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Trump Administration Executive Order “Addressing DEI Discrimination by Federal Contractors” Highlights False Claims Act Risks and Other Consequences
Vinson Elkins – On March 26, 2026, President Trump issued Executive Order (“EO”) 14398, titled Addressing DEI Discrimination by Federal Contractors, directing federal agencies to include new contractual terms relating to diversity, equity, and inclusion (“DEI”) activities, with significant potential False Claims Act (“FCA”) enforcement consequences for contractors. Pursuant to EO 14398, federal contracts, subcontracts, and “contract-like instruments” must include a clause prohibiting contractors from engaging in “racially discriminatory DEI activities.” EO 14398 threatens noncompliance consequences that include contract termination, suspension, and debarment, and FCA liability.