FRAUD UPDATE: Chenega & Cherokee Federal Executives Admit “It’s Cheating” in 8(a) Contract System

 New undercover footage obtained by O’Keefe Media Group captures executives connected to Chenega Architecture & Design and Cherokee Federal describing how companies claiming Native ownership secure lucrative federal contracts through the Small Business Administration’s 8(a) program while outsourcing much of the work.

The recordings follow OMG’s earlier investigation into ATI Government Solutions, where Contract Manager Melayne Cromwell described how some firms operate once contracts are awarded.

“We only do 20%… the rest goes to subs,” Cromwell said.

The 8(a) program was created to help “socially and economically disadvantaged” businesses compete for federal contracts. However, insiders recorded by undercover journalists described arrangements where companies leverage Native ownership structures to access contracts worth tens or even hundreds of millions of dollars.

During the investigation, Mike Montgomery, President of Chenega Architecture & Design, explained how companies often rely on subcontractors to perform much of the labor while internal teams manage the contracts.

“They hire business executives that understand the federal marketplace… they don’t do the work,” Montgomery said.

In a separate conversation, Ricky Longhurst, Senior Account Executive at Cherokee Federal, described how revenue from contracts is distributed.

According to Longhurst, roughly 63% of contract revenue goes to the business while approximately 37% goes back to the tribe. He also described how Native ownership status can streamline federal procurement.

In one exchange discussing the system, Longhurst remarked: “It’s cheating really.”

The undercover footage also describes how companies can meet participation requirements on paper by placing project managers on-site while subcontractors perform the operational work.

Following OMG’s initial reporting, Small Business Administration Administrator Kelly Loeffler announced enforcement action connected to the program. The SBA later confirmed it had suspended ATI from the 8(a) program and launched what it described as the first comprehensive audit of the program in nearly 50 years.

According to the agency, more than 1,000 firms have now been suspended from the program as part of its ongoing review.

As tips from insiders continued to come in, O’Keefe Media Group expanded its investigation to companies frequently mentioned by sources, including Chenega and Cherokee Federal.

The investigation raises broader questions about oversight of federal contracting programs and whether taxpayer-funded contracts are being executed as intended.

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