COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING BEFORE THE COMMITTEE OF THE WHOLE - - - Room 400, City Hall Philadelphia, Pennsylvania Tuesday, March 16, 1999 9:27 a.m. - - - RESOLUTION NO. 980756 - Calling on the City Council of Philadelphia to conduct a public hearing to investigate and evaluate the impact to the City of Philadelphia brought on by computer operating systems being unable to function properly on or about January 1, 2000 and what precautions are being taken to avoid a crisis. PRESENT: COUNCIL PRESIDENT ANNA C. VERNA, Chair COUNCILWOMAN JANNIE BLACKWELL COUNCILMAN DAVID COHEN COUNCILWOMAN DONNA REED MILLER COUNCILMAN RICHARD T. MARIANO COUNCILMAN FRANK RIZZO - - - VINCENT VARALLO ASSOCIATES, INC. Registered Professional Reporters Eleven Penn Center, Suite 600 Philadelphia, PA 19103 (215) 561-2220 2 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K I N D E X Mark Schweiker, Lieutenant Governor . . . . . Commonwealth of Pennsylvania. 5 Joseph Certaine, City's Managing Director . . 16 Brian Anderson, City's Chief Information. . . 16 Officer Mike Nadol, Deputy Water Commissioner . . . . 39 City Solicitor Stephanie Franklin-Suber . . . 47 Mitchell Chester, Acting Chief Information. . 50 Officer, School District of Philadelphia Gregory Martin, Executive Vice President. . . 56 and Chief Operating Officer, PGW David Lee, Chief Information Officer. . . . . 58 and Vice President, PGW Cassandra Matthews, Vice President of . . . . 69 Information Technology, Chief Information Officer, PECO Dennis Buckley, Counsel, Y2K Coordinator, PUC 86 Dan VanOstenberg, Vice President. . . . . . . 97 Information Services, Comcast Mobile Systems Jeff Coursen, Vice President of Strategic . . 105 Development, ATX Communications Bernie Pfeiffer, Executive Director . . . . . 109 Bell Atlantic Herb Taylor, Vice President and Secretary . . 121 Federal Reserve Bank of Philadelphia Charles Isdell. . . . . . . . . . . . . . . . 133 Acting Director of Aviation, City of Philadelphia 3 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K (Index, cont'd.) Steve Roberts, Chief Information Officer. . . 135 Amtrak Barbara Jones, Chief Administrative Officer 140 Delaware Port Authority Ralph Menzano, Chief Information Officer. . . 146 SEPTA Robert Giacopetti, Delaware Valley. . . . . . 152 Health Care Council Pat Harsche, Vice President . . . . . . . . . 161 Business Development and Regulatory Affairs Fox Chase Cancer Center Loretta Lawler, Assistant Director. . . . . . 165 Year 2000 Project, Temple University Health System Robert Eckert, Sr., Chief Executive Officer 171 North American Networks and I-BOB Internet Services, representing the Northeast Philadelphia Chamber of Commerce Tarren Gaddy, Community Education Program . . 183 Coordinator, Emergency Services, Southeastern Pennsylvania Chapter, American Red Cross Ron Weikers, Esq., Author . . . . . . . . . . 187 4 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K P R O C E E D I N G S
Good morning, everyone. This is the Committee of the Whole regarding a public hearing on resolution No. 6 980756. This morning, we are honored to have with us Lieutenant Governor Mark Schweiker, who will be the first witness. At this point in time, I would ask the clerk to please read the title of the resolution.
A resolution Calling on the City Council of Philadelphia to conduct a public hearing to investigate and evaluate the impact to the City of Philadelphia brought on by computer operating systems being unable to function properly on or about January 1, 2000, and what precautions are being taken to avoid a crisis.
Good morning. As I said, welcome again, and please identify yourself for the record and proceed with your testimony.
I'm Mark Schweiker, the Lieutenant Governor of the Commonwealth of Pennsylvania. And with me is Charles Gerhards, 5 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K who is the State's Chief Information Officer. Good morning and thank you, Chairwoman Verna. And also let me acknowledge the invitation extended by Councilman Rizzo to be with you this morning to address this critical issue. Shall I proceed?
Thank you, Madam President. As the new century draws near, the Year 2000 computer problem has and is receiving more and more attention in the news.
Excuse me, I don't mean to interrupt you, but I understand people are having difficulty hearing you. If you would pull the microphone closer to you, please. Thank you.
As the new century draws near, your microphone's working just fine, Madam President. (Laughter.)
The Year 2000 computer problem has and is receiving more and more attention in the news. Most of it is what I would call "doom-and-gloom reporting" -- stories about 6 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K businesses that will fail, stories about traffic lights and air traffic control systems that will shut down, and stories about microcomputer chips found in all the appliances we use today that will simply stop working. Now, I will tell you, as the Governor's chief advisor for local governments, I've seen how widespread is the problem. In the city halls, computers handle tax claims, wills, and deeds. Think about security in your jails, think about payrolls that are processed by computers, think about the interconnected traffic lights that regulate the flow of traffic at Broad and Vine Streets, and the many traffic lights throughout the City and state. It's no wonder that people are scared about what will happen when January 1, 2000 does arrive. Or that others, seeing the problem as beyond their control, have simply given up. And while the Year 2K problem is very serious, I'm here today to tell you that it's not all doom and gloom, that the Year 2000 is not only some technological snafu beyond our control. Pennsylvania will still issue driver's licenses, 7 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K birth certificates, and various certifications. Pennsylvania State government will still function. Our administration has worked very hard to make Pennsylvania a technology leader among states, and much of that recognition is due to leadership in squashing the Year 2000 bug and protecting vital government services from shutdown. More than two and a half years ago, Governor Tom Ridge and I recognized the importance of quickly addressing the Year 2000 computer problem within Pennsylvania State government. At that time, we assembled a management team to develop the Governor's Year 2000 Action Plan, and the successes that we are enjoying today can be traced to the activation of that plan. Now, when we began this comprehensive Year 2000 effort, we set December 31, 1998 -- just a few months ago -- as the deadline date for agencies to complete repairs to the mainframe systems. I should point out that the repair process consists of three steps: correcting faulty computer code, testing those corrections, 8 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K and then putting fixed programs back into useful service. 82 percent of our mainframe systems. Of the small number of programs that remain, many are simply waiting for work to be completed by outside agencies before they are ready for useful service. A recent survey conducted by the National Association of State Information Resource Executives confirms that no other state government in the nation is as far along in their Year 2000 repairs as Pennsylvania. Those survey findings were reported in the Wall Street Journal on December 29th of last year, and you can find that on Page A-14. This achievement has been earned, in large part, because of the leadership of the Administration and the fact that we made the Year 2000 challenge and correction work a priority for state agencies. This has been no small accomplishment. Bear in mind that: 30 of 40 state agencies had reported Year 2000 problems; 9 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K I want to say this slowly it says something about the tallness of the order. 46,081 mainframe computer programs have required attention; The total cost of repairs to these programs is over $41 million; And we have identified 738 data interfaces between state agencies, federal agencies, and third parties that need to be made Year 2000-ready. Let me just tell you that this work could not have been done without the excellent work by our state information technology employees, including -- and I would reference the gentleman to my right again -- Charles Gerhards.
Having completed nearly all of the work on our mainframe programs, Madam President, we are now shifting our attention more fully to the review of our personal computers and embedded technologies. These projects are already underway. We have completed a comprehensive assessment of agencies' PC hardware and software, and repairs and replacement of faulty PC's are moving forward. 10 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K We are currently finishing a comprehensive survey of agencies' embedded technologies -- computer chips found in devices that we use every day. Examples are our security system to your personal telephones. Our technology team is continuing to monitor progress to ensure that agencies repair all identified critical embedded chips by the end of 1999. The bottom line is that Pennsylvania State government, to the best of our knowledge, is leading all other states in addressing Year 2000 concerns. Now, that doesn't mean that we're home free. Everyone knows that the final push on any project -- not just a technology project like Year 2000 problem, the final push on a project is the hardest. And so we do expect some surprises. Our strategy all along has been to address the most critical computer systems first and ensure their Year 2000 readiness. And by completing that work in 1998 -- and that has been the case -- we have freed up both the staffing and resources to address any unexpected computer glitches we know 11 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K will arise. In spite of our excellent progress, we've also decided to require all agencies under the Governor to prepare Year 2000 business continuity plans -- not because we don't have confidence in our Year 2000 repairs, but because our responsibility to the State's citizens demands that we act responsibly. And all business continuity plans are to be in place and tested by September 30th of this year. Just let me offer a remark about public outreach. As a national leader in the Year 2000, Governor Ridge and I have felt a strong sense of public stewardship and related responsibility to reach out to communities throughout Pennsylvania and provide them with helpful Year 2000 information. The very fact that I'm here is an example of that kind of commitment and effort and outreach. And that's why the Pennsylvania 2K Initiative was begun. Over the last two years, we have been working with a number of Year 2000 partners, including Penn State University, the Pennsylvania Chamber of Business and Industry, the federal 12 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K government of Canada, and the states of Colorado and Texas, to cite two, and not to mention the thousands of Pennsylvania communities that rely on this relationship. By freely sharing information and ideas, we have developed a series of informative Year 2K materials that can be provided to citizens. We have brochures and workbooks and a number of other things. All of these products explain the date change problem in non-technical terms. And as a parenthetic thought, that's critical as far as creating comprehension of the problem in making sure that the citizenry buys into the propriety of the expenditure in backing of the entire endeavor, knowing that we've only got about nine months before this important date hits. So we explained it in non-technical terms and suggested ideas for squashing the millennium bug. org. And we've got a toll-free phone 13 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K number for the same purpose. As a national leader on the Year 2000, we've learned that the computer date change is a shared threat that demands we work cooperatively. By sharing information and working in unison, we can minimize any Year 2000 disruption to our businesses and communities. Now, my job today was to tell you that the Commonwealth, as a State government enterprise, is ready for the Year 2000, and we are ready.
To tell you about what we have done to ensure that State services will continue past the new year celebrations let me assure you that as a state. Well, let me assure you that as a state, we will be prepared should problems arise in communities. The point that I'm making here is that internally, the State government is in excellent shape. Externally, should we encounter problems come Saturday, January 1st of the new century, we will be in a heightened state of readiness. Our emergency operation center at the Pennsylvania Management Agency -- as an aside, that is a 7-day-a-week, 24-hour-a-day operation -- 14 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K or PEMA, will be fully staffed to respond to emergencies. PEMA, at my direction, has been instrumental -- and the Governor's direction -- has been instrumental in working with counties and communities to prepare for Year 2K issues. They are working with local governments to prepare their own continuity plans. They are planning a major Year 2K electronic town meeting later this spring to provide information to businesses, local governments, and the general public on Year 2K preparedness and contingency information. And last December, PEMA held a Year 2K preparedness exercise and is planning several more exercises this year. I invite the City of Philadelphia to take advantage of the awareness and planning tools that State government has developed for your use. Please join us as a full Pennsylvania 2K partner, drawing on the resources that I've described and adding your own ideas to the team. Pulling together -- and I believe this, emphasizing team work -- we can beat the impending Year 2000 deadline, and in the process, we can reaffirm Pennsylvania's new-found status as an emerging 15 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K technology state. And with that, I'll conclude and say thank you so much for the opportunity for a short time to address this challenge. And if there are questions, Charlie would be happy to answer them. )
Again, we thank you for your presence this morning. The Chair recognizes Councilman Rizzo.
Lieutenant Governor, I want to thank you for coming today to let us know exactly what is going on at the State level. We appreciate that very much in Philadelphia, knowing that the State PEMA are prepared to deal with this situation. Thank you, Lieutenant Governor.
Thank you. Are there any other questions or statements? (No further questions.)
Thank you, Madam 16 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K President.
Our next witness is the Joseph Certaine, and I will ask that Brian Anderson join Mr. Certaine at the witness table. (Messrs. Certaine and Anderson come forward.)
Good morning, Madam Chair. If I can make a clarification for the record. Brian Anderson, the City of Philadelphia's Chief Information Officer, will be presenting the testimony this morning, and I, in fact, am joining him.
Good morning, Council President Verna and members of City Council.
With me here today and the Managing Director is Dean Kaplan, the City's Budget Director, and Stephanie Franklin-Suber, the City Solicitor. I am Brian Anderson, Chief Information Officer for the City of Philadelphia. On behalf of the Mayor's Office, the Managing Director's 17 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K Office, and the City departments who are also here today, I am pleased to provide this testimony on the City of Philadelphia's readiness for the Year 2000. At the outset, before the City's Y2K problem could be remedied, it was critical to complete a risk assessment in order to determine the degree of risk posed to the City's major operations, which could directly impact the central services such as 911, police and fire protection, maintenance for water quality, the ability of City government to pay its bills and to collect taxes that are due. For the last four years, the Mayor's Office of Information Services has been at work on Y2K issues canvassing every software application that operates on the City's central mainframe computer to determine the severity of the problem as well as charting a course for correcting it. In March 1998, the City formalized its efforts, creating a Year 2000 Steering Committee under the leadership of the Office of the Managing Director, the City's Risk Manager, and myself. The Committee draws its members from a variety of 18 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K City departments and is charged with leading the City's efforts to identify and remedy the City government's Y2K issues. In addition, the Year 2000 Steering Committee has sought the cooperation of many of our vendors and others with whom the City does business, contacting each of them to assess private sector readiness for the Year 2000. The city is working cooperatively with two of its private sector counterparts whose readiness for the Year 2000 is critical to the City's success in addressing the Y2K problems. Those two vendors are PECO Energy and Bell Atlantic. Our efforts also include talking with other cities to determine their level of preparedness for the Year 2000. In December 1998, the City hosted a Year 2000 Readiness Forum that included representatives from Boston, New York City, Washington DC, Baltimore, Chicago, and Detroit. The forum provided benchmark and best practice information, collaboration opportunities, and inner-city support commitments. To improve public awareness, the City has developed a Year 2000 Readiness Disclosure 19 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K Website that provides information on the approach, scope, and progress of the City's Year 2000 Readiness Initiative. In the months ahead, the City will also participate in or sponsor public forums as well as disseminate Y2K information to the public on a regular basis. As a result of these efforts, the City has made significant progress in determining the scope of the City's Y2K issues. Most importantly, the Steering Committee has identified approximately 400 operations upon which central services rely. The operations include City computer systems, other electronic systems operated by the City, as well as those City vendors, contractors and suppliers, and others linked to the City electronically. Further, these operations impact a tremendous variety of City services, ranging from critical issues involving the City's procurement system technology, its airport security, its billing systems, and the 911 dispatch system; to minor issues involving the City's mail room, forms for L&I customers, and systems that coordinate the placement of legally-required government advertising notices in 20 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K the Philadelphia newspapers. For each operation, we have identified the remediation requirements, the probability of failure, and the impacts associated with failure.
The purpose of these initiatives is fundamental: we must identify the potential Y2K issues, and having identified them, chart a course for fixing them to minimize the impact on City services come January 1, 2000. The Y2K crisis has specific concerns for City services, including the following: 1. The City's financial and administration systems. These systems include the mainframe applications the City uses for accounting, purchasing, revenue collection, and vendor and bondholder payments. Failure of these systems could mean that individuals and businesses working with the City do not get billed or do not get bills paid. Failure could affect payroll for City employees and could affect the City's ability to monitor revenues. 2. City information technology. Desktop personal computers, networks, and software are tools used by every City department to fulfill 21 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K its mission. These tools enable City employees to communicate with each other, share and annualize data, and provide information to citizens as they provide City services. 3. City facilities and embedded technology. The City maintains numerous facilities, including office buildings, libraries, water treatment plants, fire stations, recreation centers, and other facilities. Many of these facilities utilize embedded technologies to control their heating, ventilation, and air-conditioning, security, and other building systems. 4. Utilities and other critical vendors. Like our citizens, the City is dependent on key vendors that supply its electricity, telecommunications, natural gas, and gasoline. If these vendors, such as PECO Energy and Bell Atlantic, experience Y2K-related problems, the City could be forced to function without power or telephones or fuel. As these examples make clear, the Y2K problem presents a very real deadline that cannot be put off. Clearly, therefore, implementing 22 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K corrective measures is not a matter of choice. That is why the City has been at work for almost four years on a variety of initiatives to addressing the Y2K problem, including a comprehensive strategy and solutions for each of the conditions described above. To date, we have had substantial success in remediating the Y2K problem as we have identified. The following is a list of the City's Y2K readiness efforts: 1. The City's financial and accounting systems. Working with the Finance Department, MOIS representatives have completed assessment and remediation on the City's mainframe computer of 55 of the 60 central business application systems, including all financial and administrative systems. Remediation for the remaining five systems is expected to be completed by June 1999. The mainframe computer and all 60 systems will be tested to ensure compliance by July 1999 as well. 2. The City's information technology. MOIS has implemented an automated desktop Year 2000 auditing software system that will allow MOIS to audit the software and hardware on all of the 23 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K City's 11,000 personal computers for Year 2000 compliance. Audits on citywide PCs will be completed by the end of March 1999. 3. City facilities and embedded technology. MOIS and representatives from a variety of City operating departments have completed an inventory of equipment dependencies with embedded technology. Embedded technology are those items with small self-contained, single-function computers that are used in building security maintenance systems, home electronics, elevators, fuel pumps, and other types of equipment. The teams currently are in the process of evaluating embedded technology systems that impact City services primarily through vendor audits and the completion of date simulation testing for possible failures. 4. Utilities and critical vendors.
