INDY Committee Meeting

STANDING COMMITTEE ON INDUSTRY

COMITÉ PERMANENT DE L'INDUSTRIE

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, March 24, 1998

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[English]

The Chair (Ms. Susan Whelan (Essex, Lib.)): Order. Pursuant to Standing Order 108.(2), this is a study on information technology and preparedness for the year 2000. We have three witnesses, representing two different groups, here before us today. We have Ms. Jennifer McNeill, president of Cipher Systems, and Ted Eedson and Ian Nunn, co-chairs from the Embedded Systems Sub-Committee.

Ms. McNeill has a time limit. She will be with us till 4.30 p.m. We'll hear from both witnesses, as usual, before we go to questions, but I will begin with Ms. McNeill.

Ms. Jennifer McNeill (President, Cipher Systems): Thank you.

I'm very heartened by being asked to speak to this group. I've been speaking on year 2000 for several years, mostly to deaf ears. Our company did the first year 2000 conversion in 1993. Since then it has been a long battle to try to educate people along the way on what year 2000 is all about.

What I would like to do, very quickly, is educate you. I apologize if this is information you already understand or know, but it's very hard for me to know at what level you are in understanding embedded systems. My experience is that most people, including IT people, have a limited knowledge of what this problem means to an organization. I'm very concerned.

As you can tell from my accent, I'm from south Calgary. We're a Calgary-based company.

Mr. Werner Schmidt (Kelowna, Ref.): I didn't know Calgary went that far south.

Ms. Jennifer McNeill: I've lived in Canada for about 11 years and I love it.

I'm quite concerned about where we are. We're about a year behind the U.S. in what we're doing for year 2000 and we have some significant problems within organizations across Canada.

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The problem we have with embedded systems is that originally it was not thought there was any issue here. I'll explain what an embedded system is. An embedded system is a chip that operates in some type of technology that times something like an elevator, let's say. In an elevator it times what time the elevator will start working. Or in an air conditioning unit or cooling unit it will cause the electricity to surge through and it will create that automatically so that the unit will switch on at certain times. All sorts of industry that we have actually causes problems with embedded systems.

It's actually the same as our information technology, except that in most cases we can't change it. We can't do anything with that technology. It's embedded on a chip that is resident within a piece of hardware.

I will talk a little bit about some of the areas that are affected as I go through this, but it's significant because we have so many electronic chips timing when and where things are going to happen.

One of my close colleagues is the year 2000 manager for MacMillan Bloedel. They have 300 remote sites and have now determined that 15% of their embedded chips in those remote sites are going to fail. The problem is that they can't figure out which ones are going to fail and when. These things keep track of information for them for environmental concerns because they stamp when the logs come in and when they go out. There are a lot of other similar instances.

The problem with embedded systems is that they're located everywhere. In many cases it's very hard to determine where they are. Most of the people who are trying to solve the year 2000 problem are IT companies and do not understand embedded systems. So when a client comes to a firm such as mine and asks if I can help with their year 2000 problem, the first thing they do is look at their computer systems. Unfortunately they don't look at things like their air conditioning and heating units, their elevators, as we discussed, or, within a manufacturing plant, their process control in the plant, which in many cases has replaced hundreds of people and keeps track of when things are done. Those are very serious issues for all organizations, but our biggest problem with them is that they are very hard to locate.

All types of systems are affected, everything from hospitals—and I know you've been educated on the hospitals and some of the health care issues. We have some serious issues with a portion of the pacemakers, with respiratory systems, and with a lot of systems operating within hospitals. I have some hospitals as clients and I talk to them about contingency planning, such as this one: What if the surgery unit is on the third floor and the elevators will not work? How do you get people to surgery who cannot be moved? Those types of issues are key as we try to determine the problems of our businesses and organizations with respect to this.

The other issue is that we have a lot of old technology being used. The manufacturers are being fairly uncooperative, and I'll tell you some of the reasons why. As we go to manufacturers and ask them why their systems won't work, they come back to us and say they don't sell that unit any more so they don't support it. We are seeing some cooperation from only about 30% to 40% of manufacturers of hardware. The rest of the manufacturers are not answering calls, are not answering letters, and are being unresponsive in helping their clients.

Our hardware has limited capacity. In many cases the hardware has to be replaced. One of the provincial governments has now determined that within their hospitals and their health care industry alone, $200 million will have to be spent to replace the embedded systems problems, and that's because they cannot find the problems. They know what some of the problems are and are trying to determine them very quickly.

Again, it's the same problem as within year 2000: most of the chips understand that you have a two-digit date, like 99, and in many cases when they hit 99 they think of it as an error code. We do believe that embedded chips will start to have even more serious problems in the year 1999. But with regard to elevators, only a portion of the elevators are affected, but for the ones that are, if you inject a 00 into the date, it thinks it is time to service it, it brings it to the floor, and it will not operate. You can say you'll get your elevator people in there right away, but if you have that happening all across Canada, you have some significant problems.

As well, we have operating systems that have problems within that technology. Again, the problem we have is that it's not measurable. It's very hard for us to measure the scope of this problem.

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As we get into organizations and ask them to inventory everything they have for embedded systems, we start out with this really long list. Then we end up with about 15% that we believe are affected. Unfortunately, we're finding chips inside of chips.

A major telco within the last month had a system that they thought was year 2000 compliant. It had embedded chips in it. They had done unit testing but had not had integrated testing across all the networks for the telco. It died. It came to a grinding halt. So we do have some significant problems with some major organizations.

Add this to the already really large scope of a problem we have for year 2000 and we have some significant problems. In my experience, I believe our manufacturers have the largest risk. The reason they do is that the estimate now is that 30% of businesses will fail because of year 2000. That's an overall estimate from Gartner Group.

I believe that estimate is higher for Canada. I believe that because there are still 300 Fortune 500 companies within Canada that have done nothing. Nothing. They have no plan. They do not know what they're going to do on their IT side much less their embedded systems side.

On the embedded systems side, again, we have manufacturing companies who not only have systems they operate from the IT side, which are mostly custom-written systems and normally legacy systems that have problems, but they also have manufacturing process controls out on their shop floor that will cause significant problems if they don't operate correctly.

They don't understand how to deal with those. The manufacturers are not responding to them. If 30% of the manufacturers' suppliers cannot provide supplies, they're in serious trouble.

As you know, some statistics from Stats Canada are that our manufacturers provide 13% of our gross domestic product and about 68% of our export revenues. That's significant, very significant.

The other problem we have is that even though the larger companies seem to be moving somewhat, our small to medium-size businesses are doing nothing. That's very problematic for us, because the small and medium-size businesses are the mainstay of the Canadian economy, as we all know.

I see that as significant because they do not have the dollars; they do not have the information; they don't understand year 2000; and the companies that are working on year 2000 are going straight for the high dollars, which are in the high-level firms. As you can imagine, our small to medium-size businesses have no assistance.

The other problem we have with embedded systems is that it's really hard to test those because they're normally in production. So if you're going to bring those down to test, you have to bring some operation down within a business. More and more of our clients are saying they can't bring down an oil and gas plant because it operates on the 7 by 24.

I have met with a lot of the oil and gas companies in Canada, especially in Calgary. We have some significant risks there. I've been told by some of the people within some of the larger oil and gas companies that if some of their plants go down, they will go out of business. Some of their plants that are very far north are definitely time- and date-driven by certain functions they perform.

So I do believe we have a significant risk. It's already been established as well that there are significant risks within oil rigs. We do have some problems within the oil and gas industry.

The other thing we have that's so important within our embedded systems is that many of those talk to each other. If we have one system, it may actually send information to another, as I indicated with a telco. So there's an interoperability problem. As we operate from one organization, we transmit information to another. The telcos are a perfect example of that. You have information all the way across.

The electrical industry has a very large problem. We're working with TransAlta on their embedded systems problem within Alberta. There are significant problems, and it's not very clear as to where those problems are and how they're going to solve them in time.

The other issue we have within the electrical industry is some of the nuclear power we have. I speak at and teach seminars on year 2000 all across Canada, and I get a lot of information, as you can imagine, from those whose names I can't pass on to you. But one particular hydro company indicated to me that 60% of their power is nuclear-based and they will shut that down. That's a significant number.

The information seems to trickle in. Unfortunately, that information does not always get positioned at a very high level, because many people don't want people to know the bad news. There are political issues within the organizations, as you can well imagine.

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We're going to see significant legal liability, we hope less than in the United States. I don't think we have any problem with getting to that point. The estimates now are that $1.3 trillion worth of litigation will be brought forth over year 2000 in general, not just embedded systems. We're hoping all of that is in the U.S. and not with us, although we do have a lot of Canadian companies that provide power and a lot of goods into the U.S., so we have some significant risk to our organizations as well. We are going to see a number of hardware and software companies that cannot stay in business because they won't have time to get their equipment in order and they will be sued. We're going to see some problems because of that.

Again, we see a reliance on input and output peripherals and very little access to design. We have a lot of old technology out there such that people are trying to determine where the problems are. They can't find schematics. They can't determine exactly how the chip is there. They know there's a problem. They know it's date sensitive. They can't determine where that is.

Again, the estimate is that about one-fifth of embedded systems there have date problems or have a date sensitivity. Within that, we're finding about 15% such that we don't have a clue. We have no knowledge of what is going to happen.

What we're recommending to organizations is that they create risk-management contingency planning within their organizations to understand very quickly what they will do. If the elevator doesn't work and their surgery is on the third floor, they will have to move surgery to the first floor.

Unfortunately, most of our hospitals have done nothing. We are seeing some movement within Alberta. The other provinces I'm working in—Nova Scotia, B.C., and Alberta are the main provinces I'm working with—are very slow; very, very slow. In fact, I would say 90% of the hospitals within B.C. and Nova Scotia have done nothing. They have not done anything about their IT problem.

