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Legal News & Updates

• Understanding FAR 52.222-90 “Addressing DEI Discrimination by Federal Contractors” — Federal Agencies Incorporating New DEI Clause into Government Contracts

  Government contractors, if they have not seen it already, are likely to begin seeing FAR 52.222-90 , Addressing DEI Discrimination by Federal Contractors , in solicitations, contracts, and subcontract flowdowns. After Executive Order 14398 was issued (which our team discussed previously ), [1] the FAR Council issued guidance on April 17, 2026, directing federal agencies to incorporate the new clause into new and existing government contracts. Effective April 27, 2026, federal agencies are required to include FAR 52.222-90 in new solicitations and contracts above the micro-purchase threshold, including those for commercial products and services, when performance or delivery occurs in the United States. The clause also flows down to subcontracts at any tier, so subcontractors may soon begin seeing it in flowdown provisions. Prime contractors should update their standard subcontract and purchase order language accordingly. Agencies are obligated to modify existing contracts by July 24, 2026, to add the new clause. The guidance directs contracting officers to make “every effort” to obtain bilateral modifications, but warns that if a contractor refuses, the contracting officer should “consider whether the contract still meets the agency’s needs and should be terminated for convenience.” Whether contracting officers will exercise that authority remains unclear. The clause requires contractors to do the following: Not engage in “racially discriminatory DEI activities”—defined as “disparate treatment based on race or ethnicity in the recruitment, employment ( e.g., hiring, promotions), contracting ( e.g., vendor agreements), program participation, or allocation or deployment of an entity’s resources.” Contractors must provide all information and reports—including access to books, records, and accounts—as required by the contracting officer for purposes of ascertaining compliance with the clause. This provides significantly expanded access to contractor records as compared to existing contract authorities, which are typically limited to work performed and cost incurred under the contract, and may reasonably be expected to lead to EEOC and Department of Justice investigations of the contractor. Be subject to termination, suspension, or debarment of federal contracts in the event of noncompliance. Report on subcontractors’ noncompliance with the clause(s) to the extent of subcontractors “known or reasonably knowable conduct” that may violate the clauses, or who sue the contractor and put the “validity of the clause” at issue. Acknowledge that compliance with the clause(s) is material to the government’s decision to pay and subjects the contractor to liability under the False Claims Act. [2] Importantly, the clause applies only in connection with the performance of work under a government contract. It purportedly does not reach conduct tied solely to commercial work, although it could extend to some indirect functions charged to the government under cost-reimbursement contracts. Companies should also understand their obligation to report any “known or reasonably knowable” subcontractor or supplier conduct that may constitute racially discriminatory DEI activities. Contractors should consider implementing supplier awareness and subcontractor screening procedures accordingly. Companies seeking a more risk-averse approach may also want to update internal policies governing government contracting relationships to state that the company does not engage with entities engaging in potentially racially discriminatory DEI activities deemed unlawful under the executive order and FAR clause. Finally, companies should consider a jurisdiction-specific review in states where they operate, because the FAR clause and recent Executive Orders may conflict with state and local affirmative action statutes and regulations, as well as minority business enterprise (MBE) contracting requirements, which contractors will need to carefully assess. FAR 52.222-90 is expressly grounded on Executive Order 14398 and its reliance on the Federal Property and Administrative Services Act (40 U.S.C. § 101, et seq .) for legal authorization, and it builds on prior Department of Justice guidance explaining the administration’s view of how federal antidiscrimination laws apply to recipients of federal funding, including the DOJ’s non-exhaustive list of unlawful practices. For more details, see our August 8, 2025 post . Companies subject to the new FAR clause now face contractual penalties, including potential False Claims Act liability, in addition to potential liability under federal antidiscrimination laws. [3] In general, companies that do not maintain or engage in “racially discriminatory DEI activities” in connection with government contracting likely face lower compliance risk under the current EO/FAR framework. Even so, the scope and intensity of future enforcement remain uncertain. [1] On April 20, 2026, groups representing university faculty and minority business owners filed a lawsuit challenging the constitutionality of the EO. [2] Note that the FAR Council is still seeking clearance from OMB under the Paperwork Reduction Act (PRA) for the information collections related to the clause, including contractors’ obligations to furnish information, report subcontractor violations, and notify contracting officers of litigation. Until OMB approves the information collection under the PRA, full enforcement of the broader information collection requirements may be deferred. [3] These requirements may also collide with expanded state false claims act statutes in many jurisdictions, which are increasingly being used by state attorneys general to pursue contractors on state and local projects, consistent with state policy priorities. For more information, see our recent CLE presentation to the State Bar of Wisconsin touching on this topic.

