Pentagon launches wide 8(a) review, targeting billions in awards
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By
Nick Wakeman
Secretary Pete Hegseth said only contracts that can pass a "lethality" test will survive.
The Defense Department is joining several other agencies in a top-to-bottom review of 8(a) small business contracts.
In a video posted Friday to X, Defense Secretary Pete Hegseth said the department will review all 8(a) contracts valued at more than $20 million.
He called the decades-old Small Business Administration program a “breeding ground for fraud" and said it is “swamp code words for DEI race-based contracting.”
DEI refers to diversity, equity and inclusion. The Trump administration has targeted DEI initiatives since the president returned to the White House a year ago. Hegseth also claims DEI detracts from the mission and lethality of the military.
The Treasury and Justice departments, plus SBA, are all conducting investigations of their agencies’ 8(a) contracts.
Hegseth said the Pentagon is the largest user of 8(a) contracts – 10 times more than other agencies.
The Defense Department will review 8(a) contracts for two things. First, a “lethality” criterion will be used.
“If a contract doesn’t make us more lethal, it’s gone,” Hegseth said. “There is no room in our budget for wasteful DEI contracts that don’t help us win wars.”
The second review will target pass-through arrangements to ensure “every small business getting a contract is the one actually doing the work, and not just some shell company funneling your money to a giant consulting firm,” Hegseth said.
The reviews will start with sole-source contracts, which accounted for $9.7 billion of DOD’s 8(a) awards in the government's 2025 fiscal year.
Another $5.8 billion in 8(a) contracts were competed in fiscal 2025, according to GovCon Intelligence.
The 8(a) program has been under significant pressure for several years, particularly after the courts ruled that SBA could no longer use accept companies into the program without showing proof that they were socially disadvantaged.
With the Trump administration, 8(a) firms have faced more challenges as the SBA workforce has been reduced by 40%. SBA technically holds the 8(a) contracts and the program has suffered without the workforce to manage those contracts.
At individual agencies as well, small business advocacy offices have been eliminated entirely or seen staff reduced to the minimum required by law.
Hegseth said the 8(a) review is "not meant to hurt small businesses," but rather part of a "larger effort to transform our acquisition ecosystem into one that makes sense for the threats we face in the 21st century."