Review of the Commission’s 

Restacking Project 

 March 31, 2009 

 Report No. 461

Review of the Commission’s Restacking 

Project

Executive Summary 

Background 

We initiated this review because of feedback received from numerous staff of the 

U.S. Securities and Exchange Commission (SEC or Commission) complaining 

about the ongoing restacking project and expressing the concern that the 

restacking project was not properly approved and initiated, did not serve a useful 

purpose, and was a waste of Commission resources. 

In 2006, the Commission moved into new buildings at its headquarters location in 

Washington, D.C., known as the Station Place 1 and 2 buildings (Station Place).1 

In May 2005, the SEC disclosed to a U.S. House of Representatives 

Subcommittee that it had identified unbudgeted costs of approximately $48 

million, attributable to misestimates and omissions of budget costs associated 

with the internal construction of the headquarters facility and improvements in 

newly-leased New York and Boston facilities. 

As a result of this disclosure, the House Subcommittee requested that the 

Government Accountability Office (GAO) conduct a review of the circumstances 

that led to the unbudgeted costs. The GAO review concluded that the primary 

cause of the misestimates and omissions of the SEC were: (1) ineffective 

management controls over budget formulation and review for the construction 

projects; (2) an inadequate administrative infrastructure; and (3) the nature of 

these facilities projects. 

As a result of the review, the GAO made several recommendations, including 

that the SEC should establish accountability at both the staff and management 

levels for the reasonableness of budget estimates, improve communication and 

consultation with operating units and staff regarding space and property needs, 

and evaluate options for budget and facilities management activities in terms of 

number of staff and expertise needed. The SEC has indicated that it took actions 

to implement the GAO’s recommendations. 

Notwithstanding the significant costs expended by the SEC in connection with 

the moves at headquarters, New York and Boston, including the approximately 

 

Review of the Commission’s Restacking Project March 30, 2009 

Report No. 461 

i 

1

 Commission headquarters includes staff located at Station Place, as well as staff located at the 

SEC’s Operations Center in Alexandria, Virginia. Throughout this report, unless noted otherwise, 

the term “headquarters” refers to Station Place. 
Review of the Commission’s Restacking Project March 31, 2009 

Report No. 461 

ii 

$48 million in unbudgeted costs, and the criticism from the GAO regarding the 

SEC’s management controls over budget formulation and review, there 

reportedly was widespread sentiment in favor of restacking (i.e., changing the 

configuration of the layout of the offices and divisions) almost from the time the 

Commission moved into its new headquarters building. 

The plan utilized when the SEC initially moved into its new headquarters 

buildings was a “vertical stack” configuration of staff, pursuant to which staffs of 

the Commission divisions and offices were spread out on multiple floors. The 

purpose of this vertical configuration was to enable staff from various divisions 

and offices to commingle on the same floor, instead of keeping staff in a single 

division or office located close together on the same floor. 

Almost immediately after the SEC decided to utilize this vertical approach, SEC 

managers decided that a horizontal approach was preferable, so that divisions 

and offices would not be split up across multiple floors. As a result, in or about 

February 2007, the Chairman asked the Executive Director to explore the idea of 

a restacking of Commission staff, including performing a cost-benefit study. 

There is no record, however, of the Executive Director actually conducting a costbenefit analysis or feasibility study, although the Executive Director stated that 

the monetary costs of the move were analyzed and discussed in senior staff and 

other meetings. There was also no documented request for the restacking 

project although, according to the Executive Director, the normal procedure in 

setting budget priorities was for the Chairman’s direction to be made verbally. 

The restacking project was approved in the second or third quarter of Fiscal Year 

2007 and included the relocation of approximately 1,750 employees on the 

second through the ninth floors of Station Place, in nine move phases. In 

addition, the project required 40,000 square feet of construction. In September 

2007, a contract for the restacking project was awarded to Project Solutions 

Group (PSG) initially for $1,303,470. The cost of construction drawings and 

permits, and an equitable adjustment for the Government’s delay have increased 

this contract to $1,751,414. In September 2008, an additional contract, for the 

construction associated with the restacking, was awarded to QSS International 

(QSSI) for $1,345,500 to renovate 40,000 square feet of space in Station Place 1 

and 2. Another contract, for construction administration, was awarded to Matrix 

Settles, the architect on the restacking project with PSG, for $84,150. 

The initial government estimate for the restacking project in 2007 was 

$2,332,000, but did not include any amount for construction. As of February 

2009, the funding obligated in connection with the restacking project, including 

construction, was approximately $3.19 million. As of November 2008, the total 

cost of the completed project was estimated at $3.9 million (which had been 

reduced from an estimate of approximately $4.6 million in June 2008). Also, the 
Review of the Commission’s Restacking Project March 31, 2009 

Report No. 461 

iii 

 

project completion date has been moved back nine months (from September 

2008 to June 2009). 

Objectives 

The objectives of our review were to assess whether the restacking project was 

conducted in accordance with applicable policies and procedures and whether an 

appropriate analysis or study was conducted to determine if the restacking 

project was cost effective and beneficial to the agency. 

This review was not conducted in accordance with generally accepted 

government auditing standards. As a review, there was no requirement to follow 

generally accepted government auditing standards. 

Results 

Immediately after the SEC incurred significant costs and budget overruns in 

connection with the move into its new headquarters building in 2005, there 

reportedly was widespread sentiment that the configuration of the space in the 

new building to stack the staff in a vertical approach should be changed. This 

vertical approach, which former Chairman William Donaldson’s Managing 

Executive for Operations had championed, was intended to enable staff from 

various divisions and offices to commingle on the same floor, resulting in greater 

communication and coordination among agency staff as a whole. Senior 

managers, however, believed the vertical configuration impeded effective 

communication and collaboration among staff within divisions and offices. As a 

consequence, in or about February 2007, the Chairman asked the Executive 

Director to explore the idea of restacking the Commission staff. 

Although a cost-benefit analysis was supposed to have been conducted, there is 

no record of any such analysis or feasibility study being done. There was also no 

survey or study conducted to determine if the existing configuration was actually 

impeding communication, or any formal analysis of whether the cost and 

disruption caused by the project would outweigh the perceived benefits of 

improved communication. Further, according to information obtained during our 

review, the former head of the Office of Administrative Services was not at all in 

favor of the project, but was given “marching orders” to go forward with it 

anyway. 

 

During our review, we sent a survey to approximately 2,100 Commission staff in 

headquarters buildings Station Place 1 and 2, as well as the Operations Center, 

to obtain their views on how the restacking to date has improved communication 

and effectiveness.2 The survey found that staff were largely satisfied with the 

location of their workspace prior to the restacking. In addition, we found that 

most of the staff did not feel dissatisfied with the time it took to communicate with 

2 We included Operations Center staff to obtain their opinions of the project. Some Operations 

Center staff were relocated to Station Place in connection with the restacking project. 
Review of the Commission’s Restacking Project March 31, 2009 

Report No. 461 

iv 

either their co-workers or supervisors prior to the restacking, nor did they feel that 

the prior configuration of their office space impeded their productivity. In 

addition, the survey showed that staff who have already moved to their 

permanent workspace felt, for the most part, that the move had no impact on 

their ability to communicate or their productivity. In addition, an overwhelming 

majority of Commission staff who responded to the survey felt that any benefits 

of the restacking project were not worth the costs and disruptiveness to their 

work. 

Additionally, our review found that prior to undertaking the restacking project, the 

SEC failed to comply with Office of Management and Budget (OMB) 

requirements and guidance for analyzing and justifying major capital investments 

and did not complete the form that had to be submitted to OMB for such projects. 

Our review also noted that the SEC policies and procedures for space 

management, particularly in regard to headquarters facilities projects, are 

unofficial and quite sparse. Moreover, the single requirement in this document 

that would have applied to the restacking project does not appear to have been 

complied with. 

. 

Thus, we conclude that there are serious questions about whether the restacking 

project was necessary and whether it had any meaningful impact on 

communication among or productivity of the staff. We also conclude that the 

SEC should have conducted a formal cost-benefit analysis of the restacking 

project and, had such an analysis been prepared, it may have led to the 

conclusion that the restacking project was not worth the costs and disruption to 

the Commission. 

Summary of Recommendations 

We recommend that the Office of Administrative Services (OAS) carefully review 

the results of the OIG’s survey and determine if any changes should be made to 

the restacking project based upon the responses. We further recommend that 

the OAS conduct another survey after the restacking process has been fully 

completed to understand the effects and impacts of the project better and 

determine what, if any, changes should be implemented. 

In addition, we recommend that, in light of the fact that the restacking project is 

still ongoing; the OAS should conduct appropriate analysis to complete and 

submit to OMB the required capital planning documentation for the remainder of 

the project. Finally, we recommend that the OAS, in coordination with the Office 

of Executive Director and using SEC information technology capital planning 

requirements as a guide, develop and adopt guidance for space investments that 

is commensurate with OMB’s guidance for capital investments. 
Review of the Commission’s Restacking Project March 31, 2009 

Report No. 461 

v 

TABLE OF CONTENTS 

Executive Summary.............................................................................................. ii 

Background ....................................................................................................... ii 

Objectives ........................................................................................................ iii 

Results ............................................................................................................. iii 

Summary of Recommendations ....................................................................... iv 

Table Of Contents.................................................................................................v 

Background and Objectives ..................................................................................1 

Background .......................................................................................................1 

The SEC’s Previous Moves and Disclosure to Congress of Significant 

Unbudgeted Costs for 2005 and 2006...........................................................1 

GAO Review of 2005 and 2006 Unbudgeted Costs......................................1 

Headquarters Restacking Project ..................................................................2 

The Perceived Need for and Decision to Undertake the 

Restacking Project .....................................................................................2 

The Initiation and Progress of the Restacking Project................................4 

Objectives .........................................................................................................5 

Findings and Recommendations...........................................................................6 

Finding 1: The OIG Survey Showed that the Headquarters Configuration Prior 

to the Restacking Project Was Not Necessarily Undesirable and that the 

Restacking Project Has Not Made a Meaningful Improvement in 

Communication Among or Productivity of the Staff ...........................................6 

The Purpose of the Restacking Project .........................................................6 

The OIG Survey Questionnaire to Commission Staff.....................................7 

The Methods of Communication Most Frequently Used by SEC Staff..........7 

Table 1: Q. 15 - Ranking of Methods of Communication Most or Least 

Often Used to Communicate With Non-Management Staff........................7 

Table 2: Q. 16 - Ranking of Methods of Communication Most or Least 

Often Used to Communicate With Management Staff................................8 

Staff Satisfaction with Communication Before and as a Result of 

the Restacking...............................................................................................9 

