States Sue to Block Agencies from Adding Anti-DEI Clauses to Government Contracts
On June 10, 2026, nineteen states and the District of Columbia filed suit in the District of Maryland seeking to halt implementation of Executive Order 14398, which was issued on March 26, 2026. The order requires federal agencies to insert a mandatory contract clause into all contracts, subcontracts, and “contract-like instruments” prohibiting contractors from engaging in “racially discriminatory DEI activities.” Compliance with the new clause is an express condition of eligibility to contract with the federal government, and consequences for noncompliance specifically include contract cancellation, exclusion from future federal contracts, suspension, and False Claims Act (FCA) liability . Filed as Maryland v. Hegseth , the complaint comes just two months after the administration announced its first False Claims Act resolution under the Civil Rights Fraud Initiative, a $17 million settlement with IBM. The IBM Settlement In April, IBM agreed to pay $17,077,043 to resolve allegations t...