Washington, D.C. - Today, Rep. James E. Clyburn, Chairman of the Select Subcommittee on the Coronavirus Crisis, and Rep. Nydia Velázquez, Chairwoman of the Committee on Small Business, sent a letter to Administrator of the Small Business Administration (SBA) Isabella Guzman as part of their ongoing investigation into a $750 million contract the Trump Administration awarded to manage the Economic Injury Disaster Loan (EIDL) program. The letter follows the Select Subcommittee’s findings, after months of obstruction by the Trump Administration, that $79 billion has been spent on potentially fraudulent EIDL loans and advances, and SBA has made 1.34 million referrals to its Inspector General for suspected fraud. The Chairs also highlighted new evidence that Trump political appointees may have played a direct role in the obstruction of the Committees’ investigation, as well as the decision to expand RER Solutions’ (RER) contract from an emergency $50 million contract to one worth $750 million.
“We are concerned that the involvement of Trump political appointees in the government contracting process here may run counter to federal contracting rules. Accordingly, we are seeking more information regarding the decision to expand this contract in order to determine whether American taxpayer dollars were spent responsibly," wrote the Chairs. “New information also suggests that the Trump Administration directed SBA personnel to withhold responsive information about this contract from our Committees."
Today’s letter highlights new evidence that political appointees may have played a role in dramatically expanding the scope of RER’s 2018 contract, with a ceiling of $100 million, to $750 million in 2020 without additional competition. SBA explained to Select Subcommittee staff during a briefing that at the onset of the pandemic, Trump “politicals reached out to several companies" and may have played a role in the decision to use the 2018 contract as the vehicle to manage the EIDL program, instead of issuing a new contract that would have been open to competition. As a result, more than $360 million in taxpayer funds were funneled to RER’s subcontractors-Rocket and Rapid. SBA further informed Select Subcommittee staff that the SBA’s Office of Disaster Assistance had received “direction" from the Trump Administration to keep information regarding the management of the $750 million EIDL contract in “close hold," and only share already publicly available information with Congress. This new evidence of obstruction is consistent with the Trump Administration’s pattern of attempting to avoid oversight of its disastrous response to the coronavirus crisis.
“Due to the Trump Administration’s refusal to comply with our investigation, our Committees were unable to obtain key information about how the Small Business Administration (SBA) managed the program," wrote the Chairs. “We are encouraged by the Biden Administration’s commitment to transparency and write today to request the production of long overdue documents necessary for our Committees to complete our investigation."
The Committees’ investigation, launched on July 30, 2020, seeks to understand the fraud controls-or lack thereof-in the EIDL program, which the SBA Inspector General testified before the Select Subcommittee were not sufficient. On Oct. 28, 2020, the SBA Inspector General issued a report finding SBA approved billions of dollars in potentially fraudulent EIDL loans and advances, including more than $62 billion in loans to applicants using duplicated address or account information and more than $14 billion in loans made to bank accounts that differed from those listed on the original loan applications.
On Feb. 11, 2021, the Committees sent letters to RER Solutions, Rocket Loans, and Rapid Finance following new evidence that the prime contractor, RER, appeared to performing only a small portion of the work while receiving 51% of the contract’s value-over $380 million.
On March 25, 2021, the Select Subcommittee released a staff memo identifying nearly $84 billion in potentially fraudulent loans resulting from the Trump Administration’s mismanagement of the Paycheck Protection Program (PPP) and EIDL program, including the refusal to implement basic controls despite warnings from the Select Subcommittee and others.
Today’s letter requests documents by May 25, 2021, and a staff briefing by May 31, 2021.
