Senate Small Business and Entrepreneurship Committee Chairman Joni Ernst (R-Iowa) on Wednesday, during a combative hearing on waste and fraud, called for a government-wide pause in all 8(a)-set-aside federal contracting programs because billions of federal tax dollars meant for small businesses are instead going to Fortune 500 giants like Walmart.

An estimated $30 billion is devoted annually through the U.S. Small Business Administration (SBA) funding programs at 22 federal departments and agencies, with most of the money being awarded to sole sources without competitive bidding and directed to a lengthy list of privileged classes of beneficiaries, including historically disadvantaged minorities, women, veterans and a host of others. The SBA is also responsible for the administration of hundreds of billions of dollars in COVID pandemic-related grants and loans intended to help small businesses.

“I do want to be clear that under this [Trump] administration, we are finally reigning in government spending and rooting out waste, fraud, and abuse. During the COVID pandemic and under the Biden administration, SBA loans were given out like candy. Let us not forget that, during the Biden administration, billions of dollars of these SBA loans went out to individuals using Barbie Doll pictures as their photo identification and were approved for SBA loans. This is totally unacceptable,” Ernst told the hearing.

“In March, it was announced that due to DOGE’s hard work in this area, they have uncovered more than 5,000 SBA loans equivalent to millions of dollars where the listed borrower was 11 years old or younger,” she added.

Ernst was responding to acerbic criticism from two committee Democrats, Ranking Member Ed Markey of New York and Mazie Hirono of Hawaii, arguing that the hearing — instead of focusing on 8(a) loans programs aimed at minority-owned businesses — should be devoted to probing how President Donald Trump and his “family members and cronies” are turning federal contracting into “Trump’s ‘pay-to-play’” using projects like building a new White House Ballroom and the Department of Government Efficiency (DOGE) formally headed by billionaire Elon Musk.

Neither Markey nor Hirono offered specific examples of allegedly criminal activity by Trump, members of his family, or business associates.

Markey at one point demanded that Ernst convene a committee hearing on DOGE activities at SBA “with the DOGE representative from SBA sitting here at the witness table under oath. I’d love to see who that is. Right now, we have about a 50% chance of picking that person out of a two-person lineup, since we have no idea who it is.” In fact, Wired Magazine earlier this year identified two DOGE representatives, Donald Park and Edward Coristine, as working within SBA.

Ernst reminded committee members and witnesses that in preparation for the hearing, she sent letters to the heads of the 22 agencies administering SBA-based set-asides asking them to stop all activity on those contracting processes, pending the outcome of a forthcoming audit she is seeking.

In each of the 22 letters, Ernst pointed out that “the SBA’s 8(a) program is the largest set-aside program at the agency, which dished out $25 billion in 8(a) set-aside contract awards during fiscal year 2024 (FY 24) alone. Yet decades of Government Accountability Office (GAO), SBA’s Office of Inspector General, and DOJ probes expose the same rot. Sloppy oversight and weak enforcement measures allow 8(a) participants to act as pass-through entities, snagging unlimited no-bid deals with little transparency. Every loophole guts public trust and rigs the system against honest competitors.”

Based on investigative work by her committee staff, Ernst provided examples of 8(a) waste and fraud within each of the 22 agencies, including at the Department of Homeland Security (DHS), which awarded an estimated $1 billion via the SBA contracting processes, including more than $641 million awarded without competition of any kind. One of the major recipients of those funds via DHS is a firm known as Calista Corporation, with two subsidiaries sharing one government identification code.

“It appears Calista Corporation is operating at least two 8(a) subsidiaries with the same primary NAICs code at the same time, in potential violation of SBA’s rules. In this fight against fraudsters, crooks, and swindlers, the American taxpayers are losing. The public deserves confidence that their hard-earned taxpayer dollars are being rigorously safeguarded and responsibly managed. Accordingly, I respectfully request that the DHS immediately pause all 8(a) sole-source contracting,” Ernst wrote to DHS Secretary Kristi Noem.

In her opening questions, Hirono claimed Ernst was demanding that the 8(a) programs be ended. The Iowa Republican responded that she was not seeking termination of the programs, but rather a pause in view of the deeply entrenched waste and fraud already uncovered while a more comprehensive audit is completed.

Hirono also asserted that “this regime has gotten rid of all of the independent entities such as the Inspectors-General (IG) who might be able to point out to us overseers about this kind of waste fraud and abuse.” In fact, Trump has terminated 18 IGs since January. There are 74 IG positions, with 38 appointed by the president, with Senate confirmation, and 36 by agency heads, without Senate confirmation. The IG system was created in 1980 by the administration of President Jimmy Carter as semi-independent watchdogs against waste and fraud.

The only other GOP senator to attend the hearing was Tim Sheehy (R-Mont.), who is not a member of the committee. Markey and Hirono were the only Democrats attending. Witnesses included Open the Books (OTB) President John Hart, Daily Wire Investigative Reporter Luke Rosak, Dylan Hedtler-Gaudette, vice president of Policy and Government Affairs for the Project on Government Oversight (POGO), a liberal non-profit government watchdog, and Dr. Courtney LaFountain, director for Financial Markets and Community Investment at the Government Accountability Office (GAO).