U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

REPORT NO. XXX ii DECEMBER XX, 2015

Dr Discussion aft

Management of the SEC’s Protective Security 

Force Contract Needs Improvement

June 22, 2016

Report No. 536
OFFICE OF

INSPECTOR GENERAL

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

M E M O R A N D U M

June 22, 2016

TO: Jeffery Heslop, Chief Operating Officer 

FROM: Carl W. Hoecker, Inspector General 

SUBJECT: Management of the SEC’s Protective Security Force Contract Needs 

Improvement, Report No. 536 

Attached is the Office of Inspector General’s (OIG) final report detailing the results of our audit 

of the U.S. Securities and Exchange Commission’s (SEC) management of its protective 

security force contract. To improve the SEC’s oversight of its protective security force contract 

we made four recommendations. The recommendations address improvements to ensure 

contractor compliance with contract terms and communication between the Office of 

Acquisitions and the Office of Security Services. 

On May 26, 2016, we provided management with a draft of our report for review and comment. 

In its June 7, 2016, response, management concurred with our recommendations. We have 

included management’s response as Appendix II in the final report. 

Within the next 45 days, please provide the OIG with a written corrective action plan that 

addresses the recommendations. The corrective action plan should include information such 

as the responsible official/point of contact, timeframe for completing required actions, and

milestones identifying how the Office of Support Operations will address the recommendations. 

Because this report contains sensitive information about the SEC’s security posture, the full 

report is non-public (SEC use only) and recipients are not authorized to distribute or release this 

report outside of the SEC. 

We appreciate the courtesies and cooperation extended to us during the audit. If you have 

questions, please contact me or Rebecca L. Sharek, Deputy Inspector General for Audits, 

Evaluations, and Special Projects. 

Attachment 

cc: Mary Jo White, Chair 

Andrew Donohue, Chief of Staff, Office of the Chair 

Michael Liftik, Deputy Chief of Staff, Office of the Chair 

Nathaniel Stankard, Deputy Chief of Staff, Office of the Chair 

Michael S. Piwowar, Commissioner 

Jaime Klima, Counsel, Office of Commissioner Piwowar 
Mr. Heslop 

June 22, 2016 

Page 2 

Kara M. Stein, Commissioner 

Robert Peak, Advisor to the Commissioner, Office of Commissioner Stein 

Anne K. Small, General Counsel 

Keith Cassidy, Director, Office of Legislative and Intergovernmental Affairs 

John J. Nester, Director, Office of Public Affairs 

Barry Walters, Director, Office of Support Operations 

Vance Cathell, Director, Office of Acquisitions 

Darlene L. Pryor, Management and Program Analyst, Office of the Chief Operating 

 Officer 
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

Executive Summary Management of the SEC’s Protective Security 

Force Contract Needs Improvement 

Report No. 536 

June 22, 2016 

Why We Did This Audit 

The safety and security of about

4,200 Federal employees and 

contractors at the U.S. Securities and 

Exchange Commission’s (SEC or 

agency) Headquarters depend on the 

security program managed by the 

SEC’s Office of Security Services 

(OSS). The success of this program 

depends, in part, on the actions of 

Special Police Officers (SPOs) 

assigned to the SEC’s protective 

security force contract with First 

Coast Security Solutions, Inc. (First 

Coast). The SPOs are licensed by 

the District of Columbia Metropolitan

Police Department and are required 

to follow District of Columbia 

Municipal Regulations in exercising 

their duties. SPO duties include 

controlling building access; 

monitoring security and safety 

systems; and patrolling to observe, 

detect, report, and respond to 

suspected or apparent security 

violations. If the services provided do 

not comply with the contract or the 

contract is not properly managed, 

SEC employees, property, and 

contractor personnel may be at risk 

of harm. 

What We Recommended

To improve the SEC’s oversight of its 

protective security force contract with 

First Coast, we made four 

recommendations. The 

recommendations address 

improvements to ensure contractor 

compliance with contract terms and 

communication between the Office of 

Acquisitions and OSS. Management 

concurred with the recommendations, 

which will be closed upon completion 

and verification of corrective action.

What We Found 

We did not identify any concerns with the performance of the 

SPOs at the SEC’s Headquarters. However, we found that 

OSS did not ensure that First Coast met all contract terms and 

Federal best practices. Specifically, the Contracting Officer’s 

Representative allowed First Coast to deviate from contract 

terms about SPO training and testing and Federal best 

practices, and relied instead on the less stringent SPO 

licensing requirements of the District of Columbia Metropolitan 

Police Department. In addition, the SEC paid for SPO training 

that First Coast did not provide. Based on information 

provided by the agency’s Office of Acquisitions and OSS, the 

difference in contractually required versus actual training hours 

resulted in questioned costs of about $177,000. 

We also found that OSS did not ensure First Coast met all 

contract terms relating to contract deliverables, quality control 

practices, and weapons inventories. For example, First Coast 

did not provide some required periodic reports including reports 

about SPO training and weapons. First Coast also maintained 

incomplete and inaccurate firearms information, including 

inaccurate firearm serial numbers, and the COR did not have an 

accurate list of all firearms on-site for almost a year. As a result, 

the SEC did not ensure that First Coast performed adequate 

quality inspections or provided accurate information for proper 

contract oversight. 

Finally, we found that post orders, which define the specific 

duties that SPOs are to perform at certain locations throughout 

the SEC’s Headquarters, needed improvement. Although most 

of the information in the post orders appeared sufficient and 

appropriate for SPOs to understand their duties, some 

information was inconsistent among all post orders, post orders 

for one post conflicted with the contract, and post orders for 

another post were incomplete. This could result in inconsistent 

or improper performance of SPO duties or responses to 

emergencies. 

Because this report contains sensitive information about the 

SEC’s security posture, the full report is non-public (SEC use 

only). 

For additional information, contact the Office of Inspector General at 

(202) 551-6061 or www.sec.gov/oig.
U.S. SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL

Major Contributors to the Report 

Colin Heffernan, Audit Manager 

Elizabeth Palmer Gontarek, Lead Auditor 

Michael Gainous, Auditor 

To Report Fraud, Waste, or Abuse, Please Contact: 

Web: www.reportlineweb.com/sec_oig 

Telephone: (877) 442-0854 

Fax: (202) 772-9265

Address: U.S. Securities and Exchange Commission 

Office of Inspector General 

100 F Street, N.E. 

Washington, DC 20549 

Comments and Suggestions 

If you wish to comment on the quality or usefulness of this report or suggest ideas for 

future audits, please contact Rebecca L. Sharek, Deputy Inspector General for Audits, 

Evaluations, and Special Projects at sharekr@sec.gov or call (202) 551-6061. 

Comments, suggestions, and requests can also be mailed to the attention of the Deputy 

Inspector General for Audits, Evaluations, and Special Projects at the address listed 

above.