On March 26, The White House published a new executive order (EO), “Addressing DEI Discrimination By Federal Contractors,” imposing a new clause demanding strict anti-DEI compliance measures on all federal contracts and subcontracts. This Affirmity compliance alert covers the details of the EO, including the clause’s threat of potential cancellation, suspension, or debarment of contracts for violations.
Summary
The latest in a long line of executive orders targeting the use of DEI programs by federal contractors, “Addressing DEI Discrimination By Federal Contractors,” represents a significant shift in federal expectations for workforce programs, reporting, and internal policies.
The EO and its accompanying fact sheet detail concrete steps required of the executive agencies subject to the Federal Property and Administrative Services Act (40 U.S.C. 101 et seq.) (FPASA). Within 30 days of the date of the order, the agencies must ensure that all new federal contracts contain a clause that:
- 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
Notably, the EO is focused entirely on race rather than sex or other protected characteristics.
The EO additionally directs the DOJ to prioritize False Claims Act enforcement (in line with its previously communicated goals) and requires the Federal Acquisition Regulatory (FAR) Council to include the new clause in all procurement, solicitations, and contracts going forward.
Who Is Impacted?
The new EO and the new clause it compels will apply to all federal contractors and subcontractors.
Actions Required
This EO significantly raises both compliance risk and the need for clear, defensible employment practices. Though the principles set out by the EO align with those in previous orders and communications from the agencies, the concrete actions described represent a meaningful step towards enforcement.
This said, the EO does not yet specify a mechanism for proving “genuine and verifiable” compliance (as the fact sheet puts it). Organizations should assume that such a mechanism, possibly involving certification, auditing, data collection, and/or other documentation, will be forthcoming.
The following actions remain best practice for your organization:
- Reassess your DEI-related policies, programs, and goals for Title VII alignment
- Ensure HR personnel, recruiters, ERG leaders, and managers are trained on the lawful execution of their roles and responsibilities
- Document the business purpose, selection criteria, and equal‑opportunity safeguards within all workforce programs
How Affirmity Can Help?
In the absence of a formally defined mechanism for proving your compliance, organizations should continue to take a data-informed approach and build a body of evidence to demonstrate compliance. Relevant Affirmity products include:
- Race and gender-based workforce analyses to establish statistical proof that no group in your organization is disproportionately advantaged or disadvantaged by key processes.
- Workforce compliance solutions, including Section 503 and VEVRAA affirmative action and EEO-1 and VETS-4212 reporting services.
- DEI risk assessment services, providing a full attorney-client privileged assessment of your program’s potential legal and reputational risks.