Defense Contract Purge: Merit Over Race Quotas

A seismic shift is underway at the Department of Defense as Secretary Pete Hegseth has launched a sweeping investigation into the Small Business Administration’s 8(a) Business Development Program, calling it the “oldest DEI program in the federal government.” This aggressive review targets hundreds of millions in sole-source defense contracts, threatening cancellation and signaling the Trump administration’s intent to eliminate race-based preferences in federal procurement to refocus taxpayer dollars on military lethality and merit-based capability.

Story Snapshot

Hegseth targets the SBA 8(a) Business Development Program, ordering reviews of all sole-source contracts over $20 million to assess contributions to military lethality
Recent DOJ and Treasury investigations uncovered over $800 million in fraud involving 8(a) contractors who skim fees and subcontract work to larger firms without performing services
The initiative aligns with Trump administration priorities to eliminate race-based preferences and redirect taxpayer dollars toward defense capabilities instead of diversity quotas
Pentagon intends to “wind down” the program for defense contracting, signaling the end of affirmative action-style procurement policies that prioritize social engineering over merit

Pentagon Launches Major Contract Review

Secretary of Defense Pete Hegseth announced on January 16, 2026, that the Pentagon will conduct a line-by-line examination of every sole-source contract exceeding $20 million awarded under the Small Business Administration’s 8(a) Business Development Program. Hegseth declared the program a breeding ground for fraud and wasteful spending, stating bluntly that “if a contract doesn’t make us more lethal, it’s gone.” The review will assess whether contractors actually perform the work or simply take fees ranging from 10 to 50 percent before subcontracting to larger “Beltway Bandit” firms. This aggressive approach fulfills campaign promises to gut non-merit-based programs distracting from core military readiness.

The DOJ has seen our footage – PROOF that the 8(a) program is being hijacked to funnel HUNDREDS of millions to connected elites while the minorities the program *intendeds* to help get nothing.

They have the evidence. No more excuses. END. THIS. PROGRAM. NOW.@TheJusticeDept… https://t.co/EYlNZ96TB3

— James O'Keefe (@JamesOKeefeIII) January 22, 2026

Fraud Investigations Expose Systemic Abuse

The Defense Secretary’s initiative follows explosive fraud revelations uncovered by multiple agencies throughout 2025. In June 2025, the Department of Justice secured guilty pleas in a massive bribery and fraud scheme exceeding $550 million involving USAID and 8(a) contractors. The U.S. Treasury subsequently identified an additional $250 million in fraudulent activity through ongoing investigations. SBA Administrator Kelly Loeffler launched a comprehensive audit examining high-dollar 8(a) contracts stretching back 15 years. These investigations revealed a disturbing pattern where small firms exploited their disadvantaged status to secure no-bid contracts, then pocketed substantial fees while outsourcing actual work to established corporations—undermining the program’s stated purpose and defrauding taxpayers.

Program Origins and Constitutional Concerns

Congress established the 8(a) Program in 1978 through the Small Business Administration to provide federal contracting advantages to socially and economically disadvantaged businesses, predominantly minority-owned firms. The program grants preferential treatment through set-asides and sole-source contracting opportunities, allowing agencies to award contracts without competitive bidding. For conservatives who value equal protection under the Constitution, this represents government-sanctioned discrimination based on race and ethnicity rather than merit or capability. The program exemplifies how well-intentioned policies devolve into quota systems that prioritize checkbox diversity over competence, exactly the type of unconstitutional social engineering that erodes American principles of equal opportunity and individual achievement.

Returning Defense Spending to Lethality

Hegseth’s crackdown signals a fundamental shift in Pentagon procurement philosophy under the Trump administration’s America First agenda. The Defense Secretary coordinates with Attorney General Pam Bondi, Treasury Secretary Bessent, and SBA Administrator Loeffler on a government-wide effort to eliminate waste, fraud, and DEI-driven contracting. The Pentagon review will determine whether each contract contributes to military lethality and whether 8(a) firms actually deliver services or merely serve as intermediaries enriching themselves at taxpayer expense. This represents common-sense stewardship of defense dollars—ensuring every contract strengthens America’s warfighting capability rather than advancing woke diversity agendas that weaken our military and squander resources desperately needed for weapons, training, and readiness in an increasingly dangerous world.

Impact on Defense Industrial Base

The 8(a) review could result in cancellation of over $100 million in Pentagon contracts currently awarded to small businesses under the program. While this disrupts firms relying on preferential treatment, it promises to redirect funds toward competitive procurement emphasizing capability and value rather than demographic characteristics. Small defense contractors must now prepare for a merit-based environment where mission contribution matters more than disadvantaged certification status. The long-term implications extend beyond individual contracts—this initiative signals the potential phase-out of race-based preferences across federal contracting, restoring constitutional principles of equal treatment and ensuring defense dollars purchase actual military capability rather than funding social experiments that compromise national security.

Hegseth’s aggressive approach builds on his earlier Pentagon DEI purge that eliminated various diversity programs in April 2025. His willingness to use provocative language like taking a “sledgehammer” to the oldest DEI program demonstrates the administration’s determination to dismantle decades of progressive policy overreach. For Americans frustrated with government waste and discrimination disguised as equity, this represents overdue accountability—finally prioritizing the constitutional mission of providing for the common defense over appeasing diversity consultants and race-hustlers who profit from dividing Americans into competing grievance categories.