Audit of the Office of Acquisitions’

Procurement and Contract 

Management Functions 

 

September 25, 2009 

Report No. 471 
OA Procurement and Contract Management Functions September 25, 2009 

Report No. 471

i
OA Procurement and Contract Functions September 25, 2009 

Audit of the Office of Acquisitions’ 

Procurement and Contract Management 

Functions 

Executive Summary 

Regis & Associates, PC, under contract with the U.S. Securities and Exchange 

Commission (SEC or Commission), Office of Inspector General (OIG), performed 

an audit of the Commission’s Office of Administrative Services (OAS), Office of 

Acquisitions’ (OA) procurement and contract management processes and 

functions, covering FY 2006 to FY 2008. This report provides the results of our 

audit. The audit identified significant risk areas, which if not addressed, could 

hinder OA from having an effective and efficient procurement and contracting 

operation. Specifically, the audit found that OAS and OA: 

1) Do not maintain accurate records and data on their procurement and 

contracting activities; 

2) Report inaccurate data in the Federal Procurement Data System;

3) Do not adequately oversee and monitor Regional Offices’ contract 

activities and training of personnel;

4) Do not have an adequate migration plan for the new automated 

procurement system, PRISM; 

5) Are not adequately supporting payments on time-and-materials and 

labor-hour contracts; and 

6) Have not been conducting contract close-out procedures in compliance 

with SEC and FAR regulations. 

These deficiencies resulted from: 1) The absence of comprehensive data that is 

needed to manage operations and report on performance; 2) Inconsistent 

operational processes; 3) Performance of contractual functions by inadequately 

trained personnel at the Regional Offices; 4) Noncompliance with FAR and SEC 

procurement and contracting policies; and 5) The lack of adequate policies and 

procedures governing the management of OA’s procurement and contracting 

function. 

OAS and OA have proactively taken steps and developed plans to address some 

of the noncompliance issues and deficiencies we identified during our audit. 

Report No. 471 

 

ii
TABLE OF CONTENTS

EXECUTIVE SUMMARY.........................................................................................ii 

TABLE OF CONTENTS ..........................................................................................1

BACKGROUND AND OBJECTIVES ....................................................................3 

Background .......................................................................................................3 

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

FINDINGS AND RECOMMENDATIONS.............................................................7 

Finding 1: OA Does Not Maintain Accurate Records and Data on its 

Procurement and Contracting Activities.........................................................7 

Recommendation 1 to 3: ..................................................................................9 

Finding 2: Contracting Data Reported in the Federal Procurement 

Data System is not Accurate............................................................................9 

Recommendation 4: .......................................................................................10 

Finding 3: OA Does Not Adequately Oversee and Monitor Regional 

Offices’ Contract Activities and Training of Personnel ................................11 

Recommendation 5 to 6: .................................................................................14 

Finding 4: The PRISM Data Migration Plan is Not Adequate...................15 

Recommendation 7: ........................................................................................17 

Finding 5: Payments on Time-and-Materials and Labor-Hour 

Contracts are not Adequately Supported ......................................................18 

Recommendation 8: ........................................................................................19 

Finding 6: Contract Close-out Procedures are not Conducted in 

Compliance with SEC and FAR Regulations ................................................20 

Recommendation 9 ........................................................................................22 

Recommendation 10: .....................................................................................23 

OA Procurement and Contract Management Functions September 25, 2009 

Report No. 471 

Page 1 
OA Procurement and Contract Management Functions September 25, 2009 

Report No. 471 

Page 2 

APPENDICES 

Appendix- I- Acronyms and Abbreviations.................................................... 24 

Appendix- II- Scope and Methodology ........................................................... 25 

Appendix- III- Criteria ................................................................................... 28 

Appendix- IV- List of Recommendations ....................................................... 30 

Appendix- V- Management Comments.......................................................... 32 

Appendix- VI- OIG’s Response to Management’s Comments....................... 36 
Background and Objectives

Background 

The Office of Administrative Services (OAS), Office of Acquisitions (OA) is 

responsible for the U.S. Securities and Exchange Commission (SEC or 

Commission) procurement and contract activities and processes, which are 

governed by the Federal Acquisition Regulation (FAR). OA’s purview 

includes oversight over the receipt of requisitions from customers, identifying 

appropriate vendors, making reasonable pricing determinations, and 

awarding and administering contracts. 

OA’s procurement and contracting function is conducted manually, and the 

office is in the process of fully automating this function. The office has three 

contracting branches that are overseen by three separate contracting officers. 

The contracting officers specialize in three different areas as follows: 

(1) OAS, Office of Human Resources (OHR) and select Regional Office 

contracts; 

(2) Information technology contracts; and 

(3) The Division of Enforcement (Enforcement), including the 

Regional Offices, and all other headquarters Offices and Divisions 

contracts. 

The contracting officers’ functions are independent of each other. The 

manner in which the contracting officers manually compile and track 

contracting data for the areas that they oversee differs, and their contract 

data are not maintained in a single integrated file. As a result, OA is unable 

to identify the universe of all OA contracts and their corresponding contract 

values. 

Requests for goods and services are initiated when a requesting office 

submits a requisition to OA. Team leaders from the contracting branches 

review the requisitions for content and complexity and subsequently, assign 

the requisitions to the appropriate contract specialist. The contract specialist 

processes requisitions, solicitations and contracts that are awarded by the 

contracting officers. OA also uses support contractors to conduct its 

functions. Goods and services are procured through competitive and noncompetitive orders and contracts, purchase cards, and via interagency 

agreements. OA uses the General Services Administration Contracts and 

Schedules, and the Federal Business Opportunities website to compete its 

OA Procurement and Contract Management Functions September 25, 2009 

Report No. 471 

Page 3 
OA Procurement and Contract Management Functions September 25, 2009 

Report No. 471 

Page 4 

contracts. OA also has a newly formed Policy, Oversight, and Acquisition 

Program branch that is responsible for researching, reviewing and 

disseminating procurement and contracting policies and procedures. 

OAS and OA have had a high turnover of management personnel in the past 

two years. Current management primarily consists of personnel who were 

hired within the past two years. All OA branch chiefs, Heads of the 

Contracting Activity, and the Senior Procurement Executive are certified at 

the FAC-C level III, or Department of Defense equivalent. OAS and OA 

management have indicated to us that they are focused on making the 

necessary organizational changes that are needed to ensure that their 

personnel are complying with the FAR and SEC regulations. 

In August 2008, the Office of Inspector General (OIG) contracted Regis & 

Associates, PC (Regis), an Independent Public Accountant, to perform a 

preliminary survey of OA’s procurement and contract management functions. 

