Federal contractors face new DEI compliance obligations
President Trump issued a new Executive Order (EO 14398) on March 26, 2026, entitled “Addressing DEI Discrimination by Federal Contractors,” along with an accompanying Fact Sheet. The new EO fundamentally alters the compliance landscape for government contractors. While prior EOs addressed diversity, equity, and inclusion (DEI) programs through policy directives, this new EO creates a mandatory, enforceable contract clause that exposes contractors to contract termination, debarment, and False Claims Act (FCA) liability.
Core requirement: New mandatory contract clause
By April 25, 2026, agencies must insert a specific clause into all covered contracts, subcontracts, and lower-tier subcontracts. By accepting a contract containing this clause, contractors agree to six binding obligations: