Title: All Federal Grantees and Subgrantees about Y2K-- Dear Colleague Letter Date: September 18, 1998 Dear Colleague, All Federal grantees and subgrantees need to be aware that non-year 2000 (Y2K) compliant systems may affect their ability to account for Federally funded programs in accordance with Federal requirements. To assist all Federal agencies in advising grantees, the Office of Management and Budget of the Executive Office of the President has requested all grant-making agencies issue the attached advisory for financial management systems to help ensure uniformity and minimize confusion. On June 27, 1997, NSF issued Important Notice (IN) No. 120 "Year 2000 Computer Problem" to Presidents of Universities and Colleges and Heads of other NSF Grantee Organizations to remind NSF awardees of their responsibilities under NSF grants and cooperative agreements. This Notice remains operative for NSF grantees. Two significant points in IN 120 were: 1. The Y2K problem is included in the recipient's already stated responsibility to maintain the scientific, administrative, and financial infrastructure of the activity being supported. The Y2K compliance requirement applies to the grantees sub-recipients, which is covered by both the NSF Grant General Conditions (GC-1) and the Federal Demonstration Partnership NSF-Agency Specific Requirements. 2. NSF should be notified if a recipient concludes that the Y2K problem is likely to have a significant impact on its ability to carry out a funded activity. Funding for Y2K compliance needs will be approached on a case-by-case basis. Another purpose of this follow-up letter is to alert you that we have established a Y2K website on NSF's Home Page at . We hope this site will help you understand the problem, assess your risk, and manage the potential impact. If you become aware of potential significant impacts to your NSF sponsored activities, please contact, through your Grantee Organization, the cognizant Grants Official cited in your grant letter. Thank you for your cooperation. ________________________ ________________________ Joseph L. Kull Linda Massaro Chief Financial Officer Chief Information Officer Attachment September 14, 1998 ADVISORY TO GRANTEES AND SUBGRANTEES FROM: Joseph L. Kull, Director, Office of Budget, Finance and Award Management, and Chief Financial Officer SUBJECT: Non Year 2000 Compliant Computer Systems May Not Meet Federal Grant Requirements The Year 2000 Issue The Year 2000 (Y2K) Issue concerns the ability of data processing systems to process year-date dependent data accurately beyond the year 1999. It is a broad operational problem, as well as an accounting systems problem. Systems that are not Y2K compliant may not be able to continue to process information in accordance with Federal management and program specific requirements. The inability to process information in accordance with Federal requirements could result in a requirement to return funds that have not been accounted for properly. Federal Grants Management and Program Specific Requirements Federal grants management requirements are contained in the OMB Circular A-102 Common Rule, "Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments" and OMB Circular A-110, "Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations." These regulations require that grantee and subgrantee financial management systems be capable of providing certain information, including: (1) accurate, current, and complete disclosure of the financial results of each federally-sponsored project or program in accordance with the prescribed reporting requirements; (2) the source and application of funds for federally-sponsored activities; and (3) the comparison of outlays with budgeted amounts for each award. In addition, implementing statutes and regulations for certain Federal programs may require that systems make certain calculations or provide specified data, which may not be possible if systems are not Y2K compliant. For example, programs that provide assistance to individuals may have time limits. Such systems must be able to calculate the passage of time accurately to ensure assistance payments do not exceed prescribed limits. Loan programs may require that interest be calculated on outstanding balances over time. Accordingly, loan systems must be capable of calculating interest payments over the period covered by loan agreements. Grantee/Subgrantee Actions Grantees and subgrantees should identify systems critical to the management of federal programs (mission-critical systems) and assess whether these systems are Y2K compliant. For those systems that are not Y2K compliant, grantees and subgrantees should take immediate action to remediate the Y2K problem and validate the success of the remediation effort. Since grantee and subgrantee data processing may be performed by outside entities or be dependent upon data received from outside entities, the assessment should include inquiries of these organizations about their Y2K assessment, system remediation, and testing efforts. The timetable for completing this process should ensure that properly functioning mission-critical systems are in operation before existing systems will cease performing mission-critical functions. Grantees should advise Federal grantor agencies if the assessment discloses significant Y2K problems or if the grantee cannot complete the remediation and testing phases before systems cease performing properly. Similarly, subgrantees should advise grantees of significant Y2K problems or of an inability to complete systems testing and validation before systems cease operating properly. This will assist Federal agencies, grantees, and subgrantees with contingency planning. Grantees should contact the Grant Officer/Specialist about the use of Federal grant funds to address Y2K problems. Questions about this Advisory Grantees should direct questions about this advisory to the NSF Policy Office at policy@nsf.gov. Subgrantees should direct questions to the non-federal organization providing them with the most Federal funding. Additional Y2K Resources The General Services Administration's Office of Information Technology maintains an Internet site (http://www.itpolicy.gsa.gov) which includes valuable information about addressing the concerns discussed in the advisory. Check under the heading "Year 2000 Directories." Joseph L. Kull