New Trump executive order targets DEI in federal contracts

President Donald Trump has signed a new executive order that would push the administration’s anti-DEI campaign deeper into the federal marketplace by requiring covered contracts to include a clause barring what the order calls “racially discriminatory DEI activities.”

The 26 March order, “Addressing DEI Discrimination by Federal Contractors”, says the policy is intended to promote “economy and efficiency” in federal contracting by preventing racial discrimination. It defines prohibited conduct as disparate treatment based on race or ethnicity in recruiting, hiring, promotions, contracting, program participation, or the allocation of organizational resources.

Under the order, agencies subject to the Federal Property and Administrative Services Act have 30 days to ensure the clause is added to covered contracts and contract-like instruments, including subcontracts and lower-tier subcontracts. A White House fact sheet says OMB will issue implementation guidance and identify sectors seen as presenting elevated compliance risk. The order also directs the Federal Acquisition Regulatory Council to amend the FAR to incorporate the new clause and remove conflicting provisions.

For contractors, the practical significance is not just policy language but enforcement exposure. The White House said agencies may cancel, terminate, or suspend contracts, and may suspend or debar contractors, for noncompliance. The fact sheet also said the attorney general is directed to prioritize potential False Claims Act cases tied to violations of the contractual prohibition.

The move is likely to trigger a new round of compliance reviews across govcon sector as contractors reassess recruiting, mentorship, supplier, and talent-development programs against the administration’s definition of prohibited DEI practices. Until the administration changes parties.