The landscape of federal contracting compliance has been fundamentally reshaped by the recent executive order revoking Executive Order 11246 (EO 11246) and the subsequent administrative actions by the Office of Federal Contract Compliance Programs (OFCCP). The termination of EO 11246’s affirmative action requirements for race and gender marks a historic pivot, creating a new era of obligations and risks for every federal contractor and subcontractor.
The Core Shift: EO 11246 is Gone
For decades, EO 11246 stood as the cornerstone of equal employment opportunity in federal contracting, mandating that covered contractors and subcontractors take affirmative action to ensure non-discrimination based on race, color, religion, sex, sexual orientation, gender identity, and national origin.
The revocation of EO 11246 and the Department of Labor’s subsequent actions have directed the OFCCP to:
- Immediately cease promoting “diversity” and holding federal contractors responsible for EO 11246’s affirmative action obligations.
- Rescind all related regulations (e.g., 41 CFR §§ 60-1, 60-2, 60-4) that required Affirmative Action Programs (AAPs) for women and minorities.
- Administratively close all pending compliance reviews tied to EO 11246.
This is the most significant change in federal contract compliance in a generation. It effectively ends the requirement for contractors to establish utilization goals and conduct analyses based on race and sex.
Ripple Effect 1: The New OFCCP Scope
While the sweeping changes eliminate the bulk of race- and gender-based compliance, the OFCCP is not gone. Its focus has narrowed, but its enforcement power remains for other statutory obligations:
Section 503 of the Rehabilitation Act of 1973: Requires affirmative action and non-discrimination for individuals with disabilities.
Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA): Requires affirmative action and non-discrimination for protected veterans.
Contractors must understand that compliance under Section 503 and VEVRAA, including the preparation of AAPs for these groups, outreach, recruitment efforts, and setting annual hiring benchmarks for veterans, remains in force. OFCCP is actively resuming and processing compliance reviews and complaints under these two laws.
Key Action Point: Review and update your Section 503 and VEVRAA AAPs, ensuring they stand independently of the now-defunct EO 11246 requirements.
Ripple Effect 2: Heightened Risk and Certification
The new executive order introduces significant new compliance and legal risks, particularly around the False Claims Act and “illegal” Diversity, Equity, and Inclusion (DEI) programs.
False Claims Act Certification
Federal contracts now include a new term requiring contractors to certify two things as material to the government’s payment:
- Compliance with all federal anti-discrimination laws (e.g., Title VII of the Civil Rights Act).
- The contractor is not promoting unlawful DEI practices.
This certification creates a False Claims Act (FCA) risk. If a contractor’s DEI program or employment practices are later deemed to violate federal anti-discrimination law, the certification could expose the company to FCA liability—allowing whistleblowers (relators) to bring costly qui tam lawsuits.
DEI Program Scrutiny
The executive order signals a significant shift toward viewing certain DEI practices as potentially discriminatory, especially those involving preferences or “workforce balancing” based on protected characteristics. Contractors must conduct a thorough legal review of all existing DEI, hiring, promotion, and retention programs to ensure they are strictly neutral and merit-based.
Key Action Point: Consult legal counsel to audit your DEI initiatives and AAPs, removing any elements that could be interpreted as discriminatory preferences or quotas.
Ripple Effect 3: Statutory & State-Level Compliance
The termination of EO 11246 does not relieve contractors of broader statutory obligations:
Title VII of the Civil Rights Act of 1964: This fundamental law prohibiting employment discrimination based on race, color, religion, sex, and national origin remains fully enforceable by the Equal Employment Opportunity Commission (EEOC).
State and Local Laws: Many states and municipalities have their own non-discrimination and, in some cases, affirmative action requirements for public contractors. These local obligations are unaffected by the federal EO change and must still be met.
The focus for non-discrimination is now squarely on non-compliance with Title VII, potentially leading to increased EEOC activity and private litigation as the EO 11246 enforcement mechanism fades.
Navigating the New Era: Contractor’s To-Do List
The end of the EO 11246 era demands a proactive response from federal contractors. Staying ahead of the curve is crucial for continued eligibility and risk mitigation.
| Action Item | Description | Urgency |
| AAP Separation | De-couple race and gender data/goals from Section 503/VEVRAA AAPs. Ensure all remaining AAPs are compliant. | High |
| DEI Program Audit | Review and revise all DEI programs to ensure absolute neutrality and guard against claims of “unlawful preferences” under the new EO’s mandate. | High |
| FCA Risk Mitigation | Implement internal controls and training to support the contract certification, minimizing exposure to False Claims Act liability. | Medium |
| Monitor Rulemaking | Closely watch the OFCCP’s proposed rule changes, which may further modify requirements for Section 503 and VEVRAA (e.g., self-identification, utilization goals). | Ongoing |
The transition is a profound legal and strategic challenge. Contractors who move quickly to dismantle defunct compliance programs while reinforcing non-discrimination and managing the new certification risks will be best positioned to thrive in the restructured world of federal contracting.