Backlash to SBA Regulatory Research Contract Is Growing

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By Cheryl Bolen

Critics are raising significant concerns about the award of a federal contract to study regulatory costs to two researchers whose previous work has been widely criticized.

The Small Business Administration’s Office of Advocacy on Sept. 21 awarded researchers W. Mark Crain and Nicole V. Crain a contract worth $136,250 to conduct a study on the disproportionate cost impact of regulations on small businesses, due in December 2018.

“We designed a new study, and offerors were evaluated on their ability to perform this study,” Patrick Delehanty, acting director of economic research at SBA’s Office of Advocacy, told Bloomberg Government in an email.

“The process for evaluating proposals is established by SBA contracting guidelines and the Federal Acquisition Regulation,” Delehanty said. “We evaluated the proposals according to that process.”

Cancel the Contract

The choice of Jupiter, Fla.-based Interaction Analytics, which employs only the Crains, to conduct the study raises red flags because of their two previous, highly controversial reports: one in 2010 for the Office of Advocacy and a similar one in 2014 for the National Association of Manufacturers.

In the solicitation notification for the contract, the SBA stated that “past performance” would be one of the factors considered in making the award, including previous experience in researching the topic.

“SBA cannot credibly claim that this is a different study,” said Amit Narang, regulatory policy advocate at Public Citizen. “It is virtually identical to the methodology used for the Crains’ deeply flawed report for NAM.”

The suspicion now is that SBA picked the Crains because they knew these researchers would produce the “alternative facts” that SBA wants, Narang said.

“SBA must cancel this contract immediately and the SBA’s inspector general needs to get to the bottom of whether this contract was improperly awarded,” Narang said.

Business Council Skeptical

Only two firms responded to the SBA’s request for proposal, said David Levine, CEO and co-founder of the American Sustainable Business Council, which believes that economic development is compatible with sound regulation.

“It is hard to believe that there are only two firms in the entire academic community who can perform this research,” Levine said.

Established in 2009, the ASBC is a network of more than 250,000 businesses, including many small businesses that have committed themselves to the “triple bottom line” of people, planet, and profit, according to Levine and the organization’s website.

The Office of Advocacy is not required to award the contract if it is not satisfied with the proposals or qualifications of the respondents, Levine said. Instead, the SBA should start over and do a better job of reaching out to qualified entities, he said.

Controlled Process

In the past few years, there has been little communication between the Office of Advocacy and the ASBC, and no outreach, Levine said.

“Clearly we’ve got some more work to do to try and push this open,” he said.

Levine said he was introduced to the Office of Advocacy many years ago, but what he found was an office “chock-full of lobbyists” representing the larger trade associations and companies, not small business leaders.

“Certainly none of the folks that were in our world,” Levine said. “Or any of the allies or any of the other organizations that we have worked with, other than those that would tout the general political line of ‘regulations are bad for business, period.’”

“So, we saw a very controlled process,” Levine said.

To contact the reporter on this story: Cheryl Bolen in Washington at cbolen@bna.com

To contact the editor responsible for this story: Paul Hendrie at pHendrie@bna.com

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