The Concept
Executive Order Issued March 26, 2026 Defines DEI & Consequences
This executive order "for the first time, attaches direct contractual consequences to diversity, equity, (DEI) practices in federal contracting.” (Ogletree)
This “builds on a series of related executive actions the Administration has taken since January 2025… government contractor and subcontractor compliance will be subject to heightened scrutiny and may portend a more aggressive enforcement risk.” (A&O Shearman)
Key Resources
Ogletree Deakins: “DEI in the Crosshairs: New Executive Order Targets Federal Contractors”
A&O Shearman: “Open books, higher stakes: Executive order redefines DEI compliance for federal contractors”
DLA Piper: “New Executive Order on DEI discrimination by federal contractors: Key considerations”
More Detail
“What’s Prohibited”?
“The administration characterizes DEI activities as practices in which ‘employees, applicants, or contracting parties are treated differently, separated, or singled out based on their race or ethnicity, rather than treated equally and objectively based on their merit,’ contending that such activities impose artificial costs that are ultimately passed on to the federal government through its contractors. The EO does not prohibit all DEI activities. Its prohibitions are limited on their face to ‘racially discriminatory DEI activities,’ which it defines as disparate treatment based on race or ethnicity in recruitment, employment (including hiring and promotions), contracting (including vendor agreements), program participation, and resource allocation. This represents a departure from earlier EOs that introduced the phrase ‘unlawful DEI’ without providing any specific definition of the term.” (Ogletree)
The Context
Understanding how this order differs from previous DEI-related executive orders
“The March 26 Order differs from the [original] January 2025 DEI-related executive orders in several notable respects:
Mandatory contract terms
“The March 26 Order requires that federal contractor and subcontractor agreements include specific contract language, with defined terms with the prior executive orders addressed DEI programs through policy directives. This is a meaningful shift, as the March 26 Order creates a new mandatory enforceable contract clause that exposes contractors to contract termination, debarment and False Claims Act liability”
Defined prohibited conduct
“It provides a concrete definition of ‘racially discriminatory DEI’ activities that is not limited to “illegal DEI,” the term referenced (but not defined) in the January 21 executive order”
Access to books and records
“The March 26 Order mandates that contractors provide access to their books and records to the contracting agency upon request, enabling compliance assessments.”
False Claims Act enforcement
“It contains an explicit directive to the Department of Justice to pursue False Claims Act enforcement, expressly tying compliance to the government’s payment decisions for False Claims Act purposes, a provision that represents a significant expansion of potential liability for noncompliance.”
Further Reading
From the Source
Text of the Executive Order: ADDRESSING DEI DISCRIMINATION BY FEDERAL CONTRACTORS
From the Source
White House Fact Sheet for the Executive Order: Fact Sheet: President Donald J. Trump Addresses DEI Discrimination by Federal Contractors
Additional Resources
Ogletree Deakins: “DEI in the Crosshairs: New Executive Order Targets Federal Contractors”
A&O Shearman: “Open books, higher stakes: Executive order redefines DEI compliance for federal contractors”
DLA Piper: “New Executive Order on DEI discrimination by federal contractors: Key considerations”
