President Trump has signed a new Executive Order (E.O.) prohibiting federal contractors and subcontractors from engaging in “racially discriminatory DEI activities,” which is defined as “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.”
The new E.O., Addressing DEI Discrimination by Federal Contractors, directs federal agencies to include a new contract clause requiring contractors to refrain from such practices and to provide the government access to all records, books, and reports necessary to determine compliance. As with E.O. 14173, compliance with this requirement is deemed material to government payment decisions under the federal False Claims Act (FCA), and the Attorney General is instructed to prioritize FCA enforcement.