Exclusive: U.S. House panel probes SEC spending on consultants

Fri Jan 4, 2013 5:54pm EST
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By Sarah N. Lynch

WASHINGTON (Reuters) - The U.S. House Oversight Committee is probing the Securities and Exchange Commission's spending on outside consultants from Booz Allen Hamilton, saying it is concerned about possible waste.

In a January 3 letter to SEC Chairman Elisse Walter, shown to Reuters, House Oversight Chairman Darrell Issa gave the agency until January 17 to turn over a lengthy set of documents laying out payments made to Booz Allen and details on how the SEC chose to hire the consulting firm, among other matters.

Reuters first reported in late February of last year that the SEC had spent millions of dollars hiring Booz Allen consultants to help streamline the agency, leading some agency insiders to question whether the SEC was getting its money's worth.

At the time the story was published, the SEC had spent over $8.5 million in less than one year on consultants to advise on reforming workflows and back-office operations. The consultants were paid anywhere from $100 to over $300 an hour.

In the letter, Issa said he was concerned that the use of the consultants creates an "obvious overlap" between their work and the responsibilities and authority of the SEC's Chief Operating Officer, Jeffrey Heslop. Heslop was tapped by former SEC Chairman Mary Schapiro to help improve the operations of the agency and oversaw the hiring of the Booz Allen consultants.

That overlap, Issa said, raises "serious questions about the necessity of the consultants, duplication of efforts, and outright waste."

He added that in addition to the documents, he wants Heslop to give his committee's staff a briefing on the consultants' work.

SEC spokesman John Nester said: "We share Chairman Issa's interest in effective management and appreciate the opportunity to demonstrate that.   Continued...

A sign for the Securities and Exchange Commission (SEC) is pictured in the foyer of the Fort Worth Regional Office in Fort Worth, Texas June 28, 2012. Picture taken June 28, 2012. REUTERS/Mike Stone