SBA Refers Nearly 700 Noncompliant 8(a) Firms to GSA to Conduct Contract Audits

WASHINGTON - Today, the U.S. Small Business Administration (SBA) referred 689 firms that were removed from its 8(a) Business Development Program to the U.S. General Services Administration (GSA) for a comprehensive review of their previous government contract awards. Earlier this year, the firms were removed from the 8(a) Program for failing to meet program requirements, including many that failed to meet the "economic disadvantage" thresholds of the 8(a) Program, and yet took advantage of contracting opportunities set aside for eligible small businesses. Given their record of noncompliance, GSA will scrutinize the firms' past government 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.

"SBA has spent the last 21 months cleaning up the 8(a) Program to clear out the firms that abused set-aside contracts designed to help legitimately economically disadvantaged small businesses to compete for federal contracting opportunities," said SBA Administrator Kelly Loeffler. "Every firm we identified will now face deeper scrutiny from GSA over the taxpayer-funded contracts they secured. 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."

"Under President Trump and Vice President Vance's leadership, GSA is partnering with SBA to root out fraud, eliminate abuse, and restore accountability to federal contracting," said GSA Administrator Edward C. Forst. "Those who manipulate the system, defraud taxpayers, and steal opportunities from legitimate small businesses will be held accountable. We will refer suspected fraud to the Department of Justice and pursue every dollar owed to taxpayers. Federal contracts are a privilege, not a license to defraud the American people."

Earlier this year, the SBA removed 689 firms from the 8(a) Program as part of its broader effort to restore integrity to federal contracting and root out pass-through abuse and fraud by shell companies. Some of the terminated firms failed to meet the program's "economic disadvantage" requirements because they exceeded net worth limits, adjusted gross income caps, or total asset limits. Others refused to comply with the agency's mandatory financial data call requiring all 8(a) contractors to provide three years' worth of financial documents for review. These firms are currently classified as "inactive" and are barred from participating in or receiving federal contracts under the 8(a) Program.

GSA's review will examine the 689 firms' contract awards during their participation in the program for potential improper awards, false statements, and pass-through arrangements. Any evidence of criminal misconduct, civil fraud, or financial impropriety uncovered during the review will be referred directly to the DOJ for further enforcement action.

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About the 8(a) Business Development Program
The SBA certifies small businesses considered to be socially and economically disadvantaged under its nine-year 8(a) Business Development Program. The 8(a) program helps these firms develop and grow their businesses through one-to-one counseling, training workshops and management and technical guidance. It also provides access to government contracting opportunities, allowing them to preferential access to federal contracts.

About the U.S. Small Business Administration
The U.S. Small Business Administration helps power the American dream of entrepreneurship. As the leading voice for small businesses within the federal government, the SBA empowers job creators with the resources and support they need to start, grow, and expand their businesses or recover from a declared disaster. It delivers services through an extensive network of SBA field offices and partnerships with public and private organizations. To learn more, visit www.sba.gov.

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