The U.S. Treasury Department has opened an investigation into $9 billion in “preference-based contracting,” including the awarding of Small Business Administration funds.
Among the targets is a business development program designed to serve socially or economically disadvantaged individuals, which it said may have been abused by large companies using pass-through arrangements with smaller firms.
“President Trump has directed his administration to eliminate fraud and waste wherever it occurs, ensuring that each taxpayer dollar is spent as intended,” Treasury Secretary Scott Bessent said in a statement Thursday. “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.”
Trump has targeted “woke” federal policies, particularly related to Diversity, Equity and Inclusion, that were implemented during the Biden administration to address inequality issues. The Treasury Department said most of the contracts under the new review were “awarded by the Biden administration’s equity in procurement initiative,” which was designed to favor underserved communities.
SBA Administrator Kelly Loeffler earlier this year directed an audit in the program, known as 8(a), alleging “rampant fraud — and increasingly egregious instances of abuse.”
“This administration will not tolerate DEI-based contracting and abuse that compromises opportunity for legitimate and eligible small businesses,” Loeffler said in Thursday’s statement.
Obligations to 8(a) vendors hit a record $41 billion in fiscal year 2024, according to Bloomberg Government, with the Pentagon awarding slightly more than half.
