Acquisition Policy

SBA proposes to terminate 154 companies from 8(a) program

SBA sent firms three letters yesterday: a suspension letter; a letter of intent to terminate; and a voluntary withdrawal agreement as part of its ongoing audit.

Jason Miller@jmillerWFED

February 12, 2026 8:18 am

4 min read

The Small Business Administration has started the process to get rid of 154 small companies from the 8(a) program.

SBA sent letters to companies based on their answers to the data call the agency initiated in December.

In a release, SBA said the data shows that these 154 companies have “exceeded statutory net worth limits, adjusted gross income caps, or total asset limits.”

“Today, we are taking action to terminate 154 D.C. firms that received $1.3 billion in federal contracts, all of whom were allowed to stay in the 8(a) program even when they were not economically disadvantaged,” said SBA Administrator Kelly Loeffler in a statement. “This administration is enforcing the law — which means we’re ending diversity, equity and inclusion (DEI) discrimination, rooting out abuse and removing big companies that unfairly dominated the federal contracting marketplace to the detriment of eligible, honest small business owners.”

These 8(a) companies face an initial suspension of 30 days before SBA issues final termination notices.

This is the latest step in an ongoing audit for the 8(a) program. In December, SBA asked 4,300 8(a) firms for 13 different data elements, including their general ledger for the last three full fiscal years, bank statements as of the last day for each of the last three fiscal year-ends and a copy of all 8(a) contracts on which the firm is currently working for the last three full fiscal years.

Then in January, SBA suspended more than 1,000 firms for non-compliance with the data call.

This decision to suspend and initiate termination of 154 firms is in addition to the 1,091 that already faced suspension.

3 letters sent to firms

SBA highlighted on example of what it found from its internal review. SBA says one Washington, D.C. 8(a) firm reported total assets of more than $35 million — over five times the statutory eligibility limit — while the firm continued pursuing set-aside contracting opportunities that were reserved for economically disadvantaged businesses.

SBA pointed to another firm that reported a net worth of at least $24 million and submitted financial statements in September 2021 showing that they exceeded the total asset limit, yet SBA allowed them to stay in the program.

“Of the $1.3 billion that the 154 8(a) firms received, nearly $1 billion was awarded by the Biden administration through noncompetitive and nontransparent sole source contracts,” the agency said in its release.

Federal procurement lawyers and contracting experts who have seen SBA’s letters say the agency’s actions is causing confusion across the community.

One source said SBA actually sent three letters to affected companies: A suspension letter; a letter of intent to terminate; and a voluntary withdrawal agreement. The source said the first two are co-signed by the SBA associate administrator and deputy associate administrator. The third is unsigned, with blank spaces for the firm to sign.

Another source said SBA’s decision seems to be in many cases based on miscalculations of the company’s financial data.

Rep. Nydia Velazquez (D-N.Y.), ranking member of the Small Business Committee, said today’s actions are part of SBA’s continued efforts to mischaracterize the 8(a) program and attack its participants without any transparency or accountability.

“It is not happening in a vacuum: Over the past year, small businesses have seen dramatic contract cuts, federal agencies are not meeting procurement goals, the number of new entrants continues to decline, and small business spending is down,” Velazquez said in a statement to Federal News Network. “SBA’s decision to hollow out its contracting staff and divert the limited resources away from enhancing small business participation in the industrial base is having predictable repercussions for all small businesses. SBA should refocus its efforts and prioritize maximizing contracting opportunities for small businesses and ensuring they can enter, compete and have success in the federal marketplace.”

8(a) oversight shortcomings

Sam Le, a former SBA associate administrator in the government contracting and business development office, said it’s up to the government to review how these firms are staying below the economic disadvantage thresholds.

Le said it’s very easy for SBA to review those caps every year through its annual review.

“SBA has the information readily available to determine whether or not companies are economically disadvantaged. If companies get the letters, they should check their materials very closely to see whether SBA has correctly applied the calculations for economic disadvantage. Some of those calculations are quite complex,” said Le, who now is managing member of Sam Le Law. “There are statutory and regulatory exemptions. So it’s not the case that just because you see a number on the page, that that’s necessarily the number that should be calculated based on the SBA regulations. It is interesting that SBA did this just based on Washington, D.C. firms. These are numerical calculations, so SBA could do this across the country. It’s likely that SBA will use the same analysis for firms outside of Washington, D.C.”

One reason why all the firms are in the DC metro area is because these are some of the highest growing firms and likely the ones with the largest number of 8(a) contracts.

It’s likely at least some of the 154 firms will appeal their suspension and proposed termination.

Just like the 1,091 firms SBA suspended in January after the data call, Le said the current total of 8(a) firms suspended is 810, meaning SBA reduced the number of suspended firms by 281.