Federal Contractor Caught on Tape Detailing Pass-Through Scam

A new undercover investigation has raised fresh questions about 8(a) SBA contracting fraud after a contracts manager at ATI Government Solutions was recorded describing how the company uses tribal ownership to secure no-bid federal awards and pass most of the work to subcontractors. ATI, on paper owned by the Susanville Indian Rancheria, has received more than $100 million in federal contracts through the Small Business Administration’s 8(a) program.

In recorded meetings, ATI’s contracts executive is heard explaining that the company performs roughly 20% of awarded work and subcontracts the remaining 80%, calling pass-through arrangements “a great thing” and noting that “there’s no competition” when applying under Native American tribal status. Investigators characterized the admissions as a textbook example of 8(a) SBA contracting fraud, in which a qualified entity serves as a front while non-qualified firms perform most of the labor.

The investigation also recorded tribal representatives confirming that they would not perform contract work while remaining 51% owners for eligibility purposes — an arrangement that appears to conflict with Federal Acquisition Regulation (FAR) 52.219-14, which requires prime contractors to self-perform at least 50% of contract value. Legal analysts note that such issues have taken on new significance after the Supreme Court’s 2025 ruling in Kousisis v. United States, which held that false representations to obtain set-aside contracts may constitute wire fraud even if the contracted work is completed.

The findings surface amid heightened scrutiny of 8(a) SBA contracting fraud, as federal contracting data shows record-level small-business and disadvantaged-business awards in 2024. Critics argue that widespread pass-through practices inflate costs to taxpayers, distort competition, and undermine the intended purpose of the federal preference system by rewarding eligibility status rather than work performance.

ATI and individuals named in the investigation later issued responses disputing authorization to speak on behalf of the company and objecting to the publication of recorded statements, but did not directly refute the claims described. Investigators state that additional footage involving other ATI personnel will be released in a forthcoming installment.

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