Defense Contractors Could Fall Under Trump ‘Divisive Concepts’ Executive Order

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On Sept. 22, President Donald Trump issued the “Executive Order on Combating Race and Sex Stereotyping” establishing requirements aimed at “promoting unity in the federal workforce,” by prohibiting workplace training on “divisive concepts,” including “race or sex stereotyping” and “race or sex scapegoating” as newly-defined in the order. The directive is broadly applicable to federal contractors and federal grant recipients, as well as executive departments and agencies and the uniformed services.

The order expands on a letter issued in early September by the director of the Office of Management and Budget that tasks all agencies to begin to identify contracts or other agency spending on trainings that include “critical race theory,” “white privilege,” or “un-American propaganda,” in an effort to ensure “fair and equal treatment of all individuals in the United States.”

On Sept. 28, OMB issued a “Memorandum for the Heads of Executive Departments and Agencies” with additional guidance aimed at assisting agencies in identifying diversity and inclusion trainings for agency employees that may be subject to Trump’s executive order. The memo suggests that agencies conduct keyword searches of training materials for specific terms, such as “intersectionality,” “systemic racism” and “unconscious bias.” It explains the terms and provides additional insight concerning the breadth of agency trainings that may ultimately be considered to violate the terms of the executive order.

Although the executive order is likely to be subject to legal challenge, federal contractors, including subcontractors and vendors, could soon be subject to the compliance requirements.

If the directive is implemented on schedule, all government contracts entered into by Nov. 21 — with the limited exception for contracts with religious entities exempt from certain nondiscrimination requirements — must contain a prescribed clause that the contractor will not use any workplace training that includes divisive concepts. Unless a Department of Labor exemption applies, contractors must also flow down and potentially enforce these new requirements for subcontractors and vendors. They must conspicuously post — where it will be seen by employees and applicants for employment — a notice provided by the relevant agency contracting officer of the contractor’s commitments under this executive order. Contractors must also distribute this notice to each labor union or representative of workers with which the contractor has a collective bargaining or any other agreement.

Potential penalties for noncompliance include that the contract may be canceled, terminated, or suspended, in whole or in part. The contractor may be subject to agency conciliation negotiations or administrative enforcement proceedings, or to suspension or debarment proceedings subject to agency discretion. 

If a contractor provides training to agency employees that would include divisive concepts, the contractor would be subject to penalties under the executive order, including debarment.

By Nov. 21, each agency head must report to the director of OMB a list of any respective grant recipients that may be required to certify that the recipient will not use federal grant funds to promote divisive concepts. By Dec. 21, all agencies must report all fiscal year 2020 spending on federal employee diversity and inclusion training programs, both conducted internally by the agency and by contractors. 

The office of federal contract compliance programs established a hotline to investigate complaints that a federal contractor is using prohibited training programs. By Oct. 22, the director of the office was expected to publish a request for information seeking submissions of workplace diversity and inclusion training information and materials from federal contractors and subcontractors, as well as employees of federal contractors and subcontractors.

The executive order represents an unprecedented effort to influence speech in the workplace and is likely to draw a number of challenges. In particular, it may conflict with federal or state requirements to provide trainings on the topics of race and sex discrimination. It also presents a number of constitutional concerns that may lead to challenges, especially once agencies begin applying its requirements to federal contractors. 

Contractors could view these requirements as coercing or restricting private speech or corporate speech in violation of the First Amendment. The rules may also draw challenges based on the Administrative Procedure Act, the Federal Property and Administrative Services Act, and other statutes.

There are a number of considerations for employers.

The executive order applies specifically to “training,” and not policies or other documents that employers may publish as part of diversity and inclusion programs. If fully implemented, its terms could trigger significant modifications to diversity and inclusion trainings, including how concepts such as unconscious bias and meritocracy are addressed. 

If it remains in effect, employers will want to begin gathering their various trainings together to prepare for a review of the language used and concepts covered to ensure compliance. For the most part, sophisticated trainings likely do not stray into the territory prohibited by the executive order, but ambiguity in the language may cause difficult analysis. Employers need not discontinue specific training modules immediately, but should carefully monitor the progress of this executive order toward implementation.

Lindsay Burke and Jennifer Plitsch are partners and Carolyn Rashby is of counsel at Covington & Burling LLP. Samantha Clark, special counsel at the firm, and Sarah Shepson and Carl Wiersum, associates at the firm, also contributed to this article. 

Topics: Defense Contracting