U.S. Securities and Exchange Commission

FY 2016 Service Contract Inventory Analysis

February 21, 2018

Office of Acquisitions 

SEC Headquarters

Washington, DC 20549 
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 five-year 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 4,425 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.

II. SCOPE

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 the FY 2017 Service Contract Inventory Alert dated 

October 5, 2017. 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 program management and development services. OMB identified 

the Special Interest Functions listed below (List 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 (List 2). 

PSC Product or Service Description – List 1 Special Interest Items 

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 

PSC Product or Service Description- List 2 SEC’s Top Ten PSCs

D301 IT AND TELECOM- FACILITY OPERATION AND MAINTENANCE

D302 IT AND TELECOM- SYSTEMS DEVELOPMENT

D307 IT AND TELECOM- IT STRATEGY AND ARCHITECTURE

R499 SUPPORT- PROFESSIONAL: OTHER

D318 IT AND TELECOM- INTEGRATED HARDWARE/SOFTWARE/SERVICES 

SOLUTIONS, PREDOMINANTLY SERVICES

R408 SUPPORT- PROFESSIONAL: PROGRAM MANAGEMENT/SUPPORT

R424 SUPPORT- PROFESSIONAL: EXPERT WITNESS

R418 SUPPORT- PROFESSIONAL: LEGAL

D399 IT AND TELECOM- OTHER IT AND TELECOMMUNICATIONS

D308 IT AND TELECOM- PROGRAMMING

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

obligates to those specific Product and Service Codes (PSCs) in FY 2016, 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. 

III. SCOPE

During Fiscal Year (FY) 16, the SEC has a total of 1,816 service contract actions in all PSCs with a 

total obligation value of $228,963,412.57 and these services play various roles in helping to achieve 

the Agency’s mission/objectives. In accordance with guidelines from the OFPP, this analysis focuses 

on contract actions over $25,000 for “Special Interest Function” and “SEC Top Ten Obligation 

Percentages” categories.

The SEC performed contract actions in seven (7) of the 15 special interest function PSCs during FY 

2016. The eight (8) special interest function PSCs with no contract actions included the following 

codes: B505 COST BENEFIT ANALYSES, D310 IT AND TELECOM- CYBER SECURITY AND 

DATA BACKUP, R406 SUPPORT - PROFESSIONAL: POLICY REVIEW/DEVELOPMENT, R407 

PROGRAM EVALUATION SERVICES, R409 PROGRAM REVIEW/DEVELOPMENT 

SERVICES, R414 SYSTEMS ENGINEERING SERVICES, R423 SUPPORT - PROFESSIONAL: 

INTELLIGENCE, R425 SUPPORT - PROFESSIONAL: ENGINEERING/TECHNICAL, and R497 

SUPPORT - PROFESSIONAL: PERSONAL SERVICES CONTRACTS.

The SEC selected five PSC’s to analyze as part of the FY 2016 Service Contract Inventory. SEC 

focused analysis on three (3) of the seven (7) special interest functions under which work had been 

performed in FY 2016 and the remaining two (2) PSCs were chosen from the SEC Top Ten Obligation 

Percentages. The PSC functions selected were: PSC D302- IT AND TELECOM – SYSTEMS 

DEVELOPMENT, PSC D307 IT AND TELECOM- PROGRAMMING, PSC D318 IT AND 

TELECOM- INTEGRATED HARDWARE/SOFTWARE/SERVICES SOLUTIONS, 

PREDOMINANTLY SERVICES, PSC R408 SUPPORT- PROFESSIONAL: PROGRAM 

MANAGEMENT/SUPPORT, and PSC R418 SUPPORT- PROFESSIONAL: LEGAL

In total, the five (5) PSCs assessed included 129 contract actions with a combined award value of 

$84,038,477.86. This subset of contract actions represents 25 percent of the Agency’s total service 

contract inventory and 33 percent of the obligation value. The details regarding SEC’s FY16 Service 

Contract Inventory are listed as follows (List 3):

List 3: SEC’s Service Contract Inventory Detail

-PSC D302 (IT AND TELECOM – SYSTEMS DEVELOPMENT), Obligated Amount: 

$31,731,375.56, 13% ( % of Total PSC Dollars Obligated), 36 (# of Contracts), 0.04% (% of Contracts 

for ALL PSCs)

-PSC D308 (IT AND TELECOM- PROGRAMMING), Obligated Amount: $6,092,359.73, 2% ( % of 

Total PSC Dollars Obligated), 5 (# of contracts), 0.01% (% of Contracts for ALL PSCs)
-PSC D318 (IT AND TELECOM- INTEGRATED HARDWARE/SOFTWARE/SERVICES 

