Three weeks after it was disclosed that the SEC might have violated federal law by entering into an office lease - one that also "grossly overestimated" the Commission's needs - Jeff Heslop, the SEC's COO and Acting Executive Director testified before a House Subcommittee.  [After the jump, read C-I's 5/25 story on the misbegotten lease and lease process.]

His mission was to testify on behalf of the Commission with respect to the agency’s lease of office space at the Constitution Center building in Washington, D.C., and to share with you information on the actions that the SEC is taking in response to the 5/16/11 report issued by the SEC's Office of Inspector General. 

Mr. Heslop notes that, while the OIG report on the Constitution Center lease revealed a number of flaws in the Commission's leasing process - although the SEC has not paid any rent and is no longer obligated for a majority of the original space - it's clear that this leasing decision lacked the rigor and attention to detail demanded for decisions of this magnitude.   As such, the SEC is committed to implementing whatever changes are needed to improve that process, starting with the retention of outside experts to conduct a comprehensive assessment of our entire leasing organization.

Mr. Heslop joined the SEC in May 2010 as its first-ever COO.  Upon joining the SEC, his responsibilities were focused on overseeing the operations of the Office of Information Technology (OIT), the finance and accounting functions of the Office of Financial Management (OFM), and the Office of FOIA, Privacy, and Records Management.  In April of this year, Chairman Schapiro asked Mr. Heslop to take over responsibilities of the departing Executive Director, who was responsible for overseeing the Office of Administrative Services (OAS), which manages the agency’s real property leasing activities.

For the complete text of Mr. Heslop's testimony, go to:   [SEC Testimony, 6/16/11]

    SEC's "WAG" Assumptions.   In an interview with the inspector general’s office, an unnamed SEC employee - one of many whose names were redacted in the report - said one of the assumptions the agency used was merely a “WAG”— a “wild-ass guess,” the report said.  The lease was not awarded competitively, and a document formally justifying it was prepared a month after the SEC had signed the contract, the report said.  The document was backdated to give the impression that it was written just a few days after the lease was signed, the report said.

The report gives fresh ammunition to the SEC’s critics at a time when the agency is already on the defensive.  The SEC has been fighting for a budget increase and meeting resistance from some congressional Republicans who say the agency has been so badly mismanaged that it does not deserve the money. 

For further details, go to:   [Washington Post, 5/24/11, "SEC leased unneeded space"]

To access the Inspector General's report, go to:   [Report of Investigation, - Case OIG-553, "Improper Actions Relating to the Leasing of Office Space"]