SBA revokes USAID’s 8(a) contracting authority in wake of bribery scandal

In the wake of guilty pleas by three contractors and a former government contracting officer for a bribery scheme at the U.S. Agency for International Development, the Small Business Administration has revoked USAID’s 8(a) contracting authority.

These four individuals all pled guilty in June for their roles in the scheme:

• Walter Barnes, the former owner of PM Consulting Group, which did business as Vistant
• Darryl Britt, former owner of Apprio
• Paul Young, former president of a subcontractor to Apprio and Vistant
• Roderick Watson, former contracting officer at USAID

Britt and Barnes paid bribes to Watson to influence contract awards to their companies, while Young helped to conceal the payments. Their scheme involved $550 million in contract awards.

Following their pleas, SBA on Wednesday said USAID could no longer award 8(a) contracts on its own.

SBA announced an audit of the 8(a) program in late June after the guilty pleas.

Awards are continuing to be made under USAID even though the agency has been absorbed into the State Department, according to analysis by TechnoMile.

“This announcement effectively ensures no set-asides will be issued by USAID without outside scrutiny,” Kevin Brancato, senior vice president of product strategy at TechnoMile, told Washington Technology.

SBA's action also could have implications beyond USAID and affect the broader small business community.

The danger of this case is that it “erodes trust across the GovCon ecosystem,” Brancato said. “Now more than ever, firms must demonstrate stringent compliance, transparent financial and ownership structures and robust internal controls.”

For 8(a) companies in particular, now is the time to reassess their pipelines around 8(a) opportunities.

“Agencies may rely more on alternative small business set-asides or elevate their compliance requirements for 8(a) joint ventures,” Brancato said.