Year 2000 Problem: Disclosure Obligations and Impact

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Year 2000 software corrective work requires a considerable programming effort of examining tens of thousands, even millions, of lines of source code (software code readable by a human programmer) to locate and correct every two-digit year date. Although the costs of corrective action vary from company to company, it is not unusual to find reports of approximately $1.15 per line of source code to correct the date field problem. Further, computer experts advise that no "silver bullet" exists to correct the year 2000 problem.(1) There is, therefore, apparently no way to circumvent the huge investment of time and money that is required and no way to extend the final deadline of 11:59 p.m. on December 31, 1999.

Although it appears that any firm or institution can become year 2000 compliant if it starts corrective action soon and devotes sufficient resources to the effort, year 2000 experts advise that the effort begin now rather than wait any longer. There is an all-too-real possibility that delays may result in insufficient time to complete all the required reprogramming work.

Year 2000 Corrective Cost in the Billions

Private Sector. The Gartner Group has estimated that the cost of correcting the year 2000 problem worldwide is approximately $300 billion to $600 billion.(2)

In a recent industry analysis, J.P. Morgan Securities, Inc., has estimated, based on its own research, that the cost approximates $200 billion.(3) The cost for software code changes, whether by an internal team or by an external technology resource, is not all of the expense. The post-fix costs of parallel testing, additional fixes, retesting, and possible new test bed equipment are sizable parts of the costs as well.

Public Sector. The estimated cost of correcting all the affected computer systems of the federal agencies is approximately $30 billion.(4) It is likely that state governments also have substantial year 2000 problems, since state governments also are significant information technology purchasers. In fact, the governments of 46 states, 6 cities, 3 counties, and 2 school districts have greater annual revenues than Dow Corning, which ranks as number 500 on the Fortune 500 list.(5) For example, New York City's year 2000 corrective costs may exceed $100 …