Lapses in year-2000 preparations by the Small Business Administration could jeopardize its capacity to guarantee and originate loans next year, according to a General Accounting Office report.

The congressional agency said the SBA claimed to have renovated and tested 42 "critical" computer systems as of June. The SBA also said it had reached agreements with 38 of the 58 outside parties with whom it exchanges data, including one responsible for 90% of all such exchanges. The SBA's total year-2000 expenditures between 1996 and 2000 are expected to reach $10.6 million.

However, the Aug. 27 GAO report, which surfaced Tuesday, contends that the SBA has not independently certified its computers' readiness. Nor has it tested the readiness of certain other software programs, such as one used to help service disaster loans. In addition, the report said, the SBA failed to develop test cases for some "key business processes" and did not track results from those tests it did conduct.

As a result, the GAO said, the SBA "lacks reasonable assurance" that its systems will survive the Jan. 1 rollover date intact. "If not adequately addressed, the Y2K computing problem poses significant risks to SBA's ability to provide . . . services to more than 490,000 small businesses nationally," the GAO concluded.

The GAO recommended that the SBA test and independently certify all systems, develop scripts to test all key business processes not already tested, involve regular staff in the testing processes, and conduct thorough tests with all 58 external partners.

An SBA spokesman rebutted the GAO's findings. "We're confident that we're ready, but we're going to continue testing all the way through this year anyway," he said. "Our systems don't exactly match (the GAO's) testing guidelines, and I think that's probably where the difference comes." -- Scott Barancik

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.