Again, there's no access to the source code. Date detectors and simulators have been used. There are very serious problems there.

The main thing we're trying to get across to people is that they have to sit down with their manufacturers, because what they are doing is sending letters to everyone and saying, okay, what are you going to be doing about year 2000? The manufacturers are either not responding, because their legal department has told them not to say anything, or responding with, well, we're not quite sure what the problem is. We're finding about 40% are responding at all.

What we're recommending is that companies actually go out and have a direct dialogue with the vendors. We are telling the large companies to carry a really big stick and try to make sure they wield their powers of being a large organization to get manufacturing companies to help them.

In our oil and gas industry, many of the oil and gas companies have actually customized the chip. They have taken technology and actually built customization around it to do a certain function for them. Unfortunately, most of our technical people, as you know, are being usurped to the States, and in many cases they don't have the people there who even wrote the custom technology to make it do what it does.

Resources are an issue for us, and they are serious issues for everyone, especially in Canada, because in Canada we're not able to pay the salaries being paid in the U.S. We haven't actually lost anyone from our organization, but our clients have lost as many as four or five people a week within their IT group. We're seeing a significant usurpation of resources.

You should understand the people who work on embedded systems are not IT people. They are electrical engineers, which we're very short of anyway. So we have a limited pool of resources to assist us.

In summary, this really adds to the scope of our year 2000 problem—as if we needed more problems. We're just trying to determine where the problems are occurring for our clients and trying to educate people across Canada about obtaining information from vendors. Contingency planning is really what is going to assist us in at least getting around the problems, determining what we do.

We have some organizations that are actually going to flip on a switch manually at a certain time to make sure everything operates correctly. We've recommended to some of the telcos we work with that they actually put generators into every off-site facility to make sure they have the capability to operate.

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At this point we're open to questions.

The Chair: Thank you very much, Ms. McNeill. Actually, before we move to questions, we're going to hear from the other witnesses.

Mr. Nunn and Mr. Eedson, please.

Mr. Ian Nunn (Co-Chair, Embedded Systems Sub-Committee): Thank you and good afternoon, Madam Chairman, members of the committee, and Ms. McNeill.

[Translation]

My name is Ian Nunn and I am very pleased to be here today.

[English]

as co-chair of the interdepartmental ad hoc year 2000 subcommittee on embedded systems.

The interest of this standing committee in the many areas surrounding the year 2000 date challenge has been exemplified in previous meetings, and we thank you for this opportunity to update you on the progress being made by government in the area of embedded technologies.

My presentation will describe an overview of the year 2000 problem as it applies to embedded technologies. My colleague, Ted Eedson, will follow my remarks with a description of the subcommittee, our terms of reference, and specific examples of our success thus far in achieving solutions to the embedded systems area for the year 2000 date challenge.

An embedded device or system is a product containing one or more microprocessors or other programmable logic devices—chips, if you like. These products are controlled by programs built directly into the chip or stored in an associated memory chip that is not reprogrammable, or that is reprogrammable, but only with sophisticated technology. Embedded systems may be found in any product with functions that involve monitoring, sensing, computing, or controlling. They range in size and complexity from the watch on your wrist, manufactured in hundreds of thousands, to the sophisticated, one-of-a-kind process control systems that run large petrochemical plants and nuclear reactors.

By arbitrary convention, computers, normally classified as mainframe, mini, or micro; telecommunications devices, including the voice and data switches that our telephone companies run on; and networking hardware are not called embedded systems. This is just an arbitrary distinction. I believe the committee recently received telecommunications year 2000 information when the CRTC, Bell Canada, and Nortel appeared as witnesses.

A number of issues characterize the embedded technologies problem.

In the first case, an extremely large number of devices are in service.

Secondly, a wide diversity of products contain embedded technologies, such as children's toys, cars, household appliances, and almost any electrical device made.

Thirdly, there is a diversity of implementations for a product category, for example in the number of makes and models of photocopiers, each of which has unique design features and non-interchangeable parts.

There is also a hidden nature behind embedded technology. Most users of such products are unaware that microprocessor technology is incorporated within the design.

The diversity of suppliers and design variations for logic chips is another factor to explore in this issue. During the lifetime of a single product, chips may be purchased from many different manufacturers, with possible differences in features and performance.

The skills necessary for the design and maintenance of embedded systems are scarce and sophisticated. These skills arise only out of university training coupled with extensive industry experience.

Finally, the cost and size of these devices may be out of all proportion to the value and quantity of the product they help produce. Digital sensors and controls worth a few dollars are used in industrial processes delivering thousands or millions of dollars worth of finished product.

To put this in contrast, the personal computer, or PC, year 2000 challenge is quite different. The design or architecture of the PC has evolved slowly over the last 15 years, with changes that usually have been accepted as standard across the industry. Parts are relatively interchangeable among different manufacturers' products, and this can often be done by the user himself. Also, a large workforce with a thorough understanding of PCs exists, and the skills are readily taught in short community college programs.

What are the modes and effects of year 2000 failure? Well, failure can be classified as one of three types. The first is catastrophic, where the device shuts down and possibly may not be restarted. The second is an invalid operation that is detectable. In this case, the device continues to operate in some manner but fails to function properly, producing erroneous results or causing improper activity to take place.

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The third example can be classified as an invalid operation that is undetectable. In this example, the operation is similar to a detectable invalid operation but the effects are intermittent or so subtle that they go undetected. These errors may be detected only in systems the fail device connects to.

I'll give you a brief example of three failure scenarios. In the first, the system may stop being unable to understand the date code 00. Secondly, the system may recognize 00 as Monday, January 1, 1990 rather than January 1, 2000, and therefore may schedule work to be performed based on an invalid assumption of what day of the week it is. In the third, the system may misinterpret 00 as 1900 again and call for scheduled maintenance or perform other automated functions incorrectly.

The potential effects of such failures range from inconvenience to major disaster. If the office fax machine prints the wrong date on faxes in the year 2000, it is at most an irritation. If a process control valve in a chemical plant malfunctions and discharges a toxic chemical into the environment, there could be a major disaster, with loss of life.

There's an anecdotal story of a 500-megawatt power station in England that performed a real date rollover test. The smart temperature sensor in the flue stack, worth a few dollars, failed and shut the entire plant down—a plant worth hundreds of millions of dollars. There are many such stories that are difficult to verify but give an indication of what might happen.

One of the more practical solutions the interdepartmental subcommittee is advocating is called the black box approach. The first step to follow in this case is identification. Where do you look? You look at anything digital or electric that could be a candidate. What do you look for? You look for anything that uses dates, either in input or output, displays dates, or has controls with a date component to them. A question you can ask is whether the user can set or change a date. If in doubt, include the device in the list of devices to be tested.

The second stage is inventory. Get as much information as possible on the product to be tested, including make, model, version, revision number, date of manufacture, serial number—anything you can find. Minor changes in design or selection of chip vendors in the same model series can affect the year 2000 performance.

The third step is vendor compliance. Seek vendor or manufacturer's statement of compliance, test methodologies and results. If the vendor says the device is compliant, ask how it found that out. Let it show you the results. Specify the conditions and rules of compliance so you know what you're getting an answer to. One important note, based on our experience, is a vendor's statement that a device is compliant does not guarantee the device will not fail under the conditions in which you use it. We've actually found cases where that has happened.

The fourth step is triage. Determine the criticality of each device or system to the organization's mission, then prioritize all your devices and systems for follow-up action. Follow-up action consists of priority testing. Test what you have time and resources for, based on the priority list you've developed.

Finally is remedial action. Do one of the three Rs—repair, replace or retire each device you've identified that has a Y2K problem. Keep in mind the book value versus the cost to test. If the device is an older device and its book value is a few hundred dollars, it might not be worth even going to the trouble of testing it at that point. It might be near the end of its life cycle and you should replace it.

I would like to add one more step at this point, and that is risk analysis and contingency planning. Before you go to testing you should have a contingency plan in place in case the device you're testing fails to return to normal operation. In any case, with devices you test that are critical to the mission of the organization there should be a contingency plan in place in the unlikely but finitely probable event the device will still fail in 2000. For non-critical devices, assign the level of contingency planning you feel is appropriate to them.

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To close, I would like to share with you some general facts that have been experienced to date. I think Ms McNeill has given me a little bit more insight in this area and I'd like to talk with her afterwards about that.

However, embedded technology is the last year 2000 technical issue to be identified and receive attention. Consequently, an understanding of the importance of this area is still emerging and has not received the full attention it should. Isolated documented cases of specific device failures are beginning to appear as industries and utilities do real-time testing.

Early estimates of the size of the problem have been placed at about 5% of installed devices. It must be emphasized at this point that we do not have reliable metrics to gauge the impact of this aspect of the year 2000 problem and by the time we do they probably won't be of much use.

Given the pervasiveness of embedded technology and the size of the problem, the one cautionary point to be emphasized is do not delay. The specialized expertise in this field will disappear from the market first before other areas of year 2000 expertise, and we already know that inventories from some devices such as programmable logic controllers will not meet the demand. There cannot be enough devices manufactured between now and the year 2000 to solve the problem.

Thank you. I will now ask you to turn your attention to Ted Eedson, the other co-chair for this subcommittee.

Mr. Ted Eedson (Co-chair, Embedded Systems Sub-Committee): Thank you, Ian. Good afternoon, Madam Chairman, members of the committee, and Ms. McNeill.

[Translation]

My name is Ted Eedson and I am here as the co-chair of the Sub-Committee on Embedded Technology of the Interdepartmental Working Group.

[English]

As Ian has mentioned, I want to thank the Standing Committee on Industry for this opportunity to speak as a witness on the subject of the year 2000 and its effect on embedded technologies.

