Government Contracts Maritime Military – Page 2

Other Transactions: A Flexible and Efficient Acquisition Tool for the Department of Defense

On March 6, 2025, the Defense Secretary released a memorandum directing the Department of Defense (“DoD”) to adopt the Software Acquisition Pathway (“SWP”) to speed up the development, procurement, and delivery of software needed for weapons and business systems. Specifically, the memorandum directed DoD to use Commercial Solutions Openings and Other Transactions (“OTs”) as the default solicitation and award approaches for acquiring capabilities under the SWP. As a result, we are likely to see an expansion in DoD’s use of OTs. Thus, contractors should be aware of the rules and regulations regarding OTs.
Background
While OTs have been in the news a lot these days, they are not a new concept. OTs date back to 1958, when Congress granted the National Aeronautics and Space Administration (“NASA”) the authority to enter into transactions other than contracts, grants, or cooperative agreements in order to foster innovation and speed in the space race.
Since then, Congress has granted OT authority to several other federal agencies, including the Department of Energy, the Department of Health and Human Services, the Department of Homeland Security, the Transportation Security Administration, and the Department of Transportation. However, the most significant and frequent user of OTs has been the DoD.
What is an OT?
An OT is a legally binding agreement that is not subject to most of the federal laws and regulations governing procurement contracts, such as the Federal Acquisition Regulation, the Competition in Contracting Act, the Cost Accounting Standards, and the Contract Disputes Act. An OT can be structured in various ways, depending on the type, purpose, and scope of the project, as well as the needs and interests of the parties. This means that DoD has more discretion and flexibility to negotiate the terms and conditions of an OT, and to tailor them to the specific needs and objectives of the project. This also means that the participants have more freedom and autonomy to conduct their work, and to avoid most of the compliance burdens and administrative costs associated with procurement contracts.
An OT is still subject to certain statutory requirements, such as the Anti-Deficiency Act, the Freedom of Information Act, the False Claims Act, the Anti-Kickback Act, and the Procurement Integrity Act. An OT is also subject to certain policy and oversight considerations, such as the public interest; the protection of human subjects; the safeguarding of classified information; the prevention of fraud, waste, and abuse; and the audit and review by DoD and other agencies. Moreover, an OT—while not a procurement contract—is still a contract in the eyes of the law, and can be enforced and challenged in the courts. As we recently discussed, the Court of Federal Claims (“COFC”) appears to be taking a broader view of its jurisdiction over OTs than it has previously, so we may see more post-award protests for OTs at the COFC.
Because an OT is not subject to many of the federal laws and regulations applicable to procurement contracts, an OT does not automatically provide the same rights and remedies that are available under procurement contracts, such as those relating to equitable adjustments, claims, appeals, protests, and termination settlements. Therefore, the parties to an OT need to carefully consider and negotiate the terms and conditions of their agreement, and also address the risks and responsibilities that may arise during the performance and administration of the project. For example, in addition to basic terms such as the scope of work, deliverables, performance milestones, and payment provisions, the parties may want to negotiate clauses addressing data rights, intellectual property rights, dispute resolution mechanisms, termination procedures, and audit rights.
Types of DoD OTs
The DoD has two main types of OTs: Research and Development OTs and Prototype OTs, the latter of which can lead to production contracts.
Research and Development OTs
Research and Development OTs are utilized for basic, applied, and advanced research projects.10 U.S.C. § 4021(a). Research OTs may be used to pursue research and development of technology with dual-use application (commercial and government). Research OTs may also be used to advance new technologies and processes to evaluate the feasibility or utility of a technology. However, unlike Prototype OTs, DoD cannot transition a Research OT to a follow-on production contract.
Prototype OTs
A Prototype OT can be used for a broad range of projects, including but not limited to (A) a proof of concept, model, or process, including a business process; (B) reverse engineering to address obsolescence; (C) a pilot or novel application of commercial technologies for defense purposes; (D) agile development activity; (E) the creation, design, development, or demonstration of operational utility; or (F) any combination of subparagraphs (A) through (E). 10 U.S.C. § 4022(e)(5). And, for a Prototype OT to be awarded, one of the following conditions must be met: (i) significant participation by a nontraditional defense contractor or a nonprofit research institution; (ii) all significant participants being small businesses or nontraditional defense contractors; (iii) at least one-third of the total cost being covered by non-federal parties; or (iv) exceptional circumstances that justify the use of innovative business arrangements or structures. 10 U.S.C. § 4022(d).
Note that successful completion of a Prototype OT can result in a follow-on production contract without further competition, provided the prototype OT was competitively awarded, and the solicitation and agreement included the possibility of a production contract. This streamlined transition from prototype to production can allow for rapid fielding of new technologies and capabilities—once a prototype has proven its value and effectiveness, DoD can quickly move to production, ensuring that contractors are able to start working on delivering critical technologies without the delays often associated with competitive procurements.
Key Takeaways
DoD’s use of OTs has been steadily growing in recent years, both in terms of the number and the value of agreements. This is only expected to increase further under the current administration. Thus, contractors should keep in mind the following:

Embrace the Flexibility: Recognize that OTs offer a flexible framework that allows for innovative and collaborative agreements. This flexibility can be leveraged to tailor agreements that meet specific project needs without the constraints of traditional procurement regulations.