  5 June 2026, 1:19 pmcontracts
• Privity Required: Tenant at a Government-Owned, Contractor-Operated Facility Lacked the Contractual Relationship Necessary to Assert a Claim Against the U.S. Army

  As experienced government contractors know, the rights and remedies available to prime contractors and subcontractors vary markedly. Prime contractors have a direct contractual relationship with the U.S. Government—referred to as “privity” of contract—and therefore may bring claims directly against the government under the Contract Disputes Act (CDA). Subcontractors are typically only able to pursue claims against the prime contractor or against the government on a “pass through” basis. In a notable case released at the end of last year, the U.S. Court of Appeals for the Federal Circuit applied these principles to a dispute involving a tenant at the Milan Army Ammunition Plant in Milan, Tenn. The Milan facility was a government-owned, contractor-operated (GOCO) facility run by American Ordinance LLC, which had contracts with the Army Joint Munitions Command to operate the plant. The contracts allowed the plant to be put to “commercial use” through “tenant use agreements” with third parties. One tenant, Wolf Creek Railroad LLC, had a 25-year tenant use agreement with American Ordinance to operate a commercial railroad at the site. The Army did not deal directly with Wolf Creek, although it did receive a copy of the agreement and insisted that American Ordinance reserve the right to cancel if the plant was closed. Of course, that is what happened. In 2019, the Army announced that it was closing the plant and that American Ordinance needed to terminate its tenant use agreements. In 2023, Wolf Creek filed suit against the Army in the U.S. Court of Federal Claims (COFC) under the CDA, alleging breach of the tenant use agreement, including the “duty of good faith and fair dealing” that is implied in all government contracts. In 2024, COFC dismissed the suit for lack of subject matter jurisdiction and failure to state a claim. Wolf Creek appealed to the U.S. Court of Appeals for the Federal Circuit, which affirmed COFC’s ruling. Under the Tucker Act, for the COFC to have jurisdiction, there must be an “express or implied contract with the United States.” 28 U.S.C. § 1491(a)(1) . The Federal Circuit found that this contract did not exist. Wolf Creek claimed that the FAR flow downs in its tenant use agreement—which the Army had directed American Ordinance to include—created a contractual relationship with the Army. The Federal Circuit rejected this argument, finding that “[t]hose provisions . . . do not soundly imply the creation of a new contractual relationship between the Army and Wolf Creek . . . or otherwise provide a mechanism for the subcontractor/tenant to sue the Army.” The Federal Circuit also rejected the argument that American Ordinance was acting as an “agent” for the Army and thus had the authority to waive the Army’s sovereign immunity. This is a fairly high bar, which subcontractors/tenants will not be able to meet unless there is a clear showing that the prime contractor was acting as a “purchasing agent” for the government, the contractual relationship with the government was established through clear contractual consent, and the contract stated that the government would be directly liable to the contractor for the contract price. Those facts didn’t exist in this case. Instead, Wolf Creek was paying American Ordinance to use the plant to generate revenue for itself. While the Army did receive some benefits from this relationship, this was not the same as American Ordinance purchasing directly from Wolf Creek for the Army’s benefit. Wolf Creek Railroad is a good reminder for subcontractors: even if the government is indirectly exercising a great deal of control over your actions, you are unlikely to be in privity with the government absent express terms. This will limit a subcontractor’s rights and potential remedies if things go sideways. The citation for the Federal Circuit’s non-precedential decision is Wolf Creek R.R. LLC v. United States , No. 2024-1873, 2025 WL 3276822 (Fed. Cir. Nov. 25, 2025).

