The Small Business Administration suspended more than 1,000 companies in the 8(a) program. SBA made the decision after it deemed those small businesses non-compliant with its financial data request from December.

“Suspended firms have 45 days to appeal the suspension,” said Maggie Clemmons, an SBA spokesperson in an email to Federal News Network. “SBA will release further information on the suspensions in the coming days.”

The suspension comes after SBA sent a letter to more than 4,300 8(a) firms in December seeking 13 different data, ranging from a list of the company’s employees to bank statements for the last three fiscal years to a copy of all 8(a) contracts, as part of its ongoing audit of the program.

Data compiled by GovContractPros, an advisory services firm specializing in federal procurement, found that SBA admitted 753 companies into the 8(a) program in fiscal 2024. Of those 753 firms, the company says SBA suspended 156 of them.

In fiscal 2025, SBA says it admitted only 65 companies into the 8(a) firm. GovContractPros says SBA suspended 10 of those firms, including nine which joined the program after the Trump administration began leading SBA.

Lawyers that represent small businesses say SBA issued the suspensions on Wednesday based on the fact that the 8(a) firms either failed to submit their responses on or before the Jan. 19 deadline or submitted incomplete responses.

“At least some firms that submitted complete data call responses only one day late — on Jan. 20, and before any suspension notices were issued — often due to errors in the government-operated MySBA Certifications portal, nonetheless received suspension notices, indicating that SBA is taking a strict approach to alleged non-compliance with the filing deadline,” wrote Meghan Leemon and Matt Feinberg, partners with the law firm Piliero Mazza, on a blog post. “Firms subject to 8(a) suspension are not permitted to receive new competitive or sole-source 8(a) awards. However, firms are required to complete existing 8(a) contracts, and federal agencies may exercise options on those contracts, even while a firm is suspended, unless otherwise prohibited by statute or regulation.”

SBA’s new clarifying guidance

The suspensions are part of a broad Trump administration effort to audit the 8(a) program and address allegations of fraud and abuse. SBA’s data call was one of several ongoing audits to now include the Treasury Department, the General Services Administration and, as of last week, now the Department of Defense.

“The Biden administration expanded and then abused the 8(a) program to hand out billions in taxpayer-funded government contracts to favored minorities at the direct expense of honest small businesses, which is why we ended the practice on day one,” said SBA Administrator Kelly Loeffler in a press release. “Since then, the Trump SBA has been working to reverse the damage – and today, we’re reiterating one simple fact: the Biden-era practice of discriminating against white Americans is over, and reforms to enshrine that fact are well underway. The SBA is ending diversity, equity and inclusion (DEI) in federal contracting – and our programs will remain open to all eligible job creators in compliance with federal law.”

In addition to suspending nearly a quarter of the 8(a) program participants, SBA issued new guidance today clarifying that the small business development program “is open to job creators of every race – consistent with court orders, notices from the U.S Department of Justice (DOJ), and President [Donald] Trump’s broader effort to eliminate DEI across the federal government – and that any race-based presumptions of social disadvantage have been inoperative since 2023.”

The guidance outlines new ways the SBA will manage the program.

It says it will administer the 8(a) program based on race neutral requirements and there will be no presumptive preference given to anyone.

SBA also will no longer approve the use of “socially disadvantage narratives” as a way to get into the program. It removed from its website the Biden-era “Guide for Demonstrating Social Disadvantage.”

Finally, SBA will consider several factors when determining eligibility for the 8(a) program, including whether the individual has been a “victim of illegal or radical DEI policies or illegal affirmative action policies or has otherwise been the victim of discriminatory practices such as race-based quotas, set asides or hiring targets, in each case by government and non-government actors.”

SBA says these steps are in reaction to the “dramatic expansion” under the Biden administration of companies in the 8(a) program.

Since January 2025, SBA accepted just 65 new 8(a) firms into the program, compared to over 2,100 who were accepted during the four years of the Biden administration.

Undermining the 8(a) program?

Jackie Robinson-Burnette, a former SBA associate administrator in the Office of Government Contracting and Business Development during the Biden administration, wrote on LinkedIn that this change isn’t a small tweak, but it’s re‑anchoring of the program’s foundation.

“It’s important to reform the 8(a) program without crushing the firms the program was designed to help,” wrote Robinson-Burnette, who now is the CEO of Senior Executive Strategic Solutions. “Are we dismantling and putting a sledgehammer to the program to curtail spending $20 million-plus on 8(a) sole source contracts or is it about something else?”