The Steering Committee representatives have held a continuing series of discussions and meetings with their Y2K counterparts from PECO Energy, Bell Atlantic, and SEPTA to discuss coordinating the efforts to minimize risks associated with the Y2K problem. MOIS and department officials are now 24 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K contacting all vendors providing supplies for the City to establish the vendor level of Y2K preparedness. And 5, contingency planning. While the City has undertaken a comprehensive effort to identify and remediate the impact of a variety of Y2K issues, it is nevertheless equally important for the City to develop contingency plans to ensure that critical municipal services will be provided, even if the Y2K failure occurs. Under the leadership of the Steering Committee, the City expects tat all contingency plans will be completed by May 1999 and tested throughout the remaining months of this year. The following disclaimer applies to my testimony and statements today and to the testimony and statements of all City personnel appearing before City Council in this hearing: The City believes that the Year 2000 readiness initiative, which includes the plans and measures about which City personnel are testifying in this hearing, is a sound and rational program for responding to a complex and difficult challenge and one which is obviously 25 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K unprecedented. We believe that the Readiness Initiative will be effective with the limits of our resources and technology in substantially reducing chances of disruption or failure of computing and other electronic systems because of Y2K-related causes. However, it is impossible for the City to guarantee that all of the systems on which the City depends will be unaffected by Y2K disruptions. Therefore, all testimony and statements by City personnel about the Readiness Initiative in this hearing are subject to change, are for informational purposes only, and are not intended to create a warranty, contract, or a legally-binding representation on the part of the City or its vendors. All testimony and statements of the City personnel in this hearing are intended as "Year 2000 Readiness Disclosures" as defined by the Year 200 Information and Readiness Disclosure Act enacted October 19, 1998, and are subject to all of the protections of the Act. Madam President, this concludes my testimony. I want to thank you, Councilman Rizzo, and City Councilmembers for hosting this forum, 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K and I will be glad to answer any questions that you may have.
Thank you. The Chair recognizes Councilman Rizzo.
Thank you, Madam President. Mr. Anderson, thank you for all the work and for your preparation for this hearing today. I think it's important that the citizens of Philadelphia know that the City is prepared to deal with this issue. I would like to know, are there any departments -- police, fire -- I listened very carefully to your testimony. Are there any areas of concern, immediate concern to you that have not been addressed to your satisfaction at this point?
No. I would say that everything is, at this point, on track. We have a complete accounting of every project that is still in progress. And at this point in time, everything is on track. We meet on a biweekly basis with each City department to go over and review progress and 27 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K issues to ensure that everything stays on track.
Well, again, thank you very much, Managing Director Certaine, City Solicitor, Mr. Kaplan. I appreciate it very much. Thank you, Madam President.
I just have a couple of questions. Did I understand you, Mr. Anderson, to say that in May of '99, the City will be prepared to test its systems to ensure Y2K compliance?
Madam President, we are -- and I will also let the Managing Director respond. Just to clarify my statement, we are testing all of our changes on an ongoing basis. In May of 1999, we are prepared to test our contingency plans. As I had stated, in addition to all of the readiness activities we are conducting to correct any computer problems or equipment that may fail, we have developed contingency plans and are developing contingency plans that we plan to test in May of 1999.
What are the precautions that the City is taking with regards to those vendors that the City suspects might have 28 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K a Y2K problems?
Well, we're doing a number of things. Number one, our critical vendors, such as PECO Energy and Bell Atlantic, we have biweekly working sessions with PECO Energy at this time. We have reviewed our corresponding plans, we are coordinating in our contingency plans and our response plans. In other regards, with less critical vendors, we have checked for their compliance and their disclosures. And we continue to work with them to ensure that no City supply is disrupted.
What is the City's backup plan in the event we experience electrical outages such as street lights and/or traffic lights?
Madam President, my name is Joseph Certaine. I'm the Managing Director for the City of Philadelphia. In response to your question, those -- that question and many more are being considered within the City of Philadelphia for the possibility of an electrical service interruption. Our contingency plans are being reviewed right 29 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K now, and we haven't finalized them, but I can safely say that the City's contingency plan would call for manual traffic control, either through uniformed police personnel or signage that would be placed at various critical intersections to handle traffic flow if something like that were to occur.
And what precautions would the City be taking to ensure that the water and sewer services are not disrupted? MR. CERTAINE; the Water Department is represented here in the room, but for a general overview, the City of Philadelphia's working very closely with the Water Department and PECO Energy on matters once again of electrical service interruption that might have that kind of an impact. For more detail, the Water Department could respond to your question, if you prefer.
We will be happy to hear from them. Councilman Rizzo, do you have further questions?
Yes, Madam 30 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K President. Your questions motivated me to ask a question of the Managing Director. May I do that?
You mentioned contingency plans, Mr. Managing Director. The day-to-day operation of a big city would, it necessarily take a Y2K issue to have contingency plans in place? And why don't existing contingency plans already deal with the Y2K issue?
Councilman, you're absolutely right. The running of not just a large city but any enterprise -- a business, a large jurisdiction like Philadelphia or a small one -- would dictate that there would be contingency plans so that services would not be interrupted by things like power outages or anything that we're describing. The City of Philadelphia has a contingency plan that covers just about everything except Y2K. And we are using this opportunity, in fact, to upgrade our contingency plans overall because this is the closest examination that we've 31 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K made of City systems and processes, equipment, facilities, or operations plans for that matter, because of this Y2K scenario. So we see it as a golden opportunity to upgrade our existing contingency plans and include the possibility of system failure. All of our contingency plans were for strikes and severe winter weather or civil disorder or other things that you could anticipate. None of us in Operations had considered, as we drafted contingency plans and updated them over the years, we had not anticipated a systems failure that would necessity reevaluating our service delivery. So we see it as an opportunity to do exactly that. But you're right, we do have contingency plans in place, and most of our contingency plans cover the kinds of scenarios that would evolve as a result of the Y2K bug. The one thing, though, that we did not include was mainframe applications that, because of some glitch -- not because of electrical failure, but because of some glitch, may fail, or an application or a process that may fail as a result of it. 32 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K So that's why we're updating everything.
Mr. Certaine, if you had to rate the top three challenges that Y2K will cause City operations, what would be number one, two, and three of your concerns that were the toughest to deal with in dealing with Y2K?
Well, absolutely the toughest to deal with -- I think everything hinges on whether or not we'd have electrical service. Without sustained electrical power, most of our systems would be impacted in one way or another. As far as two or three, I'd just have to go back to number one. If we didn't have electrical service, we could lose our telecommunications ability, which would have an impact, and it would impact on other things, but I would say the things that we're primarily concerned about are the interruptions in utility service that would impact the City of Philadelphia. There are some external challenges that we may have to face. We're not sure what would happen, say, as an example, if there was a problem 33 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K with financial institutions, and you read in the papers every day about the failure of ATMs and things like that. That would indirectly affect the City of Philadelphia. But we're pretty confident in working with PGW and PECO and Bell Atlantic, the cooperative relationship that we have and the series of meetings and close examinations of our processes, that we won't have to experience that.
The 911 emergency service, fire and police, assuming that we don't have an interruption of electric service, how significant a challenge is an efficient, uninterrupted roll-over of people needing emergency services dialing 911? Forget for a moment the fact that you just mentioned that your number-one concern is -- and we'll have PECO and the other utilities here momentarily. But let's say that we have electrical service. How significant a problem is Y2K to 911 operations?
Well, it's a -- Y2K would have a significant impact on 911. But if we do have electrical service and telecommunications, 34 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K that is the bulk of the 911 operational concern. From a system standpoint, I would like to have Brian Anderson respond to that, because of a lot of the system applications fall within the jurisdiction of the Mayor's Office of Information Services.
One thing I'd like to just add is when it comes to our challenge, there's been a considerable amount of work on all of our internal operations IT systems and principally our financial systems. As I had stated in my testimony, we have been working on that problem for over four years. In terms of our concern, obviously, we are more concerned about those operations that we are not in direct control of. As the Managing Director had mentioned, PECO Energy is one concern, Bell Atlantic and telecommunications services that they provide is another concern. As I had stated, we are working closely with them to ensure -- to minimize that concern and to ensure that we're ready if any disruptions do occur.
Thank you, Mr. 35 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K Anderson. Mr. Certaine, I'm again referring to a story in today's paper. Obviously, your concern that the electric utility could have interruptions of service, and you're planning to purchase a generator to deal with that in the event that that would occur, but let's talk about operations throughout the City other than your central location. Firehouses, police stations, how would they be affected? What would be the effect on a citizen calling 911 in the event of a fire or in need of police at the local level more so at a fire station than a police station? But we obviously don't have back up generators at our police stations; is that correct?
Well, we do in critical areas where we would require electrical generation but, for 911, I would have to defer again to Brian Anderson or to the Department of Public Property or to the police who are here. I would say, Councilman, that we have a backup plan that is routinely in use for severe weather or anything else that might be disruptive 36 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K to the 911 centralized application, and that's the backup system that we have at the Emergency Operation Center. But I would like for Mr. Anderson to respond to that again. We can also call up the Department of Public Property, telecommunications, and the Philadelphia Police and Fire Department if you'd like.
Number one, I can just say that our 911 system, I can assure you that it is ready. We have gone through scenarios where it indicates the power being lost and we have developed plans to ensure that service continues in that event. As for the fire stations and the remote district offices, those scenarios are also included in our scenario to ensure -- you know, the focus has been to ensure that our 911, our response services continue in the event of power being lost to those areas. If you would like more detail, I'm sure we could provide that but --
Well, we're going to have representatives of PECO Energy so, obviously, 37 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K there's a lot on their plate when it comes to Y2K because of your dependency on electrical power, which is obviously not a. Secret but I'm surprised and maybe not so, maybe because the electric service is so reliable that we rarely have long interruptions of service, that going to the expense of purchasing backup equipment might not be a wise decision, but I would hope that now because of Y2K, and maybe you could explain, Managing Director Certaine, your plan to purchase a significant piece of generation equipment, and possibly you would like to look at other areas while you're in the process of investigating this.
Councilman Rizzo, the matter that you referred to in today's paper is the acquisition of a backup generator for the Mayor's Office of Information Services mainframe. That is something that has not existed, and it is something that we had planned to do. The Y2K millennium bug creates an opportunity to get it in sooner rather than later. That's why I had deferred to Mr. Anderson in response to that question. 38 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K There are backup generators at critical locations throughout City government, including the fire administration and police administration buildings that would handle certain functions that you described, and there are critically-placed backup generators in place for other communications needs and systems around the City that I really don't want to get into too much detail about here. But for the newspaper story and the large acquisition that you're talking about, it is something that we should have had, an uninterruptable power supply and backup generating for the City's mainframe. It's just something that had not been acquired until now and coincidentally happens to fall within the time frame that we're preparing for Y2K.
I believe that Madam President wanted some information from the Water Department. Was there something that we wanted to learn from the Water Department?
Is someone from the Water Department here? (Mike Nadol comes forward.) 39 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K
Good morning. I don't know if you remember the question. Please identify yourself for the record.
Good morning. I'm Mike Nadol, Deputy Water Commissioner, overseeing our financial and administrative services. Also with me is Susan Lior, also Deputy Water Commissioner, who heads our Information, Science and Technology Division. And if you could repeat the question, I'd appreciate it.
I think my original question was, what are the precautions that the City has taken to ensure that the water and sewer services are not disrupted?
Okay. We, along with the Mayor's Office of Information Services and the Managing Director's Office have been working on this issue since 1995. We have undertaken multiple initiatives reflective of the size and complexity of our systems. Just to give you a sense of that, and we could certainly provide as much detail as you'd 40 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K like, we operate two mainframe systems. Both of those mainframe computers have had their hardware and operating systems replaced over the last several years with Year 2000-compliant equipment. We have been working to either reprogram or replace all of the mainframe applications that reside on those systems. The vast majority have already been completed, and the rest are well on track to be completed within the next several months. With regard to our treatment plants, we not only have been working to procure new equipment and new systems where necessary to inventory the extensive embedded technologies that exist but, again, in conjunction with the Managing Director's Office in particular, we've been developing contingency plans that involve manual operation, which is an option for our treatment plants that involve stockpiling, if necessary, of chemicals and equipment just in case there's some sort of delay in receiving supplies from any of our critical vendors. And, again, those contingency plans have largely been developed, but we're continuing 41 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K to refine them, and we'll be working with other operating departments to go through different kinds of exercises and scenarios to further refine those well in advance for the change in the calendar.
Thank you. Does that answer your question, Councilman?
Yes. I just have one follow-up question. In reference to your dependency on PECO Energy, what contingency plan is there for interruptions? You may have covered that; I was distracted momentarily, and I apologize if you've covered that area, but to you have emergency generators to keep the water pumping? And also very important, the sewage treatment facilities in the event of a lengthy interruption of services? 'Cause I know that you were cited during an interruption of power by the -- you pumped raw sewage into the river a few years back, I don't recall. And I know that because of the interruption of electrical service, that became a very bad situation. 42 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K So what are you doing now since that experience in the event you would lose PECO Energy service?
Okay. All of our critical facilities are equipped with dual feeds, dual power lines so that in the event that, one, there's a failure in some area of PECO system, we have an alternative source of supply. We've also been working very closely with PECO over the last number of months to have them inspect all of our facilities to check the switches to help us identify any problems that might have existed in our connections to PECO system. With regard to our treatment plants, two of our plants are our Northeast and our Southwest Water Pollution Control Plants, which do have very large standby generation capacity that was implemented at those facilities as part of co-generation project using methane gas from those facilities to help us offset and reduce our electric bills and enabling us to go into interruptible rates that saved the City approximately a million dollars a year. Beyond those facilities, the use of 43 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K standby or backup generation equipment would, for the most part, be prohibitively expensive and unrealistic, the size of the pumps, the size of the equipment is really beyond the kind of backup generation equipment that the Mayor's Office of Information Services is looking to implement for its mainframe. We're just talking about extraordinary demand for these facilities. What we do have available, however, for much of the City is extensive storage capacity in our reservoirs that would enable us, using gravity flow, to serve much of Philadelphia, even in the event of some kind of unanticipated problem. And again, we've been working very closely with PECO, not only to identify any potential problems so that we can mitigate them in advance of the change in the calendar, but also to prioritize our key sites and those pumping stations, for example, that serve areas of the City that are more vulnerable to vulnerable to power-related service disruption.
In your industry, you don't see a cost-effective way to provide, because of the size and the magnitude of the 44 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K equipment, to have backup generation to power those pumps, so it's something that in the industry, other water companies don't do that? Or we just don't do that here? Are you saying it's impossible or just very expensive?
In part, we view it as unnecessary based on the work that we've been doing in conjunction with PECO to identify the potential for problems. Beyond that, anything's possible if you're willing to spend enough money. You can engineer a solution to almost anything. But to date, we do not believe that there's any rationale to do that.
But from your experience, you've never had a problem with the dual service? How about the times when we've had a total blackout? What effect did that have when there was no alternate service to rely on when you had a total interruption of service? How long you can you deal with storage and sanitation facilities before you have to discharge raw sewage into the river? And how long would that gravity system supply water? You're saying that gravity feed 45 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K would supply water service to all of Philadelphia without electric power?
To my knowledge, we have not experienced any significant disruptions, certainly not in recent memory, as a result of power disruptions. Again, we have from time to time, because of lighting strikes or scheduled repair work, lost one of the lines going into a major facility. We've never had a situation in recent memory where we've been shut down altogether. So we're relatively comfortable, and I'm looking forward to hearing PECO's testimony today, but we've been meeting with them for months and are very confident that we've got a good plan in place.
Mr. Anderson, I would like to ask one more question. What are the precautions the City's taking with regards to 46 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K those vendors the City suspects may have Y2K problems?
Madam President, we are doing a number of things, and it depends on the vendor and what the impact is if that supply is disrupted. With our banks, in regard to our transactions such as our direct deposit and other financial transactions, we are actually working with our banks to test the transmissions. They have corrected their systems on their end, we have corrected our systems as necessary on our end. And to complete the test, we are testing the transaction in between the two systems. With other vendors, we are looking for their disclosure information that they're making available to us. So we have two levels of readiness that we are conducting with our vendors. One, when you talk about our banks, when you talk about power and electricity, we are working directly with those vendors to test and ensure readiness. With others when, it's normal supplies, we're doing two things: we are stocking up, as 47 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K appropriate, just in case there's some disruption. But we are also checking to ensure readiness of those vendors.
Thank you. The Chair recognizes Councilman Rizzo.
My question is for the City Solicitor. Could you just briefly --
Good morning, Madam Chair. I'm going to respond to the question. I have no formal testimony. Thank you.
Thank you, Madam President. City Solicitor, could you please tell us how the Law Department is preparing to deal with the potential of Y2K litigation?
What potential liabilities are we referring to as they relate to the problem?
Thank you. Madam Chair, Councilman Rizzo, for the record, my name is Stephanie Franklin-Suber. I'm City Solicitor. First, the Law Department has been 48 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K actively involved in working with the City's Y2K readiness from a number of different perspectives. First, we have been working closely to ensure that we are maximizing the City's protections legally by ensuring, for example, that all statements made regarding Y2K compliance comport with the Year 2000 Information and Readiness Disclosure Act. That's one of the reasons you see a number of the disclaimers in written testimony and with regard to the City's Website. That act limits the extent to which a maker of a statement or other kind of communication can be held liable for communications in connection with Y2K problems. And in certain circumstances, it would even prohibit their use as evidence. So we are in the process of annualizing the kinds of possible claims that could be filed against the City of Philadelphia in connection with losses or other kinds of injuries that would be attributable to Y2K problems. We've also been working to make sure that there are provisions in City contracts that the City enters into with various vendors and suppliers to strengthen our legal position in the 49 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K event that there's a loss from a Y2K problem. We've also worked closely with the Managing Director and the operating departments to review the Y2K Readiness Initiative in its entirety. As you might image, I will be circumspect with regard to certain of my comments because the program, the Readiness Initiative itself, is subject to change, is subject to improvement and refinement. And public disclosure of any of the specific plans which are not complete or a public disclosure of our proposed litigation strategy would be inappropriate. Let me just say simply that we have been monitoring litigation that has been filed to date. We are analyzing the kinds of arguments and allegations. And generally speaking, I will say there are two legal theories, for example, that could be asserted. For example, tort claims in connection with negligent damage to persons or property or breach of warranty claims for failure to provide goods or services in accordance with contractual obligations. So, again, that's another reason why we are very sensitive to the kinds of public 50 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K statements and comments that are made in connection with the readiness program.
Thank you. Do you have any other questions of this panel Mr. Rizzo?
