FAR Council tightens DEI rules

The FAR Council issued implementation guidance for Executive Order 14398, adding enforceable contracting tools to bar certain DEI programs for federal contractors. (acquisition.gov) President Trump signed EO 14398 on March 26, 2026; the FAR Council memorandum is dated April 17, 2026 and directs agencies to use FAR clause 52.222-90 beginning April 24, 2026. (federalregister.gov) The memorandum orders agencies to update FAR class deviations by April 27, 2026 and to bilaterally modify existing contracts by July 24, 2026; the clause covers solicitations above the micro-purchase threshold (about $15,000) with U.S. performance and flows down to all subcontract tiers. (acquisition.gov) The new clause states that compliance is “material” to the government’s payment decisions, creating direct exposure under the False Claims Act, and the guidance lists failure to comply as a basis for suspension and debarment. (ogletree.com) Prime contractors must report “known or reasonably knowable” subcontractor conduct and must furnish information, books, records, and reports to contracting officers for compliance checks. (ogletree.com) Law firms and agency alerts advise federal contractors, subcontractors, grant recipients, and universities to revise internal monitoring, recordkeeping, and reporting policies immediately to meet the new requirements. (foleyhoag.com) Governance groups and disclosure studies show rising board-level DEI oversight in recent years, and advisers warn companies with public-sector exposure will face heightened board compliance and disclosure duties. (nacdonline.org) A coalition of higher-education associations, professors, minority contractor groups and others filed National Association of Diversity Officers in Higher Education et al. v. Trump in the U.S. District Court for the District of Maryland on April 20, 2026 seeking to block the order. (democracyforward.org) The FAR guidance cites government contracting data showing roughly 160,508 prime contracts in FY2025 awarded to more than 34,000 unique vendors, with an estimated universe above 642,000 awards when subcontracts are included. (ogletree.com) Agencies must adopt the FAR deviations by April 27 and begin inserting FAR 52.222-90 on April 24, 2026, while contractors face a July 24, 2026 deadline to modify existing contracts and litigation in Maryland proceeds. (acquisition.gov)