One of the most critical issues the Internal Revenue Service (IRS) faces this year is the need to make its computer systems Year 2000 (Y2K) compliant. The IRS has developed a strategy that details a comprehensive set of actions to be executed during the rollover period between the last days of 1999 and the first days of 2000. It calls for the IRS to designate key personnel to implement checklists affirming that essential support functions and business processes are performed as required.

Early in the development of this strategy, the Century Date Change (CDC) Project Office was charged with the responsibility of overseeing and coordinating the development of specific staffing plans to identify the number and skills of employees and contractors who will be needed to work during the rollover period. These Business Resumption Teams (BRTs) will be an integral part of the execution, monitoring, responding, and reporting phases of the strategy.

The objective of our review was to evaluate the IRS’ progress in preparing for the rollover period and beyond. We determined whether staff and contractors had been identified and whether procedures for the rollover period had been developed.

Overall, the IRS’ efforts have been effective in developing and implementing a strategy for the rollover period and beyond and should reduce the risks associated with the Y2K event. The CDC Project Office has played a key role in developing and implementing a strategy to invoke the procedures in the Business Continuity and Contingency Plan.

However, several issues still need to be addressed. During the November 20, 1999, rehearsal, management identified the following concerns:

• Inventory integrity continues to be a problem. Equipment assigned to certain locations could not be found, or equipment was not on the inventory listing.
• There were capacity problems, causing slow access to the system for input.
• In some cases, the reporting system was not completing form updates and was losing submitted data. This caused completed milestones to show a status of incomplete.
• There was some confusion in the field as to what point in the process a trouble ticket, which is the official record of a reported system problem, is to be entered into the system. Current procedures require this to be done prior to a milestone being missed so the problem can be addressed as early in the process as possible.

These issues must be addressed prior to the rollover period, to ensure all equipment is updated to accept the century date change, and to enable the reporting of milestone completions during the rollover period. The rehearsal did establish, however, that the reporting system does work, personnel in the field were, in most cases, able to complete their assigned tasks, and their progress could be tracked. The system also identified positive events as well as problems in completing assigned milestones.

As of November 23, 1999, the project office had developed general guidelines for the business owners, who are the executives responsible for the agency’s core business processes, in establishing the BRTs and for reporting problems during the rollover period. However, staff had not been assigned to the BRTs in all locations, and specific procedures for identifying and reporting Y2K problems had not been fully developed.

Any more delays in identifying the staff for the BRTs, and the specific procedures to identify and report problems, increase the risk that the IRS will not be able to respond quickly to problems identified during the rollover period.

It is critical for these teams to be in place and fully prepared prior to the rollover period, to ensure that key IRS functions would not be suspended should core business systems fail. Quick and effective responses to such scenarios are essential for the Y2K conversion to be successful.

Management is already addressing the problems identified during the rehearsal exercise. We recommend that the CDC Project Office take an even more active role in preparing for the rollover period. In addition to developing and distributing general procedures to the business owners, the CDC Project Office should assume full responsibility for following up to ensure that all staff and specific procedures are in place for the Y2K rollover activities.

Management's Response: Although the IRS’ official response was not available as of the date of this report, we incorporated comments provided by the CDC Project Director. He provided an update on actions regarding the problems identified during the first rehearsal exercise. Improvements have been noted in the second rehearsal exercise. The IRS will conduct a third rehearsal to ensure that all organizations have reported in during the exercise. In addition, the CDC Project Office will confirm contact points for 24 hours a day, seven days a week access to management and technical staff for each site during the rollover period.