The Small Business Administration (SBA) has referred 689 companies that were removed from a federal program to the General Services Administration for an audit of their previous government contracts.
The companies were removed from the 8(a) Business Development Program for not meeting certain eligibility criteria, including many businesses that did not meet the “economic disadvantage” thresholds of the program.
Taking into consideration their prior noncompliance, the GSA will examine their past contract awards for “potential fraud, improprieties, and financial misrepresentation, and may refer any potential wrongdoing to the U.S. Department of Justice (DOJ) for investigation,” the SBA said in an Oct. 21 statement.
The firms were removed from the 8(a) Program earlier this year as part of cleaning up the federal contracting roster to remove abuse and fraud. Certain companies were removed because they exceeded net-worth limits and, in the process, usurped contracting opportunities set aside for eligible small businesses. These businesses had collectively received nearly $1.3 billion worth of 8(a) contracts during fiscal years 2021 to 2024 under the Biden administration.
Other companies refused to share financial information with the SBA for review.
SBA Administrator Kelly Loeffler said in a March 4 statement that the 8(a) program had become rife with companies that abused the initiative, blaming it on a lack of oversight over decades and the previous administration’s diversity, equity, and inclusion agenda.
“We are ending abuse and [diversity, equity, and inclusion] discrimination in federal contracting and removing every fraudulent participant that took opportunity away from legitimate and eligible small business owners at taxpayers’ expense,” Loeffler said at the time.
In her latest statement, Loeffler said that the hundreds of firms identified will now face deeper scrutiny from GSA over their taxpayer-funded contracts.
“While prior Administrations looked the other way, the Trump SBA will not tolerate bad actors exploiting federal contracting programs at the expense of honest, eligible small businesses,” she said.
In an Oct. 21 statement, GSA said that the contract audits of 689 businesses are part of the agency’s efforts to detect procurement fraud.
GSA Administrator Edward C. Forst said in the statement that the agency was partnering with the SBA to root out fraud and restore accountability in federal contracting.
“Those who manipulate the system, defraud taxpayers, and steal opportunities from legitimate small businesses will be held accountable,” Forst said. “Federal contracts are a privilege, not a license to defraud the American people.”
Back in June 2025, four people pleaded guilty in a fraud scheme involving more than $550 million in contracts and two 8(a) businesses. One of the individuals was a U.S. Agency for International Development (USAID) contracting officer, who took bribes from a defendant in exchange for using his position at USAID to award contracts to an 8(a) business.
Meanwhile, in addition to the socially and economically disadvantaged ownership requirement, a small business must meet other conditions to qualify for 8(a), including certain asset and income limitations, according to the SBA.
The 8(a) certification lasts for up to nine years. Once chosen to be part of the program, the business must certify, on a yearly basis, that it fulfills all necessary regulatory and statutory requirements.
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