The risks identified in the preliminary survey stemmed from OA’s lack of 

comprehensive operational procedures that were needed to manage its 

procurement and acquisition operations, address inconsistent operational 

processes, and properly train all personnel that are involved in the 

procurement function. The preliminary survey also found that the 

procurement and contracting functions within OA were driven by a manual 

system in which the three contracting officers maintained different Microsoft 

Word and Excel spreadsheets to document their respective procurement and 

contracting workload. Based on the issues identified in the preliminary 

survey, the OIG contracted with Regis to conduct this follow-up audit of the 

Commission’s procurement and contracting processes and functions. 

Overview of Regional Offices’ Procurement Activities 

The Commission’s Regional Offices acquire goods and services from outside 

vendors to support their operations and to help carry out the SEC’s mission. 

This is accomplished either through purchases that are made by authorized 

government purchase cardholders or through the issuance of legally binding 

contractual documents. OAS has delegated select senior personnel officials 

(i.e., Regional Directors, select Associate Regional Directors, and select legal 

counsels) in the Regional Offices with the authority to enter into, and modify 

contracts with vendors on behalf of the Commission. These officials have 

been delegated the express written contracting authority in the form of 

warrants up to $100,000, to procure services limited to expert witnesses, 

foreign counsel depositions, and transcript services for Enforcement. In 

December 2008, warrants granted to select personnel in the Regional Offices 

were revised to include litigation support of up to $100,000. All other 
OA Procurement and Contract Management Functions September 25, 2009 

Report No. 471 

Page 5 

Regional Office requirements are procured by OA personnel. The Regional 

Offices also have the authority to award and administer purchases that are 

under the $3,000 micro-purchase threshold through its designated 

government purchase cardholders. 

To better understand the Regional Offices’ procurement functions, we 

developed a questionnaire (survey) that was designed to determine the level 

of involvement of select personnel in the SEC’s Regional Offices who conduct 

procurement and contracting activities. The purpose of the survey was to 

identify information regarding: 

• Personnel who performed the procurement and contracting functions; 

• Personnel who have warrant authority and/or assist with procurement 

and contracting matters; 

• The volume of procurements in total number and dollar amounts; 

• Training that is received by personnel who perform procurement 

functions; 

• OA oversight of the Regional Office’s procurement activities; and 

• Challenges encountered with procurement and contracting matters. 

The survey was issued to the SEC’s Regional Offices on December 19, 2008 

and responses were received through January 19, 2009. The survey was 

completed by personnel who either had oversight of the procurement and 

contracting function, or who supervised personnel who performed these 

functions such as Regional Directors, Associate Regional Directors, 

administrative officers, supervisory program support specialists, and others 

who were involved in procurement activities. 

In addition to issuing the survey, we interviewed personnel from the Regional 

Offices regarding their compliance with the FAR and SEC regulations and 

regarding the performance of their procurement and contracting (acquisition) 

duties. The survey revealed significant risk areas which, if not addressed, 

could hinder OA’s overall procurement and contracting function. 

Objectives 

This audit was conducted in accordance with the SEC/OIG’s annual audit 

plan, and its objectives were to: 

1) Identify the population of contracts and other procurement vehicles 

administered by OAS during fiscal year (FY) 2007 and FY 2008; 
OA Procurement and Contract Management Functions September 25, 2009 

Report No. 471 

Page 6 

2) Determine if cost-reimbursable type contracts have been properly 

closed in accordance with the FAR and if the costs were allowable, 

allocable, and reasonable; and 

3) Determine if procurement activities in the Regional Offices are 

effectively managed and whether individuals performing procurement 

activities are properly trained in accordance with Office of 

Management and Budget requirements. 
Findings and Recommendations 

Finding 1: OA Does Not Maintain Accurate 

Records and Data on its Procurement and 

Contracting Activities 

We requested a list of open and closed contracts from OA and the Office of 

Financial Management (OFM) to verify the universe of all SEC contracts.1 

OA provided us with a consolidated spreadsheet which consisted of its open 

contracts that were developed based on data maintained and tracked by three 

different contracting officers/branch chiefs. We found that these three 

contracting officers maintained the contracts under their purview differently. 

Our review of the consolidated spreadsheet further found that 14 of 50 data 

fields on the spreadsheet were blank. The contracting officers’ spreadsheets 

are the main instruments that OA uses to track its procurement and 

contracting data for the SEC’s Headquarters Offices/Divisions and select 

Regional Offices. Yet, OA does not have policies or standard operating 

procedures to identify the acquisition data that should be tracked and how its 

contracting officers should maintain contracting data. 

Additionally, we found that OA’s consolidated spreadsheet could not be 

reconciled with OFM’s records. We compared the contract values from the 

consolidated spreadsheet to OFM’s active contract listings and found 

approximately $13,050,8432 in contracts that were not identified on the 

consolidated spreadsheet. OA’s open contracts only consisted of blanket 

purchase agreements, interagency agreements, indefinite delivery contracts, 

and purchase orders. OA did not have a consolidated record of active, 

pending, completed, modified, or cancelled contracts. We further found that 

some contracts that OA classified as closed were listed as open on OFM’s 

contract list. Thus, we were unable to accurately identify the universe of the 

SEC’s contracts and the corresponding contract values. We note that OA was 

also unable to accurately identify this universe. 

Furthermore, we found that OA was unable to provide requested data on 

contracting activities that originated from the Regional Offices. We 

determined that OA does not appropriately monitor all Regional Office 

 

1 When OA discontinued using the Strategic Acquisition Manager (SAM), which was OA’s 

automated procurement system (APS) in March 2008, its contracting officers reverted back to 

maintaining their respective procurement and contracting (acquisition) data manually. 

OA Procurement and Contract Management Functions September 25, 2009 

2

 These values were estimated from OFM’s payment records of current contract activities. 

Report No. 471 

Page 7 
OA Procurement and Contract Management Functions September 25, 2009 

Report No. 471 

Page 8 

contracting activities. We further discovered that the Regional Offices were 

not required to submit monthly, quarterly, or annual reports on contract 

activities to OA personnel, nor do they remit files to OA on contracts that 

have been executed. 

Pursuant to the OMB Circular A-123, Management’s Responsibility for 

Internal Control: 

Management has a fundamental responsibility to develop and 

maintain effective internal control. The proper stewardship of 

Federal resources is a fundamental responsibility of agency 

managers and staff. Federal employees must ensure that 

government resources are used efficiently and effectively to 

achieve intended program results. Resources must be used 

consistent with agency mission, in compliance with laws and 

regulations, and with minimal potential for waste, fraud, and 

mismanagement. 

 . . . . Internal Control -- organization, policies, and procedures 

– are tools to help program and financial managers achieve 

results and safeguard the integrity of their programs. 

Implicit in these requirements are the need to maintain records on critical 

contract data. The aforementioned failures to maintain accurate records and 

data resulted from OA not having established sufficient processes and 

monitoring methods to ensure compliance with all established federal 

requirements and the Commission’s acquisition policies and procedures. 

