Following the uncovering of a massive bribery scandal at USAID, the Small Business Administration (SBA) is ordering a full audit of all government contracting officers who have exercised grant-awarding authority under the agency’s business development program over the last 15 years.
In a letter obtained by Fox News Digital, SBA Administrator Kelly Loeffler said the scale of the USAID fraud is a ‘damning reflection of systemic failures in oversight and accountability.’ She further said that the fraud ‘was not an isolated incident.’
In response, Loeffler instructed Associate Administrator Tre Pennie, who oversees government contracts awarded by SBA, to ‘act decisively’ to crack down on any potential similar abuses in the agency.
Loeffler instructed Pennie to immediately initiate a full-scale audit of the agency’s awarding officers back to 2010.
‘The role of federal government contracting officers is not ceremonial or self-dealing; rather, it is a position of immense authority and fiduciary responsibility,’ said Loeffler. ‘The contracting process must be transparent and built on merit, not personal gain.’
This comes after USAID, an agency tasked with administering civilian foreign aid, was essentially dismantled by the DOGE waste, fraud and abuse cuts made under Elon Musk and President Donald Trump. The move was met with massive protests from Democrats who claimed that cutting USAID would impoverish and harm recipients across the globe.
Despite claims of how much good the agency was doing, it was recently discovered that an influential contracting officer at USAID named Roderick Watson was able to carry out a massive, long-term bribery scheme dating all the way back to 2013.
Watson, 57, pleaded guilty to ‘bribery of a public official,’ according to a DOJ press release.
According to the DOJ, Watson sold his influence starting in 2013, with contractors Walter Barnes, owner of Vistant, and Darryl Britt, owner of Apprio, funneling payoffs through subcontractor Paul Young to hide their tracks.
A DOJ press release said that 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 statement said that Watson is alleged to have received bribes ‘valued at more than approximately $1 million as part of the scheme.’
Vistant was awarded in November 2023, as part of a joint venture, a contract worth up to $800 million with one of the focuses of that contract being to address ‘a variety of issues affecting the root causes of irregular migration from Central America to the United States,’ an issue that President Joe Biden tasked then-Vice President Kamala Harris with during his presidency.
Several days later, that contract was canceled after USAID published a notice that said Vistant was excluded from government contracting due to ‘evidence of conduct of a lack of business honesty or integrity.’
The joint venture then successfully sued the government over being put on that exclusion list and was re-awarded the contract and given a $10,000 payment in August 2024.
In her letter, Loeffler said the USAID scandal ‘represents a collapse in the very safeguards that are supposed to protect American taxpayer dollars and ensure fair access for legitimate small businesses.’
She slammed the Biden administration for awarding the $800 million contract to Vistant despite the business being labeled by USAID as lacking ‘honesty and integrity.’
‘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,’ said Loeffler.
She said that SBA plays a ‘critical role’ in federal contracting and ‘will no longer stand by while abuses are perpetrated at the expense of taxpayers and deserving small businesses.’
Loeffler said the agency’s audit will begin with high-dollar and limited competition contracts within SBA’s 8(a) business development program. The findings will be referred to the U.S. Office of Inspector General (OIG) and the DOJ.
Any officials or businesses found in violation of the SBA’s ethical standards or who have committed criminal misconduct will be referred to the appropriate authorities and SBA will assist the DOJ in recovering misappropriated funds, Loeffler said.
‘We will not allow public trust to be quietly eroded by backdoor deals and unchecked discretion,’ said Loeffler.
‘We owe it to America’s small businesses to get this right,’ she went on. ‘Your office has the authority, and now the mandate, to act decisively.’