Quick Hits
- Noncompliance with the DEI anti-discrimination clause at FAR 52.222-90 can result in debarment or suspension, a sanction on par with fraud, bribery, and antitrust violations as grounds for a governmentwide exclusion from federal contracting.
- The FAR Council proposed a rule on September 18, 2026, that would stamp the three-tier enforcement structure of the DEI clause into the FAR: contract-level remedies (cancellation, termination, or ineligibility), governmentwide exclusion (debarment or suspension), and potential False Claims Act liability.
- Because the clause already flows down to subcontracts—including those for commercial products and services if delivery or performance is in the United States—at any tier, prime contractors face heightened exposure for subcontractor noncompliance and placing importance on monitoring and flow-down administration.
- Contractors can consider reviewing current DEI-related policies and practices, update codes of conduct and training programs, and consider submitting comments on the proposed rule by October 19, 2026, via regulations.gov (FAR Case 2026-011).
The proposed rule is part of the Revolutionary Federal Acquisition Regulation Overhaul (RFO), covering revisions to FAR Parts 9, 27, and 47, and the corresponding clauses and provisions in Part 52. Government contractors should pay close attention to the revisions to FAR Part 9, which formally codify noncompliance with FAR clause 52.222-90, Addressing DEI Discrimination by Federal Contractors, as a cause for debarment and suspension.
E.O. 14398 establishes that agencies should not do business with contractors that engage in any racially discriminatory diversity, equity, and inclusion (DEI) activities and directs the FAR Council to amend the FAR accordingly. The order defines “racially discriminatory DEI activities” as disparate treatment based on race or ethnicity in the recruitment, employment (e.g., hiring or promotions), contracting (e.g., vendor agreements), program participation, or allocation or deployment of an entity’s resources. “Program participation” is broadly defined to include membership or participation in, or access or admission to, training, mentoring, or leadership development programs; educational opportunities; clubs; associations; or similar opportunities sponsored or established by the contractor or subcontractor.
The FAR Council took a two-phase approach. In its first phase, the FAR Council issued model class deviations to replace each FAR part. On April 17, 2026, prescribing wide class deviations, the FAR Council issued implementation guidance directing agencies to incorporate FAR 52.222-90 into new solicitations and existing contracts valued over the micro-purchase threshold. The clause requires contractors to agree not to engage in any racially discriminatory DEI activities; furnish information and reports—including broad access to books and records—as required by the contracting officer for compliance purposes; accept that noncompliance may result in cancellation, termination, or suspension of the contract; report any subcontractor’s known or reasonably knowable conduct that may violate the clause; and recognize that compliance is material to the government’s payment decisions under the False Claims Act. The clause flows down to subcontracts at any tier for which the place of delivery or performance is in the United States. Agencies were required to begin using the clause by April 24, 2026, and to modify existing contracts by July 24, 2026.
Now, this proposed rule is part of the second—more durable—phase, using the formal notice-and-comment rulemaking process. This proposed rule is one of twelve rules constituting the FAR Council’s phase two rulemaking effort under E.O. 14275, Restoring Common Sense to Federal Procurement (April 15, 2025), which directed the first comprehensive overhaul of the FAR in its forty-year history.
Proposed Revisions to FAR Part 9: Implementation of E.O. 14398
FAR Part 9, Contractor Qualifications, governs the standards and procedures the government uses to determine whether a prospective contractor is responsible and eligible to receive a federal contract award. It includes the rules for contractor responsibility determinations, qualification requirements, and, critically, the framework for debarment and suspension at Subpart 9.4. The most significant change to FAR Part 9 in this proposed rule is the formal implementation of E.O. 14398 into that debarment and suspension framework.
In particular, the proposed rule would add a new subparagraph at FAR 9.406-2(b)(1)(viii), providing that the suspending and debarring official may debar a contractor for “[f]ailure to comply with the requirements of the clause at 52.222-90, Addressing DEI Discrimination by Federal Contractors.” Importantly, the proposed debarment cause falls within FAR 9.406-2(b)(1)’s preponderance-of-the-evidence framework, not the conviction-or-civil-judgment causes in FAR 9.406-2(a).
Debarment is one of the most severe administrative consequences in federal procurement: a debarred contractor is excluded from receiving new government contracts, the exclusion can last up to three years, and it applies governmentwide. Other causes for debarment listed in FAR 9.406-2 include conviction of fraud, tax evasion, bribery, and violations of antitrust statutes. The inclusion of 52.222-90 noncompliance alongside these causes continues to reflect the weight the administration is placing on the DEI clause.
The proposed rule would also add a new subparagraph at FAR 9.407-2(a)(11), providing that the suspending and debarring official may suspend a contractor suspected, upon adequate evidence, of noncompliance with 52.222-90. Unlike debarment, suspension does not require a completed investigation or adjudication. It is an interim measure that can be imposed based on adequate evidence of a violation and has an immediate, governmentwide effect on a contractor’s ability to receive new awards. This means a contractor could be blocked from the federal marketplace on an allegation of noncompliance even before the underlying facts have been fully resolved. Suspension is not permanent, however, and carries an outer limit of eighteen months unless legal proceedings are initiated.
Adding 52.222-90 noncompliance to the debarment and suspension causes list elevates the consequences from the contract level to the governmentwide enforcement level. Prior to this proposed rule, the clause itself already authorized contract-specific remedies, including cancellation, termination, and ineligibility for further government contracts. The proposed rule, if finalized, would layer governmentwide exclusion on top of those contract-level remedies, making clear that the government may pursue debarment or suspension to exclude a contractor from doing business with all federal agencies. Combined with the clause’s recognition that compliance is material to the government’s payment decisions under the False Claims Act, the enforcement framework encompasses three distinct tiers of risk: contract-level remedies, governmentwide exclusion through debarment or suspension, and potential False Claims Act liability.
Contractor Considerations Going Forward
Federal contractors and subcontractors may take this proposed rule as an opportunity to accelerate their compliance efforts around FAR 52.222-90. As an initial step, contractors can review the proposed rule and consider submitting comments by the October 19, 2026, deadline via regulations.gov, citing FAR Case 2026-011.
Because the DEI anti-discrimination clause is already in effect through the class deviation process, contractors may also confirm that their existing contracts have been modified to include the clause and that their internal compliance programs address its requirements. Now may be an appropriate time to review current workforce and DEI-related policies and practices to evaluate whether any could be characterized as “racially discriminatory DEI activities” under the clause’s definitions, with particular attention to recruitment, hiring, promotions, vendor agreements, program participation, and resource allocation. Because the clause flows down to subcontracts at any tier, prime contractors can consider whether appropriate flow-down language is in place and assess mechanisms to monitor and manage subcontractor risk.
Ogletree Deakins’ Diversity, Equity, and Inclusion Compliance Practice Group, Government Contracting and Compliance Practice Group, and Workforce Analytics and Compliance Practice Group will continue to monitor developments and will post updates on the Diversity, Equity, and Inclusion Compliance, Government Contracting and Compliance, and Workforce Analytics and Compliance blogs as additional information becomes available.
This article and more information on how the Trump administration’s actions impact employers can be found on Ogletree Deakins’ Administration Resource Hub.
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