Senate Committee Chair Calls for Shutdown of $40 Billion Federal Contracting Program

Senator Joni Ernst is demanding that 24 federal agencies immediately suspend funding for a Small Business Administration program that ballooned under the Biden administration and now faces serious allegations of fraud and corruption.

The Iowa Republican, who chairs the Senate Small Business Committee, is targeting the 8(a) program, which the federal government designed to assist “socially and economically disadvantaged” small businesses through training, counseling, and exclusive access to federal contracting opportunities.

Here are the facts. The 8(a) program distributed more than $40 billion in contract awards during fiscal year 2024 alone, making it the largest set-aside program at the SBA. Under Biden, the administration tripled the initiative’s contracting goals from the original target of awarding 5% of federal contracts to 8(a) companies up to 15%.

Ernst’s concern is not merely philosophical. She has identified what she describes as “alarming, potentially fraudulent 8(a) awards made across government that need to be investigated.” The senator sent letters to agency chiefs ranging from Transportation Secretary Sean Duffy to Department of Homeland Security Secretary Kristi Noem, calling for an immediate funding halt.

“Despite concerns with the 8(a) program, Joe Biden opened the floodgates to fraud,” Ernst stated. “The program must be halted at every agency while a thorough review is conducted to ensure taxpayers are not being ripped off by con artists.”

The evidence supporting Ernst’s position is substantial. Decades of Government Accountability Office reports, SBA Office of Inspector General investigations, and Department of Justice probes have exposed systemic problems. According to Ernst’s letters, inadequate oversight and weak enforcement measures have allowed 8(a) participants to operate as pass-through entities, securing unlimited no-bid contracts with minimal transparency.

Recent developments validate these concerns. The Department of Justice arrested four individuals in Maryland and Florida in June as part of an investigation into 8(a) fraud. Additionally, an October undercover investigation allegedly uncovered an 8(a) firm admitting to violating federal law by using minority-owned status as a front to obtain more than $100 million in no-bid government contracts while outsourcing 80% of the actual work.

This represents a fundamental betrayal of the program’s stated purpose. When the federal government creates set-aside programs ostensibly designed to help disadvantaged small businesses, those programs must actually benefit legitimate small businesses. Instead, the evidence suggests that lax Biden-era oversight transformed the 8(a) program into a vehicle for fraud that enriches con artists at taxpayer expense.

Ernst correctly identifies the core problem. Every loophole in the system erodes public trust and creates an unlevel playing field that punishes honest competitors. When fraudulent actors can exploit minority-owned status to secure massive no-bid contracts and then outsource the work, the program fails on every level. It fails taxpayers, it fails legitimate small businesses, and it fails the very communities it purports to serve.

The solution is straightforward. Halt the program immediately across all 24 agencies, conduct a comprehensive review of existing contracts and participants, and implement enforcement mechanisms that actually prevent fraud. Tax dollars designated for small business assistance must benefit actual small businesses, not serve as a slush fund for sophisticated fraud schemes operating behind a facade of social justice.

The Biden administration’s decision to triple the program’s scope without adequate safeguards was predictably disastrous. Now the Trump administration must clean up the mess.

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