On March 26, 2026, President Trump signed an Executive Order titled Addressing DEI Discrimination by Federal Contractors. This EO represents the most significant expansion of the Administration’s anti-DEI campaign to date, moving beyond prior executive orders that addressed internal federal agency programs and now imposing direct contractual obligations, and potentially significant legal exposure, on federal contractors, subcontractors, and lower-tier subcontractors.

For Alaska Native Corporations, their subsidiaries, and tribal entities engaged in federal contracting, this EO may require immediate attention. While the core prohibition on “racially discriminatory DEI activities” may seem straightforward, the EO’s enforcement architecture, including False Claims Act liability and qui tam whistleblower provisions, creates risk even for entities whose hiring and business practices are lawful. That risk is potentially more significant for ANCs and tribes that maintain shareholder hire preferences or Native hire preferences, which are legally sound but could be mischaracterized by uninformed employees, competitors, or agency personnel.

What the Executive Order Does

The EO defines “racially discriminatory DEI activities” as disparate treatment based on race or ethnicity in recruitment, employment (hiring, promotions), contracting (vendor agreements), program participation, or allocation of an entity’s resources. It then requires federal agencies, within 30 days, to include a new mandatory contract clause in all federal contracts and subcontracts. Under that clause, contractors must agree to the following:

• • Not engage in any racially discriminatory DEI activities.
  • Furnish information, reports, and access to books and records for agency compliance reviews.
  • Accept that noncompliance may result in contract cancellation, termination, or suspension, and potential debarment.
  • Report any subcontractor conduct that may violate the clause.
  • Notify the contracting agency if a subcontractor sues the contractor and the suit puts the validity of the clause at issue.
  • Acknowledge that compliance is material to the Government’s payment decisions under the False Claims Act, 31 U.S.C. § 3729(b)(4).

That last point is the teeth of this EO. It converts what might otherwise be a policy dispute into a potential False Claims Act violation.

False Claims Act and Qui Tam Exposure

This is the provision that may deserve the most attention. Section 4(d) of the EO directs the Attorney General to:

• • Consider whether to bring FCA actions against contractors or subcontractors that violate the new contract clause; and
  • Ensure prompt review of qui tam actions brought by private persons under 31 U.S.C. § 3730(b)(1), including by rendering a decision on whether to intervene under § 3730(b)(4) within the 60-day seal period described in § 3730(b)(2), “to the maximum extent practicable.”

The qui tam provisions of the False Claims Act, 31 U.S.C. § 3730, allow any private person, typically a current or former employee, to file a civil action on behalf of the United States alleging that a contractor submitted a false claim to the government. If the government intervenes, the relator (whistleblower) can receive 15–25% of any recovery. If the government declines and the relator proceeds alone, the relator’s share can be 25–30%.

By making compliance with the DEI clause “material to the Government’s payment decisions,” the EO creates a direct pathway for whistleblower suits against employers for alleged “DEI” practices. An employee who believes, even incorrectly, that their employer is engaged in racially discriminatory DEI activities could file a sealed qui tam complaint. The EO’s instruction to the DOJ to expedite review of these claims within the 60-day seal period signals that the Administration wants these cases to move quickly.

The practical risk: Even a meritless qui tam action imposes real costs, legal fees, management distraction, reputational harm, and the possibility of an agency-initiated compliance review triggered by the complaint. The existence of the claim itself can affect contract performance evaluations and re-compete positioning.

ANC Shareholder Hire Preferences and Tribal/Native Hire Preferences

Many ANCs maintain shareholder hiring preferences, policies that favor the hiring and promotion of their shareholders and their descendants in corporate operations, including subsidiary operations that perform federal contracts. Similarly, tribal entities and tribally-owned contractors often maintain Native hire preferences, sometimes pursuant to contractual requirements (such as Indian Self-Determination Act contracts) or tribal employment rights ordinances (TEROs).

These preferences are generally lawful. The legal foundation is well established: under Morton v. Mancari, 417 U.S. 535 (1974), the Supreme Court held that preferences for members of federally recognized tribes are political classifications, not racial classifications, and therefore are not subject to strict scrutiny under the Equal Protection Clause. This principle has been repeatedly affirmed by federal courts and has withstood challenge. ANCSA shareholder status is likewise a political and non-racial classification based on share ownership of a federally recognized entity established by an Act of Congress, not a racial or ethnic category.

The EO defines the prohibited conduct as “racially discriminatory DEI activities” based on “race or ethnicity.” As such, a properly structured shareholder hire preference or tribal/Native hire preference is based on a political relationship to a sovereign entity, not on race. It should therefore fall outside the scope of this EO.

But not every employee, agency contracting officer, or DOJ attorney reviewing a qui tam complaint will understand this nuance. For instance, a line employee who does not receive a promotion in favor of a shareholder descendant may not appreciate the legal distinction between a political classification and a racial one. A contracting officer conducting a compliance review under this EO may not be familiar with Morton v. Mancari or the unique legal status of ANCs under ANCSA. These are the situations where claims get filed and inquiries get opened, not because the preference is unlawful, but because it is misunderstood.

Given the breadth of this executive order, ANCs and Tribes engaged in federal contracting may wan to consider reviewing their shareholder or tribal member hiring preferences to ensure that they are clearly grounded in ANCSA shareholder status, tribal membership, or other political classifications. In addition, they should consider reviewing training programs, mentoring initiatives, scholarship programs, vendor diversity requirements, or similar activities that reference race or ethnicity. If any of these are accessible only to certain racial or ethnic groups, as opposed to being based on shareholder/descendant status or tribal membership, adjustments may be warranted.

Finally, federal contractors should continue to review federal regulatory guidance on this executive order.  The executive order directs the Federal Acquisition Regulatory Council to issue interim guidance within 60 days and formal FAR amendments thereafter. OMB will also issue guidance identifying “economic sectors that pose a particular risk.”

Bottom Line

This Executive Order seeks to implement enforceable contract terms backed by False Claims Act liability and qui tam whistleblower incentives and build an enforcement architecture designed to encourage private enforcement through financial incentives and expedited DOJ review. For ANCs and tribal entities, the hire preference issue adds a unique layer of risk, not because the preferences are unlawful, but because they are easily mischaracterized.

This article summarizes aspects of the law and opinions that are solely those of the authors. This article does not constitute legal advice. For legal advice regarding your situation, you should contact an attorney.