SBA sends another shot across 8(a) program bow

The Small Business Administration acted in record time to suspend ATI Government Solutions from federal contracting.

SBA made the decision the day after a video emerged from the O’Keefe Media Group, a right-wing activist organization, showing that an official from ATI admitted to defrauding the SBA’s 8(a) program.

A senior program manager from ATI Government Solutions met with James O’Keefe, who was in disguise, and got the person to talk about how ATI allegedly is just a pass through for larger firms. In the video, the ATI employee told O’Keefe, who is known to be a conservative activist and has engaged in deception to conduct investigations, that the company routinely does less than the 50% of the work required under typical 8(a) contracts.

“As of today, the SBA has officially suspended ATI Government Solutions, which is majority-owned by Susanville Indian Rancheria, as well as three of its executives, from conducting any new business with the federal government. While we continue our investigation, ATI and its referenced executives will not be permitted to bid for federal contracts, subcontracts or set-asides, and will not be able to receive any federal assistance,” SBA Administrator Kelly Loeffler posted on X on Oct. 22.

SBA issued the suspension governmentwide for ATI as well as three of its executives: Firmadge Crutchfield, ATI’s founder and CEO, Scott Deutschman, the co-founder and corporate development officer, and Marina Mulyayeva, ATI’s CFO.

The Treasury Department and the General Services Administration quickly followed with suspensions of their own.

ATI Government Solutions is owned by the Susanville Indian Rancheria tribe, and has been in the 8(a) program since February 2019. In 2025, ATI had 32 government contracts worth more than $144 million, according to USASpending.gov. The Treasury Department is its largest customer.

Decision made in 24 hours?

Experts say SBA made the decision to suspend ATI and its leadership unusually quickly.

Sam Le, a former director of policy planning and liaison at SBA and now the managing member at Sam Le Law and author of GovCon Intelligence, says typically, agencies go through a much more detailed process before making a decision to suspend a company or person.

“Ordinarily with a suspension and debarment, an agency would go through a fact finding process and they may issue a ‘show cause’ letter to the company to get the company side. The reason for that is suspension is a very serious penalty and consequence that companies now prohibited from getting new government contracts, and in most situations, it can’t receive options or orders and it can’t get a subcontract either. So suspending them is preventing them from getting most types of government awards,” Le said in an interview with Federal News Network. “SBA did this looks like within a 24 hour period, most likely without getting input from the firm. Now, ATI has 30 days from the time of the suspension to come back to SBA with reasons for why it should get the suspension lifted. My presumption would be that the firm has responded very quickly with its side of the story to explain why whatever was said in the video is not necessarily meriting suspension of this type.”

Emails to ATI and their law firm seeking comment were not returned.

Susanville Indian Rancheria Tribal Chairman Arian Hart posted a statement on Facebook about the ATI suspension:

“The Susanville Indian Rancheria, a federally recognized Indian tribe, is aware of an inquiry by the SBA regarding the Tribe’s participation in the SBA 8(a) program. The Tribe is committed to fully cooperating with the SBA and providing any and all information necessary to enable a thorough review. The Tribe has launched an internal investigation to ascertain all relevant facts and to determine the best course of action for the Tribe.”

“Integrity, accountability and compliance are foundational to our tribal government and business operations. We affirm our commitment to transparency and our priority to safeguard the interests of the tribe and the integrity of our businesses. We remain steadfast in our mission and in maintaining the highest standards of conduct, and we take these allegations very seriously. More information will be forthcoming pending the results of a thorough investigation.”

SBA in the middle of a 10-year review

The ATI Government Solutions suspension and investigation comes as SBA has been conducting a review of the entire 8(a) program since June.

The SBA kicked off its internal review of the 8(a) program after news broke of a bribery scandal at USAID. SBA’s Office of General Contracting and Business Development, in collaboration with other agencies, is leading the audit.

SBA says the scope of the review will focus on “high-dollar and limited-competition contracts” that have been awarded over the last 15 years, going back to 2010.

Nicole Pottroff, an equity partner with the law firm Koprince McCall and Pottroff, who works with a lot of 8(a) and other small firms, said there are several reasons why there are problems with 8(a) contracts. Sometimes, she said, the issue is with the government not including a provision. Sometimes it’s true fraud by companies who are looking to game the system. But more times than not, she said 8(a) companies struggle to understand the rules of the program.