Our next witness is Mitchell Chester. (Mitchell Chester comes forward.)
Please identify yourself for the record and proceed with your testimony.
Good morning, Councilwoman Verna. I'm Mitchell Chester. I'm the Acting Chief Information Officer for the School District of Philadelphia. And I have one 51 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K other staff member who will be joining us up at the table. To my right is James Perillo, who's Administrative Assistant for the Office of Information Technology. I'll provide with you an overview of the School District efforts in regard to the Year 2000 readiness, and then be prepared to answer questions. The School District has been planning for the date change for the past at least four years. And over the last year, those efforts have intensified considerably with a number of activities, including the establishment of a cross-district oversight team charged with the responsibility of ensuring the readiness of the School District for the date change in interrupted service. That cross-district team consists of representatives of various offices in the District, including the General Counsel's Office, the Chief of Staff's Office, the Finance Office, Facilities Office, Transportation Office, as well as the Office of Information Technology. The District has employed, in addition 52 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K to its own staff, the use of a number of consultants to assist us, and we've looked at four basic areas as we've gone ahead with our efforts to ensure School District readiness for uninterrupted functioning into the new year. Those four areas are the areas of information technology, our computing and networking systems, our facilities, our supply chain, and desktop computing in the School District. I'll say a few words about the efforts in each of those areas. In the area of information technology and networking, we have two major efforts. One is focused on our business systems, our finance, accounting, human resources, payroll, purchasing systems. The others are our administrative systems and applications, our student systems. In the area of business systems, we are in the process of installing new business software, working with American Management Services. That project has been ongoing since about the first of the year, '98. The project is well along in its work. We've begun unit testing, systems testing. And beginning April 1st, we'll be moving into acceptance testing for that 53 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K project. We have a number of other systems on our administrative side, the nonbusiness systems around student accounting that we are looking at largely in-house, using our own staff. Those systems have been renovated. We've put the code, the computer code through an assessment phase. We've revisited the code as a result of the assessment, and we are now involved in unit testing and systems testing of those applications. In the area of facilities, we are conducting a systemic inventory of every school building that the School District owns. That inventory is more than halfway completed at this point and should be completed fully within a couple of weeks. We've trained --
Excuse me. How about the buildings that the School District rents?
We are also dealing with lease facilities. And we are contacting each of the landlords for lease facilities and seeking their assurance and asking them questions about 54 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K the level of preparedness for those lease facilities. We have between 60 and 70 lease facilities. We are in the process of contacting vendors who represent our supply chain to ensure their Year 2000 readiness, to get their assurances. With all contracts going forward, we're insisting, and for all bidding processes, we're requiring certification by potential contractors of their Year 2000 readiness. We're also in the process of evaluating the desktop computers, which, as you know, are used widely, not only for administrative functions but also for curriculum instruction functions in the School District. We're in the process of assessing the readiness of those machines and providing guidance on their remediation. In each case, we've taken a tact of conducting an inventory, assessing and annualizing where things are likely to fail, prioritizing which are critical, which are non-critical, coming up with a remediation plan, proceeding with the remediation plan, working on contingency planning and resource allocation throughout. 55 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K That's the general approach that the School District has taken. We're confident that we're on top of the situation and making very good progress in regards to ensuring uninterrupted functioning. I'd be happy to take any questions.
Thank you. The Chair recognizes Councilman Rizzo.
Thank you, Madam President. Some of the information that has been developed, some information, things that we've learned in dealing with this Y2K situation, are you going to in the out-years utilize some of the this information? Like you mentioned and President Verna indicated about some of our lease property. But maybe in future leases generation or some of the things that you're identifying today should be included in those leases because, like the Managing Director said, this generator for the mainframe is something that they really wanted, and this is accelerating the purchase and the installation of that. I would hope that this learning 56 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K experience will be utilized to ensure that we don't have problems in the future just on day-to-day business.
Your point is well taken, Councilman Rizzo. We are indeed trying to learn from this experience lessons that will serve the City and the District well beyond simply remediating for Year 2000 problems.
Thank you. Thank you, gentlemen. We appreciate your coming in. Our next witness is David Lee, and I would suggest that Mr. Lee take anyone he desires up to the witness table with him. (Gregory Martin et al. comes forward.)
Good morning. Please identify yourself for the record and proceed with your testimony.
Good morning, Madam President. My name is Gregory Martin, I'm Executive Vice President and Chief Operating 57 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K Officer for PGW. Along with me today are Mr. David Lee, our Chief Information Officer and Vice President, and Mr. Raphael Mason, who is PGW's Y2K Project Director.
Excuse me, Mr. Martin. Councilman Rizzo, did you receive this morning?
Madam President, I'm not sure at this point that I've received the document.
Well, it's too late, I guess, to really look into it. Okay, please proceed with your testimony.
Madam President and Members of Council, in brief, PGW, two and a half years ago retained IBM consulting to assist us in reviewing and evaluating our information technology and our other systems and to develop a strategic plan for the information systems that impact our critical operations. We're in the process of implementing that strategic plan and we're confident that the 58 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K replacement and enhancement of PGW's information systems that is underway will support its current business and the future business that it's in without any interruption in its operations. Mr. David Lee and Mr. Raphael Mason are here to speak in detail about the information systems and the strategic plan that we're implementing.
Thank you for the opportunity to testify. " And this is really the largest challenge, the largest systems project in the history of the information age, and all the experts agree that the Y2K transition will affect each of us. We want to assure you that PGW's committed to life and safety priorities and maintaining and enhancing our levels of customer service through the Year 2000. And we have dedicated substantial time, energy, and resources to bring our systems into compliance. While the origins of our challenge are 59 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K primarily technical, it is more accurately described as a business problem, and Y2K affects people and businesses that operate or depend on a personal or mainframe computer or chip. Y2K is also very much a collective issue. Few programs and systems exist in isolation, they interact with an individual company as well as with external business partners and customers. And given the complex partnerships that exist today, any one company's success in its Y2K effort is dependent upon the success of all other significant industry participants. So PGW has anticipated this millennium issue as early as 1996 and has a comprehensive plan in place to achieve our goal, that our systems will perform without material disruption as we move into the Year 2000. PGW's plans for preparing and testing its computer systems for Y2K compliance have been approved by senior executive team, and the project is being funded in the normal course of the company's funding and approval. Our remediation plan involves every area of business within the company. PGW has engaged outside experts, as Mr. 60 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K Martin, has noted to provide 100 percent coverage in assessment, inventory evaluation, and prioritization of all Year 2000 issues. Experienced teams, including professional managers, programmers and consultants, are working on the Y2K challenge at PGW. These teams are responsible for analyzing and remediating PGW's technology -- that is, the mainframe applications information technology assets and embedded systems in the operational areas and facilities. Several Y2K project teams are responsible for the inventory and assessment of systems, systems remediation, testing prior to implementation of remediated systems, implementation and post-installation testing to confirm the Y2K are readiness of our systems. The team is working with significant vendors, and business alliances are exploring alternatives to reduce the risk of Y2K errors and systems, which exchange data among PGW and other firms. The teams also supply project management services, internal and external communication services, risk assessment and 61 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K contingency planning, strategies for avoiding Y2K risk in connection with new vendors, internal audits, and project management metrics and support with respect to legal and regulatory issues. In addition to these operational teams, the accountability structure include an Executive Steering Committee providing senior management oversight and an Advisory Steering Committee providing tactical guidance to the operational teams. Our strategic initiatives, starting as early as 9/1/97, formed the core of our replacement strategy for our mainframe application portfolio. The portfolio is scheduled to be completed by the end of April. We are on schedule, and this provides more than 90 percent coverage of our business. The remaining 10 percent will be covered by the mainframe remediation strategy until they can be scheduled for replacement. To provide additional insurance and coverage, and inventory of our current mainframe system was completed in July of 1998 by IBM. This effort amounted to about 2 million lines of code, 62 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K the mainframe represented 100 percent vulnerability.
This effort is now completed as of February 1999, which is what we had scheduled its completion for and testing will be completed by the end of June 1999. This same process has been carried forward to all our existing IT assets. , and embedded systems. Our Scada systems, our residential and commercial meter-reading, distribution and control technology for gas vaporization and others. These assets of PGW were completely inventoried, assessed, evaluated, and prioritized by outside consultants and also completed in July of 1998. The information assets represented about 40 percent vulnerability, and our embedded system approximately 10 percent. Remediation has already begun in this area since July of 1998, with a projected completion date of the end of June 1999. In summary, our pipeline supplies, totaling about five, is regulated by FERC, Federal Energy Regulatory Commission. While PGW has done its due diligence, these suppliers are monitored 63 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K by the federal government, and we expect them to be compliant, if they are not already. Our distribution network will be prepared to provide continuous gas to the citizens of Philadelphia through system remediation as well as added storage capacity of gas in anticipation of the new millennium. Our ability to provide emergency and normal customer service will be intact with our Year 2000 Remediation Program, and emergency response planning, which will anticipate this new millennium. From a reporting and monitoring standpoint, the Executive Steering Committee and the PFMC Board will be updated on a monthly basis. The Advisory Steering Committee and operation teams meet biweekly and report on progress issues and milestone completion. Detailed tracking will be accomplished through database management systems implemented by the Year 2000 Program Director. In regards to our third-party interfaces and relationships, whether third-party vendors and businesses alliances will achieve satisfactory Y2K compliance in a timely manner is 64 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K one of the most significant issues for any Y2K effort. Our success at PGW depends on parallel efforts being undertaken by other entities, which our systems interact with. Our Y2K team is working with our business alliances to enable us to continue our business without material errors or interruptions through the Year 2000 and beyond. We are taking steps to determine the status of the Y2K compliance plans of our significant vendors from production, distribution, and retailing. For instance, we have an extensive survey to all significant vendors with whom we interact. Requesting that they report their respective level of compliance. We are exploring ways of monitoring the progress of those business-critical vendors who are still working towards achieving compliance. Both internal and external third-party testings are included in our testing strategies. The progress of testing against the plans is monitored and reported regularly to project management by internal audit and by project team leaders and managers. 65 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K Our testing is schedule to conclude in the June-July 1999 time frame for all Y2K categories, although additional testing may occur due to subsequent developments in the course of our project or external circumstances. Contingency planning will be in place by the end of June, with simulations taking place throughout the remainder of the year. A 24/7 plan, including escalation procedures for alerting personnel and suppliers, will be defined in anticipation of the new millennium coming in. That is the sum total of our testimony and how we are prepared at PGW to continue to supply gas to Philadelphia, and we would like to entertain any questions at this time.
Thank you. The Chair recognizes Councilman Rizzo.
Thank you, Madam President. The pipeline companies, you indicated that they're regulated and you believe that they're Y2K-compliant. Being that this could be in the height of your heating season, possibly a little colder next winter than it's been for you 66 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K this winter, but what are we doing as PGW to assure that the supply of natural gas won't be interrupted to our city? And I know that at one time, we had some capacity to manufacture and also store gas. How long could we survive in a cold period without a -- without a supply of natural gas from a pipeline supplier? I believe you said there's five?
Councilman Rizzo, first, I would say that we have been working with the Federal Energy Regulatory Commission, who has the regulatory authority with respect to the interstate pipelines. And the Y2K compliance project, the FERC (Federal Energy Regulatory Commission) is basically satisfied that the pipelines will be compliant and be able to supply natural gas. But that notwithstanding, PGW has a liquified natural gas plant. Through that plant, we'd be able to supply up to -- well, we'd be able to supply our firm sales customers for up to five to six days of natural gas if needed.
The issue of safety, 67 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K your technology on board your vehicles, like many other operating departments, your technology for your technicians to respond to gas leaks, and again, in the same category of safety, the odorization process where you add an odor to the gas in the event there's a leak, it can be detected by a customer, is that process all secured, your own board technology to your technicians? And also the ability to maintain a safe gas supply that can be detected by customers?
Councilman, yes, we are able to inject in various segments of our distribution system deodorant for natural gas, and we don't need electricity to do that, it's a mechanical process. With respect to the vehicles, we do have the communication system which is a wireless system, and we're pretty much confident that the communication system would be intact during that time also.
And, Mr. Lee, that's all been Y2K-tested to make sure that you're not going to be without communication to your 68 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K technical people?
Yes. And even so as when we have our emergency response plan in place, they will include manual procedures as well so that we are not completely reliant on that.
The emergency response plan, the contingency plan, which is scheduled to be completed by the end of June.
Thank you. Thank you all for coming today. Madam Chair, thank you.
Cassandra Matthews, and I would suggest she take to the testifying table whoever she thinks is necessary. (Cassandra Matthews et al. come forward.)
Is Mr. Buckley to be a part of your panel? Mr. Buckley, are you to be a part of the panel? 69 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K
Miss Matthews, identify yourself and proceed with your testimony.
Madam President, I'm Cassandra Matthews, and I am joined by Mickey Gallitola, who is our Year 2000 Director; and also Robert Farrington, who is our Year 2000 Embedded Technology Manager for the Distribution Company. I am the Vice President of Information Technology and Chief Information Officer for PECO Energy. The company, which delivers electricity to more than 620,000 homes, schools, businesses, and other consumers in the City of Philadelphia. I joined PECO Energy in November of 1996. I am responsible for the overall management of the company's computer and information technology strategy, architecture, business solutions, and services. I am here today to update City Council on PECO Energy's progress in addressing and resolving the Year 2000 issue for ongoing service to our customers and for our continued business success. I will have a short overview of our 70 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K program, summarize the program status, address completion dates and contingency plans, and discuss our joint effort with the City of Philadelphia in regard to Year 2000 activities. First, I would like to stress that PECO Energy considers its Year 2000 program to be one of the its most important initiatives, and we are committed to having all critical systems Year 2000-ready for delivery of safe and reliable utility service. We have placed a high priority on the remediation date problems in our systems and in the development of adequate contingency plans. Scheduled completion dates are being aggressively pursued, and we believe we are well-positioned to meet our objectives. The strategic intent of our Year 2000 program is to control the scope, risk, and impact of the Year 2000 roll-over while ensuring that all required work is performed in a timely manner. To that end, we limited the program's scope by retiring unneeded systems, replacing systems that do not support our current business objectives, and refurbishing others. We've limited risk by identifying those 71 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K systems that can be impacted by dates before January 1, 2000, and are concentrating on those systems with the greatest business impact and the highest degree of complexity. We've limited Year 2K impact by focussing on external interfaces and on applications used across the enterprise, followed by applications specific to a single unit or departments of the company. PECO Energy's Year 2000 Program is divided into four major sections: computer or IT systems; embedded technology -- that is devices used to control, monitor or assist the operation of equipment machinery or plants; the supply chain, which is third-party vendors; and contingency planning. The general phases common to IT and embedded technology sections are determining inventory, assessing readiness, preparing or replacing non-ready systems, and testing. Our Year 2000 organization is corporate-wide, with all divisions of the company represented. At daily leadership meetings, we review both strategic and immediate plans to ensure we meet scheduled commitment. A Big Five 72 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K accounting and auditing firm conducts quarterly assessments of our program and progress. The assessment results are reported directly to PECO Energy's Board of Directors. Now, let me provide you with the status of our activities. We have completed our entire inventory, prioritized all items that we believe are mission-critical, and determined the strategy for them. Mission-critical systems are those believed by the company to be essential for the safe and reliable delivery of electric and natural gas services and business services to our customers. The Year 2000 Program has identified 227 critical IT systems. The readiness status of those systems is as follows: 122 systems are Y2K ready and 105 systems are currently being upgraded, modified or tested.
With respect to embedded technology, again, these are controllers and other devices that monitor or assist in the operation of equipment and utilize a date-sensitive microchip. We have identified 137 critical functional systems, and I don't want that to be mistaken to 73 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K be that we only have 137 embedded components, all right? We've examined over 100,000 embedded components throughout the company. The readiness status of those systems is as follows: 66 of the embedded systems are Year 2000-ready; 66 of the systems are being modified, upgraded and tested; and 5 systems have not yet started. We plan to have all systems Year 2000-ready by January 1st -- excuse me, by July 1, 1999, except for a small number which are impacted by vendors, dates and schedule plans. The contingency planning and supply management aspects of our program are in progress. These sections are scheduled to be complete by July 1, 1999. As a utility whose business success relies on providing reliable service to customers, contingency plans play a vital role in our everyday operations. PECO Energy's current contingency plans are being modified to address how the company will respond to Year 2000 events that may disrupt normal operations. Contingency plans are being developed for all critical suppliers as well. 74 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K Additionally I am very pleased to report on PECO Energy's joint Y2K effort with the City of Philadelphia's Year 2000 Readiness Team. We are meeting weekly with City staff to develop joint contingency plans. The areas of particular interest include emergency management and communication. Our working relationship is quite beneficial. We are also working with large customers on their Year 2K Readiness programs and any concerns that they may have. We have visited almost 300 large customers as a part of this effort. We also plan to work with suburban governments. Promoting awareness of our Year 2000 corporate-wide effort is an important aspect of our overall program. We've developed a strategic communications plan for employees and customers. Internal and public communications in various forms is well underway. com; a voice mailbox number with program 75 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K status, which is 215-841-6000; brochures and direct mailings. We understand the increased public sensitivity to this issue, and we are committed to maintaining effective communications about our Year 2K Program. With respect to Year 2000 readiness for PECO Energy's nuclear facilities, let me assure you that our preparations at our two plants -- Limerick and Peach Bottom -- are focused on public safety and continuity of power. We work closely with the Nuclear Regulatory Commission (known as "NRC"), which is the federal agency responsible for monitoring nuclear plant safety. In November of 1998, the Limerick plant was audited, and the NRC audit report concluded that the PECO readiness program is, one, comprehensive and based on Nuclear Energy Institution guidelines; two, that the program is receiving proper management, support, and oversight; and, three, project schedules are being aggressively pursued with no adverse findings to the public. com. 76 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K PECO Energy also submits detailed quarterly updates to the Securities and Exchange Commission. Two nationwide Y2K-readiness drills will be, one in April and another in September. PECO Energy will participate in both drills. Similarly, the Pennsylvania-New Jersey-Maryland interconnection -- that's PJM -- which manages the day-to-day activities of the Mid-Atlantic region's power transmission is preparing regional commission plans, tests and drills in cooperation with PECO Energy and other neighboring utilities. As you can see. PECO Energy and its customers benefit from interaction with these agencies.
