SBA Expels 154 Firms from 8(a) Program

D.C.-Based Companies Failed Economic Eligibility

Requirements; $1.3 Billion in Contracts at Issue

The U.S. Small Business Administration (SBA) has initiated termination proceedings against 154 Washington, D.C.-based firms that participated in the federal government’s 8(a) Business Development Program, citing failure to meet economic eligibility requirements.

The 8(a) program is a nine-year certification initiative designed to assist socially and economically disadvantaged small businesses. Participating firms receive one-on-one counseling, training workshops, and management and technical assistance, along with preferential access to federal contracting opportunities, including set-aside and sole-source contracts.

According to the SBA, an internal review determined that the 154 firms did not meet statutory “economic disadvantage” criteria. The agency said some companies exceeded limits on personal net worth, adjusted gross income (AGI), or total assets. The firms will be suspended for at least 30 days before facing final termination from the program.

Collectively, the companies received approximately $1.3 billion in 8(a) set-aside and sole-source federal contracts between fiscal years 2021 and 2024, according to the agency.

The move has sparked debate over the future of diversity, equity, and inclusion (DEI)-related initiatives in federal contracting. Some observers view the action as part of a broader rollback of DEI-based policies, while others express concern that expanded audits could result in additional removals of firms across multiple states.

SBA Administrator Kelly Loeffler said the acti

on is part of an effort to restore integrity to federal contracting programs.

“Under the previous administration, ineligible firms were allowed to remain in the 8(a) program and received more than $1 billion in federal contracts,” Loeffler said. “We are enforcing statutory requirements and ensuring that federal contracting opportunities go to businesses that truly qualify.”

According to the SBA’s internal findings, one D.C.-based 8(a) participant reported total assets exceeding $35 million — more than five times the statutory eligibility limit — while continuing to pursue contracts reserved for economically disadvantaged businesses. Another firm reported a net worth of at least $24 million and had financial statements as early as September 2021 showing it exceeded total asset limits, yet remained in the program.

The SBA also stated it has ended practices that approved 8(a) applicants based solely on race. During the Biden administration, more than 2,200 firms were newly admitted to the program over four years. By contrast, the agency said only 65 firms were admitted last year under the current administration.

In a recent clarification, the SBA stated that no American — including white Americans — can be denied government services on the basis of race.

The agency has signaled that oversight efforts will continue, raising the possibility of further reviews and potential removals as it conducts broader audits of 8(a) program participants nationwide.