During his presidential campaign, Donald Trump pledged to eliminate federal diversity, equity, and inclusion programs. However, government contracts continue to be distributed based on race and gender considerations. The Small Business Administration has maintained discriminatory contracting practices worth billions of dollars through the use of “disadvantage” narratives, despite widespread fraud and adverse court decisions.
The federal government has long reserved specific contracts
exclusively for businesses designated as disadvantaged and women-owned enterprises. Before 2023, the SBA automatically classified racial minorities as disadvantaged. The discrimination was total: data from 2020 to 2023 shows these programs awarded zero contracts to white men.
While the Trump administration has attempted to curtail these contracts, the SBA’s 8(a) program—the largest disadvantaged-business initiative—continues to flourish. In November, a contracting attorney described it as “still one of the most lucrative and sought after” SBA certificates. Fiscal year 2025 recorded the highest 8(a) spending ever at $26 billion.
Despite President Trump’s executive order prohibiting federal DEI discrimination and a federal district court invalidating the SBA’s minority disadvantage presumption, the 8(a) program persists. The mechanism resembles how universities have utilized personal essays to circumvent affirmative action prohibitions. The Small Business Administration now requires companies to submit “social disadvantage narratives” for 8(a) program qualification. These narratives allow business owners to establish minority status by recounting racial insults or purported discrimination. While applicants may not explicitly indicate race, the message remains clear: white men are excluded.
The SBA’s “Guide for Demonstrating Social Disadvantage” exposes this strategy. The guide instructs applicants on navigating the system, providing examples of potential “disadvantage.” It supplies minorities and women with formulaic language: “I believe my application [for a bank loan] was denied due to bias toward my race” and “I believe my request [to declare a business major] was denied based on sex bias.” Following agency approval, contracts begin flowing without requiring substantive evidence.
These applicants are not necessarily disadvantaged. Earl Stafford Jr., a black contractor, submitted an essay describing unspecified discrimination that made him question whether he possessed “what it took to be in business.” The Washington Business Journal covered Stafford’s “painstaking” essay-writing experience. Yet his father, Earl Stafford Sr., established a successful defense company and launched a private foundation—scarcely an underprivileged background.
Like any race-based program, 8(a) invites fraud. White business owners can recruit minority figureheads or women to nominally lead
disadvantaged or woman-owned companies while maintaining actual control. Alternatively, minority-owned firms can obtain government contracts but function as intermediaries, collecting fees while subcontracting the work. The Supreme Court ruled against a
“disadvantaged” company last year that failed to provide contracted paint for a Philadelphia bridge and train station, instead passing work to other firms.
Outright dishonesty abounds. In 2023, Margarita Howard and her companies HX5 and HX5 Sierra paid nearly $8 million to the government for falsifying Howard’s assets to participate in 8(a). While claiming disadvantage, Howard allegedly resided in a 14,000-square-foot waterfront Florida mansion featured on HGTV’s Extreme Homes. Howard remains HX5’s CEO and continues seeking federal funding. The Trump administration granted her company millions last year.
Other contractors have falsely claimed Native American status or embezzled Native-designated funds. ProPublica recently examined Charles Dawson, whose companies secured hundreds of millions promising to assist “Native Hawaiians.” He diverted funds toward private jets, Porsches, and polo. Even following a federal raid, his companies continued receiving federal support.
System insiders acknowledge rampant fraud. A 2018 government audit examined 25 8(a) recipients collectively receiving over $100 million. Twenty “should have been removed from the . . . program” due to ineligibility.
The Trump administration has initiated corrective measures. Secretary of War Pete Hegseth recently announced a “line by line” investigation of 8(a) contracts. SBA administrator Kelly Loeffler reduced the contracting goal from Biden’s 15 percent to the statutory 5 percent and demanded financial records from 8(a) businesses to eliminate fraud.
However, the fundamental problem transcends fraud. These programs systematically discriminate against white men. Rather than reforming 8(a), the Trump administration should abolish it entirely.