U.S. SMALL BUSINESS ADMINISTRATION WASHINGTON, D.C.20416 OFFICE OF CAPITAL ACCESS May 19, 2020 Dr. Laura Meyers Flamed Parenthood of Metropolitan Washington, Inc. 1225 4th Street, NE Washington, DC 20002-3431 Re: Notice of Investigation and Request for Records Dear Dr. Meyers: Planned Parenthood of Metropolitan Washington, Inc. applied for a loan through the Paycheck Protection Program. In its loan application, PPMW self-certified that it is eligible for a Paycheck Protection Program loan. PPMW, however, is a local affiliate of Planned Parenthood Federation of America, Inc. We have preliminarily concluded, therefore, that PPMW is ineligible fora Paycheck Protection Program loan under the applicable affiliation rules and size standards, consistent with Congressional intent, and that the loan you have received should be returned. If you wish to contest our preliminary conclusion, the Small Business Administration will conduct an investigation pursuant to Section 5(b)(l 1) of the Small Business Act1 to assess eligibility for a Paycheck Protection Program loan and the basis for eligibility certification. PPMW, which is identified as a PPF A ?local of?ce? on PPF A?s websitez, applied for a $1,328,800 Paycheck Protection Program loan. This is one of 38 loans that PPF A local affiliates have applied for through the Paycheck Protection Program. Intotal, PPFA local affiliates have applied for more than $80 million in Paycheck Protection Program loans. To obtain its loan, PPMW certified in its Paycheck Protection Program Borrower Application Form that ?[t]he Applicant is eligible to receive a loan under the rules in effect at the time this application is submitted that have been issued by the Small Business Administration (SBA) implementing the Paycheck Protection Program . . . By making this certification, PPMW represented that it, when considered together with all of its affiliates, has 500 or fewer employees.4 15 U.S.C. 634(b)(l ?(authorizing the Administratorofthe Small Business Administration to ?make such investigations as he deems necessary to determine whether a recipient of or participant in any assistance under [the Small Business Act] or any other person has engaged or is about to engage in any acts or practices which constitute or will constitute a violation of any provision of. . . or of any rule or regulation under [the Small Business Act] . . 2 Planned Parenthood Federation of America, Local Offices, Contact Us available at 3 SBA Form 2483. 4 Small Business Administration, Business Loan Program Temporary Changes; Paycheck Protection Program, Affiliate Rules for Paycheck Protection Program, 85 Fed. Reg. 20817.20818-19 (Apr. 15, 2020) (?In most cases, a borrower will be considered together with its affiliates for purposes of determining eligibility for the . . . An llPage To make such a certification properly, PPMW was required to apply the affiliation rules applicable to the Paycheck Protection Program5 and identify its affiliates.6 Those affiliation rules provide, among other things, that: ?Concerns and entities are affiliates of each other when one controls or has the power to control the other, or a third party or parties controls or has the power to control both. It does not matter whether control is exercised, so long as the power to control exists.?7 For example, af?liation can arise from management: (3) Affiliation based on management. Affiliation arises where the CEO or President of the applicant concern (or other officers, managing members, or partners who control the management of the concern) also controls the management of one or more other concerns. Affiliation also arises where a single individual, concern, or entity that controls the Board of Directors or management of one concern also controls the Board of Directors or management of one of more other concerns. Affiliation also arises where a single individual, concern or entity controls the management of the applicant concern through a management agreement.8 PPFA is known to have and to exercise control over its local affiliates, such as PPMW. bylaws, a version of which is publicly available, reveal that becoming a PPFA affiliate requires a certification by the PPFA board.9 Once certified, ?[e]ach Affiliate shall be governed by written bylaws which conform to PPFA policies.?IO PPFA imposes 17 ?affiliation mandates? on local affiliates on topics ranging from medical standards and guidelines to policies regarding inter- affiliate patient transfers.?l To maintain their PPFA affiliation, affiliates must submit to a rigorous PPFA accreditation review every three years. 1 2 PPFA affiliates that fall short of standards entity generally is eligible for the if it, combined with its affiliatesfewer employees whose principal place of residence is in the ?United Statestax-exempt nonprofit organization described in section 501(c)(3) of the IntemalRevenue . . 