I will be presenting some background information concerning the work of the embedded systems subcommittee. First and foremost, our team is a volunteer subcommittee of government employees dedicated to resolving the year 2000 challenge with regard to embedded systems. We have representation from 22 federal government departments and agencies as well as representatives from local municipal governments.

I'd like to share with you the purpose of our subcommittee, which entails several key components. We are providing education to member departments as to the issues involved with embedded systems and the year 2000. We are pooling information found on embedded systems issues, particularly data relating to testing and sharing collection and identification and testing methodologies to avoid duplication of effort across departments and agencies.

We have been identifying products and submitting such for inclusion in the Government of Canada's vendor readiness information service central database. Escalating issues of significant concern or requiring a mandate have been brought to the attention of the interdepartmental working group for action. Finally, we've been reaching out to other organizations to share our knowledge and raise awareness levels.

There are a number of broad categories of identified systems or products that fall within the domain of interest of the subcommittee.

The Chair: Excuse me. If I could ask you to summarize the brief you presented.... I didn't realize that both you and Mr. Nunn were going to read two briefs in their entirety. We have a limited time for questions, so I would prefer if you could summarize it.

Mr. Ted Eedson: Sure.

The areas of concern of the subcommittee are office automation products, laboratory facilities and equipment, medical devices, building infrastructure, process control systems, and electrical power and other utilities in the transportation and navigation systems. Volunteers have accepted roles for coordinating most of those areas of concern.

Our guiding principles are that we will share information, and we are using the Public Works and Government Services-managed vendor information database. That database is currently available to the Government of Canada, but we have been told that by April 1 of this year that site, which is an intranet site, will be opened up to the Internet and will therefore be available to the public. It's a searchable database with information on the products we have garnered from the industry.

We have made a concerted effort to ensure the information supplied from the vendor community is current and as accurate as possible. However, Public Works is fully aware that the supplier community reserves the right to control its respective product releases. Therefore PWC cannot warrant or guarantee, explicitly or implicitly, that the supplier community will conform to the information provided in this compliance study. Users have been advised to verify specifics with their own department and technical authorities prior to making technology or business decisions.

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In conclusion, I'd like to talk about a few of the products on which we have information on the site. The office automation product area is a new category, but we are using material that has recently been published by the Building Owners and Managers Association. They have come out with an excellent publication dealing with buildings but also office automation. This was delivered in January 1998, and I brought a few copies here for your interest.

The second area concerns laboratory facilities and equipment, and we've learned that the information concerning vendor compliance research and testing will be available at the Health Canada website in the near future. The Canadian Food Inspection Agency has set up a database for 22 laboratory facilities, containing over 1,500 pieces of equipment with embedded chips, and this information as well will be made available through the existing websites.

We have a fair amount of information to date on building infrastructure. The department submitting this information to the website is Public Works and Government Services Canada, and they have been fairly successful in their contact with industry, having contacted some 70 companies, with a response rate of over 60%.

There are now 122 products listed, some of these representing one or many products in a related category. Of these 122 products that are listed, in 81% the vendor is stating “yes”. That is stated with a particular product model and version model, but the products are becoming available. There are 9 still in the testing phase, and 13 are reporting non-compliance but with information on the upgrade that is required.

The year 2000 compliancy was identified as being prevalent in the elevator industry, where most vendors responded that all their products were compliant. Three of the four vendors of fire alarm systems have also responded, and they have 22 products that they are listing as compliant.

There is no progress information currently available to the embedded systems committee concerning process control systems. A preliminary review of the Atomic Energy Control Board experts suggests that the year 2000 may not be a nuclear safety problem, but we have no solid information to date.

In terms of electrical power and other utilities, our subcommittee has been presented with information from both Ottawa Hydro and Ontario Hydro, and the inter-departmental working group has also received an update from Atomic Energy Control Board. Ottawa Hydro indicated that a target date for completion of conversion was July 1999, a date they felt could not be extended. Ontario Hydro estimated that at the end of December 1998 their conversion testing and deployment stages would have taken place.

A final category of interest involves transportation and navigation systems. Through sharing of information, we have been informed that the Department of Fisheries and Oceans has identified 6,000 items in their year 2000 inventory. They plan to hire somebody to perform a category leader function around May of this year.

Transport Canada is presently monitoring NAV CANADA's year 2000 activities, and results indicate that systems will be ready and only minor delays in flights are anticipated.

Thank you again for your interest in our subcommittee. Although departments and agencies are ultimately responsible for ensuring successful conversion of all their systems, our volunteer group is taking what they feel is a social responsibility in sharing information to solve the embedded technology portion of the year 2000 challenge.

The Chair: Thank you very much, Mr. Eedson and Mr. Nunn.

If I could remind all the members of the committee, Ms. McNeill is only with us until 4.30 p.m., so in your first round of questions you may wish to keep that in mind.

Mr. Schmidt.

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Mr. Werner Schmidt: Thank you, Madam Chair.

Thank you very much, Ms. McNeill and Ian and Ted, for appearing here this afternoon. I think it's rather a significant and growing problem in the awareness of all of us. I'm rather humbled to think somebody who has been doing this for two years is still prepared to admit she doesn't know it all. That's rather a sobering thought, but also a very good one, because it means there's still something left to learn on it and you're quite prepared to learn what needs to be done to solve the problem.

I'm very concerned about the comment that has just been made by Mr. Nunn, that we now know there isn't enough manufacturing capacity to deal with the restitution, if you like, that needs to be made to restore or to bring 2000 compatibility into our control devices, especially including embedded systems. My question is, how do you solve the problem? If we already know there isn't enough manufacturing capability and we know there's a problem, what is the solution to that difficult situation?

Mr. Ian Nunn: I think this would have to be taken back to the industry categories where this is beginning to emerge. This information was based on information out of the States on power utilities, where they use these programmable logic controllers in switching.

Whether enough capacity can be brought on line when a particular problem is clearly identified, I don't know. I'm sure extraordinary measures could be taken at the government level to ensure this could happen.

Mr. Werner Schmidt: I don't think we're in the “could” area here any more. If we're into a crisis situation, something has to happen. If we already know there's the potential for crisis in a particular area and if we already know the manufacturing capability is non-existent, it's not good enough to say the government will find some kind of crisis management system. That is inadequate. We don't have an indefinite time, as government usually does; it keeps on rolling and something happens.

What will be done? What needs to be done now in order to prevent that situation from happening? I think it's critical. If your words are true and if the research you've indicated here and the research our researchers have given us are correct, we don't have an option. Something has to be done; not later, now.

Mr. Ian Nunn: I would agree.

Mr. Werner Schmidt: Okay, so what?

Ms. Jennifer McNeill: What has to be done is the escalation of this to a very high level of government and industry within Canada so there is the level of knowledge within organizations to understand what their risk is.

It's not going to be finished. At this point it's not possible to get the work done on the IT systems that are mission critical alone, much less the embedded systems. The organizations have to do risk management and contingency planning, and if they have a problem that's going to cause a disruption of services, such as a hospital not being able to open the doors or the fire alarms not going off, then they have to do contingency planning and risk management and determine how to get around those problems—and they have to do it now.

Mr. Werner Schmidt: If I understand that answer correctly, it means we have to say, today, that there will be failure.

Ms. Jennifer McNeill: That's correct, and the problem we see is that no one is ready to go out on a limb and say that. They won't take that chance, although we have evidence of other problems that have already occurred and are documented all over the world. No one within industry or within government will go out on a limb and say we have a significant problem and we need to deal with it.

Mr. Werner Schmidt: The point is that right now, as we sit here, we have put on record your statement that there will be failure.

Ms. Jennifer McNeill: That's correct.

Mr. Werner Schmidt: In my opinion, if that is correct, Madam Chair, it has to be made public. This is a public forum here this afternoon.

Is the issue then to determine where the failures will take place, and is it a matter of priorizing the risk level of failure?

Can you, with the background you have, prepare us, or give us some indication of where it is that the critical, life-threatening failures are likely to take place?

• 1605

There are life-threatening situations and there are also the big financial situations, such as the delivery of the transmission of funds from one account to another, and things of this type. That's only one aspect of the whole contractual obligation that exists between businesses.

Ms. Jennifer McNeill: I can tell you that the first place we have to start is with our electrical utilities, to determine if they're going to actually be able to provide power and what portion of power they're going to be able to provide.

Within doing that, it helps us to determine the other businesses that are going to be affected. If a telco can't get power, it can't provide phone service. If a person can't dial 911 and they have a sick child or someone is ill, then we're going to have loss of life.

Those are risks that are very clearly determined. We can see those. A hospital is a high priority. We have to determine within those the areas that are problems. Most of the hospitals that have done that work have already identified where their problems are. That information needs to be shared across that same industry.

The Chair: Last question, Mr. Schmidt.

Mr. Werner Schmidt: Thank you.

The question then is, having identified that, can we test to make sure that those critical areas have become capable of handling the 2000 crisis? Can we test them?

Ms. Jennifer McNeill: We can test some of them. Some of them cannot be tested. Those that cannot be tested are the ones that either have to be replaced, if it's determined that it's a serious risk, or turned off.

Mr. Werner Schmidt: They can't be turned off.

Ms. Jennifer McNeill: If you have an oil and gas plant or a chemical plant that will emit chemicals because it doesn't know what day it is, then that chemical plant needs to be shut down if it's not possible to test the system.

Mr. Werner Schmidt: Okay, but there are others where life is involved. If you shut it down, that's death.

Ms. Jennifer McNeill: That's right.

Mr. Werner Schmidt: So you can't shut that down. How can you test now that it's going to work?

Ms. Jennifer McNeill: In many cases, it's not possible to test.

Mr. Werner Schmidt: To do that, it has to be replaced now.

Ms. Jennifer McNeill: That's right.

