Pentagon “8(a) Sledgehammer” Review Raises Stakes for Ojibwe Tribal Contractors

By Joe Morey

Rez Life Weekly Editor

A major federal contracting pipeline used by tribally owned businesses is facing sudden turbulence after Defense Secretary Pete Hegseth announced a sweeping Department of Defense review of certain SBA 8(a) Business Development Program contracts, saying the Pentagon will take a “sledgehammer” approach to what he characterized as abuse and “DEI” driven contracting.

In public remarks reported by multiple outlets, Hegseth framed the review as mission first and budget-driven. “If a contract doesn’t make us more lethal, it’s gone,” he said, adding that “there is no room in our budget for wasteful DEI contracts that don’t help us win wars.”

According to business development leaders across Indian Country, the announcement matters far beyond Washington because 8(a) is not just another small business program. It is one of the key contracting pathways used by tribally owned firms, including some tied to Ojibwe nations in Wisconsin. And because Congress has historically allowed higher sole source thresholds for certain tribal and Native entities, critics and contracting experts say the Pentagon’s new scrutiny is likely to land heavily on Native owned portfolios.

What the 8(a) program is, and why tribes use it

The SBA 8(a) Business Development Program is a federal business development and contracting assistance program intended to help eligible small businesses compete for federal work. SBA states that eligibility includes not only individually owned disadvantaged firms, but also small businesses owned by Indian tribes, Alaska Native corporations, Community Development Corporations, and Native Hawaiian organizations.

The program is widely used in defense contracting because it can streamline awards, shorten timelines, and reduce the “capture” advantage that large incumbents often hold. A core feature is that 8(a) can be used for sole source awards in certain circumstances, but those awards still come with a defined regulatory framework. For example, the Federal Acquisition Regulation lays out rules for 8(a) sole source processes, including the requirement that SBA accept the requirement and that pricing be negotiated and documented as fair and reasonable.

8(a) contracts are also subject to limitations on subcontracting, including restrictions on how much of the work can be performed by firms that are not similarly situated, a point that becomes central in today’s controversy over alleged “pass-through” arrangements.

What Hegseth says he plans to do

Reporting this week indicates DoD will launch a “line-by-line” review of sole source 8(a) contracts over $20 million, with Hegseth suggesting the department may widen scrutiny beyond that figure.

The review is being described as part of broader federal scrutiny involving other agencies as well, but DoD’s move stands out because the Pentagon is one of the largest users of the 8(a) pathway.

The political framing has been unusually blunt. According to an Alaska-focused report describing the impact on Native corporate portfolios, Hegseth argued the program’s goals are “laudable,” but claimed 8(a) had morphed into “DEI race-based contracting” language.

Why Native owned firms feel the ground shifting first

A major reason Native advocates are alarmed is structural. In recent years, Congress and the acquisition rules evolved to allow higher sole source thresholds in certain contexts for DoD 8(a) awards, especially involving tribal and similar entities.

A Government Accounting Office  (GAO) report on sole source 8(a) contracting notes that the threshold was raised in 2020 for certain DoD 8(a) sole source contracts to levels above $100 million, after previously being set around $22 million.

A Congressional Research Service product summarizing acquisition thresholds similarly highlights that ANC or Indian Tribe-owned 8(a) awards can have different justification thresholds, and for DoD it cites higher levels tied to statute and regulation.

Here is the practical implication: if tribal entities are more likely to hold larger 8(a) sole source awards because the ceiling is higher, then a Pentagon rule that starts by auditing everything above $20 million concentrates pressure where tribal and Native corporate structures have historically been most active.

According to reporting by Federal News Network, federal contracting attorneys and analysts have made the same point: the decision to focus on awards above $20 million is widely seen as targeting the categories of firms that can lawfully receive larger sole source 8(a) awards.

The Native perspective letter now shaping the debate

One of the most widely circulated responses is an open letter published on Substack by a blogger who goes by the name Holly MathNerd, titled “An Open Letter to Sec. Hegseth.” In it, she quotes Hegseth describing his approach as “taking a sledgehammer” to what he called “the oldest DEI program in the federal government,” adding that it was a program he “hadn’t heard of” before.

MathNerd’s argument is not that fraud should be ignored. It is that blunt enforcement could damage what she calls “load-bearing” structures in federal procurement. Her letter repeatedly returns to three themes that resonate strongly in Indian Country contracting circles.

1) 8(a) as a competition tool, not a giveaway

MathNerd argues that 8(a), especially when used properly, is one of the only ways the federal government can inject competitive pressure into a system dominated by a small set of prime contractors. She contends that eliminating or crippling 8(a) does not punish the biggest incumbents, and instead reduces leverage against them.

Her letter also cites President Trump’s recent attacks on major defense contractors for slow production and shareholder focus, arguing that frustration with prime contractor performance should not be misdirected toward small business development tools.

2) “Fraud” headlines versus program mechanics

A second theme is precision. MathNerd points to high-profile fraud allegations involving federal contracting, but argues that broad “8(a) is corrupt” narratives can conflate a criminal bribery scheme with evidence that 8(a) itself is inherently abusive.

