The Federal Acquisition Regulation Council must issue implementing guidance within 60 days (by May 25, 2026). Individual agency heads must review compliance and report within 120 days (by July 24, 2026). The obligation flows down to subcontractors at all tiers. The specific language of the compliance clause and how agencies will interpret "racially discriminatory" remain unclear pending FAR guidance.
Federal contractors now face material risk. The order expands on January 2025's Executive Order 14173 by granting agencies auditing powers—contractors must provide access to books, records, and accounts—and introducing debarment as a penalty. Violations expose contractors to False Claims Act liability, contract termination, and exclusion from future government work. For companies dependent on federal revenue, the debarment threat represents an existential consequence. The decentralized enforcement structure across agencies will likely create inconsistent compliance standards, forcing contractors to navigate multiple interpretations simultaneously. Counsel should begin auditing client DEI programs now and prepare for agency inquiries once the April 25 deadline passes.