All utilities and their regulatory agencies are working together to achieve a smooth transaction to the Year 2000. In conclusion, it is PECO Energy's business to generate electricity and natural gas service to our customers in the face of the constantly changing technology; it has been our business for the last 120 years. And part of this business includes being prepared for adverse conditions. We plan for snow and wind storms with 77 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K extra crews at strategic locations to react to any problems that Mother Nature can cause. Likewise, even though we have a plan to make our computer-related systems ready to avoid Year 2K problems, just in case of unforeseen events, we plan to have teams in place to respond quickly. Madam President, this concludes my testimony. I will be glad to answer any questions that you or members of City Council may have. Thank you.
Is anyone else at the table, with the exception of Mr. Buckley, that wants to testify at this time?
Thank you very much, Miss Matthews. I read recently that PECO Energy performed a Y2K simulation at one of the nuclear plants and it failed miserably with a loss of power for a significant period of time. Can you please tell us or give us some assurance that necessary steps are being taken to correct such problems and that such breakdowns will not occur in the future? 78 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K
What I would like to do is address what happened at Peach Bottom. We experienced a computer failure -- it was last month during our Year 2K readiness testing. Newly installed hardware and software was set up to the test, and it was not a problem with the equipment but there were hundreds of tests that we continued to perform across PECO Energy. But most importantly for you to know is that Peach Bottom, like most power plants, relies on older control and monitoring technology that is less vulnerable to the Year 2000 problem. The upgraded systems for more modern technology are backed up in supplemental systems to the plant. At no time last month was the plant or its safety systems threatened. The plant has continued to run at full power and is unimpacted by any Year 2K problems.
We see on television quite frequently that it's being suggested that families stock up on certain types of food just in the event of a failure. Tell me, 79 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K are you personally ready in the event of a Y2K failure? (Laughter.)
No, I'm not doing anything different about the Year 2K at my home, and I really do not believe that people should succumb to the hype and fear tactics that we currently hear in advertising and on the news. PECO Energy, I believe, has been very diligent in its responsibilities and in our preparation for Year 2K. I also believe that most government officials and service-providers are doing the same. I would suggest that if individuals want to do anything, they might check their home PC's and laptops or call the manufacturers and find out if there are any devices that can avert any problems.
Thank you. The Chair recognizes Councilman Rizzo.
It appears there's a lot on PECO Energy's plate. Many of the operating departments indicated the importance of maintaining electrical service at the Y2K 80 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K changeover. Will you have extra -- obviously, there will be some attention to this. Many people take this, like you just said, that they're not going to do anything differently, but I hope PECO Energy would do something differently. What will be the staffing when this changeover occurs? Will there be extra people available to deal with emergencies that exist? I just experienced a situation yesterday with -- technology's great and PECO Energy's trying to save its rate payers, but during the recent storm, the 800 reporting didn't seem to respond well, and there were interruptions of service. So I'd like to know what you plan to do. Even though many of the executives of PECO Energy are just going to go about their life, there's many people out there concerned. Could you just describe what your strategy will be?
Yes. Our contingency plans, our upgrade contingency plans for Year 2000 will not be completed until the end of the year. And what we are currently doing is establish a 81 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K process prior to December 31st because it would be prudent to do that. We plan to have 24-hour crews available and placed at strategic locations. Some will be at the main office in the Energy Control Center, and some will be distributed out in the field, and we'll run that way -- we plan to run that way for at least two, three weeks, depending on what's necessary. Also, we're very closely linked with the City right now with its contingency plans in place that will allow us to assist the City should there be any problems in emergency services. We're also working with institutions and hospitals to make sure that they understand how they should be establishing contingency plans as well. In terms of the problems that we experienced yesterday, we are upgrading our technology to overcome that problem because it is load-related, and we have plans to increase the capacity that we have on our IVR system.
Thank you. 82 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K The Chair recognizes Councilman Mariano.
Thank you, Madam President. Miss Matthews, is PECO coordinating with organizations that provide emergency services?
Yes, we are currently coordinating -- as I said, we're coordinating with emergency management within the City. We're coordinating with hospitals as well, and we've also had special off-site external seminars for some of these institutions and work very closely with them to help make them understand what they need to be sensitive to. We've actually done walk-downs in their critical locations, and it's being defined by the City, the priority of the locations, so we have done walk-downs to look at their equipment and them give any updates we can.
Let me ask you about this. You spoke about this with Councilman Rizzo. The grid, the amount that you sell, the load's not going to be any worse the last day in December of '99 than it will be at that magic hour 83 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K same load might even be less. Who knows, look at New Year's Eve.
There's probably plans just in case everybody puts their computer on at the same time, everybody uses air conditioners, blow dryers in the City of Philadelphia, so the grid of service may be from Maine or Virginia or somewhere.
No. In this region, we have enough capacity to manage anything that you could potentially do. There is no problem with capacity in the region.
You could tell Councilman Mariano uses a blow dryer regularly. In your contractual commitment, you indicated that you have significant generation capacity right here to support our needs, but I read that you have made some very significant contractual arrangements with other utility companies especially at Limerick in the event we had a problem is your capacity designed to meet 84 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K load requirements here, contractual equipment. Or did you shed those agreements?
For contractual commitments as well as any load spikes that we have in the region, there is no problem.
Could you just comment on something that's concerning me? I had brief conversation with Ed McBride -- believe it or not, running out to Home Depot stores to buy generators to deal with this issue. A generator, if properly installed, I hope that PECO Energy would do some communication piece to caution people that they really need to know that you just can't install a generator at your facility because you're jeopardizing the safety of your peak workers, the safety of their family if they don't know how to isolate from PECO. So I would hope that maybe the communications department could put something out in the electric bills or whatever. I see so many people going out and buying these generators who just don't realize the dangers of installing portable generators at home or in their 85 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K businesses.
No, we understand and we know that you understand, based on the work that you've done at work in the safety division, that it's difficult to install a generator on their own. What we are suggesting is that any decision to purchase a generator really should be based on business needs as well as personal needs, and that a qualified electrician should do that installation so that we can add some additional information in the communications that we have to put inserts in bills. I think that would be a very good idea.
Thank you. Are there any other questions from members of the committee? (No further questions at this time.)
At this time, we want to recognize Mr. Buckley. Thank you very much. Our next witness is Dennis Buckley, Counsel to the Chairman, Y2K Coordinator of PUC. 86 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K
Thank you very much for the opportunity to appear before you today. Again, for the record my name is Dennis Buckley. And I am the counsel and also the Y2K coordinator for the Honorable John M. Kane, who is the Chairman of the Pennsylvania Public Utility Commission. The comments that I make here today are attributable to the Chairman's Office, and I had previously filed remarks and I would ask that they be accepted into the record as if I read them in their entirety. What I would like to do is talk to you a little bit about the Pennsylvania PUC's oversight and stand ready to answer any of your questions. Driving down here today and coming down the Schuykill Express, I heard one of your news radio stations ask very solemnly in tone, Will we be watching the mummers on TVs powered by batteries? No, not unless you're at a bus terminal and you're feeding quarters into those TVs. Ladies and gentlemen, I think that it's very important that everybody take a step back, 87 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K take a deep breath, and really take a hard look at the Y2K issue. I think that Ms. Matthews raised a very valid point here with her discussion about generators. I have to tell you, I had a phone call this weekend, it was my mom, and she asked, Should we go out and buy a generator? I said, Mom, what have I told you about saving your money? If you want to buy a generator for ice storms, snow storms, lightening strikes, vehicles knocking trees over, that's entirely up to you. And the comments here are correct -- you have to have somebody who is qualified to put it in. Certainly I wouldn't want my father trying to install a portable generator for my mom. But the point is that a tremendous amount of oversight and care has gone into addressing the Y2K problem. In July of 1998, the Pennsylvania Public Utility Commission initiated a formal investigation into Y2K compliance by public utilities, including the electric industry, the telecommunications industry, natural gas, and water. Now, some entities are not under the 88 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K Pennsylvania PUC's jurisdiction. You should understand that, for example, the Philadelphia Gas Works are not under our jurisdiction, but our friends at PECO our on the record saying that there are plans being made by our utilities to continue to provide mission-critical services through the Year 2000 and beyond. That investigation has concluded. The presiding administrative law judge has filed his report with the Commission and the Commission is going to act on that report and make recommendations this month, on March 31st, at our public meeting. Thereafter, the Commission's order and the judge's report and recommendation will be accessible on our Website, which Miss Matthews gave you -- www.puc.paonline.com. So you can go and read for yourselves about the readiness with our utilities. Now, I'm not a commissioner and I'm not here today speaking on behalf of all five PUC commissioners. I'm here talking on behalf of the Chairman, and it would be presumptuous and premature of me to start addressing the outcome of that information. 89 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K I can tell you that what we have seen on the public record to date is very, very reassuring. The electricity will stay on, the phones will work, natural gas will flow, and water will flow. That is the basic bottom line here. We have asked our utilities to affirmatively demonstrate that they will be Y2K-compliant by March 31st or that they will have contingency plans in place. And if exceptions are necessary, then those exceptions are for good cause shown and will be ruled on by the Pennsylvania Public Utility Commission at its meeting on March 31st in Harrisburg, Pennsylvania. What I would like to do now throw the floor open to questions and answers and would be happy to respond to any that you may have.
Thank you very much. What is your opinion of that experiment, the Peach Bottom experiment?
I think it was an appropriate exercise. The whole point of Y2K preparedness is to try these things out. When I saw the article, I kind of winced a little bit. I thought, Geez, here's a company getting beat up 90 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K because they trying to make it happen.
Thank you, Madam Chair. Mr. Buckley, first of all, thank you for joining us in Philadelphia today.
And please thank the Chairman for allowing you to come and visit. A lot of people not familiar with the utilities also winced when they saw that article 14 in the paper. They winced with concern, but knowing the utility business, I winced similarly, thinking that here they are, trying to prepare, and a failure occurs. Now, there are people not as knowledgeable as we are about the utility industry and about nuclear power, that are very, very concerned. I know that PECO Energy is prepared but we have other reactors within this area that could affect Philadelphia. Pennsylvania Power & Light, I can't keep up with all the new names of these companies. You know what I'm talking about. 91 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K
They're scattered throughout this region, so I'd like to know what the PUC is doing in concert with the NRC to ensure PECO Energy is prepared and that the other utilities are also as prepared with their reactors as PECO Energy is with theirs. Could you describe what's going on in other areas of Pennsylvania?
Certainly. I've already highlighted the interrelatedness of the systems that we have but I want to pick up on a point that Miss Matthews brought up. We have a very great advantage over other regions of the Pennsylvania- New Jersey- Maryland interconnection. This is a high transmission zone, an area that was established after the New York City blackout in 1965, for the purposes of ensuring system reliability. After the blackouts in 1965, they took a very hard look at what was taken by the North American Electric Reliability Council to address those kinds of problems, that problem of interrelatedness. So when we initiated our PUC investigation in July of 1998, we asked the staff 92 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K of PJM, which is not jurisdictional but is an interstate entity -- to cooperate with us to answer our questions in addition to the questions we've directed to other utilities as well. We had questions like, Will your systems be ready? Have you tested your nukes? We maintain a liaison with the NRC and we share information with them and perhaps one of the most critical steps is that we have retained a third-party independent contractor to do verification testing on all of the responses that the utilities have given us in the investigation, and that third-party contractor is going out right now to make an assessment to assure that what we've been told about nuclear units, oil-fired units are indeed correct.
Is the Nuclear Regulatory Commission doing something independent from the utility independent from what you described the NRC's Public Utility Commission's work? Do you have any information on exactly when the NRC is doing in reference to Y2K?
Obviously, I can't speak on behalf of the NRC, but I can tell you that we 93 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K are pursuing parallel tracks. If you will, on assessing utility compliance, and NRC has a national mandate. The NRC has a different timeline than we do; their compliance deadline is July 1, 1999, while ours is March 31st of 1999. So I do want to highlight that difference. The other item we have is a formal, on-the-record investigation; whereas I believe the NRC -- and I'm a little bit hesitant because I don't want to mischaracterize other agencies' efforts -- is using a consult type of approach.
I have a question for Miss Matthews. That July 1st date that the NRC hags given companies that operate nuclear reactors, can you tell me the status of PECO Energy's timeline to meet that date?
Yes. All of our systems in the nuclear plants will be compliant by July 1st, with the exception of one or two -- the ones that I had said had not been started. I think I had quoted that there were a total of five. There are some systems that cannot be remediated until we go through an outage in the fall. That has been reported to the NRC and they do understand 94 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K that.
How do you explain to the people watching this on television and who will read about it or hear about it on the radio that here we are, there's obviously a rational explanation. Here we are in March of 1999 talking about meeting deadlines in June, July for this year that we've had a long, long time to prepare for. Why does it appear that we're under the gun in dealing with this Y2K issue? Is it something that big business and utility companies -- and speaking for the utilities, is it something that we've had to have this timeline on, or is it something that was put on the back burner and now all of a sudden last year, it's, Hey, we better start focussing on this. Why is in April and March that we're just really starting to meet deadlines in July?
All right, in terms of our focus on Year 2000, we've been focussing on Year 2K with very large teams since January of '97. When you look at the embedded 95 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K technology, however, you cannot remediate that technology until you go through an outage or from production. So what we're doing is doing our remediation based on our regular maintenance and outage timelines, which is exactly why the timeline stretches out into the October time frame.
We're getting ready to go into one in April, and we had one in September, October. We did work then so what's happening is with each outage, we are remediating the embedded technology within the reactors. What happens is, the outage that we have in the October time frame, we've already remediated the sister unit to the Peach Bottom unit taken down in the October time frame, and we're very confident in our ability to make those modifications so we've made them at Limerick.
But there are going to be some requests to the Nuclear Regulatory Commission for some assistance?
No, that's not what I'm telling you. The time remediation at Peach Bottom is October of 1999.
By July 1, 1999 already, but we asked for an exception to get the work done in October because we didn't want to bring that unit down outside of the outage time frame.
Thank you. Any other questions? (No further questions at this time.)
The next panel is Telecommunications. We have Jeff Smith, Senior Vice President of Comcast Mobile; Dan VanOstenberg, Vice President of Information Services, Comcast Mobile; Bernie Pfeiffer, 97 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K Executive Director of Bell Atlantic of PA; Dorothy Brunswick of Bell Atlantic; and Jeff Coursen, Vice President of Strategic Development ATX Communications; as well as Renee Cohn, Legal Counsel, ATX Communications. (Telecommunications panel members come forward.)
Thank you very much. You can speak in any order you choose, but please identify yourself for the record and proceed with your testimony.
My name's Dan VanOstenberg, Vice President of Information Services, Comcast Mobile. And with me are Jeff Smith and Kyle Birch, our in-house counsel. On behalf of Comcast, I would like to thank City Council, and in particular, Councilman Rizzo and Madam Chair, for this opportunity to discuss the status of our Year 2000 efforts. Comcast provides wireless telecommunications to its customers throughout Pennsylvania, New Jersey, Delaware and Maryland. Among our customers are utilities which serve the region as well as residents and businesses in the 98 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K Greater Philadelphia area. Our product consists of analog and digital phones provided by third-party manufacturers and used by our commerce for wireless communications, switches, and cell sites. Since services provided may be vital to its commerce for ongoing communications, we recognize that it's important that the services we provide are not interrupted as a result of millennium change milestones. The need for the Year 2000 compliance in our internal system is recognized, and we are committed to compliance testing of the systems which may affect Comcast's operations. We do not contemplate problems among our billing systems and our other operating systems at this point in time. At this point in our compliance project, we have identified the key internal and external computer systems and communications elements that must be Year 2000-compliant for us to continue to provide service to our customers as well as those required to support internal operations. We also have upgraded or replaced a number of systems and are working with key vendors 99 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K towards ensuring compliance of systems. Comcast Cellular, follows four general functional areas: First, the communication network, including switching equipment, cell sites, servers, and operation support systems; Two, information technology infrastructure hardware and software communications equipment directly support daily the Comcast cellular computer network; Three, non-IT cooling systems uninterrupted power supplying electricity and, of course, heat, ventilation and air-conditioning and security systems; Fourth, billing processes, including all aspects and provision of communication services and related invoicing to our customers. Comcast Cellular Year 2000 compliance efforts are being directed by an interdepartmental committee with subject matter representatives from billing, engineering, and MIS, which encourages marketing and finance relations as needed for particular initiatives. This core group consists of contract and consultant personnel in individual 100 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K areas and meets as needed with respect to specific systems and meets as a whole. Biweekly guidelines for Year 2000 project are as follows: First, involvement by each functional group to ensure full understanding of all requirements; Second, use of both spanning and windowing techniques. The choice between these two approaches will be situation-specific based on the system itself and its nature; Third, establishment of compliance guidelines for vendors and internal applications; And fourth, the formulation of contingency plans with participation in this planning by recommended financial leaders within the company. Comcast Cellular's goal is to be 2,000 compliant by July 1, 1999, in sufficient time for the millennium. Individual elements and interoperability testing will take place before the Year 2K date change occurs, focussing primarily our attention on customer-affecting systems. 101 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K Within our communications network, Comcast Cellular's engineering department is responsible for implementation of customer products and services and the maintenance company's telecommunications, network, and digital cellular services, cellular data services, and ancillary voice mail, short messaging, and Quick Link.