Table 3: Q. 13 - How do you feel about the time it took to communicate 

with staff (non-management and management) in your organization 

before the restacking project began? .........................................................9 

Table 4: Q. 14 - How do you feel about the time it now takes to 

communicate with staff (non-management and management) in your 

organization since moving to your permanent workspace?......................10 

Staff’s Satisfaction with Previous Space Before and as a Result of 

the Restacking.............................................................................................11 
Review of the Commission’s Restacking Project March 31, 2009 

Report No. 461 

vi 

Table 5: Q. 17- How did you feel about the location of your workspace 

before the restacking project was initiated? .............................................11 

Table 6: Q. 19- How do you feel about the location of your permanent new 

workspace?..............................................................................................11 

Perceived Productivity of Staff Before and as a Result of the Restacking ...12 

Table 7: Q. 24- “To what extent did having the alignment in place 

prior to the restacking project impede your organization’s productivity? ..12 

Table 8: Q. 25- How has the move to your temporary workspace impacted 

your productivity? .....................................................................................12 

Table 9: Q. 26- How has the move to your permanent new workspace 

impacted your productivity?......................................................................13 

Perceived Effectiveness and Efficiency Before and as a Result of the 

Restacking...................................................................................................13 

Table 10: Q. 28- In your opinion, to what extent will the alignment after the 

restacking project help to improve the effectiveness and/or efficiency of 

your office/division?..................................................................................13 

Communication of the Purpose of the Restacking.......................................14 

Table 11: Q. 15- How well was the purpose of the restacking project 

communicated to you? .............................................................................14 

Staff Views on Whether the Restacking Project Was Worth the Costs and 

Disruption.....................................................................................................15 

Table 12: Q. 31- In your opinion, are the restacking project benefits to your 

office/division worth the cost and time that it has taken for construction, 

packing, moving, and unpacking, etc.? ....................................................15 

Recommendation 1......................................................................................17 

Recommendation 2......................................................................................17 

Finding 2: The SEC Did Not Comply with OMB Circular, A-11, Part 7, and Did 

Not Perform Sufficient Analysis to Support the Decision to Approve the 

Restacking Project. .........................................................................................18 

OMB Circular A-11, Part 7 ...........................................................................18 

The Capital Programming Guide .................................................................19 

Lack of Documentation and Analysis for the Restacking Project.................21 

Recommendation 3......................................................................................23 

Finding 3: The SEC Does Not Have Sufficient Policies and Procedures in 

Place to Ensure that Major Capital Projects Like the Restacking Project are 

Adequately Analyzed and Supported. .............................................................23 

Executive Order 13327 ................................................................................23 

The Commission’s Unsigned Space Management Regulation, 

SECR 5-8.....................................................................................................24 

Information Technology Capital Planning Policies and Procedures.............24 

Inadequate Policies and Procedures for Real Property Projects .................25 

Recommendation 4......................................................................................26 
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Report No. 461 

vii 

Appendices 

Appendix I: Abbreviations and Acronyms ..........................................................27 

Appendix II: Scope and Methodology ................................................................28 

 Scope. .......................................................................................28 

 Methodology..............................................................................28 

 Internal/Management Controls ..................................................28 

 Use of Computer-Processed Data.............................................28 

 High-Risk Areas.........................................................................29 

 Prior Audit Coverage .................................................................29 

Appendix III: Criteria ..........................................................................................30 

Appendix IV: List of Recommendations .............................................................31 

 Recommendation 1 ..................................................................31 

 Recommendation 2 ..................................................................31 

 Recommendation 3 ..................................................................31 

 Recommendation 4 ..................................................................31 

Appendix V: Management Comments ...............................................................32 

Appendix VI: OIG Response to Management Comments...................................42 
Background and Objectives

Background 

The SEC’s Previous Moves and Disclosure to Congress of Significant 

Unbudgeted Costs for 2005 and 2006 

Beginning in 2001, the U.S. Securities and Exchange Commission (SEC or 

Commission) entered into leases for space in new facilities in Washington, D.C. 

for its headquarters employees.3 Subsequently, the SEC also arranged for 

improvements in new leased facilities in New York City and Boston. The SEC 

originally estimated a total tenant build-out cost of approximately $97 million for 

the new headquarters facility (including both Station Place buildings), of which 

the SEC would pay $47 through appropriated funds.4 In May 2005, the SEC 

disclosed to the Subcommittee on Science, the Departments of State, Justice, 

and Commerce, and Related Agencies of the House Committee on 

Appropriations that it had identified unbudgeted costs for Fiscal Years 2005 and 

2006 of approximately $48.7 million. These unbudgeted costs were attributable 

to misestimates and omissions of budget costs associated with the construction 

of the facility in Washington, D.C. and improvements in the New York and Boston 

facilities, resulting in a requested reprogramming of funds for 2005 and 2006. 5

 

GAO Review of 2005 and 2006 Unbudgeted Costs 

As a result of this disclosure, Congress requested that the Government 

Accountability Office (GAO) provide a briefing on the facilities management and 

budgeting issues of the SEC. From July through August of 2005, the GAO 

conducted a review of the circumstances that led to the unbudgeted costs and 

provided a formal briefing document to the Chairman of the Subcommittee on 

Science, the Departments of State, Justice, and Commerce, and Related 

Agencies on October 20, 2005, on the results of its review.6 

The GAO concluded that the primary causes of the misestimates and omissions 

of the SEC were: (1) ineffective management controls over budget formulation 

and review for the construction projects; (2) an inadequate administrative 

 

3

 The lease for Station Place 1 was awarded to Louis Dreyfus Properties, LLC on May 29, 2001. 

The SEC entered into a lease with 600 Second Street Holdings LLC for Station Place 2 on 

November 26, 2002. 

4

 The remainder of the $97 million was to be covered by the building owner through tenant 

allowances. 

5

 Of the $48.7 million in unbudgeted costs, $19.3 million were attributable to the construction of 

the new headquarters facility, while $29.4 million resulted from the lease improvements in New 

York City and Boston. 

Review of the Commission’s Restacking Project March 31, 2009 

Report No. 461 

Page 1 

6

 See GAO-06-61R SEC Project Management, Briefing to The Honorable Frank R. Wolf, subject: 

U.S. Securities and Exchange Commission: Building Project Management and Related Budget 

Planning, October 20, 2005. 
Review of the Commission’s Restacking Project March 31, 2009 

Report No. 461 

Page 2 

infrastructure; and (3) the nature of these facilities projects. Specifically, the 

GAO found that the SEC did not include any improvement costs for its newlyleased office space in New York for budget years 2005 and 2006, and included 

unrealistically low costs for improvements in the new Boston office and 

construction costs for the headquarters building. The GAO noted that the 

estimates for Boston were based on a “rule-of-thumb” amount that had not been 

updated annually and was not adjusted for current labor and materials costs. 

The GAO further observed that the SEC’s estimates for the headquarters 

building had not been updated in 18 months and, therefore, did not reflect 

increased costs for construction materials, security and technology. 

The GAO found that there was a lack of oversight and quality assurance over 

project management and budget planning at the SEC for these projects, as well 

as a lack of internal controls over budget estimates. In addition, according to the 

GAO, there was inadequate consultation with the Commissioners and key 

divisions regarding space needs, resulting in change orders and additional costs. 

The GAO also found that there was insufficient institutional expertise and 

resources in facilities management within the SEC. 

As a result of the review, the GAO made several recommendations for 

improvement, including that the SEC should establish accountability at both the 

staff and management levels for the reasonableness of budget estimates, 

improve communication and consultation with operating units and staff regarding 

space and property needs, and evaluate options for budget and facilities 

management activities in terms of number of staff and expertise needed. The 

SEC indicated that it had taken steps to implement the GAO’s recommendations. 

Headquarters Restacking Project 

The Perceived Need for and Decision to Undertake the Restacking Project 

Notwithstanding the significant costs expended by the SEC in connection with 

the previous moves at headquarters, New York and Boston, including the 

approximately $48 million in unbudgeted costs, and the criticism from the GAO 

regarding the SEC’s management controls over budget formulation and review, 

according to the SEC’s Executive Director, there was widespread sentiment in 

favor of restacking (i.e., changing the configuration of the layout of the offices 

and divisions) almost from the time the Commission moved into its new 

headquarters buildings. 

SEC senior management officials informed us that the plan utilized by Chairman 

Donaldson’s Managing Executive for Operations when the SEC initially moved 

into its new headquarters building was a “vertical stack” configuration of staff. In 

a vertical configuration, the staffs of the larger Commission divisions and offices 

(e.g., the Divisions of Corporation Finance and Enforcement) were located on 

multiple floors. The intended purpose of this configuration was to enable staff 

from various divisions and offices to commingle by being located on the same 
Review of the Commission’s Restacking Project March 31, 2009 

Report No. 461 

Page 3 

 

floor, instead of keeping staff in a single division or office located close together 

on the same floor. The stated reasons for this approach were to “’cross-pollinate’ 

the agency and break down silos” by locating divisions or offices on multiples 

floors.7

However, we were informed that almost immediately after the SEC decided to 

utilize this vertical approach, SEC managers determined that a horizontal 

approach was preferable, so divisions and offices would not be split up across 

multiple floors.8 Specifically, the Divisions of Enforcement and Corporation 

Finance were spread out over five floors each, and “[t]he Office of the Chief 

Accountant was spread out over two floors, in spite of it being a small office.”9 

We were informed that SEC managers believed that the “vertical” approach 

discouraged effective communication and collaboration, since staff would often 

have to travel to different floors for meetings with the co-workers in their division 

or office, group, or branch with whom they worked most closely. 

Managers from several Commission divisions and offices expressed their 

concerns to former Chairman Cox about the configuration of staff in the 

headquarters building. In or about February 2007, the Chairman asked the 

Executive Director to explore the idea of a restacking of Commission staff. The 

Executive Director was to perform a cost-benefit study regarding the restacking 

and report the results to the Chairman. According to two February 26, 2007 

memoranda, Chairman Cox “asked [the] Executive Director to study and report 

back to [him] on the costs and benefits that would be involved” with relocating 

divisions and offices within the Commission’s headquarters building. 10

There is no record of the Executive Director actually having conducted a costbenefit analysis or feasibility study, although the Executive Director stated that 

the monetary costs of the move, as well as potential drawbacks, were analyzed 

and discussed extensively in senior staff and other meetings. According to the 

Executive Director, the opinions expressed by the senior staff as to the 

desirability of restacking “were overwhelmingly positive.”11 The Executive 

Director noted that a feasibility study was not conducted because the benefits of 

conducting the restacking were deemed to be significantly greater than the oneyear cost of the project, although it is unclear how the Executive Director arrived 

at this conclusion without conducting the study. 