OA used Strategic Acquisition Manager (SAM) as its pilot automated 

procurement system (APS) from May 2007 to March 2008 to track its 

acquisition activities. OA later cancelled SAM as a result of the system’s 

failure to meet their needs, and the vendor’s failure to provide trained system 

administers who could fix the system’s problems. Also, OA encountered 

problems with interfacing SAM to Momentum, the Commission's financial 

accounting system. Momentum tracks the agency's budget, obligations, 

expenditures and balances. When OA’s use of SAM was officially 

discontinued, the office did not establish record-keeping procedures or 

standard operating procedures for the manual oversight of its procurement 

and contracting data. This has contributed to OA’s inability to identify the 

universe of the contracts it oversees. OA’s lack of record-keeping procedures 

and its failure to establish a comprehensive manual audit trail and 

standardized process to track and monitor procurement and contracting 

activities has resulted in incomplete and inaccurate contracting records. The 
OA Procurement and Contract Management Functions September 25, 2009 

Report No. 471 

Page 9 

failure to accurately maintain records on all contract processes increases the 

risk of inaccurate reporting to internal and external stakeholders such as the 

SEC Chairman, Congress, and OMB. 

Recommendation 1: 

The Office of Acquisitions should develop record-keeping standard 

operating procedures to track procurement and contracting 

(acquisition) activities. 

Recommendation 2: 

The Office of Acquisitions should develop a periodic internal review 

process to ensure that the newly developed recordkeeping standards 

are followed. 

Recommendation 3: 

The Office of Acquisitions should determine the universe of active and 

open contracts and the corresponding value of the contracts. Once this 

is accomplished, the Office of Acquisitions should reconcile the 

universe of active and open contracts with the Office of Financial 

Management’s active contract list. 

Finding 2: Contracting Data Reported in the 

Federal Procurement Data System is not 

Accurate 

The Office of Federal Procurement Policy (OFPP) Act of 1974 required the 

Administrator of OFPP within OMB to establish a system for collecting and 

developing information about federal procurement contracts. Accordingly, 

the Federal Procurement Data System (FPDS) was implemented in 1978. 

The Congress, Government Accountability Office (GAO), executive branch 

agencies and the public rely on FPDS data for information on agencies’ 

contracting actions, government-wide procurement trends, and for the 

achievement of small business goals. We requested and obtained a list of 

contract activities that OA reported in the FPDS during FY’s 2007 to 2008, 

and we further requested and received OFM’s procurement activities 

covering the same period of time. 
OA Procurement and Contract Management Functions September 25, 2009 

Report No. 471 

Page 10 

PDS: 

usly 

reported contract action data, regardless of dollar value. 

ve the required training and 

nderstanding to input data into the FPDS. 

with governing 

gulations and not properly accounting for federal resources. 

 

ecommendation 4: 

mission’s 

Headquarters Offices and Divisions and the Regional Offices. 

 

Pursuant to FAR Subpart 4.606(a), Actions Required to be Reported to 

3 F

 . . . . at a minimum, agencies must report contract actions 

over the micro-purchase threshold, regardless of the 

solicitation process used, and agencies must report any 

modification to these contract actions that change previo

We determined that the data OA reported in the FPDS was incomplete and 

inaccurate when it was compared to OFM’s procurement and contracting 

activities, because the data reported to FPDS did not include all of the SEC’s 

procurement activities, such as modifications. In addition, the contracting 

activities OA reported in the FPDS for procurement contracts included 

activities for Headquarters, but not for the Regional Offices. These occurred 

because OA had not established sufficient processes and procedures to ensure 

its compliance with procurement and contracting data reporting 

requirements. Based on the survey issued to select personnel in the Regional 

Office, and the interviews we conducted, we found that a significant number 

of personnel did not understand all their job functions and did not know how 

to use the FPDS. Also, based on the survey results and interviews, some SEC 

personnel indicated that they did not ha

u

OA’s failure to maintain concise contract records increases its risk of 

inaccurate reporting to the SEC Chairman, Congress and OMB. When 

accurate data and other needed contract information are not properly 

maintained, there is also an increased risk of noncompliance 

re

R

The Office of Administrative Services should develop an internal 

process to ensure procurement data is accurately and fully reported in 

the Federal Procurement Data System for both the Com

3

 FAR Subpart 4.606(a), Actions Required to be Reported to FPDS. 
OA Procurement and Contract Management Functions September 25, 2009 

Report No. 471 

Page 11 

 

Finding 3: OA Does Not Adequately Oversee 

and Monitor Regional Offices’ Contract 

Activities and Training of Personnel 

OA’s acquisition workforce is comprised of personnel in the GS-1102 series, 

Contracting Officers, Contracting Officer Technical Representatives (COTR), 

and Project/Program Managers. Pursuant to Securities and Exchange 

Commission Regulation (SECR) 10-15, Contract Administration Positions, 

and Office of Federal Procurement Policy, all designated personnel are 

required to take federal acquisition or SEC acquisition training to obtain and 

retain their procurement and contract oversight responsibilities.4 However, 

we found that personnel in the Regional Offices who are assigned to execute 

and manage procurement and contract activities and the Point-of-Contact 

personnel who monitor procurement activities, were not required, and for the 

most part, have not taken any federal acquisition or SEC acquisition training 

courses. We also determined that OA did not: 

• Maintain data on procurement and contracting activities that were 

executed by the Regional Offices; 

• Oversee and monitor the Regional Offices procurement and 

contracting activities; 

• Ensure the competency of employees performing contracting and 

procurement activities at the Regional Offices; and 

• Ensure that Regional Office procurement data was entered into FPDS. 

The OIG survey included questions that pertained to the level of training 

that has been provided to personnel who participate in procurement and 

contracting activities. The results of the survey showed that Regional 

officials who were delegated key aspects of contract administration lacked the 

adequate training and experience needed to successfully perform their 

contracting duties. 

Furthermore, we found that OA does not adequately monitor the Regional 

Offices. The OIG survey found that OA granted 16 personnel in the Regional 

Offices (Regional Office Directors and select Associate Regional Directors and 

legal counsels) limited warrant authority up to $100,000, to enter into 

contracts for the Enforcement. However, OA did not establish a review or 

monitoring process for which its contracting officers would have oversight or 

knowledge of the contracts that these select Regional Office personnel 

4 OA designates Inspection and Acceptance Officials for the SEC’s Offices/Divisions that do not 

have COTRs. 
OA Procurement and Contract Management Functions September 25, 2009 

Report No. 471 

Page 12 

execute. Also, these personnel were not required to submit monthly, 

quarterly, or even annual reports on contract activities to OA. Further, OA 

did not require Regional Offices to remit files to OAS on the contracts that 

were executed. Moreover, we found that some Regional Office Directors and 

Associate Regional Directors were unfamiliar with and not in compliance 

with applicable federal and SEC regulations. In discussions with these 

individuals, we learned that they appear to follow a “whatever it takes to get 

the job done” approach, yet, some did not fully understand and have not 

implemented all the FAR regulation requirements. 

