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Y2K Update: U.S. Navy Report Overplayed, But Many Y2K Problems Loom Dire Y2K predictions in a recent U.S. Navy report are 'worst-case,' not 'probable,' Navy spokesmen say; but U.S. businesses are falling behind in Y2K preparation, and global recession seems increasingly likely. By GSReport Start Date: 8/25/99 According to the Washington Post of August 19, the U.S. Navy "predicts 'probable' or 'likely' failures in electrical and water systems for many cities because of the Year 2000 technology problem -- an assessment more dire than any other made by the government." And so it did seem, based on an official Navy report updated only a few weeks ago and first brought to national attention by well-known Y2K activist Jim Lord (http://www.jimlord.to/). The Post credited Lord for breaking the Navy story, which included such dire-sounding conclusions as: -- "probable" or "likely" partial failures in utilities that serve nearly 60 of roughly 400 Navy and Marine Corps facilities -- "likely" partial electrical failures at facilities in Orlando and Fort Lauderdale, Florida; Gulfport, Mississippi; and nine other small to mid-size cities -- "probable" partial water system failures in Dallas and Houston, Texas; Nashville, Tennessee; Baton Rouge, Louisiana; Montgomery, Alabama; Tulsa, Oklahoma; and 59 other cities -- "likely" partial natural gas failures in Albany, New York; Fort Worth, Texas; Pensacola, Florida; Charleston, South Caroliina; Columbus, Ohio; and Nashville, Tennessee. No sooner did the Navy report become widely visible, however, than Clinton administration Y2K czar John Koskinen insisted it was merely an exercise in worst-case scenario planning and by no means a prediction of what would "likely" or "probably" happen. The Navy's own website (http://www.nfesc.navy.mil/y2k/utilinfo/MatrixHeader.html) states that the report "represents our opinion of utility provider preparedness, as it affects Naval Installations only. The data does not necessarily correlate with a utility provider's ability to service the general public or other customers, just their level of preparedness & property vulnerability as it affects Naval infrastructure. Though based on detailed reviews (where the utility company was amenable & available) by the Navy's utility experts using the same audit questions in every case worldwide for consistency, it is nevertheless quite subjective & unavoidably so. It does not represent the Navy's official position... It is a contingency planning 'aide' only. Specifically, Installations are to use the risk factors herein as considerations in their utility contingency plan development." Moreover, says the Navy statement, "We feel the utilities servicing Naval Installations in the continental United States particularly, as well as utilities servicing Naval Installations outside of the continental United States, are looking very good in their Y2K preparedness, and we do not expect consequential Y2K failures of facilities, devices & infrastructure owned by these utility companies." Pressed for clarification in the wake of the Washington Post story, Navy Rear Admiral Louis M. Smith told the Associated Press on August 20, "I don't think we have a problem with utilities... There are no indications of likely widespread failures of water, electricity, gas or sewers." See http://users.erols.com/steve451/NavyAssessment.htm for further analysis of the Navy report. UTILITIES, ANOTHER OPINION: Dick Mills, a longtime watchdog-critic of utility company Y2K preparations, posted his latest assessment of utility progress in early August, based on attending a NERC (North American Electric Reliability Council) planning workshop in Chicago. Mills says NERC's own report of the workshop "exaggerates the confidence and underplays the risks. It isn't even worth reading." Nonetheless, behind the bravado he sees real progress and cause for optimism: "Anybody who thinks that the utilities are covering up for not doing a good job is wrong. They have done a very good job and they are trying hard and very energetically to make it come true that [no disruptions] will happen" on Jan 1, 2000. Mills notes that contingency planning has made great strides. In case of a major power failure, he believes recovery will occur well within three days and very likely within hours. His recommendation: be prepared for possible blackouts up to 72 hours in early January. Also be prepared for "severe shortages and rolling blackouts" during the peak power-use period of summer 2000. TRAVEL ADVISORY: An August 20 report from