A fundamental aspect of these services is the cellular telephone and the ability to operate. Cellular phones are not typically date- or time-sensitive; therefore, it's not anticipated to be a Year 2000 problem. Lucent Technologies is our most significant vendor and we're working closely with Lucent to upgrade all components of the network. According to Lucent, our current version of the cell and the executive cell processor, the networks that control call transmission and switching are already compliant so we have confidence that we have ample time for our testing. In addition to Lucent, Comcast Cellular Telecommunications Equipment, Bell Tel Labs, 102 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K Hewlitt-Packard, Sentogram, and Octel Labs have already identified current conversions to be Year 2K compliant. Over the past four years, we have every expectation that necessary Year 2000 project work will have similar success. Comcast Cellular's billing department is responsible for managing the billing information systems to assure invoicing to our customers as well as testing. In 1997, we began an internal process of inventorying and surveying readiness, which gave us the understanding of which versions of software and equipment will be needed to become Y2K compliant and what upgrades to be installed to have an environment that will allow us to establish dates when the software is available for installation. The result of this survey used compliance efforts to make sure we're addressing our most important efforts first in compliance programming. We have a full-time team of professionals assigned to this work. The Comcast Cellular Facilities Group is working with landlords and utility providers to ensure that there's no interruption to operation 103 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K due to a facilities-related issue. In terms of testing, the Year 2000 certification of Comcast Cellular includes testing at various level functions, certifying interoperability requirements and types of systems. Initial acceptance of software certified as compliant individual or unit testing of the function performed typically confirmation accurate as well as testing to confirm stable information from trade organizations, business partners, and clients at the test level. Interoperability testing within Comcast Cellular operation's next level of testing in Year 2000 program where appropriate systems or elements are tested to verify stand alone or work together properly. For example a simulation environment, where call are recorded with dates in the Year 2000 should be rated through the compliant system. For customer invoices, we plan to be testing functions beginning in April, which gives sufficient time for June 30, 1999. As the year progresses, we'll be monitoring the status of network elements on an ongoing basis, and plan to 104 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K identify critical areas in jeopardy of being non-compliant. In conclusion, Comcast Cellular has recognized the Year 2K compliance problem since 1995. Personnel compliance of those systems is critical to continue and service delivery. Still, the telecommunications arena is actually a network of networks with only a portion of this larger infrastructure under our control dependent on outside vendors. Although no plan is guaranteed to address complex issues, we have made progress to date in our commitment to success, and our current compliance status reinforces our confidence that we will continue to provide service substantially unaffected by the Year 2000 problem. That's the testimony on behalf Comcast Cellular. I'd be happy to entertain other questions.
Thank you. How confident are you that the outside vendors will be compliant?
We have a good level of confidence research behind why they believe 105 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K those dates are accurate in terms of software versions being made available to us for testing.
I'm Jeff Coursen, Vice President of Strategic Development, ATX Communications. Also represented is our in-house legal counsel, Renee Cohen, to my left.
Excuse me. Before you proceed Councilman Rizzo has a question for Mr. VanOstenberg.
I can hold my question until I hear all of the testimony and we'll get it all done at once.
We have a fivefold plan inclusive of the organization of our efforts of how we strategically planned for Y2K. The process is in place to validate that plan. The first component is organization. 106 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K We've established a Year 2000 Compliant Committee to oversee all company efforts. We have senior management of ATX Management Information Systems that are dedicated senior managers of the company and who are representing all of the departments. They meet weekly, and at the direction of a senior project manager, they monitor progress and management from each key functional area of the company. And we've developed a Website to keep customers up to date. com/y2k. Plans in the general areas of our technological operations, and the sole control of ATX is dependent in some way on one or more third parties. Several of our mission-critical network elements and operating systems have already proven to be Year 2000-compliant. For those company-wide compliance plans in place, Year 2000 goals mission-critical stems Year 2000 compliant by July 1, 1999. Like all other telecommunications providers, ATX interconnects end-to-end service to our customers. While we cannot control Year 2000 readiness of those parties, we will work to 107 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K resolve any difficulty. A cornerstone of our Y2K compliance activities is to provide products and services. As part of this program, we have prioritized and determined those that are critical to provide each service deemed mission-critical. We've asked our vendors to assess their own Year 2000 readiness by sending our questionnaires regarding their compliance certification for them to complete and return. ATX has also developed a, quote, buddy system where possible so that each vendor has a buddy with a similar service. That if the primary vendor failed to meet an area of compliance that's mission-critical, it can be managed separately to monitor compliance and testing. Process. To approach and address the situation systematically, this process involves performing inventory of company systems and determining the nature and extent of any potential problems, remediation and modification of any date conversation problems and development of contingency plans, unit testing adequately, and integration and system testing. 108 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K To integrate our ability to provide top priority, ATX assigned priority level to each network element. The priority level is based upon the impact the element or systems compliance would have on our ability to continue to provide voice and data services to our customers, plans to use multiple efforts to address date remediation fields to four-digit logically, and to physically incorporate two-digit users by prefixes with either a or a 20. 12 And, third, where necessary, replace 13 with commercially-available products ATX products 14 by issuing date-related chips and controllers that 15 are installed in electronic devices. 16 Testing and contingency plans. We've 17 established company-wide for all mission-critical 18 operations a contingency plan for each 19 department. We've developed contingency plans, ordering generators, powering systems, and stockpiling extra paper for billing. Fifth and finally, the telecommunications industry's Preparedness Network Reliability and Interoperability Council was established to advise those in the industry about 109 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K Year 2000 readiness. The goal of this council is to assess readiness across the telecommunications industry, identifying hot spots and reporting accurately on the status of industry preparedness for Y2K report. The telecommunications industry is also developing contingency plans associated with Y2K.
These contingency plans are the last line of defense in Y2K preparation across the industry, and users are responsible for taking appropriate action to ensure that services and equipment that access public telecommunications network are Y2K compliant. That concludes our testimony. I will add that ATX is providing long-distance services to the City at this point in time. Thank you.
My name is Bernie Pfeiffer, Executive Director, Bell Atlantic. My remarks are geared to a series of visuals which I had originally prepared but I will conform my remarks to more of a testimony form. 110 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K Good morning and thank you for the opportunity to speak at this meeting of the Philadelphia City Council to apprise you of the overall steps Bell is taking to address, as stated, the previously-filed responses with the Pennsylvania PUC. It is Bell Atlantic's goal to have its network and other Year 2000 systems compliant by the end of year June 1999. We believe Bell Atlantic's communication services will continue to be available in uninterrupted fashion on and after New Year's Day of the Year 2000. This includes Bell Atlantic's business-specific areas: network facilities, switching, transmission equipment, computer systems, hardware and software used in monitoring networks, as well as conducting every portion of the modern business buildings, garages, central office, etc. Bell Atlantic has underway a corporate-wide program addressing the impact of the Year 2000 issue. Our operations program, which we began in 1995, is continuing as planned. Year 2000 compliance is both a major program and we must make clear corporate 111 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K priorities and be committed to making January 1, 2000 just another day on the network. Heading this up effort for Bell Atlantic Joe Castellano, who reports directly to the chairman of Bell Atlantic. Mr. Castellano has been designated as the Program Y2K Compliance for all Bell Atlantic systems. In addition, Mr. Castellano also chairs an officer-level steering committee across the company that manages all Bell Atlantic Year 2000 efforts as well as monitoring overall progress. Project teams are in place for key functional areas of the business, details of which I'll address in a moment. These teams direct actual detailed implementation of the program. The Year 2000 Enterprise Program Office also has been established to provide staff and support to the steering committee to monitor progress and certify remediated systems. At this point, I'd like to switch to the third page of the prepared visuals. And, again, I'll go through the process that we have in place to assure Year 2000 compliance. As indicated by some of my colleagues 112 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K here, clearly, Bell Atlantic doesn't manufacture anything except dial tone. We are beholden to a partnership with the vendors that we use, over which we provide that dial tone. In addition, once assessments have been made as to whether or not particular vendor equipment is compliant, we then move on to a decision to either remediate that -- that is, to fix it -- or retire the item because it cannot be remediated in any cost-effective manner, or transfer it to other systems. Following that, we have a fairly significant program of testing, including testing of individual elements as well as integration of testing across multiple elements and across systems. This process -- and I'll describe this in a little more detail later. This process, in actuality, winds up being a fairly significant effort carried out at multiple efforts. A certification validation sign-off that the remediation is effective follows the testing. The hard part comes when you're deploying back into a network which has well over 150,000 items that have the potential to be remediated. 113 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K Following the next visual, the enterprise projects in place, many of which have already been discussed here at the table, include network elements, which, in our particular case, is in excess of 150,000 items. A total of 75 of those have been assessed as compliant, which leaves about a quarter of the items which need to be dealt with in some sort of a fix.
We have a network operational support system, and of the 514 systems representing lines of code of these, about 80 need some sort of a fix. The telecommunications group information system has 340-some-odd systems. In addition, we have programs for finance, information technology infrastructure, and facilities. I'd also like to just mention briefly the fact that unregulated subsidiaries -- Bell Atlantic Mobile International and long-distance companies -- are a part of the mix and have similar goals and similar urgencies about getting Y2K-ready. Bell Atlantic, in addition to the actual remediation and certification process, Bell Atlantic is set to make sure that in the event of unforeseen events at the time the millennium 114 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K occur, that we have people and processes in place to ensure that any problems are dealt with quickly. At this point, I'd like to skip ahead and just mention the fact that for the telecommunications industry generally, there are three or four major groups working very diligently in terms of making the Y2K transition a non-event -- at least in the telecommunications industry. One is the Telco Year 2000 Forum. A local exchange of carriers recently issued a report which details the results -- details over 1900 tests conducted by Telco on behalf of local exchange carriers. Those 1900 tests, in fact, turned up 6 problem areas identified throughout those 1900, and those 6 problem areas were addressed by the vendors and corrected and retested with no further problems. An alliance solution known as "ATIS Testing" is also at work in terms of internetwork operability. And the Telecom Industry Association, CTIA, is working diligently on behalf of the cellular companies on assurance. In addition, the United States 115 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K government, including the President's Year 2000 Council and the FCC's Year 2000 Commissioner Michael Powell also instituted a Y2K program, of which Bell Atlantic is a part, as well as many other telecommunications providers across the United States. , situated in Geneva, Switzerland is also a member. At this point, I'll skip ahead in the interest of time to some other issues and interdependencies. I mentioned before that we have embedded chips in various facilities such as elevators and security systems in buildings and garages that have a very close working relationship with vendors and suppliers. The E-911 Program that Bell has underway, the E-911 service is provided in three major components of which Bell Atlantic supplies many. The first is the actual network itself so that when a customer dials 911, he has the ability of an operator to get that call to the E-911 Public Safety Answer Point. In addition to that, there are modifications that are made in the network to provide specific routing. Those 116 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K modifications by Bell Atlantic are to be completed by the end of June 1999. The second area is an automatic location information database, which is also being completely revamped by Bell Atlantic to be ready for the end of June 1999. This database includes public safety answer points which Bell Atlantic maintains on behalf of the police and local fire departments. Bell conducted a specific inventory of each, and every one of those maintenance responsibilities and found them either compliant or have been scheduled for remediation upgrade before the end of June 1999. year2000. There are customer premises equipment that may or may not be maintained by Bell Atlantic. And private systems, when left unremediated, have the potential for having businesses who use them be left without communications, even though the public network itself is functioning properly. So we have tried to make a very concerted effort to make sure if their private networks are, in fact, not 117 3/16/99 COMM. OF THE WHOLE - RES.
980756 - Y2K maintained by Bell Atlantic, that they need to work with their vendors for compliance of their own networks. I mentioned before that Bell Atlantic is focussing on two areas. The first is customer care. Should unforeseen events which we do not expect to happen cause some serious or minor disruptions in the network, we want to be able to ensure continued customer care. And in addition, operating an emergency operation center and working with the emergency management agencies of various states and municipalities across our region. Lastly, I would also like to mention that Bell Atlantic is participating in a telephone economy and electric utility dialogue as well as participating with the North American Electrical Liability Council along with AT&T power committees in a Year 2000 mode. Lastly, just for the record, I want to indicate the level of concern and level of importance of this in our recently-filed 10-Q. Bell Atlantic expects to spend over half a billion dollars. This level of commitment is an 118 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K indication that Bell Atlantic not only looks at this as an important issue but is also very confident that at the time of the millennium that, in fact, it will just another day. Thank you.
Thank you very much. The Chair recognizes Councilman Rizzo.
Thank you, Madam President. I think the record should reflect that all of the witnesses today provide services to the City of Philadelphia. ATX provides our long-distance service, and our local dial tone is provided by Bell Atlantic Mobile Systems and Comcast. The question that I have is, I guess it's best directed to Bell Atlantic since Comcast I don't believe, at least, serves the City with this. All of our on-board computers in police vehicles are provided data through Bell Atlantic Mobile, I believe it is. Can you tell me, is there any concern with that aspect of the Police Department's day-to-day operations as it pertains 119 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K to Y2K?
I can check to find that out that information and get back to you on it. However, I think on the traditional telephone network and between and among telecommunications providers, the exchange of date information does not occur. What does occur is timing individual calls -- when they start, when they stop. But in fact, the transmission of date information does not generally occur. But in terms of Bell Atlantic Mobile's specific service to the Police Department, I have to admit that I'll have to have somebody get back to you that.
Fine, if you'll send that information to the Chair, to the President of City Council, I'd appreciate that. One of my staff submitted a question that I wasn't going to ask, but I'll read it instead to make sure I get it right. It pertains to satellites. Are the satellites Y2K-compliant?
In the emerging technology of the telecommunications industry, 100 percent of our services provided to the City are 120 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K wire-lined fiber optics or copper wires in the ground; it's not even approaching the satellite services. I can get back to you on that, if there are any specific satellite, microwave or other capabilities in the network that we can find.
You might need one. I guess that's it, Madam President. Thank you very much.
Thank you all very much. At this time, we will take a five-minute recess. Thank you. (Short recess taken.) - - - (Proceedings resume.)
We will now resume our public hearing. Our next witness is Herb Taylor from the Federal Reserve Bank. 121 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K (Herb Taylor comes forward.)
Please identify yourself for the record and proceed with your testimony.
My name is Herb Taylor, Vice President and Secretary of the Federal Reserve Bank of Philadelphia. Thank you, Councilman Rizzo for inviting me here today to talk about Y2K readiness of the banking industry in the City of Philadelphia. I am here on behalf of Federal Reserve Bank here in Philadelphia, which serves as the nation's central bank. As the central bank, the Fed has a unique window on the banking system's state of readiness for the century roll-over. People's questions about money and banking during the century roll-over are basic: Will my money be safe in the bank? Will my ATM work? Will my direct-deposit paycheck or 122 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K government benefit payment be there for me? Will I be able to get my mortgage and other bills paid on time? In short, people are asking: Will banks be prepared to conduct business as usual when the century roll-over comes? We at the Federal Reserve believe the answer is yes, based on the actions we've taken, and are taking, as the core provider of cash and other payment services. We also say "yes" on the basis of the examination of banks that we have made, and are making, as a federal bank regulator. Let me begin with our role as core provider of cash and other payment services. As the central bank, the Fed supplies banks and other depositories -- savings institutions and credit unions -- with currency and coins they need to meet their customers' demands. We also process about one-third of the checks that banks present to one another on behalf of their customers in the everyday course of business. In addition, we move literally trillions of dollars every day through electronic payment services. Large-dollar transactions involving funds and government securities travel 123 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K over our Fedwire network. Small-dollar electronic payments are processed through our automated clearinghouse. It is through this ACH network that employers make direct deposits of employees' paychecks, that the Social Security Administration and our government agencies make direct deposits of benefits payments to our senior citizens, veterans, and others. S. are processed through the Federal Reserve. So clearly, the first order of business in preparing the banking system for the century roll-over is to make sure the Fed's own internal payments processing systems are in good order. The Fed has completed that task as of the end of 1998. All of our cash and check processing systems and our electronic funds transfer systems were evaluated, remediated, and tested successfully for Y2K readiness by that time. The next step is to make sure that our electronic communications links to depository institutions will function properly so that payments can continue to flow to them in the new millennium. 124 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K The Fed began testing these links with banks and other depositories in July of last year, and that process will continue for several more months. The Philadelphia Fed has direct links to 348 financial institutions in the 3rd District -- which encompasses eastern Pennsylvania, South Jersey, and the state of Delaware. Thus far, we have tested successfully for connectivity with 269 of them. Another 30 have scheduled to test with us, and all are required to test with us by June 30th. The Fed also tested its connection with the Treasury for whom we process payments. And all of those connections have tested successfully. The bottom line is that the Federal Reserve's facilities for processing payments -- including direct deposit of payrolls and government benefit payments -- are ready to go for the Y2K roll-over. We realize that public concerns about potential problems during the Y2K roll-over will occasion an increased public demand for cash so the Fed has acted to make sure that there will be enough cash to meet everyone's needs. We ordered 125 3/16/99 COMM. OF THE WHOLE - RES.
980756 - Y2K an extra $50 billion in new currency from the Bureau of Engraving and Printing this year. This $50 billion, combined with money we already have in our vaults, will give us enough supply to double the amount currently in circulation here in the United States. And if financial institutions tell us they need still even more currency, we have several options to accommodate that increased demand. The bottom line here is that the Fed has plenty of cash on hand, and we are encouraging bank customers to order enough cash early so that they have enough in their vaults when customers ask for it. When it comes to providing cash, clearing checks, and moving funds electronically, the Fed can deliver for the banks. The next question is: Can the banks deliver for their customers? Speaking now as an agency that oversees and supervises banks, we at the Fed believe the answer is yes. The examination of banks proceed on a regular cycle. In order to assess the overall safety and soundness of a bank, examiners look at every major aspect of the enterprise. Federal 126 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K regulators began their formal oversight of banks' Y2K preparations in 1996. Bank examiners were given special training and focussed on banks' Y2K-related vulnerabilities. The list includes both those in banks' computer systems and in their automated operations -- heating systems, elevators, vault doors. It includes vulnerabilities both in banks' in-house systems and in the systems provided by outside vendors. Banks' ATM machines are on that list. What have we found? Evaluation of banks' Y2K readiness is proceeding in three phases. Phase 1 was completed at the end of 1998, and the results were extremely encouraging. Some 97 percent of the nation's banks were found to be making satisfactory progress in their Y2K preparations. They had developed adequate plans for remediation and testing of the systems, and their boards of directors and senior management were properly engaged in overseeing the process. The results of the exams conducted by our own Bank's examination staff at banks here in Philadelphia involving the banks in our district were consistent with these national results. 127 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K Bank regulators now approaching the end of Phase 2 of their examinations. In this phase, examiners are checking to see that banks are taking the remediation steps they planned, and banks must also be on target for completing their testing with the Fed and any other external service providers by the mandated June 30th deadline. And banks must be on course to complete their Y2K contingency plans by June 30th. The overall results of the Phase 2 examinations will be available nationally in May or June. Meanwhile, the third phase, Phase 3, begins on April 1st. Examiners in the third phase will concentrate on the largest national and regional financial institutions and on any institutions that are behind schedule in their preparations. The bottom line here is that banks and their regulators have been focussed on managing the Y2K roll-over for some time. Regulators are actively assessing banks' progress, and will continue to do so. And, as always, banks that fail to meet regulatory safety and soundness standards are subject to formal enforcement 128 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K actions, and those actions would be publicly disclosed. We recognize that no amount of work by banks and no amount of oversight by regulators can guarantee every transaction at every bank will go flawlessly when the century roll-over occurs. But any glitches should be localized, short-lived, and manageable. Now we come to the last link in the chain of assuring that bank customers find the transition to the new century to be a relatively smooth one: the preparations that we all make ourselves as bank customers.
