Issa quizzes SEC on possible overuse of consultants

The chairman of the House oversight panel is taking the Securities and Exchange Commission to task for spending an estimated $8.5 million in one year on consultants to help reorganize the agency to implement the 2010 Dodd-Frank Financial Reform Act.

Rep. Darrell Issa, R-Calif., on Jan. 4 sent a letter to newly named SEC Chairwoman Elisse Walter demanding that she turn over documents to his Oversight and Government Reform Committee related to SEC Chief Operating Officer Jeffrey Heslop’s hiring of Booz Allen Hamilton to implement the Mission Advancement Program recommended by another consulting firm.

“Notwithstanding the regularity with which federal agencies contract with independent consultants,” Issa wrote, “the obvious overlap between the authority and responsibilities of the Office of the Chief Operating Officer and the Program Management Office established by Booz Allen raise serious questions about the necessity of consultants, duplication of efforts and outright waste.”

Issa questioned the chief operating officer’s justification for hiring consultants at $100 to $300 an hour when “similarly positioned SEC staff only cost $93 an hour.”

In defending his approach, Heslop had argued that the $8.5 million paid for itself in savings after the consultants identified 700 to 900 unused wireless cards that were costing the commission $43 per month apiece, as well as an underused shuttle bus service costing $14,000 per month.

But Issa said Heslop had told lawmakers that he and then-Chairman Mary Schapiro were already aware of such savings potential. “It is difficult to understand why management consultants … were required to identify such common sense and obvious savings,” Issa wrote.

Booz Allen spokesman James Fisher told Government Executive that the company “always cooperates with the government on investigations; we have no comment on this matter.”

Issa’s letter also cited a recent civil complaint filed in court by David Weber, a former assistant SEC inspector general for investigations who was terminated last fall. The self-described whistleblower used his complaint to attack Heslop for attempting to unlawfully convert his employment status from political appointee to a career reserved executive position, an issue, Issa wrote, that the committee investigates to assure that such hiring is based on merit in an open, competitive process.

Weber also used his complaint to attack former SEC Inspector General H. David Kotz for allegedly inappropriate personal relationships in the office.

SEC spokesman John Nester said in a statement that “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. With respect to the civil complaint referenced in the letter, we plan to vigorously contest the lawsuit.”

The story was first reported by Reuters. Issa gave the SEC until Jan. 17 to deliver the documents.