April 28, 2026
The short story
- President Trump has signed another Executive Order (“EO”) banning “racially discriminatory DEI activities”;
- Contractors will be required to acknowledge compliance with multiple obligations including potential access to books, records and accounts, as well as for oversight of their subcontractors;
- The new EO further defines “racially discriminatory DEI activities” and “program participation”; and
- Based on the newly required obligations, contractors should review employment practices, policies and program participation for potential risk.
The following are links to the Executive Order and the Executive Order Fact Sheet:
The long story
On March 26, 2026, President Donald Trump “doubled down” on his administration’s focus and emphasis on Federal Contractor DE&I programs by signing EO 14398 entitled, “Addressing DEI Discrimination by Federal Contractors.” This new EO reinforces his January 2025 EO (14173) “Ending Illegal Discrimination and Restoring Merit-Based Opportunity.” The new EO requires that federal agencies incorporate a clause banning “racially discriminatory DEI activities” in government contracts, subcontracts and grants.
For the purposes of the order:
“Racially discriminatory DEI activities” means disparate treatment based on race or ethnicity in the recruitment, employment (e.g., hiring, promotions), contracting (e.g., vendor agreements), program participation, or allocation or deployment of an entity’s resources; and
“Program participation” means membership or participation in, or access or admission to: training, mentoring, or leadership development programs; educational opportunities; clubs; associations; or similar opportunities that are sponsored or established by the contractor or subcontractor.
In a nutshell, contractors will have to agree to the following:
- The contractor will not engage in any “racially discriminatory DEI activities (as defined above);”
- The contractor will furnish all information and reports including access to books, records, and accounts required by the contracting agency;
- Non-compliance with the clause could cause a contract to be cancelled, terminated or suspended in whole or in part;
- The contractor will report any subcontractor’s known or reasonably knowable conduct that may violate the clause;
- The contractor will inform the contracting department/agency if they are sued by a subcontractor for any issue questioning the validity of the clause;
- The contractor recognizes that compliance with the requirements of the clause is material for the purposes of the False Claims Act.
In light of this development, we encourage federal contractors to review their employment practices, policies and program participation for potential risk and to contact your Kullman Attorney if you have any questions regarding compliance with this new Executive Order.