RECOVERY ACT-THIS NOTICE IS PROVIDED FOR INFORMATION PURPOSES ONLY. THIS IS NOT A REQUEST FOR PROPOSALS OR REQUEST FOR INFORMATION. THIS OPPORTUNITY IS AVAILABLE ONLY TO CONTRACTORS UNDER CONTRACT NO. SBAHQ09R0023. THIS IS NOT A REQUEST FOR PROPOSALS OR REQUEST FOR INFORMATION. DESCRIPTION/ SPECIFICATIONS 1. BACKGROUND The Small Business Administration (SBA) is an independent agency of the executive branch of the U.S. government that was created in 1953 to aid, counsel, assist, and protect the interests of small businesses to preserve free competitive enterprise and to maintain and strengthen the overall economy of our Nation. SBA provides financial assistance to small businesses in the form of government-guaranteed loans using the 7(a) and 504 loan programs. Under section 7(a) of the Small Business Act (Act), SBA guarantees loans originated and closed by approved lenders. Under SBA's general procedures (GP) program, SBA reviews and approves loan packages submitted by lenders. In addition, SBA has provided Preferred Lender Program (PLP) status to 693 lenders, allowing them to approve SBA guaranteed loans without an SBA review. The 504 Loan Program is an economic development program offering a financing package in long-term fixed assets. The loans are originated by Certified Development Companies (CDCs), which generally are non-profit corporations certified and regulated by SBA to package, process, close, and service 504 loans. SBA has designated 24 CDCs as Preferred Certified Lenders (PCL) with delegated authority for loan approval decisions. SBA, however, reviews and approves borrower eligibility. Loans processed under PCL authority are subject to the same loan terms and conditions as other 504 loans. The SBA Office of Inspector General (OIG) was established by the Inspector General Act of 1978 as an independent and objective unit to conduct and supervise audits and investigations relating to the programs and operations of SBA. The OIG recommends policies to promote economy, efficiency and effectiveness and to prevent and detect waste, fraud and abuse in SBA's programs and operations. The Auditing Division of the SBA OIG conducts financial and performance audits of internal agency functions and program participants to promote the economical, efficient, and effective operations of SBA programs. On February 17, 2009, President Obama signed into law the American Recovery and Reinvestment Act of 2009 (the Recovery Act). The Recovery Act provides for reduced loan fees and higher guaranties to stimulate lending in SBA's 7(a) and 504 loan programs, new SBA credit programs, secondary market incentives, and enhancements to current SBA programs to help unlock credit markets and begin economic recovery for the nation's small business sector. The America's Recovery Capital (ARC) loan program is a new SBA credit program provided under Section 506 of the Recovery Act that provides deferred-payment loans of up to $35,000 to viable small businesses in need of money to make payments on existing, qualifying loans for up to six months. These loans are 100 percent guaranteed by SBA with repayment beginning up to 12 months after the loan is fully disbursed. In order to provide unprecedented levels of transparency and accountability, the Recovery Act and related Office of Management and Budget (OMB) guidance require increased financial reporting on, and oversight of, programs, grants, and projects funded under the Act to deter and detect fraud, waste and abuse; and ensure that program goals are met. Past experience, such as SBA's response to the 9-11 terrorist attacks and the 2005 Gulf Coast hurricanes, has shown that this pressure can significantly increase the vulnerability of SBA's programs to fraud and unnecessary losses. Therefore, the OIG oversight efforts will focus heavily on detecting and deterring fraud, waste, and abuse in Recovery Act programs and assessing whether appropriate internal controls are implemented to meet the increase in program demand while ensuring SBA loans are originated and closed in a commercially prudent manner. SCOPE OF WORK Overview The contractor will be required to analyze lender and SBA compliance with loan origination and closing requirements found in the applicable sections of 13 CFR section 120, SOP 50 10 (5), and SBA policy notices, in addition to those associated with prudent lending practices followed by the commercial lending industry. Using procedures agreed upon by the Office of the Inspector General (OIG), the contractor shall conduct examination(s) of SBA guaranteed loans disbursed pursuant to the Recovery Act. Appendices I, II, and III describe the origination and closing actions to be reviewed for 7(a), 504, and ARC loans along with the applicable requirements, and will serve as the basis for the agreed-upon-procedures to be followed by the contractor. The OIG will provide the contractor a list of loans to be examined based on a sample drawn from the following five loan groups: - Group 1 - Loans originated and closed by section 7(a) lenders using authorities delegated by SBA, excluding ARC loans. - Group 2 - Loans originated and closed by section 7(a) lenders, but reviewed and approved by SBA personnel, excluding ARC loans. - Group 3 - Loans originated and closed by delegated lenders under the ARC loan program. - Group 4 - Loans originated and closed by lenders, but reviewed and approved by SBA personnel under the ARC loan program. - Group 5 - Loans refinanced under the Stimulus for Community Development Lending (504 loans). The sample is expected to be drawn on September 8, 2009 and will include a minimum of 150 loans (approximately 30 loans from each of the 5 loan groups). Additional loans may be added, to be priced on an agreed-upon fixed price per loan. The OIG reserves the right to substitute loans among the 5 loan groups based on changes in program funding availability and loan performance by program area. The OIG also reserves the right to request additional AUP examinations of loans to be awarded as separate tasks under this contact. For any additional examination, loans will be sampled and reviews with be conducted in the same manner described herein. The contractor will be responsible for obtaining loan files and other documentation directly from the lenders and SBA. Travel is not required to obtain loan files.
