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Trump order bars DEI practices in federal contracts

By

Jon Dunn

On March 26, 2026, President Donald Trump (R) signed an executive order (EO) that orders federal agencies to add a new clause to federal contracts barring contractors and subcontractors from engaging in diversity, equity, and inclusion (DEI) activities. The order establishes penalties including contract termination and potential exclusion from future federal work.

The order, titled Addressing DEI Discrimination by Federal Contractors, says agencies must add that clause within 30 days, which makes the first compliance deadline April 25, 2026. Trump framed the order as a contracting and civil-rights measure, writing that the federal government should “promote economy and efficiency in Federal contracting by preventing racial discrimination.”

The order defines racially discriminatory DEI activities 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 order applies to prime contractors and subcontractors performing work under federal contracts.

For federal contracts, the order includes provisions related to:

  • Prohibiting certain DEI practices. Contractors cannot use race or ethnicity based criteria in hiring, promotions, contracting, or internal programs.
  • Mandatory contract clause and reporting. Agencies must add a compliance clause to contracts, and contractors must provide records to verify compliance.
  • Subcontractor accountability. Contractors must apply the rule to subcontractors and report potential violations.
  • Enforcement and penalties. Agencies can terminate contracts or bar contractors from future work, and violations may trigger False Claims Act liability.

The order also directs the Federal Acquisition Regulatory Council to issue interim guidance within 60 days and to update the Federal Acquisition Regulation, the government’s procurement rulebook. Agencies must review implementation and report on compliance within 120 days.

The Attorney General must consider whether to bring enforcement actions under the False Claims Act against contractors or subcontractors that violate the order’s requirements.

The March 26 EO is the latest in a series of actions the Trump administration has taken to eliminate DEI across the federal government and its contractors:

  • Ending Illegal Discrimination and Restoring Merit-Based Opportunity, issued Jan. 20, 2025, rescinded Executive Order 11246, eliminating the longstanding requirement that federal contractors engage in affirmative action in hiring and promotion, and directed agencies to require contractors to certify they do not operate DEI programs that violate federal anti-discrimination laws. President Lyndon B. Johnson (D) issued EO 11246 in 1965.
  • Ending Radical and Wasteful Government DEI Programs and Preferencing, issued Jan. 20, 2025, directed federal agencies to shut down internal DEI offices, terminate DEI-related positions, and end DEI training programs across the federal workforce.