---
title: "Executive Order 14398 & FAR 52.222-90: What Federal Contractors Need to Know Now"
description: EO 14398 raises compliance stakes for federal contractors. Learn how FAR 52.222-90 affects DEI programs, subcontractors, and FCA risk.
---

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# [Executive Order 14398 & FAR 52.222-90: What Federal Contractors Need to Know Now](https://www.onsigroup.com/blog/executive-order-14398-far-52.222-90-what-federal-contractors-need-to-know-now)

 Written by [Emmi Gaytan](https://www.onsigroup.com/blog/author/emmi-gaytan) | May 28, 2026 8:15 PM

**On March 26, 2026, [Executive Order 14398 introduced](https://www.lexology.com/library/detail.aspx?g=57ea78fb-e1c3-4d4c-8d4f-add2cfed8b24) sweeping new compliance requirements for federal contractors and subcontractors—specifically targeting certain DEI-related practices.** With the release of **FAR 52.222-90**, these requirements are no longer theoretical—they’re being actively incorporated into federal contracts today.

The result? A rapidly evolving compliance landscape with **significant legal, operational, and financial risks**.

 

### The Short Answer

**Federal contractors must act now.**   
FAR 52.222-90 introduces new certification, reporting, and compliance obligations tied to contract performance—and failure to comply could expose contractors to **False Claims Act (FCA) liability, contract termination, suspension, or even debarment.**

 

## What EO 14398 Changes

Executive Order 14398 builds on earlier federal efforts to regulate DEI practices but takes a more expansive approach. It requires contractors to:

- **Avoid “racially discriminatory DEI activities”**
- **Report subcontractor violations that are “known or reasonably knowable”**
- **Provide access to records demonstrating compliance**

Importantly, these requirements are now embedded into contracts through **FAR 52.222-90**, strengthening the government’s ability to treat compliance as material to payment decisions, increasing FCA exposure.

 

* *

## Where and When This Applies

### *Contract Coverage*

FAR 52.222-90 must be included in:

- Contracts over $15,000
- **Commercial products and services contracts**
- Contracts performed **within the United States**

### *Implementation Timeline*

- April 24, 2026: Required in all new solicitations
- **July 24, 2026 (target)**: Agencies must make "every effort" to modify existing contracts
- Contracts expiring by **December 31, 2026** may be modified at agency discretion

### *Flow-Down Requirements*

Prime contractors must **flow this clause down to all subcontractors** at every tier performing work in the U.S.

## Why This Is Different

Unlike prior DEI-related directives:

- Scope is broader - Applies beyond traditional anti-discrimination law
- **Focus is narrower** - Primarily on race and ethnicity-based disparate treatment
- **Enforcement in stronger** - Tied directly to payment under the FCA

The government has not clarified key terms like “disparate treatment” or “allocation of resources,” creating **significant ambiguity** and compliance risk.

## Key Compliance Obligations

Under FAR 52.222-90, contractors must:

- Certify they do **not engage in prohibited DEI practices**
- Provide **records, reports, and documentation upon request**
- **Monitor and report subcontractor conduct**
- **Report suspected subcontractor violations and provide requested information related to compliance**
- Acknowledge potential consequences including **termination or debarment**

The “**reasonably knowable**” standard introduces expanded expectations for subcontractor oversight, including potential responsibility for issues contractors knew or should have known.

## Enforcement Risks Are Real

The federal government has already signaled aggressive enforcement:

### *False Claims Act (FCA) Exposure*

- Compliance is explicitly tied to **payment decisions**
- Violations can lead to: 
    - **Treble damages**
    - Penalties of ~$14,000–$28,000 per claim
- Risk extends to **both contractor and subcontractor conduct**

### *Debarment & Suspension*

- Noncompliance is now an **independent basis** for exclusion
- Even **good-faith mistakes** may trigger enforcement

### *Early Enforcement Activity*

The DOJ has already:

- Launched a **Civil Rights Fraud Initiative**
- Issued investigative demands to contractors
- Reached at least one **$17 million settlement** tied to DEI practices 
    - [IBM Pays $17 Million to Resolve Allegations of Discrimination Through Illegal DEI Practices](https://www.justice.gov/opa/pr/ibm-pays-17-million-resolve-allegations-discrimination-through-illegal-dei-practices)

Notably, enforcement has included **historical practices**, not just current programs.

## What Contractors Should Do Now

Waiting for more guidance is risky. Contractors should begin taking action immediately:

### *1. Audit Your DEI Programs*

- Identify all programs tied to: 
    - Hiring and promotions
    - Supplier diversity
    - Training and mentorship
- Evaluate risk under the new definitions
- Document findings and remediation decisions

### *2. Prepare for Contract Modifications*

- Expect requests to incorporate FAR 52.222-90
- Develop a response strategy
- Assess potential **business and legal impacts**

### *3. Update Subcontractor Oversight*

- Revise subcontract agreements to include: 
    - Flow-down clauses
    - Compliance certifications
    - Monitoring provisions
- Establish processes to meet the “reasonably knowable” standard

### *4. Get Ready for Records Requests*

- Organize documentation now
- Build systems to track compliance activities
- Prepare for audits or investigations

### *5. Stay Alert for Updates*

- Ongoing developments may include: 
    - Legal challenges to EO 14398
    - Agency-specific guidance
    - Formal FAR rulemaking
    - OMB approval of reporting requirements

## The Bottom Line

**EO 14398 and FAR 52.222-90 significantly raise the stakes for federal contractors.**   
With broad definitions, unclear standards, and aggressive enforcement mechanisms, compliance is no longer a passive exercise—it requires **proactive risk management and documentation.**

Contractors that act early will be best positioned to navigate these requirements and avoid costly enforcement actions.

## How Onsi Group Can Help

Navigating new federal compliance mandates like FAR 52.222-90 requires a strategic, well-documented approach. **Onsi Group partners with contractors to assess risk, strengthen compliance programs, and prepare for government scrutiny.**

From **DEI program audits and subcontractor compliance frameworks** to **training through Onsi University**, our experts are here to help you stay ahead of evolving regulations.

👉 [**https://www.onsigroup.com/contact**](https://www.onsigroup.com/contact) to learn how we can support your compliance strategy.

 

Author: Emmi Gaytan

Editor: Angela Hendrix, Jennifer Loya, Aaron Ramos, Luis Decker

[View full post](https://www.onsigroup.com/blog/executive-order-14398-far-52.222-90-what-federal-contractors-need-to-know-now)

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