Time: Sat Dec 13 04:15:01 1997
From: Paul Andrew Mitchell [address in tool bar]
Subject: SLS: IRS may be in deep trouble (fwd)
Bcc: sls

>A little fairy tale.
>Has a happy ending, and everything...
>Bob Hettinga
>--- begin forwarded text
>Date: Wed, 17 Sep 1997 19:13:41 -0500
>From: Bill GL Stafford <springco@arn.net>
>Organization: Spring Management Company
>MIME-Version: 1.0
>To: Robert Hettinga <rah@shipwright.com>
>Subject: Preparing the Remnant for the far side of the crisis
>This is a rather long post.  I wanted for you to see it personally.   It
>important and I wanted to clear it thru you.  If I don't see it posted I
>will know
>you did not chose to post it.
>Best personal regards,
>Bill GL Stafford
>Began fowarded mail:
>>From:             jmcnally@bigdog.fred.net
>>Date sent:        Thu, 11 Sep 1997 10:42:20 -0400 (EDT)
>>Subject:          REMNANT REVIEW of September 5, 1997
>>Gary North's
>>                              REMNANT REVIEW
>>emailbonus:                                       Matt. 6:33-34
>>           Preparing the Remnant for the far side of the crisis
>>Vol. 24, No. 9                 590              September 5, 1997
>>       I am hereby lifting the copyright of this issue of
>>       Remnant Review.  This one I want you to send to your
>>       friends, neighbors, boss, Congressman, and anyone
>>       else who might want advance information on the end,
>>       at long last, of the 16th Amendment: vetoed by Year
>>       2000 noncompliant computers.  Photocopy it, print it,
>>       whatever.  Then visit my Web site for full documen-
>>       tation (under "Government"):
>>     What I am about to report will verify what I have been saying all
>>year.  If this doesn't constitute proof, I don't know what can persuade
>>you.  From this point on, anyone who tells you that the Millennium Bug
>>is not a big deal, or who says, "We'll just have to wait and see about
>>there's no need to hurry," simply doesn't know what he's talking about.
>>Ignore him.
>>     On August 21, I stumbled into the most amazing government
>>document I have ever seen.  I had read a brief news story about a
>>company that had applied for a contract to work as a subcontractor for
>>the IRS in a restructuring of its computer systems.  The IRS admitted to
>>Congress last January that its $4 billion, 11-year attempt to modernize
>>its computer systems had failed.  Here was a follow-up story.  So, I
>>to the company's Web site to find more information.  This led me on a
>>merry chase across the Web.
>>     Finally I landed on the IRS's page -- specifically, its page
>>relating to
>>its PRIME project.  There were pages of blue links to documents, each
>>one with a strange name or the name of a state.  It was not clear to me
>>first what I had discovered.  So, I started clicking links. I found
>>nothing that I could understand, link after link: government
>>Then I hit pay dirt: the mother lode, my friends -- what we have been
>>waiting for since 1913.  Deliverance.  Free at last, free at last!  THE
>>     This amazing admission appears in an innocuously titled document,
>>"Request for Comments (RFC) for Modernization Prime Systems
>>Integration Services Contractor" (May 15, 1997).  The author is Arthur
>>Gross, Associate Commissioner of the IRS and Chief Information
>>Officer, i.e., the senior IRS computer honcho.  It was Mr.  Gross who
>>went before Congress in January to admit defeat.
>>     Mr. Gross now says that the IRS is no longer capable of operating
>>own computer systems.  The IRS has over 7,500 people involved in just
>>computer maintenance, with a budget a $1 billion a year (Appendix B.
>>p. 2), yet they can no longer handle the load.  And so, says Mr. Gross,
>>some of them are going to get fired.  You can imagine the continuing
>>morale problem that this announcement will cause!  The IS (information
>>systems) division will be, as they say, DOWNSIZED.  From now on, the
>>IRS must achieve the following:
>>           . . . shifting the focus of IS management to a
>>           business orientation: servicing customers with
>>           exponentially increasing technology needs,
>>           implementing massive new technology applications
>>           on schedule within budget while managing the
>>           downsizing of the IS organization
>>           (Appendix B. p. 2).
