Ernst Calls for Complete Halt and Full Audit of Fraud-Filled Contracting Program
News Release from Office of Sen Joni Ernst, (R-IA) Dec 8, 2025
WASHINGTON – After several high-profile fraud schemes were exposed in the 8(a) program, U.S. Senate Committee on Small Business and Entrepreneurship Chair Joni Ernst (R-Iowa) is asking all federal agencies to halt new 8(a) sole-source contract awards made through the program that provides billions in funding to “socially and economically disadvantaged businesses.”
In letters to the 22 federal agencies that are subject to the statutory “small disadvantaged business” goal which includes 8(a), Ernst details concerning awards that appear to be potentially fraudulent or made to ineligible firms and asks the agency to halt all future 8(a) sole-source awards pending a thorough review to ensure taxpayers are not being ripped off.
“While there’s no doubt that the Biden administration’s indifference toward 8(a) program integrity enabled swindlers and fraudsters to treat federal contracting programs like personal piggy banks, 8(a) program flaws have raised alarm bells for decades. The SBA’s 8(a) program is the largest set-aside program at the agency, which dished out $25+ billion in contract awards during fiscal year 2024 (FY 24) alone. Yet decades of Government Accountability Office (GAO), SBA’s Office of Inspector General, and DOJ probes expose the same rot,” wrote Ernst.
Click here to view the letters.
Background:
In June, the Department of Justice found that the 8(a) program was used to facilitate a $550 million bribery scheme over several decades. Four men, including a government contracting officer at the United States Agency for International Development (USAID), pled guilty to the charges.
Last month, James O’Keefe blew open a potential $100 billion fraud scheme in the 8(a) program. In a guerilla-style interview, a representative from ATI Government Solutions, a firm that claimed Native American ownership to get 8(a) status, explained how the company committed pass-through fraud by winning awards based on their minority status, taking a hefty cut for themselves, and then hiring another company to do the actual work.
After these fraud schemes were exposed, Ernst swiftly called for a top-to-bottom review of the 8(a) program that was long-overdue after Joe Biden opened the floodgates to fraud by tripling the funding goals of the program, despite a history of abuse at the expense of taxpayers and deserving small businesses.
She then introduced the Stop 8(a) Contracting Fraud Act to halt all new no-bid awards until a detailed audit of the entire program is conducted.
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LETTER
Secretary, U.S. Department of War
Dear Secretary Hegseth, December 8, 2025
As Chair of the U.S. Senate Committee on Small Business and Entrepreneurship, a top priority of mine is rooting out waste, fraud, and abuse within Small Business Administration (SBA) programs and across the federal government.
Unfortunately, the 8(a) program's no-bid, unlimited sole-source contracts are a fraud magnet:
• The Department of Justice (DOJ) recently exposed a years-long fraud and bribery scheme involving a former United States Agency for International Development (USAID) contracting officer and two 8(a) contractors;1
• The Citizen Journalism Foundation (CJF) blew the lid off a “$100 billion federal contracting scam” allegedly perpetrated by ATI Government Solutions (ATI).2
While there’s no doubt that the Biden Administration’s indifference toward 8(a) program integrity enabled swindlers and fraudsters to treat federal contracting programs like personal piggy banks, 8(a) program flaws have raised alarm bells for decades.
The SBA’s 8(a) program is the largest set-aside program at the agency, which dished out $40+ billion in contract awards during fiscal year 2024 (FY 24) alone.3 Yet decades of Government Accountability Office (GAO), SBA’s Office of Inspector General, and DOJ probes expose the same rot. Sloppy oversight and weak enforcement measures allow 8(a) participants to act as pass-through entities, snagging unlimited no-bid deals with little transparency.4 Every loophole guts public trust and rigs the system against honest competitors.
