On November 12, 2025 Senator Joni Ernst (R-Iowa) sent letters to the Small Business Administration’s (“SBA”) Administrator Loeffler and the SBA Office of Inspector General (“OIG”) attacking the SBA’s 8(a) program. Following those letters, on November 17, Senator Ernst introduced a bill that would stop all 8(a) sole source awards until an audit of the 8(a) program is completed. Specifically, the bill would revoke the SBA’s Section 8(a)(16) authority to award sole source contracts except where national security demands that such contracts be issued. If this bill is passed, the moratorium would be in effect until the SBA completes its audit of the 8(a) program and an audit report is submitted to the Senate Committee on Small Business and Entrepreneurship and the House Committee on Small Business.

The letter to Administrator Loeffler, and the apparent basis for the proposed bill, alleges that the 8(a) program provides unfair and inappropriate advantages to companies participating in the 8(a) program. The letter also commends Administrator Loeffler’s audit of the 8(a) program and alludes to potential additional Senate Committee on Small Business and Entrepreneurship (the “Committee”) oversight of the 8(a) program. The Committee is chaired by Senator Ernst.

The letter demands that Administrator Loeffler provide the Committee the following information:

• • All copies of the 13 C.F.R. § 124.601-.604 reports received by the SBA since June 17, 2024, the date on which the SBA complied with Senator Ernst’s original document requests. These reports contain information about 8(a) companies, including the parties and people engaged to assist in the procurement of government contracts, various financial statements, and information on the benefits provided to the beneficiaries of entities owning small business concerns.
  • All copies of annual reports required in 13 CFR 124.112(b), which are the “[s]ubmissions supporting continued eligibility” received by each Indian Tribe, Alaskan Native Corporation, Native Hawaiian Organization, and Certified Development Company over the past eight years.
  • All reports submitted to the SBA by a particular Tribe and its 8(a) subsidiaries.
  • All documents and communications related to any disciplinary or corrective actions SBA has taken on 8(a) firms over the last 5 years, including suspensions, disbarments, and removals from the 8(a) Program initiated by the SBA.
  • Any changes made to the SBA’s ‘Standard Operating Procedures’ (“SOP”) on 8(a) compliance over the last 5 years.
  • All SBA SOP or guidance material relevant to verifying 8(a) entity-owned participant ownership and control. Senator Ernst’s letter asks the SBA to identify whether and how 8(a) participants must disclose to the SBA the distribution of funds that the 8(a)-parent entity receives.
  • All SBA SOP or guidance material relevant to the limitations on subcontracting, including but not limited to timelines, processes, and responsibilities of relevant entities.
  • A written response to the following questions:
    • When would a contractor be suspected of violating the limitations on subcontracting?
    • What is the specific process that occurs when a prime contractor is suspected to have violated the limitations on subcontracting, up to and including resolution?
    • Have any contractors been found to have violated the limitations on subcontracting over the last 5 years? If so, please provide a list of those entities and the disposition of these cases, including any enforcement action or penalty levied against them.
    • Any difficulties, challenges, or roadblocks to strong oversight and enforcement of the limitations on subcontracting.

While this letter is concerning, no public action has been taken by Administrator Loeffler. No hearings on this matter have been scheduled per the Committee website. If the Administrator or the Committee take public actions on this letter, we will provide an update.

The letter to SBA’s OIG largely focuses on entity owned firms (i.e., firms owned by Alaska Native Corporations, Tribes, and Native Hawaiian Organizations) and the limitations on subcontracting that apply to small business contracts, including 8(a) contracts. It alleges that the 8(a) program is plagued with fraud and requests that the SBA OIG investigate and prosecute any misuse of the 8(a) program, particularly with regards to entity owned participant violations of the limitation on subcontracting rule found in FAR Part 19 and 13 CFR 125.6. While the letter requests specific information on a particular entity and their subsidiaries, it is clearly implying that other entities may be abusing the 8(a) program. No statement has been put out by either the Senate Committee in response to this letter.

While it is unlikely the Bill that has been introduced by Senator Loeffler will be passed by either the House or Senate, it is likely that hearings concerning the 8(a) program will take place. Entity owned firms may want to prepare for such hearings and be in close contact with their federal delegation regarding these hearings.

We also acknowledge the contributions of Sam Schimmel, Law Clerk, in the development of this update.

This article summarizes aspects of the law and opinions that are solely those of the authors. This article does not constitute legal advice. For legal advice regarding ‎your situation, you should contact an attorney.