>>     Do you think that people slaving away in their cubicles, trying to
>>the Millennium Bug, will respond favorably to this notice?  "Fix it, and
>>then you're out!"  Mr. Gross knows better.  So, with this amazing
>>document, he calls on private industry to come in and TAKE OVER
>>calls "a strategic partnership" (p. 1).  The new partners will have to
>>the Millennium Bug.  The IRS will give them exactly eight months, start
>>to finish: October 1, 1998 to the end of June, 1999.
>>                     The IRS's Digital Augean Stables
>>     Perhaps you have had trouble on occasion getting information from
>>the IRS about your account.  After reading this document, I now know
>>why.   The information is held in what the IRS calls "Master Files" (p.
>>4).  These files are held in the Martinsburg, West Virginia, computer.
>>This computer receives data sent in by 10 regional centers that use a
>>total of 60 separate mainframes.  These mainframes do not talk to each
>>other.  Or, as Mr. Gross puts it, they are part of "an extraordinarily
>>complex array of legacy and stand-alone modernized systems with
>>respect both to connectivity and inoperability between the mainframe
>>platforms and the plethora of distributed systems" (p. 4).  This is
>>bureaucratese, but I do understand the word, INOPERABILITY.
>>     The tax data build up in the local mainframes for five business
>>Then they are uploaded to West Virginia.  This may take up to 10 actual
>>days.  Then the Martinsburg computer sends it all back to the regional
>>computers in the Service Centers.  Then the information is made
>>available to the "Customer Service Representatives" (p. 5), i.e., local
>>collectors.  The elapsed time may take two weeks.
>>     But . . . it turns out that the actual source payment documents are
>>not sent to the Master Files.  Neither is "specific payment or tax
>>information."  This information stays in what the IRS calls
>>STOVEPIPED SYSTEMS, meaning stand-alone data bases "which, for
>>the most part, are not integrated with either the Master Files or the
>>corporate on-line system, IDRS" (p. 5).  Separate tax assessments for
>>same person can appear in six separate systems, and these do not
>>communicate with each other (p. 5).  "Further, each system generates
>>management reporting information which is not homogeneous, one with
>>the other . . ." (p. 7).  To help us visualize this mess, and much
>>messes, the document includes charts.  These charts are so complex that
>>my printer was unable to print out the 116-page document -- probably
>>not enough RAM.  I had to get two other people involved to get one
>>readable copy.
>>     I have included one of these charts on the back page, just for fun.
>>Go ahead.  Take a quick look.  No need to get out your magnifying glass
>>just yet.   Then comes the key admission: "These infrastructures are
>>largely not century date compliant . . ." (p. 11).  The phrase "century
>>date compliant" is the government's phrase for Year 2000-compliant.  In
>>Now hear this:
>>          In addition to three computing centers, (Memphis,
>>          Detroit and Martinsburg) the latter of which is a
>>          fully operational tax processing center, the IRS
>>          deploys a total of sixty mainframes in its ten
>>          regional service centers.
>>          None of the mainframes are compliant, thereby
>>          necessitating immediate actions ranging from
>>          systems software upgrades to replacement (p. 9).
>>It gets worse:
>>          A still greater and far reaching wave of work
>>          in the form of the Century Date Project is
>>          cascading over the diminishing workforce that
>>          is already insufficient to keep pace with the
>>          historical levels of workload.  For the Internal
>>          Revenue Service, the Century Date Project is
>>          uniquely challenging, given the aged and non-
>>          century compliant date legacy applications and
>>          infrastructure as well as thousands of undocumented
>>          applications systems developed by business personnel
>>          in the IRS field operations which are resident on
>>          distributed infrastructures but not as yet
>>          inventoried (p. 13).
>>     Notice especially two key words: "undocumented" and "inventoried."
>>"Undocumented" means there is no code writer's manual.  They either
>>lost it or they never had it.  "Inventoried" means they know where all
>>the code is installed.  But it says: "not as yet inventoried."  How much
>>code?  Lots.
