Summary
Prevents companies that work for the federal government from using diversity, equity, and inclusion (DEI) activities that treat people differently based on race.
What problem does this solve?
Some companies use diversity programs that treat people differently based on their race, which the government claims is discriminatory and wasteful. This order stops federal contractors from using these programs.
Who does this affect?
- Federal contractors and subcontractors
- Employees of federal contractors
- Federal government agencies
What does this order do?
Bans certain DEI activities for federal contractors
Requires all federal contracts to include a clause that forbids contractors and subcontractors from engaging in 'racially discriminatory DEI activities,' such as treating people differently based on race in hiring or promotions.
Establishes severe penalties for non-compliance
Allows the government to cancel contracts and ban non-compliant companies from future work. Also allows for legal action under the False Claims Act, which can result in large fines.
Defines what counts as discriminatory DEI
Defines 'racially discriminatory DEI activities' as treating people differently based on race or ethnicity in hiring, promotions, contracts, or access to company programs like training and mentoring.
Requires contractors to report on themselves and others
Forces contractors to provide any information and records the government asks for to check for compliance. They must also report any subcontractors they know of who may be violating the rule.
Directs agencies to update regulations
Orders the Federal Acquisition Regulatory Council to amend its rules to include the new anti-DEI clause in all federal contracts and remove any rules that conflict with it.
Identifies high-risk industries
Requires the Office of Management and Budget to identify industries that are at high risk of using discriminatory DEI practices and to issue special guidance for them.
What is the real world impact?
•
Dismantles diversity and inclusion programs
Frames Diversity, Equity, and Inclusion (DEI) initiatives as inherently discriminatory to justify banning them for any company that does business with the federal government. This could force many private companies to end their diversity programs or risk losing government contracts.
When does this start?
This order sets several deadlines for government agencies to implement these new rules for federal contractors.
Contract clause implementation
Within 30 days of March 26, 2026, all federal agencies must start including the new anti-DEI clause in their contracts.
Interim guidance for agencies
Within 60 days of March 26, 2026, the Federal Acquisition Regulatory Council must issue temporary guidance on how agencies should implement the new contract clause.
Agency compliance report
Within 120 days of March 26, 2026, the head of each federal agency must review their agency's compliance with the order and report their findings.