Defense Secretary Pete Hegseth has declared war on what he calls the Pentagon’s “oldest DEI program,” ordering an aggressive review of billions in contracts.
Story Highlights
- Hegseth targets 1978-era 8(a) contracting program, ordering line-by-line review of sole-source contracts over $20 million
- Recent DOJ and Treasury investigations exposed over $800 million in fraud schemes involving 8(a) contractors skimming fees and subcontracting to “Beltway Bandits”
- Pentagon will eliminate contracts that don’t enhance military lethality, potentially canceling $100+ million in current agreements
- Move fulfills Trump administration promise to gut merit-less programs and redirect taxpayer dollars to defense readiness
Pentagon Takes Aim at Decades-Old Contracting Program
Secretary Hegseth announced January 16, 2026, that the Pentagon will conduct an exhaustive examination of the Small Business Administration’s 8(a) Business Development Program within defense contracting. The 1978-era initiative was designed to help socially and economically disadvantaged small businesses access federal contracts through set-asides and sole-source opportunities. Hegseth minced no words in his assessment, declaring the program has become a breeding ground for waste, fraud, and abuse while masquerading as a diversity initiative that weakens America’s military readiness and competitiveness.
Watch: https://www.youtube.com/watch?v=SkmrJDiT840
Massive Fraud Schemes Uncovered Across Government
The crackdown follows explosive revelations from multiple federal agencies. In June 2025, the Department of Justice secured guilty pleas in a staggering $550 million bribery and fraud scheme involving USAID and 8(a) contractors. Treasury Secretary Bessent’s investigators subsequently identified an additional $250 million in fraudulent activity, with ongoing probes continuing to expand. The schemes typically involve 8(a) firms collecting 10-50 percent fees from contracts, then immediately subcontracting the actual work to larger defense contractors without performing any meaningful services themselves. SBA Administrator Kelly Loeffler has launched a comprehensive audit examining 15 years of high-dollar 8(a) contracts to root out systematic abuse.
Lethality Over Diversity Becomes New Pentagon Standard
Hegseth established a clear litmus test for all Pentagon contracts moving forward. “If a contract doesn’t make us more lethal, it’s gone,” he stated bluntly. The review will scrutinize every sole-source 8(a) contract exceeding $20 million, with smaller agreements also facing examination. Pentagon officials must now demonstrate how each contract contributes to warfighting capability rather than checking diversity boxes. This represents a fundamental shift from the Obama-Biden era focus on social engineering within military procurement. The initiative aligns with broader Trump administration efforts to eliminate race-based preferences and restore merit as the primary criterion for federal spending decisions.
Small Businesses Face Uncertain Future in Defense Contracting
Defense industry analysts warn that small firms currently relying on 8(a) set-asides must prepare for dramatic changes. ClearanceJobs reported that companies should immediately assess whether their work directly supports military missions and be ready to compete on merit rather than demographic status. The potential wind-down of 8(a) participation in defense contracts could reshape the entire small business contracting landscape. Legitimate small businesses that actually perform contracted work and contribute to lethality will survive; those serving as pass-through entities for larger firms will face elimination.
Hegseth Takes Sledgehammer to Pentagon’s ‘Oldest DEI Program’https://t.co/jP3EpBCXwm
— PJ Media (@PJMedia_com) January 23, 2026
Constitutional Principles Restored Through Merit-Based Reform
This action advances core conservative principles by ending government favoritism based on immutable characteristics rather than capability and performance. The Trump administration recognizes that true equal opportunity means judging contractors by their work quality, not skin color or demographic status. Fraud enforcement protects constitutional governance by ensuring Congress’s appropriated defense funds actually strengthen military readiness instead of enriching middlemen through rigged procurement systems. The review coordinates with Attorney General Pam Bondi’s ongoing investigations and SBA Administrator Loeffler’s audits, demonstrating unprecedented whole-of-government commitment to rooting out waste.
Sources:
Hegseth Says Pentagon To Sledgehammer ‘Oldest DEI Program’ – Black Enterprise
Hegseth Orders Pentagon Review of SBA 8(a) Contracting Program – HSToday
NDAA Restores Women’s Policy Teams Canceled in Pentagon DEI Purge – Military Times
