DOD Issues Guidance to Contracting Officers Regarding Solicitations and Contracts with DEIA Requirements

When a new presidential administration results in a new party occupying the White House, taxpayers often expect myriad government and public policy changes will soon follow. Hewing that truism, President Trump began his administration by issuing a slew of executive orders immediately after taking office. As expected, those executive orders ranged from immigration and energy policy to international relations and diversity and equity initiatives.

Regarding the latter, the President's executive order, Ending Radical and Wasteful Government DEI Programs and Preferencing, seeks to eliminate the illegal and discriminatory programs known as diversity, equity, inclusion, and accessibility ("DEI" or "DEIA") efforts within the federal government, including by:

• "terminat[ing], to the maximum extent allowed by law, all DEI, DEIA, and 'environmental justice' offices and positions (including but not limited to 'Chief Diversity Officer' positions); all 'equity action plans,' 'equity' actions, initiatives, or programs, 'equity-related' grants or contracts; and all DEI or DEIA performance requirements for employees, contractors, or grantees;" and
• listing all "Federal contractors who have provided DEI training or DEI training materials to agency or department employees"

Consistent with the President's executive order, the Department of Defense (the "Department" or "DOD") published a memorandum to contracting officers on how the Department will be implementing that executive order and related Office of Personnel Management ("OPM") initial guidance.

Specifically, DOD the memorandum provides that contracting officers shall, with immediate effect, "cancel or amend solicitations and terminate or partially terminate existing contracts (including set-asides) and contract-like instruments (e.g., Other Transaction Authority agreement) that contain diversity, equity, and inclusion (DEI) and diversity, equity, inclusion, and accessibility (DEIA) requirements."

Notably, the DOD guidance provides that in some instances a solicitation may be amended or the government may issue a bilateral modification to descope work, "remove or end DEI and DEIA related requirements (e.g., training or support activities) consistent with the Executive Order and OPM guidance." Obviously, with reference to amending solicitations and modifying contracts, a significant number of contractors within the DOD ecosystem will be impacted.

In light of the foregoing, contractors should approach any upcoming DOD contract actions with an eye toward protecting your interests, including by:

• determining the type of modification the government seeks (bilateral or unilateral)
• paying attention to any language in a bilateral modification that seeks to limit or preclude any claims you may have on the government for cost or schedule impacts associated with the descoping
• reviewing your contracts and contract-like instruments for any clauses that provide for remedies relating to increased cost, schedule, or performance impacts
• documenting any additional incurred cost or schedule impacts that may arise out of the descoping
• preparing any requests for equitable adjustment ("REA") or termination settlement proposals ("TSP") to recover any cost or schedule impacts relating to the descoping
• promptly notifying the government regarding any cost or schedule impacts, and that you are reserving all rights
• consulting with outside counsel (e.g., government contracts, employment) to determine how to best navigate these issues

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