Vanity Fair article Part Three

Luring programmers was only the first step, however. Then followed months of inventorying, analyzing, and repairing, and an equal number of months testing the results. At each stage, the size of the problem grew. One U.S. bank thought it had 60,000 PC.'s; on second look, it came across 50,000 more. At General Motors, where there were two billion lines of computer code and 100,000 outside suppliers-any one of which could shut down the assembly lines-most executives believed that there would be no Y2K troubles on the factory floor. Then a new team came in and. found what were described as "catastrophic problems" at every plant. 'With each new discovery, costs spiraled. 'While watching his company spend $500 million on Y2K fixes in 1997 and 1998, AT&T chairman and C.E.O. C. Michael Armstrong said, "They were given an unlimited budget and they managed to exceed it."

But money alone was no guarantee. of success. On average, every 7 out of 100 software repairs produced a new computer error. The fixed 2000 deadline was also trouble, since only one in five major software projects ever finishes on time. Then there was something called the "Crouch-Eclilin Effect," which, if valid (about that, opinions were divided), could cause a fully fixed computer to randomly switch dates, wipe out data, make wrong calculations, and perhaps not start up at all.

That was not the end of the problems. In a once-every-400-years exception within the Gregorian calendar; 2000, unlike 1900, 1800, and 1700, is a leap year--a fact programmers had neglected to tell their electronic charges. Some companies have already learned this the hard way. A New Zealand minerals-processing plant, for instance, discovered an unplanned for extra day in 1996. Production lines stopped, the liquids hardened, and by the time everything was straightened out nearly three quarters of a million dollars in damage had been done. Halfway around the world, a similar glitch turned away 50,000 people who wanted to play the Arizona lottery. To add further vexation, the F.B.I., according to the New York Post had turned up yet another Year 2000 threat: the Mafia. Sniffing ill-gotten gain, organized crime was recruiting Y2K technicians to plant "trapdoors" in computers, which at an opportune moment would funnel corporate funds into Mob accounts.

Capitol Hill also began to stir. In the House, California congressman Stephen Horn's Subcommittee on Government Management, Information, and Technology began assigning preparedness grades for federal agencies. The first report card, released on July 30, 1996, was "not something you'd like to take home to your parents," Horn said: "F" for Labor, Energy, FEMA, and Transportation (whose chief was indifferent to the problem); "D" for Veterans Affairs, NASA, Justice, Interior, HUD, Health and Human Services, Agriculture, Commerce, and the E.PA. (none of which had any action plan, or any estimate on how much a fix would cost). On the Senate side, Robert Bennett's Y2K subcommittee was having trouble getting straight answers. "People lie to us or they refuse to talk to us," he said. Referring to his attempts to raise awareness abroad, he later said, "I've met with C.E.O.'s of major foreign corporations, pleading with them to get involved with this. And I meet with blank stares.... Nobody cares."

Y2K, meanwhile, was looking more and more like a job for the Sorcerer's Apprentice. The first new mess was the discovery that virtually all the 400 million desktop computers in the world-including the 100 million used by U.S. business-were century-bugged as well. Cleansing each would require only a few hours. The catch was that some companies had strung together tens of thousands, and a glitch missed in one could infect all the others.

In 1995, British engineers found that microprocessors-the dime-size "embedded chips" contained in everything from escalators to microwave ovens-were Y2Ksusceptible as well. The good news was that less than 10 percent of them carried dates, and of those only a fraction would have problems. The bad news was that there were at least 30 billion embedded chips around. the globe, and no way of telling which were at risk without checking all of them. And that would be tricky, since many chips contained .dates for no reason (though this made them no less dangerous). In other cases, identical chips functioned differently-one Y2K-secure, its twin anything but. Testing did not ensure a sound sleep, either; as some chips would function fine through the millennium, only to fail years later.

The last quirk was the killer: most chips were so ingeniously tucked away that they were impossible to fix. Instead, the equipment they ran-whether a $5 toy or a $119,000 medical imaging device had to be replaced. When the various problems were totaled, the cost of making the world safe from chips was put at $300 to $600 billion, more than the price tag of the entire Vietnam War, according to Merrill Lynch.

Not until 1997 did word of this disaster-in-the-making reach the United States. "No body thought of it," says David Hall, senior computer consultant at ACS Technical Solutions in Chicago. "[Microprocessors] don't look like the stuff with flashing lights you see at IBM, and they don't look like the PC. sitting on your desk. It's hard to realize if you don't work with them all the time, these things actually run off software." When the message was finally delivered, during testimony before Horn's sub committee, Ann Coffou, a senior manager with the Giga Information Group, sketched Armageddon: elevators halting, 911 services collapsing, pacemakers failing, water pipes bursting, fax machines stopping, weapon systems switching on. "The overall effect on the economy worldwide," she said, "could be monumental."

