ATI sues SBA to lift suspension from federal contracting

ATI Government Solutions is suing the Small Business Administration to end its governmentwide ban from federal contracting.

The 8(a) company filed a suit in federal court yesterday alleging SBA and Administrator Kelly Loeffler have violated the Federal Acquisition Regulations, the Administrative Procedures Act and the Fifth Amendment of the Constitution requiring due process in keeping is suspension active for more than a year.

“Over the past 12 months, we have provided the SBA with thousands of pages of evidence and repeatedly demonstrated this suspension was improper from the start. We have made repeated good-faith efforts to resolve this matter amicably,” said an ATI Government Solutions spokesperson in an email to Federal News Network. “Despite our exhaustive cooperation, ATI has been left with no choice but to seek judicial relief to remedy this egregious injustice and the violation of our due process rights. We look forward to a fair resolution grounded in the facts and the law.”

An SBA spokesperson declined to comment because it’s active litigation.

SBA suspended ATI from the 8(a) program and from governmentwide contracting last October when a video emerged of what turned out to be a low level employee talking to O’Keefe Media Group, a right-wing activist organization, about alleged company fraud in the 8(a) program.

While SBA lifted ATI’s ban from the 8(a) program in June, the agency extended the governmentwide ban for another six months earlier in October.

No contact from law enforcement in a year

The extension of the governmentwide suspension, which ATI calls a de facto debarment, was the last straw that precipitated the lawsuit.

“For over a full year, SBA has stalled, stammered and deflected, refusing to budge on ATI and its affiliates’ suspensions, and failing to address the evidence ATI has offered in support of its request to lift the suspension,” ATI wrote in its lawsuit. “[D]espite having no evidence whatsoever — let alone adequate evidence — to justify ongoing suspension and having substantial evidence entirely refuting all of the stated bases for suspension since at least Nov. 20, 2025, on information and belief, SBA officials reached out to one or more Department of Justice or other law enforcement officials in bad faith to encourage those officials to improperly investigate plaintiffs or otherwise request an extension of the unlawful suspension. Without such an investigation or request, SBA would be unable to maintain ATI’s suspension as a matter of law.”

In the court filing, ATI says SBA told them on Oct. 21 that the governmentwide suspension would be extended by another six months. SBA told ATI that the basis for the extension was based on the Federal Acquisition Regulation that permits SBA to extend an otherwise-expiring suspension if “an office of a U.S. Assistant Attorney General, U.S. Attorney or other responsible prosecuting official requests its extension.”

“No law enforcement official has ever contacted [ATI] about any ‘investigation,’ and neither DOJ nor any other ‘responsible prosecuting official’ has made any request for information of any kind to any of the plaintiffs. Defendant Loeffler’s public declarations that she would share O’Keefe’s videos with law enforcement are the only apparent basis of any law enforcement investigation into plaintiffs,” the lawsuit states. “On information and belief, SBA enlisted DOJ’s assistance to persist in its violation of plaintiffs’ rights, still without providing any basis for its suspension. On information and belief, the apparent DOJ investigation is based on the same baseless, invented (and repeatedly refuted) O’Keefe videos as the SBA suspensions. Only one conclusion is justified: the SBA suspended ATI in bad faith, maintains its suspension in bad faith, and refuses to address the damage it has caused as a result of this ongoing and pervasive bad faith.”

ATI, which is wholly or majority-beneficially owned by the Susanville Indian Rancheria Tribe in California, says the suspension has “irreparably destroyed” its business because SBA acted outside the law. The company tells the judge that the suspension has led to agencies ending millions of dollars in ATI’s government contracts and halting their future contracting opportunities.

“In addition to the stigma caused by defendants’ unlawful suspension of plaintiffs and their defamatory insinuations that plaintiffs engaged in fraud or dishonesty in their capacity as federal contractors, plaintiffs have lost nearly $130 million in existing federal government contracts that were terminated as a result of the suspensions, in addition to hundreds of millions of dollars of additional lost contracting opportunities, including those opportunities offered during the suspensions,” the lawsuit states. “The effective halt in economic activity for the tribe’s businesses that has occurred as a result of the SBA’s suspensions has destroyed an important revenue stream for the tribe, and critically compromises its long-term fiscal prospects.”

GSA kicks off audit

ATI is asking the judge for relief by declaring the suspension unlawful and ending it as well as asking for SBA to pay its attorney’s fees and “award of such other and further relief as this court deems necessary and appropriate.”

ATI’s lawsuit comes as the General Services Administration kicked off an audit of 689 8(a) companies based on SBA’s request. SBA initially suspended more than 1,000 firms in January from the 8(a) program. By April the number of firms suspended dropped to 114.

Details about the audit are thin, but GSA says it “will examine the noncompliant businesses’ federal contracts and refer suspected fraud to the Office of Inspector General and the Department of Justice.”

Loeffler said in the release, “SBA has spent the last 21 months cleaning up the 8(a) Program to clear out the firms that abused set-aside contracts designed to help legitimately economically disadvantaged small businesses to compete for federal contracting opportunities. Every firm we identified will now face deeper scrutiny from GSA over the taxpayer-funded contracts they secured. While prior Administrations looked the other way, the Trump SBA will not tolerate bad actors exploiting federal contracting programs at the expense of honest, eligible small businesses.”

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