Overview
- President Trump’s executive order, signed March 26, 2026, gives agencies 30 days to insert a new clause in all federal contracts and subcontracts.
- The clause bans “racially discriminatory DEI activities,” defined as disparate treatment based on race or ethnicity in recruiting, hiring, promotions, contracting, access to training or mentoring programs, or how an entity deploys its resources.
- Contractors must furnish information to agencies and provide access to books and records so officials can verify compliance.
- Noncompliance can lead to contract cancellation, termination, suspension, or debarment, and the Department of Justice is directed to evaluate False Claims Act cases tied to these terms.
- The order instructs OMB to issue implementation guidance and identify high‑risk sectors for added scrutiny, and legal advisers urge contractors to audit DEI programs and strengthen subcontractor oversight and reporting.