7

 Response of the SEC Executive Director to OIG Questions Concerning the Restacking Project, 

page 1. 

8

 According to the SEC’s Executive Director, the vertical configuration plan was implemented 

against the wishes of much of the Commission’s senior management. 

9

 Response of the SEC Executive Director to OIG Questions Concerning the Restacking Project, 

page 1. 

10 Memorandum from Chairman Christopher Cox to the Chief Accountant, dated February 26, 

2007, pages 1-2, and Memorandum from Chairman Christopher Cox to the Director of the 

Division of Corporation Finance, dated February 26, 2007, page 2. 

11 Response of the SEC Executive Director to OIG Questions Concerning the Restacking project, 

at 2. 
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Report No. 461 

Page 4 

 

There was also no documented request for the restacking project although, 

according to the Executive Director, the normal procedure in setting budget 

priorities was for the Chairman’s direction to be made verbally. 

The Assistant Director for Real Property in the Office of Administrative Services 

(OAS) informed the Office of Inspector General’s (OIG) in an interview 

conducting during the course of the review that the former head of OAS was not 

at all in favor of the restacking and referred to it as a “thankless task.” Further, 

the Assistant Director for Real Property stated that the former head of OAS had 

“marching orders” from above (possibly the Executive Director's Office or the 

Chairman’s Office) to undertake the project. Another source in OAS informed the 

OIG that OAS was asked to do the restacking by the Executive Director’s Office 

and that the former head of OAS did not want to consider the restacking project 

initially because there were so many other projects ahead of it. The Assistant 

Director for Real Property further stated that no cost benefit analysis was 

performed, no other alternatives were considered,12 and the staff were not 

contacted to determine if they were in favor of the restacking. 

The Initiation and Progress of the Restacking Project 

The restacking project was approved in the second or third quarter of Fiscal Year 

2007, and included the relocation of approximately 1,750 employees on the 

second through ninth floors of the headquarters building, in nine move phases. 

In addition, the project required 40,000 square feet of construction, as well as the 

moving of numerous employees to temporary office space during the 

construction. The moves were scheduled to begin in the fall of 2008 and were to 

be completed during 2009. 

In September 2007, the SEC awarded a contract for the restacking project to 

Project Solutions Group (PSG) in the amount of $1,303,470, with two additional 

options available. 13 The scope of the initial contract included managing the 

planning and execution of the restacking project, as well as the supervision and 

provision of moving services. The contractor was required to provide a master 

project plan and schedule for the restacking. Also, the contractor was to provide 

cost estimates for renovations and furniture. The cost of construction drawings 

and permits, and an equitable adjustment for the Government’s delay, have 

increased the total amount of the contract to $1,751,414.14 The restacking 

12 The Executive Director stated that the alternatives of doing nothing, maintaining the status quo 

with variations, such as additional training, or doing a consolidation of only some offices were 

considered but rejected. Response of SEC Executive Director to OIG Questions Concerning the 

Restacking Project, page 3. 

13 One company, Facilities Solutions Group, protested the award to PSG. The SEC’s contracting 

officer for the PSG contract denied the protest. 

14 We were informed that the Government’s delay was due to failed negotiations with the Station 

Place property owner over liability issues related to obtaining a construction general contractor, 
Review of the Commission’s Restacking Project March 31, 2009 

Report No. 461 

Page 5 

 

project’s initial completion date (including all moves) was scheduled for 

September 2008, one year from the award in September 2007. 

In September 2008, the SEC awarded a separate contract for the construction 

associated with the restacking project to QSS International (QSSI) for $1,345,500 

to renovate 40,000 square feet of space in the Headquarters building, 26,000 

square feet in Station Place 1 and 14,000 square feet in Station Place 2. We 

were informed that the construction was on schedule and was to be completed 

by March 2009. Another separate contract for construction administration was 

awarded to Matrix Settles, the architect on the restacking project with PSG, for 

$84,150. 

The initial government estimate for the restacking project was $2,332,000. This 

total included $832,000 for program management and $1,500,000 for moving 

services. Moving services were estimated at $600 per person for 2,500 people. 

The initial estimate included no construction costs, and the restacking project 

was supposed to have been completed in one year. The amount obligated as of 

February 2009, including construction costs, was approximately $3.19 million,15

although documents we obtained showed that anticipated construction costs 

were reduced during the course of the project, lowering the estimated total 

project costs from approximately $4.6 million to approximately $3.9 million. Also, 

the project completion date has been moved back nine months -- from 

September 2008 to June 2009. 

Objectives 

Objectives. The objectives of our review were to assess whether the restacking 

project was conducted in accordance with applicable policies and procedures, 

and whether an appropriate analysis or study was conducted to determine if the 

restacking project was cost effective and beneficial to the agency. 

as it was originally planned that the landlord would retain the construction contractor. After the 

negotiations failed, the SEC was required to enter into a contract for the project construction. 

15 Of this amount, approximately $1.84 million in costs have been incurred by the overall project 

manager, PSG, and the architect, Matrix Settles; the remaining $1.35 million in costs have been 

incurred by QSSI, the construction contractor. 
Findings and Recommendations

Finding 1: The OIG Survey Showed that the 

Headquarters Configuration Prior to the 

Restacking Project Was Not Necessarily 

Undesirable and that the Restacking Project 

Has Not Made a Meaningful Improvement in 

Communication Among or Productivity of the 

Staff 

Our survey of Commission staff indicated that overall, 

Commission staff were satisfied with their space 

configuration prior to the restacking project and do not 

believe the project has resulted in more desirable 

office space, has improved communications or 

effectiveness, or was worth the time and cost of the 

restacking. 

The Purpose of the Restacking Project 

The Office of Administrative Services (OAS) informed Commission staff that the 

purpose of the restacking project was to “... realign [d]ivisions/[o]ffices 

‘horizontally’ at Station Place to promote internal communications and improve 

operational effectiveness for the Commission.”16 According to a newsletter 

provided to Commission staff in connection with the restacking project, divisions 

and offices were frustrated by the time it took to communicate with people in their 

own divisions and offices.17 A significant anticipated result of the restacking 

would be to consolidate the divisions and offices into contiguous space so 

communication would be more efficient. According to a subsequent newsletter, 

locating divisions and offices together would also lead to improved efficiency and 

productivity.18 

In the absence of documented analyses to support the assertions that restacking 

would promote internal communications and improve operational effectiveness 

for the SEC, we surveyed Commission staff for their reactions to the restacking in 

terms of the goals to improve communications and efficiency and effectiveness. 

 

16 Restacking Project – Restacking Purpose and Scope, located on the Commission’s Insider 

webpage. 

17 “The Restacker,” Volume 1, Issue 1, September 10, 2008, page 2. 

Review of the Commission’s Restacking Project March 31, 2009 

Report No. 461 

Page 6 

18 “The Restacker,” Volume 1, Issue 2, October 3, 2008, page 2. 
Review of the Commission’s Restacking Project March 31, 2009 

Report No. 461 

Page 7 

The OIG Survey Questionnaire to Commission Staff 

We distributed our questionnaire to 2,164 Commission headquarters staff at 

Station Place buildings 1 and 2, and the Operations Center. We included staff 

who were not impacted by the restacking to provide them with an opportunity to 

express their views. However, we eliminated these responses from our survey 

results whenever necessary (e.g., by using questionnaire responses such as 

“Not Applicable,” or “...did not move.”). A total of 1,150 staff began our survey 

and 1,065 (92.6%) “completed” it.19 

The Methods of Communication Most Frequently Used by SEC Staff 

Our review found that the restacking project was primarily initiated because 

senior staff members believed that communication among staff was impaired by 

the “vertical” configuration of the Station Place buildings. In our survey, we 

asked staff about the methods of communication they most often used to 

communicate with both non-management and management staff. 

To determine the methods by which staff most often communicated with each 

other, Question 15 of our survey asked the staff to rank the methods of 

communication in terms of most or least often used to communicate with nonmanagement staff. Ratings ranged from 1 (Least Often) to 4 (Most Often). 

Table 1: Q. 15 - Ranking of Methods of Communication Most or Least Often 

Used to Communicate With Non-Management Staff 

Number of Responses: 1,071 

E-Mail 

(Includes 

Blackberry) 

Face-toFace Telephone 

(Includes 

Mobile 

Phones) 

MicroSoft 

SharePoint 20

Fax 

Average 

Rating 3.33 2.98 2.62 1.13 1.08 

Source: OIG Generated 

Similarly, question 16 of our survey asked the staff to rank the methods of 

communication in terms of most or least often used to communicate with 

management staff. Ratings ranged from 1 (Least Often), to 4 (Most Often). 

 

19 For the purposes of our survey, “completed” only means that the recipient clicked on the “done” 

button at the end of the questionnaire; all of the questions may or may not have been answered.

20 Microsoft SharePoint is a browser-based collaboration and document management platform 

that can be used to host web sites that access shared workspaces and documents. 
Review of the Commission’s Restacking Project March 31, 2009 

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Table 2: Q. 16 - Ranking of Methods of Communication Most or Least Often 

Used to Communicate With Management Staff 

Number of Responses: 1,073 

E-Mail 

(Includes 

Blackberry) 

Face-to-Face Telephone 

(Includes 

Mobile 

Phones) 

MicroSoft 

SharePoint 

Fax 

Average 

Rating 

3.34 2.98 2.43 1.09 1.05 

Source: OIG Generated 

The survey results indicated that the SEC staff communicated most often via 

e-mail and utilized the telephone quite a bit as well. Although survey participants 

did rank face-to-face meetings as the second highest communications medium, 

the survey results indicated that the physical location of staff is not as important 

when they use e-mail and telephone to communicate. Staff who are not closely 

located together may send an e-mail or call each other to communicate, which is, 

for example, what telecommuters must do to communicate with their co-workers 

and managers. 

In addition to providing ratings of various communications methods, the survey 

afforded staff the opportunity to provide written comments. Several of the 232 

comments from staff regarding the impact of the restacking on communications 

(submitted in response to survey question 12) also conveyed the opinion that 

staff effectively utilize the telephone and e-mail to communicate, or that face-to 

face communications are not critical to job performance. These comments 

included the following statements: 

• Since most communications seems to be by phone and e-mail, the 

rationale for this project seems unsupportable. I was at DOJ in a 

building in which the attorneys in our office were in offices on five 

different floors of the building. It is really not that difficult to take the 

elevator from one floor to another if you must have a face-to-face 

meeting with someone. 

• ... Most people communicate by email anyway. An office mate 

across the hall, email [sic] me rather than coming over and talking. 

Most employees telework. ... 

