The Small Business Administration on Wednesday said it sent letters to 154 firms located in Washington, D.C., informing them that they no longer meet the “economically disadvantaged” requirements.
SBA Administrator Kelly Loeffler said in a news release that stripping the D.C. firms of the designation is part of a broader integrity push aimed at rooting out what she calls abuse in federal contracting set-asides.
“Under President Trump, the SBA is restoring integrity to federal contracting programs that promoted both discriminatory DEI and rampant abuse during the Biden Administration,” Loeffler said in an SBA news release. “This Administration is enforcing the law – which means we’re ending 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.”
The SBA said in a news release that the firms had become too large to qualify as disadvantaged. The firms were notified by letter and will be suspended from the program for at least 30 days before any final termination.
The agency said the companies exceeded at least one of the program’s statutory financial thresholds, including personal net worth limits, adjusted gross income caps, or total asset limits, that are used to determine whether a qualifying owner is economically disadvantaged.
Loeffler said the firms collectively received nearly $1.3 billion in 8(a) set-aside and sole-source federal contracts from fiscal 2021 through 2024, with nearly $1 billion awarded through sole-source contracts.
The 8(a) program is a nine-year development track that provides training and counseling and can open the door to contracting opportunities reserved for businesses deemed socially and economically disadvantaged.
To qualify under the economic disadvantage standards, the SBA generally requires that the qualifying individual’s net worth be $850,000 or less, adjusted gross income averaged over three years be $400,000 or less, and total assets be $6.5 million or less.
The SBA said its review was conducted by the agency’s Office of Government Contracting and Business Development, which routinely verifies participant eligibility.
In describing its findings, the agency pointed to examples it said raised concerns, including one firm that reported more than $35 million in total assets — more than five times the statutory limit — and another that reported a net worth of at least $24 million while continuing to pursue set-aside opportunities.
The move follows other recent actions targeting the 8(a) program.
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In late January, the SBA announced that it had suspended 1,091 firms, which amounts to roughly a quarter of the program’s participants, after they failed to submit three years of financial documentation by an agency deadline.
The SBA did not release a list of the 154 companies in its announcement. The agency said the suspension period is intended to precede final termination decisions as the proceedings move forward.