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Wednesday, June 25, 2025

New DEI Executive Order Creates Potential False Claims Act Exposure for Federal Contractors - The National Law Review

Much attention has been given to the Trump Administration’s new Executive Order titled “Ending Illegal Discrimination and Restoring Merit Based Opportunity” (the “EO”). As stated, its principal aim is to eliminate race- and sex-based preferences administered in the name of DEI (diversity, equity, and inclusion) and DEIA (diversity, equity, inclusion, and accessibility) programs and policies. Less attention, however, has been paid to the potential future liability exposure for federal contractors embedded in the EO’s citations and references to the federal False Claims Act (FCA). As written, the EO appears to set the stage for potential enforcement actions initiated by private parties through the qui tam provisions of the FCA and may thereby increase the likelihood of litigation against federal contractors challenging their future maintenance and implementation DEI and DEIA policies programs.

Specifically, the EO requires the head of each federal government agency to include in each of its contracts and grant awards “[a] term requiring the contractual counterparty or grant recipient to agree that its compliance in all respects with all applicable Federal anti-discrimination laws is material to the government’s payment decisions for purposes of section 3729(b)(4) of title 31, United States Code.” EO §3(a)(iv) (emphasis added). It also requires “[a] term requiring such counterparty or recipient to certify that it does not operate any programs promoting DEI that violate any...



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