Mr. Werner Schmidt: Thank you, Madam Chair.

The Chair: Thank you, Mr. Schmidt.

Ms. Jennings.

Ms. Marlene Jennings (Notre-Dame-de-Grâce—Lachine, Lib.): Thank you very much.

I'd like to address two issues. One is to continue on with the issue Mr. Schmidt has raised.

Ms. McNeill, you mentioned that Canada is a year behind the United States on this whole issue. Can you give us a little bit of light? Are we ahead of any country?

Ms. Jennifer McNeill: Yes. I would say Canada and Britain are at about the same position. The problem Britain has is that they're trying to incorporate the EU at the same time, which is compounding their problem significantly.

I would say we are second. The other countries, such as third world countries...and Russia has indicated they're doing nothing. So we are definitely working diligently, but we're very far behind.

Ms. Marlene Jennings: In terms of within Canada, are there regions that are further ahead than others? Are there sectors of activities that are further ahead than others—and this is addressed to any one of the three—where you're confident that they began addressing the issue sufficiently soon that by 2000, if there is any failure, it's going to be a minor thing and will not create disruption, at least within that sphere of activity?

Ms. Jennifer McNeill: As far as I'm concerned, we have a telco industry that's very aggressively dealing with it and we also have a banking industry that's very aggressively dealing with it.

The positive thing about our banking industry is that we don't have 4,000 banks or 10,000 banks to deal with. We have 6 major financial institutions that will have problems, but they're able to deal with it on a wider scale than if we had the number the U.S. have.

Ms. Marlene Jennings: In terms of, say, the manufacturing section, are there sectors that...?

Ms. Jennifer McNeill: The auto industry has been very proactive, but that's driven out of the United States. Ford is being driven out of the United States, and Chrysler. The auto industry has required that their 25,000 suppliers come before them and tell them if they're going to be compliant. If they're not, they're not going to do business with them.

Ms. Marlene Jennings: All right.

In terms of an average Canadian, in terms of their own home, have you looked at what could be the possible impacts? I know the VCR bit, but is there anything that is a more serious impact?

• 1610

We just lived through an ice storm in eastern Ontario and in a significant part of Quebec, and the whole issue of the type of energy source for heating and for electrical appliances is now something that is a real nerve centre. When you're telling me that Ontario Hydro and Ottawa Hydro are addressing it, do you know if Hydro-Québec is addressing this issue?

Mr. Ted Eedson: We have a letter from Hydro-Québec that says they are addressing the issue, but there are no details. We will therefore be doing follow-up with that.

In the presentation from Ontario Hydro to the Regional Municipality of Ottawa-Carleton and the Government of Canada representatives who were there, the representative indicated that there was work going on in Alberta, British Columbia and, I believe, Manitoba. What I found significant is that he did not talk about anything in the east of Canada, but again the information flow is there.

Ms. Marlene Jennings: This will be my last question. Can you give us some concrete recommendations as to what you feel the federal government can do to help move this whole process along, so that whatever failures there are that will inevitably take place, we will significantly reduce the number of those failures and the impacts they would have? That's for any one of the three.

Mr. Ted Eedson: I would suggest that the nature of the problem we have run up against in our subcommittee is that we have responsibility on a departmental basis, but we do not have access to national viewpoints and national mechanisms to deal with these problems. I believe these national mechanisms do not exist. For instance, in the energy area, we have a number of national and continental organizations. Some are in government, some in private industry, and they have a role, but there is no organization that I'm aware of collecting the year 2000 status of member utilities. There's no reporting mechanism, there's no reporting requirement, so the difficulty we have is that we have no way of answering what the risk is for utilities.

We need a nationally empowered office of some kind to collect reporting information, to require it from utilities, to roll it up, to look at it, and to then come up with an action plan if one is required. I think that's a way to address it.

For other jurisdictional areas, such as hospitals, again they are not national or federal issues. It's my understanding that those are provincial issues. If you want to address them from a national perspective, then I think a nationally empowered organization has to be put in place. I do not believe one currently exists.

Ms. Marlene Jennings: Thank you.

The Chair: Thank you, Madam Jennings.

Mr. Jones, do you have any questions?

Mr. Jim Jones (Markham, PC): Yes, I do.

What is scary is that one of you—I think it was you, Jennifer—said 300 of the top 500 companies in Canada are doing nothing about it. What do we have to do to get those people onboard? A lot of the medium-size and small companies probably look up to these companies, and if they see the bigger ones not doing anything, they don't really have any great incentive to do anything either. What has to be done there?

Ms. Jennifer McNeill: Again, we have to educate from a very high level nationally. We have to let people know that this is real. There is still the belief that this is hype, that people have created this problem to try to pad their pocket books. There's still the belief that it can't be that bad. It's really bad news.

When you go into a company that makes maybe a $10-million profit in six or seven years and you tell them they have to spend twice that to fix their year 2000 problem, it's very hard to get them to do anything. I think some of those are just going to choose to shut their doors, or else not operate their computers.

From the Fortune 500 companies, the problem we see is that not only are they slow to do anything, but their senior management doesn't want to get involved because it's seen as an IT issue. Senior managers don't understand that it's going to affect their businesses. They have an IT manager who's telling them everything's going to be okay, and they believe that person. The IT managers won't tell them the truth because they're scared they'll lose their jobs.

• 1615

So there's an issue from a personal standpoint, a human resource standpoint, but what we see is that senior management in very large organizations doesn't understand the problem, doesn't have a clue. We have to educate them. We have to spend as much time as it takes to educate senior executives about what the risks to their organizations are, because they will be held financially liable.

Mr. Jim Jones: What kinds of problems are we going to have if countries like Russia and the European countries and maybe the Asia-Pacific countries are not doing enough or doing virtually nothing? How could that impact Canada?

Ms. Jennifer McNeill: Significantly, from a financial standpoint.

We're going to be affected because we do business with so many different countries. The Asian countries have done basically nothing about year 2000. Russia, from a defence standpoint.... We have some issues with countries that may not be at war with us but may be at war with the U.S. It's an opportune time for them.

Mr. Jim Jones: Are you aware of any countries or governments making laws saying people have to comply and maybe do reporting and all of that? Is that really what Ian was referring to, some type of empowerment, but maybe even more important, some type of law such that they almost have to report on their readiness, just like an income tax return?

Mr. Ian Nunn: Yes.

Ms. Jennifer McNeill: The British government actually put a bill through about eight months ago indicating that every organization basically had to become compliant. It's impossible for them to monitor, but it did raise the level of awareness within the country about how important it is to deal with the issue.

Mr. Jim Jones: We're saying that the liability could be $1.3 trillion. Is that for Canada or is that worldwide?

Ms. Jennifer McNeill: Worldwide.

Mr. Jim Jones: That's worldwide provided that everybody does something.

Ms. Jennifer McNeill: That's right.

Mr. Jim Jones: This could be worse than the Second World War.

Ms. Jennifer McNeill: It could be significantly worse.

Mr. Jim Jones: Thank you.

The Chair: Thank you, Mr. Jones.

Mr. Shepherd.

Mr. Alex Shepherd (Durham, Lib.): I wonder if you could just clarify something for me. Maybe this is a totally dumb question, but embedded chip.... Maybe I should ask my son, since he's in computer engineering.

With respect to some of these applications you're talking about, I don't understand why they're date-sensitive. I think you were talking about the logging operation. Some people talk about elevators. What do dates have to do with them?

Ms. Jennifer McNeill: Let's use the example of a pacemaker, because that was pretty hard for me to understand: how could a pacemaker have a year 2000 problem? With pacemakers, we've identified that there are three different types. There are the older ones that do not have any type of electronic chip. Then we have a middle group that was manufactured longer than 18 months ago. Those pacemakers recalibrate themselves at a certain date, so the date is set within those pacemakers. As of that date, the person has to go back into the hospital and have the pacemaker recalibrated. The ones manufactured in the last 18 months recalibrate themselves. So there is this portion of pacemakers with that problem.

The QEII hospital in Halifax has determined that they didn't provide any of these newer ones because they didn't have the funds to do that, so the majority of theirs are older or from this middle group that has the problem.

In many cases it's a maintenance issue. It's not necessarily that the system hits a 00 and says it's the year 2000. It hits a date. Some of the fire engines, for example, have a maintenance date, and when it hits 00, they say “time to be maintained” and they shut down completely. They will not operate.

Mr. Alex Shepherd: Okay. You've answered my question.

I guess what we're all getting at is how we can get the country to take this seriously. One thing I've suggested in other meetings—and it was part of the task force recommendation—is that the federal government, through the Department of Finance, provide a rapid write-off. I know it's probably just a drop in the bucket in a way, but we could give them a 100% write-off for buying hardware that is year 2000 compliant; some of the hardware side of that.

Do you think that would show, as part of this raising of awareness, that the government is at least taking it seriously, that it is going to go out there in the community and give people a write-off similar to what we did when we entered metrication? We gave everybody a write-off to make them compliant. Do you think that would be useful?

• 1620

Ms. Jennifer McNeill: I think it's a start. I think anything we can do to make organizations understand that it's a serious problem will help. I think the more awareness that's created from government, the better our status will be. Companies will actually start addressing it.

Mr. Alex Shepherd: It says it's a communication problem. What other things do you think governments can do? Maybe we should have a video showing companies collapsing and going out of business and being sued for millions of dollars and run them on the CBC every night. Are they things the government should consider?

Ms. Jennifer McNeill: It is absolutely something they should consider, but also important is that we don't project ourselves—and this is one of the tricky issues about year 2000—as having a bigger problem than anyone else. If Canada starts projecting that they have a serious year 2000 problem to their partners throughout the world, that may create problems. We may have a recession earlier than year 2000. So there's a very fine line between educating the people within the country and telling people outside the country how bad it is.