We conducted follow-up interviews with personnel from six Regional Offices, 

based on their responses to the OIG survey. The Regional Office personnel 

expressed the following issues and concerns regarding their procurement 

activities: 

• Contracting officers from OA should visit the Regional Offices to gain 

an understanding of “what goes on here.” This would give the 

contracting officers a better understanding of the Regional Offices’ 

needs. 

• The SEC procurement and FAR regulations language is too difficult for 

them to understand. 

• Personnel performing contracting and procurement functions wore 

“many hats” and were not dedicated primarily to contracting functions. 

• Training in the procurement functions was needed for personnel who 

issue various types of contracts, and those who use the purchase card. 

Based on the results of interviews with the personnel involved in 

procurement activities at the Regional Offices, we found that many personnel 

received little or no formal procurement or contracting training related to 

their procurement responsibilities, other than a three-day Introductory 

Contracting course that OA implemented in May 2007. 

We also found that OIG Report No. 430, Contract Ratifications, issued 

September 2007, included findings and recommendations that were related to 

procurement activities at the SEC’s Regional Offices that remained 

unresolved. The findings included a recommendation that the Commission 

implement additional management controls to help preclude unauthorized 

commitments, update policies such as SECR 10-2, Contracting Authorities 

and Appointments, and put operating procedures in-place to help ensure 

compliance with issued policy. This OIG report also found that Regional 

Office staff with contracting authority and the administrative staff, who 

prepare procurement actions, did not possess the required skills to perform 

their procurement responsibilities successfully. 
OA Procurement and Contract Management Functions September 25, 2009 

Report No. 471 

Page 13 

According to the SECR 10-2, SEC Contracting Authorities and Appointments: 

 

The Senior Procurement Executive (SPE) shall establish 

acquisition policy; monitor the overall effectiveness and 

efficiency of the contracting functions; and establish 

controls to assure compliance with laws, regulations, and 

procedures. The duties of the SPE are described in FAR 

2.101. This function is delegated to the Associate 

Executive Director, OAS. 

Pursuant to Revised OMB Circular A-123: Management’s Responsibility For 

Internal Control, (December 2004), for Control Environments: 

. . . . within the organizational structure, management 

must clearly: define areas of authority and responsibility; 

appropriately delegate the authority and responsibility 

throughout the agency; establish a suitable hierarchy for 

reporting; support appropriate human capital policies for 

hiring, training, evaluating, counseling, advancing, 

compensating and disciplining personnel; and uphold the 

need for personnel to possess and maintain the proper 

knowledge and skills to perform their assigned duties as 

well as understand the importance of maintaining 

effective internal control within the organization. 

In addition, OFPP Letter 05-01, Developing and Managing the Acquisition 

Workforce (April 2005), provides that the agency’s Chief Acquisition Officer or 

equivalent: 

 . . . . is responsible for assessing the current skills 

inventory of the workforce, identifying short- and longterm agency needs, and establishing plans, including 

recruitment and retention strategies, for obtaining the 

acquisition workforce resources and skills required to 

meet future agency mission needs. 

The deficiencies described above occurred as a result of OA’s inadequate 

internal controls over the procurement and contract management functions, 

and its lack of adequate monitoring for procurement and contracting 

activities at the Regional Offices. When the OIG discussed these concerns 

with OAS’ management, OAS agreed that OA inadequately monitored and 

lacked control over the procurement and contracting activities at the 

Regional Offices. OAS explained that the lack of monitoring and control 
OA Procurement and Contract Management Functions September 25, 2009 

Report No. 471 

Page 14 

occurred because of the decentralization that was implemented by the 

Commission to expedite the acquisition needs of the Regional Offices. OAS 

officials stated that they were willing to exert control and provide oversight 

responsibility over the Regional Offices’ procurement and contracting 

functions in the future. We found that OAS officials have started to conduct 

Regional Office site visits to familiarize its staff with the Regional Offices’ 

contract and procurement activities. 

As discussed in detail in Finding 1 above, we also determined that OAS did 

not report all the SEC’s procurement and contracting data in the FPDS and 

did not ensure that only Regional Office personnel who had the requisite 

acquisition and procurement training performed the Regional Office’s 

contract administration functions. For example, Contracting Officer 

Technical Representatives, Project/Program Managers, and non-GS 1102 

series regional personnel are assigned to execute and manage contract and 

procurement activities, but have not received proper acquisition training. 

Thus, these failures increase the risk of unauthorized and inappropriate 

execution of contracts which may violate governing regulations and guidance 

provided in the FAR and OMB circulars. OA’s failure to adequately ensure 

that all Regional Office personnel who perform procurement and contracting 

duties receive required federal acquisition and procurement training and the 

lack of an automated contracting function adversely affects OAS’ ability to 

accurately report data in the FPDS. This creates a potentially high-risk 

environment for fraud, abuse, and the mismanagement of funds. 

Recommendation 5: 

The Office of Administrative Services shall develop an acquisition training 

plan to ensure all Commission headquarters and Regional 

Offices/Divisions acquisition workforce performing procurement and 

contracting duties have requisite acquisition training that complies with 

the applicable Office of Federal Procurement Policy training 

requirements. 

Recommendation 6: 

The Office of Administrative Services must provide oversight over the 

Regional Offices’ procurement activities to ensure the proper use of 

Contracting Officer Technical Representatives, Inspection and Acceptance 

Officials, Point-of-Contact personnel and other personnel that handle 

procurement and contracting activities; acquisition controls are in-place 

for all contracting and procurement activities; and appropriate data is 

reported in the Federal Procurement Data System. 
OA Procurement and Contract Management Functions September 25, 2009 

Report No. 471 

Page 15 

Finding 4: The PRISM Data Migration Plan 

is Not Adequate 

OA acquired its new automated procurement system (APS), called PRISM in 

September 2008. The PRISM contract was competitively awarded to 

Compusearch for $2.5 million, to cover a one-year base period and subsequent 

years of annual maintenance. PRISM is a web-based, commercial-off-theshelf procurement and contract management system that provides a 

streamlined end-to-end procurement cycle that integrates and tracks 

information from a single point of entry, from initiation of the requirement, 

through the solicitation and award, contract administration, to closeout and 

document archive. Previously, OA used two different APS’s, the 

Procurement Desktop System (PDS) and SAM to track its acquisitions. OA 

discontinued its use of PDS in 1998 and acquired SAM in 2007. OA 

shutdown SAM in March 2008 for a variety of reasons, including poor 

performance and the inability of the vendor to provide qualified support staff 

who were needed to supplement the on-site help desk. To date, we found that 

OA has spent approximately $5 million for PDS and SAM and neither system 

has fully met OA’s needs. The costs from the cancellation of SAM alone 

amounted to nearly $2.5 million. 

