WASHINGTON — The U.S. Small Business Administration has issued a warning to federal contracting officers, reinforcing their legal duty to report fraud and misconduct in the SBA’s 8(a) Business Development Program after a sweeping federal investigation exposed a years-long bribery scheme involving over $1.3 billion in improperly awarded contracts.
The directive, released this week, follows a U.S. Department of Justice probe that revealed a former USAID contracting officer colluded with two 8(a) contractors to steer more than $550 million in federal awards through fraudulent means. One contractor, flagged for lacking “honesty or integrity,” reportedly secured an additional $800 million in contracts to evaluate migration issues in Central America despite internal warnings.
“Our 8(a) contracting officers have a legal responsibility to uphold the law and protect taxpayer dollars,” SBA Administrator Kelly Loeffler said in a statement Tuesday. “We will no longer tolerate the self-dealing and fraud that was allowed to proliferate under the Biden Administration.”
Loeffler, who took the helm at the SBA earlier this year, has ordered a full-scale audit of the 8(a) program and is now mandating all federal officers involved in 8(a) contracting to report misconduct, including falsified eligibility documents or concealed disqualifying information.
The 8(a) program is designed to help small and disadvantaged businesses compete for federal contracts. It has faced scrutiny in recent years amid reports of manipulation and abuse.
This week’s letter marks a shift in the SBA’s oversight stance, emphasizing a “renewed commitment to rigorous oversight” across the program.
The SBA vows stricter enforcement after a DOJ probe exposed widespread fraud in the federal 8(a) contracting program.