President Issues Contractor "Critical Race Theory" Executive Order

The Trump Administration issued an executive order (EO) that will prohibit all contractors from providing employee training regarding subjects cited within the EO tied to race and sex relations. A contractor's obligation to comply with the EO will attach when language from the EO is added as a clause in a newly issued government contract.¹ This EO must be flowed down to subcontractors and the failure to comply could result in a range of penalties, including contract termination or debarment. Further, there do not appear to be exceptions for contracts solely for commercial or commercial-off-the-shelf items or for small businesses.

Grant recipients including academic institutions, at the discretion of the agency, also may be made to comply with this EO.

Citing scenes of people seeking to fulfill the United States' ideals of equality in Gettysburg, Pennsylvania, and Selma and Montgomery, Alabama, the EO states the administration's belief that certain teachings in government and by contractors are occurring that are grounded in a mistaken belief that "America is an irredeemably racist and sexist country." To the extent contractors offer diversity or other training that runs afoul of this (no matter whether it is developed and delivered by employees or a third party), contractors will need to adjust such training in advance of the EO being added to a government contract or subcontract.

More specifically, the EO prohibits any form of race or sex stereotyping or scapegoating and gives examples of prohibited teachings, including:

• one sex or race is superior
• an individual is inherently consciously or unconsciously racist or sexist by virtue of their race or sex
• a person should be discriminated against because of their race or sex
• that a person's moral character is determined by their race or sex
• a person's race or sex makes them responsible for past transgressions of that race or sex
• that a person would feel "discomfort, guilt, anguish, or any other form of psychological distress on account of his or her race or sex"
• hard work ethic is inherently racist or sexist²

Contractors also are required to provide a notice received from the agency regarding its obligations under the EO to labor unions and post notices in contractor workplaces. Prime contractors also are required to flow this provision down in every subcontract and if the prime contractor is threatened with litigation as a result, the United States may enter into and defend such litigation at the contractor's request. It is unclear if lower-level subcontractors also must have this provision flowed down to them.

The EO includes a robust reporting and investigation structure: The Office of Federal Contract Compliance Programs (OFCCP) is required to set up a special hotline and investigate allegations that contractors and subcontractors have violated the EO. Further, OFCCP is required within 30 days of the EO to publish a Request for Information seeking information from contractors and their employees regarding their diversity and inclusion training. The request would include the provision of copies of the training materials and the expense of such training.

The terms and definitions in the EO are broad. For instance, the EO provides that the term "race or sex stereotyping" means ascribing character traits, values, moral and ethical codes, privileges, status, or beliefs to a race or sex, or to an individual because of his or her race or sex. Meanwhile, the term "race or sex scapegoating" means assigning fault, blame, or bias to a race or sex, or to members of a race or sex because of their race or sex.

Because of that, contractors should carefully review any ongoing or planned diversity and inclusion training to ensure it is well within the bounds of the requirements set forth in the EO. Contractors that provide training to the federal government should pay careful attention because if the training provided to the agency under a contract violates the contract and the EO, the agency has the option to pursue debarment (though the debarment standard presumably remains "present responsibility").

While the EO does not require the issuance of regulations to become effective upon contractors, Holland & Knight will continue to monitor it for developments. In the meantime, if you have any questions, please feel free to reach out to your Holland & Knight attorney.

Notes

¹ The EO provides that this would be 60 days after the date of the EO, or November 21, 2020. It is unclear whether the EO could be added during option renewals.

² One additional example provided, verbatim, that "members of one race or sex cannot and should not attempt to treat others without respect to race or sex."