By David Cohen, Joanna Colosimo & Amanda Bowman
BLOG OVERVIEW: The FAR Council has released FAR 52.222-90, a new contract clause implementing Executive Order 14398 that prohibits federal contractors and subcontractors from engaging in race- or ethnicity-based disparate treatment in employment, contracting, and program participation. Paired with an emergency Paperwork Reduction Act (PRA) information collection request, the clause will apply to new federal contracts over $15,000 beginning April 24, 2026 with existing contracts modified by July 24, 2026, and flows down to all U.S.-based subcontractors. The PRA supporting statement projects 6,825 contractor audits per year across approximately 430 federal agencies, with noncompliance carrying consequences that include contract termination, debarment, and False Claims Act exposure.
Federal contractors are facing a significant new compliance development following the release of a proposed information collection under the Paperwork Reduction Act (PRA). This information collection request (ICR) is tied to a new Federal Acquisition Regulation (FAR) clause addressing the recent Executive Order (EO) 14398.
Although interim guidance was expected from the FAR Council in response to EO 14398, this came much faster than the 60-day deadline. While many implementation details are still emerging, federal contractors and subcontractors should begin preparations to comply with these new requirements.
New Contract Clause Prohibiting Race- or Ethnicity-Based Disparate Treatment
The FAR Council has introduced FAR 52.222‑90, a new contract clause stemming from Executive Order 14398, Addressing DEI Discrimination by Federal Contractors. The clause is designed to prohibit federal contractors and subcontractors from engaging in race‑ or ethnicity-based disparate treatment in employment, contracting, or participation in contractor sponsored programs. At the same time, the federal government requested emergency PRA approval to begin collecting compliance-related information now while the formal rulemaking process plays out.
What We Know Currently
1. The Clause Will Apply Broadly and be Implemented Quickly
Early guidance indicates that the clause will apply broadly and be implemented on an accelerated timeline given the emergency approval request. Once implemented, FAR 52.222‑90 will apply to:
- New federal contracts and solicitations over $15,000, and
- Existing contracts, which agencies will seek to modify within a short timeframe.
Prime contractors bear responsibility for ensuring compliance at every tier of their supply chain since the clause flows down to all subcontractors performing work in the United States, including those providing commercial products and services.
Contracting officers are required to implement the clause into new or modified contracts by April 24, 2026 and make “every effort” to modify existing contracts by July 24, 2026. Contractors can therefore reasonably expect all federal contracts to be modified to include this clause by August 2026. Contracts with a final expiration date no later than December 31, 2026 may be modified at the Contracting Officer’s discretion.
Notably, the required contract clause 52.222-90 slightly deviates from the language in EO 14398 as it includes additional items such as the following:
(c) The Contractor must include the substance of this clause, including this paragraph (c), in subcontracts at any tier, including those for commercial products and commercial services, for which the place of delivery or performance is in the United States.
2. What Is Prohibited
The clause incorporates EO 14398 language defining prohibited conduct as disparate treatment based on race or ethnicity, including in:
- Recruitment or employment (e.g., hiring, promotions, etc.)
- Access to training, mentoring, or leadership development programs
- Participation in contractor sponsored initiatives or programs
Importantly, the definition of “program participation” is broad and may capture informal or formal programs tied to development, advancement, or networking.
3. Scope of Information Collection Under the Emergency ICR
The emergency ICR would authorize government agencies to collect the following categories of information in connection with clause compliance requirements:
“i. Par (b)(2) - Furnish all information and reports, including providing access to books, records, and accounts, as required by the Contracting Officer, for purposes of ascertaining compliance with the clause.
ii. Par (b)(4) - The Contractor will report any subcontractor's known or reasonably knowable conduct that may violate this clause to the Contracting Officer and take any appropriate remedial actions directed by the Contracting Officer.
iii. Par (b)(5) - The Contractor will inform the Contracting Officer if a subcontractor sues the Contractor and the suit puts at issue, in any way, the validity of the clause.”
It is not yet clear what a formal “request” for this information would look like in practice. However, agency guidance and related materials suggest that record requests may be structured similarly to Equal Employment Opportunity Commission (EEOC) systemic investigations or Department of Justice (DOJ) civil investigative demands, where contractors receive targeted requests for documents and narrative responses in connection with specific inquiries. Although not described as a formal audit program, these information requests may in practice resemble audit-like reviews of contractor compliance on a case-by-case basis, but decentralized across all agencies.
