Graham,
I opine that their claim is baseless. Does the agency offer any supporting documentation or studies for their claim? In the case of SWMM, the modeler may enter any real-world period of rainfall, including common small storms, and can calibrate the output for flow, and possibly other parameters. Obviously, this isn't anything new to you or other SWMM-ers It's been done hundreds-- if not thousands--of times over the past two decades by users the world over.
Of course, any model is potentially subject to the "garbage in, garbage out" adage. And since modeling is more subtle than "cookbook" engineering formulas like the (ir)Rational Method, the potential exists to predict flows sloppily, especially if calibration across the ENTIRE flow regime is not done. However, it would have to be a pretty sorry modeling job to out-sloppy the Rational Method. Remember Dr. James' posting of 11 March this year? He referred SWMM-ers to a graph by Pe(l?)cher, which can be seen at
http://www.eos.uoguelph.ca/webfiles/james/runcoef.gif .
Don Waye
NVPDC