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U.S. Securities and Exchange 

Commission

FY 2017 Service Contract Inventory Analysis

Office of Acquisitions 

SEC Headquarters

Washington, DC 20549
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I. INTRODUCTION

The Securities and Exchange Commission (SEC) is a United States Agency with a 

mission to protect investors, maintain fair, orderly, and efficient markets, and facilitate 

capital formation. In addition to the Securities Exchange Act of 1934 that created the 

agency, the SEC enforces the Securities Act of 1933, the Trust Indenture Act of 1939, 

the Investment Company Act of 1940, the Investment Advisers Act of 1940, the 

Sarbanes–Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer 

Protection Act of 2010, and other statutes.

It is the responsibility of the Commission to:

• interpret federal securities laws; 

• issue new rules and amend existing rules; 

• oversee the inspection of securities firms, brokers, investment advisers, and 

ratings agencies; 

• oversee private regulatory organizations in the securities, accounting, and 

auditing fields; and 

• coordinate U.S. securities regulation with federal, state, and foreign 

authorities. 

The SEC consists of five presidentially-appointed Commissioners, with staggered fiveyear terms. One of them is designated by the President as Chairman of the Commission 

— the commission’s chief executive. By law, no more than three of the Commissioners 

may belong to the same political party, ensuring non-partisanship. The commission’s

functional responsibilities are organized into five divisions and 23 offices, each of which 

is headquartered in Washington, DC. The Commission's approximately 4,600 staff are 

located in Washington, D.C. and in 11 Regional Offices throughout the country.

The Commission convenes regularly at meetings that are open to the public and the 

news media unless the discussion pertains to confidential subjects, such as whether to 

begin an enforcement investigation.

Section 743 of Division C of the FY2010 Consolidated Appropriations Act P.L. 111-117, 

requires civilian agencies to prepare annual inventory of their service contracts. 

Inventories are required to be submitted in accordance with the Office of Management 

and Budget (OMB) guidance dated November 5, 2010 and December 19, 2011, and FY 

2018 Service Contract Inventory Checklist dated September 7, 2018 In addition, 

agencies are to perform an analysis of their data in their inventories for the purpose of 

determining if contract labor is being used in an appropriate and effective manner and if 

the mix of federal employees and contractors in the agency is effectively balanced.

In accordance with OMB guidance, agency reviews are to give priority consideration to 

agency use of contracted (a) professional and management services and (b) 

information technology support services. Review of professional and management 

services should include acquisition support and an appropriate sampling of policy and 
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program management and development services. OMB identified the Special Interest

Functions listed below (Table 1) for heightened management consideration. This was

based on concerns of increased risk of losing control of mission and operations as 

identified through a review of reports issued in recent years, such as by the Government 

Accountability Office, the Commission on Wartime Contracting, agency Inspectors 

General, Congressional Committees, and the Acquisition Law Advisory Panel (also 

referred to as the “SARA Panel”), as well as by OMB’s own analysis. In addition, each 

agency is required to identify the Top Ten Product Service Codes (PSC) that accounted 

for the agency’s greatest percentage of spending (Table 2). 

PSC Product or Service Description

B505 Cost Benefit

D302 Systems Development

D307 Strategy and Architecture

D310 Cyber Security and Data Backup

D314 System Acquisition Support

R406 Policy Review/Development

R407 Program Evaluation Services

R408 Program Management/Support

R409 Program Review/Development Services

R413 Specifications Development

R414 Systems Engineering

R423 Intelligence

R425 Engineering/Technical

R497 Personal Services Contracts

R707 Contract/Procurement/Acquisition Support

Table 1: Special Interest Items

PSC Product or Service Description

D302 IT AND TELECOM- SYSTEMS DEVELOPMENT

R408 SUPPORT- PROFESSIONAL: PROGRAM MANAGEMENT/SUPPORT
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R418 SUPPORT- PROFESSIONAL: LEGAL

