The U.S. Department of the Treasury has initiated a department-wide audit of contracts and task orders awarded under preference-based contracting programs, amounting to about $9 billion in contract value across the agency and its bureaus. The review will focus on potential misuse of the Small Business Administration’s 8(a) Business Development Program, as well as other initiatives that provide federal contracting preferences to eligible businesses.
This action comes after Treasury suspended and terminated all contracts with ATI Government Solutions following allegations of fraud involving more than $253 million in previous contract awards.
According to Treasury officials, there is concern that past use of contracting preferences may have allowed large companies to bypass procurement rules by using small businesses as intermediaries. In these arrangements, eligible small businesses would retain fees for minimal participation while subcontracting most of the work elsewhere. The majority of contracts now under review were awarded during the Biden administration’s equity in procurement initiative.
“President Trump has directed his administration to eliminate fraud and waste wherever it occurs, ensuring that each taxpayer dollar is spent as intended,” said Treasury Secretary Scott Bessent. “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.”
Kelly Loeffler, Administrator of the U.S. Small Business Administration, stated: “During the Biden Administration, federal contracting set-aside programs proliferated without scrutiny or oversight – which is why the SBA launched a full audit of the 8(a) Business Development Program earlier this year to examine contracts across every agency. This Administration will not tolerate DEI-based contracting and abuse that compromises opportunity for legitimate and eligible small businesses. I am grateful to Secretary Bessent for his commitment to rooting out fraud at the Department of the Treasury and for taking major steps to help SBA stop the rampant waste of taxpayer dollars.”
To improve accountability, Treasury acquisition professionals are now required to obtain detailed staffing plans and monthly workforce performance reports for all service contracts. These measures are intended to identify non-performance issues or pass-through arrangements that could signal potential fraud.
