On December 5, 2025, the Small Business Administration (SBA) issued formal data and document requests to certified 8(a) Business Development Program participants. This follows SBA’s June 2025 announcement that it would implement an “immediate and full-scale audit” of the 8(a) Program. The requests, issued by the SBA Office of General Counsel via email, justified the audit as follows: “Recent reports by journalists and independent investigators have raised questions about widespread misconduct within the 8(a) Businesses [sic] Development Program, adding to years of credible concerns that the program designed to serve ‘socially and economically disadvantaged’ businesses has become a vehicle for institutionalized abuse at taxpayer expense.” Given the wide-ranging scope of the full-program audit, PilieroMazza launched an “8(a) Audit Response Task Force” to assist clients in navigating SBA’s audit requests and any ongoing or future investigations, inquiries, and litigation arising out of the audit.
The audit requests issued today seek various financial, employment, vendor, subcontractor, and other business data, within 13 categories, namely:
- General Ledger for the last three full fiscal years (CSV Files Only)
- Trial Balance as of the last day for each of the last three fiscal year-ends (CSV Files Only)
- IRS Form 4506 covering the last three full fiscal years (PDF Files Only)
- Bank Statements as of the last day for each of the last three fiscal year-ends (PDF Files Only)
- Bank Reconciliations as of the last day for each of the last three fiscal year-ends (PDF Files Only)
- Payroll Register and Reconciliation (including any distributions to any owner) monthly for the last three full fiscal years (PDF Files Only)
- List of All Employees, broken out by contracts those employees are servicing, for the last three full fiscal years (PDF Files Only)
- List of all Vendors (as well as all joint ventures) for the last three full fiscal years (PDF Files Only)
- Copy of all 8(a) Contracts on which the firm is currently working for the last three full fiscal years (PDF Files Only)
- Subcontracting Agreements related to the contracts in item 9 (for the last three full fiscal years) (PDF Files Only)
- Financial Statements which include, at a minimum, the year-end Balance Sheet, YTD P&L, Cash Flow Statement, and the Statement of Equity for each of the last three fiscal years (CSV Files Only)
- Financial Statement Reconciliation to the year-end Trial Balance for the last three fiscal years (CSV Files Only), and
- For each of the last three full fiscal years, a Sub-Ledger Schedule tying to the year-end trial balance accounts for: all Accounts Receivable accounts, all Accounts Payable accounts and all P&L accounts (CSV Files Only)
Responses are due January 5, 2026.
8(a) Program participants should take this audit very seriously and consider the following important takeaways:
- All current and recent 8(a) Program participants should confirm they received the audit email. Although a formal announcement has not been made, it appears that SBA intended all current 8(a) Program participants (including individual-owned and entity-owned companies) to receive the audit request. In addition, companies that recently have been early-terminated or early-graduated from the 8(a) Program and even presently-suspended entities are subject to the audit. If an audit email was not received, 8(a) companies should check their spam folders or reach out directly to SBA to determine whether they are subject to the audit. Although at this time we are not aware of any companies who have completed their entire 8(a) Program term have received the audit request, companies that have been 8(a) Program participants at any time in the last 15 years should keep an eye on their emails in case additional audit requests are issued in the coming weeks and months.
- Failure to respond could result in suspension, debarment, or exclusion from the 8(a) Program. The audit email indicates that “[f]ailure to respond to the SBA’s inquiry may result in a determination that your firm is not eligible for continued participation in the 8(a) Program and may result in further investigative or additional remedial action.” Simply put, SBA has put any administrative remedy on the table for companies that fail to respond (or fail to adequately or completely respond) to the audit request. Notably, SBA has broad authority to regulate the 8(a) Program, and it could construe a failure to respond or failure to adequately respond as an issue implicating a contractor’s present responsibility.
- Timely responses are critical, and assembly of responsive information will take time. As noted above, SBA has set a deadline of January 5, 2026 for the production of the requested data. While all of the information requested should be readily available to 8(a) companies, entities with a large number of 8(a) contracts will need time and attention to compile the information. The 30-day deadline will come quickly, and companies should not assume that extensions will be readily approved by SBA. For companies that do require an extension, they should reach out to SBA immediately and provide a reasonable basis for the extension. We recommend that requests for extension be funneled through counsel or directed to a Business Opportunity Specialist and SBA’s Office of General Counsel for further guidance. Failure to submit appropriate responses on or before the deadline could result in administrative action by SBA, so strict compliance with the current (or, if applicable extended) deadline is important.
