The Small Business Administration (SBA) is cutting ties with 154 small businesses under its 8(a) Business Development Program after finding those firms did not meet certain eligibility criteria, the agency said on Feb. 11.
The 8(a) program is designed to help small businesses facing social and economic disadvantages gain access to federal contracting opportunities while receiving special assistance and mentorship.
The SBA said that 154 of those small businesses failed the economic disadvantage eligibility requirement and “exceeded statutory net worth limits, adjusted gross income caps, or total asset limits.”
“Collectively, these firms received nearly $1.3 billion in 8(a) set-aside and sole-source contracts during the Biden Administration, from Fiscal Year 2021 to 2024,” SBA said in a press release.
Those businesses will be placed under a 30-day suspension before they are ultimately terminated.
“Under President Trump, the SBA is restoring integrity to federal contracting programs that promoted both discriminatory DEI and rampant abuse during the Biden Administration,” said SBA Administrator Kelly Loeffler in a statement.
“Today, we are taking action to terminate 154 D.C. firms that received $1.3 billion in federal contracts, all of whom were allowed to stay in the 8(a) Program even when they were not economically disadvantaged,” she added.
After launching a full-scale investigation into the 8(a) program in June, the SBA in December required all 4,300 participants to submit financial records from the previous three fiscal years.
Loeffler said in December that the review was being conducted after “mounting evidence” showed that the 8(a) program “aggressively prioritized DEI [diversity, equity, and inclusion] over merit in federal contracting.”
The investigation was launched after a Justice Department investigation found that a federal contracting officer helped steer more than $550 million in federal work to an 8(a) business, which later won another $800 million in contracts.
In a statement on Feb. 11, Loeffler said that by terminating the 154 businesses’ participation in 8(a), the Trump administration is enforcing the law.
“We’re ending DEI discrimination, rooting out abuse, and removing big companies that unfairly dominated the federal contracting marketplace to the detriment of eligible, honest small business owners,” Loeffler said.
Outside of SBA, Defense Secretary Pete Hegseth ordered a similar review of 8(a) contracts awarded by the Pentagon, stating that the initiative allowed fraud and abuse in federal contracting.
The Treasury Department is also conducting a review of preference-based contracting after Treasury Secretary Scott Bessent cited allegations of more than $250 million in 8(a) pass-through fraud at the department.