SOLUTIONS, PREDOMINANTLY SERVICES), Obligated Amount: $17,067,751.64, 7% (% of 

Total PSC Dollars Obligated), 21 (# of contracts), 0.04% (% of Contracts for ALL PSCs)

-PSC R408 (SUPPORT- PROFESSIONAL: PROGRAM MANAGEMENT/SUPPORT), Obligated 

Amount: $15,910,430.70, 6% ( % of Total PSC Dollars Obligated), 43 (# of contracts), 0.06% (% of 

Contracts for ALL PSCs)

-PSC R418 (SUPPORT- PROFESSIONAL: LEGAL), Obligated Amount: $13,236,560.23, 5% ( % of 

Total PSC Dollars Obligated), 24 (# of contracts), 0.10% (% of Contracts for ALL PSCs)

-Total: $84,038,477.86, 33% (% of Total PSC Dollars Obligated), 129 (# of contracts), 25% (% of 

Contracts for ALL PSCs)

The rationale for selecting these five (5) PSCs is as follows:

1. IT AND TELECOM – SYSTEMS DEVELOPMENT - PSC D302 was selected because it is on 

the special interest list and a top ten obligation each year, but has not been reviewed since FY 

2014. Approximately 13% ($31,731,375.56) of the SEC’s total service dollars were obligated 

under this PSC.

2. IT AND TELECOM- PROGRAMMING - PSC D308 was selected because it is new to the top 

ten biggest percentages of obligations and has not been previously reviewed. Approximately 

2% ($6,092,359.73) of the SEC’s total service dollars were obligated under this PSC.

3. IT AND TELECOM- INTEGRATED HARDWARE/SOFTWARE/SERVICES SOLUTIONS, 

PREDOMINANTLY SERVICES - PSC D318 was selected because it is on the top ten biggest 

percentages of obligations and has not been reviewed since FY 2014. Approximately 7% 

($17,067,751.64) of the SEC’s total service dollars were obligated under this PSC.

4. SUPPORT- PROFESSIONAL: PROGRAM MANAGEMENT/SUPPORT- PSC R408 was 

selected because it is on the special interest list and a top ten obligation each year, but has not 

been reviewed since FY 2012. PSC R408 also has potential for personal services and

inherently governmental work to be performed by contractors and to cover some SEC critical 

functions. Approximately 6% ($15,910,430.70) of the SEC’s total service dollars were 

obligated under this PSC.

5. SUPPORT- PROFESSIONAL: LEGAL - PSC R418 was selected because it is on the top ten 

biggest percentages of obligations and has not been previously reviewed. Approximately 5% 

($13,236,560.23) of the SEC’s total service dollars were obligated under this PSC.

IV. METHODOLOGY

A combination of methods and tools were utilized to collect data, including information form the 

Federal Procurement Data System – Next Generation (FPDS NG) and a questionnaire was distributed 

to Contracting Officer Representatives (CORs) that helped determine whether appropriate contract 

policies and procedures are in place. 
A total of 129 contracts were reviewed and analyzed and this was accomplished in four steps. The 

Office of Acquisitions’ Advancing Excellence (AE) team initially reviewed all 129 contracts falling 

under the selected PSCs to: identify the COR (s) for the action and to determine whether there was 

work performed on the action in FY16. 

As a result of the initial analysis, five contract actions were omitted from further review due to: the 

actions not including a SOW because they were awarded to provide a minimum funding guarantee, the 

action was canceled, or all the work was performed and there was no activity on the contract in FY 

2016 except for closeout. Next, the Statements of Work for the remaining 124 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. Thirdly, the 

analysis team distributed surveys to the Contracting Officer Representatives (CORs) that were selected 

as part of the FY 2016 Inventory. The survey process was conducted to determine the following: the 

approximate number of full time employee equivalents performing under each contract; if the 

contractor was performing inherently governmental functions; if there are sufficient government 

personnel for oversight of the contractor’s performance; and if the contractor has been performing 

critical functions. 

The questions included in the survey were specifically formatted to directly address the OMB’s 

mandate and they are as follows:

1. Are contract personnel (CP) involved in providing legal advice or development, 

interpretations and application of regulations and statues to agency employees? If so, please 

explain.

2. Does the CO/COR interact with the contractor? Please indicate type of interaction and the 

frequency.

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

functions? If so, please explain functions performed.

4. Does the contractor attend non-work-related meetings with the COR (e.g. social functions)? 

If so, please explain which meetings CP attend and why.

