Six Questions Federal Contractors Are Asking About the New DEI Executive Order
Key Takeaways Executive Order 14398 narrows the administration’s focus to race- and ethnicity-based DEI practices but expands contractor risk through mandatory contract clauses, reporting obligations, and a more robust enforcement framework. Although EO 14398 does not expressly state that it applies retroactively, federal contractors should expect it to affect existing contracts quickly as agencies begin adding the required clause, and contractors begin flowing it down to subcontractors. The order creates significant uncertainty for contractors balancing federal requirements with state and local affirmative action obligations, making careful review of current programs and contracting practices essential. Federal contractors should act now to assess diversity, equity, and inclusion-related (DEI) policies, strengthen documentation and certification processes, and build oversight mechanisms for subcontractor compliance in light of potential False Claims Act (FCA) exposure. The recent...