  19 May 2026, 8:27 pmcontracts
• New Executive Order Heightens Scrutiny on Race-Based DEI, Expands Federal Contractor Compliance Obligations, and Decentralizes Enforcement Across Multiple Agencies

  On March 26, 2026, the White House issued an Executive Order (2026 DEI Executive Order) imposing new obligations on federal contractors to provide evidence of the elimination of racially discriminatory Diversity, Equity, and Inclusion (DEI) activities. The stated justification for the 2026 DEI Executive Order is to prevent “artificial” and “unnecessary” DEI program costs from being passed on to the Government in federal contracts. Within 30 days of the directive, federal agencies are required to include a new clause(s) in federal contracts and contract-like instruments similar to the clause required under Executive Order (EO) 14173, Ending Illegal Discrimination and Restoring Merit Based Opportunity, issued on January 21, 2025. However, there are additional obligations including record keeping and an audit type enforcement mechanism. Adding to contractor’s compliance concerns is that the 2026 DEI Executive Order decentralizes oversight by directing each federal agency to adopt enforcement measures to ensure compliance. Finally, the Federal Acquisition Regulatory Council is required to amend the Federal Acquisition Regulation (FAR) to include the new contracting clause dictated by the 2026 DEI Executive Order and take other appropriate interim actions to ensure compliance with the 2026 DEI Executive Order. Definition of Racially Discriminatory DEI Activities The 2026 DEI Executive Order limits the definition of racially discriminatory DEI activities to employment decisions, contracting activities such as vendor agreements, program participation, or allocation or deployment of entity resources that results in disparate treatment based on race or ethnicity. The phrase “allocation or deployment of entity resources” is undefined and could be broadly interpreted by the administration as applicable to activities beyond those described in previous guidance. Program participation encompasses “membership, participation in, or access or admission to training, mentoring, or leadership development programs; educational opportunities; clubs; associations; or similar opportunities that are sponsored or established by the contractor or subcontractor.” Terms of Contract Clause(s) The 2026 DEI Executive Order applies not only to executive departments and agencies but also to independent agencies subject to the Federal Property and Administrative Services Act. By April 25, 2026, covered departments and agencies must ensure that their contracts and “contract-like instruments [1] ” (such as cooperative, service, or concession agreements, and some grants) include the new clause(s), and flow down the clause(s) to subcontractors. Under the new clause(s) contractors and subcontractors must: Not engage in racially discriminatory DEI activities. Furnish data and provide access to books, records, and accounts to the contracting agency to demonstrate compliance with the 2026 DEI Executive Order. Be subject to termination, suspension, or debarment of federal contracts in the event of noncompliance. Report on subcontractors’ noncompliance with the clause(s) to the extent of subcontractors “known or reasonably knowable conduct” that may violate the clauses, or who sue the contractor and put the “validity of the clause” at issue. Acknowledge that compliance with the clause(s) is material to the government decision to pay and subjects the contractor to liability under the False Claims Act. The Federal Acquisition Regulatory Council is directed to amend the Federal Acquisition Regulation within 60 days of March 26, 2026 to 1) permit the inclusion of the above-described provisions in federal contracts and solicitation; 2) remove any current conflicting provisions; and 3) publish interim guidance, consistent with the 2026 DEI Executive Order. Penalties, New Enforcement Threat Provision, False Claim Act Liability The Office of Management and Budget (OMB) is directed to issue guidance