President Trump last week issued a new Executive Order intended to prevent federal contractors and subcontractors from engaging in diversity, equity and inclusion (DEI) efforts.
The EO says that, while his administration has “made significant progress in ending racial discrimination in American society . . . some entities continue to engage in DEI activities and often attempt to conceal their efforts to do so.”
Under the EO, federal agencies have 30 days in which to begin ensuring that contracts, including subcontracts, contain a clause that requires contractors to agree that:
- They will not “engage in any racially discriminatory DEI activities” (defined as “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”);
- They will “furnish all information and reports, including providing access to books, records, and accounts, as required by the contracting agency . . . for purposes of ascertaining compliance with this clause”‘
- The 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” in the event of noncompliance;
- They will “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”;
- They will “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;” and
- They “recognize . . . that compliance with the requirements of this clause are material to the Government’s payment decisions for purposes of [the False Claims Act].”
The EO also requires federal contracting agencies to “cancel, terminate, suspend” any contract or contract part if the contractor or subcontractor fails to comply with the clause, and to take action to suspend or debar such contractors or subcontractors.
The EO directs the White House Office of Management and Budget (OMB), in coordination with the Attorney General, the Equal Employment Opportunity Commission (EEOC) and White House staff, to “identify economic sectors that pose a particular risk of entities engaging in racially discriminatory DEI activities based on current or past conduct and issue additional guidance to contracting agencies regarding best practices to ensure compliance with this order within such sectors.” Lastly, it directs the Attorney General to consider whether to bring actions under the False Claims Act against contractors or subcontractors that violate the EO.
The EO is the latest in a number of Trump administration executive actions designed to remove DEI programs from the federal government, including contracting. Last year, President Trump issued EOs to eliminate all “DEI-related mandates, policies, programs, activities, guidance, regulations, enforcement actions, consent orders, and requirements in federal agencies,” and to eliminate equity-related grants and contracts, as well as DEI-related performance requirements for contractors and grantees.