While much of the focus on President Trump’s recent Executive Order on Ending Illegal Discrimination and Restoring Merit-Based Opportunity (the “EO”) has been on its elimination of race and sex-based affirmative action requirements for federal contractors, another provides carries even greater potential implications. The EO also introduces new contractual obligations related to diversity, equity, and inclusion (“DEI”) efforts and signals an intent to use the False Claims Act (FCA) as a tool to target government contractors for what it views as “illegal” DEI initiatives—potentially subjecting those companies to substantial financial and even criminal penalties.
Government contractors are no strangers to being test subjects for Executive policy initiatives. Past administrations have leveraged the federal government’s immense purchasing power to enforce requirements that couldn’t gain traction in Congress. From paid leave and minimum wage mandates to COVID-related requirements, federal contractors have consistently faced unique obligations and consequences that don’t apply to their non-contractor counterparts. The same practice is playing out here.
Although the exact details of the new contractual requirements are still pending, government contractors are urged to begin preparations now to minimize potential business disruptions and significant liability risk. Below is a Q&A to further clarify these developments.
Q: What exactly is this new contractual requirement?
A: The...
On February 26, 2025, the U.S. District Court for the Northern District of Texas issued a significant False Claims Act (FCA) ruling in United States of America ex rel. Cheryl Taylor v. Healthcare ...