William Hart Discusses 8(a) Fraud Enforcement Trends on The Federal Drive Podcast

Rogers Joseph O’Donnell PC of counsel William G. Hart discussed a recent wave of False Claims Act settlements and agency-level audits targeting the SBA’s 8(a) program during a recent interview on Federal News Network’s The Federal Drive podcast with Terry Gerton.

Hart, a former senior federal prosecutor, said the administration has singled out the 8(a) program as part of a broader effort against diversity, equity and inclusion initiatives, with cabinet officials describing the program as vulnerable to fraud and pass-through arrangements.

“Every part of the government is coordinating with the Justice Department in order to target, identify, and ultimately investigate and potentially prosecute fraud among its 8(a) contractors,” Hart said on the podcast.

Hart pointed to two recent Service-Disabled Veteran-Owned Small Business settlements, in the Middle District of Florida and the Northern District of New York, in which the small businesses were found to be little more than conduits for larger, ineligible contractors. He said investigators focus on whether the small business is actually exercising operational control, rather than on how the arrangement is structured on paper.

“They’re looking for, what is the lived reality on the ground, not what the corporate structure might otherwise suggest,” Hart said.

Hart noted that these cases can surface through qui tam whistleblower suits, as happened in the New York settlement, or through agency-level audits, including a wholesale SBA review of the 8(a) program announced last year and a separate Department of War audit of its 8(a) contractors. He cautioned that larger subcontractors face their own exposure under theories of aiding and abetting, conspiracy or willfully causing the submission of false claims.

Hart recommends that 8(a) firms review four areas to assess their vulnerability: which entity is actually performing the contract, the terms of the teaming agreement or subcontract, how labor is divided between the parties and how contract revenue is allocated.

Hart has deep white-collar experience, including matters involving fraud, trade sanctions and export controls. He has also conducted large-scale internal corporate investigations, including those involving international issues and operations.

Listen to Hart’s full Federal Drive interview here.