The Small Business Administration has directed roughly 4,300 companies in its 8(a) Business Development Program to submit detailed financial records by January 5 in an effort to verify compliance and detect fraud, according to a letter obtained by The Daily Wire. The move targets potential abuse in the decades-old initiative, which gives contracting preferences to businesses deemed socially and economically disadvantaged, and follows mounting evidence of alleged pass‑through schemes.
The 8(a) Business Development Program, which federal officials say has been in place since 1978, is designed to reserve certain federal contracts for firms owned by socially and economically disadvantaged individuals. Under the program, agencies can "set aside" work for qualifying companies and, in some cases, award contracts on a sole‑source basis without full and open competition, according to the Small Business Administration and reporting by The Daily Wire.
The program reaches nearly all federal agencies and has periodically drawn criticism over alleged corruption and misuse. Daily Wire reporting notes that concerns intensified after the Biden administration raised the governmentwide target for contracts set aside for minority‑owned firms from 5% to 15% of contracting dollars.
According to The Daily Wire, SBA Administrator Kelly Loeffler said there is "mounting evidence" that some minority‑set‑aside contracts have become "a pass‑through vehicle for rampant abuse and fraud," particularly when firms secure work through their disadvantaged status and then subcontract most of the performance to other companies that do not qualify.
Loeffler told The Daily Wire that the SBA's top‑to‑bottom review of the 8(a) program began in June, after a criminal case revealed that one firm had received more than half a billion dollars in U.S. Agency for International Development contracts after bribing a government official with $1 million. Court records cited by The Daily Wire show that USAID official Roderick Watson, Vistant founder Walter Barnes and Apprio Inc. founder Darryl Britt pleaded guilty in connection with the scheme. At the time of his guilty plea, Britt served on Carnegie Mellon University's Business Board of Advisers.
The Daily Wire reports that the case illustrated a broader pattern in which 8(a) firms obtain contracts in a wide range of fields and then rely heavily on other entities to carry out the work, raising concerns that some companies are serving primarily as middlemen and increasing costs for taxpayers.
Recent investigative reporting has focused additional scrutiny on ATI Government Solutions, an 8(a) contractor whose eligibility is based on affiliation with a Native American tribe but which is run by white executives, according to a video published by O'Keefe Media Group and summarized by The Daily Wire. In that undercover video, ATI senior director Anish Abraham acknowledged that the company acted as a "pass‑through" on a $100 million contract, keeping about $65 million and paying another firm roughly $35 million to perform the work.
Following the O'Keefe Media Group exposé, the SBA suspended ATI Government Solutions and several related firms tied to CEO Firmadge Crutchfield, who is white, The Daily Wire reports. Members of the associated Native American tribe said in recorded remarks that they considered themselves victims of the arrangement and argued that contracts intended to benefit Native communities should involve work carried out by those communities.
In a letter sent to approximately 4,300 disadvantaged contractors, the SBA said that such reports "have raised questions about widespread misconduct within the 8(a) Business Development Program, adding to years of credible concerns that the program designed to serve 'socially and economically disadvantaged' businesses has become a vehicle for institutionalized abuse at taxpayer expense," according to the text quoted by The Daily Wire.
The letter, which The Daily Wire describes as being addressed to each of the 4,300 firms, instructs companies to upload their general ledgers, bank statements, payroll registers, subcontracting agreements and other detailed internal financial records to the agency by January 5. It warns that those who do not comply risk losing their eligibility for federal contracts administered under the program.
Most of the documents are requested in CSV or other computer‑readable formats, a structure that The Daily Wire notes could allow the SBA to use data‑analysis tools, including artificial intelligence, to identify possible pass‑through arrangements or other irregularities.
"We’re committed to thoroughly reviewing every federal contract, contracting officer, and contractor — while working alongside federal law enforcement," Loeffler said in a statement quoted by The Daily Wire. The outlet also reports that she described some minority‑set‑aside work as having become "a pass‑through vehicle for rampant abuse and fraud."
The initiative comes as the 8(a) program faces additional legal scrutiny in the wake of recent court rulings that limit or bar government programs from providing benefits based explicitly on race. According to The Daily Wire, SBA officials say those decisions mean the program will need to be reevaluated to ensure it complies with evolving judicial guidance.
Note: The original version of this article incorrectly identified Kelly Loeffler as "Administrator Kelly Loeffler" in its opening passage without context. Loeffler is serving as administrator of the Small Business Administration under President Donald Trump, as reported by The Daily Wire.
