On January 21, 2025, President Donald Trump issued an executive order titled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity.” The executive order’s stated purpose is to end “illegal” diversity, equity, and inclusion (DEI) efforts.

Among other things, the executive order directs the director of the Office of Management and Budget to “[t]erminate all ‘diversity,’ ‘equity,’ ‘equitable decision-making,’ ‘equitable deployment of financial and technical assistance,’ ‘advancing equity,’ and the like mandates, requirements, programs, or activities, as appropriate.”

Anecdotally, we have already seen this directive be interpreted by multiple contracting agencies as mandating the immediate termination or descoping of any federal contract that includes a DEI provision or requirement — or even just the mention of “DEI” in the scope of work. While this may seem unfair to federal contractors who are simply performing in accordance with the government’s own requirements, this appears to be a new reality that they must face. 

Depending on the specifics of the situation, contractors may be able seek agency reconsideration of its termination decision, convince the agency to alter the scope of the subject contract (rather than terminate the contract altogether), recover costs resulting from the termination of the contract, and/or challenge the propriety of the termination. 

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