WASHINGTON — The Small Enterprise Administration doled out tens of tens of millions of {dollars} in contracts in latest days — together with $50 mi
WASHINGTON — The Small Enterprise Administration doled out tens of tens of millions of {dollars} in contracts in latest days — together with $50 million for a contract linked to the agency of a good friend and donor to President Trump — to assist it cope with the deluge of mortgage purposes from companies ravaged by the coronavirus-triggered financial collapse.
The flurry of contracts got here because the S.B.A. was straining to rapidly disseminate a whole lot of billions of {dollars} by way of banks to tens of millions of small companies. It’s a logistical and technical problem that individuals who have labored with the historically low-profile company say is in contrast to any it has confronted beforehand, and one which the company acknowledges requires non-public sector experience to execute.
The Trump administration is leaning closely on the non-public sector to assist it perform components of the $2 trillion coronavirus reduction package deal signed by President Trump final month.
On Thursday, the Treasury Division, which is overseeing $500 billion in help, introduced that it had tapped a trio of Wall Avenue companies — PJT Companions, Moelis & Firm and Perella Weinberg Companions — to advise the federal government in its bailout of the airways, cargo carriers and firms deemed vital to nationwide safety.
The New York Federal Reserve retained the funding agency BlackRock to run bond-purchasing packages linked to federal efforts to revive the financial system, and Mr. Trump listed the agency’s chief government, Laurence D. Fink, as among the many Wall Avenue executives consulted about disseminating stimulus funds to firms.
The contracts and consultations have raised questions on favoritism, particularly for the monetary trade, which critics maintain answerable for the final massive financial disaster in 2008.
Together with the Treasury Division, the Small Enterprise Administration has been given the job of holding off the worst of the financial harm on this disaster. The S.B.A. has been tasked with spearheading the small enterprise aspect of coronavirus restoration.
Along with administering a $349 billion mortgage program created by the stimulus package deal, which started accepting a flood of purposes on Friday, the company had already been combating a surge in coronavirus-related mortgage purposes by way of different packages, together with its catastrophe mortgage program. The stimulus invoice included $562 million for catastrophe loans “to stop, put together for, and reply to coronavirus.”
However final week, the web site for enterprise homeowners to use for catastrophe loans associated to the coronavirus reportedly was shut down because of security issues.
Jennifer Kelly, a spokeswoman for the S.B.A. said in a statement that “this unprecedented global pandemic requires an unprecedented public-private response, and every hurdle that impedes, slows, or otherwise frustrates that response is being cleared in consultation with legal and ethics officials.”
The agency has turned to a range of companies to buttress its ability to process the disaster loans as well as the new $349 billion loan program for small businesses that opened on Friday.
On Sunday, the agency’s Office of Disaster Assistance issued an emergency $50 million contract to support its processing of coronavirus disaster loans to a Virginia-based government contractor called RER Solutions. It is partnering on its S.B.A. work with Rocket Loans, a Detroit-based company that provides consumer loans online.
Rocket Loans is part of a family of companies founded by the billionaire Dan Gilbert, who also co-founded Quicken Loans, which donated $750,000 to Mr. Trump’s inauguration and $67,000 to the committee that hosted the 2016 Republican convention. Mr. Gilbert has visited the White House, where Mr. Trump singled him out as “a great friend of mine, a supporter and great guy.”
Quicken Loans last year paid $32.5 million to settle a years-old lawsuit in which it was accused by the Justice Department of making hundreds of improper loans through the Federal Housing Administration’s lending program, costing the agency millions of dollars.
The S.B.A. contract with RER Solutions, which is for “data analysis and loan recommendation services for Covid-19,” appears to be related to a $10-million-per-year contract that RER signed with the S.B.A. in late 2018 for similar services related to processing disaster loan applications. Rocket Loans was a subcontractor on that work.
“We are stepping up to help solve problems under an existing contract,” said Aaron Emerson, a spokesman for Rocket Loans, adding “we were tapped to help the S.B.A. process applications.”
Mr. Emerson and Errin Green, the chairwoman and chief executive of RER Solutions, said their firms had nothing to do with the disaster-loan website that reportedly experienced problems last week.
Neither RER, nor Rocket Loans, would say how much of the money from the work would go to Rocket Loans.
Representatives from Rocket Loans have reached out in recent days to outside law firms and others for help in expanding the company’s operations to handle the government work, according to a person with direct knowledge of the effort.
Frank Taylor, whose company, The First Choice, bid against RER Solutions for the S.B.A. contract in 2018 and unsuccessfully challenged the decision to award it to RER, said that the systems created by RER and Rocket Loans “were not set up to take the volume of S.B.A. loans” likely to flood the system from businesses and people affected by coronavirus.
“And now it’s biting them in the butt,” he said.
Mr. Taylor asserted Rocket Loans did not have a track record in government contracting sufficient to warrant trusting it with the S.B.A. contract, and suggested that Mr. Gilbert’s political connections may have played a role in his company landing the work.
“I’ve learned in this business that politics plays a role in every aspect of the federal government, so it would not surprise me,” said Mr. Taylor, who described himself as a Democrat.
Mr. Emerson, the Rocket Loans spokesman, pointed out that Mr. Gilbert’s companies had donated to Democratic committees, as well, though those donations pale in comparison to donations by Mr. Gilbert and Quicken to Republicans.
“Our support of both Republican and Democratic parties is wholly irrelevant,” Mr. Emerson said. “We build great products and deliver unmatched service.”
S.B.A. has issued contracts to other firms to provide other services related to processing applications from businesses hit by coronavirus.
Late last month, its Office of Disaster Assistance hired a company called Liveops to help with customer service related to its coronavirus response. Last week, the office signed a $5.3 million deal for Salesforce software licenses “to support Covid-19.” The next day, it had hired a firm called Agility Technologies for more than $2 million dollars to work on a replacement for its Disaster Loan Application Portal, according to contracting records.
The private sector influence goes beyond the disaster loans system, as the agency becomes the hub for an additional $349 billion in loans to small businesses that are trying to make payroll.
On Sunday, the agency inked a $95,000 deal for “social media support services” related to the virus from a Washington, D.C., public relations firm. The next day, it signed a contract worth more than $9 million dollars for an “emergency CAFS hardware refresh,” a likely reference to its Capital Access Financial System.
Other companies are likely to be involved in the agency’s response to the crisis. A spokesman for Microsoft said in a statement that it was “actively discussing how we can extend our support further with additional agencies including the S.B.A.”
Jo Becker contributed reporting from Los Angeles.