Following the exposure of a massive bribery scandal at USAID, the Small Business Administration is launching a comprehensive audit of every government contracting officer who awarded grants under its business development program over the past 15 years.
In a letter obtained by Fox News Digital, SBA Administrator Isabella Casillas Guzman, not Kelly Loeffler, called the fraud a “damning reflection of systemic failures in oversight and accountability” and said it “was not an isolated incident.”
Loeffler ordered Associate Administrator Tre Pennie, who oversees SBA contracting, to “act decisively” and begin a full-scale audit of all awarding officers dating back to 2010,” Fox News reported.
“The role of federal government contracting officers is not ceremonial or self-dealing; rather, it is a position of immense authority and fiduciary responsibility,” Loeffler said. “The contracting process must be transparent and built on merit, not personal gain.”
The move comes after USAID, the foreign aid agency, was dismantled under cuts identified by Elon Musk and President Donald Trump targeting waste, fraud, and abuse. Democrats protested, arguing that the cuts would negatively impact impoverished communities abroad.
However, years of fraud have now implicated those same programs. Roderick Watson, a longtime USAID contracting officer, recently pleaded guilty to “bribery of a public official” for his role in a massive kickback scheme that ran from 2013 to 2020.
The DOJ said Watson took bribes from Walter Barnes, owner of Vistant, and Darryl Britt, owner of Apprio, with the help of subcontractor Paul Young.
According to the DOJ, “Britt and Barnes regularly funneled bribes to Watson, including cash, laptops, thousands of dollars in tickets to a suite at an NBA game, a country club wedding, downpayments on two residential mortgages, cellular phones, and jobs for relatives. The bribes were also often concealed through electronic bank transfers falsely listing Watson on payroll, incorporated shell companies, and false invoices.”
The total value of the bribes was estimated at more than $1 million.
In November 2023, Vistant—through a joint venture—was awarded a contract worth up to $800 million. One goal of that contract was to address “a variety of issues affecting the root causes of irregular migration from Central America to the United States,” an issue that had been assigned to Kamala Harris when she was vice president.
Just days after the deal was awarded, USAID canceled the contract and disqualified Vistant, citing “evidence of conduct involving a lack of business honesty or integrity.”
However, this was not the end of the story. The joint venture sued, won the case, and had the contract restored and received a $10,000 payment from the government in August 2024.
In her letter, Loeffler said the USAID case “represents a collapse in the very safeguards that are supposed to protect American taxpayer dollars and ensure fair access for legitimate small businesses.”
She blasted the Biden administration for awarding the $800 million contract to a company that had already been flagged for dishonesty.
“The fact that a federal official was able to act as the linchpin of a persistent, large-scale fraud operation speaks to a failure in internal controls and a breakdown in the contracting environment that demands immediate correction,” Loeffler said.
She added that SBA plays a “critical role” in the contracting process and “will no longer stand by while abuses are perpetrated at the expense of taxpayers and deserving small businesses.”
The agency’s audit will begin with high-dollar and limited competition contracts within SBA’s 8(a) program. Findings will be referred to the Office of Inspector General and the Department of Justice.
Officials or businesses found to have violated ethical standards or committed crimes will be referred to the proper authorities, and SBA will assist in recovering taxpayer funds.
“We will not allow public trust to be quietly eroded by backdoor deals and unchecked discretion,” Loeffler said.
“We owe it to America’s small businesses to get this right,” she added. “Your office has the authority, and now the mandate, to act decisively.”