* Schapiro says SEC will reduce spending, time on project
* SEC had hired Booz Allen to help with agency restructuring
* Project stems from a requirement in 2010 Dodd-Frank law
* House Republicans critical of SEC spending on the project
* SEC says project has helped save millions
By Sarah N. Lynch
WASHINGTON, April 25 (Reuters) - U.S. securities regulators have scaled back their spending on a project to restructure the agency, a move that comes after critics questioned the costs of consultants' work.
"It is anticipated that the level of activity... will be reduced in FY 2012," said Securities and Exchange Commission Chairman Mary Schapiro in prepared testimony before a House Financial Services panel for an SEC oversight hearing on W edn esday.
"Staff and management time to devote to this initiative will continue to be in short supply, and future phases of implementation are likely to require levels of funding that must be directed at other agency priorities at this time."
In February, Reuters reported that the SEC had spent over $8.5 million on dozens of consultants from Booz Allen Hamilton to help advise on reforming workflows and back-office operations.
That work was the result of a separate operational study required in the 2010 Dodd-Frank Wall Street reform law and conducted by the Boston Consulting Group.
The law tasked the SEC with becoming a more nimble agency after embarrassing enforcement misses, including Bernard Madoff's $65 billion Ponzi scheme.
However, the law did not require the SEC to hire consultants to help with the follow-up work to carry out the Boston Consulting Group's reform recommendations
The so-called MAP project work by Booz Allen has cost the SEC between around $100 an hour to over $300 an hour, with the burn rate at one point being as high as $1.4 million per month.
The SEC's chief operating officer, Jeffrey Heslop, has said the agency needed the outside expertise and said the project has created efficiencies that will save millions of dollars.
In her testimony on Wednesday, Schapiro said one piece of the project has helped the SEC identify ways to save more than $8.3 million over the next two years.
But Republican Representative Scott Garrett expressed concern about the MAP project at the hearing and said he was hard-pressed to support the SEC's request for a fiscal 2013 budget boost of $245 million to roughly $1.57 billion.
Although the SEC's budget is covered by fees it imposes on the industry, Congress still must approve the SEC's annual spending.
"I have heard estimates that you have spent as much as $10 million on something that you could have done internally through the office of the chief operating officer," Garrett said. "This type of blatant example of millions of dollars wasted, I find it difficult to sympathize with your request for millions of dollars of additional taxpayer money year after year."
When asked to explain why the SEC was scaling back implementing the reforms from the Boston Consulting Group's report, Schapiro reminded lawmakers that the estimated cost to complete the reforms was between $45 million and $50 million.
"We don't have that kind of money to spend on this," she said, adding that the SEC will instead take incremental steps to get it done.