Yesterday, Brenna Jenny, Deputy Assistant Attorney General, Commercial Litigation Branch, Department of Justice (“DOJ”) Civil Division, offered remarks on False Claims Act enforcement related to so-called “illegal DEI.” Other outlets have broadly recapped these remarks, a rare opportunity for direct insight into DOJ’s thinking on these issues.
Below are 10 key points for government contractors from the remarks of Ms. Jenny (who spoke for herself, and not officially for the DOJ).
From the outset of his current term in office, President Trump has made it a signature policy objective to target and dismantle diversity, equity, and inclusion (“DEI”) and so-called “gender ideology” in both the public and the private sectors. Blank Rome has covered these policy initiatives extensively, along with the various lawsuits challenging them. In the courts and elsewhere, the government has been questioned about what the phrase “illegal DEI” actually means.
Perhaps in response to those queries, on July 29, 2025, the Department of Justice (“DOJ”) issued a memorandum titled “Guidance for Recipients of Federal Funding.” The memo’s stated objective is to offer “non-binding suggestions to help entities comply with federal antidiscrimination laws and avoid legal pitfalls,” thereby aiming to “minimize the risk of violations.”
This memo provides the most comprehensive insight about DOJ’s perspective on DEI and gender ideology practices to date, and thus serves as a valuable resource for recipients of federal funding as they review their current policies. Private employers, too, may find the memo a useful framework to evaluate potential risks associated with DEI initiatives and to discern what actions the Administration considers to violate civil rights laws. That said, the DOJ memo does not address certain practical questions that entities will face in trying to adhere to its guidance. Below, we summarize the memo and provide our analysis of its most significant aspects for federally funded entities and companies.
Uncertainty for companies when making business decisions is a new norm. Tariffs aren’t going to be the only thing that is on again and off again. The same is happening with directives governing diversity, equity, and inclusion (“DEI”) initiatives. In the first two days of President Trump’s second term, he signed two DEI-related executive orders (“EOs”), EO 14151 (Ending Radical And Wasteful Government DEI Programs And Preferencing) and EO 14173 (Ending Illegal Discrimination And Restoring Merit-Based Opportunity). While they were in effect, these EOs caused widespread concern throughout the public and private sector as entities scrambled to understand the implications for their businesses. Approximately a month later, a federal judge in Maryland issued a preliminary injunction that stopped the government from implementing key provisions of the two EOs. However, the tide turned on Friday, March 14, 2025, when a three-judge panel from the U.S. Court of Appeals for the Fourth Circuit granted the government’s motion to stay the injunction pending appeal. This ruling empowers the government to resume the implementation of EO 14151 and EO 14173.
While the preliminary injunction was in effect, the government was precluded from (1) terminating “equity-related” contracts and grants pursuant to EO 14151, (2) requiring that government contractors and grantees sign a DEI certification pursuant to EO 14173, and (3) bringing any False Claims Act (“FCA”) or other enforcement action premised on the DEI certification. (As we have previously explained, the certification requirement in EO 14173 is intended to deter contractor and grantee DEI-programs by invoking the specter of FCA liability.)
Now that the injunction is stayed, an emboldened government will likely move swiftly to terminate contracts and grants that it views as being “equity-related” and to require contractors and grantees to execute the DEI certification. We have previously recommended general steps that contractors and grantees can take as they navigate a rapidly changing environment in which the president signs new EOs almost daily. Below, we offer recommendations specific to the government’s renewed ability to implement the previously enjoined provisions of the DEI-related EOs.
In 2021, federal government prime contractors and subcontractors found themselves in a difficult situation with respect to COVID vaccination requirements. More than a dozen states enacted laws prohibiting companies from requiring their employees to be COVID-19 vaccinated or even show proof of COVID-19 vaccination as a condition of employment. At the same time, federal government contracts were subject to mandatory employee vaccination requirements in the FAR and DFARS. (i.e., FAR 52.223-99 Ensuring Adequate COVID-19 Safety Protocols for Federal Contractors (OCT 2021) (DEVIATION) and DFARS 252.223-7999 Ensuring Adequate COVID-19 Safety Protocols for Federal Contractors (Deviation 2021-O0009) (OCT 2021). Luckily, the potential conflict was resolved, on May 9, 2023, when President Biden signed Executive Order (“EO”) 14099, Moving Beyond COVID–19 Vaccination Requirements for Federal Workers, which revoked EO 14042, Ensuring Adequate COVID Safety Protocols for Federal Contractors. EO 14099 directed agencies to rescind any policies that were adopted to implement EO 14042. Thus, the potential conflict between inconsistent federal and state laws concerning COVID-19 vaccinations was mooted.
A new conflict between state and federal procurement requirements may be brewing for federal prime contractors and subcontractors concerning race-based employment preferences and diversity policies after the Supreme Court decision in Students for Fair Admissions v. Harvard and Students for Fair Admissions v. UNC.