To avoid repeating the mistakes that were made with the previous failed 

APS, OA management informed us that it had selected a vendor for its third 

APS with a proven success record within the federal government. OA 

officials further informed us that they wanted a product that could be 

administered and configured without extensive customization. OA officials 

have dedicated a functional expert to manage the PRISM system’s business 

configuration design, implementation and testing. 

PRISM’s implementation consists of three phases and OA is currently in 

phase two. Phase one consisted of collecting paper contract files that are 

maintained in OA and matching the data with the information that is in 

Momentum, with a cross-check between the paper contract files and contract 

information that is in Momentum to ensure that information migrated into 

PRISM is accurate. Phase two consists of integrating OA, OHR, OIT, and the 

Regional Office’s procurement and contracting data. This integration is 

expected to take place in January 2010. The third and final phase will be the 

integration of contract information for the Office of the Secretary, 

Enforcement, and all other Commission offices and divisions that were not 

integrated during phase two. 
OA Procurement and Contract Management Functions September 25, 2009 

Report No. 471 

Page 16 

We found that the purpose of the implementation plan was to fully migrate 

OA’s current acquisition activities into PRISM. After SAM was deactivated, 

however, OA’s contracting officers reverted back to using a manual system to 

track and document its procurement and contracting activities. As discussed 

in Finding 1, OA has three contracting officers that maintained different 

Word and Excel spreadsheets to track and document the contracts for which 

they have oversight. Moreover, because of a lack of standard operating 

procedures, there is no uniformity in the manner in which the contracting 

officers maintained their acquisition information and no audit trail. 

Therefore, the data contained in SAM is not current, and only represents a 

partial snapshot of OA’s procurement activity as of March 2008. Also, 

because only one of OA’s branches and its customers used SAM, it does not 

contain all of OA’s procurement actions. Thus, there is an incomplete volume 

of data that is available in SAM. Yet, the data is still valuable and must be 

utilized. Since OA does not have a centralized repository of acquisition and 

contracting information and the universe of contracts could not be 

determined in order for OA to identify all its open and closed contracts, the 

office must now manually reconstruct the data. In addition, OA should 

compare and reconcile the contracting officers’ Word documents and Excel 

spreadsheets to the acquisition data in SAM, as well as to the procurement 

and contracting-related information that is in Momentum, before inputting 

the data into PRISM. Momentum consists of information that can be used to 

help validate the data in the contracting officer’s Word and Excel 

spreadsheets, before OA fully migrates to PRISM. 

We determined that OAS did not have an adequate plan to reconcile the 

universe of acquisition information to data that is maintained by the 

contracting officers, and the various systems such as SAM and Momentum. 

We identified the following concerns regarding the migration of data from the 

contracting officer’s Word and Excel spreadsheets to PRISM as follows: 

• There was a lack of complete and accurate contract records (pending, 

current, and closed); 

• There were no standard procedures or systematic methods for entering 

data into the various Word and Excel spreadsheets; 

• Contracts that OA management represented as closed were classified 

by OFM as open and current in Momentum; 

• OFM deobligated funds on contracts in Momentum for year-end 

financial statement preparation purposes without notice from OA that 

the contracts were completed and that additional excess funds were 

available for deobligation; 
OA Procurement and Contract Management Functions September 25, 2009 

Report No. 471 

Page 17 

 

• There was no tracking system in-place to ensure the completeness of 

the contract population; and 

• Contract files were not securely retained. 

According to the FAR 4.801, General:5 

(a) The head of each office performing contracting, contract 

administration, or paying functions shall establish files containing the 

records of all contractual actions. 

(b) The documentation in the files shall be sufficient to constitute a 

complete history of the transaction for the purpose of- 

(1) Providing a complete background as a basis for informed 

decisions at each step in the acquisition process; 

(2) Supporting actions taken; 

(3) Providing information for reviews and investigations; and 

(4) Furnishing essential facts in the event of litigation or 

congressional inquiries. 

When accurate contract data and other necessary contract information are 

not maintained, there is an increased risk of non-compliance with governing 

regulations, and improperly accounting for federal resources. 

These weaknesses resulted due to OAS’s failure to establish adequate 

internal controls to provide for the proper administration and oversight of its 

procurement and contract management functions. Specifically, OAS has not 

established sufficient policies, processes, and monitoring procedures to 

ensure compliance with established federal and Commission acquisition 

regulations and guidance. 

Recommendation 7: 

The Office of Acquisitions should revise and finalize its data migration 

plan and include key controls or steps that will ensure that all data 

migrated into PRISM is accurate and complete and has been reconciled or 

compared at a minimum to the contracting officer’s Word and Excel 

spreadsheets, and to the data that is in SAM and Momentum. 

5

 FAR 4.801. 
OA Procurement and Contract Management Functions September 25, 2009 

Report No. 471 

Page 18 

 

Finding 5: Payments on Time-and-Materials 

and Labor-Hour Contracts are not Adequately 

Supported

During our audit, we judgmentally selected 32 open contracts, 24 Firm-FixedPrice contracts, 6 Time-and-Materials and 2 Labor-Hour contracts to 

determine whether payments on these contracts were properly supported. 

OA management provided us with the contractor personnel invoices and the 

corresponding timesheets for these contracts, as applicable. We also obtained 

the contractor’s resumes and other necessary supporting documentation. We 

found that for all 8 Time-and-Materials and Labor-Hour contracts we 

reviewed, the contractors did not provide any timesheets to support their 

invoices, yet the COTRs assigned to the contracts approved the invoices for 

payment. In only three of the 6 Time-and-Materials contracts, did the 

contractors even provide a summary of hours that were charged to the 

contracts by its employees and consultants. 

Pursuant to FAR 52.232-7, Payments under Time-and-Materials and LaborHour Contracts, “the government will pay the contractor as follows, upon the 

submission of vouchers approved by the contracting officer or the authorized 

representative:”6

• The hourly labor rates shall be paid for all labor 

performed on the contract that meets the labor 

qualifications specified in the contract. 

• Labor hours incurred to perform tasks for which labor 

qualifications were specified in the contract will not be 

paid to the extent the work is performed by employees 

that do not meet the qualifications specified in the 

contract, unless specifically authorized by the contracting 

officer. 

• Subcontracts for supplies and incidental services, for 

which there is not a labor category specified in the 

contract, will be paid at cost. 

• Intercompany labor rates shall not include profit for the 

transferring division (except for commercial items as 

described in FAR 16.601(c)(2) summarized above), 

6

 FAR 52.232-7, Payments under Time-and-Materials and Labor-Hour Contracts. 
OA Procurement and Contract Management Functions September 25, 2009 

Report No. 471 

Page 19 

 

subsidiary or affiliate (the prime contractor, however, 

may include profit). 