• I work at home 3 days a week and talk to very few people during 

the 2 days per week that I’m in the office as my job does not require 

it. ... 
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Thus, our survey found that email, not face to face meetings, is the most 

frequently used method of communication among staff, and that email and 

telephone, as well as face to face meetings, are frequently-used communication 

methods. 

Staff Satisfaction with Communication Before and as a Result of the 

Restacking 

As noted above, the newsletter provided to Commission staff in connection with 

the restacking indicated that divisions and officers were frustrated by the amount 

of time it took to communicate with staff in their own divisions and offices.21 

Accordingly, we surveyed the staff to determine the level of satisfaction among 

the staff regarding communication both prior to and as a result of the restacking 

project. Question 13 of our survey asked: “How do you feel about the time it 

took to communicate with staff (non-management and management) in your 

organization before the restacking project began?” 

Table 3: Q. 13 - How do you feel about the time it took to communicate with 

staff (non-management and management) in your organization before the 

restacking project began? Number of Responses: 745 

Very 

Satisfied 

Somewhat 

Satisfied 

Somewhat 

Dissatisfied 

Very 

Dissatisfied 

25% 41% 21% 13% 

Source: OIG Generated 

The responses above suggest that a considerable majority of the staff (66%) 

were satisfied with communications before the restacking. To compare, 

Question 14 asked: “How do you feel about the time it now takes to 

communicate with staff (non-management and management) in your 

organization since moving to your permanent new workspace?” The 

percentages of staff who were satisfied or dissatisfied with communications after

moving to permanent workspace were as follows: 

 

 

21 “The Restacker,” Volume 1, Issue 1, September 10, 2008, page 2. 
Review of the Commission’s Restacking Project March 31, 2009 

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Table 4: Q. 14 - How do you feel about the time it now takes to 

communicate with staff (non-management and management) in your 

organization since moving to your permanent workspace? Number of 

Responses: 392 22

Very 

Satisfied 

Somewhat 

Satisfied 

Somewhat 

Dissatisfied 

Very 

Dissatisfied 

22% 46% 17% 15% 

Source: OIG Generated 

While 68% of the staff who responded to this question were either “very 

satisfied,” or “somewhat satisfied” with the communication in their organizations 

after moving to new permanent workspace, the survey found that a similar 

percentage (66%) were satisfied with their communications before they moved. 

These results suggest that, for the staff who responded to this question, the 

restacking had little impact on their satisfaction with communications in their 

organizations. This view was supported by some of the comments we received 

from the survey participants (e.g., “Most of my communications are with the 

people w/in my AD group, and we currently all sit near each other, and will 

continue to sit near each other in the future. ... ”; “Just because we are in the 

same office doesn’t mean [communication] is better. Sometimes you work with 

other offices and it is better to be on the floor with the office you work with rather 

than the office you work for.”). Some staff even indicated communication would 

be worse after the restacking (e.g., “The supervisors who I routinely meet with 

are closer to me now, one floor right above me, than they will be when we are all 

on the same floor”; “As a result of the restacking, our group will be much more 

spread out and so communication within our group will be worse not better. ... ”). 

Our survey results do not appear to contradict entirely the assertion that divisions 

and offices were sometimes frustrated by the time it took to communicate with 

people in their own divisions (34% of the staff who responded to Question 13 

were either “very dissatisfied,” or “somewhat dissatisfied” with communications 

before the restacking project). However, the survey results suggested that the 

restacking had little impact on this issue (32% were either “very dissatisfied,” or 

“somewhat dissatisfied” after they moved). 

 

22 According to management, only 215 staff members had been moved to permanent space as of 

March 12, 2009. However, most, if not all, staff who are moving to new permanent space as part 

of the restacking project are already aware of their new office locations. Moreover, another 

question in the survey (Question 12) produced similar results to those of Question 14. Question 

12 inquired, “In your opinion, to what extent will the purposes of the restacking project of aligning 

SEC staff from the same offices and divisions on the same floor (horizontally) help to improve 

communication in your office/division?” Of the 1,031 staff who responded to this question, the 

highest percentage (48%) felt the restacking would improve communications “to little or no 

extent”; 22% felt it would improve communications “somewhat”; 17% felt it would improve 

communications “to a great extent”; and only 8% felt it would improve communications “to a very 

great extent.” In addition 4% felt the restacking would actually harm communications. 
Review of the Commission’s Restacking Project March 31, 2009 

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Staff’s Satisfaction with Previous Space Before and as a Result of the 

Restacking 

The restacking project’s intent (to relocate staff to improve communications, 

productivity and effectiveness) implies that the staff were dissatisfied with their 

current locations and, therefore, improvements were needed. To determine the 

extent to which the staff believed their spaces needed improvement, Question 17 

of our survey asked: “How did you feel about the location of your workspace 

before the restacking project was initiated?” The percentages of staff who were 

satisfied or dissatisfied with the location of their previous workspaces are as 

follows: 

Table 5: Q. 17- How did you feel about the location of your workspace 

before the restacking project was initiated? Number of Responses: 1,043 

Very 

Satisfied 

Somewhat 

Satisfied 

Somewhat 

Dissatisfied 

Very 

Dissatisfied 

57% 32% 7% 4% 

Source: OIG Generated 

The responses above suggest that the overwhelming majority of staff (89%) were 

satisfied with their spaces before the restacking, with a sizeable majority (57%) 

being very satisfied. To compare, Question 19 asked: “How do you feel about 

the location of your permanent new workspace?” The percentages of staff who 

were satisfied or dissatisfied with the location of their permanent new 

workspaces were as follows: 

Table 6: Q. 19- How do you feel about the location of your permanent new 

workspace? Number of Responses: 615 

Very 

Satisfied 

Somewhat 

Satisfied 

Somewhat 

Dissatisfied 

Very 

Dissatisfied 

24% 36% 21% 18%

Source: OIG Generated 

These results suggest that the staff were actually more satisfied with their 

workspaces before the restacking (89%) than after they moved to permanent 

new workspaces (60%). Also, the percentage of staff who were “very satisfied” 

decreased sharply for the new permanent workspaces (from 57% before to 24% 

afterward). Also, the percentage of staff who were “very dissatisfied” rose 

significantly for the new permanent workspaces (from 4% before to 18% 

afterward). 
Review of the Commission’s Restacking Project March 31, 2009 

Report No. 461 

Page 12 

Perceived Productivity of Staff Before and as a Result of the Restacking 

As noted above, according to the “Restacker” newsletter, the restacking was 

expected to lead to improved efficiency and productivity.23 This implies that the 

previous workspaces needed improvement because they impeded productivity of 

the workforce. 

To determine whether the staff felt that their previous workspaces impeded 

productivity, Question 24 of our survey asked: “To what extent did having the 

alignment in place prior to the restacking project impede your organization’s 

productivity?” The percentages of staff who believed their previous workspaces 

impeded productivity were as follows: 

Table 7: Q. 24- To what extent did having the alignment in place prior to the 

restacking project impede your organization’s productivity? Number of 

Responses: 685 

To a Great 

Extent 

To Some 

Extent 

To Little or No 

Extent 

7% 26% 68%

Source: OIG Generated 

The survey revealed that a large majority of the staff (68%) felt that the alignment 

in place prior to the restacking had not impeded their productivity much, if at all. 

While 33% of the survey participants stated that their productivity had been 

impeded, only 7% felt that their previous workspaces impeded productivity to a 

great extent. 

To determine how the staff felt about productivity as a result of the restacking, we 

asked the staff about both the move to temporary space and the subsequent 

move to permanent workspace. Question 25 of our survey asked: “How has the 

move to your temporary workspace impacted your productivity?” 

Table 8: Q. 25- How has the move to your temporary workspace impacted 

your productivity? Number of Responses: 218 

Greatly 

Increased 

Productivity 

Increased 

Productivity 

No Noticeable 

Impact on 

Productivity 

Decreased 

Productivity 

Greatly 

Decreased 

Productivity 

1% 8% 59% 26% 6% 

Source: OIG Generated 

 

23 “The Restacker,” Volume 1, Issue 2, October 3, 2008, page 2. 
Review of the Commission’s Restacking Project March 31, 2009 

Report No. 461 

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To obtain the staff’s views on the impact of the move to permanent space on 

productivity, Question 26 of our survey asked: “How has the move to your 

permanent new workspace impacted your productivity?” 

Table 9: Q. 26- How has the move to your permanent new workspace 

impacted your productivity? Number of Responses: 155 

Greatly 

Increased 

Productivity 

Increased 

Productivity 

No Noticeable 

Impact on 

Productivity 

Decreased 

Productivity 

Greatly 

Decreased 

Productivity 

4% 12% 65% 14% 6% 

Source: OIG Generated 

These results suggest that the staff believe the move to temporary workspace 

had decreased their productivity (32%) to a much greater degree than it 

increased (9%) it. These results further suggest that slightly more staff actually 

felt that their productivity decreased (20%) as a result of the move to permanent 

new workspace than believed the project increased (16%) it. In addition, the 

largest percentages of staff who responded indicated that neither their temporary 

nor their permanent workspaces made a noticeable difference in productivity 

(59% for temporary workspaces and 65% for permanent workspaces). Thus, the 

survey results raise serious questions concerning whether the restacking project 

has actually improved productivity. 

Perceived Effectiveness and Efficiency Before and as a Result of the 

Restacking 

To determine how staff felt about the impact of the restacking on effectiveness 

and efficiency in their organizations, Question 28 of our survey asked: “In your 

opinion, to what extent will the alignment after the restacking project help to 

improve the effectiveness and/or efficiency of your office/division?” The results 

were as follows: 

Table 10: Q. 28- In your opinion, to what extent will the alignment after the 

restacking project help to improve the effectiveness and/or efficiency of 

your office/division? Number of Responses: 554 

Will Improve 

Effectiveness/ 

Efficiency to 

a 

Great Extent 

Will Improve 

Effectiveness/ 

Efficiency to 

Some Extent 

No Noticeable 

Impact on 

Effectiveness/ 

Efficiency 

Will Decrease 

Effectiveness/ 

Efficiency to 

Some Extent 

Will Decrease 

Effectiveness/

Efficiency to 

a Great 

Extent 

9% 25% 51% 10% 5% 

Source: OIG Generated 
Review of the Commission’s Restacking Project March 31, 2009 

Report No. 461 

Page 14 

The survey results found that a certain percentage of the staff (34%) believed 

that the alignment after the restacking would improve effectiveness or efficiency. 

However, the results also revealed that a considerably larger percentage of the 

staff (51%) indicated that the restacking would have no noticeable impact on 

effectiveness or efficiency, and that an additional 15% of the staff actually felt the 

restacking project would decrease effectiveness or efficiency. 

