The Department of the Treasury has launched a department-wide audit of contracting activity valued at approximately $9 billion, focusing on potential misuse of the Small Business Administration’s 8(a) Business Development Program and other preference-based federal contracting initiatives.
Announced on Thursday, the investigation covers all contracts and task orders issued across the agency and its bureaus, particularly those with preferential status, which may have allowed large companies to exploit “pass-through” arrangements. The scheme allows a small, eligible business to retain fees for minimal participation while subcontracting nearly all the actual work.
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What Prompted the Treasury Investigation?
The audit follows the department’s termination and suspension of all contracts with ATI Government Solutions, a contractor accused of fraud involving more than $253 million in awards.
Treasury is scrutinizing contracts to detect and eliminate fraud and abuse of taxpayer dollars, in line with the priorities of the Trump administration.
“President Trump has directed his administration to eliminate fraud and waste wherever it occurs, ensuring that each taxpayer dollar is spent as intended,” said Treasury Secretary Scott Bessent. “Treasury will not tolerate fraudulent misuse of federal contracting programs. These initiatives must benefit legitimate small businesses that deliver measurable value to the government and the public.”
SBA Expands Oversight of 8(a) Awards
The audit follows SBA’s review of contracts awarded through the 8(a) Business Development Program, which provides opportunities for small disadvantaged businesses.
“During the Biden Administration, federal contracting set-aside programs proliferated without scrutiny or oversight,” said SBA Administrator Kelly Loeffler.
New Treasury Oversight Measures
To enhance accountability, Treasury has instructed acquisition officials to require detailed staffing plans and monthly workforce performance reports for all service contracts to help detect non-performance, subcontractor pass-through activity and other potential indicators of fraud.
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