Small Business Administration (SBA) Orders 8(a) Firms to Submit Extensive Financial Records
Overview of the 8(a) Program and Background
The SBA’s 8(a) Business Development Program (the “Program”) supports small businesses owned by socially and economically disadvantaged individuals and certain entities (e.g., Alaska Native Corporations, American Indian Tribes, and Native Hawaiian Organizations). Eligible firms gain access to set-aside federal contracting opportunities, plus tailored counseling, training, and technical support.
In recent years, the Program has come under much scrutiny. Beginning in 2023 in response to a challenge in federal court, the SBA ended its practice of providing a “presumption” of social disadvantage to certain identified ethnic groups and has since required all current and new participants to provide narratives proving social disadvantage. In June of this year, under the current administration, the SBA announced a full-scale audit of the Program to investigate what it perceives as a program rife with abuse and fraud. Later, the SBA almost immediately suspended ATI Government Solutions (a tribally-owned 8(a) Program participant) after it became aware of alleged widespread, “pass through” fraud in its work. Following that report, the Department of the Treasury initiated a comprehensive audit of “all contracts and task orders awarded under preference-based contracting, totaling approximately $9 billion in contract value.”
What’s New: Immediate Audit & Production Requirement
The SBA is now carrying out its promised audit of the Program. On December 5, 2025, SBA announced it would issue letters to all active 8(a) participants requiring financial disclosure for the past three fiscal years, including “bank statements, financial statements, general ledgers, payroll registers, contracting and subcontracting agreements, and employment records.” The SBA set a deadline to submit all documentation by January 5, 2026. Failure to comply with this deadline risks loss of 8(a) status or further enforcement actions. Further, contractors that fail to submit accurate, complete, and non-misleading disclosures may face criminal penalties or civil enforcement under the False Claims Act.
Immediate Next Steps for 8(a) Participants
- Confirm Receipt of Audit Notice – Check email spam/junk folders. All too often (even important) government notices are filtered by company IT systems.
- Compile Documentation Quickly – Review SBA’s checklist and begin gathering documents in the requested format.
- Conduct a Proactive Internal Review – Identify inconsistencies before submission to anticipate any potential issues and concerns.
- Respond Thoroughly and Timely – Submit by the January 5, 2026, deadline. The announced scope of the information is broad. Plan in advance and gather information as quickly but as carefully as possible.
- Prepare for Increased Scrutiny. It is possible that upon review SBA may request more information. In more serious circumstances, SBA could also respond by issuing investigative demands, initiating suspension or debarment proceedings, or referring matters to the Department of Justice for investigation in connection with the False Claims Act. If that occurs, counsel should be engaged immediately.
Bottom Line
8(a) participants must treat this audit notice seriously. Collect required documentation now, perform an internal review, and ensure full, timely compliance. Our Government Contracting and White Collar Defense, Investigations & Compliance teams are standing by to help.