• Payment for materials is subject to the Allowable Cost 

and Payment clause. The contracting officer will 

determine allowable costs of materials in accordance with 

Subpart 31.2 of the FAR in effect on the date of the 

contract. 

The FAR 52.232-77

 further states that the Contractor shall substantiate 

vouchers (including any subcontractor hours reimbursed at the hourly rate in 

the schedule) by evidence of actual payment and by: 

• Individual daily job timekeeping records; 

• Records that verify the employees meet the qualifications for the 

labor categories specified in the contract; or 

• Other substantiation approved by the contracting officer. 

The conditions noted above were the result of COTRs, Inspection and 

Acceptance Officials, and the Point-of-Contacts not having a full 

understanding of the FAR requirements as related to the documentation that 

is needed to support payments for Time-and-Material and Labor-Hour 

contracts. These deficiencies also occurred because the FAR requirements for 

payment were not being adequately communicated to the COTRs on how to 

approve payment for these types of contracts. We determined that OA did 

not comply with the FAR requirement to maintain adequate documentation 

to support its payments for Time-and-Materials and Labor-Hour contracts. 

This increases its risk that improper payments may be made to contractors. 

Recommendation 8: 

The Office of Acquisitions should re-educate the acquisition workforce on 

the Federal Acquisition Regulation requirements related to Time-andMaterials and Labor-Hour contracts by specifically addressing proper 

documentation to support invoice payments. This could be accomplished 

by issuing a Securities and Exchange Commission Administrative Notice. 

7

 Ibid. 
OA Procurement and Contract Management Functions September 25, 2009 

Report No. 471 

Page 20 

 

Finding 6: Contract Close-out Procedures 

Were not Conducted in Compliance with SEC 

and FAR Regulations 

OA has only officially started to close-out its completed (closed) contracts in 

the last two years. Contract close-out should be a continual effort to ensure 

that contract files are administered in accordance with the FAR. Contract 

close-out is a critical process in the life of the contract. OAS is required by 

FAR 4.804-5, Procedures for Closing Out Contract Files;8 and FAR 

4.805, Storage, Handling, And Disposal of Contract Files9 to establish 

procedures for closing, storing, and disposing of contracts. During our audit, 

we noted that the close-out procedures OA used were not in compliance with 

these FAR provisions. 

We judgmentally selected 25 closed contracts from a closed contract list that 

OA provided to us covering FYs 2006 to 2007. We reviewed the closed 

contract files to determine whether they contained the documentation that 

was required by the FAR, such as the contract, property clearance, interim or 

disallowed costs settlement, completed price revision, subcontractors’ 

payments evidence, finalization of indirect cost rates, completed contract 

audit evidence, contractors’ closing statements, contractors’ final invoices, 

and evidence that contract funds were reviewed and excess funds were 

deobligated. In addition, we examined correspondence between the 

contracting officers and other parties to determine whether modifications to 

the contracts or other actions were properly executed and supported. 

None of the 25 contracts that we reviewed complied with the FAR provisions 

as described above. Some of the issues we identified during our review of the 

closed contract files were as follows: 

(a) OA personnel were unable to locate all the requested closed contract 

files; 

(b) E-mails or documentation to evidence that contracts had been closed 

were not be kept in the active contract files; 

(c) Close-out dates, per OA’s close-out logs, were not completed; 

(d) There was no evidence of contractor closing statements in the files; 

(e) Files were missing copies of Form SECR 2414, Contract Completion 

Statement. 

8

 FAR 4.804-5, Procedures for Closing Out Contract Files. 9

 FAR 4.805, Storage, Handling, and Disposal of Contract Files.
OA Procurement and Contract Management Functions September 25, 2009 

Report No. 471 

Page 21 

 

Also, there was no evidence that assigned personnel in the SEC’s 

Offices/Divisions (program offices) who were responsible for monitoring 

contracts actually reviewed the contract fund status and notified the proper 

office when excess funds should have been deobligated from the contract. We 

did not find contract modifications to de-obligate funds on the contracts in the 

contract closeout files. 

The SECR 10-14, Procurement Contract Administration, April 2005, (SECR 

10-14) provides for close-out procedures that are applicable to all SEC 

contracts, including acquisitions placed under the Economy Act (31 U.S.C. 

1535). Though SECR 10-14 consists of three forms (SEC 2350, Contractors' 

Performance Evaluation; SEC 2414, Contract Completion Statement; and 

SEC 2415, Contract Closeout Checklist) that must be completed as a part of 

the contract administration close-out process, none of the forms were 

completed in any of the 25 contract files that we reviewed. The contracting 

officers indicated that this occurred because the SEC forms were outdated 

and of no use. 

Pursuant to the SECR 10-14, the close-out process “requires coordination 

among the Procurement and Contracting Branch, OAS, Comptroller, 

contractor, and the program office.” Implicit in this requirement is the need 

to ensure that the close-out process is completed by an individual with the 

requisite acquisition knowledge and experience. The FAR Subpart 4.8—

Government Contract Files, 4.804-5, Procedures for Closing-Out Contract 

Files,10 provides as follows: 

 

(a) The contract administration office is responsible for 

initiating (automated or manual) administrative closeout of 

the contract after receiving evidence of its physical completion. 

At the outset of this process, the contract administration office 

must review the contract funds status and notify the 

contracting office of any excess funds the contract 

administration office might deobligate. When complete, the 

administrative closeout procedures must ensure that: 

1) Disposition of classified material is completed; 

2) Final patent report is cleared; 

3) Final royalty report is cleared; 

4) There is no outstanding value engineering 

change proposal; 

5) Plant clearance report is received; 

10 FAR Subpart 4.8—Government Contract Files, 4.804-5, Procedures for Closing-Out Contract 

Files.
OA Procurement and Contract Management Functions September 25, 2009 

Report No. 471 

Page 22 

 

6) Property clearance is received; 

7) All interim or disallowed costs are settled; 

8) Price revision is completed; 

9) Subcontracts are settled by the prime 

contractor; 

10)Prior year indirect cost rates are settled; 

11)Termination docket is completed; 

12)Contract audit is completed; 

13)Contractor’s closing statement is completed; 

14)Contractor’s final invoice has been submitted; 

and 

15)Contract funds review is completed and excess 

funds deobligated. 

Also, the FAR 4.805, Storage, Handling, And Disposal of Contract Files11, 

provides that: 

(a) Agencies must prescribe procedures for the handling, 

storing, and disposing of contract files. These procedures 

must take into account documents held in all types of 

media, including microfilm and various electronic media. 

We determined that the deficiencies associated with the files as outlined 

above occurred as the result of OA’s inadequate internal controls over the 

procurement contract administration process. Specifically, OA does not have 

a process in place that identifies contract close-out procedures, contracts that 

should be closed, when close-out should commence, and documentation that 

should be maintained as evidence to properly close contracts in accordance 

with FAR and Commission requirements. As a result, there is an increased 

risk that the Commission’s contracts are not being properly closed. 