>>          The IS organization has inventoried and scheduled
>>          for analysis and conversion, as required, the
>>          approximately 62 million lines of computer code
>>          comprising the IRS core business systems.  With
>>          respect to the business supported field
>>          applications and infrastructures, however, we do
>>          not know what we do not know.  Until central field
>>          systems and infrastructures are completed, the IRS
>>          will be unable to analyze, plan, and schedule the
>>          field system conversion (p. 13).
>>     I love this phrase: WE DO NOT KNOW WHAT WE DO NOT
>>KNOW.  This is surely not bureaucratese.  Now, let's put all of this
>>a clearer perspective.  The Social Security Administration discovered
>>y2k problem in 1989.  In 1991, programmers began to work on
>>correcting the agency's 30 million lines of code.  By mid-1996, they had
>>completed repairs on 6 million lines (CIO Magazine, Sept. 15, 1996.)
>>Got that?  It took five years for them to fix 6 million lines.  But the
>>has 62 million lines THAT THEY KNOW ABOUT, but they don't know
>>about the rest.  It's out there, but there is no inventory of it.
>>     Consider the fact that they have not completed their inventory. 
>>1996 "California White Paper," which is the y2k guide issued by the IS
>>division of the California state government's y2k repair project, says
>>inventory constitutes 1% of the overall code repair project.  Awareness
>>is 1%.  So, after you get finished with inventory, YOU HAVE 98% OF
>>YOUR PROJECT AHEAD OF YOU.  Meanwhile, the IRS has not yet
>>completed its inventory.
>>     The IRS has led the American welfare state into a trap.  The
>>government, like the U.S. economy, will be restructured in the year
>>2000.  Most Americans will be in bankruptcy by 2001, but they will be
>>     Meanwhile, the news media are all a-dither about the Clinton-
>>Congress accord on taxes, which will balance the budget in 2002.  As
>>George Gobel used to say, "Suuuuuure it will."  Who is going to collect
>>revenues in 2000?
>>                   Please Help Get Us Out of This Mess!
>>     The next section of Mr. Gross's report I find truly unique. When
>>the last time you read something like this in an agency's report on its
>>own capacity?  (The next time will be the first.)
>>         MODERNIZATION (p. 13).
>>     This states the IRS's problem clearly: its computer systems are
>>barely making it now, and the Year 2000 Problem will torpedo them.
>>          Mr. Gross then announces the IRS's solution: quit.  The IRS
>>now admitted that "tax administration is its core business" and it will
>>now "shift responsibility for systems development and integration
>>services to the private sector . . ." (p. 54).  But first, it must find
>>some well-heeled partners.
>>     "The IRS has acknowledged that its expertise now and in the future
>>is tax administration."  This means that "the IS organization must be
>>rebuilt to preserve the existing environment and partner with the
>>sector to Modernize the IRS" (p. 13).  I love it when someone
>>"Modernize."  Especially when it really means "officially bury."
>>     Then the coup de grace: "Any reasonable strategy to move forward,
>>therefore, would focus on managing the immediate crisis -- 'stay in
>>business' while building capacity to prepare for future Modernization"
>>(p. 14).  Then comes part 2 of the report:
>>                         The Next Eighteen Months:
>>                          Staying in Business and
>>                        Preparing for Modernization
>>     Mr. Gross knows that there is a deadline, and it isn't 2000.  It's
>>months earlier.  He has selected June, 1999.  Most organizations have
>>elected December, 1998.  This allows a year for testing.  Mr. Gross is
>>more realistic.  He knows late 1998 is too early.  The IRS can't do it.
> (I
>>would say that late 2008 is too early.  The IRS has tried to revamp its
>>computer system before.)
>>     . . . the IRS must undertake and complete major infrastructure
>>initiatives no later than June 1999, to minimally ensure century date
>>compliance for each of its existing mainframes and/or their successor
>>platforms.  At the same time, the IRS must complete the inventory of its
>>field infrastructures as well as develop and exercise a century date
>>compliance plan for the conversion replacement and/or elimination of
>>those infrastructures. (p. 19).
>>     Then comes an astounding sentence.  This sentence is astounding
>>because it begins with the word, IF.  (Note: RFC stands for Request for
>>   If...? IF...?  He is warning all those private firms that he is
>>in to clean up the mess that they may not be given the code analysis. 