As if to underscore the warning, reports of trouble began appearing. At a Boston bank, so severe were the Y2K glitches in cash-advance terminals that all of them had to be junked. Meanwhile, visa, MasterCard, and American Express waited more than a year to issue cards that expire in 2000, until they could be sure their point-of-sale machines would accept them. That, at least, was only an inconvenience. During a Y2K test at a manufacturing plant, a flawed chip switched a pressure-monitoring system to default, which could have blown up a steampipe. Identifying the source of such mishaps wasn't easy. In a Y2K test that could have led to the shutdown of a power plant, the trouble was traced to a single chip in a temperature sensor located in a chimney. Reflecting on the food that might go undelivered, the heating oil unpumped, the electricity ungenerated-all because of bits of silicon smaller than a postage stamp. --Dr. Leon Kappelman has said, "This isn't the inconvenience part where your paycheck comes a few days late. This is the blood-in-the-streets part."

But the White House was serene. "We have a high degree of confidence that the important services and benefits will continue through and after the new millennium," said O.M.B. official Sally Katzen, the administration's Y2K' point person, in September 1997. "It is my expectation that when we wake un on January 1 in the year 2000 the millennium bug will have been a non-event." Counters Maryland congresswoman Connie Morella, who co-chairs a Y2K task force, "It's the American concept that if there's a computer problem, we don't have to worry.... Bill Gates or someone will come up with a magic bullet."

Microsoft's C.E.O. and chairman had no such plans. Y2K was a mainframe problem-and a "pretty simple" one at that-he told the press after hosting a "summit" of 100 industry C.E.O. 's in May 1997. All anyone needed to do to solve it was to move off of mainframes and onto PC. systems (which, happily enough, run on Windows).

Critics noted that Windows 3.0, 3.1, and 95 all needed fixing. But Gates wouldn't give ground. "There is no problem with programs," he insisted, turning the blame onto those that use them. "There is no problem with PC.'s and with packaged software." As for the alarm Y2K was generating, that, Gates said, was the fault of those who "love to tell tales of fear." Not that he seemed to mind. Thanks to the worries about Y2K, be said, the personal computer industry could expect "a little bit of a windfall."

These comments infuriated Y2K experts. "He's not only slowed the whole effort down by a year," Y2K consultant William Ulrich says of Gates, "he's also guilty of having the problem and downplaying it. Sin on top of sin."

Finally, in March 1998, after Jason Matusow, Microsoft's Y2K strategy manager, admitted that the company's having been "slow in addressing this issue" was "a mistake," Microsoft erected a Web site listing Y2K-related issues with dozens of products. "It's surprisingly complex. for something that seems so simple," Gates's lieutenant later said. "The issue is not in any one component. It's the mix of components that's so dangerous."

The same was becoming increasingly clear in Washington, where, at a number of agencies, progress on Y2K moved backward. The Agency for International Development, for one, had been given an "A" on Horn's list report, for announcing plans to replace its. entire computer system. Now, A.I.D.'s grade had. dropped to "F" because the computers it bought were not Y2K-compliant. These troubles, though, paled in comparison to those of the Federal Aviation Administration .(F.A.A.).

The problems began with arithmetic. According to the F.A.A,, it would meet the Y2K conversion deadline with time to spare; according to the data on which it based the claim, more than 60 percent of its computers would not be running on New Year's Day 2000. The F.A.A. also appeared to have difficulty determining when employees would retire, since the official appointed to work on Y2K had recently done just that. Lethargy was also an F.A.A. vice: by February 1998, its work on Y2K had fallen seven months behind schedule.

Worse, 34 of the 100 F.A.A. systems on which the flying public's safety depended would suffer "catastrophic failure" if not re paired. And that would be tricky, because IBM said the computers were so old, it would not fix them. "What is contingency planning for the F.A.A.?" asked Yardeni. "Binoculars?"

White House computers hadn't been fixed, either, and as yet no one fully knew their readiness for the year 2000. Frustrated, Horn cornered Clinton at the summer 1997 congressional picnic. "Look," he said to. the president, "you've got to give leadership. The person you most admire is Roosevelt. And his most famous phrase is 'We have nothing to fear but fear itself.' You need to explain that to the American people in a fireside chat." Clinton promised he would, and Horn sent him Y2K materials. But that was their last contact. "Normal Clinton behavior," says Horn. "They play this game of going right to the edge." Having gotten nowhere with Clinton, either, Morella turned her attentions to Gore, lobbying him during a December 1997 White House reception. "I want the president to say something," she told Gore, "and we should have a [Y2K] czar." She added that he would fit the bill perfectly. "It's hard to find the time," Gore said jokingly. "Why don't you do it?"

Finally, in February 1998, Clinton signed Executive Order 13073, which set up the Council on Year 2000 Conversion, a high level group that was to help fix the government's "mission-critical" computer systems some 7,336 in all. The man in charge was O.M.B. Deputy Director for Management John Koskinen.