Mr. Alex Shepherd: You said earlier than the year 2000. Are you saying there will be a recession in the year 2000 because of this problem?

Ms. Jennifer McNeill: That's my personal belief, and it's based on the information I have by working in this for years. I'm not making any predictions. Don't hold me to it. I don't want any legal repercussions. But for certain, that is my personal opinion. If we get by with a recession we'll be fortunate. You can't have 2% of businesses in Canada go out of business because they cannot operate and not have a serious economic problem. The estimate now is 30% of companies will fail. If 50% have not started, which is what Stats Canada has said—50% of companies across Canada have not done anything—it's not possible to do that much work.

The Chair: Thank you, Mr. Shepherd.

Mr. Lowther.

Mr. Eric Lowther (Calgary Centre, Ref.): Thank you, Madam Chair.

A couple of quick questions, and I invite any of the presenters to answer, but I'll focus on you, Ms. McNeill, because you have to leave fairly quickly.

As I understand it, you've been involved in this for about two years. Is that right?

Mr. Jennifer McNeill: We did our first conversion in 1993, so we've been doing the work since about 1993.

Mr. Eric Lowther: Okay. Six months ago, this committee had this thing come before us and we were all sort of thinking this will be a quick thing and we'll buy the Microsoft package and we'll all be done. But now you can see that we're much more serious.

Having been in this for two years now, have you gone through that same process of thinking this is a short-term program? Do you still feel more and more a sort of escalation, or did you see this on day one?

Ms. Jennifer McNeill: I knew there was going to be a significant problem, but I did believe companies would address it. I had people tell me as short a period of time as two years ago that they had four years. But being a programmer by trade, I know how long it takes to change code. I know how significant the problems are.

The frustrating thing for me is educating senior-level management and trying to get them to understand how significant the problem is. It's a very hard thing to do. I do see the companies are starting to move. Since January of 1998, it almost seems as if that date has registered now.

Mr. Eric Lowther: Do you think if there were the current level of awareness you're seeing, if we could roll back the clock to two years ago when you first started this, would we have a problem with the tear 2000 or would we have made it?

Ms. Jennifer McNeill: I believe in 95% of the cases we would have made it, and the other risk would have been minor. I believe if we had started—

Mr. Eric Lowther: But now you're telling us, as you did to Mr. Schmidt, I believe, that we will have problems.

Ms. Jennifer McNeill: I believe we will have problems, yes.

Mr. Eric Lowther: So could I say that this is maybe too little, too late?

Ms. Jennifer McNeill: Absolutely.

Mr. Eric Lowther: The second question I have—and please don't take offence. You make money from fixing this problem. Is there a component here of maybe a bit of...? I read an article the other day that there's a lot of hype around this, but it might be a small blip on the map come the first day of 2000 and we're all jumping through hoops prior to that. Can you address whether this is maybe somewhat alarmist?

• 1625

Ms. Jennifer McNeill: No. In fact, I try to go the other way. If I told you the things I know about some of the industries I think will fail, it would scare your socks off. So I won't do that.

I believe it's a significant problem. Every day I'm in organizations, in their code and their embedded chip groups who are trying to solve the problem, and I know what the problems are within those organizations. Those are actually people who are working on the problem. The information I provide is based on real-life examples of companies such as electrical companies, which say they are going to have 60% of their nuclear power.... They are not sure they are going to operate.

Mr. Eric Lowther: You made some mention that when you are in dealing with these companies, part of your effort is around contingency planning. What percentage...? A certain percentage is going to be, let's fix all your problems. Another percentage is going to be, gee, we might not be able to fix all your problems, so what are you going to do? What are you finding in your experience is the percentage of effort? If you had 100% effort, how much of it would be dedicated to contingency planning?

Ms. Jennifer McNeill: My recommendation is at this point about 70% of it is contingency planning, because they will be lucky to get the remaining 30% finished and tested. I'm recommending to all my clients that they do risk management. My clients are very large organizations.

Mr. Eric Lowther: Will you blue-sky for me? If you don't want to do this, you don't have to, but you have some interesting experience here and you've obviously penetrated some companies to which we have not had the access to do so. If you are uncomfortable with this, fine, but....

It's the morning of the year 2000. What is the scene?

Ms. Jennifer McNeill: To my mind the scene is that at a minimum some rural electrical power will not be available. Some telephones in that same area will obviously not be available. There will be problems with most businesses, or many businesses, not being operational; not being able to function. In the health care industry there will be significant problems with hospitals providing services. Schools will not be able to function, possibly because their heating and air conditioning units will not operate, or in the rural areas because they can't get electricity.

Mr. Eric Lowther: Thank you—I think.

The Chair: Ms McNeill, we know you have a time constraint. Whenever you have to go, we will excuse you.

Mr. Bellemare.

[Translation]

Mr. Eugène Bellemare (Carleton—Gloucester, Lib.): Before we go any further, I think our Committee should get some information on the Bill mentioned by Mrs. McNeill as she referred to Great Britain. I think that we should get a copy of it and that our research assistants should give us a report on the recommendations we should present to Parliament.

[English]

That said, Ms. NcNeill, we had the winter storm in eastern Ontario and southern Quebec. That was very drastic because it was winter. It was January. It wasn't the bitterest of winters but it was a very cold one. That could possibly be just a preview to what could happen on a nation-wide basis, or at least in certain provinces and in certain key areas of the provinces. Do you agree this is a possibility?

Ms. Jennifer McNeill: Yes. One of the senior people dealing with the embedded systems for one of the electrical utilities we work with told me the problem in Quebec was a blip in comparison to what could happen to them; a little blip on the map. They said the biggest problem they would have would be that all the electrical utilities would be in the same place, so there would be no ability to call in people to assist from other areas.

Mr. Ted Eedson: This is what we've heard as well. Not only is the deadline immovable, but the arrival there is simultaneous. When it fails, it will fail throughout. You have the time zone differences, so you will get a time zone lag. But the failure will be on everybody's doorstep at the same time.

• 1630

Mr. Eugène Bellemare: Since Ontario and especially Quebec have huge contracts with many of the states in the U.S., this could create quite an international incident.

Ms. Jennifer McNeill: Absolutely. There's so much interdependence, as I indicated earlier, between the different systems. All the power in North America is tied together. If we have one problem in any utility throughout Canada, it will significantly affect all the rest of the power at least across Canada.

Mr. Eugène Bellemare: Okay, the Hollywood show was last night. Today, some people might say we're going through all this hype and feeding a frenzy, and we're also feeding all those companies specializing in playing the role of the four horsemen of the apocalypse. How do you respond to that?

Ms. Jennifer McNeill: My recommendation is not that organizations start spending money immediately to fix the problem, but that they try to determine what the risk is. If they find out they have no risk, then they can go on to do other things.

But they're doing nothing. They haven't even checked to see if they have a problem. I don't care whether they pay me or not; I care whether they do something to be in operation.

Mr. Eugène Bellemare: As members of Parliament, we have a responsibility to alert the people. We don't have a responsibility to scare the hell out of them if it's going to create a panic that would be even more disruptive than the original malaise or impending problem.

What would you suggest the government do? This is apart from making sure that meetings happen all over the place between departments and certain parts of industry to alert industry or the private sector by having them parade here in a procession every second day. What is it we should be doing so that after January 1, 2000, we have a comfort zone, not a mea culpa zone? What is it we should be doing, aside from the information part?

Ms. Jennifer McNeill: We need to be educating the organizations on what the real problems are. I mean not just people within the lower levels of the organization, but we need to be educating our senior managers, our CEOs.

Mr. Eugène Bellemare: It appears they are all educated.

Ms. Jennifer McNeill: They are not.

Mr. Eugène Bellemare: When you say CEO, what level is that? Are we talking about mom and pop shops or others?

Ms. Jennifer McNeill: At least in the beginning, we're talking about large organizations, such as Chrysler Canada. With some of the larger companies, like Petro-Canada, the CEO is on the task force, but the CEOs I meet with from large organizations don't understand the scope of the problem at all.

Mr. Eugène Bellemare: Thank you.

The Chair: Thank you, Mr. Bellemare.

Both witnesses talked about utilities, heat, as one option. It's my understanding from discussions I've had since the ice storm that there is another option that doesn't require hydro to heat your home. If you have gas and your furnace has an automatic pilot light, it can switch over to that. It doesn't need electricity for that.

A lot of the new furnaces weren't installed that way, but supposedly there is a way to adapt them, according to one of our colleagues who used to be in the furnace industry.

It's something people may want to consider so they're not cold on January 1, 2000.

Mr. Ted Eedson: The issue there, though, is that once that heat is generated, you use a fan to pump it around the house, and the fan runs on hydro.

The Chair: I would sit close to the furnace, I think.

Mr. Ted Eedson: I'm buying a cord of wood.

The Chair: Mr. Johnston, do you have any questions?

Mr. Dale Johnston (Wetaskiwin, Ref.): No.

The Chair: Mr. Schmidt.

Mr. Werner Schmidt: One could almost become despondent by the kind of conversation we've had here this afternoon. I think the problem is very serious.

I think the government is one very good example. We have written letters to every department out of this committee asking them to tell us what it is that's being done, and not very much has come back.

• 1635

You talked about the CEOs of these very big companies, but what about the Prime Minister? What about the ministers of our departments?

Ms. Jennifer McNeill: My suggestion to one of the members of the task force, which was not taken very positively, was that I believe Jean Chrétien needs to understand very seriously what this problem is. It's as significant a problem for our country as any we've ever faced. At least he needs to be educated and needs to understand what the issues are and what the risk is. I think that's fair. I think it's unfair if he's not educated. I'm not sure whether that has happened.