>>code analysis constitutes the crucial 15% of any Year 2000 repair job,
>>according to the California White Paper.  Then, and only then, can code
>>revision begin.
>>     Meanwhile, the IRS system's code is collapsing even without y2k.
>>The programmers are not able to test all of the new code.  Mr.  Gross
>>calls this "Product Assurance."  This division, he says, has "sunk to
>>staffing levels less than 30 percent of the minimum industry standard .
>>.. ."  This makes it "one of the highest priorities within the IS
>>organization, given that, today, major tax systems are not subjected to
>>comprehensive testing prior to being migrated to production" (p. 15). 
>>short, Congress passes new tax code legislation, and the IRS
>>programmers implement these changes WITHOUT TESTING THE
>>NEW CODE.  Now comes y2k.  As he says, "the Century Date
>>Conversion will place an extraordinary additional burden on the Product
>>Assurance Program."  I don't want to bore you, but when I find the most
>>amazing government document I've ever seen, I just can't stop.  Neither
>>could Mr. Gross:
>>     Regrettably, the challenge is far more overarching: to modernize
>>functioning but aged legacy systems which have been nearly irreparably
>>overlaid by and interfaced with a tangle of stovepiped distributed
>>applications systems and networked infrastructures (p. 55).
>>     I'll summarize.  The IRS has got bad code on 63 aging mainframe
>>systems, plus micros.  It has lost some of the code manuals.  It does
>>know how much code it has.  It must now move ("migrate") the data
>>from these y2k noncompliant computers -- data stored in legacy
>>programs that are not y2k compliant -- to new computers with new
>>programs.  These computers must interact with each other, unlike
>>today's system.  Bear in mind that some of this code -- I have seen
>>estimates as high as 30% -- is written in Assembler language, which is
>>not understood by most programmers today: perhaps 50,000 of them,
>>worldwide (Cory Hamasaki's estimate).  Then everything must be tested,
>>side by side, old system vs. new system, on mainframe computers, before
>>anyone can trust anything.  (This assumes that extra mainframes are
>>available, but they aren't.)  Warning:
>>     Beyond the magnitude of the applications system migration, the
>>complexity and enormity of the date conversion that would be required
>>necessitates careful planning and risk mitigation strategies (e.g.,
>>parallel processing).  While the risks inherent in Phase III may be
>>incalculable given the age of the systems, the absence of critical
>>documentation, dependency on Assembler Language Code (ALC) and
>>the inevitable turnover of IRS workforce supporting these systems, it is
>>essential to plan and execute the conversion of the Master Files and its
>>related suite of applications (p. 30).
>>     I'll say it's essential!  The key question is: Is it possible?  No.
>>     Can you believe this sentence?  "The risks inherent in Phase III
>>be nearly incalculable . . ."  What does he mean, "may be"?  They ARE.
>>    Meanwhile, Congress keeps changing the Internal Revenue Code.
>>This creates a programming nightmare: coding the new laws.  So, how
>>big is this project?  Here is how Mr. Gross describes it: "Modernization
>>is the single largest systems integration undertaking in world eclipsing
>>in breadth and depth any previous efforts of either the public or
>>sector.  Given the fluid nature of the Nation's Tax Laws, Modernization
>>is likely to be the most dynamic, creating even greater complexity and,
>>in turn, compounding the risks" (p. 54).  Many, many risks.
>>     Two questions arise: (1) Who is going to fix it?  (2) At what
>>The answer?  He has no answer.  All he knows is that this project is so
>>For this project, the IRS is not saying what its "partners" will be
>>It's open for negotiation.
>>     You may be thinking: "Boondoggle."  I'm thinking: "Legal liability
>>in 2000 larger than any company's board of directors would rationally
>>want to risk, unless they think Congress will pass a no-liability law in
>>2000."  Here is Mr. Gross's description of the special arrangement.  Pay
>>close attention to the words "competitive process."  He bold faces
> I
>>do, too.