InfoWorld Electric (http://www.infoworld.com/cgi-bin/displayStory.pl?990820.hny2k.htm) says the U.S. State Department will issue a bi-annual travel advisory in mid-September warning travelers of Y2K-related risks for certain travel destinations. Business firms doing large amounts of international commerce are also advised to curtail employee travel to high-risk destinations during the transition period. International shipping, parcel delivery and travel reservations to and from high-risk destinations will likely be compromised. Among the high-risk locations are Brazil, Indonesia, Italy, Russia, Saudi Arabia, and Thailand. The State Department is making contingency plans to evacuate U.S. diplomatic personnel from countries hardest hit by Y2K disruption. ONLY THREE STATES READY? According to an Associated Press story dated August 14, only three U.S. states -- Iowa, Nebraska and North Dakota -- are reporting complete Y2K compliance, including testing, of all state agencies and services from law enforcement to welfare to utilities. Another 33 states have told the General Accounting Office of the U.S. Congress that their Y2K preparations will be completed during the month of September. Fourteen states say they won't be ready until at least October. "States are facing an extremely busy next few months to get themselves ready," said Joel Willemssen, director of the U.S. Civil Agencies Information Systems. "Important progress has been made, but much work remains to avoid disruption of critical services." OVER HALF OF BUSINESSES WON'T BE READY? An August 12 story from Drew Parkhill of CBN News (http://www.cbn.org/newsstand/y2k/insights.asp?file=990812k.htm) notes that, according to data from the latest survey of large U.S. businesses by the respected Cap Gemini America Inc. (http://www.usa.capgemini.com), 52% of responding business firms say that at least some of their mission critical systems will not be Y2K-ready on Jan 1, 2000; and 16% of firms say that half or more of their mission critical systems will not be ready. Remarkably, these numbers are much larger than those reported one year ago, when only 12% of firms said they would not be ready; and even double the number found by Cap Gemini in April 1999, when 22% of firms said they would miss the deadline. The clear trend: U.S. businesses are steadily falling behind their remediation deadlines. ASIA WILL GRIND TO A HALT, JUST IN CASE: An August 16 story in the Times of India says that much of Asia will purposely "grind to a halt" minutes before midnight on December 31. Then, "fingers crossed, they will turn everything back on minutes into the new millennium" and hope that everything works. It's the strategy of last resort for many nations that are hopelessly behind in their Y2K preparations. Of course, not everything will work. "In India, for example, power suppliers have failed to properly address the computer problem, officials said, so lights could go out in a domino effect," said the Times story. "In Malaysia, transport bureaucrats have already been equipped with a contingency plan recovery kit, containing a candle and old fashioned rubber stamps for counter staff... Because Vietnamese computers will not be ready in time, the two national airlines have been ordered to train pilots to fly without radar by November 30." And, the Times said, "China will not say how it is coping. 'There will definitely be precautions,' was all one official from the country's leading bug-fighting group would tell." BIGGEST PROBLEM MAY BE RECESSION: Growing numbers of financial advisors as well as spokespeople for the U.S. State Department, CIA and other agencies are pointing to the prospect of overseas turmoil and its economic consequences -- including trade disruptions, higher oil prices and defaults on debt -- as the biggest and most likely downside of Y2K for the United States and other best-prepared nations. Global economic recession lasting six months or more now seems probable. Temporary but widespread layoffs of U.S. workers, especially in the manufacturing sector, are increasingly likely. Millions of people not otherwise hit by Y2K could be hit hard in the pocketbook by spring or early summer 2000. GSReport ADVISES: Extra cash savings, enough to cover at least two months of household expenses, is the number-one best insurance against personal hardship due to Y2K disruption. Our previous recommendations for preparation remain in effect as guidelines (see our multi-part series Preparing for Y2K, now posted at http://www.gsreport.com/Y2KPage.html).
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