Trump’s New Executive Order Weaponizes Contracting Power to Gut Racially Focused DEI Programs

President Donald Trump’s administration has unveiled a new executive order aimed squarely at federal contractors’ diversity, equity, and inclusion (DEI) initiatives—specifically those that consider race or ethnicity. Issued on March 26, 2026, Executive Order No. 14398 demands that contractors and subcontractors certify they will not engage in any “racially discriminatory DEI activities,” a broad and deliberately ambiguous phrase that threatens to dismantle a wide range of race-conscious programs.

The order requires federal agencies to insert a new contract clause obligating contractors to refrain from any DEI efforts that involve “disparate treatment based on race or ethnicity” in hiring, promotions, vendor agreements, training programs, and even employee affinity groups. Contractors must also grant agencies access to their records to prove compliance and report any subcontractor misconduct. Failure to comply risks contract termination, suspension, or debarment, and exposes contractors to potential False Claims Act liability.

This move marks a sharp retreat from the administration’s earlier, more expansive 2025 order that targeted DEI activities across multiple protected categories. Now, the focus is narrowly on race and ethnicity, excluding protections based on sex or gender. The order aligns with a recent General Services Administration proposal that similarly restricts DEI certification requirements to race and color discrimination, raising questions about the administration’s inconsistent and selective approach to civil rights enforcement.

Civil rights groups and industry associations swiftly filed suit on April 20, 2026, in the District of Maryland, challenging the order as a violation of the First Amendment and federal anti-discrimination laws. The plaintiffs argue the government cannot force contractors to abandon lawful DEI programs under threat of losing contracts. They seek to halt enforcement and remove the order’s language from federal contracts.

Despite the legal pushback, contractors are advised to prepare for compliance until courts rule otherwise. The order’s expansive definitions could outlaw routine diversity recruitment, mentorship programs, and employee resource groups that help foster inclusion and equal opportunity.

This executive order is another front in the Trump administration’s ongoing campaign to undermine racial equity efforts and roll back protections for marginalized communities. By weaponizing federal contracting power, the administration is attempting to choke off funding for DEI programs that challenge systemic discrimination—while cloaking its actions in the language of “non-discrimination.”

We will continue to track this developing story and its implications for civil rights, corporate accountability, and the future of diversity and inclusion in federal contracting.