The emergency authorization would provide a maximum period of six months for the proposed ICR. In the interim, the FAR Council would prepare a Federal Register notice to support a permanent information collection requirement. The authorization materials also indicate that the FAR Council will continue engaging with the public through a future rulemaking process, including notice-and-comment procedures, to refine and potentially reduce administrative burden, likely to be completed in the next six months before the emergency authorization expires.
As previously noted, in practice, near-term enforcement is likely to resemble EEOC systemic investigations or DOJ civil investigative demands rather than a single standardized audit process.
4. Noncompliance Could Have Serious Consequences
The enforcement framework underlying the clause extends beyond standard contractual remedies and introduces potential statutory exposure for noncompliance. Noncompliance may result in:
- Contract termination or suspension
- Ineligibility for future federal contracts
- Exposure under the False Claims Act if a contractor falsely certifies compliance
The link to the False Claims Act is particularly significant. Contractors who certify compliance while knowingly engaging in racially discriminatory activities could face False Claims Act damages and penalties.
What the PRA Justification Tells Us About Audits
The PRA supporting statement estimates 6,825 audits per year, with relatively short response timelines and electronic submission requirements. These audits will be handled by contracting officers across approximately 430 different federal agencies. The government estimates that each contractor will spend approximately one hour responding to information requests, while agency staff will spend an estimated 16 hours reviewing each submission. It is possible that this enforcement responsibility is ultimately consolidated into one agency such as the Office of Federal Contract Compliance Programs (OFCCP), EEOC, or DOJ in the future for efficiency reasons.
Many Questions Left Unanswered
Despite this new documentation and guidance, several critical questions remain unanswered, including:
- Who will conduct audits long term? Will it be individual contracting officers or will there be centralized enforcement? It is also worth asking whether those tasked with enforcing will be trained in how to assess disparate treatment.
- What will the scope of reviews be? Will they cover entire organizations or be narrower to cover locations or divisions fulfilling government contracts?
- What will the lookback period for audits be?
- What specific data elements will be required under the final information collection?
These details will matter immensely for federal contractors in determining the burden of compliance, the level of their legal exposure, and their record retention strategies.
Immediate Next Steps for Federal Contractors
Despite the uncertainty, there are prudent steps organizations should be taking now to be as prepared as possible, including the following:
- Review diversity, equity, and inclusion (DEI)-related programs for race‑ or ethnicity-based eligibility or selection criteria.
- Inventory federal contracts and subcontracts likely to be affected and coordinate early with procurement and contracts teams so the clause rollout is not a surprise.
- Begin flowing down the required clause to subcontractors once a prime contract is amended, which is expected by July 24, 2026. Federal contractors can also begin flowing down after April 24, 2026, if preferred.
- Prepare internal escalation and response protocols for contracting officer inquiries.
- Coordinate human resources, legal, procurement, and compliance teams on documentation and messaging.
- Monitor Federal Register notices closely for the expected final PRA and rulemaking updates. DCI will also continue monitoring the situation. Sign up for updates here.
This is a fast-moving area with high stakes for federal contractors. While many operational details are still evolving, the federal government is clearly signaling that enforcement is imminent. Contractors should begin thoughtful, proactive reviews now as opposed to waiting for final rules to arrive. Additionally, they should be monitoring the compliance landscape, preparing for investigations, and focusing on implementing flow-down contracting language.
How DCI Can Help
DCI Consulting Group brings more than two decades of experience advising federal contractors on OFCCP compliance, equal employment opportunity (EEO) analytics, workforce data analysis, and employment litigation support. We have been closely tracking Executive Order 14398 and the rollout of FAR 52.222‑90 since issuance and are well positioned to support contractors as enforcement expectations take shape. Our team helps organizations proactively assess compliance risk through privileged reviews of DEI programs, conduct statistical analyses of hiring, promotion, and compensation practices, and advise on subcontractor flow down requirements and vendor diversity program design. We also prepare clients for EEOC and DOJ records requests and Civil Investigative Demands and provide expert litigation support in connection with enforcement actions.
DCI will be hosting a webinar on this topic. Complimentary registration is here: https://content.dciconsult.com/new-far-clause-signals-audits