5. Do CORs defer to contractors to answer internal office or policy and procedural questions?

6. Has the contractor’s work changed over the period of performance? If so, were changes 

determined to be within scope of the contract?

7. Has an agency employee directly requested CP to conduct work not required in the 

contract?

8. Has the contractor been instructed to contact the CO in cases where they believe the work 

is out of scope and is there a record of these instructions?

9. As the COR, do you maintain contract files documenting actions under the contract? 

10. Is the number of current CORs in the program office sufficient to oversee contract 

activities? If not, what changes are needed?

11. Are CP involved in the performance of critical functions in such a way that could affect the 

ability of the agency to maintain control of its mission and operations?

12. Does the contract spell out the procedure for submitting work products, government 

review, contractor revisions and government acceptance?

13. Does the contract designate a contractor POC or project manager? Explain how tasks are 

provided to the contractor’s employee.

14. Does the contract include a QASP (Quality Assurance Surveillance Plan)? 
15. Does the contractor POC request or the government provide input into hiring decisions?

16. Are CP involved in the determination of budget policy, guidance, and strategy?

17. Are CP involved as technical advisors to a source selection board/panel or participating as 

voting or non-voting member of a source selection board/panel?

18. Is the contractor making any policy decisions for the Agency?

19. How many Contractor Personnel are associated with this award?

VI. FINDINGS

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

 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;

 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;

 The agency is not using contractor employees to perform inherently governmental functions; 

 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;

 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 

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

All 129 contract actions in the five (5) PSC categories were analyzed for the qualitative portion of the 

analysis. 

The results of the qualitative analysis, which consisted of the contract SOW reviews, revealed a total 

of three (3) actions that included questionable or ambiguous language and warranted further discussion 

with the Contracting Officer. In all instances the verbiage was vague and/or could have been 

construed that the government was assigning the Contractor work directly instead of going through the 

Contractor’s PM. The AE Team worked with the SEC Office of Acquisitions’ Policy team to craft 

language that was thought to be more suitable as sample replacement language which was provided to 

the Contracting Officers (COs). The Agency expects that these types of concerns will continue to 

decrease as many of OA’s procurement actions are now reviewed, discussed at the SEC’s Acquisition 

Roundtable, and as a result, are remedied early on in the acquisition process.

For the quantitative portion, which consisted of the survey, 123 contract actions were analyzed. Fiftyeight CORs of the 59 who received the survey responded, giving the Agency a response rate of 99 

percent from the CORs. The following are some of the measurements that were extrapolated from the 

survey. 

1) From the results, the Agency determined that there are no contract personnel (CP) involved in 

providing legal advice or development, interpretations and application of regulations and 

statues to agency employees

2) Five (5) service contracts were identified in which the COR has minimal interaction with the 

Contractor. Although the COR didn’t feel that additional interaction was necessary for reasons 
such as: the PM had daily interaction with the vendor or the trial attorneys interfaced directly 

with the vendor, this has been noted and further reinforcement in the area will take place.

3) There were 11 instances identified of Contractor personnel performing the same or similar 

function(s) as agency staff or closely associated functions. In total, there are 120 Contractor 

personnel performing same or similar function (s) as agency staff or closely associated 

functions. While this is not concerning in itself, the Agency is closely monitoring these actions 

and continues to ensure that the proper oversight is taking place on these contracts.

4) The Agency identified zero instances contract actions Contractor personnel attend non-work 

related meetings with the COR.

5) The Agency identified zero instances where CORs deferred to Contractors to answer internal 

office or policy and procedural questions.

6) Two instances were identified where the work performance changed. Further follow-up with 

the CORs revealed that the performance change was within scope of the contract for one action 

and in the other instance, the CO was engaged and a modification to the contract was executed.

7) The Agency identified zero instances where an agency employee directly requested CP to 

conduct work not required in the contract.

8) There were many instances where the COR could not recall being instructed to contact the CO 

in the cases where the work may be out of scope. This is an area where the Agency can benefit 

from greater oversight. As a means to rectify concerns like this, the Contract Management 

Excellence (CME) Team has an effective kick-off meeting initiative underway which will 

ensure proper instructions are provided going forward.

9) There were zero instances where the COR did not maintain a contract file.

10) The agency identified fourteen instances (ten respondents or 16 percent of the CORs 

surveyed), where the COR indicated the number of CORs in their office is not sufficient to 

oversee contract activities. A few of the approaches the Agency has identified to address this 

concern are: have the CO review workload during the COR Nomination process, and to 

provide additional COR Supervisor training to ensure supervisors understand the roles and 

responsibilities of CORs. 