D318

IT AND TELECOM- INTEGRATED HARDWARE/SOFTWARE/SERVICES 

SOLUTIONS, PREDOMINANTLY SERVICES

R424 SUPPORT- PROFESSIONAL: EXPERT WITNESS

D307 IT AND TELECOM- IT STRATEGY AND ARCHITECTURE

R499 SUPPORT- PROFESSIONAL: OTHER

D399 IT AND TELECOM- OTHER IT AND TELECOMMUNICATIONS

D317 IT AND TELECOM- WEB-BASED SUBSCRIPTION

S206 HOUSEKEEPING- GUARD

Table 2: SEC’s Top Ten PSCs

The analysis in this report provides a listing of the required service contracts with 

contract-related information as required in OMB’s Office of Federal procurement 

Policy’s (OFPP) guidance. This analysis portion of the report is divided into four main 

parts:

1.) – Summarizes the special interest functions and top ten functions studied, 

the dollars obligates to those specific Product and Service Codes (PSCs) in FY 

2017, and the rationale for focusing on the identified functions.

2.) Methodology – Discusses the methodology used by the SEC to support the 

analysis, including selection of questionnaire participants and questions included.

3.) Findings – Summarize the findings, including a brief discussion of the extent to 

which the desired outcomes described in section 743(e)(2) are being met. After 

analyzing key factors included in the Service Contract Inventory questionnaire, 

concrete conclusions are provided in order to continue setting effective priorities 

that align with the Agency’s strategic goals.

4.) Actions Taken or Planned – Explains the steps the SEC has taken or plans to 

take to address any identified weaknesses or challenges. 

Scope

II. SCOPE

The SEC selected three (3) PSCs for review. None of the selected PSCs were included 

in the FY 2016 review. 
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PSC Product or Service 

Description 

Dollars 

Obligated in 

FY 2017

Rationale for Selection

D310 IT AND TELECOM- CYBER 

SECURITY AND DATA 

BACKUP

$835,855.75

PSC selected because it is on the 

special interest list and has not been 

reviewed since FY 2013.

D399 IT AND TELECOM- OTHER 

IT AND 

TELECOMMUNICATIONS

$9,045,415.92

PSC selected because it is on the top 

ten biggest percentages of 

obligations and has not been 

reviewed since 2013.

R499 SUPPORTPROFESSIONAL: OTHER

$9,895,130.62

PSC selected because it is on the top 

ten biggest percentages of 

obligations and has not been 

reviewed since 2014.

Table 3: SEC’s Service Contract Inventory Detail

The SEC reviewed 100% of the contract actions under these PSCs awarded in FY2017, 

following the methodology prescribed below.

III. METHODOLOGY

There were a total of 52 contracts falling under the 3 PSCs selected for the SEC’s 2017 

Service Contract Inventory. These contracts were first reviewed to determine:

o If there was performance on the contract in FY17,

o If the contract had subsequently been closed out, and

o Who is the COR. 

As a result of the initial analysis, twelve contracts were omitted from further review 

because no work was performed during FY 2017. Next, the statements of work for the 

remaining 40 contracts in the inventory were reviewed to determine if there was any 

ambiguous language that might cause uncertainty as to whether inherently 

governmental functions were being performed. 

Finally, the SEC selected a non-representative sample of 10 contracts in which work 

was performed during FY 2017 and had not yet been closed out. The contracts included 

in this sample were selected based on the statement of work review, to include a variety 
of different services including those most likely to include performance of inherently 

governmental functions, critical functions, closely associated functions, or otherwise 

require a higher degree of management and oversight. The SEC Office of Acquisitions’ 

Advancing Excellence Team conducted meetings with the CO and CORs assigned to 

each of these contracts to address the questions listed below to address the OMB’s 

mandate:

1. Inherently Governmental Functions:

a. Are Contractor Personnel (CP) performing duties such as: providing 

legal advice or development, interpretations and application of 

regulations and statues to agency employees, determination of budget 

policy, guidance, and strategy or making policy decisions for the 

Agency?

2. Critical Functions: 

a. Are CP performing critical functions under this contract? If so, please 

explain functions performed.

i. Are CP involved in such a way that could affect the ability of the 

agency to maintain control of its mission and operations?

b. Are there specific safeguards and monitoring systems in place for 

those contracts under which critical functions are being performed to 

ensure these functions do not become inherently governmental?