John Shoraka, a former associate administrator of government contracting and business development at SBA and now the co-founder and managing director of GovContractPros, said the SBA and now DoD’s audits are part of a concerted effort to undermine the confidence in the 8(a) program.

“It seems to be one initiative after another initiative, sort of in a very sequenced flow of events to undermine the program and sort of put the brakes on the program,” he said. “I think there’s a perception, and, it’s the wrong perception, that the 8(a) program is, at its core, a DEI program. I honestly don’t think that the administration believes there is significantly more fraud in the 8(a) program than any other contracting program. In fact, the data shows, if you look at inspector general cases or if you look at Department of Justice cases, the instances of fraud in the set-aside programs and particularly the 8(a) program, are actually significantly lower as opposed to across the entire federal government. So when we focus on fraud, waste and abuse in the 8(a) program, I think it’s just raising the flag. They can’t really say we want to kill this program because it’s DEI, they need to identify some sort of red flag to point to and say, ‘Ah-a, we told you this program was fraudulent, and therefore we need to terminate or put the brakes on this program.’”

Leemon and Feinberg, from the law firm Piliero Mazza, said companies caught up in the suspension should consider sending an informal appeals to SBA to lift the suspension.

“If informal channels are unsuccessful, a suspended 8(a) company may — and should — appeal SBA’s decision within 45 days of the date of the Notice of Suspension to SBA’s Office of Hearings and Appeals. This process can be time consuming, and appeals decisions can be delayed for months or even years,” the lawyers wrote.

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The 8(a) small business contracting program is coming under the microscope of its biggest user.

The Defense Department is joining a growing list of agencies auditing the use of sole source contracts through the 8(a) program.

Experts warn that DoD’s decision to launch this new audit signals that this 40-year-old small business development program is teetering further on the edge.

“It’s not a death knell, but it’s absolutely going to leave a mark. It’s absolutely going to hinder our ability to bring some of that new technology, that new manufacturing capability to the federal marketplace. That’s probably my bigger concern,” said Norm Abdallah, executive vice president at Hui Huliau, a Native Hawaiian-owned firm in the 8(a) program, in an interview with Federal News Network. “We’re behind in terms of the ability to manufacture here in the U.S., and have outsourced that beyond what one should in the defense of their own country, and so hindering the ability for us to help bring some of that to bear in the U.S. marketplace is probably the biggest concern.”

Abdallah said the 8(a) program is an avenue for companies to enter the market, obtain past performance experience in the federal sector and learn the ropes so DoD, and really every agency’s, ongoing distrust and scrutiny of the program is likely going to impact the government in bigger ways than expected.

Secretary Pete Hegseth posted a video on X on Friday explaining that the Pentagon is worried about two main things: The 8(a) program is a diversity, equity and inclusion (DEI) program, and it’s wrought with fraud.

We are taking a sledgehammer to the oldest DEI program in the federal government—the 8(a) program. pic.twitter.com/c9iH8gcqG7

— Secretary of War Pete Hegseth (@SecWar) January 16, 2026

“Providing these small businesses with opportunities is a laudable goal, but over the decades, as it happens, the 8(a) program has morphed into swamp code words for DEI, race-based contracting. And here’s the worst part, in many, many instances, these socially disadvantaged businesses, they don’t even do work. They take a 10%, 20%, sometimes 50% fee off the top, and then pass the contract off to a giant consulting firm, commonly known as beltway bandits. For decades, this program, 8(a) has been a breeding ground for fraud, and this administration is finally doing something about it,” Hegseth said. “Effective immediately, I’m ordering a line-by-line review of every small business sole source, 8(a) contract that is over $20 million, and we’ll look at everything smaller than that too. The Department of War has the biggest chunk of 8(a) spending by far, 10 times more than any other agency. So our cleanup, it’s going to be 10 times tougher.”

DoD’s audit will include two phases. Hegseth said if a contract doesn’t make meet the DoD’s goal of increasing lethality, they will terminate it.

“We have no room in our budget for wasteful DEI contracts that don’t help us win wars, period, full stop. Second, we’re doing away with these pass through schemes. We’ll make sure that every small business getting a contract is the one actually doing the work, and not just some shell company funneling your money to a giant consulting firm,” he said. “This approach is, of course, not meant to hurt small businesses, and that’s not the point. America is full of great, amazing small businesses. This is part of a larger effort to transform our acquisition ecosystem into one that makes sense for the threats we face in the 21st century.”

