President Trump issued an Executive Order (EO), "Addressing DEI Discrimination by Federal Contractors," on March 26, 2026. This EO adds to several executive orders previously issued by the President aimed at dismantling Diversity, Equity, and Inclusion (DEI) programs within the federal government and among private-sector federal contractors. This order represents a major escalation by moving from general policy statements to enforceable contract terms. The new EO orders federal agencies to include by April 6 a mandatory clause in all new and existing contracts (and subcontracts at all tiers) prohibiting "racially discriminatory DEI activities".
The EO defines these prohibited activities as disparate treatment based on race or ethnicity in recruitment, hiring, promotions, vendor agreements, and "program participation" (e.g., mentoring, leadership development, or affinity clubs.)
Specific programs and practices banned or restricted under this EO include:
• Affirmative Action Plans: The requirement for federal contractors to maintain affirmative action plans has been rescinded.
• Diverse Slate Policies: Policies requiring diverse hiring panels or candidate pools based on race or gender are prohibited.
• Race-Based Recruitment: Any hiring or recruitment efforts that use race or ethnicity as a determining factor are banned.
• Diversity Statements: Requiring applicants to submit "diversity statements" or "overcoming obstacles" narratives.
The EO calls for use of the following to enforce the EO requirements:
• False Claims Act (FCA): Compliance is now considered "material" to government payment. Contractors who falsely certify they do not engage in these DEI activities could face significant financial penalties and treble damages under the FCA.
• Contract Termination: Violations can lead to the immediate cancellation of contracts and debarment from future federal work.
• Access to Records: Contractors must provide the government access to their internal books, records, and accounts to verify compliance.
• Subcontractor Monitoring: Prime contractors are obligated to report "known or reasonably knowable" violations by their subcontractors.