White House Orders End to Race-Based Hiring by Government Contractors
Published Date: 3/31/2026
Presidential Document
Summary
Starting soon, all companies that work with the federal government must stop any hiring or promotion practices that treat people differently based on race or ethnicity. This change aims to make sure everyone is judged fairly on their skills and work, saving taxpayer money by cutting unnecessary costs. Federal contractors have to follow these new rules right away, or they risk losing government contracts.
Analyzed Economic Effects
5 provisions identified: 0 benefits, 5 costs, 0 mixed.
Ban on Racially Discriminatory DEI Practices
If your company contracts with the federal government, you may not engage in racially discriminatory DEI activities. The order defines those activities to include disparate treatment based on race or ethnicity in recruitment, hiring, promotions, contracting, program participation, or resource allocation.
Contract Loss and Debarment Penalties
The order directs agencies to cancel, terminate, suspend, or cause cancellation/termination/suspension of contracts for failure to comply and to take action to suspend and debar noncompliant contractors or subcontractors. The Attorney General may also consider bringing False Claims Act actions for violations.
New Contract Clause and Compliance Duties
Within 30 days of March 26, 2026 (by April 25, 2026), federal contracts and subcontracts must include a clause forbidding racially discriminatory DEI activities. That clause also requires contractors to provide information and reports and give contracting agencies access to books, records, and accounts to show compliance.
Obligation to Report Subcontractor Violations
Contractors must report any known or reasonably knowable conduct by subcontractors that may violate the clause to the contracting agency and must take remedial actions directed by the agency. Contractors must also inform the agency if a subcontractor sues and the suit challenges the clause.
Agency Guidance, Sector Reviews, and Implementation Deadlines
The Office of Management and Budget will issue guidance to agencies; OMB, the Attorney General, and other officials will identify sectors at risk and issue further guidance. The Federal Acquisition Regulatory Council must amend the FAR and issue interim guidance within 60 days of March 26, 2026 (by May 25, 2026). Each agency head must review implementation and report within 120 days of March 26, 2026 (by July 24, 2026).
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