11) There was one (1) service contract, with a total of four (4) Contractor personnel, identified 

where critical functions are being performed; the Agency closely monitors the CP’s 

performance to ensure that this does not affect the ability of the agency to maintain control of 

its mission and operations. 

12) There were no instances where the COR responded that the contract did not spell out the 

procedure for submitting work products, government review, contractor revisions and 

government acceptance. 

13) There were zero instances where the COR responded that the contract does not designate a 

contractor POC or project manager.

14) There were no contracts identified that failed to include QASP when applicable.

15) There were zero instances where the contractor POC request or the government may have 

provided input into hiring decisions. CORs responded that input is only given relative to 

ensuring that the selected individuals meet the contract requirements.

16) The Agency didn’t identify any instances where CP was involved in the determination of 

budget policy, guidance, and strategy.

17) There were three (3) contracts identified in which CP serve on TEPs as advisors in a nonvoting capacity.
18) There were zero contracts identified where the contractor was making any policy decisions for 

the Agency.

19) The contracts reviewed accounted for approximately 1076 full time employee equivalents.

Agency Success

From the analysis of the survey responses received as part of the FY16 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 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 SAM. The AE team worked with the SEC’s 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, 2018, the SEC’s compliance rate was roughly 78%. There were a few variables 

that influenced the Agency’s service contract reporting compliance rate. One factor of influence was 

the SEC’s decision to exempt a total of 18 contracts from the service contract reporting requirement. 

The Agency granted exemptions based on 1) a determination that the services under contracts did not 

fit within the service description outlined in FAR 37.101, 2) actions were cancelled in FY17 and there 

was no performance under the contract prior to the cancellation, 3) an action was closed-out prior to 

FY17; yet it still appeared on the list of actions that required reporting, and 4) although the contract 

has a service code; the preponderance of the work performed was not service related. Although 

exempted, three (3) of the vendors decided to report on their actions so this drove down the number of 

SEC exempted actions to 15.

Over the course of the service contract reporting period, there were inconsistencies in the number of 

actions included on the Interim reports provided by OMB on max.gov website. Many contracts did 

not appear on the list of those requiring reporting until December, and a few did not appear on the list 

until January. The delay in our contracting officers’ ability to communicate this requirement to those 

vendors is likely responsible for the SEC’s decrease in compliance compared to the 87% service 

contract reporting achieved during the FY2016 cycle.
VI. ACTIONS TAKEN OR PLANNED

A. Ongoing Process Improvements

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 functions is avoided. In 

FY17, the Office of Acquisitions provided new training on contractor personnel in the workplace to 

the SEC’s Enforcement Division, and circulated a new quick guide on the subject throughout the 

agency. A key focal area has been on the COR Program, particularly, ensuring that CORs are 

receiving proper training and are fully equipped with the knowledge needed to perform their duties 

effectively. In FY17, the Office of Acquisitions developed and offered targeted monthly trainings for 

CORs that were more Agency specific. These formal COR training classes were offered throughout 

the year and included such topics as: COR Refresher, Onboarding and Offboarding of Contractor 

Personnel, CPARS, Closeouts, RQ Packages, Simplified Acquisition Procedures: Applying to 

Complex Services and Commodities. These trainings are ongoing and OA plans to expand upon 

what’s currently offered. 

In FY16, eFile became the official electronic system of record for the Agency and CORs were 

required to start utilizing the system at the beginning of FY17, October 2016. There has been a 

significant push for CORs to maintain extensive/complete files in eFile. Additional emphasis has been 

placed on requiring CORs to include all COR files, with mandatory documentation, in the system by 

January 2018. Other oversight mechanisms include ensuring that COs are playing an increasingly 

active role in the selection of CORs. This includes actions such as: performing in-depth analysis of 

the number of actions the COR is currently assigned and making a sound determination that the COR 

possesses the right skills/abilities/experience for the COR appointment.

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

established with the distinct goal of elevating the COR’s role in the organization. The team consist of 

stakeholders from the Office of Acquisitions (Contract Specialists, Contracting Officers, Procurement 

Analysts, the COR Program Manager) and CORs as all of these individuals play a play a vital role in 

the success of the COR Program. The CME Team has identified four (4) COR building blocks: 

Stakeholder Education/socialization, Communications, Community/Knowledge Pool/Resources and 

Training as the foundational elements to build upon in order to achieve the vision of elevating the 

COR’s role.

VII. RESPONSIBLE OFFICIAL

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

the accountable 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 that assists with continuous improvement of the Agency compliance with compiling, reviewing, 

and reporting on inventories.