WASHINGTON, D.C. — U.S. Small Business Administration (SBA) Administrator Kelly Loeffler recently announced a full-scale audit of the agency’s 8(a) Business Development Program in response to a U.S. Department of Justice (DOJ) investigation that uncovered a major fraud and bribery scheme involving federal contracts.
“In recent years, SBA’s 8(a) Business Development Program has seen rampant fraud – and increasingly egregious instances of abuse,” Loeffler stated. “Effective immediately, I am launching a full-scale audit of the program to stop bad actors from making the kind of backroom deals that have already cost taxpayers hundreds of millions of dollars. We must hold both contracting officers and 8(a) participants accountable – and start rewarding merit instead of those who game the system.”
The DOJ investigation revealed that over $550 million in federal contracts were fraudulently awarded through bribery and manipulation by a U.S. Agency for International Development (USAID) contracting officer. One contractor involved in the scheme was flagged by USAID for lacking “honesty or integrity” but still received an additional $800 million in contracts. These funds were allocated to evaluate issues linked to irregular migration from Central America.
The upcoming SBA audit will focus on high-dollar and limited-competition contracts, reviewing records spanning the past fifteen years. The Office of General Contracting and Business Development will lead the effort in collaboration with federal agencies that issue 8(a) contracts. Cases of fraud or abuse identified during the audit will be referred to the SBA Office of Inspector General and the DOJ for enforcement actions.
The SBA also intends to pursue recovery of misused funds, signaling a firm commitment to oversight and accountability. The initiative highlights the need to restore integrity and credibility within the 8(a) Business Development Program, which is intended to support disadvantaged small businesses.
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