SEC scraps plans for new data center

The Securities and Exchange Commission has called off plans to a lease a new data center, according to agency contracting officials. The move, as the end of its current contract nears, marks the second time the regulatory agency has abandoned efforts to find a home for one of two primary data centers it maintains.

On Dec. 2, SEC officials used the contracting bulletin board FedBizOpps.gov to cancel a request for proposals, issued only two months prior, for a new 4,000 square foot primary data center in the Washington area to supplement its other data center in Alexandria, Va.

The Oct. 15 solicitation sought a facility that could support telecommunications and data delivery over a 10-year, fixed-price contract period. SEC's information systems require secure, reliable, round-the-clock access to data -- including confidential financial information -- from multiple sources. Under the nixed project -- estimated to cost $30 million -- the center would have been required to provide high-speed data lines, as well as backup hosting services.

SEC officials on Monday were not able to comment on the reason for the cancellation. Some procurement specialists suspect the action was the result of problems SEC is having managing its real estate. Two recent inspector general reports highlighted difficulties the agency is experiencing with overseeing information technology spending and leases. Other observers said SEC could have been responding to a White House initiative aimed at consolidating data centers.

The lease for SEC's current alternate facility expires in March 2011.

In May 2009, SEC backed away from its first attempt to procure a new data center, according to market research firm INPUT. A request for information on potential bids issued in February 2009 contained requirements very similar to this year's formal request for proposals.

Alex Rossino, principal analyst for federal information services at INPUT, said scrapping this second attempt "reflects a lack of internal coordination within the SEC between its IT and administrative offices." The agency -- and the amount of corporate data it examines -- is poised to grow considerably under goals the Obama administration set forth to strengthen the enforcement of financial regulations.

But a September IG audit of its property procurement procedures found the agency's leasing branch does not have adequate policies and, until recently, had no final leasing policies and procedures. IG officials wrote, "The absence of adequate leasing policies and procedures led to certain situations in which the SEC was required to make lease payments that could have been avoided if appropriate policies and procedures had existed and been followed consistently." Furthermore, SEC's five-year draft strategic plan offers no specific goals or performance measures for leasing, even though the agency spends about $83.8 million annually on property leases, officials added.

Separately, a March IG assessment of its information technology investment practices found the agency's chief information officer did not have enough authority to manage capital planning and investment control processes.

Rossino said IT and contracting offices probably scrubbed the solicitation after discussing the challenges underscored in the reports. "I anticipate that the SEC will move forward with this procurement eventually, but it will need to get its leasing processes house in order first," he added. "Expanding its data center is critical to the future success of the agency's mission."

Ray Bjorklund, chief knowledge officer at the research center FedSources, said the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act could have influenced SEC's decision to scratch the project. "One other factor might be the realignment of financial oversight organizations under the Dodd-Frank bill," he said. "It's possible that there may some consolidation of the IT environment under the auspices of [the Treasury Department]."

The cancellation also comes at a time when the White House is urging all agencies to downsize their data center footprints. The push to combine or outsource the government's 2,094 data facilities is aimed at reducing greenhouse gases, cutting real estate costs, expediting operations and strengthening security. "There may have been some pressure to reconsider in light of the administration's quest to reduce the proliferation of data centers," Bjorklund noted.