>>     Our challenge, therefore, is to FORGE A BUSINESS PLAN AND
>>     PUBLIC/PRIVATE PARTNERSHIP in accordance with federal
>>     governmental procurement laws and regulations ABSENT THE
>>     He calls on businesses to create a "DETAILED SYSTEMS
>>DEVELOPMENT PLAN" (p. 60).  He goes on: "In general, the IRS
>>seeks to create a business plan which: Shares risk with the private
>>sector; Incents [incents???!!!] the private sector to either share or
>>assume the 'front end' capital investment . . ." (p. 60).  Read it
>>Yes, it really says that.  THE IRS WANTS THE PRIVATE SECTOR
>>     This is why the minimum requirement for a company to make a bid
>>is $200 million in working capital.  It has to have experience in
>>computers.  It must be able to repair 5 million lines of code (p. 70).
>>     How complex is this job?  The complexity is mind-boggling: a seven-
>>volume "Modernization Blueprint."  To buy it on paper costs $465, or
>>you can get a copy on a free CD-ROM.  Needless to say, I got the CD-ROM.
>>     So, you think, at least the IRS is getting on top of this problem.
>>Suuuuure, it is.  The contract award date is [let's hear a drum roll,
>>please]: October 1, 1998 (p. 73).  How realistic is this?  You may
>>remember Mr. Gross's deadline: June 1999.  So, he expects these firms
>>to be able to fix 62 million lines of noncompliant code, if they can
>>the missing code in the field offices, even though the IRS has lost the
>>documentation for some of this code, in an eight-month window of
>>productivity.  Social Security isn't compliant after seven years of work
>>on less than half the IRS's number of lines of code.
>>     The IRS is facing a complete breakdown.  Its staff can't fix the
>>The IRS wants private firms to pay for the upgrade and manage the
>>computer systems from now on.  It does not know how much code it has.
>>It does not have manuals for all of the old code.  It does not even know
>>how to pay the firms that get the contracts: either by "contractually
>>greed upon fees" or "pursuant to measurable outcomes of the
>>implemented systems" (p. 61).  It has called for very large and
>>experienced firms to submit comments by October 1, 1997.
>>     In short, the IRS does not know what it is doing, let alone what it
>>has to do.  It only knows that it has to find a few suckers in private
>>to bear the costs of implementing a new, improved IRS computer system
>>and then assume responsibility for getting it Year 2000-compliant
>>between October 1, 1998 and the end of June 1999.  ("There's one born
>>every minute.")  Here are 12 companies that have expressed interest:
>>nderson Consulting, Computer Sciences Corporation, EDS
>>Government Services (EDS is not itself y2k compliant), GTE
>>Government Systems, Hughes Information Technology Systems, IBM,
>>Litton PRC, Lockheed Martin Corporation, Northrup Grumman
>>Corporation, Ratheon E-Systems, Tracor Information Systems
>>Company, and TRW.  The list is posted at:
>>                                Conclusion
>>     It's all over but the shouting.  The IRS is going bye-bye.
>>Accompanying it will be the political career of Mr. Gingrich and the
>>historical reputation of Mr. Clinton.  Bill Clinton will be remembered
>>the President on whose watch the Federal government shut down and
>>stayed shut down.  First Mate Newt will try to avoid going down with
>>the ship of state, but he won't make it.  And as for Al Gore . . . . 
>>maybe he can get a job herding cattle on the Texas ranch of his ex-
>>roommate at Harvard, Tommy Lee Jones.  Think of it: not "Gore in
>>2000," but GORED IN 2000.  Mr. Information Highway will hit a dead end.
>>     On June 30, 1999, the IRS will know that its computers are still
>>noncompliant.  On the next day, July 1, fiscal year 2000 rolls over on
>>the Federal government's computers and on every state government's
>>computer that has not rolled over (and shut down) on a bi-annual basis
>>on July 1, 1998.  Almost every state: about half a dozen will roll over
>>October 1, 1999.
>>     In 1999, chaos will hit the financial markets, all over the world
>>assuming that this does not happen earlier, which I do not assume.  The
>>public will know the truth in 1999: THE DEFAULT ON U.S.
>>GOVERNMENT DEBT IS AT HAND.  The tax man won't be able to
>>collect in 2000.  The tax man will be blind.  Consider how many banks
>>and money market funds are filled with T-bills and T-bonds.  Consider
>>how the government will operate with the IRS completely shut down.
>>Congress hasn't thought much about this.  Neither has Bill Clinton.

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