Quick Hit: On April 10, 2026, the Department of Justice (“DOJ”) announced the first False Claims Act (“FCA”) resolution secured under its Civil Rights Fraud Initiative. The settlement resolves allegations that International Business Machines Corporation (“IBM”) violated the FCA “by failing to comply with anti-discrimination requirements in its federal contracts due to practices the United States contends discriminated against employees and applicants for employment because of race, color, national origin, or sex,” and requires IBM to pay the federal government over $17 million. This is the first settlement of an FCA matter based on a contractor’s diversity, equity, and inclusion (“DEI”) initiatives.
Key Takeaways: Since President Trump took office in January 2025, we have been alerting government contractors of the Administration’s efforts to target DEI in the private sector and its threat to use the FCA to stop such practices. The settlement with IBM demonstrates that the Administration is actively investigating government contractors’ DEI practices, and this settlement appears to be just the tip of the iceberg.
Although details of the investigation are limited, there are interesting aspects that can be gleaned from the published settlement agreement (in addition to the monetary component).
Quick Hit: On April 10, 2026, the Department of Justice (“DOJ”) announced the first False Claims Act (“FCA”) resolution secured under its Civil Rights Fraud Initiative. The settlement resolves all...