US Secretary of War Pete Hegseth has announced there will be incoming major changes to the way small businesses interact with the US Department of War.

Secretary Hegseth made the announcement via social media videos on 16 January, directly addressing his concerns about the US Department’s review of the 8(a) program. 

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The Business Development program allows participating businesses to receive training and technical assistance designed to strengthen their ability to compete effectively in the American economy, including small businesses owned by Alaska Native corporations, community development corporations, Indian tribes, and Native Hawaiian organisations.

Once certified, 8(a) program participants are eligible to receive federal contracting and receive training and technical assistance, according to the US Small Business Administration.

“I promised we would hunt down the waste, the fraud, and the abuse that is run rampant in this department for decades, and to instead redirect that money to President Trump’s America First priorities,” according to a broadcast message from Secretary Hegseth.

“Well, today we are once again taking action on these promises. We’re actually taking a sledgehammer to the oldest DEI program in the federal government.

“A program few people outside of Washington have ever heard of, that I hadn’t heard of. It’s called the 8(a) program. Now, if you’re like me, you’re asking yourself what is an 8(a)? It’s a great question. 8(a) refers to the Small Business Administration’s program to assist small, disadvantaged businesses owned by a socially disadvantaged individual or tribe.

“Providing these small businesses with opportunities is a laudable goal, but over the decades, as it happens, the 8(a) program has morphed into swamp code words for DEI, race-based contracting. And here’s the worst part. In many, many instances, these socially disadvantaged businesses, they don’t even do work.

“They take a 10 per cent, 20 per cent, sometimes 50 per cent fee off the top, and then pass the contract off to a giant consulting firm, commonly known as Beltway Bandits.

“For decades, this program, 8(a), has been a breeding ground for fraud, and this administration is finally doing something about it. The Department of Justice under Attorney General Pam Bondi recently exposed half a billion dollars in 8(a) fraud. Treasury, led by Secretary Bessent, found another quarter billion, and their investigation is just beginning.

“We’re not required to pay enormous brokerage fees only to have these firms pass those contracts along to giant consulting companies, and we won’t, we’re not doing this anymore. So effective immediately, I’m ordering a line-by-line review of every small business, sole-source 8(a) contract that is over $20 million. And we’ll look at everything smaller than that too.

“We’ll make sure that every small business getting a contract is the one actually doing the work, and not just some shell company funnelling your money to a giant consulting firm.”

Secretary Hegseth also announced that the departments of Treasury, Justice and Small Business Administration are all directed to immediately investigate 8(a) contracts.

In addition, he announced that contracts “which aren’t lethal” or “pass-through schemes” will be reviewed and removed.