SEC taps BDM to upgrade online database
- By L. Scott Tillett, L. Scott Tillett
- Jul 05, 1998
The Securities and Exchange Commission last month awarded BDM International Inc. a contract to design the second generation of the agency's online database of information on publicly traded companies.
Under the $49 million, three-year contract, BDM will redesign the Electronic Data Gathering, Analysis and Retrieval system, which the SEC uses to regulate publicly traded companies and the public uses to retrieve information to help make investment decisions.
With the new contract, called EDGAR II, the SEC will depend more on the Internet, allowing public companies filing documents with the SEC to submit graphics and charts, not just text, said Kenneth Fogash, the SEC's contracting officer. Companies now file information electronically using a DOS-based software supplied by the SEC. The electronic files, which are all text-based, arrive at the SEC on disks or are transmitted via a dial-in connection.
"What we're trying to do is make it easier and more flexible for the filers," Fogash said.
By using the World Wide Web to file documents, companies should have a more simplified way to submit information, and it should also allow the SEC and the public to obtain a more complete picture of a company's financial performance, Fogash said.
"The information that they submit to EDGAR will be much enhanced, and that will look much better than the ASCII charts that are used now," said Ron Maylor, senior vice president for business development at BDM.
The SEC awarded EDGAR II to BDM, which is the incumbent contractor for the EDGAR contract, because the company offered the best value to the government, Fogash said.
But officials at some companies doubt that the Web approach will make filing significantly easier.
Companies now may have to create two electronic documents that contain the same information. One of those documents, stored perhaps as a Microsoft Corp. Word file, would be used to produce a hard-copy financial report for investors and potential investors and might include bold and italicized type, graphics and special symbols for highlighting sections of a financial report. The other document, created for the SEC, would contain plain text in Hypertext Markup Language, the software language used to create documents on the Web.
"I don't know how they're going to get around this formatting issue," said Rita McConville, chief financial officer of Akorn Inc., a publicly traded drug maker based in Lincolnshire, Ill. McConville said having to create two documents in two formats is a burden. She said an ideal situation would be a "a system where I could just take my Word file and submit my Word file."
However, publicly traded companies may be able use software tools that convert Word documents to HTML. The conversion could save the time in reformatting a document to SEC specifications, said Michael Williams, BDM's program manager for EDGAR.
Fogash said the SEC plans to have the first component of EDGAR II in place by November, changing the way it disseminates EDGAR information to nine financial-sector organizations that pay to get the information in real time.
The current nine subscribers to the real-time filing service get the service through telecommunications lines leased from GE Information Systems, Williams said. The service costs $278,000 per year. But as part of EDGAR II BDM will provide the lines on its own, rather than lease them, and it will charge customers $79,000 a year for the real-time service. The move is one that should encourage more subscribers to the service, Williams said.
Other EDGAR users can access information for free, but not in real time, at the EDGAR Web site (www.sec.gov/edgarhp.htm).
Public companies that file information to EDGAR will not use the Web for filing until the second half of 1999, Fogash said. BDM said it is still fleshing out the details of filing via the Web.
Williams said a new EDGAR may result in an HTML Web page for each report a company files. Hot links on each page would allow people using EDGAR for investment research to jump directly to the section of the report they want to read. Public users now must scroll through an entire text document to find what they are looking for.