The Fed joins fellow regulators, other organizations, and the banks themselves in urging people to take a common-sense approach. First, get good information and start with your bank. Your bank should be prepared to answer any questions you have about the best way to meet your needs during the roll-over. Second, take reasonable precautions. Our fellow regulator, the FDIC, recently published a handy "to-do list" for bank customers. Some of the items on the list: save your receipts from 129 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K bank transactions like loan payments or ATM withdrawals; if you do your banking at home by computer, make sure that your own PC is Y2K-compliant; and be wary of people offering products "guaranteed" to fix or prevent Y2K problems. The third step in the common-sense approach is to avoid extreme measures that will only increase your risks. Stockpiling and carrying around unusually large amounts of cash is risky business because cash is not insured against fire, against theft, or against loss. On the other hand, nobody has ever lost a penny of FDIC-insured deposits ever. One practical approached suggested in a popular Red Cross publication was to hold as much cash as you would expect a snowstorm -- timely advice this week in Philadelphia. org. 130 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K The fed in its fellow regulators and service providers have all been very hard at work for a long time to meet the Y2K roll-over challenge. We at the Fed believe that this hard work will pay off, and that the roll-over to the new millennium for the banking industry will be generally a smooth one. That concludes my remarks, Madam Chair.
Can I give a sigh of relief? I have heard so many people who have said, What do I do with my money? Do I take it out of the bank? And if I do, what do I do with it? But I'm glad to hear that we're well on the road to making certain that there will be no 17 problems. Thank you. The Chair recognizes Councilman Rizzo.
I concur 100 percent with the President's comments. I myself have heard many people suggest that they were going to withdraw their money and cash in bank certificates, which I think you alluded to, which would be devastating to cash in a security. So I would hope that the people 131 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K watching us on television today will settle down a little bit after hearing your testimony and not do anything that could be very disruptive to their finances by reacting inappropriately. I would also hope that the banking community would also work with us to assure, through advertisements or handouts within their statements to assure customers. Certainly they want to retain all customers they have. Especially some of our seniors are very, very concerned, like President Verna said, about this Y2K issue. I think today your testimony and whatever the banking community can do to communicate the fact that this shouldn't be a concern would be very, very helpful. And I thank you today for coming here, Mr. Secretary.
I agree. There has to be some communication with customers in verbal and in written form.
One of the processes that we are engaged in at this point is having banks include flyers in their statements to their customers, for example, discussing this Y2K issue 132 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K and inviting customers to ask your bank for more information and on how to proceed.
Actually,, we got one in our bank statement this month, so I expect that you'll be seeing them more and more. This was a great opportunity, and I want to thank you for the opportunity to make those words available.
Fine. Thank you very much. Next is Mr. Charles Isdell, Acting Director of Philadelphia International Airport. (Charles Isdell comes forward.)
I understand that there's a panel that will testify with Mr. Isdell. Dave Roberts from Amtrak. Do we have anyone here from the Delaware River Port Authority? (Barbara Jones comes forward.)
And Ralph Menzano, from SEPTA. (Ralph Menzano comes forward.) 133 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K
Mr. Isdell. I think you'll be the first to testify.
I'm Charles Isdell, Acting Director of Aviation for the City of Philadelphia. And I'm joined today by Jeff Shull, who's our Director of Security and Systems Technology. In the interest of Council's schedule and because the airport is actually a division of the City's Commerce Department, I would refer to the earlier testimony in terms of formal testimony that was presented by Brian Anderson, the City's Chief Information Officer. From the airport's specific perspective, we began efforts to address the Y2K problem in August of 1996. Since that time, we have been upgrading and replacing systems as appropriate to prepare for the end of this year. Throughout 1998 and up to the present, we've also cooperated with the airlines, particularly through 134 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K U.S. Airways, our hub carrier, on a survey done by the Air Transport Association, the airline trade association. We've also been cooperating with the FAA and the General Accounting Office on surveys of airport preparedness for Y2K, and we've been reviewed successfully in each of those surveys. In addition to that, as I earlier mentioned, as part of the City government, we have been working with the Mayor's Office of Information Services, the Managing Director's Office on their Business Risk Assessment Project, and we also participate now on the City's Y2K Steering Committee. Internally, the airport has identified 38 separate systems which requires some remediation or upgrade, and we have already -- we now have -- of those 38 systems are 100 percent 19 Y2K-compliant; the remaining systems will be by 20 June 30th of this year. 21 We continue testing systems. We also 22 are preparing for those contingencies which have been mentioned throughout the testimony earlier today, such as power outages that might occur that would be beyond our control. And our contingency 135 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K planning is also being coordinated with the City government. We will participate in the simulations being planned. We do emergency electrical power generator switch-overs on a quarterly basis. We're asking doing them on a monthly basis for the remainder of this year. We have not actually started that. But, in general, we feel that the airport is well prepared, and we're here to answer any questions that you may have. Thank you very much for the opportunity.
Thank you. Supposing we hear from everybody from the panel and then we could ask questions. I believe Mr. Roberts is next to testify.
I'm Steve Roberts, from Amtrak. I'm the Chief Information Officer, in charge of all the technology plus the Year 2000 which, encompasses everything from computer systems to tracks fuel to electricity. I'm the spokesman.
Excuse me? In the 136 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K schedule, right. Amtrak began our Y2K preparedness in October of 1996. We established a permanent project office that was dedicated to it at that time and continues to this day. We also hired external people to evaluate our systems. And we've actually employed two companies -- one of which is IBM -- to renovate all the systems that we have. I'm happy to report at this date that one of our main systems, which is our reservation system, which drives 100,000 travel agents in 240 stations across the country, has been taking reservations since February 6th for the Year 2000, so people are actively making reservations. So we're in business, as far as all that goes. The majority of our other systems are already back in production. We have some that are still in final testing. Final target date is the end of June to put everything back in shape. Because we actually own the railroad between Washington and Boston here, we have an engineering department which has basically been evaluating all the infrastructure or the embedded systems that we 137 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K have. And we have detail reports from them which basically itemizes all of our embedded systems, which includes things like track circuits interlocking, timers, battery chargers, crossing predictors, data recorders, engines, global positioning units. Most of them are not date-dependent. In the railroad, if you talk to anyone in the Class 1 railroads or some of the commuter lines, you'll find out that the railroad -- the equipment or the embedded systems is primarily event-driven, which means it's triggered by trains passing by, rather than by dates. For the embedded systems that do have microprocessors in them, very few of them actually have a date in them, and virtually none of them is the date used in any safety or operational consideration. Where the ones do have it, which is basically dates that are used for recording events, it is primarily a logging function, and all of those have been inventoried. The few that need attention are receiving it, but we really see no safety-related or operational concerns in our embedded systems. 138 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K In addition to that, we run a fairly large network across the country, communications to all our offices. We work with IBM, who is responsible for it, and mainly all of the infrastructure looks pretty good. We've looked at all of the telephone systems, the computer networks and so forth and so on, and they appear to be on track for the Year 2000. In addition to that, we, as everybody else here in the hearings here, have been working closely with the power companies up and down the corridor here. We're quite confident that the power grid looks pretty good, as you've heard here today. We are making certain contingency plans with upper management and the operational people to play the "what-if game" -- if the worst happens, what would we. We have both electric and diesel engines in the systems since outside of the corridor, we're exclusively diesel. And we're looking at some of the nuances of that primarily in the New York City area, where we have some restrictions on us. Fuel is -- we've had a detailed analysis of our fuel situation and talked to all 139 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K of the suppliers. Most of the fuel is actually gravity feed; it's not highly dependent upon any computer systems to fill up the fuel trucks. The facilities. We are doing a detail review of all the system inside of there -- which is the elevators, the air-conditioning, those kinds of things. Many of the facilities are leased, so we're in contact with our landlords across the country. By the nature of the beast known as "the railroad," our normal day-to-day, minute-to- minute operation is based on safety and getting the public moved around, especially in the corridor here.
So there are mandated work rules that we have that have to do with if the switch freezes in the wintertime, which it does; if a backhoe cuts through some power, which it does on our system. So there are embedded procedures in place to handle all of those contingencies. We've pretty much looked at after our review of all these plans and details that, you know, Y2K, if there's anything that happens, will just be another day on the railroad. But not to kind of leave that the way it is, we are going 140 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K ahead with some additional contingency planning. We also intend to, later in the year, set up a training program for our staff to basically review those operating procedures that are in place. I'd be happy to entertain any questions.
Thank you. I believe our next witness will be from the Delaware River Port Authority.
I'm Barbara Jones, the chief Administrative Officer of the Delaware Port Authority. With me today is Steve (inaudible), conceive our Director of Technology and Management Information Systems. We are here today representing our chairman, Manuel Stamitakis. And Councilman Rizzo, Mr. Stamitakis asked us to extend his appreciation to you for inviting us to participate in this hearing. The Delaware River Port Authority of 141 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K Pennsylvania and New Jersey is a bistate agency that owns and operates four bridges connecting Pennsylvania and New Jersey: the Commodore Barry, Walt Whitman, Benjamin Franklin, and Betsy Ross Bridges. Through its subsidiary, the Port Authority Transit Corporation, it operates the PATCO High-Speed Line, providing rail service between Lindenwold, New Jersey and Philadelphia, Pennsylvania. The Port of Philadelphia in Camden is a DRPA subsidiary that promotes regional port development. Additionally, the DRPA supports and promotes economic development throughout southeastern Pennsylvania and southern New Jersey. The DRPA, PATCO, and PPC have been well aware of the Year 2000 issues for quite some time. " Essentially, that guide outlines five-phased process that consists of awareness, assessment, renovation and conversion, validation, and implementation. The following describes what the DRPA, PATCO, and PPC have done in each areas: 142 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K Staff began an awareness campaign last year. An internal steering committee representing all facets of our operations was formulated and charged with the responsibility of monitoring Year 2000 progress and taking steps to assure that the organization moves towards compliance. Thus far, our awareness efforts have been internally focused, providing information to staff, commissioners, and directors. The steering committee meets periodically, and monthly status reports are provided to commissioners and directors. The DRPA, PATCO, and PPC understand the seriousness of the Year 2000 problem and its potential adverse impacts, and we are working diligently to minimize our risks to the greatest extent possible. In the assessment phase, we worked with our hardware and software vendors to define potential areas of risk and the options for minimizing or limiting those risks. DRPA determined that its hardware and most of its software was compliant. Three software applications were identified as non-compliant and 143 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K targeted for replacement. PATCO determined that all of its mission-critical systems would be compliant upon the replacement of its Unisys A-4 mainframe, and that hardware was targeted for replacement and replaced in January of this year. PPC determined its hardware to be compliant and identified two software applications to be replaced. Essentially, DRPA, PATCO, and PPC assessment revealed their information systems to be compliant. As problems were uncovered, upgrades and patches were identified and applied to ensure Y2K compliance. , a Boston-based consulting firm to further assist us in determining potential risk. Law Risk is working with the DRPA, PATCO, and PPC employees to determine our Y2K readiness and technological, business, and legal risk. Law Risk has provided us with an assessment and recommendations in areas 144 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K such as key business relationships, contracts, insurance, financial services and systems, facilities, utilities, etc. Our overall Law Risk assessment revealed that we are in pretty good shape and have made great strides towards compliance, but we still have a few areas to concentrate on within the next few months to further minimize risk. "Renovation" is defined as the phase in which code is actually changed to become Y2K-ready. Conversion involves modifying product components and business applications to become Y2K-compliant.
In this phase, the work to correct Year 2000 projects is actually carried out. The DRPA, PATCO, and PPC have upgraded applications programs, firmware, operating systems, and hardware over the past year. The problems identified during our assessment phase have been rectified or are scheduled to be remedied by the end of this month. PATCO, and PPC have completed their conversions; DRPA is still scheduled to replace two packages. The validation phase involves actual testing. Complete systems are tested, using 145 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K software specifically designed to test for Y2K problems. DRPA, PATCO, and PPC have tested and continue to test their hardware and software systems. Most testing has been done by staff. PATCO also utilized the services of a consultant to assist in verifying that all of their code sources are compliant. I would add, however, just as the gentleman from Amtrak did, that PATCO's system, in terms of train operations, is not date-sensitive. To date, all testing has gone well. Neither DRPA, PATCO, nor PPC have experienced any problems or system failures to date. January 1, 1999 was targeted as a potential date on which to expect Y2K-related problems. Fortunately, we did not encounter any such problems. Testing and validation is expected to be complete at PATCO by March 31, 1999; DRPA and PPC will complete testing and validation May 28, 1999. Additional testing as required will occur throughout the year. The final phase is implementation. In this phase, tested systems and applications are put back into production. As the DRPA, PATCO, and 146 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K PPC complete the phases outlined above, once a system is tested and no errors are found, it will be immediately put back into operation. In summary, the DRPA, PATCO, and PPC have worked toward achieving Y2K compliance for over a year. We have identified areas of potential risk and attempted to eliminate those risks. Over the next several months, we will continue our testing efforts and put contingency plans in place to assure our Y2K readiness and minimize the risk of our services being interrupted on January 1, 2000. We will do all we can to continue to provide safe and efficient transportation services well into the new millennium. That concludes our testimony, and we're prepared to answer any questions.
Thank you. Our next witness is Ralph Menzano, who is the Chief Information Officer from SEPTA.
That's correct. Thank you. Good afternoon. Thank you for allowing me to appear here in front of City Council. In January of 1997, I was working for 147 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K Chase Manhattan Bank in New York, and we had put a lot of effort into the Year 2000 already. And I had to come back to Philadelphia, where my roots are -- I was born in South Philadelphia, went to school at St. Joe's Prep in North Philadelphia, went west to Villanova University, and I'm glad to be back here and helping the City with its Year 2000 efforts.
You've done a great job with the place. It's a beautiful city once again. SEPTA had a late start with the Year 2000 effort. When I came on board, it had not started, although the board of directors had vigorously pursued the topic. I have provided you with materials that are a presentation of sorts as well as our official Year 2000 Readiness Disclosure. Everything that I will say here are included within that handout. In spring of '97, we actually started the project. The Board of Directors provided the initiative, and we started to get funding. By 148 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K summer, we did an assessment -- or an inventory, really, of all of our systems. We came up with 195 systems that we needed to validate and see if they were Year 2000-compliant or not. By fall of 1997, we had to provide money to the project. The board of directors awarded $3 million. It has since been expanded to $5 million for the project. By winter of 1998, we actually started work on the project -- that is, to change code and to check all of these systems. Right now, we're tracking 349 systems from the 195 that we started with. The difference is, the traditional systems where code is involved can't be calculated. You know, you have millions of lines of code and dollar per item. But we did not take into account embedded systems -- that is, processors and signal switches, elevators, escalators and the likes, and now we've added those to our inventory. As of this point in time, we are compliant for most of our critical systems. We are 80 percent complete in the total project, and our General Manager, Jack Leary, says that on 149 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K January 1, 2000, the train might be the best place to be. You know, January 1, 2000 is a work day for SEPTA. Even though that's a Saturday, it's one of our biggest days of the year in terms of ridership, and we're proud to say we will be ready. I agree with Amtrak's Steve Roberts that the train systems are definitely ready to go. We were together at the Federal Railroad Administration meeting, and that was the general feeling amongst all the railroads -- Union- Pacific, Wisconsin Central, you name it, CSX, they all agree that the trains are ready to go for the Year 2000. We do worry about things like grade crossings and wayside equipment that measure events, but all of those are triggered by non-date issues. So we're ready for the railroad. We do have some things that we need to cover -- things like fare boxes and turnstiles. For example, in a fare box, you have a logic board, and on that logic board, there is a chip. That chip in and all of our fare boxes today is not Year 2000-compliant. We have a project where 150 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K we're taking each logic board out, replacing the chip, and putting it back in. It's 1500 fare boxes, and we'll get that done, but it's a time-consuming evident, but at least we've recognized it. " But you'll note that that system is date-driven and time-driven, and we will have ready for the Year 2000 as well. So we're not tracking just January 1, 2000. In my handouts, I have a series of dates that we're tracking that all of you should be aware of. Besides January 1, 1999, we're also looking at April 9, '99, this coming April, where the electrical systems will be tested nationwide. We're very interested in the results of that test. We're tracking September 9, '99 -- or in systems terms, it would appear as 9/9/99, a date field that many programmers used in the olden days of ten years ago. 151 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K We're tracking, of course, December 31, 1999, January 1, 2000. We'll look very carefully at February 29, 2000. Well, why is that important? Well, it's because uses a tertiary rule of the Gregorian calendar. The first rule is that every four years is a leap year.
