Trump's DEI Order Creates Dilemma for Federal Contractors

Source:Bloomberg

Federal contractors are scrambling to figure out how far they should go in changing policies they’ve used to recruit and retain employees, in light of the Trump administration’s crackdown on what it describes as “illegal” DEI.

Companies that provide goods and services to the US government have a lot at stake. Agencies reported spending more than $770 billion in prime contracts in 2024, and there could be legal repercussions and hefty penalties for crossing the line on diversity, equity and inclusion— a line the administration hasn’t clearly defined. At the same time, existing contracts obligate these companies to maintain hiring policies they’ve been practicing for decades.

“The biggest question to me is, what is still in the contract that you need to comply with? How does it get changed, and when, and by whom?” said David Berteau, president and CEO of the Professional Services Council, an industry group that represents federal contractors.

“Those are still, at least from my perspective, unanswered questions on an uncertain timetable,” he added.

President Donald Trump rescinded Executive Order 11246, a 1965 rule that required contractors to practice “affirmative action” in their hiring, recruiting and promotion policies. In practice, this has meant tracking race and gender in their workforces, and identifying any policies that led to some groups being underrepresented, contracting attorneys said.

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GSA takes steps to remove DEI from federal contracts

Source:WashTech

The General Services Administration’s new class deviations will likely lead to a formal rulemaking process that would more permanently enshrine the Trump administration’s desire to outlaw diversity, equity and inclusion provision in government contracting.

Both deviations issued Saturday are GSA's move to implement the Trump executive order entitled "Ending Illegal Discrimination and Restoring Merit Based Opportunity."

GSA is making changes to the Federal Acquisition Regulation that the agency says will let contracting officers amend and modify current solicitations and contracts without penalty to the government or contract holder.

Agencies can use the modifications to remove contract clauses that promote DEI or have DEI considerations as contract requirements.

GSA Federal Acquisition Service Commissioner Josh Gruenbaum called the deviations “the first steps in transforming the FAR into a sensible, common-sense guideline to ensure that the federal government is working with industry as an attractive partner for business.”

In addition to rolling back DEI programs, the Trump administration has emphasized streamlining government operations as a priority. The administration has said it wants the government to operate more like a business.

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What Contractors and Grantees Need to Know About President Trump’s Day 1 Executive Orders

Source:WILEY

President Trump issued several Executive Orders (EOs) on January 20, his first day in office, that will impact pending, current, and future contracts and grants. Many of his initial EOs are generally applicable across government agencies, but they will have specific impacts on federal, state, and local awardees (contractors and grant recipients) that support government programs. Many are also reversals from the previous Administration’s EOs, including several policy reversals that we have come to expect over the past few decades whenever the party that controls the White House changes. Below is a brief summary of the Day 1 EOs that contractors and grantees will need to closely analyze and watch over the coming weeks as agencies begin implementation.

President Trump is continuing to issue EOs at a rapid pace, and many of those will impact government contractors and grant recipients. For example, President Trump on January 21 (Day 2) issued an EO on “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,” which among other actions rescinds EO 11246, “Equal Employment Opportunity”—a significant change to a procurement policy that has been in place for nearly 60 years. Wiley will provide additional analysis of that EO and others affecting contractors and grant recipients in the coming days and weeks.

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