Room 4561
						March 15, 2006



Mr. Christopher Sullivan
Chief Financial Officer and Treasurer
Pegasystems Inc.
101 Main Street
Cambridge, MA 02142

Re:	Pegasystems Inc.
	Form 10-K for Fiscal Year Ended December 31, 2005
	Filed March 7, 2006
	File No. 001-11859


Dear Mr. Sullivan:

      We have reviewed the above referenced filing and your
response
letter dated February 17, 2006 and have the following additional
comments.  We may ask you to provide us with supplemental
information
so we may better understand your disclosure.  Please be as
detailed
as necessary in your explanation.  After reviewing this
information,
we may raise additional comments.

	Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects.  We welcome
any questions you may have about our comments or any other aspect
of
our review.  Feel free to call us at the telephone numbers listed
at
the end of this letter.

Form 10-K for the Fiscal Year Ended December 31, 2005

Significant Accounting Policies

Revenue Recognition, page 45

1. We note your response to prior comment number 1. In order for
us
to further understand your accounting for fixed-price service
contracts please address the following:
* You indicate that you are recognizing revenue from fixed-price
contracts using the proportional performance model yet we note
that
you also indicate that you apply this model by recording revenue
equal to the direct costs incurred resulting in no gross profit
until
the project is completed.  This methodology does not appear to
comply
with the proportional performance model which requires that
revenue
be recognized based on a pattern of performance and direct costs
are
recognized as incurred.  Therefore, please explain to us how your
accounting complies with the proportional performance model as
contemplated by SAB Topic 13.
* You also indicate that you use labor hours to measure
performance.
Determining whether an act triggers revenue recognition generally
should be based on whether that act results in value being
provided
to the customer, not on the level of costs associated with the
act.
Please explain to us how you determined that recognizing revenue
based on labor hours appropriately reflects the value being
provided
to your customers.
* We also note that you offer time and materials based projects.
Please explain to us how your pricing for these contracts compares
to
that of your fixed price contracts.

Note 6.  Income Taxes, page 58

2. We note that you engaged tax experts to review your tax
positions
and that this review led you to record various adjustments to your
tax accounts in the fourth quarter of 2005.  It is unclear to us
which of the adjustments disclosed on page 60 was a result of this
review and which, if any, relate to prior periods.  Please provide
us
with a summary of the gross adjustments recorded and the periods
they
relate to.  Tell us why none of the adjustments related to prior
periods and explain in detail why you believe the timing of each
adjustment was appropriate.

	As appropriate, please amend your filing and respond to these
comments within 10 business days or tell us when you will provide
us
with a response.  Please submit all correspondence and
supplemental
materials on EDGAR as required by Rule 101 of Regulation S-T.  You
may wish to provide us with marked copies of any amendment to
expedite our review.  Please furnish a cover letter with any
amendment that keys your responses to our comments and provides
any
requested information.  Detailed cover letters greatly facilitate
our
review.  Please understand that we may have additional comments
after
reviewing any amendment and your responses to our comments.

	You may contact Christine Davis, Staff Accountant, at (202)
551-
3408, Marc Thomas, Senior Staff Accountant at (202) 551-3452 or me
at
(202) 551-3489 if you have questions regarding these comments.

Sincerely,



      Brad Skinner
							Accounting Branch Chief
??

??

??

??

Mr. Christopher Sullivan
Pegasystems Inc.
March 15, 2006
Page 3