The Minority Business Development Agency (MBDA) has been found to have a stunning lack of oversight, with a recent audit revealing that 96 percent of the reviewed transactions should not have been approved. The audit, which was conducted in November 2025, reviewed $16 billion in transactions approved by the MBDA's business center program, a network of federally funded consultancies aimed at supporting minority-owned businesses.
The audit found that $15.4 billion of the $16 billion in transactions reviewed were "duplicate transactions, transactions with missing or inadequate documentation, and transactions that MBDA should not have approved based on the underlying activity." In one case, a business obtained a $33 million contract through the program without providing any paperwork. This lack of oversight is particularly concerning, given the agency's mission to support minority-owned businesses, which are often at a disadvantage in the market.
Background and Consequences
The MBDA was created by executive order during the Nixon administration in 1969 and was codified into law under the Biden administration. The agency's business center program was designed to provide support to minority-owned businesses, which must be at least 51 percent minority-owned to qualify for services. However, the program has been plagued by issues with record-keeping and self-attestation, with a 2017 audit finding similar problems.
According to Judge Glock, the director of research at the Manhattan Institute, who studies waste and fraud in government programs, "I cannot recall seeing anything at this level of improper or inappropriate payments... Over 90 percent is fairly wild for a major program." The lack of oversight at the MBDA has significant consequences, as it can lead to the misallocation of funds and undermine the effectiveness of the program.
The Trump administration attempted to eliminate the agency in March 2025, but a federal court blocked the move. The administration then fired all remaining employees at the agency in October 2025. Despite this, the agency could still be refunded by a future Democratic president, highlighting the need for improved oversight and accountability.
The audit's findings are a cause for concern, as they suggest that the MBDA's lack of oversight may have led to fraud and other forms of mismanagement. As Glock noted, minority contracting is notorious for front schemes and pass-through scams, and the practice has been linked to political corruption and higher infrastructure costs. The report does not establish that any fraud occurred, but it suggests that there were functionally no safeguards in place to prevent it.