The Trump Administration recently released Executive Order (EO) “Ending Illegal Discrimination and Restoring Merit Based Opportunity” which aims to remove all Diversity, Equity, and Inclusion (DEI) policies and programs within the federal government. In response to the EO, the General Services Administration (GSA) released a memo saying they intend to take immediate action eliminating the enforcement of all contract clauses, provisions, and terms and conditions related to DEI.
This EO will have an impact on all federal contractors as well as subcontractors who are subject to affirmative action obligations. What does this mean for your current or future contracts? Let’s talk about what we know so far.
What We Know About the EO Eliminating DEI Programs
The Executive Order “Ending Illegal Discrimination and Restoring Merit Based Opportunity” seeks to eliminate DEI policies and programs across the federal government and within private companies that work with the government. The EO mandates the Office of Federal Contract Compliance Programs (OFCCP) within the Labor Department to immediately stop promoting diversity, mandating contractors to abide by affirmative action, and encouraging contractors to engage in workforce balancing based on race, color, sexual preference, religion, or national origin.
Additionally, the EO rescinds previous executive actions which we’ll discuss below.
EO On DEI Revokes Previous Orders Related to Equal Employment
This Executive Order revokes past executive actions including Executive Order 11246, Equal Employment Opportunity, amended by Executive Order 13672. These EOs required federal contractors and subcontractors to take “affirmative action” to provide equal employment opportunities. Actions contractors were required to take under this EO and included:
- Filing compliance reports, including the Employment Information Report (EEO-1)
- Include provisions stating they “will not discriminate against any employee or applicant for employment because of race, color, religion, sex, sexual orientation, gender identity, or national origin.”
- Understanding that noncompliance of these policies could result in contracts being “cancelled, terminated, or suspended in whole or in part."
The Federal Acquisition Regulation (FAR) implemented these requirements in several clauses; there is no information yet on these clauses being edited or removed.
EO Removing DEI Does Not Currently Impact Veterans and Persons with Disabilities
The EO does NOT however, affect equal employment requirements related to protections for veterans, persons with disabilities, and compliance with Title VII (discriminate against employees or applicants because of their race, colors, religion, sex, or national origin).
The EO states specifically that it does not “apply to lawful federal or private-sector employment and contracting preferences for veterans of the U.S. armed forces.” Similar to veterans, persons with disabilities are protected by statues including the American with Disabilities Act, Section 503, etc.
GSA’s Response to the EO Revoking DEI Programs
GSA’s new interim Director, Stephen Ehikian, sent out a contractor notice last week, outlining how they are going to implement this new Executive Order. GSA intends to immediately cease the enforcement of all contract clauses, provisions, terms, and conditions related to DEI.
These clauses are defined by GSA but not limited to:
- Clauses that mandate diversity-related obligations
- Any reporting or record keeping requirements specifically related to diversity-related obligations
- DEI requirements imposed on contractors on a firm-wide basis
The memo does NOT direct GSA Multiple Award Schedule (MAS) contractors to take any immediate action under their contracts. GSA will release further guidance and direction soon.
What Does the EO on DEI Mean for Current Government Contracts?
Federal contractors have a grace period of 90 days until April 21, 2025, to continue to comply with previous regulatory requirements that were in effect before Trump took office. The EO states that the government will be taking enforcement actions against contractors with DEI that establish preferences or affirmative action requirements.
However, some experts say the path forward may be unclear for some contractors. While EO encourages the elimination of all preferential and affirmative action programs, new executive actions do not automatically modify existing government contracts. Some contractors may wait to hear further guidance from GSA and other contracting agencies to make any major changes. However, all future contracts will be affected, so this is a change contractors should be looking to make in the near future.
How the EO on DEI will Impact Future Government Contracts
The EO introduces two new terms to all new federal contracts and grants, which we’ll outline below:
- The head of each agency must require federal contractors and grant recipients to acknowledge that compliance with anti-discrimination law is “material to the government’s payment decisions” for the purpose of the False Claims Act (FCA).
- Federal contractors and grant recipients must certify that they do not have DEI programs that violate anti-discrimination laws.
Keeping up with Future Contracting News and Insights
This Executive Order and others such as the federal hiring freeze and DOGE are all going to impact the federal marketplace in some way, but right now it’s unclear just how much federal regulations and vehicles such as the GSA Multiple Award Schedule will change. As we know working with the government, some regulations may take time to be official or to take effect. That being said, it’s essential you keep up with all news related to the govcon world, so you are prepared for anything that affects your contract. To stay updated on future changes in the new administration, check out our blog and our monthly newsletter.
