“Stop 8(a) Contracting Fraud Act”: What Senator Ernst’s Proposal Could Mean for SBA’s 8(a) Program
Senator Joni Ernst, chair of the Senate Committee on Small Business and Entrepreneurship, has introduced the “Stop 8(a) Contracting Fraud Act,” a bill that directly targets the Small Business Administration’s flagship 8(a) Business Development Program. The bill responds to recent allegations of extensive fraud in the program and reflects a broader political narrative that questions the integrity and administration of federal preference programs. (Small Business Committee)
Formally introduced as S. 3173 in the 119th Congress, the bill would prohibit the SBA from awarding new sole-source contracts under section 8(a)(16) of the Small Business Act until the agency completes a comprehensive audit of the 8(a) business development program and submits a report to the Small Business Committees in both chambers of Congress. (LegiScan) The proposed moratorium is thus not a permanent dismantling of 8(a), but a suspension of one of its most consequential tools—sole-source awards—conditioned on a program-wide review.
The legislative findings are anchored in highly publicized enforcement actions. Ernst’s press release highlights evidence of roughly $100 million in alleged fraud and references a Department of Justice case in which the 8(a) program was used as part of a $550 million bribery scheme over several decades, involving, among others, a USAID contracting officer. (Small Business Committee) These facts are deployed to support the conclusion that the program is “broken” and that taxpayers are being “defrauded,” language calibrated to resonate with broader concerns about waste and abuse in federal contracting.
The text of S. 3173 incorporates a limited safety valve. It allows a contracting officer to seek a waiver of the moratorium when a sole-source 8(a) award is deemed necessary in the interest of national security, subject to approval by the SBA Administrator or Deputy Administrator. (GovInfo) This provision implicitly acknowledges that in certain mission-critical contexts, the government relies on 8(a) sole-source tools for speed and continuity of operations. Nonetheless, the default posture of the bill is restrictive: absent such a waiver, agencies would be unable to make new 8(a) sole-source awards until SBA completes the audit ordered on June 27, 2025, and transmits its findings to Congress. (GovInfo)
For federal contractors, the risks are twofold. First, even if the bill never advances beyond introduction—it is currently a single-sponsor, partisan Republican bill with no cosponsors and has only been referred to committee—it signals that 8(a) is under intensified political and oversight pressure. (LegiScan) Second, if some version of this moratorium were to be enacted, firms whose growth strategies rely heavily on 8(a) sole-source vehicles could face delays, pipeline volatility, and a forced pivot toward competitive 8(a) and full-and-open competitions. Agencies, for their part, would need to reassess acquisition strategies and justify any national security waivers in an environment of heightened scrutiny.
Disclaimer: This blog post is provided for general informational and educational purposes only and reflects publicly available information as of the date of writing. It does not constitute legal, financial, or other professional advice and should not be relied upon as such. Readers should consult qualified counsel or advisors before taking any action based on this content.