GSA's New DEI Certification Could Cost Universities Billions — The False Claims Act Trap Explained

Every university in America that receives federal funding — research grants from NIH and NSF, student financial aid from the Department of Education, cooperative agreements with the Department of Energy — is now confronting a single question that could reshape the entire landscape of higher education finance: Can we sign this certification, and what happens if we're wrong?

The General Services Administration published proposed updates to the System for Award Management (SAM) on January 28, 2026, adding new certification requirements for all recipients of federal financial assistance. The language requires organizations to attest that they comply with "federal antidiscrimination laws" as interpreted through recent executive orders — and specifically identifies practices "labeled as DEI or DEIA" as potential violations. A public comment period that closed on March 30 drew nearly 22,000 responses, the vast majority from higher education institutions and organizations denouncing the proposal as vague, overbroad, and legally unprecedented.

What makes this different from the dozens of executive orders and policy memos that have targeted diversity programs over the past year is the enforcement mechanism: the False Claims Act. And that changes the math entirely.

What the Certification Actually Says

The draft text, updated on February 18, 2026, requires federal grant recipients to certify three things:

First, that they comply with federal antidiscrimination statutes and do not implement practices violating those laws — with specific examples including "race-based 'diverse slate' policies in hiring," race-based scholarships or programs, preferential hiring or promotion practices, access to facilities or resources based on race or ethnicity, and training programs that "stereotype or exclude individuals by protected characteristics."

Second, that they will not "knowingly bring illegal aliens into the United States or transport, conceal, harbor, shield, hire, or recruit" undocumented individuals.

Third, that they will not "fund, subsidize, or facilitate violence, terrorism, or other illegal activities" threatening national security.

The second and third certifications, while notable, are relatively straightforward compliance attestations. The first certification is the one that has higher education in an uproar — because the language uses "may" rather than definitive declarations of what constitutes a violation, creating what legal experts describe as a compliance target that institutions cannot see clearly enough to hit.

The False Claims Act Mechanism

To understand why universities view this as existential, you need to understand how the False Claims Act works in the context of federal grants.

The False Claims Act (31 U.S.C. §§ 3729-3733) imposes civil liability on anyone who knowingly submits a false claim to the federal government. Penalties include treble damages — three times the government's loss — plus per-claim penalties that currently range from $13,946 to $27,894 per violation. The Act also includes a qui tam provision allowing private citizens to file lawsuits on the government's behalf and collect a portion of any recovery.

When a university signs the new SAM certification and then accepts a federal grant, that certification becomes a condition of payment. If the government later determines that the university was operating a program that violates the certification — say, a diversity scholarship program that the administration considers unlawful race-based discrimination — every federal payment made while the certification was in effect could be deemed a false claim.

The Association of American Universities spelled out the stakes explicitly: "If an institution certifies in good faith but is later found to have operated a program that the government considers a violation, that certification could be deemed false and material to every federal payment made during the certification period." A major research university that receives $500 million annually in federal grants could face theoretical liability in the billions.

Jon Fansmith, senior vice president for government relations at the American Council on Education, was more direct: "It is very clearly meant to intimidate."

Why Universities Can't Just Comply

The obvious response — eliminate any program that might be considered DEI-related and sign the certification — is far more complicated than it appears, for three reasons.

The standards are undefined. The certification references executive orders and federal antidiscrimination law, but the specific practices it lists as potentially problematic are preceded by "may" — not "shall" or "does." A university could eliminate its diversity office, cancel every identity-based scholarship, and disband all affinity groups, and still have no certainty that it has complied. As the AAU stated: "Institutions are asked to certify they are not doing something without being told clearly what that something is."

The legal landscape is actively contested. ACE president Ted Mitchell noted that the proposal relies on "legal interpretations that are the subject of current federal litigation and have not yet been resolved by the courts." Federal courts have issued conflicting rulings on the legality of various DEI-related programs in the wake of the Supreme Court's 2023 Students for Fair Admissions decision. The GSA certification effectively converts disputed legal theories into mandatory compliance requirements — before the courts have settled the underlying questions.

Compliance itself carries institutional costs. Many universities have argued that programs the administration characterizes as DEI — mentorship programs for first-generation students, support services for veterans transitioning to academic life, community health partnerships with underserved populations — serve legitimate educational and research missions that have nothing to do with unlawful discrimination. Eliminating these programs to satisfy a vague certification doesn't just affect university culture; it affects the research enterprise itself. NIH-funded clinical trials, for example, are required to include diverse participant populations. A university that dismantles its community engagement infrastructure to comply with one federal requirement may find itself unable to comply with another.

The Research Funding Dimension

For grant seekers specifically — the researchers, PIs, and research administrators who navigate the federal funding system — the certification creates a new layer of risk that sits on top of every proposal and every award.

Principal investigators don't typically sign SAM certifications — institutional officials do. But PIs whose research involves populations, communities, or topics that the administration might characterize as DEI-adjacent now face indirect risk. A sociology researcher studying racial disparities in health outcomes, a computer scientist developing bias detection tools, or an education researcher studying achievement gaps may find that their university's research compliance office adds new review requirements or steers them away from politically sensitive topics — not because the research is unlawful, but because the institution cannot afford the False Claims Act exposure of hosting it.

Research administrators face the most immediate operational challenge. They must advise institutional leadership on whether to sign the certification, assess which existing programs might create exposure, and develop compliance monitoring systems for a set of rules that don't yet exist in definitive form. Many are working without clear guidance from the government on what, precisely, constitutes a violation.

Small and mid-size institutions face disproportionate risk. A university with a $50 million research portfolio has the same certification obligation as one with a $5 billion portfolio, but far less legal capacity to evaluate the risks. These institutions are most likely to respond by over-complying — cutting programs that may be perfectly legal — because they cannot afford the legal costs of defending ambiguous positions.

What Comes Next

The public comment period closed on March 30 with nearly 22,000 submissions. Over two dozen higher education associations — including the AAU, ACE, and 22 partner organizations — have formally called on GSA to rescind the proposal entirely.

The administration's March 27, 2026 executive order requiring federal contractors to pledge non-engagement in "racially discriminatory DEI activities" suggests the certification effort will expand, not retreat. The contractor order and the grant recipient certification use similar language but apply to different legal frameworks — federal procurement law versus federal assistance law — creating parallel compliance obligations that cover virtually every institution that does business with the federal government.

Several possible paths forward exist:

Legal challenge. Multiple organizations are evaluating litigation strategies. The vagueness of the certification language — particularly the use of "may" instead of definitive prohibitions — could provide grounds for a challenge under the Administrative Procedure Act or the Due Process Clause. However, litigation takes time, and universities must decide whether to sign the certification before courts can rule.

Conditional compliance. Some institutions are exploring whether they can sign the certification with accompanying disclosures or clarifying statements that document their good-faith interpretation of its requirements. Whether GSA will accept qualified certifications is unclear.

Selective refusal. Declining to sign the certification means losing all federal funding — an option that is financially impossible for most institutions. However, a coordinated refusal by major research universities would create political and practical consequences that the administration would need to address.

For researchers navigating this uncertainty, the practical advice is threefold: document the institutional purpose and legal basis for every program that touches your research, maintain open communication with your research compliance office about evolving requirements, and diversify your funding portfolio to reduce dependence on any single federal source. The federal funding diversification guide provides frameworks for building resilience across funding streams, and Granted can help identify foundation and non-federal funding alternatives that don't carry the same certification requirements.