Fed Plans Upgrade of Backup Site

The Federal Reserve System, struggling with a computer outage that has kept a contingency site tied up for months, is planning a rapid upgrade of its disaster recovery capabilities.

Fed official said that equipping the site to handle two bank outages simultaneously should be accomplished as early as this fall. However, the central bank won't start work until its current stricken tenant moves out, probably in August.

On July 5, the Fed issued an invitation to vendors to bid on the additional computer memory, software, and communications equipment needed to expand its data processing backup facility in Culpeper, Va. Fed officials expect to issue contracts by early August. They did not disclose the estimated cost of the upgrade.

Crises Have Brought Concern

Bankers' concern over disaster recovery has been heightened over the past few years by the San Francisco earthquake, Hurricane Hugo, and the weeklong blackout that afflicted Wall Street banks and investment houses last summer.

The New York Federal Reserve Bank then became the first Fed bank ever to move its operations to a disaster recovery site.

The New York Fed is one of several that own and operate their own sites, while 11 other Fed processing centers rely on the Culpeper site. The facility is designed to handle only one bank outage at a time.

The Fed's current problem is the outage at the Minneapolis Fed that began in April. An asbestos-lined pipe burst in a wall above the computer room, damaging the bank's mainframe and forcing the move to Culpeper.

The bank does not plan to move its operations back to Minneapolis until August, leaving the other 10 sites vulnerable.

The Minneapolis outage "raised the level of concern about our overall recovery capability," said Doug Fleming, disaster recovery manager for the Federal Reserve System, who is based in Kansas City. "We recognize we need the ability to support more than one site at a time."

Under the Fed's plans, the Culpeper facility will be reconfigured not only to handle two simultaneous bank outages but also to handle the operations of the two largest Fed districts that rely on the site Mr. Fleming said. By most measures, Chicago and Atlanta are the two largest districts.

By choosing to expand the existing facility, rather than build a new one, the Fed can work more quickly and contain its costs.

Capacity to Be Doubled

Under the plans, the Fed will upgrade its single International Business Machines Corp. mainframe and add personnel, in addition to increasing computer memory and adding data communications equipment.

Hot-site centers already have the necessary hardware, software, and communications lines installed for quick recovery after an outage.

In addition to Minneapolis, 10 other Fed offices around the country and the board of governors in Washington use the Culpeper, Va., site for primary backup. Besides New York, the San Francisco and Los Angeles banks have their own "hot site" facilities.

The Culpeper site will continue to handle "critical" functions such as accounting, funds transfers, automated clearing house, securities transfers, and treasury drafts.

Some Fed offices will use the site to provide software backup to functions that operate the reader-sorters for check processing in each Fed office.

Other Upgrades Delayed

Until the work at Culpeper is completed, Fed banks that use the site will have to put on hold any individual plans for computer system upgrades.

But Fed officials have decided that they cannot begin work on reconfiguring the Culpeper site until the Minneapolis Fed moves out.

"We don't want to make changes at Culpeper that could impact their operations," said Mr. Fleming.

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