Leverage Nontraditional Partnerships: Consider forming partnerships with nontraditional defense contractors, research institutions, and consortia. These collaborations can bring diverse expertise and innovative solutions to the table, enhancing the project’s success.

Stay Informed on Legal Requirements: While OTs are exempt from many procurement laws, they are still subject to certain statutory and policy requirements. Ensure compliance with these requirements to avoid legal pitfalls.

Monitor Emerging Trends: Keep an eye on emerging technology areas where the DoD is increasing its use of OTs and position your organization to take advantage of opportunities in these high-priority areas.
Seek Legal Counsel: Given the unique nature of OTs and their legal implications, it is important to consult counsel with experience in federal contracting and OTs to assist in navigating complex legal landscapes and mitigate risks.

An In-Depth Look at Three of the Most Common Types of Government Procurement Fraud

While government procurement fraud can take many different forms, certain forms are more common than others. These forms of fraud within the procurement process cost taxpayers hundreds of billions of dollars per year, and they impact agencies across the federal government.
Although federal agencies have the authority to audit their contractors, and while the U.S. Department of Justice (DOJ) and Offices of Inspectors General (OIGs) specifically target procurement fraud, the federal government still relies heavily on whistleblowers to report fraud, waste, and abuse. This makes it critical for whistleblowers to come forward when they have information that could help uncover procurement fraud cases—and the False Claim Act’s whistleblower reward provisions provide a direct financial incentive to do so.
“Whistleblowers play a critical role in the federal government’s ongoing fight against government procurement fraud. From bid rigging and collusion to violations of the Buy American Act (BAA), whistleblowers can receive financial rewards for reporting all types of procurement fraud to the appropriate federal authorities.” – Dr. Nick Oberheiden, Founding Attorney of Oberheiden P.C.
With all of this in mind, when can (and should) employees, former employees, and others consider serving as a federal whistleblower? Here is an in-depth look at three of the most common types of government procurement fraud:
3 Common Types of Government Procurement Fraud
1. Bid Rigging and Collusion
The U.S. General Services Administration’s Office of Inspector General (GSAIG) identifies bid rigging and collusion as being among the most common types of government procurement fraud. It specifically identifies five forms of bid rigging and collusion that are particularly common within the federal contracting sector:

Bid Rotation – Bid rotation involves “tak[ing] turns submitting the lowest (winning) bid on a series of contracts” based on a “pre-established agreement.”
Bid Suppression – Bid suppression involves an agreement “not to bid, or withdraw a previously submitted bid, so a designated bidder is ensured to win.”
Bidding Collusion – Bidding collusion involves contractors agreeing to “set prices they will charge . . . , set a minimum price they will not sell below, or reduce or eliminate discounts.”
Complementary Bidding – Complementary bidding involves certain contractors “submit[ting] bids which are intentionally high or which intentionally fail to comply with bid requirements.”
Customer and Market Division – Customer and market division involve contractors agreement “not to bid or submit only complementary bids for customers or geographic areas.”

Even when competitive bids are submitted, the integrity of the bid evaluation process can be compromised through coordinated efforts to mislead contracting officials. As a result, recognizing unusual patterns in the bids governments receive can be a key first step toward identifying collusion or fraud in the procurement process.
If left undiscovered and unreported, all forms of bid rigging and collusion can lead to federal agencies paying more than necessary for essential products and services. In many cases, contractors will engage in multiple forms of bid rigging, price fixing, and collusion in an effort to create the appearance of legitimate competition. Contractors’ current and former employees will often have access to information that federal agencies have no practical way of discerning on their own—and this is one of several reasons why whistleblowers play such an important role in the federal government’s fight against procurement fraud.
According to the GSAIG, the following are common indicators (among others) of potential bid rigging and collusion:

Competing bids that contain identical line items or lump sums
Bids that greatly exceed the contracting agency’s estimated contract value
Bids that greatly exceed the total contract value of competing bids
Last-minute alterations or withdrawals of competitive bids
Contractors giving different bid amounts for the same line items on different contracts
Non-submission of bids by qualified contractors
Frequent interactions or communications between bidders near the time of submission
Certain contractors never (or rarely) bidding against others
Contractors only bidding for certain types of contracts despite broader capabilities
Joint venture submissions when both contractors have the ability to perform individually