Communication of the Purpose of the Restacking 

In one area, communication about the purpose of the restacking project, the staff 

did provide positive feedback with regard to the restacking. Question 11 of our 

survey asked the staff: “How well was the purpose of the restacking project 

communicated to you?” Our results were as follows: 

Table 11: Q. 11- How well was the purpose of the restacking project 

communicated to you? Number of Responses: 1,038

Very Well Well Not Very Well Not At All 

18% 44% 30% 8% 

Source: OIG Generated 

The survey results indicated that, most of the staff (62% vs. 38%) felt that the 

purpose of the restacking project was well communicated. Some of the written 

comments we received on this topic were as follows: 

• Excellent email communication. Excellent feedback when needed 

to contact restacking team with questions. Immediate response. 

• The OAS team had multiple planning meeting[s] to discuss move 

related issues. In addition, OHR staff had dedicated meetings to 

discuss the impact and held an open house event when temp 

moves occurred so that new office locations would be known. 

• The purpose of the restacking was communicated to me very well. 

In fact, there was too much communication on this project.... 

• DIAC (the Disability Issues Advisory Committee) was well informed. 

One survey participant observed, however, “The overall purpose of the 

project was explained, but the specific purpose of my AD group's move was 

never explained. ... The purpose of our move remains a mystery.” Another 

participant pointed out: that there was no communication to solicit the staff’s 

views on the project before it was undertaken, stating: 
Review of the Commission’s Restacking Project March 31, 2009 

Report No. 461 

Page 15 

... [A]ll [communication] was AFTER THE FACT. Staff was not 

given any chance to speak on this before it was decided. 

Taxpayers should be outraged, and we should be wholly mortified, 

to be wasting such an incredible amount of money and time on this 

- not the least of which includes large-scale construction on a 

building already over-budget. 

Staff Views on Whether the Restacking Project Was Worth the Costs and 

Disruption 

The survey also attempted to determine whether the staff felt, on the whole, the 

benefits of the restacking project outweighed the costs of and the disruption 

caused by the project. Question 31 of on survey asked: “In your opinion, are the 

restacking project benefits to your office/division worth the cost and time that it 

has taken for construction, packing, moving, and unpacking, etc.?” 

Table 12: Q. 31- In your opinion, are the restacking project benefits to your 

office/division worth the cost and time that it has taken for construction, 

packing, moving, and unpacking, etc.? Number of Responses: 607 

Yes No

19% 81%

Source: OIG Generated 

These results suggest that the overwhelming majority of Commission staff (81%) 

did not feel that the restacking project was worthwhile because the negatives of 

the project outweighed the benefits. Many of the numerous written comments 

that we received from the survey presented this very sentiment. The following is 

just a sample of the comments we received: 

• It is very expensive and disruptive to move so many people. It is a 

waste of taxpayer’s money. It also makes the agency look wasteful. 

• ... This appears to me to be nothing more than a land grab by 

divisions that want better office space. In this period of austerity, it 

is remarkable to me that the Commission would spend millions of 

dollars on a completely unnecessary move. 

• ... This has been the biggest waste of American people's tax 

dollars. The Commission should be embarrassed with what they 

have chosen to spend their time and money on. 
Review of the Commission’s Restacking Project March 31, 2009 

Report No. 461 

Page 16 

• ... I do not expect any benefits to my office/division to result from 

the restacking project and thus it will not be worth the cost and 

time. 

• This is a waste of taxpayers' money. It would be more beneficial to 

the staff to have to walk or go up or down a flight of stairs to speak 

to other members of their Division; we could all use some exercise. 

• Again, it is appalling how much time and energy are being wasted 

in this process. I am sure it is a staggering total in terms of the 

days of productive work lost ... all so we can engage in musical 

chairs as the markets and our institutional reputation sink .... 

• ... [W]hile I haven't moved yet, I do not think that communications 

will substantially change with the move and therefore do not think 

the move is justified based on the millions of dollars it has been 

reported it is costing. In my personal case, I will be further from my 

supervisors and while I sometimes would just walk upstairs to see if 

they were available to talk I will make sure to e-mail or call them 

first before walking over. 

• In the end, there may be some benefits. However, the move to 

"temporary" space, only to have to move again in 2-3 months 

seems like duplicate work. Before restacking, the organization was 

split in different locations and so communication was challenging. 

After the restacking, we're still in different locations -- the "different 

locations" shifted, but the outcome didn't improve anything. 

Restacking = good intentions -- not well implemented. I think it 

would have been more effective to try and move organizations only 

1 time, instead of 2 or 3 times. 

• This project is an absolute waste of time and money. ... Just 

because the previous idea to commingle the Divisions was an error, 

it does not resolve that error by trying to change it. Two wrongs do 

not make a right. ... 

• Huge and obvious waste of resources in our technological age 

where people can easily communicate without being seated next to 

one another – what a tremendous waste! 

• ... It has been a grave waste of taxpayer money at a time when we 

cannot afford to waste anything. That money could have gone to 

other uses here at the Commission. 
Review of the Commission’s Restacking Project March 31, 2009 

Report No. 461 

Page 17 

• ... This is a total waste of time we should be spending conducting 

investigations. ... 

• I think it is a complete waste of money and time. I interact with a lot 

of people in my position and I haven’t found one individual that is 

happy about the restacking. 

• The cost far exceeds any benefits. 

We conclude based upon the survey results that the restacking project was 

initiated without taking into account the views of Commission staff. The staff 

indicated in our survey that they were largely satisfied with their current office 

locations and the survey showed that, for the most part, the staff felt the 

restacking project did not provide any tangible benefits to them. 

Moreover, while significant resources have been devoted to the restacking 

project, very few of the Commission staff who responded to our survey felt it was 

worth the costs. Overall, the restacking project was very unpopular with the staff 

who responded to our survey, including staff who have already moved and staff 

who are scheduled to move. Thus, the restacking project at a total estimated 

cost of approximately $3.9 million does not appear at this point to have achieved 

its intended objectives or been worth the cost. 

Recommendation 1: 

The Office of Administrative Services should carefully review the results of the 

OIG survey to determine whether the restacking project should continue in its 

current form or any changes should be made to the project based upon the 

survey responses, and to ensure better planning and foresight in any future 

similar projects. 

Recommendation 2: 

The Office of Administrative Services should conduct another survey of the staff 

after the restacking process has been completed to understand the effects and 

impacts of the project better and determine what, if any, changes should be 

implemented. 
Review of the Commission’s Restacking Project March 31, 2009 

Report No. 461 

Page 18 

 

Finding 2: The SEC Did Not Comply with 

OMB Circular, A-11, Part 7, and Did Not 

Perform Sufficient Analysis to Support the 

Decision to Approve the Restacking Project. 

The SEC failed to comply with OMB Circular, A-11, Part 7’s 

requirement that an Exhibit 300 (Capital Asset Plan and Business 

Case Summary) be submitted providing analysis and justification in 

support of major capital projects such as the restacking project. No 

business case was made for the investment, and no effort was 

made to quantify whether the restacking project would actually 

improve productivity or whether the project was worthwhile given 

the cost and disruptive effect on Commission staff. No formal costbenefit analysis was conducted, although two memoranda indicated 

that the Chairman had requested one. 

OMB Circular A-11, Part 7 

Office of Management and Budget (OMB) Circular A-11, Part 7, Section 300 (in 

effect at the time the restacking project was approved) established policies for 

planning, budgeting, acquisition and management of Federal capital assets.24 

According to this OMB Circular, capital assets includes land, structures and 

equipment, as well as intellectual property and information technology “that are 

used by the Federal government and have an estimated useful life of two years 

or more.”25 

The OMB Circular provided that the policy and budget justification and reporting 

requirements in Section 300 applied to all agencies of the Executive Branch of 

the Government that were subject to Executive Branch review.26 Further, the 

Circular stated, “All major investments must submit an Exhibit 300 in accordance 

with this section.” 27 According to the Circular, Exhibit 300 is a format for 

demonstrating to agency management and OMB that the project team has 

“employed the disciplines of good project management, represented a strong 

business case for the investment, and met other Administration priorities to 

define the proposed cost, schedule, and performance goals for the investment if 

24 OMB Circular A-11, Part 7, Section 300 -- “Planning, Budgeting, Acquisition, and Management 

of Capital Assets”, July 2003. This section was revised in June 2008. Unless noted otherwise, 

the citations in this report refer to the 2003 version of the section. 

25 OMB Circular A-11, Part 7, at § 300.4. 

26 OMB Circular A-11, Part 7, at § 300.2. Section 25 of the OMB Circular prescribed the agencies 

that were exempt from this review. The SEC was not one of these exempted agencies. OMB 

Circular A-11, Part 2, at § 25.1. 

27 OMB Circular A-11, Part 7, at § 300.2. 
Review of the Commission’s Restacking Project March 31, 2009 

Report No. 461 

Page 19 

 

funding approval is obtained.”28 “Exhibit 300 consists of two parts, each of which 

is designed to collect information that will assist agency management and OMB 

during budget review.”29 The information collected on Exhibit 300 is used, 

among other things, to “[e]nsure that spending on capital assets directly supports 

[the] agency’s mission and will provide a return on investment equal to or better 

than alternate uses of funding ....”30 The GAO has recognized that “Exhibit 300 

is required by OMB.”31 

According to the version of Section 300 of OMB Circular A-11, Part 7, that was in 

effect when the restacking project was initiated, a “major acquisition” was defined 

as “a capital project (investment) that requires special management attention 

because of its: (1) importance to an agency’s mission; (2) high development, 

operating, or maintenance costs; (3) high risk; (4) high return; or (5) significant 

role in the administration of an agency’s programs, finances, property, or other 

resources.”32 It further provided that “[t]he agency’s documented capital 

programming process should include the criteria for determining when an 

investment is classified as major.”33 

The Capital Programming Guide 

OMB issued a Supplement to Part 7 of OMB Circular A-11, entitled the “Capital 

Programming Guide,” which was intended to assist Federal agencies effectively 

plan, procure and use capital assets to achieve the maximum return on 

investment.34 The stated purpose of the Capital Programming Guide ”is to 

provide professionals in the Federal Government guidance for a disciplined 

capital programming process, as well as techniques for planning and budgeting, 

acquisition, and management and disposition of capital assets.”35

28 OMB Circular A-11, Part 7, at § 300.7 

29 OMB Circular A-11, Part 7, at § 300.7. 

30 OMB Circular A-11, Part 7, at § 300.7. Exhibit 300 is not limited to Information Technology 

projects; the prior version of the form asked whether or not the investment was for information 

technology. The newer version of the form, at Question 12b, specifically asks whether the 

investment is “for new construction or major retrofit of a Federal building or facility.” Also, we 

noted that other agencies, e.g., the Department of Homeland Security, the Department of Justice 

and the Department of Labor, have submitted Exhibit 300 forms for facility construction projects. 

