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During the Federal Bar Association's 2026 Qui Tam Conference on February 19, 2026, the Department of Justice ("DOJ") provided remarks regarding its enforcement focus on "illegal DEI" (which DOJ simply characterizes as "anti-discrimination") using the False Claims Act ("FCA") as a primary tool. As a reminder, this stems from President Trump's January 2025 Executive Order (which we previously have written about here, here, and here). Enforcement of anti-discrimination laws is part of DOJ's Civil Rights Fraud Initiative, emphasizing that—at least for federal contractors—discrimination concerns are increasingly being evaluated through a fraud-and-compliance lens rather than solely through traditional civil rights enforcement mechanisms.
Below are key themes federal contractors should consider as DOJ continues to focus enforcement efforts in this area.
DOJ's Enforcement Posture
In its remarks, DOJ characterized enforcement relating to "illegal DEI" (i.e., violations of current anti-discrimination laws) as a top priority within its civil fraud division, with particular attention being paid to race and sex discrimination. DOJ's stated premise is straightforward: opportunities should not turn on immutable characteristics. That framing matters, because it signals DOJ's view that certain practices—regardless of how they are labeled internally (e.g., "DEI," "inclusion," "representation," "equity")—may create FCA exposure when they are tied to federal funds and alleged to violate anti-discrimination laws.
This was a consistent theme in DOJ's remarks: the government is not investigating companies merely for having DEI programs. Instead, DOJ suggested it is investigating whether companies are engaging in unlawful discrimination, which can occur with or without a formal "DEI" structure or program. This distinction is important for risk assessments. Companies should be wary of simply reframing or renaming programs without also ensuring that its underlying decisions and/or metrics are not based upon protected characteristics.
DOJ also pointed to Attorney General Pam Bondi's July 2025 memo, "Guidance for Recipients of Federal Funding Regarding Unlawful Discrimination," and stated that failing to follow the memo's best practices may increase enforcement risk. While guidance memos generally are not controlling (particularly in light of the Loper Bright decision), practically speaking, the guidance memo can function as an informal benchmark. That is, even if not legally controlling, it likely will shape prosecutorial expectations and investigative priorities.
Finally, DOJ indicated it is not interested in policy debates. In other words, even if a company views a program as addressing historical inequities, DOJ will focus on whether the company's decision-making is unlawfully based on protected traits.
Higher-Risk Conduct
Helpfully, DOJ outlined specific conduct that it views as raising concerns, particularly when they relate to hiring, promotions, internships, training programs, and access to career-enhancing opportunities. While many of these concepts are discussed in AG Bondi's July 2025 memo, DOJ's remarks provided some specific examples of evidence it has seen in investigations to date.
Policies or Practices for Making Decisions Based on Race/Sex
Companies that have formal policies or practices that direct decisions to be made based on race/sex will absolutely increase enforcement risk. In particular, DOJ has suggested it will look for (and has seen in prior and ongoing investigations) evidence such as written policy documents, internal communications (emails/messages) from leadership, and/or statements or program descriptions on company websites or intranet pages.
Demographic Goals
Any demographic goals that are based upon protected characteristics will increase enforcement scrutiny. In particular, DOJ described encountering internal tracking tools that treat race/sex as a performance metric—such as color-coded charts (e.g., green/yellow/red) indicating whether hiring or promotion outcomes are meeting demographic targets. DOJ also highlighted scenarios where promotion slates or groups are required to include a specified number of individuals with certain protected characteristics.
Pressure on Personnel to Make Race/Sex-Based Decisions
DOJ indicated it is particularly focused on evidence of companies pressuring managers and leadership to make hiring, staffing, or promotional decisions based on race/sex. Specific examples included scenarios where:
- employees are required to set or meet project staffing/hiring goals (based on race or sex) that affect performance evaluations; or
- compensation (including management pay) is tied to achieving demographic outcomes.
DOJ also noted that relator testimony (from whistleblowers) can be especially persuasive in describing internal pressure to make decisions based on race or sex.