3. Closely Associated Functions:

a. Are CP performing the same or similar function(s) as agency staff or 

closely associated functions? If so, please explain functions performed.

b. Are there specific safeguards and monitoring systems in place for 

those contracts under which closely associated functions are being 

performed to ensure these functions do not become inherently 

governmental?

4. Scope of Work:

a. If a modification to the scope of work has taken place: 

i. Was an in scope determination made?

ii. Were the changes significant enough to warrant OGC 

involvement or reaccomplishment of a Pre Award Service 

Contract Checklist?

b. Are there specific safeguards and monitoring systems in place to 

ensure that work being performed by contractors has not changed or 

expanded to become an inherently governmental function?

5. Management and Oversight of Service Contracts:

a. Are there sufficient resources available to you as a COR in order to 

effectively manage and administer service contracts?

b. How many CP are associated with this award?

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IV. FINDINGS

The SEC conducted the inventory analyses in accordance with section 743(e) to ensure 

that:

1. Each contract in the inventory that is a personal services contract has been 

entered into, and is being performed, in accordance with applicable laws and 

regulations;

2. The agency is giving special management attention, as set forth in Federal 

Acquisition Regulation (FAR) 37.114, to functions that are closely associated with 

inherently governmental functions;

3. The agency is not using contractor employees to perform inherently 

governmental functions; 

4. The agency has specific safeguards and monitoring systems in place to ensure 

that work being performed by contractors has not changed or expanded during 

performance to become an inherently governmental function;

5. The agency is not using contractor employees to perform critical functions in 

such a way that could affect the ability of the agency to maintain control of its 

mission and operations; and 

6. There are sufficient internal agency resources to manage and oversee contracts 

effectively.

The statement of work reviews revealed that no contracts included questionable or 

ambiguous language regarding performance of inherently governmental functions. 

Additionally, the following findings were determined from the interviews conducted with 

the CO and CORs of the ten contracts selected: 

1. Contractor Personnel (CP) are not performing duties such as: providing legal 

advice or development, interpretations and application of regulations and statues 

to agency employees, determination of budget policy, guidance, and strategy or 

making policy decisions for the Agency.

2. CP are not performing critical functions under this contract. 

3. CP are performing the same or similar function(s) as agency staff or closely 

associated functions on several contracts, including performance of data 

analytics, IT security engineering support services, FOIA services, and exam 

support services. 
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4. Specific safeguards and monitoring systems are in place for those contracts 

under which closely associated functions are being performed to ensure these 

functions do not become inherently governmental, including well defined roles, 

funneling all work assignments through the Contractor program manager, and 

active COR oversight.

5. If a modification to the scope of work had taken place, in scope determinations 

were made.

6. There were no changes significant enough to warrant OGC involvement or 

reaccomplishment of a Pre Award Service Contract Checklist.

7. There are specific safeguards and monitoring systems in place to ensure that 

work being performed by contractors has not changed or expanded to become 

an inherently governmental function.

8. Overall there are sufficient resources available to the COR in order to effectively 

manage and administer service contracts. One COR noted that there are fewer 

resources available for contract closeout and deobligation activities.

9. There are a total of 52 and 1⁄4 full time equivalent CP associated with the 10

awards for which interviews were conducted.

Agency Success

From the analysis of the survey responses received as part of the FY17 Inventory, the 

SEC has determined that: 

1) Contract labor is being used in an appropriate and effective manner and the mix of 

Federal employees and Contractors in the Agency are effectively balanced 

2) Service contracts are highly compliant in most areas, with contracts generally entered 

into and performed according to applicable laws 

3) Contractor employees are not being used to perform critical functions in such a way 

that could affect the ability of the agency to maintain control of its mission and 

operations

4) Overall the government possesses the expertise to perform oversight of the 

contractor’s performance
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5) Adequate controls are currently in place to ensure contractors are not performing 

inherently governmental functions and that contractors’ performance under their 

contracts are satisfactory. 

