On January 21, 2025, President Trump signed an Executive Order (EO) titled "Ending Illegal Discrimination and Restoring Merit-Based Opportunity.”[i] This order rescinds EO 11246, which had been in effect for nearly 60 years, and required federal contractors to implement affirmative action programs and maintain non-discriminatory hiring policies.
EO 11246 required federal contractors and subcontractors to develop and maintain Affirmative Action Plans (AAPs) as a condition of doing business with the federal government. These requirements were enforced through Federal Acquisition Regulation (FAR) 52.222-25, which mandated contractors to affirm compliance with EO 11246 and its implementing regulations (41 CFR 60-1 and 60-2).
In a sharp departure from past policy, the new EO explicitly prohibits federal contractors from considering race, color, sex, sexual preference, religion, or national origin in employment, procurement, or contracting decisions in ways that violate federal civil rights laws. Specifically:
• Federal contractors are no longer required to maintain AAPs.
• Hiring or promotion practices that consider race, gender, or other protected characteristics are now prohibited.
• Any company policy aimed at increasing diversity in hiring for federal contracts could now be considered unlawful under this EO.
Beyond eliminating affirmative action obligations, the order also introduces new compliance requirements for federal contracts and grants. Every federal contract must now include a clause requiring contractors to certify compliance with federal anti-discrimination laws and further certify that they do not operate any Diversity Equity and Inclusion (DEI) programs that violate these laws. Additionally, the EO makes compliance with these anti-discrimination laws material to the government’s payment decisions under the False Claims Act (31 U.S.C. § 3729), potentially exposing contractors to significant liability if found in noncompliance.
The Office of Federal Contract Compliance Programs (OFCCP) will no longer oversee affirmative action compliance. Instead, the responsibility shifts to individual agencies, which must ensure that contractors comply with the EO. Effective immediately, the OFCCP has been ordered to cease:
• Promoting "diversity" initiatives among federal contractors.
• Holding federal contractors and subcontractors responsible for taking "affirmative action."
• Allowing or encouraging contractors to engage in workforce balancing based on race, color, sex, sexual preference, religion, or national origin.
The OFCCP, however, retains oversight of affirmative action requirements for veterans (Vietnam Era Veterans’ Readjustment Act) and individuals with disabilities (Section 503 of the Rehabilitation Act), which are not affected by this EO.
What’s Next
This EO raises key questions, particularly regarding implementation and whether existing FAR regulations will be amended or repealed. Although the order is effective immediately, the FAR Council will need to update contracting regulations, and the OFCCP will likely issue further guidance in the coming weeks. Contractors have 90 days to continue adhering to existing requirements before full compliance is expected. In the meantime, FAR provisions requiring affirmative action remain in place, which may create potential grey areas for contractors.
To align federal contracting policies with the EO, the Office of Management and Budget (OMB) has been directed to review and revise government-wide contracting processes to remove all references to DEI, streamline procurement procedures, and eliminate mandates or programs related to diversity, equity, or equitable decision-making, etc.
While this order does not specifically target federal small business set-aside programs, its broader effort to eliminate race and gender conscious policies may raise concerns about whether programs such as 8(a) and Women-Owned Small Business (WOSB) could be affected. As of now, these programs remain intact as they are codified in federal law, but regulatory and legal challenges could emerge in the future.
With so much still in flux, federal contractors should evaluate how this order affects their policies and contracts. Internal hiring and promotion policies should be reviewed to ensure compliance with the new EO while also maintaining adherence to anti-discrimination laws like Title VII of the Civil Rights Act. Contractors should also review existing contracts to determine whether AAP-related obligations still apply and consult with contracting officers for guidance.
The full impact of this executive order remains uncertain. In the months ahead, contractors can expect new rulemaking and regulatory changes to align with the EO’s mandates. We will continue monitoring developments and providing updates as new guidance emerges. If you have questions about how this order affects your business, or questions about the broader push to remove DEI initiatives, please reach out.
[i] https://www.whitehouse.gov/presidential-actions/2025/01/ending-illegal-discrimination-and-restoring-merit-based-opportunity/