Announcing that he would personally demonstrate his confidence in the nation's electronic systems by flying from New York to Washington millennium New Year's Eve, Koskinen went on to say, "There is no indication at this time that there will be major disruptions for the American people."

Others weren't so sanguine. Within weeks of Koskinen's appointment, the General Accounting Office (G.A.O.) issued a report saying that only 35 percent of the government's "mission-critical" systems -- those that the departments cannot function without--had been fixed; at the current pace, it was highly dubious the rest would be finished by 2000.

The press, for its part, lambasted the administration. "When it's time to talk technology, Vice President Gore never seems to be at a loss for words," wrote Stephen Barr and Rajiv Chandrasekaran in The Washington Post "But when it comes to the Year 2000 computer glitch, arguably the nation's most pressing technological problem, Gore has been strikingly silent. There have been no public speeches, no 'town hall' meetings, no photo-ops with programmers."

The O.M.B. was also sounding the alarm, and so was the nonpartisan G.A.O. "No one is in change," the G.A.O.'s top computer scientist, Rona Stiliman, told a Y2K conference. "In essence," she said, "our entire way of life is at risk."

On July 14, 1998-two years after receiving Moynihan's letter-Clinton at last spoke up. "Any business that approaches the New Year armed only with a bottle of champagne and a noisemaker;" he declared during a daytime address to the National Academy of Sciences, "is likely to have a very big hangover New Year's morning." What exactly would happen, Clinton didn't claim to know. On the one hand, he said, "the consequences of the millennium bug, if not addressed, could simply be a rash of annoyances, like being unable to use a credit card at the supermarket." On the other, "it could affect electric power, phone service, air travel, major governmental service." Whichever; he was going to ask Congress to pass a law or two to do something about it.

Almost as Clinton was speaking, the Department of Defense was admitting that of the 430 mission-critical systems claimed to have been fixed the previous November, only a quarter actually bad been. "Anyone who dared report anything besides [compliance]... was worried," said D.O.D.'s Y2K chief, William Curtis. "That's because we shot the messengers."

Other agencies were also hedging the truth. A G.A.O. audit found that 15 of the systems that the Agriculture Department claimed were Y2K-ready were, in fact, only dreamed-about projects. But the F.A.A. appeared to have been honest about some things-such as admitting that it didn't know whether its new computers were Y2K-compliant-and made the extraordinary claim that it had done 14 months' worth of Y2K repairs in 6 months' time.

The gathering dismay put House Speaker Newt Gingrich in a mellow mood. "Year 2000 is a total downside risk for Clinton and Gore," he said. "If nothing goes wrong, they get no gain whatsoever. If [government computers] crash and burn. Mr. Information Superhighway has a real problem and will get a lot of heat."

As 1998 wound down, every silver lining Y2K seemed to be accompanied by a darker cloud. The government, by most reckonings, seemed to he doing better (even if the F.A.A.'s new software was losing aircraft at O'Hare), and Charles Rossotti's worries had eased enough that he could now say that key I.R.S. systems would be Y2Kcompliant by January 1999: he admitted nonetheless that I.R.S. machines had sent taxpayers bills for $300 million. But fears were growing for the private sector, where preparedness was woefully laggard for small and medium-sized companies, and even more so for those overseas, where the situation in some developing countries was of such gravity that Joyce Amenta, who was then the United Nations' director of information technology, was warning of bank panics. trade ruptures, and civil unrest. Koskinen adds, "We are in a high-wire balancing act. We've got to get people to take a serious problem seriously. On the other hand, one of our risks is. overreaction.... I need to give people the facts as we know them. I won't speculate that the world is coming to an end."

Chris Dodd wouldn't, either. But he'd seen and heard enough to know that there were three places where no one should be come New Year's Eve: "In an elevator; in an airplane, or in a hospital." Bennett-whose daughter had decided to fill her garage with food, on the assumption that, after 2000, none would be available-was only marginally more optimistic. "Of course the power grid is going to work," he said, during a Y2K Risk Assessment Task Force public forum. "That's based on the assumption that the telephones will work, and that's based on the assumption that the power grid is up. The banking systems are going to work just fine, so long as all the telephones work and as long as there's no brown-out problem on the power side. And the health-care system is going to work just fine as long as the financial system works. It's all so interconnected, we're not going to know until we go through it whether it will really work or not."

Whatever happens, the pity is that Grace Hopper will not be around to see it. The "Grandmother of the Computer Age," as she was known, once said that she hoped to live until the year 2000. "I have two reasons," she said. "The first is that the party on December 31. 1999, will be a New Year's Eve party to end all New Year's Eve parties." And the second? "The second is that I want to point back to the early days of computers and say to all the doubters, 'See? We told you the computer could do all that.'"