Publication Date: March 26, 2026
The President signed a new Executive Order on March 26 that directly connects your company’s diversity programs to one of the most powerful legal tools in the federal government — the False Claims Act (FCA). Here’s the plain-English version of what that means: the FCA is a law that lets the government — or even a whistleblower inside your company — sue you for fraud if you make false statements to get paid on a federal contract. The penalties are severe: up to three times the amount of money involved, plus fines per false claim. The EO directs agencies to prohibit what it defines as “racially discriminatory DEI activities,” including as it relates to subcontracts and vendor agreements, and imposes new compliance and reporting obligations on contractors and subcontractors. T Akin Gump Strauss Hauer & Feld LLPhe critical enforcement hook is this: the clause recognizes that compliance with the requirements is material to the Government’s payment decisions for purposes of section 3729(b)(4) of title 31, United States Code — the False Claims Act.
Akin Gump Strauss Hauer & Feld LLPIn plain terms: if your company signs a contract that includes this new clause and then maintains diversity programs the government deems non-compliant, your invoices could be challenged as fraudulent. Even worse, this flows down to your subcontractors — meaning their HR programs are now your legal exposure too. Every contractor needs to do three things immediately: (1) pull your current DEI program documents, (2) review your subcontractor agreements, and (3) call a GovCon attorney before April 15.
Sources: Akin Gump Alert