The federal False Claims Act (“FCA”) is one of the United States’ most effective tools to detect and prevent fraud against the Government. One reason the FCA is so effective is that it encourages the employees of an organization to come forward as claimants and receive a share of any financial recovery to the Government. Recognizing the central role of these whistleblowers in the FCA’s enforcement scheme, Congress included an anti-retaliation provision in the statute that protects them when they report suspected fraudulent conduct. Under the FCA’s anti-retaliation provision, employees, contractors, or agents can sue for damages on their own behalf if they are “discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment because of lawful acts done” in connection with a reported FCA violation. 31 U.S.C. § 3730(h)(1). Likewise, nearly every state also affords some degree of whistleblower protection, either statutorily or in the common law.
The FAR Council recently published a proposed rule mandating the use of project labor agreements (“PLAs”) on federal construction projects where the total estimated cost to the government is $35 million or more. See FAR Case 2022-003, 87 FR 51044 (Aug. 19, 2022). The proposed rule codifies President Biden’s February 4, 2022, Executive Order No. 14063. 87 FR 7363 (Feb. 9, 2022). Certain exceptions apply, and for projects below $35 million whether to mandate PLAs is left to the discretion of each federal agency. A PLA is a pre-hire collective bargaining agreement with one or more labor organizations that establishes the terms and conditions of employment for a specific construction project.
Why it’s significant: The proposal rule, and the underlying Executive Order, further enhance an Obama-era Executive Order that encouraged PLAs on federal construction projects over $25 million, but did not require it. 74 FR 6985 (Feb. 11, 2009). The new Executive Order puts forth the new rule to seek increased “economy and efficiency,” arguing that large-scale construction projects can create “special challenges” for efficient and timely procurement, and contractor labor disputes can cause significant project delays. During the Obama and Trump Administrations, construction industry trade groups sought revocation of the Obama Executive Order, arguing it increases taxpayer costs and filing pre-award bid protests against agencies implementing a PLA requirement, in order to have it removed. During the time that rule was in effect, between 2009 and 2021, the FAR Council estimated that a PLA was used only 12 times despite there being roughly 2,000 eligible contracts. The new Biden Executive Order and proposed rule firmly moves the industry requirements on federal projects in the opposite direction and establishes a clear federal prerogative for PLAs on large construction projects.
Effects on the industry: Once in effect, the proposed rule will cause a significant shift in the federal construction industry. Recent Bureau of Labor Statistics estimates show that only 12.6 percent of the construction work force belong to unions. This means a contractor may face staffing challenges arising from a restricted pool of potential candidates. The FAR Council notes in the proposed rule that the average number of construction awards valued at $35 million or more, from Fiscal Year 2019 through Fiscal Year 2021, was approximately 119 annually, with an average cost of $114 million per award.
Since December 2021, after a Federal District Court for the Southern District of Georgia issued a nationwide injunction against the federal contractor vaccine mandate, compliance with the federal contractor vaccine mandate has been in limbo. Many hoped that, on appeal, the Eleventh Circuit would bring some clarity to vaccine requirements. Unfortunately, that is not the case. On August 26, 2022, the Eleventh Circuit agreed that a preliminary injunction was warranted, however the Court narrowed the applicability of the injunction. The court held that the injunction should only apply to the specific plaintiff-states and trade associations in the case, and should not “extend[] nationwide and without distinction to plaintiffs and non-parties alike.” Georgia v. President of the United States, No. 21-14269 (11th Cir. Aug. 26, 2022).
The Eleventh Circuit agreed with the lower court that a preliminary injunction was warranted, stating that while “Congress crafted the Procurement Act to promote economy and efficiency in federal contracting, the purpose statement does not authorize the President to supplement the statute with any administrative move that may advance that purpose.” Therefore, the Court held that “the President likely exceeded his authority under the Procurement Act when directing executive agencies to enforce” the vaccine mandate.
Blank Rome LLP and the National Defense Industrial Association (“NDIA”) Delaware Valley Chapter are pleased to present this new live webinar on Monday, December 6, 2021, from 12:00 to 1:00 p.m. EST.
The rules and guidance around the federal contractor COVID-19 vaccine mandate are changing by the day. Please join Blank Rome’s Government Contracts and Labor & Employment attorneys for timely analysis of what federal contractors need to be prepared, including an in-depth discussion of:
Latest guidance: What do prime contractors need to know to comply?
Which of my employees are covered by the mandate?
Does the mandate apply to subcontractors?
How do I deal with exemption requests?
What should I do if my workforce is not fully vaccinated?
PRESENTERS
Brian S. Gocial, Partner, Government Contracts, Blank Rome LLP, and Partner and Member of the Board, NDIA Delaware Valley Chapter
The National Defense Industrial Association drives strategic dialogue in national security by identifying key issues and leveraging the knowledge and experience of its military, government, industry, and academic members to address them. You can learn more about them on their website.
QUESTIONS? Please contact Alena Leon, Business Development Consultant.
In short: a broad vaccine mandate for employees of government contractors is coming. But the exact details on application, exemptions, and compliance remain unclear. New rules due by October 8, 2021, should better address those questions. Adding to this uncertainty, the Guidance encourages individual agencies to issue their own (potentially broader) guidance. That said, we can infer a lot from Friday’s guidance.
