The Federal Acquisition Regulation (FAR) Council has issued a new contract clause, FAR 52.222-90 – “Addressing DEI Discrimination by Federal Contractors,” implementing recent Executive Orders focused on DEI-related compliance obligations.
This clause introduces significant new requirements and enforcement mechanisms for federal contractors and subcontractors.
Key Effective Dates
- April 24, 2026: Clause required in all new solicitations and contracts above the micro-purchase threshold (currently $15,000)
- July 24, 2026: Deadline for agencies to modify most existing contracts
What the New Clause Requires
The FAR 52.222-90 clause:
- Prohibits contractors and subcontractors from engaging in racially discriminatory DEI activities
- Requires contractors to provide all requested information and reporting to demonstrate compliance
- Mandates reporting of:
- Suspected violations by subcontractors
- Any legal challenges to the validity of the clause
- Flows down to subcontractors at all tiers
- Establishes compliance as material to government payment decisions, increasing exposure under the False Claims Act
Enforcement Risks
Noncompliance may result in:
- Contract termination, suspension, or cancellation
- Potential debarment
- False Claims Act liability, including financial penalties
Contracting officers are directed to work with contractors to bilaterally modify existing agreements. However, refusal to accept the clause may lead agencies to determine the contract no longer meets their needs.
What About Existing Contracts?
- Agencies must make good faith efforts to modify existing contracts by July 24, 2026
- Contracts expiring by December 31, 2026 may be modified at the contracting officer’s discretion
- If a contractor declines modification, the agency may terminate the contract
What Should Contractors Do Now?
Lighthouse recommends taking a data-informed, compliance-focused approach to demonstrate fair and lawful employment practices:
1. Workforce Analysis
- Conduct race and gender-based analyses
- Identify and address any disproportionate outcomes in employment decisions
2. Compliance Program Review
- Ensure alignment with:
- Section 503 (Individuals with Disabilities)
- VEVRAA (Protected Veterans)
- EEO-1 reporting requirements
- VETS-4212 reporting
3. Subcontractor Oversight
- Prepare to implement clause flow-down requirements
- Establish monitoring and reporting protocols for subcontractors
How Lighthouse Can Help
Lighthouse Compliance Solutions can assist with:
- Workforce analytics and adverse impact reviews
- Merit-Based Opportunity Profile report based on race and gender
- Audit-ready compliance documentation
- Subcontractor compliance strategies