US President Donald Trump on Thursday signed an executive order directing federal contractors and their subcontractors to eliminate diversity, equity and inclusion (DEI) practices, the White House said.
The order requires federal contracts to include a clause prohibiting what it calls “racially discriminatory DEI activities,” extending the restriction across hiring, promotions, training programmes and vendor agreements.
Contract clause makes compliance mandatory
Under the order, contractors working with the federal government must certify that they are not engaging in DEI practices that involve differential treatment based on race or ethnicity. The rule applies not only to primary contractors but also to subcontractors at multiple levels.
Companies will be required to provide records and information to government agencies to demonstrate compliance. Contractors must also report any known violations by subcontractors and inform authorities if legal disputes arise over the validity of the clause.
Failure to comply could result in contracts being cancelled, terminated or suspended. They may also be declared ineligible for future government work, effectively cutting them off from federal business.
Enforcement tightened across agencies
The order directs the White House Office of Management and Budget to issue guidance to agencies on how to enforce the new rules. Federal agencies have been asked to review contracts, ensure compliance and take action against violators.
It also calls for the identification of sectors where companies are more likely to engage in such DEI practices, with additional compliance measures to be introduced in those areas.
The Attorney General has been tasked with reviewing potential violations and considering action under the False Claims Act. The order further calls for the prompt review of civil cases related to such contracts.
Administration calls DEI discriminatory
The executive order frames DEI practices as discriminatory and inefficient. It states that such policies treat individuals differently based on race or ethnicity rather than merit.
“DEI activities are not only unethical and often illegal, but also cause inefficiencies, waste, and abuse,” the order said. It added that hiring and promotion decisions should be based on merit “without regard to immutable characteristics.”
According to the administration, DEI policies increase operational costs, reduce workforce efficiency and limit the available talent pool, with these costs ultimately passed on to the federal government.
Part of broader rollback of DEI policies
This also builds on earlier actions by Trump aimed at dismantling DEI initiatives within federal agencies and influencing their removal in the private sector.
The latest order expands that effort by linking compliance directly to federal contracting, significantly raising the stakes for companies that rely on government business.
Debate over impact continues
The decision is expected to intensify debate over DEI policies in the United States. Civil rights advocates argue such initiatives are necessary to address long-standing inequalities faced by women, LGBTQ+ individuals and ethnic minorities.
However, Trump and his supporters have consistently argued that DEI policies are “anti-merit” and discriminatory against groups such as white people and men.