Kelly Loeffler, Administrator of the U.S. Small Business Administration (SBA), announced that she has directed(Link is external) the SBA’s Office of General Contracting and Business Development to launch an immediate and full-scale audit of the agency’s 8(a) Business Development Program after a U.S. Department of Justice (DOJ) investigation uncovered(Link is external) a years-long fraud and bribery scheme involving a former federal contracting officer and two 8(a) contractors.
“In recent years, SBA’s 8(a) Business Development Program has seen rampant fraud – and increasingly egregious instances of abuse,” said Loeffler. “Effective immediately, I am launching a full-scale audit of the program to stop bad actors from making the kind of backroom deals that have already cost taxpayers hundreds of millions of dollars. We must hold both contracting officers and 8(a) participants accountable – and start rewarding merit instead of those who game the system.”
The DOJ investigation revealed(Link is external) that over $550 million in government contracts were fraudulently steered through bribery and abuse of a U.S. Agency for International Development (USAID) contracting officer. One 8(a) contractor, despite being officially flagged by USAID as lacking “honesty or integrity,” went on to receive(Link is external) an additional $800 million in federal contracts to evaluate “issues affecting the root causes of irregular migration from Central America.”
The audit will be led by the SBA’s Office of General Contracting and Business Development, beginning with high-dollar and limited-competition contracts and going back over a period of fifteen years – in collaboration with various federal agencies that award contracts to 8(a) participants.
