SBA Proposes to Terminate 154 Companies From 8(a) Program

Why It Matters

Stricter enforcement of 8(a) eligibility reshapes the federal contracting landscape, potentially limiting access for firms that no longer meet economic‑disadvantage criteria and signaling a shift in the administration’s approach to diversity and small‑business participation.

Key Takeaways

• SBA terminated 154 DC firms exceeding 8(a) size limits.
• Firms received $1.3 billion in federal contracts, $1 billion non‑competitive.
• 30‑day suspension precedes final termination notices.
• Over 1,000 firms already suspended after data‑call compliance review.
• Industry groups warn of miscalculations and reduced small‑business opportunities.

Pulse Analysis

The SBA’s recent crackdown on 8(a) participants underscores a renewed focus on compliance and fiscal stewardship within the federal procurement system. After a December‑initiated data call that required detailed financial statements, the agency identified dozens of firms whose net‑worth, assets, or adjusted gross income surpassed the program’s statutory caps. By moving swiftly to suspend and ultimately terminate these entities, the SBA aims to preserve the integrity of a program designed to level the playing field for truly economically disadvantaged businesses.

For contractors, the immediate fallout is two‑fold. On one hand, the removal of firms that have captured $1 billion of non‑competitive contracts opens opportunities for eligible small businesses to compete for high‑value set‑aside work. On the other hand, industry observers warn that the agency’s methodology—relying on complex financial calculations—may lead to disputes and appeals, potentially slowing award cycles. Lawmakers such as Rep. Nydia Velázquez have framed the action as a broader attack on the 8(a) program, raising concerns about reduced small‑business participation and the impact on the administration’s procurement goals.

Looking ahead, the SBA is likely to extend this scrutiny beyond the D.C. metro area, applying the same data‑driven analysis nationwide. Firms currently in the 8(a) program should audit their financial disclosures, verify compliance with asset and income thresholds, and be prepared to respond to suspension letters within the 30‑day window. Proactive engagement with SBA officials and, if necessary, filing for voluntary withdrawal can mitigate the risk of forced termination and preserve the program’s intended benefits for genuinely disadvantaged enterprises.

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

SBA moves to terminate over 150 8(a) firms in Washington DC following eligibility review · February 11, 2026

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 an 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 non‑competitive and non‑transparent 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 are 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 Velázquez (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,” Velázquez 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 that 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.