U.S. Securities and Exchange Commission 

FY 2012 Service Contract Inventory Analysis 

December 2013 

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Office of Acquisitions 

SEC Headquarters 

Washington, DC 20549 
Background 

The Securities and Exchange Commission {SEC) has the 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 commission, 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, Jumpstart Our Business Startups {JOBS) Act of 2012 and 

other statutes. 

It is the responsibility ofthe Commission to: 

• interpret and enforce 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 4,200 staff are located in Washington 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. 

Introduction 

Section 743 of Division C of the FY2010 Consolidated Appropriation s Act P.L. 111-117, requ ires 

civilian agencies to prepare annual inventory of their service contracts. Inventories were 

required to be submitted in accordance with the Office of Management and Budget (OMB} 

issued guidance dated November 5, 2010 and update guidance dated December 19, 2011. 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 . 

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Per 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 (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 

was required to identify their top ten Product Service Codes (PSC) that accounted for the 

agency's greatest percentage of spending in FY 2012 (Table 2). 

PSC Product or Service Description 

D302 ADP Systems Development Services 

D307 Automated Information Systems Services 

D310 ADP Backup and Security Services 

D314 ADP System Acquisition Support Services 

R408 Program Management/Support Services 

R413 Specifications Development Service 

R414 Systems Engineering Services 

R421 Technical Assistance (Added 8/15/2011) 

R423 Intelligence Services 

R425 Engineering and Technical Services 

R497 Personal Services Contracts 

R707 Management Services/Contract & Procurement Support 

Table 1: Special Interest Items 

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PSC Product or Service Description 

D301 ADP Faci lity Management 

D399 Other ADP Telecommunications 

R408 Program Management/Support Services 

R424 Expert Witness 

D307 Automated Information System Services 

R499 Other Professional Services 

R710 Financial Services 

S206 Guard Services 

R799 Management: Other 

R609 Administrative: Stenographic 

Table 2: SEC's Top Ten PSCs 

When reviewed in total, there were only five Service Codes at the detailed level that 

represented the SECs top ten and the special interest product service codes. They are listed as 

follows with their agency information (Table 3}: 

Service Code- % #of 

Detailed Level 

Service Code Description Obligated Contracts Obligated Amount 

D3 Information Technology 42% 164 $122,621,416 

and Telecommunications 

R4 Support- Professional 23% 305 $67,529,442 

R7 Support- Management 3% 51 $19,949,982 

52 Housekeeping 4% 4 $10,388,516 

R6 Administrative 2% 1 $5,600,000 

Totals 74% 525 $226,089,356 

Table 3: SEC's Detailed Level Service Codes 

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On December 31, 2012, SEC notified OMB of the areas planned for analysis in the FY 2012 

inventory. While selecting the PSC's for review, SEC found that 65% of services funding fell into 

two of the detailed level services codes; D3 Information Technology and Telecommunications 

(42%} and R4 Support - Professional {23%}. SEC selected four special functions to analyze as 

part of the FY 2012 Service Contract Inventory. The functions selected were D302 ADP Systems 

Development Services, D307 Automated Information Systems Services, R408 Program 

Management/Support Services, and R499 Other Professional Services. 

Analysis 

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

• Since the SEC has no authority to award personal service contracts, our review 

confirmed no personal service contracts have been awarded; 

• The commission 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 commission is not using contractor employees to perform inherently governmental 

functions; 

• The commission 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 commission 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 commission resources to manage and oversee contracts 

effectively. 

PSC 0302 ADP Systems Development Services - $2,602,432.53 

The ADP Systems Development Services (PSC D302} function was selected for review since it is 

on the special interest list and had not been previously reviewed . Approximately 1% 

($2,602A32.53} of the total service dollars were obligated under this PSC. The analysis was 

centered on seven contracts which accounted for 100% of the dollars obligated under this PSC. 

PSC 0307 Automated Information System Services - $14,046,064.13 

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The Automated Information System Services (PSC 0307} function was selected for review due 

to the amount of dollars obligated under this area and that it is on the special interest list. 

Approximately 5% ($14,046,064.13} of the total service dollars were obligated under this PSC. 

The analysis centered on 14 contracts which accounted for 99% of the dollars obligated under 

this PSC. 

R408 Program Management/Support Services - $36,397,320.33 

The Program Management/Support Services (PSC R408} function was chosen because the type 

of services performed in this area had the potential to be treated as personal services and is the 

third highest PSC dollar value. Approximately 12% ($36,397,320.33} of the total service dollars 

were obligated under this PSC. The analysis focused on 48 contracts which accounted for 97% 

of the dollars spent in the PSC. 

PSC R499 Other Professional Services - $11,845,804.48 

The Other Professional Services (PSC R499} function was selected for review due to the amount 

of dollars obligated under this area and to expand the review from previous years. 

Approximately 4% ($11,845,804.48} of the total service dollars were obligated under this PSC. 

The analysis centered on 32 contracts which accounted for 88% of the dollars obligated under 

this PSC. 

Analysis Process 

All four PSC analyses were conducted in the same manner. The analysis was accomplished in 

two steps. First, the team reviewed the Statement of Work for each of the top ten dollar value 

contracts and the special interest functions categories to determine if inherently governmental 

functions were being performed. It was determined from the review of the statements of work 

that the contractors were not tasked to perform inherently governmental functions. Second, 

the analysis team surveyed and interviewed the Contracting Officer Representatives (CORs} for 

a large sample (104 contracts) of the contracts being reviewed. The surveys and interviews 

were conducted to determine the following: 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 is performing critical functions. Analysis of 

contracts examined provided no indication of inherently governmental functions or personal 

services being performed. Additionally, the FPDS review shows the IGF data is accurate. Based 

on the analysis performed it has been determined that adequate controls are in place and no 

additional controls need to be incorporated into existing procedures. Feedback from a small 

number of CORs referenced a burden of performing contract oversight and this is being 

addressed at the office level. 

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Conclusion 

In the reviews accomplished SEC has determined that the contractors are not performing 

inherently governmental functions and there are adequate government personnel to perform 

oversight of the contractor's performance. 

SEC has several controls in place to ensure contractors are not performing inherently 

governmental functions and contractor's performance under the contract is adequate. 

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