But the second rule is that if that leap year is an end-of-century year, it is not a leap year; except if that end-of-century year -- and this is the third rule -- is divisible by 400, which the Year 2000 is. So the Year 2000 is a leap year, February 29th does exist. But back in 1900, 1900 was not a leap year, so it's a very interesting occurrence, and we wonder if our systems are smart enough to handle that. So when we test our systems, we're testing for that date as well. One other date. You mentioned, Councilman, about mobile communications and satellite. We're also interested in August 22, 1999. That is the date when many of the satellites will change their calendar and their clocks, and we did have to make a change in many of our mobile data terminals for our paratransit 152 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K vehicles and for our transit police systems. So you were right to be concerned about satellite communications. And I'm ready, as everyone else, to answer.
Thank you very much. You all gave very good testimony. The Chair recognizes Councilman Rizzo.
Thank you, Madam Chair. As you just stated, the testimony was complete, and I have no questions of these witnesses. Thank you.
Fine. Thank you all very much. Rob Giacopetti, Counsel for the Delaware Valley Health Care Council. (Mr. Giacopetti et al come forward.)
Good afternoon. Please identify yourself for the record.
Council President Verna, Councilman Rizzo, and members of City Council, my name is Robert Giacopetti, and I'm here on behalf of the Delaware Valley Health Care 153 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K Council, which represents and advocates more than 160 --
I'm sorry, could you pull the microphone closer to you, please.
I am here on behalf of the Delaware Valley Health Care Council, which represents and advocates for more than 160 health care organizations in the region. Joining with me today are Patricia Harsche, Fox Chase Cancer Center; Loretta Lawler, Temple University Health System; and John Rooney, of the University of Pennsylvania Health System. DVHC of HAP and its members are committed to taking whatever steps are necessary to prevent potential Year 2000 problems from interrupting the delivery of quality health care. We appreciate this opportunity to update you today on our efforts. As others have discussed this morning, the potential for problems across society is tremendous. Nearly every area of activity is affected -- electric grids, banks, stock markets, shipping, and health care. No segment of the 154 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K economy can afford to ignore the possibility of disruption on January 1st and afterwards. Hospitals and health systems face the same types of concerns as most other organizations. Cellular phones, pagers, security systems, elevators, and heating systems can all be affected by Y2K problems. However, hospitals are distinctive organizations, and in addition to numerous disruptions that could emerge at any organization, there are several unique Y2K concerns specific to the delivery of health care that I will address today. The practice of medicine is increasingly dependent on the use of technology. The reliability of technologically advanced medical devices and equipment is crucial to the delivery of quality care. Ensuring that all medical equipment is Y2K-compliant is a priority for all of our city's hospitals. In addition to being reliant on high-tech medical equipment, delivery of quality health care is also very dependent on the adequacy of sufficient medical supplies. Should Y2K problems prevent adequate distribution of medical 155 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K supplies to hospitals, the access to quality care for patients could be adversely affected. Many organizations that rely so heavily on supplies to perform their mission can prepare for this possibility by stockpiling; hospitals cannot, for three reasons: First, many health-care supplies have expiration dates and cannot be stockpiled. This is especially true for pharmaceuticals and blood products, which have limited shelf life. Second, widespread efforts to stockpile these supplies with longer shelf lives may create widespread shortages. Third, hospitals in this region operate on thin margins and do not have the resources at their immediate disposal to stockpile supplies. For fiscal year 1996, data compiled by the Pennsylvania Health Care Cost Containment Council illustrated that approximately two-thirds of the City's general acute care hospitals operated on margins less than 2 percent of net patient revenue. Perhaps the greatest difficulty associated with hospitals' and health systems' 156 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K preparations for potential millennium problems is a dependency of suppliers upstreamed to provide adequate information about Y2K compliance of their products and services. Additionally, hospitals and health systems are vulnerable to possible financial disruptions from third-party payers. As mentioned earlier, hospital margins are thin. A severe Y2K disruption in claims processing could hinder a hospital's ability to pay suppliers, meet its payroll, and thereby affect the quality of patient care. For example, most hospitals and health systems in Philadelphia receive roughly more than half of their revenues from public programs such as Medicare and Medicaid. If that much revenue were to be cut off because of Y2K failure of claims processing and/or payment by either the Health Care Financing Administration or its fiscal intermediaries or carriers, hospital operations could be seriously disrupted.
The same concern would apply if one of the Delaware Valley's major health insurers experienced widespread Y2K troubles that slowed their processing of claims. 157 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K Further, the ability of hospitals and health systems to provide quality patient care is not only dependent on vendor and payor Y2K compliance, but also in the possible increase of demand for services that could be generated as a result of other Y2K and crises in the community. Individuals who cannot necessary medications at home, widespread failure in home heating, and industrial equipment malfunctions would result in an in emergency department visits and hospitalizations from associated health problems and injuries. Increased demand on inpatient service this time of year could put a significant strain on the region's health-care delivery system. To help address these concerns, disaster planning is an integral part of the region's health-care delivery system. Hospitals have in place disaster plans designed to manage a wide range of problems in our communities. Hospital disaster plans are continually revised and improved to be able to accommodate any number of occurrences that could range from a severe weather condition, a major transportation 158 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K catastrophe, or terrorist attack. For example, DVHC has collaborated with the area leadership of the National Disaster Medical System to form the Philadelphia Local Emergency Planning Committee's Hospital Subcommittee. The goals of this committee include creating a forum for discussing and promoting joint disaster planning activities among Delaware Valley hospitals and local agencies, as well as heightening awareness of the potential for disasters that would go beyond the capability of an individual hospital. This committee will consider Y2K issues and the implications for hospitals in our emergency medical system. And I also offer the resources of this committee to Council in future consideration for Y2K planning. Hospitals and health systems are committed to ensuring that patient care is not disrupted on January 1, 2000 and are making the financial investment needed to see this mission through. What exactly are the costs of Y2K compliance and health care expected to be? The American Hospital Association estimates that the average hospital, with 100 to 300 beds, of which 159 3/16/99 COMM. OF THE WHOLE - RES. million to ensure compliance. Much of the money hospitals will need to spend on Y2K compliance will be spent this year. For our communities, Madam Chairman, this expense couldn't come at a worse time. The immense challenge of ensuring Y2K compliance for hospitals comes on top of a series of financial pressures that include declining Medicare reimbursement brought on by the federal Balanced Budget Act of 1997 that will reduce payments in this region by approximately $1 billion. HealthChoices, the State's mandatory managed-care program for Medicaid patients in Philadelphia has also resulted in a decrease of patient revenue. Further, hospitals are caring for increasingly uninsured and under-insured City population. DVHC of HAP believes that hospitals and government agencies, utilities, financial organizations, and others in the community must work together to meet this challenge. While hospitals have been working on this issue for some time, we hope that all key parts of our regional 160 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K infrastructure are conducting internal risk assessments, inventories of potentially affected systems, and the development of contingency plans while working closely with community partners at each step. Obviously, the best approach to manage potential disruptions on January 1st is to anticipate them. Specifically, it is incumbent upon hospitals to prepare now to respond to the potential loss or disruption of any essential hospital process or service.
These efforts need to be directed both internally across the hospitals' facilities, and externally in the broader community. This would include working with such entities as utility companies, emergency medical services, government agencies, and other health-care providers. The area's hospitals and health systems look to City government to help facilitate this process of coordination between City services, utilities, and health-care organizations, and we applaud the action of Councilman Rizzo and City Council of convening this hearing.
Thank you. 161 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K
To date, DVHC of HAP is taking a number of steps to inform, educate, and our assist our members with Y2K compliance, which I will not go through but which are included on the written testimony. The initiatives undertaken by DVHC complement programming offered at the nation level -- by the nationwide level of the AHA. And together, we have been working to make sure that hospitals and health systems are informed, educated, and have assistance in Y2K contingency planning. And at this time, I'd like to introduce my colleagues to discuss specific the Y2K initiatives being undertaken at City hospitals and health systems. I thank you for this opportunity and I will be available to answer any questions following the remarks of my colleagues.
Thank you, Madam President and Councilman Rizzo for this opportunity to speak. I am Pat Harsche, Vice President of Business Development and Regulatory Affairs at the Fox Chase Cancer Center, and I chair the Y2K Steering Committee. 162 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K Fox Chase has been engaged in Y2K 2000 planning for the last five years in order to assure the continuity of our core business operations and key support functions. We've dedicated staff in a center-wide effort to ensuring that we will be absolutely ready -- and I can assure you that we will be. We build on a high-tech infrastructure that is natural for a national cancer center, and so our Y-2000 efforts parallel the system of upgrading our technology that would be natural in order to continue our business operations. It is a dynamic process, it is ongoing. Nearly every month, we install major new systems to support science and medicine, and we ensure during that process that they are Y-2000-compliant. We've established an internal Website to provide staff at Fox Chase up-to-date information on resources on all computer assets, and we have a vibrant and healthy communication process -- not only with staff but with members of the board and the community. We have focused on five main areas: our administrative and research computing, our 163 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K financial operations, our patient-care operations, building systems, and utilities. And in addition to our hardware, software embedded systems which are on campus, in house, we are also looking at those vendors in our value chain, many of whom you've heard speak today: medical and drug suppliers, third-party payers, banks, and so on. We're concerned as well about our key suppliers and were very relieved to hear the testimony of the water, electric and gas utility providers this morning. All managers, laboratory heads, and physicians have been consulted regarding Y-2000 matters. And we're working with, among others: the Commonwealth; the Hospital Association of Pennsylvania; the Joint Commission on Hospitals; a variety of Y-2000 databases, many of whom you've heard about this morning; outside vendors to test and patch our systems; and our colleagues at Jeanes Hospital, with whom we share a campus which is a part of the Temple University System. So where are we? We've inventoried all assets in all of our focus areas. All vendors and suppliers of our hard and software have been asked 164 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K to certify Y2K compliance, and when we haven't received that certification -- and we have not from a number of vendors -- we've gone ahead and tested their equipment anyway. We are now at 98 percent compliant for all systems, and all critical systems are 100 percent compliant. Contingency plans have been formulated in all critical areas in the event of equipment breakdown, failure of hardware or software, failure of key utilities to provide power or water, or failure of payers to transmit payment. Disaster planning at Fox Chase is built on a long history of disaster planning with our sister organization, Jeanes Hospital, and so we have a long and healthy history of understanding what can happen during a disaster. The hospital staff are educated and included in all aspects of contingency planning at every level, every individual. What kinds of contingency questions are we asking? We're wondering what do we do to ensure electricity, water and heat, what do we do in the event that there is a breakdown? How do we safeguard patients in the event of a 12-hour 165 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K failure, a 24-hour failure, a 48-hour failure? Will distributors with computerized inventory management systems be able to deliver medicines and supplies? And as has been noted, we're not depending upon those inventories; we're taking a look at what we can do in order to put in supplies ahead of time to be safe.
What steps should we take to safeguard patients in the event that critical supplies are not available? How do we pay our bills and meet our payroll in the event of payer breakdown? I can tell you that we have detailed contingency plans in answer to all of those questions. Insofar as our reliance on the City, we would hope and congratulate City Council in convening this effort to take a look at public information, traffic control, and public safety and the supply of water and gas, and we're grateful for your ongoing activities. This concludes my testimony. I'll be happy to answer any questions at the proper time.
Thank you. Perhaps we can hear from the next person to testify, and then we'll ask questions. 166 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K
Good afternoon, Madam President and Councilman Rizzo. My name is Loretta Lawler. I'm the Assistant Director of the Year 2000 Project, from Temple University Health System. Temple University Health System consists of Temple University Hospital, Temple Children's Hospital, Episcopal, Jeanes, Temple Lower Bucks, Neumann Medical Center, Northeastern, Temple Physicians Incorporated, Elmira Jeffries, and Northwood Long-Term Care facilities. Temple University Health Systems is committed to the delivery of high-quality and high-value health services. In support of its commitment, TUHS has formed a project team to coordinate the Year 2000 compliance efforts of its participating hospitals and other entities. This System-wide initiative began in January of 1998. A major component of our Y2K readiness is our reliance on products and services that are required for manufacturers and suppliers outside the health system. The following steps describe Temple University's strategy to determine and achieve readiness: We've provided an inventory of all 167 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K date-sensitive systems, which includes -- without limitation-- the following: all computer hardware, software, operating systems (both mainframe and PC-based); network hardware, software, and operating systems; communications systems; systems interfaces; biomedical equipment; environmental equipment, such as air-conditioning, heat; safety-related equipment, security and fire systems. We've also implemented a change management strategy to ensure the ongoing accuracy of this inventory. As far as our strategies, we've assessed manufacturer Year 2000 readiness via direct correspondence with the manufacturers, the information gleaned from manufacturer Internet sites, by contracting with third-party consultants for independent product assessments, for information provided through industry and government-sponsored resources such as the FDA. We've also targeted specific testing on selected equipment and systems within our health system. We've ranked and performed remediation based on the number-one priority, which is patient safety; and secondarily, institutional viability. 168 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K We've identified and assessed critical business partners whose potential and ability to provide contracted services could directly impact our operations. And, again, we've heard from several of those today -- utilities, government agencies, and other critical suppliers. We also are working to identify alternate sources and potential on-site storage and generation capabilities as part of our ongoing contingency plans. We've incorporated Year 2000 compliance provisions in all contracts for the purchase of goods and services. We are also reviewing each site's contingency and disaster plans and are implementing appropriate changes to ensure preparedness. We also provide awareness throughout the health system with informational newsletters, a Website, posters, and awareness events at each of the hospital locations. The current status is, we are in the process of ongoing testing and remediation. The biomedical and facilities components and systems will be Y2K-ready by July 1, 1999. We have already identified and remediated several 169 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K information systems, applications, and systems. We will be completely finished by October 31, 1999. Some of the problems that we've encountered on the journey specifically in the area of dealing with vendors and manufacturers of various equipments and systems are matching the exact vendor information to model numbers that we have; locating vendors who have, as a result of mergers and acquisitions, changed names. Many vendors still do not have reliable information available for some of their equipment. And we've identified the need and are making plans within our project team to provide ongoing monitoring of compliance information.
As far as contingencies, as part of our overall review and update of our business continuity plans, we are developing contingencies for backup generation, assuming the possibility of up to a three-day power outage, as well as contingencies for water supplies and pharmaceuticals. We are also evaluating the readiness of our major suppliers and critical business partners and are preparing contingency 170 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K plans accordingly. Our most pressing concerns are around the availability of critical business partners to supply the critical services we discussed today -- electric power, water, telecommunications, fire and police emergency services, waste management, government funding, pharmaceutical and laboratory services. We appreciate again the actions that Councilman Rizzo and the City Council have taken to provide this forum today. We ask that you continue to heighten the awareness of this issue and balance prudent action versus some of the media hype that's surrounding this issue. We also suggest that public information be made available similar to the information provided through the Red Cross regarding prudent preparations Year 2000. We'd also encourage a citywide initiative that would include the City of Philadelphia, PECO, the police and fire emergency, telecommunications, and area hospitals to provide an ongoing forum to coordinate efforts and contingency plans. 171 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K Thank you again.
Thank you very much. Do we have anyone else to testify?
Fine. Thank you. Are there any questions? (No questions.)
Robert Eckert, Senior. (Robert Eckert, Senior comes forward.)
Mr. Eckert, before you start testifying, I just want to say that I want to thank everybody for their patience today, and I think that everybody's testimony was really very good, and I know that it's going to help us go a long way. And I do want to thank Councilman Rizzo also for insisting upon a public hearing on this 172 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K issue, and I think that it has proved to be very, very interesting. And I want to thank you again for your patience. Please proceed.
Madam President, good afternoon. My name is Bob Eckert, and I am the Chief Executive Officer of both North American Networks and its sister company, I-BOB Internet Services, and I'm here today representing the Northeast Philadelphia Chamber of Commerce. We are both a computer manufacturer and a tier-one nationwide Internet service provider. It is truly an honor and a pleasure on my part to address this distinguished Council today on the subject that is a difficult problem for both the general public as well as the business community. My presentation this morning will address both the business community, focussing -- will address the small-business community, small- to medium-size businesses in the Philadelphia metropolitan area. I was impressed with the testimony today from some of the larger corporations and the rigorous programs that they've embarked on and the 173 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K achievements that they have made to date on the issue of Y2K compliance. It was very impressive. Larger businesses are generally more specialized, and it was apparent in the compliance requirements anyway, and they have devoted considerably time, money, and resources -- and other resources to the resolution of the problem. Small businesses, on the other hand, are -- do not have these kind of resources available to them, nor the time and personnel to devote to resolution of the problem. Yet, collectively, the impact of Y2K on that community is considerable, both in terms of employment and economics, so I will address the small-business community issues. The issue is a simple one, yet very complex, due in part to its pervasiveness. It resulted from a common practice of using two digits to represent the year, a practice that was first started in the 1800s by the accounting community. When programmers in the early '60s wrote their instructions for computers, they used logic in their design that depicted by the last or least two significant digits, omitting the two 174 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K century digits, or most significant. However, we aren't talking just about very old systems alone. Many systems sold up to 1996 may have some type of problem, and those sold after '96 similarly could have a problem with Y2K compliance. The Year 2000 issue is, though, not just a large system problem. Most small businesses incorporate PC's from one degree to another. PC's have unique characteristics that must also be addressed. In addition, embedded systems must also be looked at in many organizations. Many businesses underestimate the effects of supply chain also on their business operations. These factors must also be considered. Starting today, businesses must stop thinking of this just as a computer issue; it's really a business issues. If a business is not prepared for Year 2000 transition, that business could fail. It can't simply hand the issue over to its computer people and tell them to come up with a solution; it must implement a business plan approach to address every aspect of the issue. By addressing the Year 2000 now, a 175 3/16/99 COMM. OF THE WHOLE - RES. S. businesses will fail due to the Year 2000 compliance issue. S. may fail due to the Year 2000 issue. Further, up to 82 percent could have problems with their mission-critical system, yet only 50 percent have done anything about it to date. These are staggering statistics and indicate the severity of the problem in the small-business community. By aggressively preparing, a company sends a message to its customers and suppliers that it is ready to meet the Year 2000 challenge, a position that could attract new business as well as enhance its competitive status in the marketplace. There is no within single remedy and no silver bullet to address the issue. Every business and issue is unique. The only way to approach it is to implement it through a plan to take action. We don't have 15 months left in the Year 2000.
