The federal contracting landscape has shifted dramatically. In late January 2025, President Trump signed Executive Order 14173 — “Ending Illegal Discrimination and Restoring Merit‑Based Opportunity”, rescinding EO 11246 and effectively dismantling decades of affirmative-action and DEI mandates in federal contracts
What Changed—At a Glance
- DEI mandates & affirmative action abolished for federal contractors. EO 14173 voids a swath of FAR clauses, including bans on segregated facilities, until April 21, 2025—a 90-day wind‑down window.
- New False Claims Act exposure. Contracts now include clauses making DEI violations material to payment. Missteps could invite FCA penalties—treble damages and steep fines
- OFCCP enforcement upended. The Office must cease affirmative-action audits and end diversity enforcement, and has begun laying off staff
- DBE set-asides under legal onslaught. A Justice Department move seeks to dismantle the $37B Disadvantaged Business Enterprise program for race/gender-based awards
The Ripple Effect
- Contract audits & certification crunch
Government contractors must now certify compliance with anti-discrimination law and absence of DEI programs—or risk false claims exposure. Proactive auditing of existing DEI frameworks is critical. - Set‑aside uncertainty
Programs like Part 19, 8(a), WOSB, and HUBZone linked to equity may be scrutinized or revoked. The SBA has already reset some small-business goals at agency levels - Legal liability intensifies
Even without OFCCP oversight, private enforcement via the FCA and DOJ clampdowns on DEI pose fresh risks . - Strategic pivot to merit & efficiency
Agencies are scrambling to remove DEI references from solicitations; legal firms expect contractors to pivot emphasis to cost, capability, and compliance .
What Government Contractors Should Do Now
- Deep compliance audits. Review all current contracts and subcontractor agreements for DEI-related language or set-aside dependencies.
- Embed aware certifications. Align HR and hiring protocols to ensure they satisfy the new FCA-backed clauses.
- Monitor solicitation revisions. Expect updated FAR provisions and RFPs stripped of DEI criteria—align bids accordingly.
- Support set-aside strategies. Reassess Part 19 eligibility; stay alert to race-neutral alternatives supporting disadvantaged firms
- Track legal developments. Policies are in flux: some EOs are temporarily enjoined, while state AGs, unions, and private litigants challenge them.
A New Compliance Epoch
The rollback marks a paradigm shift—what was compliance-worthy yesterday is liability today. In this evolving environment, contractors must become nimble, revisiting internal controls, certification workflows, and bid strategies. Think of compliance as a constantly shifting compass; if you don’t recalibrate regularly, you’ll lose direction—and may lose a top-tier contract too.
Capitol 50 can help your firm stay ahead. Whether you need a contract qualification review, a GSA contract refresh, or broader administration services, we’ve got the expertise to navigate this tectonic shift. Reach out to Capitol 50’s contract qualification team to secure your compliance roadmap.
