Continuing his administration’s efforts to eliminate diversity, equity and inclusion (DEI) activities, President Donald Trump signed an executive order, “Addressing DEI Discrimination by Federal Contractors,” on March 26, 2026, that directs all executive departments and agencies to include a new clause in all federal contracts and subcontracts prohibiting what the order defines as “racially discriminatory DEI activities.” The order represents another escalation of the administration’s efforts to restrict DEI programs in the federal contracting space — building on Executive Order 14173 and the Department of Justice’s May 2025 Civil Rights Fraud Initiative — and carries substantial enforcement implications, including potential liability under the False Claims Act (FCA).
Read on for key provisions of the new executive order, analysis of practical implications for federal contractors and subcontractors, and recommended steps for compliance.