Are 8(a) Small Business Preferences in Government Contracting at Risk? Increased Oversight Is Here

By Brett W. Johnson and Carrie Schaffer

The Small Business Administration (SBA) has recently increased its oversight and enforcement of its 8(a) Business Development Program,¹ including a program-wide audit requiring participating firms to produce significant financial records to determine whether inappropriate certification or fraud has occurred. The SBA has indicated this series of actions is part of a comprehensive effort to protect taxpayers and legitimate small businesses by rooting out fraud, waste, and abuse in the 8(a) program. This in addition to the government’s on-going review of government contract procurement regulations, specifically within the Federal Acquisition Regulations (FAR), and the expected overhaul of those requirements and related FAR Clauses.

Background of 8(a) Business Development Program

The SBA’s 8(a) Business Development Program is a federal contracting assistance program. The program is designed to help eligible small business concerns that are owned and controlled by socially and economically disadvantaged individuals (or qualifying entities, such as Native American tribal entities) gain access to federal contracting opportunities through a combination of business development support and preferential contracting mechanisms, including sole-source and set-aside awards. Participation is limited in duration, subject to ongoing eligibility and reporting requirements, and overseen by the SBA to ensure compliance throughout a firm’s time in the program.

Program-Wide Audit and Enforcement

On December 5, 2025, the SBA mandated that all current participants in the 8(a) Business Development Program provide financial documentation covering the last three full fiscal years as part of an ongoing, full-program audit. This data call requires submission of bank statements, financial statements, general ledgers, payroll registers, contracting and subcontracting agreements, and employment records. Firms that fail to comply by the SBA’s deadline of January 19, 2026, risk removal from the 8(a) program and further investigative or remedial actions.²

The SBA’s audit was initiated following a U.S. Department of Justice investigation that alleged misconduct and fraud associated with certain 8(a) contracts and contractors, and the SBA has characterized the audit as part of an effort to protect taxpayers and restore program integrity.³

Congressional Pressure

In parallel with the SBA’s audit initiative, the Chair of the U.S. Senate Committee on Small Business and Entrepreneurship, sent letters to multiple federal agencies urging them to pause new 8(a) contracting activity and review existing 8(a) awards while the SBA’s audit is ongoing. The letters reflect congressional concern that agencies may continue to award contracts under the 8(a) program without sufficient assurance that participants remain eligible and compliant.⁴

On December 22, 2025, multiple U.S. Senators wrote to the SBA Administrator expressing concern about the SBA’s indiscriminate data call for every 8(a) program participant, the short compliance timeline, and the lack of guidance on the breadth of requested information. The senators emphasized both the importance of meaningful oversight and procedural fairness in how audits are conducted.⁵

Impact on Existing Participants and Future Applications

From a regulatory standpoint, the SBA’s existing 8(a) eligibility and application requirements remain governed by the applicable Code of Federal Regulations.⁶ There is no deadline by which eligible small businesses must submit an 8(a) application. The SBA retains discretion over the applications, requests for additional information, and eligibility determinations.

However, in the present environment, the risk of expanded documentation requests, as well as a granular audit of financial records, extends beyond active participants to prospective applicants. Although the current SBA directive technically targets existing 8(a) participants, the enforcement posture suggests that the SBA may view extensive documentation as a baseline part of eligibility verification.

Existing participants may receive requests for continued documentation submission and should respond comprehensively and accurately to these data calls to avoid adverse program action. Participants should consider conducting internal reviews or third-party audits to ensure not just accuracy of financial information, but also as to 8(a) or other small business certification qualification. If the participant determines that the entity is not qualified (e.g., exceeds the revenue limitations, creates changes in business control to no longer be qualified, or is otherwise affiliated with a large entity, among others), voluntary decertification and potential disclosure may be appropriate.

Prospective applicants should consider the timing of an 8(a) application carefully given the current enforcement climate and demands for enhanced information concerning finances and operational controls. Firms that apply during this heightened audit period may face more extensive documentation requests during eligibility review than would ordinarily occur under normal circumstances.

As increased scrutiny is expected for the foreseeable future, companies that qualify of larger companies that team with small companies for government contract opportunities should take this opportunity to enhance compliance controls, obtain proper representations in contracts, update government contracting policies and procedures, and train compliance personnel to ensure vigilance in seeking out government procurement opportunities.