April 6, 2026 • News

Executive Order Adds Anti-DEI Clause to Federal Contracts

On March 26, 2026, the Trump Administration issued an executive order, “Addressing DEI Discrimination by Federal Contractors,” in its continuing efforts to eliminate diversity, equity, and inclusion (DEI) programs and practices in U.S. businesses. This order: (1) directs all agencies to ensure within 30 days of the date of the order that all contracts for contractors and subcontractors include a clause affirming that they will not engage in any racially discriminatory DEI activities, and (2) directs the Department of Justice to consider False Claims Act (FCA) enforcement for non-compliance.

Contractors will also be required to: 

• “furnish all information and reports, including providing access to books, records, and accounts, as required by the contracting agency” 
• acknowledge that “in the event of the contractor’s or a subcontractor’s noncompliance with this clause, this contract may be canceled, terminated, or suspended in whole or in part, and the contractor or subcontractor may be declared ineligible for further government contracts”
• “report any subcontractor’s known or reasonably knowable conduct that may violate this clause to the contracting department or agency and take any appropriate remedial actions directed by the contracting department or agency”
• “inform the contracting department or agency if a subcontractor sues the contractor and the suit puts at issue, in any way, the validity of this clause”

The Office of Management and Budget (OMB) is to provide guidance to contracting agencies on ensuring compliance with the order, which includes the potential cancellation of contracts and/or suspension and debarment of noncompliant contractors or subcontractors. 

OMB will also coordinate the identification of economic sectors that pose a particular risk of entities engaging in racially discriminatory DEI activities.

Within 120 days of the date of the order, each contracting agency will review its compliance with this order, and thereafter regularly review and take measures to ensure compliance.

Within 60 days of this order, the Federal Acquisition Regulatory Council shall amend the Federal Acquisition Regulation (FAR) will issue guidance regarding agency implementation of the clause.