31 GAO-04-138, “Budget Issues: Agency Implementation of Capital Planning Principles Is Mixed,” 

January 2004. 

32 OMB Circular A-11, Part 7, at § 300.4. The more recent version of this OMB Circular defined 

“major investment” specifically to include a system or acquisition that “is for financial management 

and obligates are than $500,000 annually.” OMB Circular A-11, Part 7, at § 300.4 (June 2008). 

In all other relevant respects, the definitions of the term in the two versions of the Circular are 

similar. 

33 OMB, Circular A-11, Part 7, at § 300.4. 

34 Capital Programming Guide (v.2.0), Supplement to Office of Management and Budget Circular 

A-11, Part 7, Planning, Budgeting and Acquisition of Capital Assets (June 2006.) 35 OMB Capital Programming Guide, page 1. 
Review of the Commission’s Restacking Project March 31, 2009 

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The Capital Programming Guide further states that agencies “should use this 

Guide to help establish a capital programming process within each component 

and across the organization.” 36 It notes that “[e]ffective capital programming 

uses long range planning and a disciplined, integrated budget process as the 

basis for managing a portfolio of capital assets to achieve performance goals 

with the lowest life-cycle costs and least risk.” 37 OMB strongly encourages 

agencies to use the guidance contained in the Capital Programming Guide but 

does not require it.38

The Capital Programming Guide contains specific guidance to agencies in 

implementing processes to address project prioritization to improve the accuracy 

of cost, schedule and performance information and to address other challenges 

in asset management and acquisition.39 This guidance includes directions 

pertinent to cost benefit analyses,40 evaluation of alternatives,41 and an 

executive review process.42 

In particular, the Capital Programming Guide provides that the fundamental 

method for a formal economic analysis of a project is the benefit-cost analysis.43 

The Guide outlines the following steps that are included in a benefit-cost 

analysis: (a) identifying assumptions and constraints; (b) identifying and 

quantifying benefits and costs, in monetary terms wherever possible, and with 

sufficient detail that is commensurate with the size and criticality of the 

investment, including making estimates of benefits and costs of each alternative 

considered; (c) evaluating alternatives using net present value, including using a 

cost-effectiveness analysis to rank alternatives; and (d) performing a risk and 

sensitivity analysis to identify where uncertainties exist and quantify them so their 

cost can be factored into overall cost estimates. 44 

The Guide encourages each agency to have an Agency Capital Plan (ACP) that 

defines the agency’s long-term capital assets decisions. In that regard, the 

Guide states, ”Each agency should establish a formal process for senior 

management to review and approve the capital assets that make up the ACP 

before the plan is presented to the agency chief executive for approval.”45

36 OMB Capital Programming Guide, page 1. 37 OMB Capital Programming Guide, page 1. 38 U.S. General Accounting Office Report to the Subcommittee on Government Efficiency and 

Financial Management, Committee on Government Reform, House of Representatives: GAO-04-

138, “Budget Issues-Agency Implementation of Capital Planning Principles is Mixed,” January 

2004, page 12. 

39 Capital Programming Guide, page 1. 40 Capital Programming Guide, page 14. 41 Capital Programming Guide, page 23. 42 Capital Programming Guide, page 24. 43 Capital Programming Guide, page 18. 44 Capital Programming Guide, page 18. 45 Capital Programming Guide, page 24. 
Review of the Commission’s Restacking Project March 31, 2009 

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Although OMB Circular A-11, with implementing guidance, prescribe specific 

procedures and processes for Federal agencies to follow when they undertake 

major investments and acquisitions, our review found that the SEC did not 

employ any of the prescribed procedures, or undertake any formal analysis or 

evaluation at all, when it decided to go forward with the restacking project. In 

addition, there was little documentation to support the basis for this very large 

project. 

Lack of Documentation and Analysis for the Restacking Project 

As part of our review, we requested from multiple sources within the SEC 

documentation of cost-benefit analyses and/or other project justifications in 

connection with the decision to initiate the restacking project. This 

documentation should provide a formal justification for the decision to initiate the 

restacking. We also requested a copy of the written request for the project. 

The SEC staff, including those from the OAS Office of Real Property and 

Facilities Support who were responsible for managing the restacking project, 

could not provide any documentation supporting the decision to undertake the 

project. OAS’s Real Property and Facilities Support staff indicated that they were 

not aware of any cost benefit or needs analysis that were done before the 

decision was made to initiate the project. OAS’s Assistant Director for Real 

Property stated that she was “99% sure” that an Exhibit 300 was not completed 

for the restacking project. 

We found that in or about February 2007, the Chairman asked the Executive 

Director to explore the idea of a restacking of Commission staff. According to 

two February 26, 2007 memoranda, Chairman Cox “asked [the] Executive 

Director to study and report back to [him] on the costs and benefits that would be 

involved” with relocating divisions and offices within the Commission. 

There is no record, however, of the Executive Director actually conducting a costbenefit analysis or feasibility study, although the Executive Director stated that 

the monetary costs of the move were analyzed and discussed verbally in senior 

staff and other meetings. The Executive Director also noted that a feasibility 

study was not conducted because the benefits of conducting the restacking were 

deemed to be significantly greater than the project’s anticipated one-year cost, 

although it is unclear how the Executive Director arrived at this conclusion 

without conducting the study. The Assistant Director for Real Property in OAS 

stated that there was no cost benefit analysis performed, no alternatives to 

restacking were considered,46 and the SEC staff were not contacted to 

46 As noted above, the Executive Director stated that the alternative of doing nothing was 

considered and rejected, as were the alternatives of “maintaining the status quo with variations, 

such as additional training to somehow compensate for the problems caused by the office layout,” 

or consolidating only some offices and leaving others where they were. Response of the 
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d 

tor, 

 

 

determine if they were in favor of the restacking. There was also no documente

request for the restacking project although, according to the Executive Direc

the normal procedure in setting budget priorities was for the Chairman’s direction

to be made verbally. 

According to information obtained during the review, the former head of OAS was 

not in favor of the project, as she felt that there were several other projects that 

should be implemented ahead of the restacking project. We were also informed 

that the decision to proceed with the restacking was dictated from above (either 

the Chairman’s Office or the Executive Director’s office), and OAS was given 

“marching orders” to go forward with the project. 

OAS provided the OIG with two memoranda from the Office of the Executive 

Director as documentation to support approvals for the restacking project. One 

memorandum, dated March 18, 2008, provided approvals for the PSG and Matrix 

Settles floor plans for the restacking.47 Another memorandum dated May 20, 

2008 approved PSG’s construction budget and project schedule.48 Both 

memoranda referenced a “coordinated review” by the Executive Director and the 

Chairman’s Office “ensure SEC mission effectiveness.” However, we were 

provided with no documentation of that review in response to our requests for 

such documents. In addition, we found no references to the restacking project in 

the Commission’s 2008 or 2009 Congressional budget justification submissions. 

In light of the foregoing, the OIG’s review found that the SEC failed to comply 

with OMB Circular A-11, Part 7, in connection with the restacking project. Given 

the significance of the project to the SEC and its importance to the 

accomplishment of the agency’s mission, we believe it would have qualified as a 

major acquisition pursuant to the version of the OMB Circular A-11, Part 7, in 

effect at the time of the restacking project, requiring the completion and 

submission of an Exhibit 300.49 

The SEC has maintained that the complaints that triggered the restacking project 

were “conveyed strongly and frequently,” 50 and the “Restacker” newsletter 

referenced the anticipated impact of the restacking as “strengthening the identity 

of the organization for internal and overall benefit.” 51 However, the SEC did not 

complete or submit to OMB an Exhibit 300 and did not even document whether 

Executive Director to OIG Questions Concerning the Restacking Project, page 3. We were 

provided with no contemporaneous written analysis of alternatives, however. 47 Memorandum to File from Diego Ruiz, Executive Director, subject: SEC Approval of 

Restacking Program, March 18, 2008. 

48 Memorandum to File from Diego Ruiz, Executive Director, subject: SEC Approval of Restacking 

Construction Budget & Project Schedule, May 20, 2008. 49 Clearly under the OMB Circular A-11, Part 7 in effect currently, the restacking project would 

trigger the Exhibit 300 submission because its costs exceeded $500,000. 

50 Response of Chief of Staff to OIG Questions Concerning the Restacking Project. 51 “The Restacker,” Volume 1, Issue 1, September 10, 2008, page 2.
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the restacking project was considered a major acquisition or investment. In 

addition, there is no evidence that any of the procedures outlined in the Capital 

Programming Guide were followed, and no formal analysis was prepared 

justifying the project. Specifically, no business case was made for the 

investment, and no effort was made to quantify whether the restacking would 

actually improve productivity, or whether the project was worthwhile given the 

high cost and disruptive effect on Commission staff. Further, no formal costbenefit analysis was conducted, although two memoranda indicated that the 

Chairman had requested one. 

Moreover, no effort was made to determine if the existing space configuration 

was actually impeding productivity, and we obtained information showing that the 

project was approved against the wishes of the former head of OAS and without 

soliciting the views of Commission staff. It is difficult to comprehend how the 

SEC could have initiated the restacking project without first consulting with the 

staff located in the headquarters facility in light of the GAO’s previous 

recommendation that the SEC improve communication and consultation with 

staff regarding space and property needs. 

Recommendation 3: 

Given that the restacking project has not been completed, the Office of 

Administrative Services should conduct appropriate analysis and complete and 

submit to the Office of Management and Budget an Exhibit 300 for the remainder 

of the project, incorporating the guidelines of the Capital Programming Guide and 

the information provided in our review. 

Finding 3: The SEC Does Not Have Sufficient 

Policies and Procedures in Place to Ensure 

that Major Capital Projects Like the 

Restacking Project are Adequately Analyzed 

and Supported. 

Executive Order 13327 

Executive Order 13327 issued by President George W. Bush on February 4, 

2004, provides that it “is the policy of the United States to promote the efficient 

and economical use of the America’s real property assets and to assure 

management accountability for implementing Federal real property management 

reforms.”52 The Executive Order further states, “Based on this policy, executive 

branch departments and agencies shall recognize the importance of real property 

 

52 EO 13327, Feb. 4, 2004, at § 1. 
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resources through increased management attention, the establishment of clear 

goals and objectives, improved policies and levels of accountability, and other 

appropriate action.”53 

The Commission’s Unsigned Space Management Regulation, SECR 5-8 

The OIG review was unable to locate any final, signed policies or procedures 

governing space management at the Commission. The only documented 

policies and procedures are contained in the Commission’s space management 

regulation, SECR 5-8, dated August 18, 2005, which is unsigned and does not 

appear on the Commission’s Insider webpage among the agency’s administrative 

regulations. 

