The settlement involves IBM, the DOJ Civil Division, and the DOJ Civil Rights Division. Acting Attorney General Todd Blanche announced the settlement, characterizing it as evidence that contractors "cannot evade the law by repackaging [discrimination] as DEI." The alleged violations involved Title VII of the Civil Rights Act of 1964 and Federal Acquisition Regulation requirements spanning from January 2019 to the present. The DOJ alleged IBM maintained practices including developing race and sex demographic goals, tying management bonuses to demographic targets, and offering certain programs only to specific employees—with costs allocated to federal contracts.
The settlement emerges from two recent Trump administration initiatives: the DOJ Civil Rights Fraud Initiative announced in May 2025 and Executive Order 14398 signed in March 2026. This represents the first tangible enforcement action under the Civil Rights Fraud Initiative after months of policy announcements. It demonstrates the administration is actively using FCA enforcement—traditionally focused on contract fraud—to challenge employment practices, significantly expanding compliance risk for federal contractors with diversity programs.