permitting agencies 1) to cancel, terminate, or suspend existing contracts or portions thereof for noncompliance with the 2026 DEI Executive Order, and 2) to suspend and debar contractors from future contracts for noncompliance. Reminiscent of Executive Order 14173, OMB, the Attorney General, the Assistant to the President for Domestic Policy, and the Chair of the EEOC are directed to identify “economic sectors that pose a particular risk of entities engaging in racially discriminatory DEI activities,” and provide guidance to contracting agencies on best practices to achieve compliance in those sectors. Finally, the Attorney General is directed to “consider whether to bring actions under the False Claims Act against any contractors or subcontractors that violate the clause” required by the 2026 DEI Executive Order as well as to actively monitor qui tam relator suits under the False Claims Act against contractors and subcontractors and determine whether to intervene in such federal litigation. What This Means for Contractors The 2026 DEI Executive Order intensifies the compliance obligations and enforcement risks for federal contractors and subcontractors. Contractors, if they have not done so already after the issuance of EO 14173, should conduct a comprehensive internal audit of their programs, policies, and practices across all departments, including human resources, community investment, procurement, and vendor management. Criteria based on race, ethnicity, or potential proxies for race and ethnicity may be scrutinized by the government as unlawful DEI. Contractors should pay particular attention to the impact of the 2026 DEI Executive Order on compliance with federal small business and disadvantaged business enterprise requirements that relate to race or ethnicity, and state and local government affirmative action or diversity requirements based on race or ethnicity, as established by state statutes or local ordinances. Such diversity requirements may conflict or potentially conflict with the provisions of the 2026 DEI Executive Order. Another risk factor is that the 2026 DEI Executive Order decentralizes enforcement across multiple federal agencies, with each potentially developing agency-specific compliance standards and framework. Contractors, working with counsel, should establish robust recordkeeping to demonstrate compliance with federal anti-discrimination laws, document legal bases for all programs, and prepare for agency specific audit requests. The 2026 DEI Executive Order signals further coordinated, industry targeted enforcement by both OMB and the Attorney General. The administration has already pursued investigative and enforcement actions in financial services (Northwestern Mutual), higher education (Harvard University); technology (Google, Verizon); retail (Nike), healthcare (CID issued by FTC against American Academy of Pediatrics focused on gender affirming care). Companies in these and other identified high-risk sectors should anticipate heightened scrutiny and consider proactive engagement with legal counsel. Significant legal and procedural uncertainties exist regarding the 2026 DEI Executive Order implementation including rulemaking requirements, legal challenges, inconsistency of agency requirements, and subcontractor reporting obligations. These uncertainties combined with potential False Claims Act liability resulting from the Department of Justice and/or qui tam relators creates a complex evolving compliance landscape. Contractors should prioritize legal review and systematic compliance efforts while monitoring forthcoming agency guidance and judicial developments. Contact us If you have questions or would like to discuss best practices to implement given the high level of scrutiny faced by contractors and subcontractors potentially subject to the 2026 DEI Executive Order, please contact Tracey O’Brien , Erik Eisenmann , Michael Schrier , or your Husch Blackwell attorney. [1] This language was used in Executive Orders 13658 (federal contactor minimum wage) and 13706 (paid sick leave) issued during the Obama administration.

