WASHINGTON, D.C. — The U.S. Department of the Treasury announced Thursday a sweeping $9 billion audit targeting federal contracts awarded under preference-based programs, in what officials describe as one of the largest anti-fraud reviews in the department’s history.
The audit will scrutinize potential misuse of the Small Business Administration’s 8(a) Business Development Program and other initiatives that grant contracting advantages to certain small or disadvantaged businesses. The move follows Treasury’s recent termination of more than $253 million in contracts with ATI Government Solutions after allegations of fraud tied to federal set-aside programs.
Under President Trump’s direction, Treasury Secretary Scott Bessent said the department is taking “aggressive steps” to detect and eliminate fraud and abuse of taxpayer dollars, with a focus on rooting out so-called “pass-through” arrangements—where large firms allegedly used small business partners as fronts to capture set-aside contracts.
“President Trump has directed his administration to eliminate fraud and waste wherever it occurs, ensuring that each taxpayer dollar is spent as intended,” Bessent said. “Treasury will not tolerate fraudulent misuse of federal contracting programs. These initiatives must benefit legitimate small businesses that deliver measurable value to the government and the public.”
The audit encompasses contracts awarded across Treasury and its bureaus, many of which were issued under the Biden administration’s equity in procurement initiative. Treasury officials said prior policies may have allowed large companies to exploit small business preferences by subcontracting nearly all work while leaving nominal participation to eligible firms.
Kelly Loeffler, Administrator of the U.S. Small Business Administration, said the Treasury review complements a broader governmentwide audit of the 8(a) program launched earlier this year. “During the Biden Administration, federal contracting set-aside programs proliferated without scrutiny or oversight,” Loeffler said. “This Administration will not tolerate DEI-based contracting and abuse that compromises opportunity for legitimate and eligible small businesses.”
To increase accountability and prevent future abuse, Treasury has directed its acquisition professionals to enforce new transparency measures, including mandatory staffing plans and monthly workforce performance reports for all service contracts. Officials said the data will help flag non-performance and potential fraud early in the process.
The review marks a significant escalation in the Trump administration’s efforts to tighten oversight of federal procurement, signaling a broader shift toward stricter enforcement and fiscal discipline across government contracting.
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