When these conditions were discussed with OA, management indicated that 

they would develop a formal process for identifying contracts for close-out. 

This included identifying contracts that should be closed-out, and providing 

separate secured storage for these contracts. Management also informed us 

that they would arrange for trained personnel to be assigned the 

responsibility for contract close-out. 

Recommendation 9: 

The Office of Acquisitions should update the SECR 10-14, Procurement 

Contract Administration, regarding contract close-out and ensure that 

11 FAR 4.805, Storage, Handling, And Disposal of Contract Files.
OA Procurement and Contract Management Functions September 25, 2009 

Report No. 471 

Page 23 

it properly aligns with the Federal Acquisition Regulation regarding 

proper contract close-out procedures. 

Recommendation 10: 

The Office of Acquisitions should develop an internal review process 

and checklist to further ensure compliance with the Federal 

Acquisition Regulation contract closeout procedures. 
Appendix I 

Acronyms and Abbreviations

APS Automated Procurement System 

COTR Contracting Officer’s Technical Representative 

Enforcement Division of Enforcement 

FAR Federal Acquisition Regulation 

FPDS Federal Procurement Data System 

FY Fiscal Year 

OA Office of Acquisitions 

OAS Office of Administrative Services 

OFM Office of Financial Management 

OFPP Office of Federal Procurement Policy 

OIG Office of Inspector General 

OIT Office of Information Technology 

OMB Office of Management and Budget 

PDS Procurement Desktop System 

SAM Strategic Acquisition Manager 

SEC or Commission Securities and Exchange Commission 

SECR Securities Exchange Commission Regulation 

SPE Senior Procurement Executive 

OA Procurement and Contract Management Functions September 25, 2009 

Report No. 471 

Page 24 
Appendix II 

Scope and Methodology

This audit was conducted in accordance with the Generally Accepted 

Government Auditing Standards. Those standards require that we plan and 

perform the audit to obtain sufficient, appropriate evidence to provide a 

reasonable basis for our findings and conclusions, based on our audit 

objectives. We believe that the evidence obtained provides a reasonable basis 

for our findings and conclusions, based on our audit objectives. 

Scope. Regis conducted the audit from January 12 through February 17, 

2009, using procedures approved by the OIG. From July through August 

2009 we performed follow-up procedures to ensure that our work was still 

valid. The scope of the audit and our professional services consisted of 

reviewing OAS’ activities covering a three to five year audit cycle. We 

identified all contract types (e.g., labor-hour vs. fixed-price, cost-based, sole 

source) that the Commission uses. We also reviewed cost reimbursable, time 

and material, and labor hour type contracts to determine whether they are 

being properly closed-out in accordance with FAR, and whether the costs 

claimed are allowable, allocable and reasonable, in accordance with the terms 

of the contract and FAR. Furthermore, we reviewed OAS’ PRISM migration 

and the implementation phases. In addition, we reviewed OAS’ policies, 

operating procedures, and SEC Regulations related to procurement and 

contract administration and management. 

Methodology. The methodology was designed by using a risk-based 

approach. The audit consisted of several processes including reviewing 

policies and procedures governing the procurement and contracting processes 

and functions; conducting interviews and walk-through procedures with 

appropriate OAS personnel to document our understanding, observing actual 

processes; and conducting detailed reviews of selected contract files. 

OA Procurement and Contract Management Functions September 25, 2009 

To address the first audit objective we identified the population of contracts 

and other procurement vehicles administered by OAS during FY 2007 to FY 

2008. We also obtained a list of open contracts from OA and OFM. OA 

provided two lists of open contracts; a list from the FPDS system and another 

list from OA personnel consisting of the Contracting Officer’s Word and Excel 

spreadsheets. The list from OFM is generated from Momentum. We 

judgmentally selected 32 open contracts and requested that OA provide us 

with contract files. The sample consisted of Firm Fixed Price, Time-and 

Material, and Labor-Hour-contracts. 

Report No. 471 

Page 25 
OA Procurement and Contract Management Functions September 25, 2009 

Report No. 471 

Page 26 

Specifically, we reviewed each file to determine whether the costs claimed 

were allowable, allocable, and reasonable in accordance with the terms of the 

contract and FAR. We verified that the contents required to be included in 

the contract folders, according to FAR, were present. Furthermore, we 

reviewed the original contract document and noted the contract value and 

ensured that all pertinent documents were available within the file. 

In addition, for firm fixed price contracts, we reviewed the contract files to 

determine the ceiling costs and any price adjustments. If a contract was used 

on commercial items or supplies and services, we also reviewed 

documentation to determine if there was adequate competition. We also 

reviewed each Time-and-Materials and Labor-Hour contracts, and performed 

the following: 

• Obtained, reviewed, and agreed total payments under each contract to 

amounts authorized, and obtained explanations from OAS on 

identified differences. 

• Obtained copies of paid contractor invoices and determine whether 

payments were in accordance with the terms of the contracts. We 

accomplished this by reviewing such items as billed hourly rates, hours 

recorded on timesheets, labor categories, and billing periods. 

To address the second audit objective, which was to determine whether cost 

reimbursable type contracts were properly closed in accordance with the FAR 

and costs were allowable, allocable, and reasonable, we selected and reviewed 

25 closed contracts to determine whether SEC followed close-out procedures 

in accordance with FAR and SEC policies. 

To address the third audit objective, which was to determine whether 

procurement activities in the Regional Offices were effectively managed and 

individuals performing procurement activities were properly trained in 

accordance with OMB requirements, we developed and sent a survey 

questionnaire about procurement functions, processes, activities, oversight, 

and reporting to the Regional Office staff. We reviewed the results of the 

survey to develop a general consensus of the Regional Offices’ operations. We 

selected and followed-up with six of the Regional Offices on their responses to 

the survey questionnaire. 

We obtained organizational charts identifying the various SEC officials who 

were responsible for functions within the OA and identified the personnel we 

would interview. We further reviewed the policies and procedures that 

govern the procurement and contracting management functions, conducted 
OA Procurement and Contract Management Functions September 25, 2009 

Report No. 471 

Page 27 

interviews and walkthroughs to document our understanding of how 

purchase requisitions and solicitations are managed. Also, we reviewed the 

receipt and evaluation of contract offers and quotes. We reviewed 

documentation pertaining to the preparation, administration, and close-out of 

awards. We also obtained and reviewed sample contracts for compliance with 

the FAR and SEC’s regulations and policies. We developed a survey to 

determine the level of involvement of select personnel in the SEC’s Regional 

Offices who perform its procurement and contracting activities. The survey 

was issued to Regional Offices’ personnel on December 19, 2008, and we 

accepted responses to the survey through January 19, 2009. Also, we 

interviewed personnel from the Regional Offices for compliance with FAR 

and SEC regulations and policies regarding the performance of their 

procurement functions. Finally, we examined whether procurement activities 

in the Regional Offices were effectively managed and are properly trained in 

accordance with OMB’s requirements. 

