Why Pete Hegseth Is Right To Take A ‘Sledgehammer’ To The 8(a) Scam

Last month, Secretary of War Pete Hegseth made a seismic announcement: “We’re 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 haven’t heard of. It’s called the 8(a) program.”

We’re confident that Daily Wire readers knew about the program: Our own investigative reporter Luke Rosiak testified to the Senate about the fraud-ridden, multi-billion dollar minority contracting scheme just a month earlier. He’s written about it extensively for years. Under the decades-old 8(a) program, 5% of all federal contracts are “set aside” for minority- and women-owned businesses. That’s right — instead of a competitive process that identifies the best company with the best value, government officials direct contracts to specific companies, with no bidding at all, based on minority status.

As Rosiak told the Senate, it opens the door to sordid corruption. When black businessman Walter Barnes got half a billion dollars in USAID contracts by bribing a government procurement official with $1 million, the contracting officer was able to guarantee he could make good on the bribe only because the 8(a) program gave him that discretion.

We don’t know if Hegseth was tuned in for Rosiak’s testimony, but Hegseth laid out the issue as clearly as anyone.

“In the Pentagon, $100 million sole-source contracts go out the door to these 8(a) firms almost every day,” Hegseth explained, “without any competition or opportunity for anyone else to bid.”

Hegseth continued: “In many, many instances, these socially disadvantaged businesses don’t even do work. They take a 10%, 20%, sometimes 50% fee off the top, 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.”

He’s talking about the Capital Beltway that surrounds Washington, D.C., where the biggest players in the government contracting business have learned to make hay out of 8(a). You see, rather than fighting only for direct contracts, the contractors based in D.C.’s suburbs have learned that they can also seek the business of the minority middlemen.

This process is flagrant. In Dulles Airport’s Terminal C, there’s a giant advertisement from an 8(a) firm, seeking companies to “partner” with. What it’s saying is that if a company like Deloitte wants to get a giant contract, it should cut the 8(a) in on the deal. The minority firm will submit a “joint venture” or “mentor-protege” application, letting government officials know with a wink and a nod that it will be Deloitte doing the work.

We are taking a sledgehammer to the oldest DEI program in the federal government—the 8(a) program. pic.twitter.com/c9iH8gcqG7

— Secretary of War Pete Hegseth (@SecWar) January 16, 2026

It works for everyone but taxpayers. The Beltway Bandit gets the contract without having to beat its rivals on price. A random minority gets a massive payday for brokering it. And the bureaucrats don’t have to go through the hassle of a competitive bidding process — they can just send the money immediately out the door.

Perhaps some government employees are overpaid, but contractors are milking the taxpayers for orders of magnitude more.

As Rosiak told the Senate, a man named Atul Kathuria bought one of the most expensive homes in the D.C. region after getting $43 million in no-bid contracts because he is… wait for it… a person from the country of India working in IT. He is no “slumdog millionaire” — he went to Georgetown University and worked at massive consultancy Booz Allen Hamilton before shattering the glass ceiling to become the first Indian IT guy.

The Small Business Administration is in charge of determining who gets the sought-after “socially disadvantaged” superpowers, and its leader Kelly Loeffler has made serious strides at attacking the fraud. She required 8(a)s to turn over an unprecedented amount of information, down to bank account statements and payroll records. The payroll records alone will be enough to prove that many of these companies are merely shells.

READ MORE: Feds Crack Down On Minority Contracting Schemes, D.C.’s Worst-Kept Secret

But the Department of War getting in on 8(a) reform is where the real money is. As Hegseth said, the Pentagon gives out 10 times as many 8(a) contracts as the next-largest agency. That’s because the Pentagon can give out up to $100 million contracts without competitive bidding if the business is “disadvantaged,” while at other agencies the limit is $4.5 million or $7 million.

A constellation of fly-by-night brokerage firms has sprung up to cash in on this — one or two black men, or even white women, who get contracts and “partner” with other companies to do the work. But the most notorious offenders are so-called “Super 8(a)s,” which can engage in even more seedy business dealings because, in the government’s eye, their owners have been even more oppressed: Those owned by Native American firms or Alaskan native tribes.

Here, again, we see how 8(a) is the Swamp that Donald Trump warned about. Alaska’s senators, both Republicans, are secretly lobbying to preserve the DEI program–calling it, perversely, “conservative” and “market-based.”

We asked Senators Lisa Murkowski and Dan Sullivan how many people who worked at so-called “Alaskan” companies were actually Alaskan, and they wouldn’t say. These are firms like Bowhead, a multi-billion-dollar conglomerate whose leadership is about as indigenous as Elizabeth Warren.

“There are skyscrapers down the street in Tysons Corner, defense contractors working on advanced weapons, that don’t have to bid competitively for contracts because we say they’re Alaskan Native Corporations,” Rosiak testified to the Senate. “But every one of us here knows there aren’t native Alaskans in those buildings.”

The Alaskan senators gave away the game when they defended the program by praising the “flexibility” the 8(a) program offers.

“We consistently hear from top Pentagon officials that the 8(a) Program provides flexibility and timeliness in procuring weapons systems that strengthen our country,” they said.

At least they’re being honest. The purpose of 8(a) isn’t to help minorities, it’s to help lazy bureaucrats steer millions to big companies without having to fill out the paperwork.

If doing government procurement the right way takes too long, then fix that. But the 8(a) program must be abolished by Congress. Trying to stop the fraud is a fool’s errand; fraudsters will simply find more clever ways to hide the fact that they’re simply subcontracting out most of the work.

The courts have recently made clear that automatic racial preferences in contracting are illegal, a development celebrated by conservative lawyers. But if you ask us, it only makes the problem worse: The set-asides for “disadvantaged” companies are still enshrined in law, so now they’re awarded based on an even more vague and arbitrary system. We kid you not, companies can get no-bid contracts if they write an essay describing how they have been victims.

It’s time for Congress to scrap the antiquated, failed 8(a) laws. It has gone on for long enough, and thanks to Hegseth and reporters exposing the waste, America is onto the scam.