A major fraud scheme has rocked the US Agency for International Development (USAID) prompting the Small Business Administration (SBA) to order a sweeping audit of contracting officers who awarded grants under its business development program since 2010.

SBA Administrator, Kelly Loeffler, in a letter obtained by Fox News Digital, called the scandal “a damning reflection of systemic failures in oversight and accountability.” She added that the fraud “was not an isolated incident.”

Loeffler directed Associate Administrator Tre Pennie to “act decisively” and immediately begin reviewing every official who exercised grant-awarding authority over the last 15 years.

“The role of federal government contracting officers is not ceremonial or self-dealing; rather, it is a position of immense authority and fiduciary responsibility,” Loeffler said. “The contracting process must be transparent and built on merit, not personal gain.”

The crackdown follows the guilty plea of Roderick Watson, a 57-year-old USAID contracting officer, who admitted to running a years-long bribery operation.

According to the Department of Justice, Watson began accepting bribes in 2013.

Contractors Walter Barnes (Vistant) and Darryl Britt (Apprio) paid him off using subcontractor Paul Young to hide the money trail.

The DOJ said bribes included cash, laptops, NBA suite tickets, a country club wedding, mortgage down payments, phones, and jobs for relatives.

The value of Watson’s bribes totaled more than $1 million.

Many were hidden through fake payroll listings, shell companies, and false invoices.

Despite being flagged for “lack of business honesty or integrity,” Vistant won an $800 million USAID contract in November 2023. The deal focused on migration issues in Central America.

Days later, USAID canceled the contract and blacklisted the company. But after Vistant sued, the contract was reinstated in August 2024, and the firm received a $10,000 settlement.

Loeffler said the episode “represents a collapse in the very safeguards that are supposed to protect American taxpayer dollars and ensure fair access for legitimate small businesses.”

She blamed the Biden administration for greenlighting such a large deal with a company USAID itself had blacklisted.

“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,” she said.

The SBA will start its audit with high-dollar and limited-competition contracts in its 8(a) business development program.

Findings will be referred to the Office of Inspector General and the Department of Justice. Any official or company caught violating ethics or committing crimes will be held accountable.

“We will not allow public trust to be quietly eroded by backdoor deals and unchecked discretion,” Loeffler stated.

“We owe it to America’s small businesses to get this right.

"Your office has the authority, and now the mandate, to act decisively.” (Fox News)