Summary

GAO reviewed the Securities and Exchange Commission's (SEC) Electronic Data Gathering, Analysis, and Retrieval System (EDGAR) pilot program to determine: (1) the cost-effectiveness of the pilot program compared to contract cost; (2) whether SEC met its scheduled pilot development; (3) the types of functions developed in EDGAR compared to the original requirements; (4) the feasibility of additional function development; and (5) whether SEC contract administration practices were adequate.

GAO found that: (1) in 1984, SEC awarded a contract for the pilot program to an accounting firm at a cost of over $8 million; (2) program costs increased 25 percent, due to additional equipment requirements and other related expenses; (3) SEC generally adhered to the proposed time frames for program completion; (4) SEC added additional functions to the system, such as text search and an automatic financial profile; and (5) three key functions require further development and testing in the operational system. GAO also found that SEC: (1) required the contractor and its employees to sign a nondisclosure agreement to eliminate any appearance of a conflict of interest; (2) failed to analyze the contractor's invoices prior to payment and permitted unnecessary delays in final execution of contract modifications; and (3) failed to fully utilize another contractor's expertise in the evaluation of the system's cost-effectiveness and efficiency.