- Details
- By Brian Edwards
- Native Contracting
The U.S. Department of the Treasury said it has ordered a comprehensive audit of approximately $9 billion in contracts awarded through preference-based programs, including the Small Business Administration's 8(a) Business Development Program.
The review follows Treasury's suspension and termination of all contracts with Native-owned ATI Government Solutions after allegations of fraud involving more than $253 million in previously issued awards, according to a Treasury statement on Thursday. Tribal Business News reported in October that the SBA suspended the Susanville Indian Rancheria-owned company from obtaining new federal contracts while investigating allegations it fraudulently used its tribal status to secure over $100 million in no-bid contracts.
Treasury officials said the audit will examine potential misuse of contracting preferences through pass-through arrangements where eligible small businesses retain fees for minimal participation while subcontracting nearly all work. Most contracts under review were awarded during the Biden administration's equity in procurement initiative, according to the statement.
“Treasury will not tolerate fraudulent misuse of federal contracting programs,” Treasury Secretary Scott Bessent said in the statement. “These initiatives must benefit legitimate small businesses that deliver measurable value to the government and the public.”
The 8(a) program provides contracting preferences to businesses owned by individuals designated as socially and economically disadvantaged, including Alaska Native Corporations, tribally owned entities, and individual Native business owners. The program requires participating businesses to be majority-owned and controlled by U.S. citizens who qualify as economically and socially disadvantaged, with owners having a personal net worth below $850,000.
The 8(a) program reached $41 billion in federal contract awards during fiscal year 2024, according to Bloomberg Government, with the Defense Department accounting for more than half.
SBA Administrator Kelly Loeffler said in June the agency launched a full audit of the 8(a) program to examine contracts across federal agencies.
"This Administration will not tolerate DEI-based contracting and abuse that compromises opportunity for legitimate and eligible small businesses," Loeffler said in the Treasury statement last week.
On Saturday, Loeffler announced via social media that SBA has suspended seven additional companies connected to ATI Government Solutions CEO Firmadge Crutchfield. The suspended companies are prohibited from bidding on new federal contracts, 8(a) set-asides, or applying for federal assistance, according to the post.
ATI defended itself in a statement to the Wall Street Journal, saying the allegations are “demonstrably false and have unfairly damaged ATI, its contracting partners, and the government customers ATI serves.”
The company said SBA regulations allow government contractors to submit a full response to suspension actions, and that it expects a fair review will “prove that ATI is and has been compliant with the applicable regulations and is a responsible contractor.”
Treasury acquisition staff will now require detailed staffing plans and monthly workforce performance reports for all service contracts to detect non-performance and potential pass-through arrangements, according to the Treasury statement.
The review affects contracts across Treasury and its bureaus. The agency did not specify how many 8(a) contracts involve Alaska Native Corporations or tribally owned businesses, or provide a timeline for completing the audit.
