SBA’s 8(a) full-scale audit: What GovCons need to know

On June 27, the Small Business Administration (SBA) announced a full review of the 8(a) Business Development Program, covering 15 years of contracts. Administrator Kelly Loeffler explained that the move follows a Department of Justice fraud case involving two contractors and more than $550 million in awards. That case revealed the scale of risk when oversight fails and showed why SBA is now taking a harder look.

The audit will be led by the SBA’s Office of General Contracting and Business Development. It will start with high value, limited competition contracts and will be carried out in partnership with the federal agencies that issued those awards. This is one of the most significant program reviews in recent history. 

Here’s what to look out for, and how to prepare. 

What the audit is 

This audit is a detailed review going back about 15 years, with a focus on whether participants have met both the rules and the intent of the program. The main areas under review include: 

• Eligibility certifications and whether firms continue to meet economic and social disadvantage standards. 

• Owner net worth and income levels. 

• Affiliation rules that restrict control by larger, ineligible companies. 

• Joint venture and subcontracting use, with focus on whether firms are performing a commercially useful function instead of acting as passthroughs. 

• Contract performance, including how much work was subcontracted compared to what was required. 

The first wave will target large contracts that faced little competition. 

What GovCons should expect 

Participants in the 8(a) program should prepare for closer oversight in three areas. 

Stricter eligibility and recertification. SBA will apply tougher standards for both new and existing firms. This includes deeper reviews of financials, ownership, and character requirements. 

Stronger expectations for internal controls. Firms will need to show that they have processes for self auditing, accurate reporting, and organized compliance documentation. 

Higher consequences for noncompliance. The risks are serious. They include removal from the program, loss of contracts, suspension or debarment, and repayment of funds tied to improper awards. 

How GovCons can prepare 

The best response is to get ready now. 

Run your own audit. Review your 8(a) contracts from the past 15 years. Check financial disclosures, eligibility, joint venture agreements, subcontracting records, and performance. Consider using outside counsel to provide an independent view. 

Keep your documentation in order. Archive procurement justifications, sourcing decisions, and market research. Organize joint venture and subcontracting agreements. Having a clear record will make it easier to respond to SBA inquiries. 

Use compliance as a strength. In proposals, emphasize your history of meeting Federal Acquisition Regulation (FAR) requirements. Show that you qualify for the program and also deliver consistently as a trusted partner. 

The bottom line 

The SBA audit is part of a bigger trend in closer examination of contracts. Oversight is increasing at the same time as rules are being simplified as part of FAR Overhaul. GovCons who prepare now by tightening their compliance practices, maintaining strong documentation, and showing their reliability will be better positioned to succeed. 

The companies that respond with clarity and discipline will not only protect their 8(a) status but also stand out as strong competitors in a market that values transparency and accountability. 

Want to learn more about how your business can empower itself to keep pace with the federal government’s compliance requirements? Connect with a Unanet expert today.