VA Compliance with Executive Order (EO) 14398 Addressing DEI Discrimination by Federal Contractors

Purpose

This notification is being provided to alert industry to the Veterans Affairs Acquisition Regulation (VAAR) Class Deviation (CD) that was announced under Acquisition Policy Flash! 26-27. The purpose of this VAAR CD is to require contractor compliance with Executive Order (EO) 14398, Addressing DEI Discrimination by Federal Contractors, was signed on March 26, 2026

What to Expect:

The EO requires all executive departments and agencies to ensure that all contracts, including contractors' subcontracts and subcontractors' lower-tier subcontracts, include the following clause language:

“In connection with the performance of work under this contract, [the contractor/appropriate party (contractor)] agrees as follows:

1. The contractor will not engage in any racially discriminatory DEI activities, as defined in section 2 of the Executive Order of March 26, 2026 (Addressing DEI Discrimination by Federal Contractors).

2. The contractor will furnish all information and reports, including providing access to books, records, and accounts, as required by the contracting agency pursuant to the Executive Order of March 26, 2026 (Addressing DEI Discrimination by Federal Contractors), for purposes of ascertaining compliance with this clause.

3. In the event of the contractor's or a subcontractor's noncompliance with this clause, this contract may be canceled, terminated, or suspended in whole or in part, and the contractor or subcontractor may be declared ineligible for further Government contracts.

4. The contractor will report any subcontractor's known or reasonably knowable conduct that may violate this clause to the contracting department or agency and take any appropriate remedial actions directed by the contracting department or agency.

5. The contractor will inform the contracting department or agency if a subcontractor sues the contractor and the suit puts at issue, in any way, the validity of this clause; and

6. The contractor recognizes that compliance with the requirements of this clause is material to the Government's payment decisions for purposes of section 3729(b)(4) of title 31, United States Code (False Claims Act).”

VA will undergo formal rulemaking to incorporate this CD into the VAAR. The public is invited to participate in that rulemaking process once it commences.