By: Daniel Seiden
A 40-year-old program designed to help “socially and economically disadvantaged” small businesses win federal contracts is full of ineligible participants, according to a recent report from the Small Business Administration’s Office of Inspector General.
Concerns about abuse of the program became national news recently when the Los Angeles Times reported that the brother-in-law of House Majority Leader Kevin McCarthy (R-Calif.) received $7.6 million in set-aside program contracts because he improperly claimed Native American heritage.
The allegations against the brother-in-law and his company Vortex Construction Inc. aren’t isolated. Eighty percent of the firms the inspector general studied should have been removed from the 8(a) program instead of receiving nearly $127 million in federal contracts, the report said. Federal agencies awarded over $17 billion in 8(a) program contracts in fiscal 2017, according to data compiled by Bloomberg Government.
The number of ineligible 8(a) companies in the report is surprisingly high, but there may be a not-so-nefarious reason for it, said Maria Panichelli of Cohen Seglias Pallas Greenhall & Furman PC, Philadelphia.