Indeed, if my memory serves me correctly, I saw in the post 176 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K office that we have 240 days, but who's counting? That's the nature of the problem, who's counting correctly as we transition to the Year 2000? The Y2K issue is everywhere, including in PC systems. In a large business that relies on PC's for field tracking of information or spreadsheet analysis or their business is tracked on one, they may be at risk. Spreadsheets may contain date-related data in non-date fields. This can cause major problems when sorting or comparing dates, and these problems can start occurring today. The good thing is that solutions are available, but they won't come to you; you must seek them out. There are numerous automated tools available to fix the issue; some are free of charge. If you install the tool prior to the Year 2000, it automatically addresses the issue. Most are easy to install and relatively inexpensive. These tools are very effective, unless they are inadvertently removed from the system prior to the Year 2000. If for any reason you should reinstall any portion of the operating system, you should verify that your Year 2000 fixes are still 177 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K installed and operating. This is prior to the transition to the new millennium. Businesses must become educated about this problem. The Small Business Administration, for example, has schedules near-term Y2K educational events in the Philadelphia and West Chester area, and I bring this as an attachment just for information to any parties that may be interested in learning more about the subject in a forum or environment. These events take place March 29th through April 1st of this year. And as I said, I have a copy of that. gov/y2k, and that also links to many other vendor sites that provide Y2K information. com, also provides very useful information on the entire subject. These are places that are readily accessible to the public. Having recently gone through a mini Y2K compliance exercise in our own company, I felt that it would be beneficial to share that experience, as we are a small business, and many of the problems and experiences we had might be 178 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K very helpful to other small businesses. In an Internet service industry such as ours, there are several mission-critical real-time applications that potentially could be impacted by Y2K. For instance, we routinely process Internet traffic; that is data packets and e-mail. We host Websites on our servers that are accessed on the Internet in real time, and we provide dial-up and dedicated Internet connections for businesses across the area. Our approach to the Y2K problem was accomplished as follows: One was awareness or assessment of our business and processes. We looked very long and hard at all areas of our business and its associated processes and identified major functions such as accounting, payroll, customer billing, customer database, and Internet service computers and components. The second phase was to develop a plan to evaluate each of these areas to determine and verify Y2K compliance. In some cases, we determined this could not be done by direct testing, particularly with the embedded systems and processors; while in other instances, 179 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K verification could be done readily. The third phase was to begin testing. And we performed specific tests on each of our servers to determine if the Y2K problem even existed; and if so, to what extent as much as was practical to do. m. and shut each one down and allowed it to transition through the midnight hour into the new year 2000. We turned the systems back on and observed that they booted up properly, and allowed them to run and produce reports that we could verify that the accuracy of the data, and more importantly, the time of them. And we could manipulate that data on a time basis accurately.
We currently tested unit servers. We have a Windows NT server, Window '95, and Windows '98 operating systems in our office. All of these were tested. The unit servers were no 21 problem they are the ones that do radius authentication, I don't mean to get too technical here. I'm sorry if I am.
But they do radius 180 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K authenticating and they do e-mail and they also host Websites. They're the primary functions of those where the business applications are done in a Windows '95 and '98 environment. The network is Windows NT. These are common operating systems and common to -- a lot of small businesses use them. So what we did and what we found out would be very useful to any small business having them. All of our -- as I said, our Windows NT servers are not yet Y2K-compliant, as we're working to Microsoft's schedule. You can visit their site on the Internet and obtain the various packets of Y2K software patches and download them to your computer for implementation. The fifth packet on the Windows NT server is expected to be released in the second quarter by Microsoft, and it's not yet available, so therefore, there's only a beta version there, so we're waiting till that's released officially. Okay, in addition to testing the various operating systems and real-time applications, we've proceeded to address work station applications -- specifically Microsoft 181 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K Office '97, and this is not uncommon in small businesses again. This is a bundled software package Microsoft that includes Microsoft Word, Microsoft Access, Power Point, and Excel Spreadsheet. To achieve Y2K compliance, we discovered we had to download SR-1 from Microsoft. This is another patch; and again. It is free from their site, and it can be found at www.microsoft.coms/office for the Office '97 product. The last remaining area that we addressed in the Y2K compliance was that part of our system which was not directly under the control of the application and software or operating system and the subject of embedded systems. From a practical standpoint, we do not have the resources and time that we would like to have ti evaluate each of these systems individually; but rather, we took an approach of going back to the manufacturer to verify Y2K compliance, which is something I think small businesses would opt to do. In summary, all businesses need to take 182 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K a proactive approach to work with suppliers and customers, both to see that they're prepared to handle Year 2000 compliance. And starting now, businesses can develop alternate plans if necessary to minimize any impact. And that's pretty good advice. Are there any questions?
Thank you for being here since very early this morning. I appreciate that very much. His testimony was very informative.
Especially talking about some of those home systems. I'm sure that people watching this on television will appreciate that.
Well, all of it applies to home systems and to small businesses alike. 183 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K
Tarren Gaddy, from Red Cross. (Tarren Gaddy comes forward.)
Good afternoon. Good afternoon, Madam President and members of City Council. This will be very short and sweet. I am Tarren Gaddy, Community Education Program Coordinator in Emergency Services at the Southeastern Pennsylvania Chapter of the American Red Cross. I am happy to be here today to represent the Southeastern Pennsylvania Chapter in addressing the Year 2000 computer issue for the City of Philadelphia and its surrounding counties, including Montgomery, Chester, Bucks, and Delaware. Our testimony today is to put forth our commitment to the City of Philadelphia that we will be there to respond, be it Y2K or every day. For more than 100 years, the American Red Cross has been on the cutting edge of disaster 184 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K relief, helping people to prevent, prepare for, and cope with disasters and other emergencies. We were there 100 years ago, and we will be there tomorrow and beyond the Year 2000. The American Red Cross, a humanitarian organization, led by volunteers and guided by its Congressional Charter and the fundamental principles of the International Red Cross movement will provide relief to victims of disasters and help people prevent, prepare for, and respond to emergencies. The American Red Cross response to disasters, such as hurricanes, floods, earthquakes, and fires, or other situations that cause human suffering or create human needs that those affected cannot alleviate without assistance. The American Red Cross is a support agency responsible for mass care, and we will work in conjunction with local City officials if large emergencies occur as a result of the Year 2000 computer complications. We will help to open and manage shelter sites for those evacuated or displaced by a disaster, and provide meals and snacks to families and to emergency workers in 185 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K impacted areas if the need arose. The Red Cross also lets people know about other available community or government resources and helps those needing long-term recovery assistance when other resources are not available. On an everyday basis, we provide common sense, preparedness, education, and awareness information regarding Y2K and other emergencies and disasters to the general public through our Community Disaster Program. Thank you our community disaster education program. That concludes my testimony, Madam President. I would like to thank Councilman Frank Rizzo, Jr.'s office for inviting the American Red Cross here today. Thank you.
Thank you. And may I say publicly that I think that the American Red Cross has done such a magnificent job for years and, as you say, will continue to do it for many more years to come. Thank you very much for coming in.
Yes. 186 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K
Just to add to what you've said, I've experienced just recently in my neighborhood two emergencies involving fire. And I'll tell you, what a difference with the American Red Cross there to give aid at an apartment complex fire on Stenton Avenue. Those folks were just without -- didn't even have a toothbrush and emergency prescriptions. And it was just nice to see personally how this organization made a difference in so many people's lives, and I want to thank the American Red Cross and all the people that --
And they do that throughout the City. And, as I said, I just had to publicly applaud you. I think they do a magnificent job. Thank you again.
Ron Weikers? Is there anyone else here to testify on this resolution? UNIDENTIFIED AUDIENCE MEMBER: Yes. 187 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K (Ron Weikers comes forward.)
Good afternoon. Madam President, I would like to thank Councilman Rizzo for inviting me to attend today's hearing. I would also like to thank the City Council for its attention to this important matter. My name's Ron Weikers. I am an attorney and I handle software litigation matters in federal courts across the country. I regularly speak on the topic of the Year 2000 problem and have just written book about Year 2000 litigation, which will published by West Group at the end of this month. Today I will speak about two issues. I have more extensive testimony which I'd like to submit for the record. (This testimony was not submitted to stenographer and, therefore, not attached.)
Today I'll just cover two issues: one, real world instances of harm that have already been caused by the Year 2000 problem; and two, pending Year 2000 litigation matters and 188 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K the potential legal implications for the City of Philadelphia. By my testimony, I hope to convey the following message to this esteemed Council: First, harm has already occurred as a result of the Year 2000 problem and additional harm is readily foreseeable. Second, it will be less expensive for the City to remediate the problem before it occurs rather than to litigate it after it occurs. I'd like to cite a few examples of real world harm: In Australia, on January 1, 1999, some hospital defibrillators and patient monitors experienced date-related problems, causing them to cease. In Canada, notices of fines for traffic violations were sent out to 300 drivers. The notices indicated that the violations occurred 100 years in the future, that the drivers were convicted 100 years and month in the future, and that failure to pay the fines may result in suspension of driver's licenses, liens on houses, garnishment of wages, arrests around the year 2100. England. Supermarket scanners are 189 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K currently rejecting use by bar code dates, the bar code dates that say that you must use certain perishables, which indicate the Year 2000. This is already occurring as well in South America. In England, a loading dock crane locked up when its embedded chip thought that it was overdue for an inspection. In Hong Kong, January 1, 1999, a computer system used by the harbor master to track the movement of vessels crashed. In Illinois of 1998, a University of Chicago hospital billing system prevented patients' names from being entered for a day because the system was unable to project months 16 into the future, as it had been programmed to do. 17 In Maine, in 1995, a Portland insurance 18 company's list of brokers with whom it does business was destroyed as a result of the Year 2000 problem. In Michigan, in 1997, a computerized point-of-sale cash register crashed whenever credit cards containing expiration dates after 1999 were processed, repeatedly preventing a produce store from completing sales. This 190 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K resulted in a lawsuit. Currently Visa, the credit card company, receives roughly 100 to 150 reports per months of other date failures. In Missouri, on January 1, 1999, the unemployment insurance system, which automatically projects claim eligibility forward by one year shut down completely due to Year 2000 compliance. In Nebraska, software that's used by large credit-card dispute resolution company would not accept expiration dates after 1999. This also resulted in a lawsuit. In New York, on January 1, 1999, employees of an insurance company were locked out of their offices due to a non-compliant security access system. Also in New York, computers that print automobile inspection stickers with two-digit year fields were unable to print stickers that expired in the year 2000. Instead, they printed stickers with the year '91 on them, causing a number of people to receive tickets as they drove around with their uninspected cars. In New Zealand, a smelting plant 191 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K suffered a million dollars in damages. In Oregon, the state's Office of Risk Management ran a report for its self-insurance reserves, which resulted in gibberish. In Oregon, in Portland again, in 1997, the Water Bureau's inventory management system failed when it attempted to project water inventories into the Year 2000. Also in Oregon, in the year 1998, a county's budgeting system rejected data that contained the Year 2000.
Now, in Pennsylvania, in the mid-1980s, the Philadelphia Police Department's own computer system, which automatically deletes parolees' records after their parole has ended erroneously deleted the records of parolees who were given a 20-year parole term because it appeared to the computer that the parole terms had ended decades earlier. Thus, the City of Philadelphia was one of the first entities to become aware of the Year 2000 problem in real terms. A Pennsylvania mortgage company 30 years ago started experiencing the same problems when they were issuing 30-year mortgages. 192 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K Also in Pennsylvania, in 1998, approximately 75 hospitals suffered a shutdown of their computer system when dates after the Year 2000 were entered. Also, as the Council is aware, the Peach Bottom facility suffered a problem when they were running Year 2000 testing. Now, all those instances which I just mentioned were actual Year 2000 failures. The testing is obviously of concern because of the loss of the monitoring capability, which is what occurred at Peach Bottom. In my opinion, it's kind of like driving a car that's fully functional but without looking where you're going. I'm sure that the Peach Bottom situation is unique, won't occur again in the Year 2000, and that everything will be resolved normally. But it's a sign of things to come. Most of the problems that will occur will not be catastrophic; most will be headaches. For example, you may find that your thermostat just dies unexplainably. And I'll skip to a couple more examples. United States, nationwide, January 1, 193 3/16/99 COMM. OF THE WHOLE - RES. 2 million federal employees crashed, and it caused almost 100,000 prescriptions to be rejected until it was fixed about a day later. Finally, in outer space, experiments that are being remotely conducted on two orbiting satellites will be halted due to Year 2000 problems with their Japan-based control computers. So in sort, the Year 2000 is coming, we've seen that harm has already occurred, and additional harm is readily foreseeable -- again, not catastrophic but of the headache type. What are the pending Year 2000 litigation matters, and what are the potential legal implications for the City of Philadelphia? Well, as explained before, there are tens of millions of computers and tens of billions of embedded systems in the United States alone. Many will fail due to the Year 2000 problem, but the exact number is unknown. Some have estimated that it will collectively cost over one trillion dollars to fix the Year 2000 problem in the United States alone, and that number's pretty accurate. For those Year 2000 problems that are 194 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K over looked, however, it has been estimated that over $10 trillion in legal damages will result, $3 trillion of which will make its way into attorneys' pockets. Now, as I stated earlier, litigation involving non-compliant software embedded systems has already erupted. And 39 lawsuits have been filed, of which are still pending. There are 10 also a number of cases that have not been brought 11 to the public's attention. 12 Of the 19 cases that have been 13 resolved, only 7 were disposed of in court; 6 were 14 dismissed due to lack of harm -- that is, in those 15 cases, the software hadn't actually crashed yet. 16 One case was dismissed based on the party's 17 contract; the judge found that the contract waived 18 warranties. Another case was decided in 19 Pittsburgh by an arbitrator in favor of the 20 defendant because the party's contract specifically did not provide for Year 2000 remediation work. Eleven cases, however, were settled, and they were outside of the court system without going to trial. These settlements, however, came 195 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K at a substantial cost to the defendants.
Each case was settled for hundreds of thousands of dollars, and that amount does not take into account attorneys' fees, which were probably also in the range of hundreds of thousands of dollars for each case. Now, the legal theories, as discussed earlier by City Solicitor Franklin-Suber, include tort claims, such as negligence and breach of contract claims. Now, these legal theories are very important to the City of Philadelphia when it comes to the Year 2000 issue. Negligence in the Year 2000 context is the failure to take reasonable precautions to present harm resulting from Year 2000 failures. For example, if a number of cities have spent considerable sums of money on making sure that their utilities, police departments, fire departments, housing services, and more are compliant, then it may be unreasonable if the City of Philadelphia fails to do the same in any particular instance. And it may result in a negligence claim. Also, breach of contract in the Year 196 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K 2000 context is the failure of a party to continue to provide a service or working product beyond December 31, 1999 when it has agreed to do so. For example, if the City of Philadelphia has expressly or implicitly promised to deliver utilities to its citizens and companies within its boarders after the year 1999, but the City fails to do, then this may lay the groundwork for a breach-of-contract claim. Now, the City of Philadelphia may be immune from liability from some claims under Pennsylvania sovereign immunity laws, and those are 42 Pennsylvania consolidated statutes 8541. The City, however, is not immune from liability for certain types of negligence and breach-of-contract claims -- in particular, also under Section 42 Pennsylvania consolidated statute Section 85-42, the City may be subject to liability for negligent acts involving, among other things, damage to personal property and bodily injury resulting from utility services that are in a dangerous condition. The city may also be liable for breach of contract such as the failure to provide various types of services, like 197 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K the provision of utilities, police protection. Fire protection. And much more. Regardless, however, of whether the City is or is not protected by any sovereign immunity, the City may indeed find itself a defendant to a number of lawsuits resulting from City services that were not provided or were improperly provided as a result of the Year 2000 problem. The result will be that the City may spend large sums of money on defense attorneys and it may spend even larger sums of money on settlements or damage awards. This may directly impact the City's financial coffers. This may also indirectly impact the City's bond rating and cost of borrowing money if sometime during 1999, the City's found to be in a poor state of Year 2000 readiness by any other credit rating agencies. From the testimony today, however, it doesn't sound, however, like that's the case. At the moment, there is one bill 23 pending in the Pennsylvania General Assembly which attempts to provide sovereign immunity to the Commonwealth and to municipalities specifically 198 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K for negligent acts that fail to prevent Year 2000 harm. I spoke with the senator who had proposed that bill last week, and they informed me that a hearing was held in October of last year and that they expect that it will move shortly onto the Senate floor. I am not hopeful, however, that this legislation will be passed, and the City should not act as if it will get passed because 38 states have proposed similar legislation, but only 7 have passed such laws. S. Senate is also considering legislation that limits but does not absolve liability. It should be noted that the Information Readiness and Disclosure Act, also referred to earlier by City Solicitor Franklin-Suber, does not limit liability for Year 2000 failure.
There is no such law that would protect the city at the moment. In short, the City must remediate and it must remediate quickly for two reasons: first, it will be less expensive for the City to remediate rather than to litigate; second, the City should remain vigilant to prevent harm to its citizens, harm that may result from a foreseeable, 199 3/16/99 COMM. OF THE WHOLE - RES. 980756 - Y2K technologically simple problem. Thank you.
Thank you very much. Did you want us to make all of your -- I don't know if you read your entire testimony, and I don't know whether you want us to give it to the stenographer.
I will submit it by e-mail later to Councilman Rizzo' office in its entirety.
That's fine. Thank you for your patience. This will conclude the public hearing for today, and we will continue the public hearing until the call of the Chair. Thank you all very much. (Adjourned at 1:42 p.m.) - - - 200 C E R T I F I C A T E I HEREBY CERTIFY that the foregoing proceedings of the Council of the City of Philadelphia of Tuesday, March 16, 1999, were reported fully and accurately by me, and that this is a correct transcript of same. RE: COUNCIL COMMITTEE OF THE WHOLE RESOLUTION NO. 980756 __________________________________, JOSEPHINE CARDILLO, Registered Professional Reporter