On March 26, President Trump issued a new Executive Order (EO), Addressing DEI Discrimination by Federal Contractors, that seeks to prohibit federal contractors and subcontractors from engaging in what the EO defines as “racially discriminatory DEI [diversity, equity and inclusion] activities.”
The EO directs agencies to incorporate a new contractual clause into prime contracts and subcontracts, requires contractors to provide compliance-related information upon request, and contemplates consequences for noncompliance, including termination, suspension, debarment, and potential False Claims Act (FCA) violations.
The EO is likely to have significant implications for companies that do business with the federal government, particularly those with programs that take race or ethnicity into account. Although additional implementation guidance is still unclear, contractors should begin evaluating their existing policies and compliance frameworks now.