An email to DoD seeking more details about the audit and a timeline for the audit wasn’t returned.

Experts say Hegseth’s decision to review sole source contracts worth at least $20 million is directed at Native American, Alaskan Native, Hawaiian Native and other tribal companies. Congress raised the sole source threshold for these firms to $100 million from $22 million in 2020. Firms not belonging to one of these groups have a sole source threshold of $5.5 million for manufacturing and $8.5 million for non-manufacturing contracts. These non-tribal or native firms can receive a sole source contract up to $20 million with certain justifications and approvals.

While experts say Congress may not act to change the law, the ongoing audits by the Small Business Administration, the Treasury Department, the General Services Administration and now DoD are sending signals that, at least for sole source contracts, the program doesn’t work.

A former DoD acquisition executive, who requested anonymity because their current company still does business with DoD, said he believes federal small business goals are at risk across the board, and while they may not be affected this year, in two to four years, agencies will see a huge reduction in their industrial base.

The former DoD executive said the administration is sending an inconsistent message to the federal contracting community. The audits and the reduction of staff in small business offices are sending one message that small businesses aren’t important. But then the White House, and DoD particularly, are expressing the desire to attract new participants to the federal market, including non-traditional companies. The executive said these companies typically depend on small business offices and programs like 8(a) to help them get a foot in the door.

John Shoraka, a former associate administrator of government contracting and business development at SBA and now the co-founder and managing director of GovContractPros, an advisory services firm specializing in federal procurement, said DoD’s audit is part of a concerted effort by the administration to undermine the 8(a) program.

“I think if you look at the dollars in the 8(a) program, especially at DoD, some will point to the fact that they actually went up in 2025. But the challenge that we saw across a lot of our clients was that offer letters that have to go through the district office in order for a sole source award to happen were being held up and or never being processed. So we saw a slowdown in sole source awards,” he said. “I think given what we’ve seen with respect to the SBA audit, given what we’ve seen with respect to the number of 8(a)s being approved, in 2024 there was something like 500 plus 8(a)s approved. In 2025, I think the last count I saw was 66 approved. So given the audits, the slowdown in processing, I think contracting officers are looking over their shoulders. I think in the short term, given the current administration and the current congressional makeup, if you will, we will see a trend away from the 8(a) program.”

DoD’s decision to audit the 8(a) program comes after Treasury and SBA announced similar audits earlier this fall. SBA is looking at the entire program and companies had to submit data to the agency by Monday.

The SBA general counsel’s office is driving the audit, which is unusual because usually these things are either done by the inspector general or program office.

Fraud, DEI concerns unfounded

Shoraka said while the questions being asked by SBA, and now eventually DoD, are legitimate questions, the approach is causing some chaos.

“A lot of our clients reached out to their district office and the district office was actually unaware that those letters had originally gone out with respect to the audit, so there was a disconnect there. The field offices aren’t sure how the data is going to be used, or who’s going to use it, or what they’re looking at,” he said. “From my perspective, given the types of questions that were asked, I think it leads to the question, are there pass throughs happening? Because there was a lot of questions with respect to, who are your subcontractors, who are your vendors, et cetera. So the question is, and I think what SBA was looking at is, are there pass throughs and who’s really in control? Is the disadvantaged individual really owning, operating and benefiting from the 8(a) company? And I think those are legitimate questions. But again, there are legitimate processes and mechanisms to monitor that, including the annual review, which occurs every year on every single 8(a) company.”

The former DoD acquisition executive said while there are concerns about the use of sole source awards over $20 million to tribal companies, the allegations of fraud and the belief that the 8(a) program is a DEI program are unfounded. He said DoD should go to Congress and change the law to reduce the risk of large sole source contracts turning into pass throughs.

Experts agreed that while no program is perfect and there probably are some challenges, the 8(a) program is typically well overseen and maintained.

In fact, Abdallah, from Hui Huliau, said most 8(a) firms spend a lot of time meeting the compliance requirements. But he said it’s also a shared responsibility for oversight with the government.

“There are several folks that have responsibility in there. The first one is the contracting officer. In some cases, they’ve got to approve subcontracts. But more basically, with SBA, we go through a review every year where we have to submit our financials, what work did we do and what work happened?” he said. “They worry about the business mix, how much of your work was set aside versus not set aside? Quite honestly, what means you got the work by some means other than the 8(a) program, be that a subcontractor to another straight commercial, et cetera. So there are lots of hooks to watch it. Do they audit the books, per se, to check for percentages? That’s less common. But it’s part of your overall review.”

