On March 26, The White House issued a new executive order (EO), “Addressing DEI Discrimination by Federal Contractors.” The order introduces a mandatory contract clause requiring heightened scrutiny and strict compliance standards related to DEI practices across all federal contracts and subcontracts. It also establishes significant enforcement mechanisms, including the potential for contract cancellation, suspension, or debarment in cases of noncompliance. Overview This executive order is part of an ongoing federal effort to reassess the role of DEI programs within organizations that do business with the government. It signals a meaningful shift in how federal agencies expect contractors to design, implement, and document their workforce initiatives. Issued under the authority of the Federal Property and Administrative Services Act (FPASA), the EO directs federal agencies to take immediate action (Fact Sheets). Within 30 days, all new federal contracts must include a clause that: Prohibits contractors and subcontractors from engaging in DEI practices deemed racially discriminatory Requires the submission of comprehensive data, documentation, and reports to verify compliance Authorizes contract cancellation, termination, or suspension if a contractor is found in violation Obligates contractors to report suspected violations by subcontractors, including legal challenges related to the clause Establishes compliance as a material condition for payment under the False Claims Act Importantly, the EO is narrowly focused on race, rather than addressing other protected characteristics such as sex, disability, or veteran status. The order also directs the Department of Justice to intensify enforcement efforts under the False Claims Act and requires the Federal Acquisition Regulatory Council to formally integrate this clause into future federal procurement regulations. Who This Affects The requirements apply broadly to all federal contractors and subcontractors, regardless of size or industry. What Organizations Should Do Now This EO raises the stakes for compliance and places greater emphasis on transparency, documentation, and defensibility in employment practices. While many of the underlying principles are consistent with existing federal guidance, the level of enforcement and oversight is expected to increase. At this stage, the EO does not define a specific process for demonstrating “genuine and verifiable” compliance. However, organizations should anticipate additional requirements—potentially including certifications, audits, and expanded reporting obligations. To prepare, organizations should consider the following actions: Conduct a thorough review of DEI-related policies, programs, and goals to ensure alignment with Title VII of the Civil Rights Act of 1964 Provide targeted training to HR professionals, recruiters, managers, and employee resource group (ERG) leaders on compliant practices Maintain detailed documentation that clearly outlines business justifications, selection criteria, and equal opportunity safeguards across all workforce programs How Minority Success Can Support Your Compliance Efforts In a regulatory environment where expectations are evolving but not yet fully defined, taking a proactive and data-driven approach is essential. Building a strong foundation of documentation and analysis will be key to demonstrating compliance and reducing risk. Minority Success offers tailored solutions to help organizations navigate these changes with confidence: Workforce analytics to assess outcomes by race and gender and identify potential disparities End-to-end compliance support, including affirmative action