Federal ED O targets DEI in contracts

A March 26 executive order now requires many federal contracts to bar “racially discriminatory” diversity, equity, and inclusion practices by contractors and subcontractors. (federalregister.gov) Executive Order 14398 defines those practices as disparate treatment based on race or ethnicity in hiring, promotions, vendor agreements, program participation, or how a company allocates resources. It was published in the Federal Register on March 31, 2026. (federalregister.gov) On April 17, the Federal Acquisition Regulatory Council told agencies to add a new clause, FAR 52.222-90, to covered solicitations and contracts starting April 24, 2026. Agencies were also told to update class deviations by April 27 and modify existing contracts by July 24. (acquisition.gov) The clause applies to new solicitations and resulting contracts over the micro-purchase threshold, including commercial products and services, when delivery or performance is in the United States. It also flows down to subcontracts at any tier. (acquisition.gov) This order lands after an earlier shift in federal contractor rules. Executive Order 14173, signed January 21, 2025, revoked Executive Order 11246, the long-running affirmative-action framework for federal contractors. (federalregister.gov) On January 24, 2025, the Labor Department ordered staff to stop all investigative and enforcement activity under the rescinded Executive Order 11246. The Office of Federal Contract Compliance Programs also said contractors could keep following the old scheme for 90 days, until April 21, 2025. (dol.gov, dol.gov) The new order shifts the compliance question from affirmative-action obligations to contract eligibility and contract language. A contractor that signs the clause and then violates it could face ordinary contract remedies, and federal responsibility reviews under FAR Part 9 can affect suspension or debarment decisions. (federalregister.gov, acquisition.gov) The order also directs agencies to consider using audit rights, record requests, and other contractual tools to verify compliance. That raises the stakes for internal controls, because statements tied to invoices, certifications, or proposals can become evidence in a contract dispute or a False Claims Act case. (federalregister.gov, acquisition.gov) GSA has already extended the policy beyond standard FAR contracts inside its own portfolio. An April 20 acquisition letter told GSA contracting activities to use similar instructions for non-FAR-based instruments such as real-property leases, concession contracts, and outleases. (gsa.gov) Supporters in the White House say the order enforces civil-rights law and merit-based contracting. Employers, trade groups, and litigants challenging related anti-DEI actions have argued that terms like “DEI activities” can be vague and can chill lawful training, recruiting, and employee-resource programs. (whitehouse.gov, federalregister.gov) For contractors, the immediate work is practical: review policies, map which programs touch hiring or supplier selection, update subcontract templates, and decide who signs the new clause. By July 24, the question is no longer whether the rule is coming, but whether a company’s contract files and internal practices match what it is promising the government. (acquisition.gov, gsa.gov)