Sen. Joni Ernst
U.S. Sen. Joni Ernst (R-IA) is calling for major fraud prevention reforms for the federal 8(a) Business Development Program, which provides billions of dollars in funding to socially and economically disadvantaged businesses.
The 8(a) program is the largest set-aside program at the U.S. Small Business Administration (SBA), which in fiscal year 2024 oversaw more than $40 billion in 8(a) contract awards.
At the same time, the SBA Office of Inspector General (OIG) has identified shortcomings and opportunities for fraud in the 8(a) program for nearly 20 years, according to a pair of Oct. 30 letters Sen. Ernst sent to SBA Administrator Kelly Loeffler and Sheldon Shoemaker, Acting Inspector General and Deputy Inspector General at the SBA.
“In this fight against fraudsters, crooks, and swindlers, the American taxpayers are losing,” the senator wrote Shoemaker. “Your office is uniquely positioned to track down, investigate, and recommend prosecution of bad actors. In the coming days and months, I expect to see significant 8(a)-related accountability actions and investigations initiated.”
The senator’s letters follow information released June 12 by the U.S. Department of Justice, which determined that the 8(a) program was used to facilitate a $550-million bribery scheme over several decades. Four men, including a government contracting officer at the United States Agency for International Development, pled guilty to the charges.
“It is obvious that the Biden administration’s indifference toward meaningful oversight in the 8(a) program allowed swindlers and fraudsters to treat federal contracting programs like personal piggy banks,” Sen. Ernst wrote Loeffler, who is conducting a comprehensive audit of the 8(a) program.
“After years of complaints about fraud in the 8(a) program, I am glad the veil has been lifted,” she added. “Small business contracting programs were never intended to function as welfare systems for favored classes or give no-bid contracts to do-nothing companies.”
Sen. Ernst, who chairs the U.S. Senate Small Business and Entrepreneurship Committee, requested that Loeffler provide the committee with myriad documents and information pertaining to the program so that the committee may continue its own oversight efforts.
Additionally, she requested that Shoemaker “immediately” take several actions, such as providing specific company credibility assessments, and to provide a staff-level briefing to the committee.