“I’m not surprised that that there are investigations going on. While I didn’t review the [ATI] contract or anything and I don’t know whether it included everything it was supposed to, that’s a really important question. When the government is investigating these types of companies, is that a False Claims Act issues versus a simple mistake?” she said. “When it’s a simple mistake, and this happens quite a bit, clients are genuinely innocent and they thought they were complying with the limitation on subcontracting, for example. Plenty of clients think, ‘Oh, well, I can exclude this amount of money, or they’re a similarly situated entity,’ but they just don’t understand those things. Those types of things happen fairly often. That is, to me, a pretty innocent mistake. Our advice to clients is typically like, let’s definitely be upfront about it and tell SBA or the agency, but let’s also immediately work toward compliance and make the changes we need to make. Those are not typically things that rise to the level of these very scary federal investigations where Department of Justice gets involved.”

Le added that while he hasn’t heard from companies getting auditing letters from SBA or other agencies, it’s clear from the video and SBA’s other comments that it may be looking closely at the Limitations on Subcontracting Rule. This is commonly referred to as the 50% rule. It’s the requirement that a company that gets an 8(a) contract has to perform the majority of that contract on its own rather than subcontracting it out. That rule prevents companies from passing through contracts to large businesses.

“The nuance of that rule, though, is that there are important exceptions to it, and if you look at this suspension and how quickly it went through, it’s not clear that SBA evaluated the exceptions and whether they apply here, and whether SBA looked closely at even reviewing ATI contracts to see what exceptions might exist to those limitations on subcontracting,” he said.

A chilling effect on the 8(a) program

SBA’s broad investigation into the 8(a) program and the Trump administration’s actions so far, such as lowering the governmentwide small disadvantaged business (SDB) goal back to 5% from 15% is having what Le said is a chilling effect on the program.

Le said companies in the 8(a) program today may be getting whiplash from the pace of change over the last year.

“What you’ve seen as a consequence is that the number of awards being made in the 8(a) program has dropped precipitously. The number of companies getting into the 8(a) program also has dropped in the last year. It was over 550 companies that were approved for the 8(a) program in 2024 and, as of August 2025, there are only 66 companies that have been approved for the 8(a) program,” Le said. “It’s getting much harder to get in, and then once you get in, the number of awards is less, and you have this additional threat of an audit. So this attention that SBA is paying to the ATI situation, to the video, is just consistent with the other actions that SBA has taken to highlight fraud in the 8(a) program and to make agencies aware of that.”

All of these concerns come after agencies set records for number of contracts and the amount of dollars going to 8(a) firms in 2024. SBA says 13% of all eligible prime contracts went to 8(a) firms last year and they were worth almost $42 billion.

Pottroff and Le say, on the other hand, there still is a lot of support for the 8(a) program on Capitol Hill, so they don’t believe the Trump administration will try to end the program.

Pottroff said decision by the United States District Court for the Eastern District of Tennessee called “Ultima,” which resulted in the requirement for owners to explain in a narrative why they are disadvantaged, may actually have saved the program and put it on better footing.

“In my opinion, it did remove the kind of diversity, equity and inclusion (DEI) element to it, and it is now just literally based on any individual’s struggle with society accepting them and helping them get through the normal steps of having, starting and progressing in a business,” she said. “I think that it’s possible that it saved the 8(a) program because now we are seeing changes. I think, frankly, it would not surprise me to continue seeing changes, but I think those changes are going to be more on a micro level and not a macro level.”

Those micro level changes include what the administration included in its FAR Overhaul, such as changing the once 8(a), always 8(a) rule and whether SBA follows suit with changes to its regulations.

“The confusion in the industry now is SBA has not made that change, and SBA runs the 8(a) program. The regulations for the 8(a) program are SBA regulations, which still have the once 8(a), always 8(a) rule. It hasn’t created a new exception that the FAR overhaul has,” Le said. “The FAR overhaul created a new exception to the once 8(a), always 8(a) rule. It says that if an agency uses HUBZone, a service disabled veteran owned or women-owned small business set aside, the agency does not need to get a release from SBA of that 8(a) requirement. Agencies are going to be in a difficult predicament and trying to decide, do they follow the FAR or do they follow SBA regulations? This may get all settled out as SBA may end up changing its regulations, but there’s been no indication yet that SBA is going down that path. So for the time being, the FAR has launched the first shot here, but it’s really up to SBA to make that change.”

Copyright © 2026 Federal News Network. All rights reserved. This website is not intended for users located within the European Economic Area.