Federal DEI Rule Now Covers Leases, Concessions Starting 2026
The Federal Acquisition Regulation (FAR) DEI clause will apply to leases and concessions by June 25, 2026.
Why it matters: Legal and compliance teams administering federal contracts, leases, and concessions must review and update policies to meet new DEI obligations and avoid enforcement risks tied to this expanded FAR clause scope.
- On June 25, 2026, the U.S. General Services Administration (GSA) confirmed via Federal Register notice that the FAR DEI clause implementing Executive Order 14398 applies to leases, concession contracts, and outleases beyond traditional government contracts.
- The FAR DEI clause prohibits race- or ethnicity-based disparate treatment in recruitment, employment, contracting, program participation, and resource allocation.
- Noncompliance can lead to suspension, debarment, and liability under the False Claims Act, mandating strict adherence.
- The GSA estimates 31,384 contracts—including leases and concessions—will face new information collection, with about 314 requiring annual reporting, imposing significant review workload on contracting officers.
On June 25, 2026, the U.S. General Services Administration (GSA) issued a Federal Register notice extending the diversity, equity, and inclusion (DEI) clause from the Federal Acquisition Regulation (FAR) to leases, concession contracts, and outleases. This extends the application beyond FAR-based contracts, significantly broadening the scope of covered agreements.
The clause stems from Executive Order 14398, which requires federal agencies to enforce nondiscrimination mandates against race or ethnicity-based disparate treatment across five domains: recruitment, employment, contracting, program participation, and resource allocation. Specifically, the clause prohibits any differential treatment in these areas, regardless of whether a program is formally labeled "DEI."
As Cameron W. Ellis of Ogletree Deakins explains, "The clause’s focus is on race- or ethnicity-based actions across multiple areas — meaning compliance requires a holistic review beyond just programs labeled as DEI."
Legal teams should note that noncompliance risks include suspension and debarment from federal contracting, as well as potential claims under the False Claims Act, which holds contractors liable for knowingly submitting false certifications related to compliance.
The GSA estimates the coverage will include approximately 31,384 contracts, with roughly 314 (1%) requiring annual information reporting. Contracting officers are expected to dedicate about 16 hours each to review these reports, underlining the considerable administrative demands imposed by the compliance process.
Though specific enforcement timelines and rulemaking updates remain forthcoming, this Federal Register notice signals a significant regulatory expansion effective June 25, 2026. Legal and compliance leaders managing federal leases and concessions should commence reviews of their policies and contracts now to ensure alignment with the updated FAR clause requirements.
By the numbers:
- 31,384 contracts covered — leases, concessions, and non-FAR contracts under DEI clause
- 314 contracts (1%) — requiring annual information collection responses
- 16 hours — average time contracting officers expected to spend reviewing each response
Yes, but: While enforcement deadlines are set for June 25, 2026, detailed rulemaking clarifying compliance processes and timelines are still pending, leaving some uncertainty for contractors.
What's next: Look for future Federal Register publications and GSA updates detailing enforcement procedures and reporting instructions ahead of the June 2026 compliance date.