A sweeping federal review of Small Business Administration 8(a) defense contracts ordered by Secretary of War Pete Hegseth is sending ripples throughout the defense industry.
The directive, issued Jan. 16, subjects all active 8(a) firms nationwide to a comprehensive audit, with heightened scrutiny on high-value, sole-source defense contracts. Hegseth ordered a line-by-line review of every sole-source 8(a) contract exceeding $20 million, with smaller awards also subject to examination, citing concerns about fraud and pass-through contracting.
“If a contract doesn’t make us more lethal, it’s gone,” Hegseth said, adding that the review will ensure small businesses awarded contracts are “the ones actually doing the work.”
Companies are required to submit three years of detailed financial, payroll and performance records to remain eligible for the program. For some companies, the order brings new questions. For others, including Huntsville-based Cortina Solutions, it is a process they welcome.
Cortina Solutions, an individually owned 8(a) engineering firm supporting multiple Department of Defense agencies and NASA, completed and submitted its audit documentation immediately.
“We did not hesitate, it’s already done,” said Edwina Musante, founder and CEO of Cortina Solutions. “This is how we do business. We do things early, we do them right, and we stand behind our work.
“We’re excited to see the 8(a) program under careful review and believe this audit is a positive step toward strengthening accountability.”
The Department of War accounts for the largest share of federal 8(a) contracting, with Hegseth saying the Pentagon awards nearly $100 billion annually to small businesses, a volume that prompted the department’s decision to conduct a sweeping review of sole-source 8(a) contracts.
Huntsville’s Defense Contractors
Huntsville is home to one of the nation’s largest concentrations of defense contractors, anchored by Redstone Arsenal, the Missile Defense Agency, and Army Materiel Command. Though the audit affects 8(a) firms across the country, local contractors in North Alabama may see advantages from increased scrutiny.
The review will examine whether 8(a) firms are meeting federal requirements to perform the majority of contract work themselves, rather than serving as pass-throughs for larger companies. Hegseth ordered a line-by-line review of all sole-source 8(a) contracts over $20 million, with smaller contracts also included, citing concerns about arrangements in which small businesses collect fees before subcontracting much of the work.
For compliant firms, the review may serve as validation rather than a setback.
“If you are doing the work yourself, if you have the people, the documentation and the capability, you should welcome additional oversight,” Musante said. “For us, it was another compliance exercise. We already provide this level of documentation regularly.”
Excellence, Integrity and ‘Get Stuff Done’
Cortina, founded in 2012, employs more than 40 people and provides engineering services across modeling and simulation, test and evaluation, systems engineering, and information technology. The company supports the Army, Navy, Air Force, Missile Defense Agency, and NASA.
Musante said the firm’s rapid response reflects its internal culture, built around three core values: excellence, integrity, and “get stuff done”.
“Excellence means doing the job right and doing it on time,” she said. “Integrity means telling the truth and treating people with respect. And get stuff done is our work ethic. We do what it takes, we bring high energy, and we have an A-team of high performers who deliver. Those values showed up in how we handled this audit.”
Rather than viewing the review as an obstacle, Musante said she sees it as an overdue reset.
“I am genuinely glad to see this happening,” she said. “There are companies in this space that are not playing by the rules, and it puts firms like ours at a disadvantage. Strong standards strengthen the program.”
A closer look at the 8(a) divide
The 8(a) Business Development Program was created to help small businesses owned by socially and economically disadvantaged individuals gain access to federal contracting opportunities. Individually owned 8(a) firms must meet strict size, revenue, and net worth limits and comply with rigorous performance requirements.
Over time, however, additional categories have emerged, including entity-owned 8(a) firms. These firms are legally permitted to receive sole-source contracts of unlimited value and are not subject to the same size caps as individually owned companies.
Musante said that disparity has made competition increasingly difficult for true small businesses.
“We are competing against companies with hundreds or thousands of employees and massive proposal resources,” she said. “They are operating under a different set of rules, yet bidding in the same space. That imbalance has squeezed out many individually owned 8(a) firms.”
She hopes the current review prompts a closer examination of how those distinctions affect fairness and competition.
“Individually owned 8(a)s are key to preserving meaningful small-business participation in federal contracting, and we hope the review leads to policies that support fairness for all participants,” Musante said.
A potential reset
Secretary Hegseth has framed the review as part of a broader effort to redirect defense spending toward mission-critical priorities and military readiness. While some non-core service contracts may face reductions, firms directly supporting engineering, missile defense, aerospace, and advanced technology are expected to remain aligned with those goals.
For Huntsville companies like Cortina, the moment represents an opportunity.
“This review reinforces what we believe in,” Musante said. “If you are doing real work, supporting real missions and running your business the right way, transparency should work in your favor.”
As the audit process continues, many Huntsville contractors are watching closely. For Cortina Solutions, the message is simple.
“At Cortina, we value our long-standing relationship with the federal government and the trust that comes with it,” Musante said. “We are proud of our capabilities and the missions we support.”
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