‘Reasonably Knowable’ in EO 14398: What Prime Contractors Need to Know About Subcontractor Oversight
Executive Order (EO) No. 14398, “ Addressing DEI Discrimination by Federal Contractors ,” issued on March 26, 2026, introduces a new compliance dynamic for federal contractors by requiring prime contractors to report “known or reasonably knowable” subcontractor conduct that constitutes “racially discriminatory” diversity, equity, and inclusion (DEI) activities. 00:00 10:32 While the new contractual obligation is plainly written, the contours of what is “reasonably knowable” are less certain. For primes, the key question now is how far their due diligence and oversight responsibilities should extend into the operations of their subs, particularly in sensitive internal areas such as employment practices (e.g., hiring and promotions), employee program participation, contracting, or allocation or deployment of company resources. The clause’s focus on conduct “[i]n connection with” the contract and traditional industry practice in the prime–sub relationship can provide a complia...