She also warns that rapid, data-driven enforcement regimes can invert due process if pattern matching becomes a substitute for evidence, a concern she expands in a separate Substack post about AI-driven fraud detection and the presumption of innocence.

3) “Pass-through” claims and subcontracting rules

Finally, her letter focuses on the allegation that 8(a) contracts are being used as “pass-through” vehicles, with a small prime firm taking a fee while subcontractors do most of the work. She argues this gets the public angry because it sounds like “no-bid” cronyism, but she points readers back to the actual rules: small business primes face enforceable limits on subcontracting, and violations are not supposed to be legal or invisible.

According to some tribal business leaders, whether readers agree or not, the letter has become a central “Native perspective” explainer of how the program works, why it matters to communities that have built tribal enterprise strategies around federal contracting, and why a scorched-earth enforcement posture could create collateral damage.

Why the crackdown hits close to home in Ojibwe Country

The most immediate takeaway for Ojibwe tribal enterprises is that the Pentagon’s review is not just a rhetorical fight about “DEI.” It could change the contracting climate in ways that directly affect Native portfolios and Native-owned firms that rely on federal projects.

Below are Ojibwe-connected examples in Wisconsin and Minnesota that are publicly documented as using 8(a) (or graduating from it). This is not an accusation of wrongdoing but simply a map of who could feel ripple effects if 8(a) use slows, becomes more politically sensitive, or faces new compliance friction.

Wisconsin Ojibwe: documented 8(a) participation

Lac du Flambeau Band of Lake Superior Chippewa

LDF Construction

According to WisBusiness (Oct. 10, 2019), LDF Construction — part of the LDF Business Development Corporation — announced it was awarded a $1,015,000 federal 8(a) construction contract by the U.S. Department of Agriculture Forest Service.

Why it matters now: LDF Construction is an example of how a reservation-based enterprise uses 8(a) to win federal work and build capacity. If federal agencies become more hesitant to use 8(a), or if added review slows awards and cashflow, that “bridge” becomes harder to cross.

St. Croix Chippewa Indians of Wisconsin (Native contracting example previously identified)

“Prey-go-neesh Construction” (tribal 8(a) contracting company)

According to Indian Gaming magazine’s tribal leader roundtable feature (June 2, 2023), the St. Croix tribe “launched a tribal 8(a) contracting company called Prey-go-neesh Construction.”

Why it matters now: If DoD and other agencies apply a more skeptical lens to tribal 8(a) structures (especially larger awards), tribes with federal-contractor portfolios can face slower awards and higher compliance burdens, even when projects are fully legitimate.

Minnesota Ojibwe: documented 8(a) participation

Mille Lacs Band of Ojibwe

Makwa Global, LLC (Mille Lacs corporate portfolio)

According to Makwa Global’s own announcement and company materials, Makwa Global and subsidiaries are described as SBA 8(a) Certified Tribal Enterprises owned by the Mille Lacs Band of Ojibwe and positioned for government contracting.

A Mille Lacs corporate news release also notes Makwa Global building a portfolio of government contracts after receiving 8(a) certification.

Why it matters now: Even if a tribal portfolio’s work is spread across multiple agencies, a high-profile Pentagon “sledgehammer” approach can change the environment across the federal marketplace.

Red Lake Nation (Ojibwe)

Red Lake Construction, LLC

According to Red Lake Construction’s website, the company is “tribally-owned” and “SBA 8(a) certified.”

Why it matters now: Construction firms working federal projects are often sensitive to pauses, re-review, and award delays. A contracting climate shift can immediately affect hiring plans and project scheduling.

Leech Lake Band of Ojibwe (member-owned example)

Frontier Construction Company Inc.

According to Frontier Construction’s website, the company’s owner is an enrolled member of the Leech Lake Band of Ojibwe and the company states it is a “successful graduate of the SBA 8(a) program.”

Why it matters now: Graduation stories underscore what 8(a) is supposed to do when it works: develop firms that can later compete outside the program. The worry among Native advocates is that a blunt rollback harms that pipeline.

The policy argument at the center: fraud enforcement vs. collateral damage

Hegseth’s case is that the Pentagon must move faster, prioritize readiness, and cut waste — and that 8(a) contracting has become vulnerable to exploitation.

MathNerd’s argument is that fraud should be prosecuted aggressively, but that program mechanics matter. She argues that gutting 8(a) could reduce competition, reduce leverage over large incumbents, and weaken the broader supplier base.

In other words, the clash is not “fraud vs. no fraud.” It is about whether the response is precision reform — tightening oversight, enforcing subcontracting rules, and punishing real misconduct — or a broad contraction that treats the 8(a) pathway itself as suspect.

What to watch next in Ojibwe Country

For tribal leaders, enterprise boards, and Native contractors in Wisconsin and Minnesota, the most important indicators in the weeks ahead will be:

-whether DoD reviews create award slowdowns and cashflow disruption;

-whether agencies narrow their willingness to use 8(a) sole-source even when lawful;

-whether reforms focus on verifiable misconduct (bribery, false self-performance, misrepresentation) rather than sweeping stigma;

-and whether tribes with 8(a) enterprises are pulled into a broader political narrative that ignores the program’s economic development role.