While this unofficial document purports to establish the SEC’s assignment and 

utilization of space program and indicates that its purpose is to ensure that the 

Commission’s spaces support the mission of the agency and enhance the 

productivity of its employees and programs,54 there are very limited actual 

requirements in this document. 

SECR 5-8 does cite a number of pertinent authorities, define a number of space 

planning terms and provide general guidance for acquiring and allocating office 

space.55 SECR 5-8 also requires decisions regarding siting new office space 

and facilities in rural and urban areas, and on historic properties, and prescribes 

procedures for field office space requests.56 With respect to space requests 

applicable to SEC headquarters facilities, however, SECR 5-08 merely provides 

that “all leasehold improvements must be approved by the OAS [Associate 

Executive Director (AED)].”57 It further provides, “Construction, equipment 

installation and furniture placement will be overseen by the OAS AED or 

designee.”58 

Information Technology Capital Planning Policies and Procedures 

In contrast to the sparse procedures and guidance for facility capital projects, 

SEC Information Technology (IT) projects are subject to a formal capital planning 

process.59 According to the SEC regulation applicable to IT capital projects, the 

Office of Information Technology’s (OIT) capital planning and investment control 

(CPIC) processes include the decision criteria used in selecting IT investments 

53 EO 13227, Feb. 4, 2004, at § 1. 

54 SEC Regulation (SECR) 5-8, “Space Management Program,” August 15, 2005 (unsigned), 

page 1. 

55 See SECR 5-8, page 7 and 8, for space allocation guidelines and suitability factors 56 SECR 5-8, pages 3-5. 57 SECR 5-8, page 6. 58 SECR 5-8, page 6. 59 SEC Regulation (SECR) 24-02, Information Technology Capital Planning and Investment 

Control, June 14, 2006. 
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and the use of defined performance measures in assessing an investment’s 

progress in achieving specific outcomes.60 OIT’s CPIC process specifically 

addresses investment selection, control and evaluation, and defines the roles 

and responsibilities of the various groups involved with the IT Capital Planning 

process (e.g., the IT Capital Planning Committee, Information Officers’ Council, 

Chief Information Officer, and Commission senior staff).61 

Inadequate Policies and Procedures for Real Property Projects 

Our review concluded that the SEC has not sufficiently established heightened 

management attention, clear goals and objectives, or improved policies and 

levels of accountability in connection with its use of real property assets, as 

envisioned by Executive Order 13327. It is particularly surprising that the SEC 

would not have instituted these types of policies and procedures, given that the 

$48 million in unbudgeted costs in connection with the agency’s previous moves 

led the GAO to recommend that the SEC improve its procedures relating to 

facilities projects. 

The only existing SEC polices and procedures that would pertain to a large real 

property project like the restacking project remain unsigned and fail to prescribe 

any steps, other than OAS AED approval, that must be taken before this type of 

project is initiated. As OMB’s Capital Programming Guide described above 

stated, these steps are necessary to ensure effective capital programming that 

utilizes long range planning and a disciplined, integrated budget process in order 

to achieve performance goals with the lowest life-cycle costs and least risk. 

Detailed procedures are also necessary to ensure that real property projects are 

fully analyzed and considered before a decision is made to go forward. Given 

the survey results described above, it seems quite likely that if the SEC had 

engaged in some formal and comprehensive analysis of the restacking project in 

advance of its undertaking, a different decision may have been made and 

significant sums of money might have been saved. 

Moreover, in the case of the restacking project, it is not entirely clear that even 

the minimal requirement of the unsigned space management regulation was 

complied with, as we were informed that the OAS AED at the time the project 

was initiated did not support the restacking project. Hence, we were unable to 

ascertain whether there was an OAS AED approval for the restacking project. 

While it is likely that the Chairman’s decision to proceed with the project, as 

communicated through the Executive Director, may have de facto been sufficient 

to approve the project, the SEC nonetheless should have documented that it 

complied with this single requirement of SECR 5-8. 

60 SEC Regulation (SECR) 24-02, page 2. 61 SEC Regulation (SECR) 24-02, pages 8-10. 
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Recommendation 4: 

The Office of Administrative Services (OAS), in coordination with the Office of the 

Executive Director, should develop and adopt policies and procedures to make 

its guidance for investments in space more consistent with the guidance in the 

Office of Management and Budget’s Capital Programming Guide. The OAS 

should also review the Information Technology Capital Planning requirements for 

guidance in developing these policies and procedures. 
Appendix I 

Abbreviations and Acronyms 

ACP Agency Capital Plan 

CIPC Capital Planning and Investment Control 

GAO Government Accountability Office 

IT Information Technology 

OAS Office of Administrative Services 

OAS AED Office of Administrative Services Associate Executive Director 

OIG Office of Inspector General 

OIT Office of Information Technology 

OMB Office of Management and Budget 

PSG Project Solutions Group 

QSSI QSS International 

SEC/Commission U.S. Securities and Exchange Commission 

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Appendix II 

Scope and Methodology

This review was not conducted in accordance with generally accepted 

government auditing standards. As a review, there was no requirement to follow 

generally accepted government auditing standards. 

Scope. The scope of our review covered areas related to the initiation and 

approval of the restacking project. We reviewed and assessed processes related 

to the restacking project by obtaining information from the Office of 

Administrative Services, Office of Executive Director, and the Office of the 

Chairman regarding the initiation of the project. We conducted our fieldwork from 

December 2008 to March 2009. 

Methodology. We interviewed staff and managers in the Office of Real Property 

and Facilities Support of the Office of Administrative Services (OAS) and 

reviewed contract files in the Office of Acquisitions to obtain an understanding of 

the process by which the restacking project was initiated. We requested and 

obtained information from the Office of the Executive Director and Office of the 

Chairman on the factors that led to the initiation of the restacking project. Also, 

we obtained information from OAS and Office of Financial Management (OFM) to 

determine the amount of funding that was provided for the restacking project. 

In addition, we distributed a questionnaire to 2,164 Commission headquarters 

staff at Station Place buildings 1 and 2, and the Operations Center. We included 

staff who were not impacted by the restacking to provide them with an 

opportunity to express their views. We eliminated these responses from our 

survey results whenever necessary (e.g., by using questionnaire responses such 

as “Not Applicable,” or “...did not move.”). A total of 1,149 staff began our survey 

and 1,062 “completed” it.62 

Internal/Management Controls. We reviewed internal controls that were 

considered significant within the context of the review objectives. We interviewed 

OAS management and staff, requested information from OFM, and identified and 

reviewed applicable policies and procedures. We identified areas for 

improvement, as listed above. 

Use of Computer-Processed Data. We used computer-processed data 

regarding funding for the restacking project. We did not perform tests of system 

general or application controls. We used the funding data as background to 

 

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62 For the purposes of our survey, “completed” only means that the recipient clicked on the “done” 

button at the end of the questionnaire; all of the questions may or may not have been answered.
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estimate the size of, and the amount of funding provided for, the restacking 

project. 

High-Risk Areas. The Government Accountability Office (GAO) identified 

management of Federal real property as a high-risk area in 2003 and continues 

to deem this area as high risk. (GAO-09-271, “High-risk Series; An Update,” 

January 2009.) The GAO found problems with excess and underutilized 

property, overreliance on costly leasing, and security challenges. The GAO has 

reported that real property management problems have been exacerbated by 

obstacles including competing stakeholder interests, legal and budget related 

limitations, and the need for better capital planning. 

Prior Audit Coverage. The OIG issued a report on Real Property Leasing, 

Audit No. 330, May 31, 2001. This audit report contained several 

recommendations, including: updating Commission guidance; documenting 

OGC reviews of lease documents; and providing additional training to leasing 

staff. The GAO issued a briefing to Congress in 2005 regarding the 

Commission’s facilities management and budget issues. The GAO’s 

recommendations included improved accountability for the reasonableness of 

budget estimates, regular reporting of project status, and hiring of new positions 

for OFM and OAS. 
Appendix III

Criteria 

Executive Order 13327, Federal Real Property Asset Management, 

February 4, 2004. This Executive Order promotes the efficient and 

economical use of Federal real property assets by requiring agencies to 

recognize the importance of real property resources through increased 

management attention, the establishment of clear goals and objectives, and 

improved policies and levels of accountability. 

Office of Management and Budget Circular No. A-11, Part 7, Planning, 

Budgeting, Acquisition and Management of Capital Assets, July 2003 

and June 2008. Part 7, Section 300, establishes policy for planning, 

budgeting, acquisition and management of Federal capital assets. Section 

300 of this Part requires submission of an Exhibit 300, “Capital Asset Plan 

and Business Case,” for all major capital investments.. 

Office of Management and Budget Circular No. A-11, Part 2, Preparation 

and Submission of Budget Estimates, July 2003 and June 2008. Section 

25.1 “Does Part 2 (Preparation and Submission of Budget Estimates) apply to 

me?” lists the agencies that are exempt from the policy and budget 

justification and reporting requirements of Part 7, Section 300 (e.g., the 

Exhibit 300). 

Capital Programming Guide, V2.0, Supplement to Office and 

Management and Budget Circular A-11, Part 7: Planning, Budgeting, 

and Acquisition of Capital Assets, June 2006. The Office of Management 

and Budget (OMB) issued the Capital Programming Guide to assist agencies 

plan, procure, and use capital assets more effectively. Agencies are strongly 

encouraged to use this Guide in developing their capital programming 

processes. 

Securities and Exchange Commission Regulation (SECR) 5-8, Space 

Management Program, August 18, 2005 (unsigned). SECR 5-8 purports to 

establish the Commission’s program for assigning and utilizing space, cites 

pertinent authorities, defines space planning terms and provides general 

guidance for acquiring and allocating office space. 

Securities and Exchange Commission Regulation (SECR) 24-02, 

Information Technology Capital Planning and Investment Control, June 

14, 2006. SECR 24-02 defines the Commission’s policies and processes for 

capital planning and investment control regarding major information 

technology investments. 

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Appendix IV 

List of Recommendations

Recommendation 1: 

The Office of Administrative Services should carefully review the results of the 

OIG survey to determine whether the restacking project should continue in its 

current form or any changes should be made to the restacking project based 

upon the survey responses, and to ensure better planning and foresight in any 

future similar projects. 

Recommendation 2: 

The Office of Administrative Services should conduct another survey of the staff 

after the restacking process has been completed to understand the effects and 

impacts of the project better and determine what, if any, changes should be 

implemented. 

