Overview
- The order, signed Thursday, March 26, requires agencies within 30 days to add a standard clause to contracts and subcontracts that bars defined racially discriminatory DEI activities.
- The clause defines banned conduct as disparate treatment based on race or ethnicity in hiring, contracting, program participation such as training or mentoring, or how a company allocates resources.
- Contractors must open books and records to agencies, flow the clause down to lower tiers, report known or reasonably knowable subcontractor violations, and alert agencies if a subcontractor files a challenge.
- Noncompliance can trigger contract cancellation, suspension, or debarment, and the Justice Department is directed to prioritize False Claims Act reviews including whistleblower suits.
- Implementation moves next to rulemaking as the FAR Council prepares guidance within 60 days and OMB, DOJ, and the EEOC plan sector guidance, while contractors start audits and seek clarity on scope and retroactive reach.