These companies received almost $850 million worth of 8(a) contracts between fiscal year 2021 and 2024 under the previous administration.
The Small Business Administration (SBA) is removing 628 companies from its 8(a) Business Development Program after they refused to produce, for review, three years of financial documents, the agency said in a March 4 statement.
The 8(a) program seeks to help small business owners, who are considered socially and economically disadvantaged, to develop and grow operations through training, workshops, and guidance. Program participants gain access to contracting opportunities in the federal marketplace.
In December, the SBA ordered all 8(a) participants, more than 4,300 companies, to hand over financial documents of the previous three years.
Companies were asked to produce bank statements, payroll registers, financial statements, employment records, general ledgers, and contracting and subcontracting agreements.
This was done “as part of the agency’s ongoing effort to root out DEI [diversity, equity, and inclusion] and small business pass-through contracting abuse that proliferated across the federal government,” the SBA said in its recent statement.
On Jan. 28, the SBA announced it suspended 1,091 8(a) participants as the companies failed to meet the Jan. 19 deadline to submit the requested documents.
“The 628 8(a) firms SBA is moving to terminate today are among the 1,091 that were initially suspended last month for refusal to comply with the agency’s document request,” the agency said.
“Collectively, these firms received nearly $850 million in 8(a) contracts during the Biden Administration from Fiscal Year 2021 to 2024.”
The SBA said it was working to restore the integrity of the federal contracting marketplace under the leadership of Administrator Kelly Loeffler. The actions are part of the first audit of the 8(a) program in the agency’s almost 50-year history.
Loeffler blamed a lack of oversight over decades and the previous administration’s DEI agenda for having resulted in the 8(a) program becoming rife with “socially and economically disadvantaged” companies that abused the initiative.
“Last year, we required those contractors to show us their books—and today, we’re beginning the process of terminating over 620 firms who refused to comply. The message is clear: if you have something to hide, you cannot do business with the federal government,” Loeffler said.
“We are ending abuse and DEI discrimination in federal contracting and removing every fraudulent participant that took opportunity away from legitimate and eligible small business owners at taxpayers’ expense. Our audit continues and will have more results to report, including potential investigations.”