When the Biden Administration tripled the 8(a) contracting goal from 5 percent to 15 percent, I sounded the alarm on the obvious potential for fraud and abuse, ripe for exploitation by wrongdoers seeking to snatch a government-sanctioned windfall.5 Unfortunately, swift and decisive actions to curb the use of these contracts and a thorough review of each award to ensure compliance with the law did not occur until the Trump Administration.6 Within a day of the CJF investigation becoming public, SBA Administrator Loeffler launched an investigation into ATI and its CEO, suspended the company and three of its executives, and recently uncovered and suspended seven additional potentially problematic companies.7 Soon thereafter, the Treasury Department announced a comprehensive audit of 8(a) contract awards totaling approximately $9 billion.8
In FY 24, the Pentagon awarded approximately $8.5 billion through the 8(a) program, including $6.5 billion in total 8(a) sole-source dollars and $2 billion in total 8(a) set-aside dollars.9 Through my investigation, I discovered Dawson MCG, LLC, (UEI: HS3VC3KDDGJ6), received a $3.4 million 8(a) sole-source award (PIID: N6247823D2404) from the Office of Naval Facilities Engineering Systems Command Hawaii (NAVFACSYSCOM HAWAII) on June 30, 2023, just days after the federal government raided the Dawson conglomerate offices, confiscating company computers and cell phones.10 Dawson MCG, LLC, is a member of the DAWSON family of companies, all of which are subsidiaries of the Native Hawaiian Organization (NHO), Hawaiian Native Corporation.11
I am troubled by a company under active federal investigation continuing to receive high-dollar, no-bid contracts from the Pentagon, despite federal actions indicating major concerns regarding the firm’s “good character,” which is a required eligibility criterion for 8(a) participants.12 Newly unsealed court filings from the Department of Justice detail how Christopher Dawson, the founder of the Dawson companies, and other executives “used shell companies and direct company transfers to steal money from Dawson’s [8(a)] federal contracting business to line their own pockets and purchase expensive homes.”13 Prosecutors believe that, between 2015 and 2021, the total amount of money diverted into one of Dawson’s shell companies was $17 million; nearly double what was sent to Hawaiian Native Corporation for the benefit of Native Hawaiians.14 In this fight against fraudsters, crooks, and swindlers, the American taxpayers are losing. The public deserves confidence that their hard-earned taxpayer dollars are being rigorously safeguarded and responsibly managed.
Accordingly, I respectfully request that the Pentagon immediately pause all 8(a) sole-source contracting. I also request that your department:
1. Examine for potential fraud the individual contract, PIID: N6247823D2404, and any other 8(a) awards made by the Pentagon to Dawson MCG, LLC, (UEI: HS3VC3KDDGJ6), and the network of Hawaiian Native Corporation subsidiaries it may be connected to;15
2. Examine all sole-source 8(a) contracts awarded by your agency since FY 20 for any violation of laws and regulations pertaining to 8(a) program eligibility,16 potential offenses as established in 15 U.S. Code § 645, and any other fraudulent or improper activity;
3. Examine all 8(a) set-aside contracts awarded by your agency since FY 20 for any violation of laws and regulations pertaining to 8(a) program eligibility,17 potential offenses as established in 15 U.S. Code § 645, and any other fraudulent or improper activity; and
4. Promptly inform the Committee, in writing, of your decision to pause all 8(a) sole-source contracting and any findings that your investigation may yield on or before December 22, 2025.
Thank you for your prompt attention to this important matter….
Sincerely,
Joni K. Ernst, Chair
FOOTNOTES:
1 Press Release, DOJ, USAID Official and Three Corporate Executives Plead Guilty to Decade-Long Bribery Scheme Involving Over $550 Million in Contracts; Two Companies Admit Criminal Liability for Bribery Scheme and Securities Fraud, (June 12, 2025), available at https://www.justice.gov/opa/pr/usaid-official-and-three-corporate-executives-plead-guilty-decade-long-bribery-scheme.
2 James O’Keefe (@JamesOKeefeIII), X (Oct. 20, 2025, at 2:44 PM ET), https://x.com/JamesOKeefeIII/status/1980344367014429114.
3 SBA, Scorecard Details, (July 14, 2025), available at https://www.sba.gov/federal-contracting/contracting-data/small-business-procurement-scorecard/scorecard-details.
4 The GAO, OIG, and DOJ have undertaken various examinations of the 8(a) program since its inception. Some of these reports include: GAO, GAO-22-105567, DOD SMALL BUSINESS CONTRACTING: USE OF SOLE-SOURCE 8(A) CONTRACTS OVER $22 MILLION HAS INCREASED (Mar. 28, 2022), available at https://www.gao.gov/products/gao-22-105567; see also GAO, GAO-16-113, ALASKA NATIVE CORPORATIONS: OVERSIGHT WEAKNESSES CONTINUE TO LIMIT SBA’S ABILITY TO MONITOR COMPLIANCE WITH 8(A) PROGRAM REQUIREMENTS (Mar. 21, 2016), available at https://www.gao.gov/products/gao-16-113; see also GAO, GAO-14-706, SUBCONTRACTING LIMITATIONS: CONTINUED NONCOMPLIANCE WITH MONITORING REQUIREMENTS SIGNALS NEED FOR REGULATORY CHANGE (Sep. 16, 2014), available at https://www.gao.gov/products/gao-14-706; see also OIG REPORT 18-22, IMPROVEMENTS NEEDED IN SBA’S OVERSIGHT OF 8(A) CONTINUING ELIGIBILITY PROCESSES (Sept. 7, 2018), available at https://www.sba.gov/document/report-18-22-improvements-needed-sbas-oversight-8a-continuing-eligibility-processes; see also Press Release, DOJ, USAID Official and Three Corporate Executives Plead Guilty to Decade-Long Bribery Scheme Involving Over $550 Million in Contracts; Two Companies Admit Criminal Liability for Bribery Scheme and Securities Fraud, (June 12, 2025), available at https://www.justice.gov/opa/pr/usaid-official-and-three-corporate-executives-plead-guilty-decade-long-bribery-scheme.
