The Small Business Administration has directed all companies in the 8(a) Business Development Program to provide financial documentation, as the agency intensifies efforts to identify fraud, waste and abuse across federal small business contracting.
More than 4,300 participating firms must submit bank records, payroll data, financial statements and contracting agreements covering the last three fiscal years, SBA said Friday. Companies that do not comply by Jan. 5 risk removal from the program and additional enforcement action.
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Why Is SBA Requiring New Financial Reviews?
SBA Administrator Kelly Loeffler said recent federal investigations and oversight findings point to longstanding vulnerabilities in the 8(a) program, which is designed to assist socially and economically disadvantaged small businesses.
Loeffler stressed that there is “mounting evidence” that the program “went from being a targeted program to a pass-through vehicle for rampant abuse and fraud,” noting that the review aims to restore program integrity and protect taxpayer dollars.
What Triggered the 8(a) Audit Action?
The government-wide review follows a Department of Justice case that uncovered a $550 million bribery and fraud scheme involving a former contracting official and two 8(a) contractors. As part of the response, SBA has launched a full-scale audit focused on high-value and limited-competition awards made over the last 15 years.
SBA has already suspended executives and companies linked to alleged misconduct involving more than $253 million in contract awards.
The Department of the Treasury has initiated a parallel audit of preference-based contracting, totaling an estimated $9 billion in awards.
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