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Agencies Start Using New DEI Contract Clause Under EO 14398

An emergency data request signals stepped-up audits for contractors.

Overview

  • Federal regulators directed agencies to insert FAR 52.222-90 in covered solicitations now and to seek bilateral updates to existing contracts by July 24, with discretion to modify awards that end by December 31.
  • The clause makes contractors certify they will not run DEI programs that treat people differently by race or ethnicity and it applies to awards above the $15,000 micro-purchase threshold except when work occurs outside the United States.
  • Prime contractors must flow the requirement to covered subcontracts, report violations they know or should know about, and notify the contracting officer if subcontractor litigation challenges the clause.
  • The FAR Council asked OMB for emergency approval to collect information so agencies can demand books and records to check compliance, with more than 6,000 contractors expected to receive requests and an estimated one-hour response per request.
  • A coalition of academic and contractor groups sued in Maryland to block EO 14398, arguing First Amendment and procurement-law violations, and an injunction could force agencies to pull the clause while denial would leave full obligations and potential contract or debarment risks in place.