Shoraka added there are a significant number of regulations or requirements to mitigate the risk of pass throughs, and most rules allow for legitimate subcontracting.

One thing all of the experts pointed out is that the program is set up to help the 8(a) firm grow and learn, but they still have to do at least 51% of the work under services contracts and 15% of the work under construction contracts.

Shoraka said what is being lost in this entire discussion is there is more fraud in non-small business socio-economic programs across government than there are in the 8(a) and other small businesses initiatives.

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Congress is seeking more in-depth information on staffing numbers, federal contracts, remote work agreements and other federal workforce details, according to several provisions of the two spending bills Senate and House appropriators released over the weekend.

The latest two-bill “minibus,” which has bipartisan, bicameral support, includes appropriations for Financial Services and General Government, as well as National Security and the State Department. The package tees up fiscal 2026 spending levels for the State Department, Treasury Department, Office of Personnel Management, General Services Administration and Small Business Administration, along with many other agencies.

For OPM, lawmakers are now eyeing $167.5 million in appropriations for 2026. That’s about $51.5 million short of OPM’s enacted $219 million appropriation for fiscal 2025. But along with the topline numbers, appropriators also appear to be looking for more details on federal workforce numbers and programs, according to a joint explanatory statement released Sunday alongside the legislation.

For one, the spending minibus includes a provision seeking further data on changes to the federal workforce size over the last year. No later than 60 days after the bill is enacted, OPM would have to publish specific data points on the number of civilian federal employees. That includes the numbers prior to the start of President Donald Trump’s term, as well as the numbers as of Sept. 30, 2025 — the final date of the deferred resignation program (DRP) — and finally, the current federal workforce levels.

The legislation additionally calls for a report from OPM of how many employees opted into the DRP, as well as the agencies, occupations, locations and pay rates for those now-former federal employees.

OPM already recently released some further information on federal workforce numbers. The updated “Federal Workforce Data” website details employee data by geographic location, agency, age, education level, bargaining unit status — and much more. The new platform also reaffirms the significant reshaping the federal workforce experienced over the last year, showing that the current federal workforce size is the lowest it’s been in at least a decade.

In addition to details on federal workforce size, congressional appropriators are also seeking more information about agencies’ use of remote work agreements for federal employees. Within 90 days of enactment, OPM would have to detail how and when employees are deemed eligible for remote work, how often those agreements are reviewed, and how remote work agreements influence locality pay adjustments, according to the legislation.

The policy provision comes shortly after OPM released updated telework and remote work guidance, which now aligns with the Trump administration’s significant curtailing of telework and remote work across the federal workforce. While emphasizing as much on-site presence as possible, OPM’s revised guidance also defined limited exceptions to return-to-office requirements for certain federal employees.

A separate provision of the spending bill would require OPM to report to Congress at least two days before signing any potential sole-source contracts, as well as any contracts worth $2 million or more.

The new provision comes as OPM is working out the details of a federal contract and action plan to modernize and centralize the more than 100 current federal HR systems used across government. During May 2025, OPM initially announced a sole-source contract award to that end, but then quickly canceled the award. OPM later issued a request for proposals (RFP), and agency officials have said they expect to soon award a contract that will eventually result in one cohesive, governmentwide HR system.

Separately, congressional appropriators are also planning to direct OPM to provide quarterly updates on the Postal Service Health Benefits program, “including any gaps in OPM’s capacity to successfully implement the program.”

The provision comes a few years after OPM first established the PSHB program for Postal Service employees. In July 2025, OPM’s inspector general office then reported that the agency’s enrollment platform for PSHB was at risk of an “operational failure” due to staffing reductions within OPM.

Bipartisan, bicameral appropriators agreed to the latest appropriations minibus on Sunday, looking to generally lower spending levels in comparison with enacted appropriations for fiscal 2025. Subcommittee leaders said the agencies that fall under those two bills would see a cumulative total of $9 billion less in spending than last fiscal year.

The proposed budget cuts are more modest than many of the steeper spending reductions the Trump administration requested for fiscal 2026, which now appear to be off the table. The new legislation marks further progress toward Congress reaching a government spending agreement, just weeks away from the Jan. 30 funding deadline.

The latest minibus comes after congressional appropriators teed up a three-bill minibus early last week. The House later passed those three bills, which are now under consideration in the Senate. In total, three of the 12 appropriations bills for 2026 have completely cleared Congress.

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