Contractors have begun receiving modifications to existing contracts implementing the new DEI clause mandated by Executive Order 14398 “Addressing DEI Discrimination by Federal Contractors.”  Shortly after the executive order, the FAR Council issued a Memorandum[1] establishing a new implementing clause, FAR 52.222-90. 

The Memorandum also established mandatory deadlines for agencies to begin including FAR 52.222-90 in federal procurements:

  • April 24, 2026: Agencies were required to begin inserting FAR 52.222-90 in new solicitations and resulting contracts.  They were also required to amend any open solicitations to incorporate the clause in accordance with FAR Part 1.107(d) by this date.
  • July 24, 2026: Contracting officers must make every effort to bilaterally modify existing contracts, including definitive contracts and indefinite-delivery contracts, to include FAR 52.222-90 by this date.

It appears that at least some agencies are on schedule, as the new clause has begun appearing in solicitations and contracting officers are now pushing out bilateral modification requests to add the clause to their existing contracts.  In some cases, modifications are bundling the new clause with other contract changes, so contractors should read proposed modifications closely in the coming months. 

In deciding whether to accept the new clause, contractors should consider a few key points:

  • FAR 52.222-90 prohibits race- and ethnicity-based disparate treatment in recruitment, hiring, contracting, program participation, or allocation of company resources.  This prohibition overlaps somewhat, but not completely, with existing federal anti-discrimination laws.  Specifically, contractors should evaluate whether they employ any race- or ethnicity-based contracting preferences or allocations of resources on their federal contracts that might violate the clause.
  • The clause limits its applicability to conduct “[i]n connection with the performance of work under this contract,” so conflicting requirements on unrelated state contracts should not preclude compliance. 
  • FAR 52.222-90 will apply to all solicitations and contracts valued above the micro-purchase threshold where the United States is the place of performance or delivery. The new clause will also apply to procurements for commercial products and services.
  • The clause requires contractors to flow it down to subcontracts at all tiers, including subcontracts for commercial products and services.  Contractors must report subcontractor non-compliance with the clause, which means contractors should consider how they will monitor subcontractor compliance and document the process in their files.
  • While the Memorandum directs contracting officers to “make every effort” to bilaterally modify existing contracts to add FAR 52.222-90, it also encourages contracting officers to terminate the contract if the contractor will not agree to modify willingly, provided the contracting officer determines that the contract no longer meets the agency’s needs. 
  • There are several ongoing legal challenges to the new clause and underlying executive order, but for now the clause is valid and enforceable once incorporated into a contract.

Contractors can expect some pressure from the government to add FAR 52.222-90 to their contracts, especially given the available threat of contract termination if they decline.  But contractors should make sure they understand the implications before signing and pay close attention to other content of the requested modification.  Contractors should also prepare to flow down the new clause and monitor subcontractor compliance.  Failure to do so may lead to suspension, debarment, and potential civil FCA exposure.

[1] Agency Implementation of Executive Order 14398, Addressing DEI Discrimination by Federal Contractors.