  31 Mar 2026, 3:05 pmcontracts
• DOJ’s Annual Report Suggests FCA Cases—Especially Qui Tam Cases—Will Continue to Surge in 2026

  The Department of Justice (“DOJ”) recently released its 2025 statistics for federal False Claims Act cases. With settlements and judgments exceeding $6.8 billion last year, DOJ’s report shows that the False Claims Act (“FCA”) remains one of DOJ’s most potent and frequently-used investigation tools. The annual report also suggests that, after a year of change and turnover that touched virtually every corner and level of DOJ, the coming year will likely see a historically high volume of FCA cases. Contractors and grant recipients, therefore, should pay careful attention to every claim for payment or compliance certification submitted to any federal authority. According to DOJ’s press release and statistics, 2025 was the high-water mark for FCA settlements and judgments. Since 1987, the earliest date for which DOJ publishes data, FCA recoveries have exceeded a total of $5 billion only three times: almost $5.1 billion in 2012; over $6.1 billion in 2014; and more than $5.7 billion in 2021. Interestingly, last year’s record-setting total also marked the reversal of three straight years where total recoveries ranged from only $2.2 billion to $3.1 billion. DOJ’s announcement also made clear that many of its judgments and settlements for 2025 resulted from policy priorities for the Trump Administration. While DOJ did not report specifics, its press release included a link to a summary of its policy objectives (also linked here ). Some of these objectives, which have been discussed previously in this blog, involve DEI and civil rights issues addressed by the DOJ’s Civil Rights Fraud Initiative. They also include efforts to use the FCA to investigate false diagnosis codes used to obtain funds for treatments related to “radical gender experimentation” and gender dysphoria. Some of these initiatives specifically encouraged whistleblowers, also known as qui tam relators, to bring cases forward for investigation by the Department of Justice. Perhaps not surprisingly, in 2025, DOJ recovered more than $5.3 billion just from cases initiated by qui tam relators, which was by far DOJ’s highest annual total. While the use of the FCA for some of the Trump Administration’s policy priorities has drawn scrutiny, DOJ has continued to use the FCA to investigate fraud, waste, and abuse among federal contractors, grant recipients, and the healthcare industry along more non-partisan lines. FCA recoveries in the healthcare sector have always been the largest share of DOJ’s total. Last year was no exception, with DOJ recovering more than $5.7 billion in the health and human services category, or 83% of DOJ’s total annual recoveries under the FCA. Notably, this ratio is more consistent with historical trends and reverses the previous two years, which saw healthcare’s percentage of total FCA recoveries drop into the 60s. (This shift is probably the result of waning investigations related to COVID-pandemic fraud cases, such that healthcare-related cases will return to commanding the vast majority of annual FCA matters.) Recoveries from the defense industry in 2024 dropped to $98 million but surged in 2025 to nearly $634 million. Total annual FCA recoveries for “other” sources jumped to $1.2 billion in 2024—probably because of investigations into COVID-recovery fraud—but dropped to about $532 million in 2025, which was still the second highest total since 2018. In the defense and military procurement arena, DOJ’s press release fact sheet described settlements and judgments that focused on accurate cost and pricing data. Three major contractors reached eight- and nine-figure settlements to resolve allegations in this area. Another notable settlement involved allegations that a contractor used a competitor’s data to improperly influence awards. Two other defense contractors each paid eight-figure settlements to resolve separate cases involving allegations that parties failed to meet contract specifications or that subcontractor billing rates were excessive and unsubstantiated. Cybersecurity compliance was another focal point for DOJ annual FCA announcement, citing three multi-million-dollar settlements with contractors that allegedly failed to deliver compliant systems. Two higher-education institutions also paid large settlement amounts to resolve cybersecurity-related FCA allegations. The type, pace, and volume of FCA case recoveries from 2025 suggests that 2026 will see more of the same. Given their broad bipartisan support, FCA investigations are likely to again play a historically large role in DOJ’s enforcement activities. Also, as noted above, DOJ’s express invitations to whistleblowers are likely to drive up the total number of qui tam cases that DOJ investigates as well as related settlements or judgments. Contractors and grant recipients should be wary of internal or hotline complaints that have overt or subtle indicators of fraud allegations. If formal DOJ investigative inquiries are made, federal fund recipients should anticipate and expect that DOJ is pushing resources to FCA investigations such that those inquiries should be taken very seriously.

