Evaluation of SBA’s Disaster Assistance Loan Recommendation Services
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We evaluated the U.S. Small Business Administration’s (SBA) procedures to award a contract for data analysis and loan recommendation services for Economic Injury Disaster Loan (EIDL) applications and Targeted EIDL Advance applications related to the Coronavirus Disease 2019 (COVID-19) pandemic.
To increase loan processing capabilities and quickly disburse loans during the pandemic, SBA used an existing contract awarded to RER Solutions and its subcontractor Rocket Loans set aside for small businesses. SBA initially set a contract ceiling of $100 million and then used emergency contracting authority to increase the contract ceiling to $850 million. This increase was done in a noncompetitive process to quickly administer the COVID-19 EIDL program.
To quickly award loans during the COVID-19 economic crisis, SBA relied on an earlier 2018 contract but did not follow the proper procedures to ensure that contract provided the best value to the government. SBA awarded the contract for data analysis and loan recommendation services without adequately ensuring the contract prices were fair and reasonable in accordance with Federal Acquisition Regulation and agency policy.
SBA’s needs had changed significantly from the 2018 disaster loan contract to the requirements for processing COVID-19 EIDLs, and those changes were not fully taken into consideration when awarding following contracts. As a result, there is no assurance that the rates SBA paid for services under the data analysis and loan recommendation contract were fair and reasonable.
SBA also did not ensure the contractor complied with established size standards to be eligible for a small business set-aside award. In addition, SBA did not ensure the contractor complied with subcontracting limitations, exceeding the limit by $13 million. These awards are intended to help small businesses compete and win government contracts. Instead, the COVID-19 contract was noncompetitively awarded and largely performed by an affiliate of one of the nation’s largest mortgage lenders.
We made six recommendations to strengthen SBA’s procurement policies and enhance controls to ensure compliance with SBA’s contracting program requirements. SBA agreed or partially agreed with all six recommendations.
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