Pandemic Darlings The pandemic economy, in original documents
Home Articles The Six-Person Prime Contractor That Ran EIDL

Articles · COVID Economic Injury Disaster Loans (EIDL)

Reported article

The Six-Person Prime Contractor That Ran EIDL

An EIDL processing contract was routed through RER Solutions, a small Herndon, Virginia firm that the House Select Subcommittee said assigned six employees to the job and retained more than $340 million.1

Pandemic Darlings · Published

Two SBA staff at folding tables under a banner reading SBA Disaster Assistance, each helping a seated visitor, in a school gymnasium
An SBA disaster assistance desk in the Tringali Recreation Center, Englewood, Florida, after Hurricane Ian, November 2022. The same SBA disaster-loan operation ran COVID EIDL; this photo is from a later disaster.Photo: PCHS-NJROTC · CC BY-SA 4.0 · Wikimedia Commons · cropped; the crop is shared under the same license

The contract started before the pandemic as a much smaller disaster-loan recommendation vehicle. In 2020, the SBA expanded it noncompetitively under emergency authority. SBA-OIG later found that SBA "did not ensure fair and reasonable prices," leaving "no assurance" about the rates it paid.2 The ceiling grew to $850 million.2

RER was the prime. The real operating stack, according to the House investigation, sat underneath it. Rocket Loans received about $233 million for 20 employees. Rapid Financial Services, a Rocket-affiliated technology firm, received about $148 million and supplied the software and staff that processed application data.3 Those splits surfaced through documents the Select Subcommittee obtained from the companies.

Chart

Who kept the EIDL contract money

Money each firm received or kept from the SBA contract, per the House report
RER Solutionsprime contractor · 6 employees on the jobmore than $340 million retained
Rocket Loanssubcontractor · 20 employeesabout $233 million
Rapid Financial ServicesRocket-affiliated · supplied the software and staffabout $148 million

Source: Idle on EIDL Fraud: Staff Report, Select Subcommittee on the Coronavirus Crisis (June 2022), as quoted in this article. As of: payments through February 2021, report of 14 June 2022. Units: U.S. dollars, rounded as the report and article round them. RER's figure is what it kept after paying hard costs and its subcontractors; the report puts RER's gross share at $357 million of $738 million paid.

Money path

How the contract money moved

Small Business Administration$850M ceilingDisaster-loan recommendation contract, expanded noncompetitively in 2020 under emergency authority.
RER Solutions, Herndon, Va.$340M+ keptPrime contractor. Six employees assigned; "contractual administrative duties", per the report.
Rocket Loans≈ $233M20 employees.
Rapid Financial Services≈ $148MRocket-affiliated; its system reviewed each application in under a second.

Source: the facts in this article: Idle on EIDL Fraud (House staff report, June 2022) and SBA OIG Report 22-10 for the $850 million ceiling. As of: 2020 to February 2021. Units: U.S. dollars; the ceiling is the contract maximum, not money paid. The arrows show the contract chain the report describes (RER as prime, the two firms as its subcontractors). None of the three firms was charged with a crime in the record reviewed.

The House report says Rapid "provided the vast majority of resources necessary to carry out SBA's contract but received only a fraction of the taxpayer funds paid for those services."3

Rapid's system could review application information in less than a second and generate fraud alerts, credit checks, and approve-or-deny recommendations.4 A tool like that can help if the humans downstream are expected to look. The House report said the Trump administration directed the creation of a batch-approval process that let SBA team leads approve dozens of applications at once, sometimes without opening individual application files.5

So the government bought speed twice. It paid contractors to make recommendations at machine pace. Then it changed the workflow so the agency could accept more recommendations at humanly impossible pace.

A direct federal relief program depended on private processing firms just as surely as PPP did, but the EIDL version stayed mostly outside the public anger aimed at loan platforms and agents.

RER, Rocket, and Rapid were not charged with a crime in the source record reviewed here. The House findings are not admissions by the companies. SBA-OIG's report is an acquisition-control critique, not a fraud indictment.

The contract the House report called "the largest individual contract across the entire federal government to respond to the pandemic's economic impact" became, in the same report's word, a "windfall."

Notes

  1. House Select Subcommittee on the Coronavirus Crisis, Idle on EIDL Fraud, June 14, 2022, Source document (27 documents released with the report). ↩
  2. SBA Office of Inspector General, Evaluation of SBA's Disaster Assistance Loan Recommendation Services, Report 22-10. ↩1 ↩2
  3. House Select Subcommittee on the Coronavirus Crisis, Idle on EIDL Fraud, June 14, 2022, Source document. ↩1 ↩2
  4. House Select Subcommittee on the Coronavirus Crisis, Idle on EIDL Fraud, June 14, 2022, Source document (Rapid's system "reviewed COVID-19 EIDL application information in less than a second to provide fraud alerts, credit checks, and approval or denial recommendations"); see also the subcommittee's February 11, 2021 document-demand letters to RER, Rocket Loans, and Rapid Finance, Source document, Source document, and Source document. ↩
  5. House Select Subcommittee on the Coronavirus Crisis, Idle on EIDL Fraud, June 14, 2022, Source document. ↩

Related in the archive

Read next

Back to top