Sen. Joni Ernst Calls for Freeze and Review of SBA 8(a) Program Amid Fraud Concerns
Sen. Joni Ernst (R-Iowa), chair of the Senate Small Business Committee, has urged 24 federal agencies to halt funding for the Small Business Administration (SBA) 8(a) program amid growing concerns of fraud. Ernst called for a thorough review of the program, citing evidence of potentially fraudulent 8(a) awards across government. She criticized the Biden administration for expanding the program and demanded a pause at all agencies during the review process.
The SBA 8(a) program aims to support socially and economically disadvantaged small businesses and reportedly awarded more than $40 billion in contracts in fiscal year 2024. In her letters to agency heads, including Transportation Secretary Sean Duffy and Homeland Security Secretary Kristi Noem, Ernst instructed a pause on 8(a) contracting, an audit of current contracts since fiscal year 2020, and requested findings be reported by December 22.
Concerns escalated after the Department of Justice arrested four individuals in Maryland and Florida this June in connection to a decade-long bribery scheme involving at least 14 8(a) contracts totaling over $550 million. One contractor involved worked for USAID, with the defendants pleading guilty.
SBA Administrator Kelly Loeffler responded by ordering a full audit of contracting officers with grant-awarding authority under the 8(a) Business Development program over the past 15 years. The audit focuses initially on high-dollar and limited-competition contracts. Loeffler also opened an investigation related to the 8(a) contract after the release of James O’Keefe’s undercover video in October, describing the program as a possible avenue for abuse under the Biden administration.
Moreover, Treasury Secretary Scott Bessent announced in November a comprehensive audit that includes all contracts and task orders under preference-based contracting, amounting to about $9 billion across Treasury and its bureaus. This audit specifically targets the SBA 8(a) Business Development program and related initiatives.
