With the advent of a second Donald Trump administration, I had expected significant policy and enforcement changes to some of the labor and employment policies that have a direct, daily impact on the operations and management of federal contractors. In many ways, my expectation (aka recognition of the obvious) has proved correct.

Indeed, among the President’s first actions was the issuance of several executive orders intended to turn the ship of state on a dime with respect to anti-discrimination and diversity policies, some of which date back to 1965. One of the most notable of these orders Executive Order 14173, Ending Illegal Discrimination And Restoring Merit-Based Opportunity (January 21, 2025).

EO 14173 repeals President Lyndon Johnson’s Executive Order (No. 11246) that mandated equal employment opportunities for federal contractors, the enforcement of which has been the province of the Office of Federal Contract Compliance Programs (“OFCCP”) established in 1978. Without getting into its many weeds, EO 11246 required contractors to agree that they “will not discriminate” against any employee or job applicant “because of race, creed, color or national origin.” President Johnson’s order also directed contractors to take “affirmative action” to ensure that applicants and employees are employed, and once employed are treated, “without regard to their race, creed, color, or national origin.” The EO has since been updated to prohibit discrimination and require affirmative action on the basis of, among other categories, sex, disability, and sexual orientation. Contractors further were required to document their workforce demographics and efforts to recruit minorities through the preparation of Affirmative Action Plans (“AAP”) and the submission of EEO-1 forms.

President Trump’s order revokes EO 11246, but states that federal contractors may continue to comply with EO 11246 for 90 days after January 21, 2025 (the date of the order). However, contractors will soon see new mandates with their own reporting requirements. Federal contractors and subcontractors will be prohibited from “consider[ing] race, color, sex, sexual preference, religion, or national origin in ways that violate the Nation's civil rights laws” in their “employment, procurement, and contracting practices.” Further, agency heads are directed to include new terms “in every contract or grant award.” These include:

(A) A term requiring the contractual counterparty or grant recipient to agree that its compliance in all respects with all applicable Federal anti-discrimination laws is material to the government's payment decisions for purposes of section 3729(b)(4) of title 31, United States Code; and

(B) A term requiring such counterparty or recipient to certify that it does not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws.

For those not familiar with the False Claims Act, paragraph (A)’s requirement that contractors and grant recipients agree that compliance is material to payment decisions is a not-so-veiled attempt to subject contractors and grantees to False Claims Act liability above and beyond whatever remedies might exist under the unspecified anti-discrimination laws. When tied with the certification requirement of paragraph (B), the submission of literally every invoice arguably be treated as an actionable certification.

Argue what you will about the merits of revoking EO 11246 and putting the kibosh on most of OFCCP’s reporting requirements and enforcement activities, I’m concerned about the potentially scary/costly consequences that may arise if a contractor “certif[ies] that it does not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws” but is later accused, whether by the Government or an enterprising False Claims Act plaintiff, of making a false certification.

Setting aside any views on the merits, a policy intended to reduce the prevalence of diversity, equity, and inclusion within the community of federal contractors may or may not be fine. However, such a policy shouldn’t impose potentially dire consequences instantly with the stroke of a pen.  The procurement universe simply is too large and multi-layered to take the approach set forth in this Executive Order. The complexity starts at the federal level—the Government frequently requires contractors to propose subcontracting plans that include goals for awarding subcontracts to small, disadvantaged businesses, women-owned businesses, and service-disabled Veteran-owned businesses. Is a program to achieve these goals a DEI program?

Federal contractors often aren’t just federal contractors. They often have state or local government contracts that frequently come with their own DEI-ish requirements. Likewise, federal contractors may have contracts in the private sector with major companies that set DEI-ish goals. Should a policy aimed at reducing DEI programs at the federal level punish federal contractors for complying with such requirements outside the federal sphere?

To my mind, this is just too much to ask no matter your views on the policy itself. I’ve written before on the use of federal contractors as guinea pigs to force policies Congress won’t enact. The federal contractor paid sick leave requirement, the contractor minimum wage, and greenhouse gas requirements come to mind. This DEI Executive Order, as written, is just more of the same.