5 The White House, FACT SHEET: Biden-Harris Administration Announces Reforms to Increase Equity and Level the Playing Field for Underserved Small Business Owners, (Dec. 2, 2021), available at https://bidenwhitehouse.archives.gov/briefing-room/statements-releases/2021/12/02/fact-sheet-biden-harris-administration-announces-reforms-to-increase-equity-and-level-the-playing-field-for-underserved-small-business-owners/.
6 Press Release, SBA, Administrator Loeffler Orders Full-Scale Audit of 8(a) Contracting Program, (June 27, 2025), available at https://www.sba.gov/article/2025/06/27/administrator-loeffler-orders-full-scale-audit-8a-contracting-program; see also Press Release, SBA, SBA Issues Letter of Warning to Federal Contracting Officers, (July 29, 2025), available at https://www.sba.gov/article/2025/07/29/sba-issues-letter-warning-federal-contracting-officers; see also Press Release, SBA, SBA Rescinds USAID Contracting Authority Following Massive Bribery Scandal, (July 30, 2025), available at https://www.sba.gov/article/2025/07/30/sba-rescinds-usaid-contracting-authority-following-massive-bribery-scandal; see also Press Release, TREAS., Treasury Orders Department-Wide Investigation into Potential Fraud Across Contracting Programs, (Nov. 6, 2025), available at https://home.treasury.gov/news/press-releases/sb0309.
7 Kelly Loeffler (@SBA_Kelly), X (Oct. 20, 2025, at 6:18 PM ET), https://x.com/SBA_Kelly/status/1980398153980342614; see also Kelly Loeffler (@SBA_Kelly), X (Oct. 22, 2025, at 11:47 AM ET), https://x.com/SBA_Kelly/status/1981024674885566517; see also
Kelly Loeffler (@SBA_Kelly), X (Nov. 8, 2025, at 12:01 PM ET), https://x.com/SBA_Kelly/status/1987203934591853068?s=20.
8 Press Release, TREAS., Treasury Orders Department-Wide Investigation into Potential Fraud Across Contracting Programs, (Nov. 6, 2025), available at https://home.treasury.gov/news/press-releases/sb0309.
9 U.S. GEN. SERVS. ADMIN., SAM.GOV, 8a Sole Source and 8a Competed Contract Obligations by Department FY2024, Award/IDV Information Report, available at https://sam.gov/ADC/servlet/mstrWeb (last accessed Nov. 10, 2025).
10 USASpending.gov indicates the obligated amount on this contract is $3.4 million. DOD, Nav. Facilities Eng’g Sys. Command Haw., Contract No. N6247823D2404, Award to Dawson MCG, LLC (UEI: HS3VC3KDDGJ6) (June 30, 2023), available at https://sam.gov/workspace/contract/award/view/N6247823D2404?agencyID=9700&modNumber=0&transactionNumber=null&refIdvPiid=null&idvAgencyID=null&contractType=IDV (last accessed Nov. 19, 2025); see also TREAS., BUREAU OF FISCAL SERVICE, USASPENDING.GOV, available at https://www.usaspending.gov/award/CONT_IDV_N6247823D2404_9700 (last accessed Nov. 18, 2025); see also
Nick Grube, Prominent Native Hawaiian Defense Contractor Is Part Of New Federal Criminal Probe, HONOLULU CIVIL BEAT, (June 29, 2023), available at https://www.civilbeat.org/2023/06/prominent-native-hawaiian-defense-contractor-is-part-of-new-federal-criminal-probe/; see also Christina Jedra, Navy Awards Red Hill Contract to Company Just Raided by Feds, HONOLULU CIVIL BEAT, (July 11, 2023), available at https://www.civilbeat.org/2023/07/navy-awards-red-hill-contract-to-company-just-raided-by-feds/.
11 Dawson, About Us: Dawson ‘Ohana – Our Family of Companies, available at https://www.dawsonohana.com/about-us/ (last accessed Nov. 18, 2025).
12 Nick Grube, Justice Department: Well-Known Hawaiian Defense Contractor Embezzled Funds, HONOLULU CIVIL BEAT, (Nov. 17, 2025), available at https://www.civilbeat.org/2025/11/justice-department-well-known-hawaiian-defense-contractor-embezzled-funds/; see also 13 C.F.R. §124.108(a)(1)-(5) and 13 C.F.R. §124.109(c)(7)(ii).
13 Id.
14 Id.
15 TREAS., BUREAU OF FISCAL SERVICE, USASPENDING.GOV, Recipient Profile Dawson MCG, LLC, available at https://www.usaspending.gov/recipient/850c8603-0568-6f97-6243-f225a1c1d364-C/latest (last accessed Nov. 18, 2025).
16 13 C.F.R. §124
17 Id.
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Nov 2025: US Senator Demands Crackdown on 8a Fraudsters
BACKGROUND: