Addressing DEI Discrimination by Federal Contractors
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This Executive Order, signed on March 26, 2026 and effective March 31, 2026, prohibits federal contractors and their subcontractors from engaging in racially discriminatory DEI activities. It defines such activities as any disparate treatment based on race or ethnicity in hiring, promotions, contracting, training programs, or resource allocation. The order requires that all federal contracts include a specific clause banning these practices, mandating contractors to report violations by subcontractors, provide compliance data, and face potential False Claims Act liability. Agencies must incorporate this clause within 30 days, with the Federal Acquisition Regulation to be amended within 60 days. Non-compliance can result in contract termination, suspension, debarment, and False Claims Act actions.
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Key Changes
- All new and existing federal contracts must include a specific anti-DEI clause within 30 days of March 26, 2026
- Contractors and all tiers of subcontractors prohibited from any race or ethnicity-based disparate treatment in hiring, promotions, training programs, or resource allocation
- Contractors must report known or reasonably knowable subcontractor DEI violations to the contracting agency
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Obligations
What this law requires
Include a specific anti-DEI discrimination clause in all federal contracts and subcontracts within 30 days of the order's effective date (by April 30, 2026)
Prohibit engagement in racially discriminatory DEI activities defined as disparate treatment based on race or ethnicity in recruitment, employment, contracting, program participation, or resource allocation
Report any subcontractor's known or reasonably knowable conduct that may violate the DEI clause to the contracting agency and implement appropriate remedial actions
Furnish all information, reports, books, records, and accounts as required by contracting agencies for compliance verification purposes
Amend the Federal Acquisition Regulation within 60 days to include the anti-DEI clause and remove conflicting provisions