Pentagon launches review of SBA 8(a) defense contracting program amid abuse concerns

Amid rising defense spending and concerns over waste, Secretary of War Pete Hegseth has directed a detailed audit of the SBA’s 8(a) Business Development Program for contracts exceeding $20 million. The move follows a summer 2024 example in which a socially disadvantaged small business secured two Defense Logistics Agency contracts totaling more than $34 million, then routed the majority of each contract to Lockheed Martin and a Leonardo DRS subsidiary.

While the arrangement complied with existing rules, it highlighted how the program can enable large defense contractors to obtain work indirectly. Hegseth described the review as a “sledgehammer” approach to a scheme he says often results in firms doing little beyond paperwork. Historical investigations have shown similar patterns across multiple administrations, with major primes like L3Harris, General Dynamics, and Lockheed Martin receiving substantial subcontracts from 8(a) firms. The article argues that because the program’s incentives are built into its legislation, incremental reforms have failed and only abolition could stop the abuse.