Executive Training or Leadership Programs Limited by Race/Sex
DOJ suggested that restricting access to executive development opportunities based on protected traits will draw scrutiny—particularly where the program provides tangible career benefits (e.g., leadership networking, sponsorship for professional development or conference attendance, mentorship with senior executives, etc.).
FCA Elements
DOJ's remarks also addressed how the elements of an FCA claim might apply in the context of alleged discriminatory practices by federal contractors, which provides some insight into how DOJ would pursue such an FCA case.
Materiality
DOJ has framed government contracting as a "partnership decision" involving stewardship of public funds. That concept may be used to argue that compliance with anti-discrimination requirements is material to payment or award decisions.
With that said, DOJ's commentary on materiality was fairly light when compared to other discussion points. Materiality could present a hurdle, especially in scenarios lacking a clear, express certification. As such, this is an area where we might expect to see ongoing litigation and fact-specific outcomes, with materiality arguments most likely to gain traction where (1) the solicitation/award requires an express certification; (2) the contract/grant conditions explicitly require compliance with anti-discrimination laws; and/or (3) the government can show it would not have awarded the contract or paid invoices thereunder if it had known of the alleged discriminatory conduct.
Scienter
DOJ described this element as "not hard," indicating it expects scienter (knowledge) to be achievable in many cases. Specifically, DOJ noted it has seen scienter through direct evidence (e.g., explicit management direction), and/or indirect evidence (e.g., formal non-discrimination policies contradicted by emails, meeting notes, or internal metrics showing race/sex is being used to drive decisions).
Damages
Calculating damages in these types of cases could be challenging (in fact, there was an entire other panel at this conference on the topic of damages in false certification/statement cases).
DOJ, however, described several damages approaches, which largely will depend on the alleged misconduct and its relationship to the contract, including:
- Full contract value (e.g., fraud in the inducement)
- Program-cost (e.g., costs of discriminatory programs charged to the government)
- Hybrid approaches (i.e., somewhere in between the two approaches above)
DOJ suggested it will seek traditional FCA multipliers (e.g., generally, at least 2x damages for settlement purposes), but that factors such as self-disclosure, cooperation, involvement of executive leadership, and commitment to reform will potentially affect settlement outcomes. DOJ also emphasized deterrence is especially important in this area, indicating a meaningful likelihood of penalties even where damages calculations are contested.
Practical Complications
Other members of the panel flagged several issues that may complicate compliance planning, including:
- Vagueness and uncertainty: The definition of "illegal DEI" remains contested, and much of the current line-drawing comes from guidance documents and memos rather than settled precedent.
- Shifting federal expectations: Some prior federal grants and programs reportedly contained DEI-related requirements that the government now suggests may be problematic, leaving contractors caught between historical grant terms and evolving enforcement positions.
- Durability across administrations: A general consensus was that the FCA typically is administration-proof and that these cases may persist even through political transitions. One panelist suggested that future priorities (e.g., whether certain cases continue through another administration) could depend heavily on the specific conduct and whether it clearly violates established anti-discrimination law.
Even amid these uncertainties, there was broad agreement of a key point: the FCA has proven to be an especially effective vehicle for this type of policy enforcement because it couples compliance theories with high damages exposure, whistleblower incentives, and significant settlement pressure.
Takeaways for Federal Contractors
While the remarks from DOJ do not materially change the original message from President Trump's January 2025 Executive Order, they certainly provide companies with more specifics and reinforce that this area is a top enforcement priority. As such, companies that do business with the federal government should consider reviewing their programs and documentation through an FCA-risk lens, including:
- whether any hiring, promotion, internship, training, or leadership programs use protected characteristics as an eligibility criterion or decision factor;
- whether demographic tracking has crossed from measurement into decision-making requirements;
- whether managers face incentives or compensation links tied to demographic outcomes; and
- whether internal communications could be read as directing decision-making based on race/sex despite formal equal opportunity policies.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
