The order applies to all federal contractors under the Federal Property and Administrative Services Act and builds on Trump's January 2025 Executive Order 14173, which revoked race- and gender-based affirmative action provisions dating to 1965. Enforcement will be decentralized across federal agencies, with guidance from the Office of Management and Budget. The specific scope of "racially discriminatory DEI activities" remains subject to agency interpretation and potential litigation—particularly whether the order reaches employee resource groups, diversity hiring initiatives, and contractor diversity reporting requirements.
Contractors face immediate compliance pressure. The April 25 deadline is two weeks away. Firms should audit current DEI programs, affinity groups, and hiring practices for potential exposure. The False Claims Act creates significant financial risk for contractors who certify compliance while maintaining prohibited activities. Expect enforcement variation across agencies and likely legal challenges on constitutional grounds. Attorneys advising federal contractors should prioritize rapid compliance audits and prepare for both agency enforcement actions and potential litigation over the order's scope.