What to Know About the Department of Defense’s Review of 8(a) and Small Business Awards
The Department of Defense (DoD) issued a memorandum on January 16, 2026 to announce a two‑stage review of small business set‑aside and 8(a) contract awards over $20 million for possible terminations for convenience. This review is occurring quickly, and contractors should be prepared to understand what DoD is investigating and respond quickly to agency requests.The DoD, which had $18 billion in contracts to 8(a) program participants and more than $80 billion to small businesses in FY 2024 (“almost ten times the 8(a) contracting spend of any other agency”) identified several bases for the review. First, certain small business and 8(a) awards may not be essential to support the warfighter asserting that “[t]he DoW has no room in its budget for DEI (diversity, equity and inclusion) and other wasteful contracts that do not advance our core mission of creating a lethal fighting force.” Second, large businesses may be inappropriately performing set-aside contracts through excessive pass-through arrangements. Third, the government may be paying above market rates for these set-aside contracts. An Overview of the DoD’s ReviewIn stage one, the DoD tasked its components to identify responsive contracts and assess whether each award is “mission critical.” Contracts for work that is deemed non‑essential are slated for potential termination for convenience.