Mr. Werner Schmidt: We have the makings here of a global catastrophe, not just a national catastrophe. The year 2000 will hit everybody at essentially the same time and we are interdependent. The more we build into global trade and things of that sort, the more that stuff all comes together. The dependence we have on the grid system that exists is fundamental.

You begin to wonder whether on the global scene there could be a single little unit that could cause the whole thing to stop. Even though the United States is ready, Canada's ready, and let's say 90% of industries are ready—I don't think you'd agree with 90% but let's assume that—is it possible that somebody in China who's not ready could cause this thing to crumble? Could that happen through no fault of our own but from something that exists elsewhere?

Ms. Jennifer McNeill: That's why the risk is so large for the companies. They believe if they handle it from an IT perspective they will have no year 2000 problem. They don't understand that if 30% of their suppliers fail, they won't be able to produce their products. They will not be able to manufacture.

Mr. Werner Schmidt: What would be your suggestion? You're obviously convinced. You've convinced yourself and a number of CEOs with whom you have worked. Some you still have to convince. What is it? From your experience you must know something about how to convince people who don't think it's a problem that we're now aware it is a problem. How could we do that type of thing within the government departments, within Canada?

Ms. Jennifer McNeill: From my experience, you can't tell them all the bad news, because it's too much to take. You have to give them a little information at a time. You have to let them know they're legally responsible if they're wrong.

Basically, you say to them, “If you can guarantee me your company will provide everything perfectly in the year 2000, then you have no legal or moral obligation.” That makes them at least delve into the problem a little further and understand they will be sued or possibly held responsible for deaths or problems that occur. Once they start taking the responsibility themselves, they start to do something.

Mr. Werner Schmidt: That's exactly the key, isn't it? To somehow get them to accept this is their problem? We're really talking about organizational change here or human behaviour. How does it change? From my experience, the hardest thing is to get people to the point where they accept that something is their problem. Until you reach that point, nothing changes.

What trigger have you found that will get people to agree that it is their problem? You must have had that experience. You must have seen the lights go on in peoples' eyes when they saw this all of a sudden. What triggered that?

Ms. Jennifer McNeill: What triggered that was actually seeing real life examples of failures, which we've been able to provide to them, and having them talk to people who have actually had failures so they understand it's a real problem.

Mr. Ted Eedson: The other side here is the sharing of information. We have received letters from industry saying these specific model numbers of this specific product are okay and these model numbers are not okay. We are posting that information in a sortable fashion on the Internet with the actual compliance letter so you can read from the industry provider exactly how they're stating it. Are they saying “Don't worry, guys, we're compliant” or are they saying “Following this protocol, these models are and these aren't, and this is what you have to do”? It's that type of information that we can deliver to our colleagues and to industry to really focus on the elements. We're being told we have to repair. It's quite specific.

The Chair: Thank you, Mr. Schmidt.

Mr. Lastewka, please.

• 1640

Mr. Walt Lastewka (St. Catharines, Lib.): Thank you very much to the witnesses for their work. I'm glad I will be able to ask Ms. McNeill some questions before she leaves.

I am trying to strike a balance here. You mentioned a couple of times the requirement to get the message, and it is becoming clearer and clearer to me that senior executives, CEOs, and directors do not understand the problem and are not giving their ITs the support they really need on the emergencies that are in front of them.

I know the Prime Minister has written to all the cabinet ministers to accelerate their work on the year 2000 projects. Are we at the point where the Prime Minister should be going on national TV declaring an emergency of some sort, without getting too much of a panic but getting the message very clearly to organizations, to the executives, to the CEOs, as you mentioned earlier, including the issue that it's very important to share information?

It's very important to provide information for those people who are trying to get the job done. For instance, we heard a couple of weeks ago from the Ontario Hospital Association about the 200 hospitals that Health Canada had to get certain information to before they could do their work. There is so much interdependence going on, and the follow-up of companies to make sure their suppliers, wherever they are in the world, are complying. Are we at that point?

Ms. Jennifer McNeill: I believe it would be very beneficial to have a statement from the Prime Minister. We have seen a statement from President Clinton, nationally. He was interviewed on TV and was asked about this, and he did not blow it out of proportion, but he did say it is a significant problem that our companies need to address. Even a statement as minimal as that would at least make organizations take it seriously and start to evaluate it. But the important message that has to come across is that this is a business issue, because the scope is outside of IT. If they hear again that there is a year 2000 problem, they think IT; they don't think embedded systems, they don't think suppliers, they don't think of the international relationships they have with other countries.

Mr. Walt Lastewka: To me the hydro example is a very good example. If you remember, a number of years ago we had the eastern seaboard shut down as a result of a small failure. The whole grid comes to a stop and then the whole grid cannot start up because it's too big to start up; therefore, it takes a sequence of events to start up.

You mentioned that you are working with many large corporations and that the CEOs and directors are not really convinced yet. Why not? What is holding them back from being convinced? What do you think is the thing they need to light the fire underneath them?

Ms. Jennifer McNeill: One example is a company that is one of the largest corporations in Alberta, which I was asked to audit just on the IT basis in terms of how their project was doing. They've had a plan in place since 1996 to solve the problem. The information that was going to the CEO of the company was that everything was okay. In reality, they have done nothing. They have 310 applications that have still not been started yet, and they are huge. So the the person who was in charge of the year 2000 problem was saying “Everything is going to be okay”. They were afraid they were going to lose their job if they told how bad it was.

We've provided that information to senior management, but at this point they will not get their 310 applications finished, and those are the mission-critical ones; those have already been prioritized according to which ones are mission-critical. That is significant. It's a lot of work that has to be finished, and we are just starting to do risk management and contingency planning with them.

The main reason is human nature and the reluctance to take bad news to your boss. It's part of society. What we recommend is that the person report to the CEO on a daily basis. Give the information on where they are weekly and where they are with their project. I go into an organization and talk to the year 2000 project manager, who says, “Our project is in shambles; we're losing people and we can't get it finished”, and the next day I'll see the CEO being interviewed in the paper, and he says, “We have no year 2000 problem; we're all fixed.” It's unbelievable. They have no idea what they're doing.

• 1645

The Chair: This is your last question, Mr. Lastewka.

Mr. Walt Lastewka: There has to be a stronger mechanism to get to every senior executive, CEO, and director. The directors are also responsible. We've already heard that they want to get off the hook on liability. That message should be made very clearly, and maybe that's what this committee needs to do in an interim report or something. Executives and directors are responsible, and they are liable for not fixing it. Just saying it's okay is not good enough.

Ms. Jennifer McNeill: That's right.

Mr. Walt Lastewka: Thank you.

The Chair: Mr. Nunn, do you wish to reply?

Mr. Ian Nunn: I would like to comment. The idea of the Prime Minister making a statement is a good one; that would be very useful. It has to be done very carefully so as not to cause any kind of panic, but it is perhaps the sense of direction we need at this point.

I would also suggest we have, again, a national organization, body, office, or whatever that has a real understanding of the problem, and I would suggest membership in that be required.

The question you should ask is how well do you sleep at night? If you sleep well at night, you don't understand the problem, really, because it is much more serious than people generally believe. It's not a technological problem; it's a business problem; it's an economic problem.

If I can just pose a simple question, what percentage of business failures do you accept? Is it 30%, 10%, 5%? What will you accept?

General Motors has about 7,000 first-line suppliers. If 5% of those go out of business, General Motors will shut down until they can make alternate arrangements. It could be days, more likely weeks, before they get their supply chains back in order, assuming they can do that.

We know the effect of an auto strike on the economy—one auto company. What happens when you shut down all the auto companies at the same time? What happens when the steel industry goes down at the same time? Is this not a reasonable question to ask or a reasonable projection to make?

The recent Asian problem was like an ice storm in world currency markets and world economies in that it was precipitated by some currency crises in a couple of countries, a couple of bank failures, and a couple of brokerage house failures. We know that the third world, including Asia, is not going to be ready. We know on that account that there are going to be massive bank failures across the entire region. What is that going to do to our economy, let alone whatever local effects might be happening?

We need careful consideration of these issues, putting them together and coming up with contingency plans based on this, because I don't see how these scenarios can be avoided. This is very serious.

The Chair: Thank you very much, Mr. Nunn. We appreciate those comments.

Mr. Jones.

Mr. Jim Jones: Let's continue with what Walt was saying, because that's where I wanted to go.

Let's say Ontario Hydro had a problem and the nuclear reactor shut down, valves started opening up, and heavy water was spilling out. Who is responsible? It ultimately could be the board of directors. If Mr. Chrétien is going to do anything in that area, maybe it's not necessarily getting on TV but writing pretty scathing legal letters to Mr. Harris and Mr. Bouchard and anybody who could be liable for something.

• 1650

In this case here, it's unlike the ice storm—and the Asian flu—in that the ice storm was a natural disaster. Nobody is really on the hook for a natural disaster other than if you can put them on the hook for not having an emergency back-up plan or something like that.

But in this case here, I think people can be on the hook. If they're going to be on the hook, I think people should know they're going to be on the hook. They should be starting to do all the checks and balances to make sure their companies are ready.

I think the onus is maybe on Mr. Manley and Mr. Chrétien and some of the other people who have that responsibility to make sure these people know they're on the hook.

Mr. Ted Eedson: From our experience at the subcommittee level, we're hearing that the departments are making great efforts to get their houses in order. We at the subcommittee level, on subjects such as this question about hydro, realize it's not within our purview to attack this problem. We have elevated it up the line to the interdepartmental working group. I think the interdepartmental working group wants to elevate it up the line to the reporting structure there.

But you're right; it is a question. I know from the presentation of Ontario Hydro their Y2 commitment. The CEO has committed to this. It is on the performance pay of their three VPs. Their presentation looked very interesting. They are attacking the problem at an appropriate level. They have created a time line when they feel they will be competent.