5 See 15 U.S.C. 13 CPR. 121.103; 85 Fed. Reg. at20818-l9. 5 Paycheck Protection Program Loans, Frequently Asked Questions (FAQS), 4-5 (?It is the responsibility of the borrower to determine which entities (if any) are its affiliates and determine the employee headcount of the borrower and its affiliates?). 7 Affiliation Rules Applicable To US. Small Business Administration Paycheck Protection Program (Apr. 3, 2020), available at pdf. 3 Id. 9 Amended and Restated Bylaws of the Planned Parenthood Federation of America, Inc., As Amended by the Membership atits Meeting on March 29, 2008 [hereinafter PPFA Bylaws], Art. ll,? 1(ii) (attached to 2007 tax return), available at .org/nonprofitsfdisplay_990fl 3 16441 3 - l644147_990_200806. atArt. XI, '2 Planned Parenthood Hudson Peconic provided the following description of accreditation program: Every three years, each Planned Parenthood af?liate undergoes accreditation, which involves a review of all aspects ofthe organizationrfrom health services to fiscaloperations to fundraising to board governance and more. We prepared for this extremely intensive process for months. Experts from offices reviewed all our procedures, interviewed and observed sta ff members, and toured our health centers. We are happy to report that we obtained full accreditation and remain in excellent standing with our national organization. 2 Page or jeopardize trademark are stripped of their affiliation. ?3 PPF A also mandatesthe services that each local affiliate must provide, including requiring each local affiliate to perform on-site abortions; local affiliates unable or unwilling to comply with this PPFA mandate have been forced to leave the PPFA network.l4 Ultimately, PPFA determines which affiliates become and remain a part of the ?Federation,? which PPFA defines as itself and the affiliates collectively. '5 Yet, PPMW did not identify PPFA or any of PPFA ?5 other local offices as affiliates?despite being identified as an affiliate of PPFA on PPFA ?5 website. Ind eed, PPMW could not have certi?ed that it was eligible for a Paycheck Protection Program loan if it is affiliated with PPFA or any of other local offices. PPFA alone reported employing 676 people in 2017,[6 and presently there are 49 local PPFA affiliates nationwide.? On its face, status as a local affiliate in the nationwide PPFA network subject todirection from PPF A on a number of management issues makes PPMW ineligible fora Paycheck Protection Program loan under the applicable affiliation rules and size standards. If you wish to dispute that assessment, then pursuant to the Administrator?s investigative authority, SBA requests that PPMW demonstrate the basis for its certification that it is eligible for a Paycheck Protection Program loan. SBA also requests that PPMW produce documents concerning eligibility certification within 10 calendar days of receipt of this letter. specific document requests are set forth in Attachment A to this letter. Incorrect or false eligibility certifications by borrowers are subject to severe penalties. lf SBA determines that a borrower made an eligibility certification that was incorrect or lacked adequate basis, SBA may seek repayment of the Paycheck Protection Program loan, and the borrower may be ineligible for loan forgiveness. If SBA determines that a borrower made a knowingly false certification on an application for a Paycheck Protection Program loan, SBA may refer the borrower for appropriate civil or criminal penalties. Planned Parenthood Hudson Peconic, 2014 Annual Report 1, available at 8/ ina l_for_website.pdf. '3 For example, PPFA disa ffiliated Planned Parenthood Golden Gate and reassigned its patients to otherPla nned Parenthood clinics. Katharine Mieszkowski, Planned Parenthood ClinicsAre Stripped of Af?liation After Complaints, The New York Times (Aug. 28, 2020), available at PPFA also commenced disaffiliation proceedings a ga inst Planned Parenthood of Ha wa ii on the grounds that the local 3 ffiliate failed ?to meet national standards medically and financially.? Lori Tighe, Isle PlannedParent/rood Gains Support, Sta r?Bulletin (1998), available at 1 ll 3/news/story3.html. '4 M. Alex Johnson, Abortion mandate costs Planned Parenthood a few a?iliates, NBC News (Dec. 6, 2012), available at 1 2f] 2/06/1 57021 a?few-a ffiliates. '5 PPFA Bylaws, Art. ll,? 1(vi). '5 PPFA 2017tax return (publicly disclosed), availableat el 7bc6c75280/ppfa_fy 8__990_-_public_disclosurepdf. Planned Parenthood, Who We Are (stating that PPFA has 49 local affiliates nationwide), available at 3[Page Sincerely, ?ma/ William Manger Associate Administrator US. Small Business Administration 4EPage