Compliance Stuff

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...

Aside from potential legal trouble, new obligations could spark business and operational friction Executive Order 14398 represents a significant expansion of the government’s enforcement posture on DEI and creates an environment where the cost of delay could substantially exceed the cost of preparation, Andrew Turnbull of Morrison Foerster writes. Contractors should consider implementing certain steps to mitigate risks related to these new requirements. Federal contractors and subcontractors face sweeping new obligations under Executive Order 14398 that prohibit them from engaging in “racially discriminatory DEI activities” and requires reporting any “reasonably knowable” violations by subcontractors . The FAR Council has already issued a mandatory contract clause, FAR 52.222-90 . Agencies have begun inserting it into new solicitations, targeting a completion date of July 24 for modifying existing contracts. Enforcement is not waiting. With a $17 million DOJ DEI settlement already on...

On June 10, 2026, a coalition of twenty states and the District of Columbia filed suit in the U.S. District Court for the District of Maryland challenging federal agency actions taken to implement Executive Order (EO) 14398, the Trump administration’s March 26, 2026, order barring federal contractors and subcontractors from engaging in “racially discriminatory DEI activities.” 00:00 17:43 Quick Hits Twenty states and the District of Columbia, acting in their capacity as federal contractors, have filed suit challenging the FAR Council’s implementing actions for EO 14398, arguing those actions exceed the agency’s statutory authority and were issued without the notice-and-comment process required under federal procurement policy requirements. The state coalition targets the agency implementing actions under the APA, arguing they are procedurally defective and the resulting contract terms too vague to enforce. Another lawsuit challenges the executive order on First Amendment grounds and al...