning of economy and government more than abstract systems critical infrastructures enable the average person to use an atm make a phone call and fly on an airline in the past many of these key infrastructures or sectors were separate however advances in information technology have caused many of these systems to be inter connected and linked through networks the committee has approached the critical infrastructures by examining the y k work occurring both vertically within specific sectors and horizontally across different interrelated sectors such as banking and telecommunications recognizing that the y k problem could have serious implications on the smooth functioning of our defense and economy senator moynihan wrote president clinton in july of and suggested a special y k commission while senator moynihan s suggestion was not taken executive order created the president s commission on critical infrastructure protection the commission was not tasked to study y k but it recognized the potential for the y k problem to cause long term problems in the infrastructures due to late starts many organizations have contracted out work on sensitive systems in some cases organizations are sending code overseas to foreign firms the correction of code overseas could lead to increased incidents of corporate espionage and intentional cyber disruptions the broad scope of y k corrections could allow an adversary to build an exceptional understanding of sensitive systems thus enabling it to design a subtle or comprehensive attack against critical systems it is absolutely vital that the owners operators and regulators of the nation s critical systems continue to be aware that y k may provide an opportunity for those with malicious intent sandia national laboratories warned the committee that thinking that we will be so preoccupied with y k that we would not notice deliberate malicious intent terrorists hackers and other criminals might see y k as a prime opportunity to attack pieces of our infrastructure or they might use y k induced infrastructure failures as cover for theft arson bombings etc we must be watchful of such groups in the months leading up to y k and we must be especially careful when monitoring the crisis as it occurs to discern deliberate intent current national security and emergency preparedness policies are not designed for the challenges of the information age the u s needs a system or process whereby the government can coordinate responses with the privately owned and operated critical infrastructures we must build the broad based contingency plans necessary to ensure that the national security and emergency preparedness posture of the u s is not compromised by y k the u s must remain ready to mitigate the economic emergency or security effects that could be caused by y k y k is an opportunity to educate ourselves first hand about the nature of st century threats technology has provided the u s with many advantages but it also creates many new vulnerabilities recognizing shifts in the technological topography of the nation requires vision reverting to a world without microchips or technology dependent systems is not only undesirable but also impossible instead we as a nation and as individuals need to consider carefully our reliance on information technology and the consequences of interconnectivity and work to protect that which we have so long taken for granted formation of the special committee senator robert bennett first identified the year as an issue for the legislative agenda in as the senate organized for the th congress he shared his concerns with senator alfonse d amato chairman of the senate banking committee who urged senator bennett to take up the issue in his new role as chairman of the subcommittee on financial services and technology the subcommittee naturally focused its first efforts on the regulators efforts to ensure y k compliance in february and again in april senators d amato and bennett requested information on y k preparations from the following financial regulatory agencies the federal reserve board frb the federal deposit insurance corporation fdic the office of thrift supervision ots the national credit union administration ncua the office of the comptroller of the currency occ the securities and exchange commission sec shortly after the committee inquiry the federal financial institutions examination council ffiec an inter agency body made up of frb fdic ots ncua and occ issued guidelines for the financial institutions and federal examiners to focus on issues they must address to avoid major service disruptions due to y k individual agency responses revealed varying degrees of readiness the sec s response detailed extensive plans for remediation and testing while other agencies demonstrated little more than a general awareness and initial response to the problem many of the regulatory agencies deferred to statements published by ffiec without providing any substantive information about their own progress these results prompted senator bennett to conduct the first hearing on financial services and the year on july at the end of the first hearing senator christopher dodd quickly recognized the importance of the y k issue and voiced his support for additional hearings on y k the subcommittee held another eight hearings to investigate the scope and severity of the y k problem and to prompt action in the financial community on november senator bennett introduced the computer remediation and shareholder protection act of crash protection act which required the securities and exchange commission to increase its disclosure regulations relative to y k readiness with the threat of the crash protection act looming the sec redoubled its efforts to raise awareness of y k implications also in november senator bennett wrote president clinton to express concern over a lack of national leadership in the y k arena the senator suggested the appointment of a y k czar to oversee the y k compliance of the federal government and initiate a public private y k action three months later president clinton issued executive order creating the president s council on year conversion subsequently john koskinen was tapped to chair the new council during these events the subcommittee struggled to reach industries outside of banking sec disclosures provided a tool albeit blunt to raise y k awareness and planning within public companies despite staff bulletins emphasizing the application of disclosure law to the y k issue the level of information disclosed in march was disappointingly low indeed some companies overlooked y k entirely under the premise that y k did not present a material threat to their businesses meanwhile off the record discussions with subcommittee staff suggested that many corporations preferred to incur sec fines than a drop in their stock prices the subcommittee invited the sec to a june hearing which led to additional guidance in the form of an interpretive release on y k disclosure however the point was made that the subcommittee on financial services and technology simply did not provide the scope necessary to adequately address the breadth and depth of the y k problem voicing this concern senators bennett and dodd met with the senate leadership senate majority leader trent lott recognized the importance of senate leadership in the y k arena and with the assistance of minority leader tom daschle cleared the way for the creation of the special committee on the year technology problem on april the u s senate unanimously voted to establish a new committee to address the y k technology problem the special committee on the year technology problem was authorized through february the majority leader named senator bennett to serve as its chairman committee membership included vice chairman senator christopher dodd d connecticut senator jon kyl r arizona senator susan collins r maine senator gordon smith r oregon senator daniel patrick moynihan d new york senator jeff bingaman d new mexico senator ted stevens r alaska ex officio senator robert byrd d west virginia ex officio because the committee does not have legislative authority each of the members was carefully selected based on membership on other committees such as judiciary armed services and government affairs according to the legislation that created it the senate special committee on the year technology problem will exist until february after which it will permanently disband