On June 27, 2025, the U.S. Small Business Administration (SBA) announced that it will conduct a full-scale audit of its 8(a) Business Development Program to restore integrity and transparency. Contractors participating in the 8(a) Program should be aware of the audit’s implications and take steps to ensure compliance with program requirements.
Background on the 8(a) Program
What: The 8(a) Program is a federal SBA initiative designed to assist socially and economically disadvantaged small business owners compete for and secure federal contracts.
Who: To qualify for the 8(a) Program, a business must be a “small” business, unconditionally majority-owned and controlled (51% or more) by socially and economically disadvantaged U.S. citizen(s) of good character. The business must also demonstrate a potential for success. See 13 C.F.R. § 124.101.
Why: Participating businesses can bid for contracts exclusively set aside for 8(a) firms and have access to various business development initiatives, which can bolster the marketability and competitiveness of a firm.
The 8(a) Audit
Why is the 8(a) Program being audited? Two recent investigations involving 8(a) businesses uncovered extensive fraud and abuse within the program.
- The Department of Justice (DOJ) recently uncovered a multi-year bribery scheme in which a contracting officer for the U.S. Agency for International Development (USAID) accepted bribes from and directed more than $550 million in government contracts to certain 8(a) contractors.
- The DOJ also uncovered a pass-through scheme in which a debarred non-8(a) firm was leveraging an 8(a) contractor’s disadvantaged status to secure 8(a) set-asides, when it was disqualified from receiving federal contracts.
What will the audit entail?
- The audit will focus on high-dollar value 8(a) contracts that have been awarded over the last 15 years.
- The audit will be conducted by the SBA’s Office of General Contracting and Business Development, with assistance from various federal agencies that participate in the 8(a) Program.
- If fraud or noncompliance is uncovered, contractors may face suspension, debarment, termination from the 8(a) Program, and liability for damages up to affected contract award values.
To prepare for this audit, contractors should:
- Gather records relating to 8(a) contracts they have worked on for the last 15 years.
- Ensure any joint venture or subcontracting arrangements are in compliance with applicable laws and well-documented.
- Conduct internal reviews and self-audits to identify any issues that may arise should the SBA audit their firm.
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