Internal Controls. We reviewed the internal controls that were considered 

significant within the context of the audit objectives. To evaluate control 

activities we obtained and reviewed applicable information from governing 

regulations and guidelines such as the FAR, OMB circulars and guidelines, 

SECR’s issued by the Commission, and the Office of Federal Procurement 

guidance. We interviewed OA and the Regional Office staff and performed 

analyses to test whether staff had adhered to the requirements outlined in 

the policies and procedures, rules, regulations, and in other written 

documentation. Through interviews with SEC staff we gained an 

understanding of the OAS and OA management and supervisory activities 

and the internal controls that are currently being used. 
Appendix III

Criteria

FAR Subpart 4.1, 4.600 Scope of Subpart. Prescribes uniform reporting 

requirements for the FPDS. 

FAR Subpart 4.606(a), Actions required to be reported to FPDS. 

Prescribes the policies and procedures relating to the administrative aspects 

of contract execution, contractor-submitted paper documents, distribution, 

reporting, retention, and files. 

FAR 4.801, General. Prescribes the requirements for establishing, 

maintaining, and disposing of contract files. 

FAR 4.804-4, Physically Completed Contracts. Describes when a 

contract is considered to be physically completed. 

FAR 4.805, Storage, Handling, and Disposal of Contract Files. 

Identifies when and how agencies must prescribe procedures for the 

handling, storing, and disposing of contract files. 

FAR 52.232-7 Payments Under Time and Materials and Labor Hour 

Contracts. Describes how the Government will pay the Contractor upon the 

submission of vouchers approved by the Contracting Officer or the authorized 

representative. 

Office of Federal Procurement Policy Letter 05-01, Developing and 

Managing the Acquisition Workforce. Requires the Federal Acquisition 

Institute and Chief Acquisition Officer’s Council to approve a program that 

standardized the education, training, and experience requirements for 

contracting professionals in an effort to improve workforce competencies. 

OMB Circular A-123, Management’s Responsibility for Internal 

Control. Defines management’s responsibility for internal control in Federal 

departments and agencies. It also provides the guidelines for conducting 

entity level internal control reviews of the acquisition function. 

SECR 10-2, Contracting Authorities and Appointments. Establishes 

uniform policies and procedures for the acquisition of the SEC’s products and 

OA Procurement and Contract Management Functions September 25, 2009 

Report No. 471 

Page 28 
OA Procurement and Contract Management Functions September 25, 2009 

Report No. 471 

Page 29 

services. Also, it describes the policies and delegates authority and 

accountability for the management of acquisition functions on behalf of the 

Chairman.

SECR 10-14, Contract Administration. Establishes the SEC’s contract 

closeout program and explains how it functions. 

 
Appendix IV 

 List of Recommendations

Recommendation 1: 

The Office of Administrative Services should develop record-keeping standard 

operating procedures to track procurement and contracting (acquisition) 

activities. 

Recommendation 2: 

The Office of Administrative Services should develop a periodic internal 

review process to ensure that the newly developed recordkeeping standards 

are followed. 

Recommendation 3: 

The Office of Administrative Services should determine the universe of active 

and open contracts and the corresponding value of the contracts. Once this is 

done, the Office of Acquisitions should reconcile the universe of active and 

open contracts with the Office of Financial Management’s active contract list. 

Recommendation 4: 

The Office of Administrative Services should develop an internal process to 

ensure procurement data is accurately and fully reported in the Federal 

Procurement Data System for both the Commission’s headquarters and the 

Regional Offices/Divisions. 

Recommendation 5: 

The Office of Administrative Services shall develop an acquisition training 

plan to ensure all Commission headquarters and Regional Offices/Divisions 

acquisition workforce performing procurement and contracting duties have 

requisite acquisition training that complies with the applicable Office of 

Federal Procurement Policy training requirements. 

Recommendation 6: 

The Office of Administrative Services shall provide Regional Offices with 

oversight including the proper use of Contracting Officer Technical 

OA Procurement and Contract Management Functions September 25, 2009 

Report No. 471 

Page 30 
OA Procurement and Contract Management Functions September 25, 2009 

Report No. 471 

Page 31 

Representatives, Inspection and Acceptance Officials, Point-of-Contact 

personnel and other personnel that handle procurement and contracting 

activities and ensure acquisition controls are in-place for all contracting and 

procurement activities and appropriate data reporting in the Federal 

Procurement Data System. 

Recommendation 7: 

The Office of Acquisitions should revise and finalize its data migration plan 

and include key controls or steps that will ensure that all data migrated into 

PRISM is accurate and complete and has been reconciled or compared at a 

minimum to the contracting officer’s Word and Excel spreadsheets, and the 

data that is in SAM and Momentum. 

Recommendation 8: 

The Office of Acquisitions should re-educate the acquisition workforce on the 

Federal Acquisition Regulation requirements that are related to Time-andMaterials, and Labor-Hour contracts, by specifically addressing proper 

documentation to support invoice payments. This could be accomplished by 

issuing a Securities and Exchange Commission Administrative Notice. 

Recommendation 9: 

The Office of Acquisitions should update the SECR 10-14, Procurement 

Contract Administration, regarding contract closeout and ensure that it 

properly aligns with the Federal Acquisition Regulation regarding proper 

contract closeout procedures. 

Recommendation 10: 

The Office of Acquisitions should develop an internal review process and 

checklist to further ensure compliance with the Federal Acquisition 

Regulation contract closeout procedures. 
Appendix V 

 Management Comments

OA Procurement and Contract Management Functions September 25, 2009 

Report No. 471 

Page 32 
OA Procurement and Contract Management Functions September 25, 2009 

Report No. 471 

Page 33 
OA Procurement and Contract Management Functions September 25, 2009 

Report No. 471 

Page 34 
OA Procurement and Contract Management Functions September 25, 2009 

Report No. 471 

Page 35 
Appendix VI 

 Office of Inspector General’s 

Response to Management’s Comments

The Office of Inspector General is pleased that the Office of Administrative Services 

(OAS) concurred with the report’s 10 recommendations. We believe that OAS’ 

proposed actions are responsive to our findings and recommendations and are 

pleased that OAS has already taken action to implement some of the 

recommendations that are identified in our report. Once all of the recommendations 

are fully implemented, we believe the Commission’s internal controls over the 

procurement and contract management function will be strengthened. 

OA Procurement and Contract Management Functions September 25, 2009 

Report No. 471 

36
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 Requests/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 Commission, 

contact the Office of Inspector General at: 

Phone: 877.442.0854 

Web-Based Hotline Complaint Form: 

 www.reportlineweb.com/sec_oig