The U.S. Department of the Treasury is conducting an audit of about $9 billion in contracts and task orders awarded under preference-based contracting.
The audit will examine potential misuse of the Small Business Administration’s 8(a) Business Development Program, as well as other initiatives that provide federal contracting preferences to certain eligible businesses.
This follows the Treasury’s recent suspension and termination of all contracts and task orders with ATI Government Solutions, following allegations of fraud involving more than $253 million in previously issued contract awards.
“President Trump has directed his administration to eliminate fraud and waste wherever it occurs, ensuring that each taxpayer dollar is spent as intended,” Treasury Secretary Scott Bessent said. “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.”
Treasury officials said that prior use of contracting preferences that fall outside normal procurement rules may have enabled large companies to use pass-through arrangements. This involves an eligible small business retaining fees for minimal participation, while sub-contracting nearly all work. Most of the contracts under review were awarded by the Biden administration’s equity in procurement initiative.
“This Administration will not tolerate DEI-based contracting and abuse that compromises opportunity for legitimate and eligible small businesses,” Kelly Loeffler, administrator of the U.S. Small Business Administration, said.
The Treasury’s acquisition professionals have been instructed to require detailed staffing plans and monthly workforce performance reports for all service contracts. This will help detect non-performance and pass-through contracting that could point to potential fraud.