http://www.lasvegassun.com/sunbin/stories/nevada/1999/oct/28/509482192.html

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October 28, 1999

Company hired for $6 million to fix any Nevada Y2K bugs goes bankrupt

By Brendan Riley ASSOCIATED PRESS WRITER

CARSON CITY (AP) - The Silicon Valley firm hired for about $6 million to fix any Nevada Y2K bugs has gone bankrupt - raising questions about the state's alternatives in case the fix doesn't work.

Marlene Lockard, chief of the state Department of Information Technology, said Thursday she has confidence in the Y2K debugging system Nevada developed with the help of MatriDigm Corp. of San Jose, Calif.

But Scott Scherer, Gov. Kenny Guinn's legal counsel, said a review of the MatriDigm contract is warranted to make sure the state is protected should an infestation of Y2K bugs develop.

MatriDigm, which had numerous Y2K-related contracts, had been working on a deal with a 31 percent owner, Zitel Corp., to give Zitel full ownership.

The deal fell through in late September. On Oct. 12, MatriDigm filed a Chapter 7 bankruptcy petition in federal court in San Jose and promptly closed its doors. An answering machine at MatriDigm cut off repeated calls made Thursday in efforts to reach a spokesman.

Lockard, contacted by phone as she boarded a plane in Indianapolis, Ind., for Nevada, said the bankruptcy action isn't a problem.

"Nothing happens, because all of our (computer) codes have been renovated and they have been since a year ago," she said.

But Scherer said the MatriDigm contract still must be reviewed to ensure Nevada isn't at risk should the Y2K fix not work as expected on Jan. 1, 2000.

"It depends on the contract and whether MatriDigm had some sort of insurance policy or some other source that we could collect from, assuming we have a problem," Scherer said. He added that the state's contracts usually require such protections.

The Y2K computer problem stems from computers not designed to account for the next century. Machines that aren't altered will read 2000 as 1900. Some people see it as a minor glitch while others have predicted apocalyptic-like horrors.

Lockard's agency has been working with state agencies to ensure their computers are ready, spending most of the year testing the new system. The agency also has been helping county and municipal governments to coordinate Y2K preparation efforts.

Lockard said the process began in 1996 when the state agreed to a test agreement with MatriDigm. After some testing, the state entered into a contract with the company. Changes in computer codes were saved on a compact disc and sent to the company, which debugged them and sent them back.

The state has 11 people devoted solely to working on Y2K solutions, in addition to programmers in various agencies.

-- Homer Beanfang (Bats@inbellfry.com), October 29, 1999

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-- Homer beanfang (Bats@inbellfry.com), October 29, 1999.