This story was originally published by Honolulu Civil Beat.
Nick Grube
Honolulu Civil Beat
Hawaiʻi U.S. Sen. Brian Schatz is searching for ways to protect a federal contracting program targeted by the Trump administration that brings millions of dollars into the Native Hawaiian community, including implementing reforms to buffer it from future attacks.
At issue is the U.S. Small Business Administration’s 8(a) program, which provides special contracting privileges to socially and economically disadvantaged individuals and groups, including tribes, Alaska Native corporations and nonprofit Native Hawaiian organizations.
Under the program, Native groups can receive large no-bid contracts, some of them worth hundreds of millions of dollars, in exchange for the promise that profits be used to support Indigenous communities.
Last year, Christopher Dawson, a Native Hawaiian defense contractor, was accused of abusing the program and stealing millions of dollars meant to help his people, spending it to instead on private jets, luxury cars and polo.
Since then, Dawson’s case has been used to attack the program. Republican U.S. Sen. Joni Ernst, who’s chair of the Small Business Committee, cited Civil Beat’s reporting on Dawson’s alleged transgressions in a letter to Defense Secretary Pete Hegseth calling on him to pause all 8(a) sole source contracts.
Hegseth followed up by saying he planned to take a sledgehammer to the program, which he has described as a race-based handout that’s a “breeding ground for fraud.”
Both Ernst and Hegseth’s criticisms build upon SBA Administrator Kelly Loeffler’s own assault on the program, including a full-scale audit and the suspension of more than 1,000 companies. Like Hegseth, she has described it as a DEI program that’s “rife with grift and fraud.”
At an Indian Affairs Committee oversight hearing Tuesday, Schatz teamed up with Alaska Republican Lisa Murkowski to offer a full-throated rebuttal to those attacks, specifically as it relates to Native entities.
“8(a), in this senator’s view, is a success story,” Murkowski said. “It is not a fraud as some have mistakenly alleged. And quite honestly that’s terminology that I would just categorically reject.”
Schatz echoed Murkowski’s tone and together the committee leaders said the program, at least as it pertains to Native groups, was born out of the country’s trust responsibilities to its Indigenous people.
It is not, they stressed, something that should be classified as diversity, equity or inclusion.
”The 8(a) program does not exist because it is DEI,” Schatz said. “It is Congress recognizing our trust and treaty obligations to Native communities and understanding that small business owned by them can be an important way to support Native economies and set them up for long term success.”
Pausing Progam Is ‘Not Fair’
Several witnesses were called to testify before the committee about the 8(a) program’s importance to their communities. Those speakers described the program as a revenue engine that turned federal contracts into tangible community benefits, supporting health care, housing, education, jobs, infrastructure and cultural preservation.
Chuck Hoskins Jr., the principal chief of the Cherokee Nation, said the 8(a) program has been transformative for his tribe, funneling roughly $364 million in federal contracting dollars into services such as health care, housing and education over the last decade.
Cariann Ah Loo, president of the Native Hawaiian Organization Association and chair of the Nakupuna Foundation, offered a similar assessment, saying that NHOs such as hers contributed more than $120 million in community benefits to Native Hawaiians between 2018 and 2024. Some of the organizations that received that money included ʻIolani Palace, the Polynesian Voyaging Society and the Purple Maiʻa Foundation.
“That reinvestment is not optional,” Ah Loo said. “It’s a condition of participation in the NHO 8(a) program, and it’s central to how the program is designed to function.”
In Dawson’s case, both SBA and U.S. Justice Department officials say he used the program to win large contracts and then use the revenues to live an extravagant lifestyle that included purchasing multimillion-dollar homes in Florida and Hawaiʻi and investing in a beachfront polo farm. Much of that money, agency officials and prosecutors said, should have been used to uplift Native Hawaiians.
Schatz acknowledged during the hearing that more needs to be done to convey to 8(a) critics — including those within the SBA — that the program is working for Native communities.
Fraud, waste and abuse “cannot and should not be ignored,” he said, and bad actors should be thoroughly investigated and held accountable. But pausing all sole-source contracts, as has been suggested by Ernst, or ending the program because of a handful of scandals is “not fair and not effective.”
Rather, the program could use more tailored oversight and regulation, he said, particularly when it comes to reporting community benefits. The SBA’s own requirements are “rather slender,” Schatz said.
Tribes, Alaska Native corporations and NHOs are required to file annual reports with the SBA detailing how much they spent on community benefits, but those reports are considered confidential and it’s unclear what the agency does to actually vet that information. Better data collection and disclosure of community benefits could help to blunt the attacks on the program, Schatz said, and ensure that it can “grow and survive for another several generations.”
Bipartisan Effort Needed
After the hearing, Schatz reiterated his stance that the 8(a) program as a whole should not be dismantled. Dawson’s case, he argued, was an act of individual alleged criminality, not proof that the entire 8(a) program is fundamentally broken.
“Anytime you’re dealing with big federal programs, there’s always the potential for someone to misbehave,” he said. “Chris Dawson was a criminal, and he broke a bunch of existing federal laws. Had he been a different kind of federal contractor, I’m sure he would have found a way to break those laws.”
Accountability should come through existing statutes and normal oversight, including possibly tightening reporting requirements, he said, not by weaponizing individual cases as part of a broader anti-DEI crusade.
Schatz said he plans to coordinate with Murkowski on next steps and made clear that any legislative response should be crafted on a bipartisan basis.
At least two other GOP senators, Markwayne Mullin of Oklahoma and Steve Daines of Montana, expressed support of the 8(a) program during Tuesday’s hearing with Mullin in particular highlighting the importance of tribal investments in local communities and how those can benefit Native and non-Natives alike.
In the meantime, Schatz said it’s important for lawmakers and officials to pay attention to legitimate claims of wrongdoing, something he worries is not always happening in the current climate.
“This feels like they are objecting to Native people making money,” Schatz said. “If we’re serious about increasing precision and oversight, then SBA and DOD need to tone down their rhetoric. If there’s a federal program that they want to know more about, there are adult ways to do that. They shouldn’t act like a Twitter troll with the power of the U.S. government.”
This story was produced by Honolulu Civil Beat, a nonprofit news organization covering Hawaiʻi that specializes in accountability and in-depth enterprise coverage. For more stories like this, subscribe to their newsletters.
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