We now have to address the other provinces to see if they are at the same degree of readiness, and that's an issue.

Ms. Jennifer McNeill: I think it's also significant to understand that the bid for mission-critical assistance on the applications for the federal government was just provided. There were seven of us on this list. In that group of companies we're being asked to do $1.1 billion worth of work, all mission-critical.

So if you can imagine getting that kind of work done, within the next period of time, before December of 1999, it's not possible to hire that many people if we had the resources. So we're going to have some mission-critical systems within the federal government where they can't provide funding to provincial governments because they are not finished.

Mr. Jim Jones: But I think it's also important that we somehow get to these chemical plants and these oil refineries that could have shutdowns and things that could really play havoc with the environment. We have to make sure the board of directors, not only the management system but also the directors, is ultimately responsible for this. I think this has to come from the top.

The Chair: Thank you.

Thank you very much, Ms. McNeill. We really appreciate your being here today, and your comments.

Mr. Murray.

Mr. Ian Murray (Lanark—Carleton, Lib.): I want to ask about the public safety aspects of this. Mr. Jones was about to touch on that, talking about oil refineries, for example.

I'm not sure if you gentlemen can answer this. I know you're representing government departments.

Let's say you have an oil refinery that's an extremely complex organization, with all kinds of controls and pipes and smokestacks. Would this problem essentially mean that the refinery would shut down or does it mean that we could be faced with some catastrophic safety problems as well?

Or do you know that? It may be unfair to ask you that question.

Mr. Ian Nunn: It would be speculation.

Mr. Ted Eedson: From what we've heard from Hydro on the nuclear plants, they are built fail-safe so that they will shut down. We've also heard from the Atomic Energy Control Board that where they feel there's a safety issue they will shut them down.

That doesn't help us as Canadians, because we will be protected in terms of the safety of the plant but we won't have any power. But I would suspect that a lot of those types of processing plants are in a fail-safe mode and would shut down and prevent catastrophe to the environment. The repercussion is that we as Canadians are missing that service.

• 1655

Mr. Ian Murray: We could very easily find ourselves with a critical oil or gasoline shortage within days of this problem kicking in. I can imagine that refineries could shut down and people would have no access to gasoline. There could be, again, public safety issues there just in terms of fire trucks, ambulances, and police cars having access to gasoline.

We'd be looking at the financial implications of businesses and banks failing and—

The Chair: If there's no money, we can't pump gas either, Mr. Murray.

Mr. Ian Murray: That's a point as well.

Mr. Ted Eedson: Take a look at the ice storm. The critical nature there was that in Quebec the locomotives were put off the rails and brought in to be beside the fire stations. In this area, the federal government shut down the complex in Hull in order to provide power to the residents of Hull. I think we would have to have contingency plans in that respect, and it's my understanding, through information we've been provided at the interdepartmental working group, that out of the discussions with the Prime Minister's office they are now tasking Emergency Preparedness to start working on those types of contingency plans in order to protect Canadians in this situation.

Mr. Ian Murray: I think you can gather that we've been rather shaken up by the testimony we've heard here this afternoon. We're on this continuum of having thought, as Mr. Lowther was saying earlier, that maybe it's a question of getting a Microsoft package, and now we're really quite concerned as a committee—and I think I can speak for most of us and say that—and at the same time we have to be very responsible in whatever we put out in terms of a report.

Again, both you gentlemen are public servants. You're members of a subcommittee of a larger committee of public servants, and one would assume that as such you're rather sober individuals—I mean that in the best sense of the term.

In regard to what you've heard from Ms. McNeill today, do you think you agree with what she has said to us, that she has not been alarmist? From what I've gathered listening to you both, you've essentially supported what she was saying in terms of what might happen.

I think where we are right now is that it's a question of what is our responsibility as a committee to try to highlight this as a real problem for Canadians. Is it your opinion that we would not be unduly alarmist and irresponsible if we were to issue a report in very short order to try to gain more public attention to this problem?

Mr. Ted Eedson: On the infrastructure issue, 100%. This has been pointed out in our committee. It's been raised at the interdepartmental working group. There is a major concern on power.

We're now finding out from some of the other utilities that they do have operational issues. They have IT issues, which means they may not be able to charge us, and we're not really concerned about that, but what we are concerned about is the pumping issue. Will the product be at the door?

Our experience really hasn't gone beyond the federal context of the areas we're in, so I'm very interested in hearing what she's saying about industry. But we know from our perspective that those things would be out there.

Again, on infrastructure, 100%, we need to get on with doing something.

Mr. Ian Nunn: I believe this is a difficult and delicate issue to deal with in terms of raising awareness, getting the word out that we have a serious problem that we have to approach in a serious manner, without causing exceptional concern or panic of any kind. I am certainly not skilled to put that together, but you have a challenge.

Mr. Ian Murray: Thank you.

The Chair: Thank you very much, Mr. Murray.

Mr. Lowther.

Mr. Eric Lowther: I just need a couple of quick things. For clarification, what is this subcommittee you're on? I'm sorry, I missed the first part of it.

Mr. Ted Eedson: This is a subcommittee of the interdepartmental working group on year 2000. That committee is partly sponsored by Treasury Board through the chief information officer. The subcommittee actually came about because as department representatives sitting on the working group we found it was very IT-oriented and we had to deal with elements that dealt with embedded systems.

• 1700

Mr. Eric Lowther: So you could report up to the chief information officer then?

Mr. Ted Eedson: We report to the chair of the IWG, who would be reporting to the chief information officer.

Mr. Eric Lowther: Okay, great. If I understand your response to Mr. Murray, generally you're in agreement with the level of urgency Ms. McNeill articulated. Is that correct?

Mr. Ian Nunn: Yes, and, if I may say so, she draws on a lot of actual experience that we do not have access to.

Mr. Eric Lowther: Understandably.

Could I throw something at you and maybe to the rest of the committee members? We all want to escalate this without causing panic. Would it be conceivable that we could do something like have a year 2000 day before the year 2000, or maybe a couple of them? On that day, could we actually line up all the different infrastructures and say today we're going to do everything as if it were the first day of the year 2000? People would write their cheques and phone companies process their calls and utilities plug in the year 2000 wherever they can. Out of this live test a whole bunch of things would emerge: what doesn't work, what's going to happen if it doesn't work, improvement of contingency plans, etc.

In the process, if it came down from the Prime Minister's office or from the government in some way, saying this day we're going to try this out, is that so practically unworkable that it would just fall apart, or would that kind of thing perhaps be fruitful?

Mr. Ian Nunn: My gut reaction is that it is probably too complex an issue. Within the government we haven't even done a government-wide test of our systems yet. Granted, they're still undergoing repair, but an integrated test across government-wide systems hasn't been done yet. I'm not sure it could be done across the country.

Mr. Ted Eedson: My comments again go back to the presentation from Ontario Hydro. Their problem is that it's not the elements of the reactor, it's the fact that they would have to take a reactor off-line to be able to test all the elements at one point. In essence, what you're talking about is taking Canada off-line to test all the elements at one point, and that would be very difficult to organize.

Mr. Ian Nunn: We know from our early experience that some systems, when they're advanced to the date 2000, cannot be restarted. They fail to function afterward. A portion would not come back on-line, or would not come back on-line properly.

The Chair: Thank you. I'll be coming back to you.

Mr. Shepherd, please.

Mr. Alex Shepherd: Ms. McNeill was talking about the private sector. We all came to some agreement that because of the inabundance of hardware and computer chips, it was impossible to have the country compliant. Doesn't it also follow that it must be impossible for the government to be compliant?

Mr. Ian Nunn: I would agree. In the area of laboratory equipment, for instance—which is one area where I've been working in terms of coordinating effort amongst the departments—a number of departments have devices called mass spectrometers, which are very costly and very large. Consequently, the manufacturers of such equipment don't have a lot of them sitting on the shelf. They realize that if they test these and find they're not compliant and they have to replace theirs in laboratories all across North America—both private and public have to replace at the same time from a limited inventory, and these things can't be built overnight—somebody is going to go without.

So the people who get in first and find the problem will be the first to get served. The people who get in last, may not.

• 1705

Mr. Alex Shepherd: You can find a piece of equipment, but obviously we must have embedded chips throughout our system as well. There must be a wide basis of areas of possible failure. Is there not?

Mr. Ted Eedson: I think the question is to do the inventory and to understand the critical nature of the failures. If I pull out my Casio calculator, this is not fully Y2K compliant—and I have checked this. It does go from January 1, 1901, to sometime beyond my life expectancy in 2000-and-something, but what is the critical nature of it? It means I can't record meetings you went to back in 1901.

Likewise, we talked about your home. I know I have to check VCRs. A VCR, when I put in a month, a day, and a year, will come back and tell me today is Tuesday. So there's an issue there. Likewise, I have a set-back thermostat that allows me to program five days, one day, one day. As long as Monday follows Sunday, it's Y2K compliant.

I think we have to get an inventory of where these dates are and do a critical analysis on those dates. An elevator in a hospital: critical. An elevator in a government building: if that elevator stops functioning, it's very annoying but we do have stairs we can take. If a fire system in a building malfunctions, we can't allow people in the building because it doesn't meet our legislated requirements.

So we have to take inventory. We have to do an assessment and get the things repaired or build a contingency around them.

Mr. Alex Shepherd: So we haven't done the assessment yet.

Mr. Ted Eedson: We're in the process. The departments are in the process of doing their best to do that inventory and that assessment now.

Mr. Alex Shepherd: But we haven't even got an inventory of the problem, let alone trying to solve the problem. Isn't that what you're saying?

Mr. Ted Eedson: In varying degrees, yes.

The Chair: Thank you, Mr. Shepherd.

Mr. Schmidt.

Mr. Werner Schmidt: Thank you, Madam Chair.

