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

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.

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

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.

“We have been transparent throughout in communicating the results of the organizational reform efforts encompassed by the Congressional mandate, and our reforms to date have resulted in significant cost savings.”

A Booz Allen representative did not respond to requests for comment.


Issa noted that the findings in Reuters’ report about the hiring of the Booz Allen consultants are “broadly compatible” with allegations recently made in a lawsuit against the SEC filed by former SEC Assistant Inspector General for Investigations David Weber.

Weber had been placed on leave from the SEC last year after employees complained he spoke openly about wanting to carry a firearm at work.

He was later fired, and then in November he sued the SEC, claiming the firing was in retaliation for his efforts to shed light on a variety of improprieties at the agency.

In his lawsuit, Weber said that prior to being terminated, he had been investigating whether Heslop had improperly steered consulting work to Booz Allen.

Weber claims he learned that Heslop had a personal friend at the company and later had pushed the SEC to hire Booz Allen Hamilton even though other SEC senior officials did not think it was necessary. Weber added that he referred his findings to the Department of Justice.

Heslop did not immediately respond to an e-mail seeking comment.

Nester said that the SEC plans to “vigorously contest” Weber’s lawsuit.

Reporting by Sarah N. Lynch; Editing by Gary Hill