New Executive Order Requires Federal Contractors to Certify Against DEI

President Trump signed an executive order on March 27, 2026, directing federal agencies to add new contract clauses requiring all federal contractors and subcontractors to certify they do not engage in "racially discriminatory DEI activities." The order carries teeth: contractors who certify falsely face potential liability under the False Claims Act, which can impose treble damages and per-claim penalties exceeding $27,000.

What the Order Requires

The executive order directs agencies to incorporate a standardized contract clause that obligates contractors to:

• Certify they do not operate programs classified as illegal DEI
• Report subcontractor violations to the contracting agency
• Make internal records available for government inspection
• Acknowledge False Claims Act exposure for inaccurate certifications

The order builds on EO 14173, signed in January 2025, which directed agencies to ensure federal fund recipients uphold "merit-based principles." That earlier order spawned the GSA's proposed SAM.gov certification requirements for grant recipients, which drew nearly 22,000 public comments before the comment period closed March 30.

Higher Education Sounds the Alarm

Universities and research institutions have been among the most vocal opponents. The Association of American Universities warned that the certification's vagueness creates "real and potentially existential" False Claims Act exposure. The American Council on Education, American Association of Community Colleges, and more than a dozen other higher education groups filed joint comments arguing that institutions "are asked to certify they are not doing something without being told clearly what that something is."

The concern extends beyond ideology. Contract clauses referencing "harboring" undocumented individuals could restrict standard educational activities, while language about not funding "terrorism" could chill classroom instruction on contested topics.

Practical Steps for Affected Organizations

Organizations holding or pursuing federal contracts should begin reviewing internal programs that could be characterized as DEI-related, consult legal counsel on certification language, and document compliance decisions. The implementation timeline has not been specified, but agencies are expected to begin incorporating the new clause into contracts in coming months.

Contractors should also monitor the parallel SAM.gov certification process for grant recipients, as the two frameworks may converge. In-depth coverage of compliance strategies is available on the Granted blog.

For detailed guidance on navigating these new requirements, visit the Granted blog.