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Highlights

Congress asked us to provide a briefing on the facilities management and budgeting issues of the U.S. Securities and Exchange Commission (SEC) that SEC disclosed to Congress in May 2005, which resulted in SEC's requesting a reprogramming of approximately $48 million of 2005 and 2006 funds. The reprogramming was requested to cover unbudgeted costs related to the construction of new facilities in Washington, D.C., and the improvement of new leased facilities in New York City and Boston. Specifically, our objectives were to provide information on (1) the amount of funding for these projects that was not planned; (2) the reasons for the change in budgeted amounts; (3) the related actions taken by SEC since this budgeting issue was uncovered; and (4) any corrective actions to prevent this issue from recurring.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
United States Securities and Exchange Commission 1. The Chairman of the SEC should direct the Executive Director to establish accountability at both the staff and management levels for the reasonableness of budget estimates submitted during the budget formulation process.
Closed - Implemented
SEC instituted a policy whereby pay raises are more directly tied to employees' success in providing reasonable budget estimates and overseeing facilities projects. SEC also replaced staff previously involved in managing and overseeing the construction and lease improvement projects. Further, SEC implemented a new information system to help detect abnormalities in budget estimates and requires more formal sign-off by each management level before reaching final approval. The actions taken by SEC have improved accountability over budget estimates and tracking of actual expenses in relation to its budget.
United States Securities and Exchange Commission 2. The Chairman of the SEC should direct the Executive Director to establish regular reporting and review procedures related to the three construction projects, and any future projects, to ensure that management is promptly informed when changes or problems occur with estimates.
Closed - Implemented
SEC built a new oversight structure to improve communication among the relevant offices and identify and resolve new issues as they arise. Included in this structure are biweekly meetings to review the status of construction projects. SEC also conducted a review of the facilities budget for the fiscal 2006 and 2007 funding cycles. In addition, SEC initiated a five-year planning cycle to improve the agency's ability to manage its facilities' needs over the long term. As a result, SEC has improved its management and accountability for tracking costs of construction projects.
United States Securities and Exchange Commission 3. The Chairman of the SEC should direct the Executive Director to improve communication and consultation with operating units and staff regarding space and property needs.
Closed - Implemented
SEC's Office of Administrative Services (OAS) began working closely with the program offices that occupy these three facilities to identify and address their specific needs, such as IT infrastructure and file room needs. OAS also begun weekly meetings with staff from SEC's Office of Information Technology to work collaboratively to address information technology issues related to the facilities projects. In addition, SEC divisions and offices are now required to provide additional support early in the planning process to improve the accuracy of the estimates underlying their funding requests.
United States Securities and Exchange Commission 4. The Chairman of the SEC should direct the Executive Director to evaluate options for budget and facilities management activities in terms of number of staff and expertise needed.
Closed - Implemented
SEC established several new budget and project oversight positions in OAS and determined it needed to hire seven new budgeting and facilities management staff. SEC replaces staff members previously involved in managing and overseeing the construction and lease improvements. SEC also hired a new official with budgeting and construction experience to lead OAS. This new official redistributed duties among OAS staff to relieve the workload of the agency's space management staff and offload certain tasks to other employees with the appropriate skill. SEC also filled its related vacancies in OFM. SEC's actions improved the staffing levels and skills in the area of budget and facilities management.
United States Securities and Exchange Commission 5. The Chairman of the SEC should direct the Executive Director to complete hiring for new positions in the Office of Administrative Services and Office of Financial Management.
Closed - Implemented
SEC established several new budget and project oversight positions in OAS and determined it needed to hire seven new budgeting and facilities management staff. SEC replaces staff members previously involved in managing and overseeing the construction and lease improvements. SEC also hired a new official with budgeting and construction experience to lead OAS. This new official redistributed duties among OAS staff to relieve the workload of the agency's space management staff and offload certain tasks to other employees with the appropriate skill. SEC also filled its related vacancies in OFM. SEC's actions improved the staffing levels and skills in the area of budget and facilities management.

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