Federal contractors must agree not to engage in “racially discriminatory” DEI

Federal contractors will soon be required to agree not to engage in any “racially discriminatory” DEI activities.

President Trump issued a new executive order (EO) directing federal agencies to include this clause within 30 days of the March 26 EO in all contracts, subcontracts and contract-like instruments (such as purchase agreements).

Contractors that fail to comply may see their contracts terminated or suspended and may be blocked from any federal contracts in the future. 

The EO defines racially discriminatory DEI activities to mean disparate treatment based on race or ethnicity in recruiting, hiring, promotion, contracting, program participation or allocation of resources.

This directive builds on several other executive orders targeting “illegal DEI and DEIA policies,” as well as guidance from the Department of Justice and the Equal Employment Opportunity Commission.

Trump said the order is necessary to avoid the “inefficiencies, waste, and abuse” caused by DEI activities that increase workforce turnover, reduce the pool of available labor and jeopardize employee collaboration.