Trump Administration Rushes DEI Crackdown on Federal Contractors Amid Legal Challenges

On April 17, less than a month after President Trump signed Executive Order 14398 targeting diversity, equity, and inclusion (DEI) programs, the Federal Acquisition Regulatory (FAR) Council issued swift guidance to federal agencies on enforcing the Order. This rapid action, well ahead of the Order’s 60-day deadline, signals the administration’s urgency to quash DEI initiatives among federal contractors.

The Order broadly prohibits contractors and subcontractors from engaging in what it defines as “racially discriminatory DEI activities.” This vague language covers a wide range of practices, from recruitment and employment to participation in training, mentoring, and leadership development programs. Contractors must certify they do not engage in these activities and that they comply with federal anti-discrimination laws — with certifications tied to potential False Claims Act liability.

The FAR Council’s April 17 memorandum implements the Order through a new contract clause, FAR 52.222-90, which applies to all federal contracts above the micro-purchase threshold (generally $15,000) performed in the United States, including commercial products and services. Crucially, the clause must also flow down to subcontractors at any tier, expanding the Order’s reach deep into federal contracting supply chains.

Contracting officers are instructed to modify existing contracts to include this clause by July 24, 2026, with refusal to comply potentially leading to contract termination. The Order effectively weaponizes federal contracting rules to dismantle DEI efforts, threatening contractors who support such programs with serious penalties.

However, the Order has already sparked legal pushback. A lawsuit filed in the District of Maryland argues that the Order exceeds existing anti-discrimination law by broadly targeting DEI initiatives rather than addressing actual discrimination. This challenge highlights the administration’s pattern of using executive power to undermine civil rights protections under the guise of regulatory reform.

The FAR Council’s guidance also revises several Federal Acquisition Regulation subparts to incorporate the new clause as grounds for suspension or debarment and signals plans for a full rulemaking process — though agencies must follow the Council’s language in the meantime.

This aggressive, top-down crackdown on DEI programs is yet another example of the Trump administration’s authoritarian overreach, weaponizing federal procurement to stifle diversity and equity efforts while exposing contractors to legal and financial risks. The ongoing legal challenge will be a crucial test of how far the administration can push these anti-DEI policies before courts step in.

For contractors and civil rights advocates alike, this rapid-fire execution of the Order demands vigilance and resistance to preserve federal support for diversity and inclusion in the workplace.