I'd like to follow up on the point Mr. Lowther raised. Maybe we can't have a national year 2000 simulation, but maybe we could simulate it on a smaller basis. Do it, say, on an Ontario electricity grid. Take that so the whole province gets involved. It's pretty big, but it's not the whole country. I wonder if that could be done. It seems to me that simulation is a pretty significant issue. It's not the real thing, but it could give us a pretty good idea of what to expect if something did go wrong. Is that a feasibility?

Mr. Ian Nunn: It strikes me as being very feasible. It would take coordination, but I think you could do it. Do it across the utilities, across the telecoms.

Mr. Ted Eedson: The other side to your question, though, is to take a close look at the ice storm and the contingency plans that were supposedly in place. Do an analysis of how well those contingency plans worked in order to get a better feel for our preparedness to be able to handle that type of situation.

Mr. Werner Schmidt: Yes, that's correct. But the problem here is quite different. The ice storm had a very physical component to it. This one does, too, in a sense, but in a sense it's a control function, by and large. That's where the failure, I think, will happen. It's in that control function, the initiation of the switching of data, the switching of information from one system to another. That is really what we're talking about here, I think. It is certainly one element of it.

It seems to me that we don't fully understand how integrated the electrical grid system really is. It's one thing to talk about the grid system. That's the supply of electricity to all the various consumers. But I think of even greater significance is just exactly what that electricity does in a particular manufacturing business, or in an infrastructure of transporting information within departments. These are all a part of one operation, which is electrical.

I think the key point here is that there's a real shortage of electrical engineers. In fact, the whole nature of electricity, if you push it back far enough, really isn't thoroughly understood. That's why the embedded chip problem is so difficult. There's a lot of stuff that was never even dreamed of when those chips were put in there. They became date-sensitive, and in some cases didn't even know they were date-sensitive. In fact, they don't know today that they're date-sensitive. The very people who put them there don't know that. There are electrical engineers who say they could be, but they don't know for sure.

• 1710

So if we could perhaps isolate it into some sections and then take one as a sample, imperfect as it would be, I think this is why we might still do something.

Mr. Ian Nunn: May I offer a comment on why I think this would be a valuable approach?

If everything is left until the year 2000 and there is widespread failure of all kinds of embedded systems, the technologists who are available to work on repairing the problem are going to be scattered all over. If you could take an isolated segment, such as utilities, and do things in advance by lining up, perhaps on a contingency plan, your technologists and universities and industries everywhere as backup in case something significant does fail, you could then bring a massive resource to work on the problem should it be necessary.

Mr. Werner Schmidt: Yes, well, this is a whole different section here, but I heard Ms. McNeill say there will be many bank failures. The words she used were “massive bank failures”.

The Chair: That was in Asia.

Mr. Werner Schmidt: No, she didn't say that. She said there will be massive bank failures.

The Chair: In Asia. She said that's in the Asian markets.

Mr. Werner Schmidt: And that doesn't affect us?

The Chair: No, she didn't say that.

A voice: And you believe that won't impact us?

Mr. Werner Schmidt: Exactly. That's the whole point. Is there an assumption, or do we as a committee really believe that if there are massive bank failures in the Asian banks they won't affect us?

Ms. Marlene Jennings: Nobody said that.

Mr. Werner Schmidt: You all said...well, okay.

Ms. Marlene Jennings: Let me correct something: It's very important, if you're saying thousands of banks—

Mr. Walt Lastewka: We didn't want you to put your political spin on it. We want you to be factual.

Ms. Marlene Jennings: That's right.

Mr. Werner Schmidt: I'm not trying to put a spin on this at all. It's not a political spin. If it was a spin, the spin I was trying to put on it was intended to indicate that there is no such thing as an isolation in this thing.

You see, people here have talked about this as a business problem. People have said this is an economic problem. I'd go one one step further: this is an existence problem. It's almost a life and death kind of a problem. We can't ignore this kind of thing just this way.

I remember that we asked the question of...I think it was the Canadian Manufacturers' Association when they were here: How do we balance off the seriousness of the problem with the reasonableness of saying that it's not a panic tomorrow morning, that you don't all have to take your money out of the bank? How do we keep people in a relatively stable position?

When they were here, the banks assured us that they are in control and are ready. I talked to a bank vice-president who's in charge of this system, and he said they are ready. I asked him again if they were. His reply was that we shouldn't forget that if it doesn't work, they can still figure things out by hand. Well, that's not adequate. That's no contingency plan. But that was his contingency plan. Well, how in the world are you going to do that when there's massive bank failure? I don't care where it is in the world. You can't write fast enough to take care of that situation.

The Chair: Thank you, Mr. Schmidt.

Do you have a reply to that, Mr. Nunn or Mr. Eedson?

Mr. Ted Eedson: Well, I'm talking out of my area of expertise, but as a Canadian, there are two things to the two areas you're talking about there. One is that I get my money out of the bank with my bank card, which runs on electricity, because the machine runs on electricity. The second thing is that my bank card goes through a telecommunications line, probably to Montreal, and very quickly comes back and spits money out to me. When you put those two together, yes, you're right, the bank can be fully compliant. But if we don't have the infrastructure in place, it fails.

Mr. Ian Nunn: I do believe Mr. Schmidt is correct in his observation of the complexity and interconnectedness of our civilization. I think of the butterfly metaphor for chaos, where the butterfly in Brazil affects the weather in Canada. I think this event will be a demonstration of that. Things will happen around the world and will have a direct impact on us, and they're things we will never foresee because we couldn't imagine that they would be affected. All I can suggest is having good contingency plans in place for whatever.

The Chair: Thank you, Mr. Schmidt.

Mr. Lastewka, you have one question.

• 1715

Mr. Walt Lastewka: I just wanted to go further on where Mr. Schmidt was going earlier. The banks told us they are taking departments and they are taking data from those departments and have constructed an area where they are actually testing. In my understanding from talking with them they have made it at a micro-level, so they can take the department systems and move them over to the testing system to test that they have everything ready.

Are we doing that anywhere in the government system also? Can we not do that, if we are not doing it—to test that the departments are compatible or are ready for the year 2000?

Mr. Ted Eedson: Within the various areas of embedded systems, where possible, we are. Again, I think Ms. McNeill talked about this. It is difficult, because you are back to the manufacturer, because we don't have the expertise on how they put the gizmo together. Then you get into the statement we heard from Ontario Hydro. It's very difficult to take a nuclear plant out of production to do that sort of test.

Within the embedded systems we are doing what we can. We are depending on the industry's response. We have been very elated with some of those responses, but it doesn't negate us from doing the test. To get a good response and then follow that up with a test with the vendor on site to validate the response...then we can say okay, that model, that version, that issue—okay, it's gone; let's focus on the other issues that are still on the plate. We are doing our utmost to try to do those and then provide the information to the world.

Mr. Walt Lastewka: My understanding is the banks were taking the interconnected systems and they have invested...in fact, almost half their money is being put into checking the systems; validating the systems. They are actually doing that type of review with their integrated systems, away from their actual work, because they were doing it on Saturdays and Sundays to make it separate. In fact, they said they were going to come back to us in the fall to tell us how far they have got. Basically yes, they were duplicating, but they were taking those integrated systems and checking them to make sure they were year 2000 compatible.

Mr. Ted Eedson: It becomes more difficult to duplicate if you are talking about the heating, ventilation, air conditioning system in a building such as this. It's a series of components from various manufacturers. We have to depend on the manufacturer to come in, do an analysis, give us a report, and act on that analysis.

Mr. Ian Nunn: It is my understanding that for mainframe systems, if that is what you are mainly talking about, a facility such as you have described is being constructed and a number of departments will be using that facility. Also, I believe at some point there will be government-wide testing of systems, so all the major government systems will be tested on passing transactions back and forth.

The Chair: Mr. Nunn and Mr. Eedson, just before we complete, there are two issues I need you to clarify.

Ms. McNeill made a comment, and I don't know if you replied to it or not, Mr. Nunn, that we were behind the United States in embedded chips. My understanding from an earlier meeting was that we were actually ahead of the United States government on the IT systems. Could you just clarify that for me?

Mr. Ian Nunn: It is my understanding also that Canada, Australia, and the U.K. are foremost in Y2K preparedness, with Canada either first or second, depending on who you talk to and what month it is.

The Chair: About health, you also made a statement earlier on in the meeting that Health Canada didn't have much to say about what was happening in the health sector. We had Health Canada witnesses before us and they told us very clearly they regulate the devices that are out there and could deregulate anything that is currently regulated and is not year 2000 compliant.

Mr. Ian Nunn: That is correct. Whatever statement I made was incorrect.

The Chair: Thank you. I'm not sure it was incorrect. Maybe I just misunderstood it. I just wanted to clarify it for the record.

On behalf of the committee, I really want to thank you for being with us today, Mr. Nunn and Mr. Eedson, and Ms. McNeill, who had to leave earlier.

• 1720

I don't know if you have any final comment you want to leave with the committee, but I offer that to you now.

Mr. Ted Eedson: I'd make the comment that the work of this committee, and as we've seen it reported in the press lately, is really...on the one hand, it's increasing the workload on my desk, but on the other hand, I appreciate that greatly.

Some hon. members: Oh, oh!

Mr. Ted Eedson: Management's concern with this has really...we've popped a bubble and it makes our work that much more difficult, but we're at least doing it. Thank you very much.

The Chair: Thank you, Mr. Eedson.

Mr. Nunn.

Mr. Gary Nunn: I'd like to thank you for the opportunity of appearing here. I've been overwhelmed by your understanding of the problem and by your knowledge of and your concern about the problem, and I have faith that you will escalate this and move the Y2K problem forward significantly for the people of Canada.

Thank you very much.

The Chair: Thank you.

The meeting is now adjourned.