Federal Contractors Face New Compliance Risks, Litigation Possibilities Under DEI Executive Order

On March 26, 2026, President Trump issued an executive order titled “Addressing DEI Discrimination by Federal Contractors.” The order builds on a series of actions by the Trump administration aimed at limiting the use of diversity, equity, and inclusion (DEI) practices in federally funded activities and contracting. It creates new contractual obligations for federal contractors and subcontractors — violations of which risk termination, False Claims Act (FCA) liability, and debarment. The order relies on the Federal Property and Administrative Services Act (FPASA), a statute that authorizes the president to impose requirements governing federal procurement. The unsettled scope of FPASA, however, could make the order and its implementation vulnerable to legal challenge.