  26 Jan 2026, 4:43 pmcontracts
• Civil Rights Fraud Investigations of DEI Programs Have Begun

  On May 19, 2025, the Department of Justice (“DOJ”) announced its Civil Rights Fraud Initiative (the “CRFI”). As discussed in our post related to that announcement, the CRFI mobilizes federal, state, and local law enforcement to investigate whether recipients of federal funds have DEI programs that violate federal civil rights laws. Multiple federal and state agencies are reportedly conducting investigations into DEI programs within corporations and institutions of higher education. DOJ’s announcement in May explained that CRFI investigators will “utilize the False Claims Act to investigate and, as appropriate, pursue claims against any recipient of federal funds that knowingly violates federal civil rights laws.” To do so, in addition to DOJ’s civil fraud teams, the CRFI draws on law enforcement resources at all levels of government: other federal agencies, state attorneys general, and local law enforcement. Every U.S. Attorney’s Office across the country has been instructed to assign at least one prosecutor to advance CRFI efforts. Citing the Supreme Court’s 2023 decision in Students for Fair Admissions and President Trump’s January 21, 2025 Executive Order 14173 on DEI, the CRFI memo asserts that the False Claims Act may apply if federal funding recipients falsely certify compliance with civil rights laws while knowingly engaging in race-based DEI practices. Federal contractors and grant recipients should be on alert. The False Claims Act (FCA) gives the DOJ authority to launch investigations. Importantly, the FCA also gives private citizens ( e.g. , company employees, vendors, and subcontractors) the right to bring lawsuits on behalf of the federal government and rewards whistleblowers with a sizeable share of any recoveries. With its CRFI announcement, the DOJ significantly widened its investigative scope by actively encouraging private citizen whistleblowers ( qui tam relators under the FCA) to submit potential civil rights fraud cases for review. Media reports indicate that several DEI-related investigations are underway. A recent Wall Street Journal article indicates that DOJ has delivered investigative demands to Google and Verizon related to their workplace DEI programs. The article cites the same unnamed sources for the proposition that DOJ’s scrutiny also has fallen upon “industries ranging from automotive and pharmaceuticals to defense and utilities.” While the nature or strengths of any of these potential investigations are unknown, and it is not clear whether any of the investigations were initiated by law enforcement independently or after a qui tam whistleblower’s tip, the timing of these investigation reports follows predictably from the May 2025 CRFI announcement. After DOJ’s explicit invitation to whistleblowers, any subsequent investigations would take months to gain traction. This is because, in addition to the time needed to formulate any complaints or investigative theories, the FCA contains specific procedural requirements and deadlines for qui tam relator cases. Notably, the FCA requires DOJ attorneys to review each qui tam relator’s complaint on a confidential basis and sets deadlines by which that review must be completed. The FCA requires DOJ to decide whether DOJ will: (i) take over the investigation and litigation; (ii) allow the qui tam relator to continue the litigation on their own (but with DOJ still collecting the bulk of any settlement or judgment amounts); or (iii) in unusual situations, dismiss the case outright. See 31 U.S.C. § 3730. The recent news of possible FCA investigations involving DEI programs suggests that, in the weeks and months following the May 2025 CRFI announcement, DOJ and/or CRFI investigators received whistleblower complaints and/or began investigations and pre-litigation assessments of potential FCA matters related to DEI programs. DOJ’s pre-litigation investigative steps can be onerous and should be taken seriously. Under the FCA, investigators may issue civil investigative demands (“CIDs”), which require companies to produce documents, provide written responses to questions, or make witnesses available for depositions. All of this occurs before any formal FCA litigation begins. Pre-litigation CIDs often function as a case within a case, imposing heavy burdens and serious legal risks on the companies or individuals who receive them. However, the pre-litigation CIDs also provide opportunities to persuade government investigators not to proceed with formal FCA litigation, potentially averting even larger litigation expenses while significantly reducing risk exposure. Even if DOJ does not dismiss a case but, instead, allows a qui tam relator’s case to proceed on its own, this can be a major victory: DOJ’s own statistics show that settlement and judgment amounts in cases where DOJ declines to intervene are typically much smaller than those where DOJ is driving the case. (DOJ annual report here .) Although the DOJ’s civil rights fraud theories under the FCA are still developing and it is unclear whether they will lead to successful judgments or settlements, the CRFI is now active. Additionally, just receiving a CID can result in significant legal expenses and increases the likelihood of facing major litigation and related reputational harm. In addition to federal investigations, most states and some municipalities have their own versions of the False Claims Act, meaning that government contractors and other recipients of government funds should scrutinize workplace DEI programs and any certifications related to compliance with civil rights laws. Examples of recent state-level action: (i) in September 2025, The Tennessean reported that the Tennessee Attorney General’s Office was investigating Deloitte, one of the state’s largest vendors that manages its Medicaid eligibility system, over “potential ‘unlawful discrimination’ tied to its hiring practices and former diversity, equity and inclusion (DEI) programs”; (ii) in August 2025, the Indiana Citizen reported that the Indiana Attorney General’s Office issued CIDs to the University of Notre Dame and Butler University seeking information about each school’s DEI programs. These investigations indicate that investigators are probing allegations that relate to DEI programs that were in place before and after the beginning of the second Trump administration. Contractors and fund recipients should also watch internal employee whistleblower complaints that may signal potential exposure under the FCA as well as collateral employment retaliation litigation involving the purported whistleblower. These might include allegations about the unfairness of a workplace program or questions about compliance certifications made by the employer about DEI-related programs. Whether concerned with federal or state action under the FCA, organizations should conduct comprehensive reviews of employment-related programs and policies to identify areas of risk. This review—if not already finished—should cover both public-facing information and an assessment of how existing or new DEI policies have been put into practice, taking into account the likely rise in qui tam relator and whistleblower actions as well as increased scrutiny from government agencies related to the CRFI.