V. SERVICE CONTRACT REPORTING 

The SEC tracked its contractors’ response rate for the annual service contract reporting 

requirement in System for Acquisition Management (SAM). Contractors holding service 

contracts were required to enter their invoicing data into. The eTools team worked with 

the contracting officers and contract specialists to ensure contractors were reporting or 

to determine any reasons why contractors may not have reported their contracts. 

Analysis was conducted based on data gathered and disseminated by OMB. As of the 

closing date to report, January 31, 2019, the SEC’s compliance rate was 82%. Despite 

the period to complete the service contract reporting being shortened due to the 

Government shutdown, this is an increase over FY17’s compliance rate of 75%.

VI. ACTIONS TAKEN OR PLANNED

The SEC is committed to continued improvements in how the Agency oversees service 

contracts. The Office of Acquisitions has initiatives underway aimed at ensuring that 

service contracts are managed effectively and that the potential for performing 

inherently governmental function is avoided.

A key focal area continues to be on the overall COR program, particularly ensuring 

CORs are receiving proper training and are fully equipped with the knowledge needed 

to perform their duties effectively. In FY18, the SEC provided two sessions of training to 

the CORs specifically regarding Service Contract Inventory. Additional COR related 

training was ongoing and OA plans to expand upon what’s currently offered. 

E-file is a SharePoint site that serves as central repository for preaward and post award 

contract documentation. It is OA’s system of record for contracts. Contracting Officers, 

Contract Specialists and the CORs were required to upload pertinent contractual

documents to eFile. In FY18, OA launched an initiative to ensure COR’s uploaded

relevant contract documentation to E-file. This included provision of an eFile checklist 

and follow up by OA Contracting Officers to verify documents such as invoices, NonDisclosure Agreements, and performance concerns were uploaded. E-file creates 

visibility and efficiency by ensuring all contract actions are properly documented and 
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accessible. It also fosters communication between the CO and CORs, which is essential 

for all service contracts.

In FY18, as part of OA’s Contract Management Excellence (CME) theme, the CME 

Team was established with the distinct goal of elevating the COR’s role in the 

organization. The team consists of stakeholders from the Office of Acquisitions 

(Contracting Officers, Contract Specialists, Procurement Analysts, the COR Program 

Manager) and CORs as all of these individuals play a vital role in the success of the 

COR Program. The CME Team has identified four COR building blocks: Stakeholder 

Education/ Socialization, Communications, Community/Knowledge Pool/ Resources 

and Training. Some of their accomplishments include the following:

Post Award Orientation Guidance: The CME Team created guidance to help new 

and experienced contract management team members kick off contract 

performance with key contractor personnel to set the right expectations amongst 

all parties to a contract and to start off on the right foot with strong, healthy 

relationships, open channels for mindful communications and feedback for all 

parties. Post award orientations create an avenue early on to deal with issues as 

they arise throughout the duration of the contract. 

COR Roundtable: The team also established a Roundtable for CORs to meet on 

a regular basis where CORs can bring issues, learn from one another, and 

develop a common understanding of best practices. The team spearheaded a 

customized training to the supervisors of CORs to help them better understand 

the roles and responsibilities of their staff members and to better support their 

staff in not only their work but also their development to be successful contract 

management leaders. 

Contract Management Tools Training: The team also provided training and 

guidance to CORs on all the new contract management tools that OA developed 

this past year. 

COR Spotlight: In appreciation for the work CORs do at the SEC, the team held 

a recognition ceremony for a number of CORs spotlighted for the work they do 

on behalf of the Commission.

The SEC is continuing many of these initiatives and expanding its CME focus in FY19
VII: RESPONSIBLE OFFICIAL

The SEC has designated the Director of Acquisitions, Vance Cathell, Senior

Management Official, as the responsible official for ensuring appropriate internal

management attention is given to the development and analysis of service contract

inventories. The SEC's Senior Management Official ensures that Agency policies,

procedures, and training associated with OFPP Policy Letter 11-01 are in place to assist

with continuous improvement of the Agency's compliance with compiling, reviewing, and

reporting on service contract inventories. 

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