Trump Order Moves to Ban DEI Programs for Federal Contractors

President Trump signed an order banning some DEI programs by federal contractors effective March 26, 2026.

President Trump signed Executive Order 14398 on March 26, 2026, introducing new limits on diversity, equity, and inclusion (DEI) initiatives for companies holding federal contracts.

• The order prohibits federal contractors, and their subcontractors, from enacting workplace programs that treat employees, applicants, or others differently based on race or ethnicity.
• Every contract must include a provision making these restrictions mandatory, affecting both current and future government work.
• Firms that violate the order risk loss of contracts, suspension, or debarment from future contracting.
• The Office of Management and Budget (OMB) will develop guidance. The Federal Acquisition Regulatory Council, the group that sets government procurement rules, must update the Federal Acquisition Regulation to reflect these changes.

A White House fact sheet describes the order as ending all federal DEI programs and contract requirements "that may encourage or mandate disparate treatment based on race or ethnicity."

Law firms advise immediate review of company hiring or DEI practices to minimize legal risk as definitions and enforcement will soon shift (Skadden; Bradley).

Leadership teams should prepare for further compliance steps once OMB and procurement officials release final guidance and amend contracting regulations. The practical scope of what constitutes prohibited "disparate treatment" is still unclear.

Yes, but: Details on how agencies will interpret and enforce the order's broad language remain unsettled.

What's next: New compliance rules and contract language from OMB and procurement officials are expected over the coming months.