Ernst Calls for Complete Halt and Full Audit of Fraud-Filled Contracting Program

WASHINGTON – After several high-profile fraud schemes were exposed in the 8(a) program, U.S. Senate Committee on Small Business and Entrepreneurship Chair Joni Ernst (R-Iowa) is asking all federal agencies to halt new 8(a) sole-source contract awards made through the program that provides billions in funding to “socially and economically disadvantaged businesses.”

In letters to the 22 federal agencies that are subject to the statutory “small disadvantaged business” goal which includes 8(a), Ernst details concerning awards that appear to be potentially fraudulent or made to ineligible firms and asks the agency to halt all future 8(a) sole-source awards pending a thorough review to ensure taxpayers are not being ripped off.

“While there’s no doubt that the Biden administration’s indifference toward 8(a) program integrity enabled swindlers and fraudsters to treat federal contracting programs like personal piggy banks, 8(a) program flaws have raised alarm bells for decades. The SBA’s 8(a) program is the largest set-aside program at the agency, which dished out $25+ billion in contract awards during fiscal year 2024 (FY 24) alone. Yet decades of Government Accountability Office (GAO), SBA’s Office of Inspector General, and DOJ probes expose the same rot,” wrote Ernst.

Click here to view the letters.

Background:

In June, the Department of Justice found that the 8(a) program was used to facilitate a $550 million bribery scheme over several decades. Four men, including a government contracting officer at the United States Agency for International Development (USAID), pled guilty to the charges.

Last month, James O’Keefe blew open a potential $100 billion fraud scheme in the 8(a) program. In a guerilla-style interview, a representative from ATI Government Solutions, a firm that claimed Native American ownership to get 8(a) status, explained how the company committed pass-through fraud by winning awards based on their minority status, taking a hefty cut for themselves, and then hiring another company to do the actual work.

After these fraud schemes were exposed, Ernst swiftly called for a top-to-bottom review of the 8(a) program that was long-overdue after Joe Biden opened the floodgates to fraud by tripling the funding goals of the program, despite a history of abuse at the expense of taxpayers and deserving small businesses.

She then introduced the Stop 8(a) Contracting Fraud Act to halt all new no-bid awards until a detailed audit of the entire program is conducted.

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