President Donald Trump has signed a new executive order aimed at prohibiting what the administration describes as discriminatory diversity, equity, and inclusion (DEI) practices among federal contractors and subcontractors.
The order requires federal contracts governed by the Federal Property and Administrative Services Act to include provisions banning contractors from engaging in racially discriminatory DEI activities. Administration officials said the move is intended to reinforce merit-based hiring and improve efficiency in federal contracting.
Under the directive, the Office of Management and Budget will issue guidance to ensure compliance across agencies and identify sectors at higher risk of violating the new standards. Federal agencies are also authorized to cancel, suspend, or terminate contracts with companies that fail to comply, and in some cases bar them from future federal work.
The order further directs the U.S. Department of Justice to prioritize enforcement through the False Claims Act, including reviewing potential violations and related civil actions brought by private parties.
Additionally, the Federal Acquisition Regulatory Council will update federal procurement rules to incorporate the new requirements and remove any conflicting provisions.
The administration framed the policy as part of a broader effort to ensure equal treatment under the law and eliminate what it characterizes as costly and inefficient hiring practices tied to DEI initiatives.
Officials said the order establishes new accountability measures to ensure compliance, arguing that such changes will help reduce operational costs and improve workforce performance across federal contracts.
The action builds on a series of executive measures taken by the administration aimed at limiting or eliminating DEI-related policies across the federal government, including changes to hiring practices, education policy, and federal procurement standards.