  20 Jan 2026, 4:31 pmcontracts
• The Impact of the Upcoming Closure of OFCCP

  Recently, my colleague Tracey O’Brien and I examined the implications of the federal government’s intention to shut down the Office of Federal Contract Compliance Programs (OFCCP). OFCCP has already proposed to prohibit data collection by federal contractors of disability status from employees and applicants. In a Notice of Proposed Renewal of Information Collections released by the OFCCP on January 7, 2026, the agency appears to indicate that existing data collection requirements under VEVRAA might also be discontinued. As a result, federal contractors may lose their ability to evaluate how effectively they are reaching out to and recruiting individuals with disabilities and veterans, as well as how well they are meeting their obligations under Section 503. With the government planning to scale back its enforcement of Section 503 and VEVRAA, both federal contractors and subcontractors will face reduced affirmative action compliance responsibilities. Consequently, any discrimination allegations they encounter are likely to be brought by private parties. Given these developments, it is advisable for contractors and subcontractors to review their current policies and take proactive measures to mitigate potential private discrimination claims. Read the full article.

  14 Jan 2026, 8:33 pmcontracts
• CMMC Day and a Break in the Senate Logjam

  After a Senate vote on Sunday evening, Congress appears closer to ending the record-setting government shutdown. The Senate advanced a funding package that includes appropriations for military construction and calls for the reinstatement of all furloughed federal employees. The potential return to normal government operations coincides with today’s official implementation of the Department of Defense’s CMMC requirements, which we have discussed and analyzed in previous posts. Effective today, under DFARS provisions 252.204-7021/7025, new DoD solicitations require contractors and applicable subcontractors to complete a self-assessment and submit SPRS documentation affirming that they meet the requirements for CMMC Level 1 or Level 2 as a condition of contract award. Additional CMMC requirements are scheduled to take effect one year from now. It is incumbent upon prime contractors, subcontractors, and suppliers to negotiate their applicable agreements to correspond with the performance expectations for each party—specifically, whether a lower-tier organization will be processing, storing, or transmitting FCI or CUI—as the CMMC program is focused on strengthening cybersecurity across the defense supply chain.