Recommendation 3: 

Given that the restacking project has not been completed, the Office of 

Administrative Services should conduct appropriate analysis and complete and 

submit to OMB an Exhibit 300 for the remainder of the project, incorporating the 

guidelines of the Capital Programming Guide and the information provided in our 

review. 

Recommendation 4: 

The Office of Administrative Services (OAS), in coordination with the Office of the 

Executive Director, should develop and adopt policies and procedures to make 

its guidance for investments in space more consistent with the guidance in the 

Office of Management and Budget’s Capital Programming Guide. The OAS 

should also review the Information Technology Capital Planning requirements for 

guidance in developing these policies and procedures. 

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Appendix V 

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Management Comments
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Appendix VI 

OIG Response to Management Comments 

We are pleased that management appreciates the work the OIG conducted in its 

review of the restacking project and our efforts to ensure that the SEC utilizes 

taxpayer resources appropriately. We are also pleased that management has 

concurred in full with three of our four recommendations designed to ensure that 

management conducts appropriate analyses of the restacking project going 

forward and for future projects that may have a significant impact on Commission 

resources and staff. 

We do take issue, however, with certain statements made in management’s 

response. First, management claims that due to the restacking project, it was 

able to terminate a lease in Virginia (for the Operations Center Annex), resulting 

in annual savings of approximately $680,000 in rent, utilities and services, and 

producing total estimated savings of $3.5 million over a five-year period. The 

amount of claimed annual savings differs substantially from the total Annex 

annual rent and operating cost figure management only recently provided to us of 

$459,912. Furthermore, at the time it provided this lesser figure, management 

acknowledged that it was able to realize the Annex lease savings only in part

due to the restacking project. Management now in its response inexplicably 

attributes the entire savings from the termination of the Annex lease to the 

restacking project. 

Moreover, our review has determined that the savings resulting from the 

termination of the Annex lease had little, if anything, to do with the restacking 

project. We understand based upon discussions with the Office of Information 

Technology project lead for the Annex closure that the lease for that facility 

expired in October 2008 and the occupants – all of whom were contractors and 

not SEC employees – were moved out of the Annex by May 2008. The 

construction contract for the restacking was not entered into until September 

2008. With the exception of less than ten contractors, the Annex occupants were 

all moved not to Station Place, but to the Operations Center, which was also 

being renovated. Management itself points out in its response that the 

Operations Center construction was unrelated to the restacking project. 

Therefore, we believe that management’s claim that it expects the restacking 

initiative to more than pay for itself by making more efficient use of headquarters 

office space is simply at odds with the facts. 

Second, management’s position that the OIG’s report incorrectly states that the 

SEC was required to submit an Exhibit 300 to the Office of Management and 

Budget (OMB) for the restacking project is based on an interpretation of the 

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incorrect version of the applicable OMB policies contained in OMB Circular A-11, 

Part 7. In its response, management claims that the OIG’s report failed to quote 

certain “critical relevant sentences” from OMB Circular A-11, which provide that 

OMB may work with the agency to declare other investments as major 

investments and the agency should consult with its OMB representative about 

which investments to consider as major or non-major. However, this language is 

found only in the more recent version of Circular A-11 (issued in June 2008), not 

the version in effect at the time the restacking project was undertaken (prior 

version issued in July 2003). The OIG made clear in its report that, in 

determining that management had not complied with the requirements of the 

OMB Circular by failing to submit an Exhibit 300 to OMB, it was relying on the 

version of the OMB Circular in effect at the time management initiated the 

restacking. 

Applying the correct version of the OMB Circular, we believe it cannot be 

disputed that the SEC failed to comply with the Circular’s requirements before 

initiating the restacking project. The July 2003 version of Curricular A-11 

required, among other things, that the agency’s documented capital 

programming process include the criteria for determining when an investment is 

classified as major. Our review disclosed that, other than for information 

technology capital projects, the SEC had no process in place for making these 

important determinations. In fact, in its response, management acknowledges 

that it only recently communicated with OMB about the requirements for the 

restacking project as a result of the OIG’s review. It is clear, therefore, that 

management did not discuss the classification of the project with OMB prior to 

the commencement of the restacking, and no consideration was given as to what 

capital planning processes should be followed before instituting the restacking. 

In addition, as demonstrated in the OIG report, none of the procedures outlined 

in OMB’s Capital Programming Guide (which supplements OMB Circular A-11) 

were followed, no formal cost-benefit analysis was prepared justifying the project, 

and there was no documented evaluation of whether the existing space 

configuration was actually impeding staff productivity. 

Moreover, management’s claim that relevant OMB officials represented that an 

Exhibit 300 for the restacking project is presently “neither required nor requested” 

requires clarification. In the course of our review, we asked management for 

evidence of any such representations on the part of OMB, but management 

refused to provide the requested information. We then undertook our own efforts 

to contact OMB and located an OMB official who had recently spoken with the 

SEC about whether OMB desired an Exhibit 300 for the restacking project. This 

official made clear that her previous response to management’s inquiry was that 

an Exhibit 300 was not needed for the restacking project at this time because 

OMB was already fairly well along in the process for developing the President’s 

Budget for Fiscal Year 2010. This official further opined that this will not be the 

case in the future, during a typical budget-process year, and that OMB can work 

with the SEC to determine which Exhibit 300s it should submit for Fiscal Year 
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2011. Moreover, the OMB official previously informed management that OMB 

has in the past requested Exhibit 300s for non-IT requests from other agencies, 

possibly for new capital projects. 

Further, while management maintains that the Exhibit 300 is required only for 

extremely large investments in the range of hundreds of millions of dollars, there 

is precedent to the contrary, as the Department of Education recently submitted 

an Exhibit 300 for a $5,130,000 construction project. It should also be noted that 

what qualifies as a “major investment” for the SEC will, of course, naturally be 

much smaller than a “major investment” for a large cabinet-level department like 

DHS or DOJ. Moreover, in its communications with the SEC about Exhibit 300, 

OMB did not indicate that the restacking project (at a cost of approximately $4 

million over several years) was below OMB’s threshold for requiring that 

document. 

Third, we are surprised at management’s dismissive response to the 

comprehensive survey that the OIG conducted of SEC staff to solicit their 

feedback about the restacking project. Management premises its overall 

disagreement with the survey on the claim that survey is deficient because it 

assumes the restacking has been completed. However, this is simply not the 

case. The survey itself made clear that the restacking project was ongoing, and 

asked that the staff specifically indicate whether their individual moves had been 

completed. In fact, question 3 of the OIG survey specifically stated, “Did/will you 

move to a permanent ‘new’ workspace as a result of the restacking project?” In 

addition, question 9 of the OIG survey requested information about move dates 

to permanent “new” workspace and included response choices that were clearly 

for future dates, e.g., July-September 2009. The survey also included several 

questions seeking feedback on the move to temporary space, which would not 

have been necessary if the project were complete. 

Moreover, management’s implication that the survey results are immaterial 

because there was near-universal support from SEC senior managers is 

troubling. The survey results showed in overwhelming fashion (approximately 

80% in some categories) that the SEC staff whose offices were relocated in the 

restacking believed communication was actually satisfactory prior to the moves; 

that, to the extent the moves had any impact on communications, it made the 

situation worse; and the project as a whole was a waste of SEC resources. 

Brushing aside such universal feedback from the SEC staff merely because the 

senior managers favored the project is not advisable in our view. It also directly 

contravenes the GAO’s recommendation to the SEC, after the significant cost 

overruns in connection with management’s previous construction projects, that 

the Chairman direct the Executive Director to improve communications and 

consultation with operating units and staff regarding space and property needs. 

It should further be noted that notwithstanding management’s representation in 

its response that there was near-universal support for the project from senior 
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managers, our survey results showed that when their opinions were sought 

confidentially as part of our survey, many senior managers replied otherwise. 

The following are just a few examples: 

• This project was a waste of money and is extremely 

disruptive to work at a critical time in the markets. 

Numerous staff spent a significant amount of worktime 

packing, unpacking and moving thus stopping or slowing 

important regulatory projects and diminishing the work of the 

SEC. 

• There appears to have been funds spent on the new 

building, chairs, moving staff, etc, that might have more 

effectively been used providing the staff with technology or 

surveillance information that would make our work more 

effective. 

• Seems like a waste of resources to restack. 

• It is an absolute waste of time and money. We had moved 

recently to this new building and things were working quite 

well. The restacking disrupted everything for months and 

took valuable staff time away from work for useless packing 

and repacking and moving and removing. The new 

configuration makes work far more ineffective and has upset 

many staff who were moved from excellent space to much 

less favorable workspace. No one can figure out why we 

were forced to engage in this useless undertaking when staff 

were needed at a critical work at a time the market was in 

turmoil. 

• [The Division] was mainly on one floor before the restacking 

project, and having the remainder of [the Division] on the 

floor immediately below the other floor did not seem to be 

detrimental at all. 

Management’s other criticisms of the survey are equally lacking in merit. For 

example, it is difficult to understand management’s claim that the OIG survey 

was “fundamentally incomplete,” when the OIG surveyed all Headquarters staff, 

including all levels of employees and managers. Moreover, management 

critiques the OIG for not working with management in designing the survey 

questions, yet offers no suggestions as to how the questions could have been 

improved. Similarly, if the OIG had adopted management’s suggestion that the 

OIG should have waited until the construction was complete before initiating the 

survey, it would have been too late to make any changes to the project based on 
Review of the Commission’s Restacking Project March 31, 2009 

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the survey results. Finally, management’s insistence on relying exclusively upon 

the contractor’s project plan for a determination of each unit’s space needs, in 

the face of the specific staff feedback in the survey that these needs will not be 

met by the restacking project, is of concern. 

Overall, as noted above, we are pleased that management concurs with all but 

one of our recommendations in this report. We hope that, going forward, 

management will exercise more care in expending the scarce resources the SEC 

requires to perform its critical mission, particularly in these times of economic 

crisis. We also hope that management makes a greater effort in the future to 

analyze proposed construction projects, submit the appropriate documentation to 

OMB, and obtain feedback from the staff who will be impacted by the projects to 

ensure successful and cost-effective results. 
Audit Requests and Ideas

The Office of Inspector General welcomes your input. If you would like to 

request an audit in the future or have an audit idea, please contact us at: 

U.S. Securities and Exchange Commission 

Office of Inspector General 

Attn: Assistant Inspector General, Audits (Audit Request/Ideas) 

100 F Street, N.E. 

Washington D.C. 20549-2736 

Tel. #: 202-551-6061 

Fax #: 202-772-9265 

Email: oig@sec.gov 

Hotline 

To report fraud, waste, abuse, and mismanagement at SEC, 

contact the Office of Inspector General at: 

Phone: 877.442.0854 

Web-Based Hotline Complaint Form: 

www.reportlineweb.com/sec_oig