SBA Announces an Audit of 8(a) Program Contracts

Posted on by

SBA has announced that it will be auditing the 8(a) Program in a recent press release entitled: “Administrator Loeffler Orders Full-Scale Audit of 8(a) Contracting Program.” 8(a) Participants and former Participants should be aware that SBA will be focusing on a review of contracts issued under the 8(a) Program.

The announcement from SBA cites to a news story highlighting a massive bribery scandal at USAID. SBA intends to “immediately initiate a full-scale audit of the agency’s awarding officers back to 2010.” The USAID case involved “a decade-long bribery scheme involving at least 14 prime contracts worth over $550 million in U.S. taxpayer dollars.”

The SBA administrator noted: “We must hold both contracting officers and 8(a) participants accountable – and start rewarding merit instead of those who game the system.”

The announcement states that:

One 8(a) contractor, despite being officially flagged by USAID as lacking “honesty or integrity,” went on to receive an additional $800 million in federal contracts to evaluate “issues affecting the root causes of irregular migration from Central America.

The SBA announcement also links to an article from the Daily Wire discussing the 8(a) contractor and its contracts at USAID. That article states:

Vistant’s criminal scheme relied on joint ventures to exploit a DEI policy called 8(a) contracting, which lets the government award contracts with no or limited competition when the recipient is a racial minority or a small business. It formed a joint venture with a larger company —which was bribing Watson and would actually do the work — so Watson could use Barnes’ status as a black man to steer the contracts to him, rather than being obligated to go through an open competitive process.

While the exact parameters of the audit are not found in this press release, here a few details.

  • Who will lead. The SBA’s Office of General Contracting and Business Development, in “collaboration with various federal agencies that award contracts to 8(a) participants.” This office at SBA is the same office responsible for the 8(a) certification and contract review process, as well as various other small business federal contracting programs such as size determinations.
  • Scope. Focus on “high-dollar and limited-competition contracts.”
  • Timeframe. The audit will look at contracts over a period of fifteen years, back to 2010.
  • Enforcement. Cases will then be investigated by SBA Office of Inspector General and DOJ.

This audit could have a large impact on the 8(a) Program, as it seeks to review 15 years of contracts and possibly recover funds. It’s also possible the result of the audit could be used to enact changes to the 8(a) Program. However, changes to the 8(a) Program are not specifically mentioned in this press release.

Questions about this post? Email us. Need legal assistance? Call at 785-200-8919.

Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook.