Trump Administration’s New Executive Order on DEI

Overview of the Trump Administration’s New Executive Order on DEI:

On March 26, 2026, President Trump signed Executive Order 14398, “Addressing DEI Discrimination by Federal Contractors,” adding to the growing list of federal measures targeting diversity, equity, and inclusion (“DEI”) in the workplace. 

Key Definitions Under Executive Order 14398:

Executive Order 14398 sets forth two key definitions relevant to its provisions:  

1. “Racially discriminatory DEI activities” means disparate treatment based on race or ethnicity in the recruitment, employment, contracting, program participation, or allocation or deployment of an entity’s resources 
2. “Program participation” means membership, participation, access, or admission to:  training, mentoring, or leadership development programs; educational opportunities; clubs; associations; or similar opportunities that are sponsored or created by the contractor or subcontractor 

New Contract Requirements for Federal Contractors:

Further, within thirty days, Executive Order 14398 requires executive departments and agencies, including independent establishments subject to the Federal Property and Administrative Services Act (FPASA), 40 U.S.C. 102(4)(A), to include the following clause in contracts and subcontracts: 

“In connection with the performance of work under this contract, [the contractor/appropriate party (contractor)] agrees as follows: 

1.  The contractor will not engage in any racially discriminatory DEI activities, as defined in section 2 of the Executive Order of March 26, 2026 (Addressing DEI Discrimination by Federal Contractors);
2.  The contractor will furnish all information and reports, including providing access to books, records, and accounts, as required by the contracting agency pursuant to the Executive Order of March 26, 2026 (Addressing DEI Discrimination by Federal Contractors), for purposes of ascertaining compliance with this clause; 
3.  In the event of the contractor’s or a subcontractor’s noncompliance with this clause, this contract may be canceled, terminated, or suspended in whole or in part, and the contractor or subcontractor may be declared ineligible for further Government contracts; 
4.  The contractor will report any subcontractor’s known or reasonably knowable conduct that may violate this clause to the contracting department or agency and take any appropriate remedial actions directed by the contracting department or agency; 
5.  The contractor will inform the contracting department or agency if a subcontractor sues the contractor and the suit puts at issue, in any way, the validity of this clause; and
6.  The contractor recognizes that compliance with the requirements of this clause are material to the Government’s payment decisions for purposes of section 3729(b)(4) of title 31, United States Code (False Claims Act).”