The Federal Acquisition Regulation (FAR) Council has issued a new contract clause, FAR 52.222-90, focused on implementing EO 14398, “Addressing DEI Discrimination By Federal Contractors.” In addition to being inserted into all new solicitations, contracting officers are being directed to modify existing contracts. This Affirmity compliance alert looks at the details of this new clause, its implementation, and the actions federal contractors and subcontractors will need to take.
Summary
The FAR Council’s new clause comes as a result of the previously covered March 26 EO 14398, “Addressing DEI Discrimination By Federal Contractors.” This EO established that the agencies should not do business with contractors found to be engaging in “any racially discriminatory diversity, equity, and inclusion (DEI) activities”. Section 5 of the EO directed the FAR Council to issue a deviation imposing a new clause demanding strict anti-DEI compliance measures on federal contracts and subcontracts.
Accordingly, the FAR Council’s memorandum directs agencies to use the new six-paragraph “Addressing DEI Discrimination by Federal Contractors” clause at FAR 52.222-90 in all new contracts beginning April 24, 2026.
To recap, the clause:
- Prohibits contractors and their subcontractors from engaging in racially discriminatory DEI activities
- Requires contractors to provide “all information and reports” for the purposes of ascertaining compliance with the clause
- Threatens the cancellation, termination, or suspension of the contract if the contractor is found noncompliant with the clause
- Requires contractors to report suspected violations of the clause by their subcontractors, or any legal action taken by that subcontractor that puts at issue the validity of the clause
- Makes compliance with the requirements of the clause material to the Government’s payment decisions for the purposes of the False Claims Act
Additionally, the memorandum directs agencies to modify existing contracts by July 24, 2026.
Who Is Impacted?
Going forward, the new clause will be inserted into all new contracts valued over the “micro-purchase threshold” (currently $15,000). Furthermore, contracting officers are directed to “make every effort to bilaterally modify existing contracts” by the July 24, 2026 deadline, working with contractors to achieve this. If contractors refuse to agree to this modification, the officer may determine that the contract no longer meets the agency’s needs and terminate it. Furthermore, if the contract is due to expire by December 31 of this year, whether to pursue modification is left to the officer’s discretion.
Note also that the memorandum specifies that the clause “flows down” to subcontracts at any tier. Therefore, contractors will also be required to insert the same clause in their subcontracts and to report subcontractor conduct that violates it. Failure to do so could result in contract termination, suspension or debarment, and/or False Claims Act exposure.
What Actions Are Required?
The FAR Council’s memorandum further underscores the need for federal contractors and subcontractors to review their current practices with urgency. This should include:
- Coordinating with legal counsel regarding the proposed bilateral modification of your federal contracts.
- Reviewing employment practices, programs, and eligibility criteria for evidence of potential disparate treatment. It is essential to proactively build a defense against future legal action and contract disputes.
- Liaising with subcontractors in anticipation of subcontract modifications compelled by the new clause. The opportunity should also be taken to assess subcontractor compliance and the resulting risk.
- Documenting the business purpose, selection criteria, and equal‑opportunity safeguards within all workforce programs.
How Affirmity Can Help
Affirmity continues to recommend that a data-informed approach that accumulates evidence of fair operations remains the best way of demonstrating compliance. You can build this body of evidence with:
- Race and gender-based workforce analyses: Establish that no group in your organization is disproportionately advantaged or disadvantaged by your processes, programs, and policies.
- Workforce compliance solutions: Section 503 and VEVRAA affirmative action, as well as EEO-1 and VETS-4212 reporting.
- DEI risk assessment services: Obtain a comprehensive, attorney-client-privileged assessment of potential legal and reputational risks in your current programs.
Protect your organization and learn more about what Affirmity has to offer: Contact our team of experts today.
About the Author
Kim Hendon oversees account management and sales for Affirmity. She is responsible for building successful, long-term partnerships with clients and generating new business. Having served with the company for more than 25 years, Ms. Hendon has in-depth knowledge and broad experience in all areas of workforce analytics and HR compliance.
Ms. Hendon assists clients with the planning and development of workforce compliance and non-discrimination programs, as well as employee engagement initiatives. She holds a Bachelor of Arts in Speech Communication and a Master’s in Business Administration. Connect with her on LinkedIn.