The Small Business Administration (SBA) is removing 628 companies from its 8(a) business development program after they refused to produce, for review, three years of financial documents, the agency said in a March 4 statement.
In December 2025, the SBA ordered all 8(a) participants, more than 4,300 companies, to hand over financial documents of the previous three years.
Companies were asked to produce bank statements, payroll registers, financial statements, employment records, general ledgers, and contracting and subcontracting agreements.
“[This was done] as part of the agency’s ongoing effort to root out [diversity, equity, and inclusion] and small business pass-through contracting abuse that proliferated across the federal government,” the SBA said in its recent statement.
The SBA had announced on Jan. 28 that it was suspending 1,091 8(a) participants, as the companies had failed to meet the Jan. 19 deadline to submit the requested documents.
“The 628 8(a) firms SBA is moving to terminate today are among the 1,091 that were initially suspended last month for refusal to comply with the agency’s document request,” the agency said in the March 4 statement.
“Collectively, these firms received nearly $850 million in 8(a) contracts during the Biden Administration from Fiscal Year 2021 to 2024.”
The SBA said it was working to restore the integrity of the federal contracting marketplace under the leadership of Administrator Kelly Loeffler. The actions are part of the first audit of the 8(a) program in the agency’s almost 50-year history.
Loeffler blamed a lack of oversight over decades and the previous administration’s diversity, equity, and inclusion agenda for having resulted in the 8(a) program becoming rife with “socially and economically disadvantaged” companies that abused the initiative.
“Last year, we required those contractors to show us their books—and today, we’re beginning the process of terminating over 620 firms who refused to comply,“ Loeffler said in the statement. ”The message is clear: if you have something to hide, you cannot do business with the federal government.
Contracts to Disadvantaged Businesses
The Biden administration had set high goals for awarding federal contracts to small disadvantaged businesses (SDBs).A company can register as an SDB if 51 percent or more of its stake is owned or controlled by “one or more disadvantaged persons,” according to the SBA.
“The disadvantaged person or persons must be socially disadvantaged and economically disadvantaged,” the SBA stated.
A socially disadvantaged person is an individual who has been subject to racial or ethnic prejudice or cultural bias within American society, according to the Code of Federal Regulations.
In April 2024, the SBA said the Biden administration exceeded its goal of awarding 12 percent of federal contracting dollars to SDBs in fiscal year 2023. This was the third straight year of awarding “record-breaking” contracting dollars to SDBs, it said.
In January 2024, the Biden administration reaffirmed its goal to raise the target for federal contracting dollars going to SDBs for fiscal year 2025 to 15 percent, which was a 50 percent increase from when President Joe Biden assumed office.
The agency has now reduced the federal government’s SDB contracting goal to the statutory target of 5 percent from 15 percent, the SBA said in its latest statement.
The practice of accepting companies into the 8(a) program solely based on “unsubstantiated claims” and “narratives of racial discrimination” has been put to an end, the agency said.
On Feb. 11, the SBA sent a letter to 150 companies based in Washington that were part of the 8(a) program, initiating termination proceedings against them.
The decision was taken after a review found that these entities failed to meet the “economic disadvantage” requirement to qualify for the program, the SBA said.
Combined with the 628 companies recently removed, the SBA has initiated termination proceedings against almost 20 percent of the 8(a) program participants, according to the agency’s recent statement.
