WASHINGTON, D.C. — The U.S. Small Business Administration (SBA) has revoked the U.S. Agency for International Development’s authority to independently manage 8(a) contracts following the exposure of a $550 million bribery scheme involving a USAID contracting officer and two contractors.
The decision, announced Wednesday, comes after a Department of Justice investigation revealed extensive abuse of the 8(a) Business Development Program, which is intended to support disadvantaged small businesses through federal contracts.
“Under the Trump Administration, the SBA will not tolerate the abuse of the government contracting process,” said SBA Administrator Kelly Loeffler. “The decision to revoke USAID’s independent 8(a) contracting authority is necessary to prevent further wrongdoing by an agency with a well-documented record of waste, criminal fraud, and bribery.”
Last fiscal year, USAID awarded $3.6 billion in contracts through the 8(a) program, which is governed by the SBA. The program allows agencies to issue sole-source and set-aside contracts to eligible small businesses. SBA has now notified USAID that it will no longer be permitted to independently issue 8(a) contracts due to what the agency described as systemic fraud.
According to DOJ findings, a USAID contracting officer accepted bribes to steer hundreds of millions of dollars in federal contracts to certain vendors. One contractor, despite being labeled by USAID as lacking “honesty or integrity,” later received an $800 million contract to assess migration issues in Central America.
The SBA’s action reasserts its oversight of 8(a) contracting functions at USAID, effectively cutting off the agency’s ability to independently manage future contract awards under the program.