On April 10, 2026, Acting Attorney General Todd Blanche announced that IBM agreed to pay $17,077,043—inclusive of civil penalties— to resolve allegations that it violated the False Claims Act (FCA) by failing to comply with anti-discrimination requirements in IBM’s federal contracts.
As discussed in our prior Legal Updates on the Department of Justice’s use of the False Claims Act (FCA) to investigate federal contractors’ diversity, equity, and inclusion (“DEI”) programs, and on the March 2026 Executive Order imposing new anti-DEI contract clauses, the enforcement risk we identified has now materialized in a landmark resolution. The government’s settlement with IBM is the first secured under the DOJ’s Civil Rights Fraud Initiative, launched in May 2025, and provides the best evidence to date of the specific employment practices that DOJ considers actionable under its FCA enforcement theory and how the DOJ may pursue enforcement.
Notably, the settlement’s covered conduct period extends back to January 2019—well before the second Trump Administration’s DEI-related executive orders and the Civil Rights Fraud Initiative—signaling that DOJ is prepared to use the FCA to scrutinize contractors’ historical DEI programs and practices retroactively, not merely to enforce prospective compliance obligations.
The DOJ’s allegations against IBM identify a specific set of practices that federal contractors should treat as high risk going forward. The...
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