  10 Nov 2025, 9:00 pmcontracts
• Contractor Rights and Remedies in a Shutdown of Extraordinary Length

  The extended duration of the October 2025 shutdown, which will soon be the longest in history, adds a new level of uncertainty and pressure for federal contractors and subcontractors. Does the shutdown excuse the government from paying invoices that come due during the shutdown? Can the government require contractors to work without payment? What relief can contractors expect for delays, cost increases, and other impacts of the shutdown? What options are available for contractors and subcontractors that are simply unable to perform without timely payment? While there is no one-size-fits-all shutdown playbook that answers all of these questions, the guiding principles that appear in a few key contract clauses and decisions from prior cases should inform every contractor’s approach to the shutdown. Here are a few that we think are important: 1. The contract defines the government’s obligations and the contractor’s rights and remedies, even during a shutdown. Raytheon recovered layoff pay and subcontractor costs paid to personnel whose work locations were inaccessible during the 1995 government shutdown because the contract assigned the risk that NOAA’s offices would be closed to the government. See Raytheon STX Corp. v. Department of Commerce , GSBCA No. 14926-COM (Oct. 28, 1999) . A logging contractor was unable to recover income lost during the 2013 shutdown because the contract stated that interruptions were expected. L&L Excavating & Land Clearing, LLC v. Dep’t of Agriculture , CBCA No. 3911 (Sept. 4, 2014). 2. The government may not cite the shutdown as a basis for withholding or delaying payments due under a contract. Most federal contracts provide for payment no later than 30 days after a contractor’s supplies or services are accepted or the designated billing office receives a “proper invoice. ” FAR 52. 232-5, FAR 52. 232-27, FAR 52. 216-7. In many cases—including construction contracts in which progress payments are computed on a percentage-of-completion basis—the Prompt Payment Act requires the government to pay interest on late payments “automatically, without request from the Contractor.” Contractual payment deadlines are not conditioned on the availability of funds, the operational status of the designated payment office, or the physical presence of the individual authorizing payment. According to one GAO report , DOD paid almost $21 million in late-payment penalties in FY 2011, and that figure is likely understated. 3. Contractors are not required to work for free but should be cautious in making the decision to stop work. The government’s failure to pay or direction to proceed without payment may be a breach of contract. But there is no simple hard-and-fast rule that defines when a delayed payment or an improper direction constitutes a “material” breach of contract. A contractor that stops work risks default termination and may face a government claim for excess costs paid to another contractor. The government bears the burden of proof in a contested default termination case, but winning is time-consuming, expensive, and not guaranteed. 4. The Sovereign Acts Doctrine is likely not an effective limit on the government’s contractual liability resulting from the government shutdown. The decision in Conner Bros. Constr. Co. v. Geren , 550 F. 3d 1368, 1380 (Fed. Cir. 2008),does not itself suggest that the Sovereign Acts Doctrine is a viable defense to a shutdown claim. In Conner Brothers , the court found that restricting access to a military base immediately after the September 11 terrorist attacks was a sovereign act. It was “public and general” and the effects on the contractor were “incidental” to the government’s national security objective. The government will have difficulty making the case that government acts and omissions during a shutdown meet this standard. And apart from Conner Brothers , the government’s reliance on the Sovereign Acts Doctrine has met with limited success. The Armed Services Board rejected DLA’s use of the Sovereign Acts Doctrine to avoid a contractor claim for excess warehouse costs after the United States withdrew troops from Iraq. Anham FZCO , ASBCA No. 59283 (July 20, 2017). When President Reagan made the decision to limit the federal government’s involvement in the commercial satellite industry after the 1986 Challenger tragedy, the Federal Circuit rejected NASA’s use of the Sovereign Acts Doctrine to avoid liability for breaching a contract to launch commercial satellites. See Hughes Communications Galaxy, Inc. v. United States, 998 F. 2d 953, 958 (Fed. Cir. 1993). Even a 2019 Congressional Research Service memo explains that contractors generally have a right to additional compensation for halting and restarting work pursuant to a Stop-Work Order issued during a shutdown. 5. The availability of a contractual remedy for an impact of a government shutdown is not a blank check. Contractors must show that they are entitled to payment. Those seeking additional compensation will always be required to show that their incurred costs are reasonable. The reasonableness of a contractor’s actions in reducing the cost impact of a compensable delay is also an important consideration. Even when there is clear entitlement and no question as to cost reasonableness, contractors cannot expect to recoup everything they spend. 6. Contractors should take steps to preserve their rights and document cost and schedule impacts of the shutdown. The contractor in Garco Construction, Inc. v. Secretary of the Army , 856 F. 3d 938, 943 (Fed. Cir. 2017), was unsuccessful not because the government proved that it restricted the contractor’s base access in its capacity as the sovereign, but because the contractor “never formally requested a time extension.” Giving timely written notice to the contracting officer, modifying release language, and attending to other seemingly ministerial contract administration tasks, is always a good idea. 7. When submitting a request for equitable adjustment or claim, contractors should include an appropriately detailed narrative of the factual and legal basis for both entitlement and quantum, a signed certification when it is required, and appropriate supporting documents. These issues have been cited as a basis for jurisdictional and procedural questions that stand in the way of resolving matters on the merits. 8. Contractors should consider engaging consultants and outside counsel early in the process. Using qualified consultants to assist in evaluating entitlement, preparing a request for equitable adjustment, and negotiating an equitable adjustment leads to better results. And as long as they are not incurred in connection with pursuing a “claim” against the United States, professional and consulting costs are allowable costs of contract administration under FAR 31. 205-33. Further reading on this topic— WARN Act Compliance during a Government Shutdown The Contractor’s Perspective Shutdown Playbook Kiewit-Turner and the Right to Stop Work The Contractor’s Perspective on Surviving a Government Shutdown

  3 Nov 2025, 3:47 pmcontracts

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