President Trump has signed another Executive Order (EO) banning “racially discriminatory DEI activities.” Contractors will be required to acknowledge compliance with multiple obligations, including potential access to books, records, and accounts, as well as for oversight of their subcontractors. The new EO further defines “racially discriminatory DEI activities” and “program participation.” Based on the newly required obligations, contractors should review employment practices, policies, and program participation for potential risk.
What the New EO Requires
On March 26, 2026, President Donald Trump “doubled down” on his administration’s focus and emphasis on federal contractor DEI programs by signing EO 14398 entitled “Addressing DEI Discrimination by Federal Contractors.” The new EO reinforces the president’s January 2025 EO 14173 entitled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity.” The new EO requires federal agencies to incorporate a clause banning what it calls “racially discriminatory DEI activities” in government contracts, subcontracts, and grants.
For the purposes of the order:
- “Racially discriminatory DEI activities” means disparate treatment based on race or ethnicity in the recruitment, employment (e.g., hiring, promotions), contracting (e.g., vendor agreements), program participation, or allocation or deployment of an entity’s resources; and
- “Program participation” means membership or participation in or access or admission to training, mentoring, or leadership development programs; educational opportunities; clubs; associations; or similar opportunities that are sponsored or established by the contractor or subcontractor.
In a nutshell, contractors will have to agree to the following:
- The contractor won’t engage in any “racially discriminatory DEI activities (as defined above).”
- The contractor will furnish all information and reports including access to books, records, and accounts required by the contracting agency.
- Noncompliance with the clause could cause a contract to be cancelled, terminated, or suspended in whole or in part.
- The contractor will report any subcontractor’s known or reasonably knowable conduct that may violate the clause.
- The contractor will inform the contracting department/agency if they are sued by a subcontractor for any issue questioning the validity of the clause.
- The contractor recognizes that compliance with the requirements of the clause is material for the purposes of the False Claims Act.
Takeaways
In light of this development, we encourage federal contractors to review their employment practices, policies, and program participation for potential risk and to contact your Kullman attorney if you have any questions regarding compliance with this new Executive Order.
Jolynn Huntley is an attorney with The Kullman Firm in New Orleans and can be reached at jbh@kullmanlaw.com.