SBA Spends $182M on Loan Forgiveness Workflow Amidst System Issues

Contract Overview

Contract Amount: $182,352,894 ($182.4M)

Contractor: Goldschmitt-Cri LLC

Awarding Agency: Small Business Administration

Start Date: 2020-09-03

End Date: 2021-07-09

Contract Duration: 309 days

Daily Burn Rate: $590.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: TIME AND MATERIALS

Sector: IT

Official Description: SBA LOAN FORGIVENESS WORKFLOW AND PROCESS IN SUPPORT OF THE CARES ACT. THIS CONTRACT REPLACES CONTRACT 73351020C0022 WHICH HAD TO BE CANCELLED DUE TO SYSTEM AND REPORTING ISSUES THAT COULD NOT BE RESOLVED WITHOUT A NEW CONTRACT BEING GENERATED. A

Place of Performance

Location: RESTON, FAIRFAX County, VIRGINIA, 20194

State: Virginia Government Spending

Plain-Language Summary

Small Business Administration obligated $182.4 million to GOLDSCHMITT-CRI LLC for work described as: SBA LOAN FORGIVENESS WORKFLOW AND PROCESS IN SUPPORT OF THE CARES ACT. THIS CONTRACT REPLACES CONTRACT 73351020C0022 WHICH HAD TO BE CANCELLED DUE TO SYSTEM AND REPORTING ISSUES THAT COULD NOT BE RESOLVED WITHOUT A NEW CONTRACT BEING GENERATED. A Key points: 1. Significant investment in critical CARES Act support. 2. Contracting challenges highlight system and reporting deficiencies. 3. Potential for cost overruns due to Time and Materials pricing. 4. Focus on IT infrastructure for essential government services.

Value Assessment

Rating: questionable

The $182.35 million contract awarded on a Time and Materials basis raises concerns about cost control. Without fixed pricing or clear deliverables, the final cost could significantly exceed initial estimates, especially given the previous contract's cancellation due to unresolved issues.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, likely due to the urgent need to replace a cancelled contract and address system/reporting issues. The lack of competition limits price discovery and may have resulted in a higher price than could have been achieved through a competitive process.

Taxpayer Impact: Taxpayers bear the cost of a sole-source contract that may not represent the best value, compounded by the need to rectify prior system failures.

Public Impact

Ensures continued processing of SBA loan forgiveness under the CARES Act. Addresses critical system and reporting failures from a previous contract. Supports the ongoing economic relief efforts for small businesses. Highlights potential inefficiencies in government IT procurement and management.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Time and Materials pricing
Previous contract cancellation due to system issues
Potential for cost overruns

Positive Signals

Supports critical CARES Act functions
Addresses urgent need for loan forgiveness processing

Sector Analysis

This contract falls under Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services. The $182 million spend is substantial for this sector, particularly for a sole-source award addressing system remediation.

Small Business Impact

The contract was awarded to GOLDSCHMITT-CRI LLC, but the data does not indicate if this is a small business. The nature of the work suggests a large prime contractor is likely involved, with limited direct benefit to small businesses unless subcontracted.

Oversight & Accountability

The cancellation of the previous contract due to system and reporting issues indicates potential oversight gaps. The current sole-source award necessitates close monitoring to ensure performance and cost control, and to prevent recurrence of similar problems.

Related Government Programs

Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services
Small Business Administration Contracting
Small Business Administration Programs

Risk Flags

Sole-source award limits competition and price discovery.
Time and Materials contract increases risk of cost overruns.
Previous contract cancellation indicates potential program management issues.
Lack of detailed information on system/reporting issues and proposed solutions.
Potential for vendor lock-in due to specialized nature of the work.

Frequently Asked Questions

What is this federal contract paying for?

Small Business Administration awarded $182.4 million to GOLDSCHMITT-CRI LLC. SBA LOAN FORGIVENESS WORKFLOW AND PROCESS IN SUPPORT OF THE CARES ACT. THIS CONTRACT REPLACES CONTRACT 73351020C0022 WHICH HAD TO BE CANCELLED DUE TO SYSTEM AND REPORTING ISSUES THAT COULD NOT BE RESOLVED WITHOUT A NEW CONTRACT BEING GENERATED. A

Who is the contractor on this award?

The obligated recipient is GOLDSCHMITT-CRI LLC.

Which agency awarded this contract?

Awarding agency: Small Business Administration (Small Business Administration).

What is the total obligated amount?

The obligated amount is $182.4 million.

What is the period of performance?

Start: 2020-09-03. End: 2021-07-09.

What specific system and reporting issues plagued the prior contract, and what assurances are in place to prevent their recurrence with this new contract?

The provided data does not detail the specific system and reporting issues of the prior contract. However, the need for a new contract suggests the problems were significant and unresolvable. Assurances for the new contract would likely involve enhanced project management, stricter performance metrics, and potentially different technical solutions, though these are not explicitly stated.

How does the Time and Materials pricing structure mitigate or exacerbate the risk of cost overruns, given the history of unresolved issues?

Time and Materials (T&M) pricing inherently carries a higher risk of cost overruns, especially when scope is not tightly defined or when dealing with complex, unresolved technical issues. Without a cap or fixed price, the contractor is incentivized to bill for hours worked, potentially prolonging the project and increasing costs. This is particularly concerning given the previous contract's cancellation due to system problems.

What is the long-term strategy for ensuring the stability and effectiveness of the SBA's loan forgiveness workflow system beyond this contract?

The data does not provide insight into the long-term strategy. This contract appears to be a reactive measure to fix immediate problems. A comprehensive long-term strategy would involve a thorough review of the SBA's IT infrastructure, potential modernization efforts, robust testing protocols, and a clear plan for ongoing maintenance and upgrades to prevent future system failures.

Industry Classification

NAICS: Information › Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services › Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Address: 11601 QUAIL RIDGE CT, RESTON, VA, 20194

Business Categories: Category Business, Limited Liability Corporation, Partnership or Limited Liability Partnership, SBA Certified 8 a Joint Venture, Service Disabled Veteran Owned Business, Small Business, Special Designations, U.S.-Owned Business, Veteran Owned Business

Financial Breakdown

Contract Ceiling: $182,352,894

Exercised Options: $182,352,894

Current Obligation: $182,352,894

Actual Outlays: $182,352,894

Subaward Activity

Number of Subawards: 8

Total Subaward Amount: $36,338,149

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline