On March 19, 2026, the U.S. Small Business Administration published a direct final rule amending its Program Fraud Civil Remedies Act regulations at 13 CFR Part 142 to conform to the Administrative False Claims Act of 2023 (“AFCA”), Public Law 118-159, sec. 5203, 138 Stat. 2440 (December 23, 2024). The AFCA made several significant changes to the SBA’s authority to pursue administrative false claims actions against entities and individuals that do business with the agency. Federal contractors, including 8(a) participants, Alaska Native Corporations, Tribes, and Native Hawaiian Organizations, will likely want to understand the scope of these changes.

The Program Fraud Civil Remedies Act Is Now the Administrative False Claims Act

The most visible change is the renaming of the statute and the corresponding regulations. All references to “Program Fraud Civil Remedies” in 13 CFR Part 142 are replaced with “Administrative False Claims.” While this is largely a nomenclature change, it signals a deliberate alignment of the SBA’s administrative enforcement framework with the federal False Claims Act (“FCA”), 31 U.S.C. 3729–3733—the government’s primary tool for combating fraud by contractors and grant recipients.

Claim Threshold Increases from $150,000 to $1,000,000

The revised 13 CFR 142.9 increases the maximum amount for a claim or group of related claims that the SBA can pursue through an administrative action from $150,000 to $1,000,000. This is a significant expansion. Previously, claims exceeding $150,000 would need to be referred to the Department of Justice for civil litigation under the FCA. The new threshold allows the SBA to administratively adjudicate substantially larger claims in-house through its Office of Hearings and Appeals.

Additionally, the new rule provides that this $1,000,000 threshold will be adjusted for inflation in the same manner as civil monetary penalties under the Federal Civil Penalties Inflation Adjustment Act (28 U.S.C. 2461 note), meaning the ceiling will continue to rise over time.

Expanded Liability for “Reverse False Claims”

Perhaps the most consequential substantive change is the addition of “reverse false claims” liability. Previously, the SBA’s administrative fraud authority was primarily focused on false claims seeking payment from the government. The revised 13 CFR 142.3(a) now defines a “claim” to also include any request, demand, or submission made to the SBA that has the effect of concealing or improperly avoiding or decreasing an obligation to pay or transmit property, services, or money to the government.

In practical terms, this means that an entity that takes steps to avoid paying money owed to the government—not just one that seeks money from the government—can now be subject to SBA administrative enforcement. The rule adopts the FCA’s definition of “obligation” from 31 U.S.C. 3729(b), which includes established duties, whether fixed or not, arising from an express or implied contractual, grantor-grantee, or licensor-licensee relationship; from a fee-based or similar relationship; from statute or regulation; or from retention of any overpayment.

For government contractors, including 8(a) companies, this expansion means that failures to report or return known overpayments, or efforts to conceal obligations owed to the SBA or other federal agencies, could trigger administrative liability.

Adoption of the FCA’s Definition of “Material”

The rule also revises 13 CFR 142.5(a)(2) to adopt the FCA’s definition of “material” from 31 U.S.C. 3729(b). Under the FCA, “material” means having a natural tendency to influence, or be capable of influencing, the payment or receipt of money or property. This aligns the materiality standard in administrative proceedings with the standard that applies in federal FCA litigation.

Revised Statute of Limitations

Under the prior rule, the SBA was required to serve a complaint within six years of the date a claim or statement was made. The revised 13 CFR 142.9(c) adopts a new, more flexible statute of limitations framework. The SBA must now issue a complaint by the later of:

1. 1. Six years after the date on which the claim or statement was made; or
   2. Three years after the date on which facts material to the action are known or reasonably should have been known by the SBA—but in no event later than ten years after the date on which the claim or statement was made.

This “discovery rule” component is significant. It gives the SBA an additional window to pursue claims based on when the agency actually becomes aware of the relevant facts, rather than being limited solely to the date of the original submission. Given the SBA’s current audit and enforcement posture—including its ongoing audit of the 8(a) Program—this extended limitations period could allow the SBA to pursue administrative claims based on information it discovers during its review of previously submitted financial records, contract data, and compliance filings.

New Attorney General Notification Requirement

The revised 13 CFR 142.38(b) adds a requirement that the SBA’s reviewing official must notify the Attorney General in writing at least 30 days before entering into any agreement to compromise or settle allegations of liability, and before referring allegations to a presiding officer for adjudication. This adds another procedural layer and ensures DOJ involvement in the disposition of administrative false claims cases.

Three-Year Limitation on Civil Recovery Actions

Finally, the revised 13 CFR 142.39 adds a three-year statute of limitations for civil actions to recover penalties or assessments after a determination of liability becomes final.

Effective Date, Comment Period, and Implications

Because the SBA has issued this as a direct final rule, it will become effective on May 4, 2026, without further action, unless significant adverse comment is received by April 20, 2026. Comments may be submitted through the Federal eRulemaking Portal at www.regulations.gov under docket number SBA-2026-0067 or RIN 3245-AI29. For questions, contact Kandace Zelaya at the SBA’s Office of General Counsel at Kandace.Zelaya@sba.gov.

Given the current enforcement environment—including the SBA’s full-scale audit of the 8(a) Program, the DoD review of high-value small business contracts, and increased congressional scrutiny of federal contracting—this rule is particularly relevant for 8(a) participants, Alaska Native Corporations, Tribes, and NHOs. The expanded claim threshold, reverse false claims liability, and discovery-based statute of limitations collectively give the SBA substantially more administrative enforcement firepower. Federal contractors should consider viewing their compliance programs, internal reporting procedures, and overpayment tracking systems  in preparation for this heightened enforcement landscape.

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.