- 8(a) companies should perform an internal audit prior to submitting a response to SBA. Before submitting a response to the audit request, 8(a) companies should complete an internal review of the information to be produced so that they know what information they are providing to SBA; whether they are providing a complete response; whether the information to be produced indicates strict or material compliance with SBA regulations or raises potential non-compliance concerns; and whether unexpected events impacting compliance require explanation. For instance, did a company receive a termination for convenience or stop-work order on an 8(a) contract that caused the company to fall below the limitations on subcontracting requirements for an option year? Issues of even minor non-compliance could raise red flags for SBA. Companies should be prepared to explain issues of potential non-compliance, and we are here to assist.
- 8(a) companies would benefit from reviewing responsive documents with experienced counsel prior to submission. Many 8(a) companies are at least generally familiar with the regulatory requirements of the 8(a) Program and SBA’s other small business set-aside programs. However, you don’t know what you don’t know. Regulatory requirements change frequently; the law that applies to an 8(a) concern may vary from contract to contract or year to year; and SBA’s interpretation of its own regulations evolves over time. Engaging experienced counsel to review audit responses and responsive document productions in advance of submission may uncover previously unknown or unidentified compliance issues that require pre-emptive explanation to SBA. Counsel will also be able to ensure completeness of each submission to provide peace of mind in unchartered territory.
- 8(a) Program participants should be prepared for early graduation or termination notices, DOJ and OIG investigations and suspension and debarment proceedings to arise out of the audit and for DOJ, and SBA to pursue False Claims Act liability and/or administrative exclusion against non-compliant firms. The SBA General Counsel’s email makes clear that the primary purpose of this audit is to identify instances of “waste, fraud, and abuse in the 8(a) Program” based on purported allegations of “widespread misconduct . . . and institutionalized abuse . . . .” Against that backdrop, it is no great leap to conclude that SBA and the U.S. Department of Justice (“DOJ”) may pursue 8(a) companies that are not compliant with the SBA regulations for damages and penalties under the False Claims Act (FCA). The penalties under that statute are severe. For instance, if DOJ or SBA determines that an 8(a) contract was awarded to an ineligible business, the measure of damages for that alleged FCA violation is as much as three times the total value of the contract, plus mandatory additional penalties, in addition to the attorneys’ fees and costs necessary to respond to a fulsome investigation and to defend the action. Furthermore, SBA has available to it various administrative remedies in lieu of or in addition to the FCA, including, but not limited to, terminating a company from the 8(a) Program, suspension or debarment. Where SBA determines, based on “adequate evidence,” that an 8(a) company presents a present or future risk to the Government, it may issue a show cause notice compelling the company to respond to a comprehensive formal inquiry. In some instances, SBA may suspend the company indefinitely without prior notice or initiate debarment proceedings to prevent the company from doing business with the government. Suspension and debarment inquiries also can have wide-reaching effects on existing government contracts, which could be subject to stop-work orders or terminations for convenience.
The bottom line for companies in receipt of SBA’s 8(a) audit request is that SBA is scrutinizing the 8(a) Program very closely and is unlikely to give companies the benefit of the doubt on compliance questions. It is critical for 8(a) Program participants to provide complete, accurate, fulsome responses to audit requests; understand their compliance obligations; determine their actual level of compliance in advance of submission; and put their best foot forward with SBA to try to avoid further scrutiny, administrative action, investigations, and FCA liability.
PilieroMazza’s 8(a) Audit Response Task Force brings together experienced attorneys from the Firm’s Government Contracts, Small Business, Litigation & Dispute Resolution, False Claims Act, and Audits & Investigations teams to help clients navigate SBA’s full-program audit of the 8(a) Program. For assistance in navigating an audit response, or if you have any questions concerning compliance with the 8(a) Program or SBA’s inquiries, reach out to Meghan Leemon and Matt Feinberg.
