GSA Changes Federal Contracts to Implement EO 14173; Certification, Other Provisions On Hold

Last week, there were two important developments for federal contractors seeking to understand how President Trump’s Executive Order 14173 titled, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,” will impact their government contracts. First, the General Services Administration (GSA) took preliminary steps to amend existing and new government contracts by issuing a class deviation to implement several of President Trump’s new DEI-related executive orders. However, late Friday evening, a federal judge in Baltimore enjoined parts of EO 14173, including the new contract certifications. Early this week, the Trump Administration responded by appealing the district court’s injunction, meaning the Fourth Circuit Court of Appeals will have a chance to weigh in.

GSA Issues a Class Deviation

Under an order publicly released on February 18, 2025, GSA outlined the following changes to the government contracting process:

• All Federal Acquisition Regulation (FAR) clauses pertaining to EO 11246 are to be removed from new bids, bids at the offer stage, and existing government contracts with six months or more left in the period of performance.
• In addition, contractors are to be notified that any existing certifications pertaining to “DEI” and climate-focused procurement in SAM, the System for Award Management, will no longer be “considered” by contracting officers, meaning they will no longer be enforced (though contractors may still be required to make such certifications by the system, which will take more time to update).
• The GSA deviation also states, “As of February 15, 2025, all uses of the term ‘gender identity’ are not to be recognized or used prospectively by Federal contractors.”
• Finally, the GSA deviation eliminates a FAR clause pertaining to apprenticeship programs. Specifically, the provision pertains to apprenticeship hours and wages, but the last section requires that the “utilization of apprentices, trainees, and journeymen under this clause shall be in conformity with the equal employment opportunity requirements of Executive Order 11246.”

Normally changes like this to the FAR would require “rulemaking” involving notices in the Federal Register, opportunity for public comment, and ultimately approval by the White House Office of Management and Budget (OMB). However, the administration is invoking a FAR provision that allows agency heads to make necessary “class deviations” to “meet the specific needs and requirements of each agency.”

That provision notes that when an agency knows that the deviation will be needed on a permanent basis, the agency “should” propose a FAR revision as described above. Note, however, that the provision uses permissive language, “should,” not “must.” It is unclear if the administration intends to eventually initiate a more formal rulemaking process.

Some Changes Halted For Now

However, on Friday, February 21, a federal District Court judge in Maryland issued a preliminary injunction regarding key provisions of Executive Order 14173, specifically what the court termed the “certification provision” and the “enforcement threat provision.”

The EO 14173 certification provision requires agencies to include two new terms in every contract or grant award:

1. A term requiring the contractual counterparty or grant recipient to agree that its compliance in all respects with all applicable Federal anti-discrimination laws is material to the government’s payment decisions for purposes of the False Claims Act; and
2. A term requiring such counterparty or recipient to certify that it does not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws.

The plaintiffs argued that the certification provision violates separations of powers principles, as well the right to freedom of speech guaranteed by the First Amendment to the U.S. Constitution. Specifically, they asserted the provision impermissibly restricts protected speech based on content and viewpoint. Plaintiffs also argued that the lack of definition and detail for terms such as “DEI” unconstitutionally “chills” them from participating or supporting DEI programs or practices that would not violate EO 14173.

The lawsuit also challenges Trump’s Executive Order 14151, “Ending Radical and Wasteful Government DEI Programs and Preferencing.” This order required federal agencies to “terminate, to the maximum extent allowed by law,…all…”equity-related” grants or contracts.” Here, the plaintiffs alleged that the order violates the Spending Clause of the Constitution, asserting that the executive branch lacks authority to unilaterally terminate grants and contracts absent express statutory authority. And they argued that the provision is unconstitutionally vague in violation of the Fifth Amendment’s Due Process Clause.

The District Court agreed with plaintiffs that there is sufficient showing to determine they are likely to succeed on the merits of these arguments and that a preliminary injunction is warranted. As a result, the Court enjoined the Trump administration from enforcing the certification provision, the enforcement threat provision, and what the court termed the “termination provision” regarding “equity-related” grants or contracts. Specifically, the Court’s order states that Defendants “shall not”:

1. pause, freeze, impede, block, cancel, or terminate any awards, contracts or obligations (“Current Obligations”), or change the terms of any Current Obligation, on the basis of the Termination Provision;
2. require any grantee or contractor to make any “certification” or other representation pursuant to the Certification Provision; or
3. bring any False Claims Act enforcement action, or other enforcement action, pursuant to the Enforcement Threat Provision, including but not limited to any False Claims Act enforcement action premised on any certification made pursuant to the Certification Provision.

Note that the injunction is “nation-wide,” or “universal,” and is not limited to enforcement against the named plaintiffs. For the time being, the administration is prohibited from enforcing these provisions at all.

On February 24, the Administration filed an appeal of the Court’s preliminary injunction, which means the Fourth Circuit Court of Appeals will now hear from both sides on this issue. As always, we will continue to monitor the situation and bring you developments as warranted. In the meantime, if you have any questions about this or any related issues, please do not hesitate to contact us at bai@berkshireassociates.com.