President Issues New “DEI Discrimination” Executive Order Directed at Federal Contractors and Subcontractors

As part of continued efforts by the administration to combat diversity, equity, and inclusion (“DEI”) activities in government procurement, President Trump issued a new Executive Order, Addressing DEI Discrimination by Federal Contractors, on March 26, 2026 (the “DEI EO”). The DEI EO directs federal agencies to include specific, mandatory DEI-related language in federal contracts and requires that the language also be flowed down to subcontractors. The proposed contract language prohibits “racially discriminatory DEI activities” and invokes potential noncompliance punishments ranging from contract termination to debarment to False Claims Act (“FCA”) liability. The DEI EO thus goes farther than previous administration pronouncements and policy directives, such as Executive Order 14174, Ending Illegal Discrimination and Restoring Merit-Based Opportunity, which raised the specter of FCA enforcement and contract DEI clauses but was short on detail (see prior article). Contractors and subcontractors should take note and prepare for compliance with the forthcoming contract clause.

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