The U.S. Department of the Treasury has launched a department-wide audit of all contracts and task orders awarded under preference-based contracting programs, which amount to about $9 billion across Treasury and its bureaus. The review will focus on potential misuse of the Small Business Administration’s (SBA) 8(a) Business Development Program and other initiatives that give federal contracting preferences to certain eligible businesses.
This move comes after Treasury suspended and terminated all contracts with ATI Government Solutions due to allegations of fraud involving more than $253 million in previous contract awards.
According to the press release, President Trump’s administration is prioritizing efforts to detect and eliminate fraud and abuse in government spending. There are concerns that some large companies may have exploited contracting preferences by using small businesses as intermediaries, allowing them to collect fees for minimal involvement while subcontracting most of the work. The majority of contracts now under scrutiny were awarded through an equity in procurement initiative during the Biden administration.
“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, commented on recent oversight actions: “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,” she said. “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 going forward, Treasury acquisition staff are now required to submit detailed staffing plans along with monthly workforce performance reports for all service contracts. These measures aim to identify non-performance or pass-through arrangements that could signal fraudulent activity.
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