2. Defective Pricing and Other Pricing Violations
Defective pricing and other pricing-related violations are also extremely common forms of procurement fraud. Here too, federal agencies often rely heavily on whistleblowers to inform them of suspect pricing practices, as they otherwise have limited options for uncovering pricing violations without initiating a costly and time-consuming audit or investigation. While conducting an audit or investigation can be well worth it when there is something to find, auditing all federal contractors to search for evidence of a potential pricing violation or another fraudulent scheme simply is not feasible.
Some common examples of pricing-related violations in the federal procurement sector include:

Defective Pricing – Defective pricing is defined as “provid[ing] incomplete, inaccurate or not current disclosures during contract negotiations.” While federal agencies can reduce government contract prices under the Federal Acquisition Regulations (FAR) in the event of defective pricing, again, agencies are often reliant on whistleblowers to inform them that action is warranted.
Price Reduction Violations – Price reduction violations involve contractors failing to lower their prices for government agencies when they offer discounts to other clients or customers. While these price reductions are not required across the board, non-compliance with this requirement (when it applies) is fairly common.
Progress Payments Fraud – Progress payments fraud involves “submit[ting] a request for payment with a false certification of work completed or falsified costs such as direct labor not rendered and materials not purchased.” This is a common form of fraud as well that can also be difficult for contracting agencies to uncover on their own—particularly in certain industries.

Similar to bid rigging and collusion, pricing-related violations can result in substantial overpayments and allow unqualified contractors to acquire contracts they wouldn’t win with accurate pricing disclosures. Whether intentional or inadvertent, these violations warrant correction to help preserve taxpayer funds and maintain the integrity of the federal procurement system. When committed intentionally, defective pricing and other pricing-related violations may warrant criminal enforcement action as well.
According to the GSAIG, the following are common indicators (among others) of potential pricing-related violations under federal contracts:

Nondisclosure of standard concessions
Nondisclosure of standard discounts
Nondisclosure of standard rebates
Failure to provide updated pricing information to the federal government
Delays in releasing updated pricing information
Failure to disclose third-party customer agreements that contain more favorable pricing than that offered to the federal government
Offering better pricing on the open market than offered to the federal government
Providing financial data and pricing information for different time periods
Inability to explain why certain supplies or materials were necessary
Reporting hours worked that are inconsistent with hours documented on employees’ timecards

3. Charging Violations
Charging violations also involve improperly billing the government under procurement contracts, but they relate more to the products and services provided (or lack thereof) than the pricing offered. For example, as identified by GSAIG, some of the most common forms of government procurement fraud that involve charging violations are:

Charging for Products Not Used or Delivered – Charging federal agencies for products not used or delivered is an extremely common form of government procurement fraud. This includes charging for materials and supplies that contractors have purchased but not used as well as billing federal agencies for end products that have not been delivered.
Charging for Services Not Performed – Charging for services not performed is another extremely common form of government procurement fraud. Many federal procurement fraud investigations focus on allegations that contractors have altered their employees’ timecards or inflated the time spent on contract-related activities.
Charging for Inferior Products or Services (Substitution) – Charging for inferior products or services (also commonly referred to as service or product substitution fraud) is common as well, especially when contractors fail to meet contract specifications. Federal contractors have an obligation to deliver in accordance with the terms to which they have agreed, and delivering inferior products or services violates this obligation.
Cost Mischarging – Cost mischarging involves “charg[ing] the government for costs which are not allowable, reasonable, or allocated directly or indirectly to the contract.” This includes misrepresenting charges as allowable, concealing unallowable costs within government billings, and hiding unallowable costs in accounts that are difficult for federal agencies to audit effectively.
Improperly Charging Under a Time and Materials (T&M) Contract – Charging expenses under a time and materials (T&M) contract that should be billed under a contractor’s firm fixed price (FFP) contract with the government is also a common type of charging violation. This, too, can be difficult for federal agencies to identify without whistleblowers’ help.

Violations of the Buy American Act (BAA) and Trade Agreements Act (TAA) fall into this category as well. The BAA requires the federal government to buy “articles, materials, and supplies” from domestic producers unless an exemption applies, while the TAA restricts the sources of end products delivered to federal agencies. Noncompliance with these statutes and falsely certifying compliance with these statutes are both common forms of federal procurement fraud.
According to the GSAIG, the following are common indicators (among others) of potential charging violations:

Costs billed under T&M contracts that exceed contract estimates
Products or services billed under FFP contracts that fall below contract estimates
Billing costs under a T&M contract that are not related to the subject matter of the contract
Using vague terms or descriptions when billing for discrete products or services
Modification of purchase orders or timecards
Inadequate documentation to support charges under federal contracts
Increases in labor hours without corresponding increases in output
Billing for labor hours at or extremely near the budgeted amount
Efforts to prevent auditing, inspection, or testing of delivered products or products in development
Irregularities in dates, signatures, and other details pertaining to charged amounts

Again, these are just three of the most common types of government procurement fraud. From manipulating the bidding process to paying kickbacks and falsely claiming small business or veteran-owned status, procurement fraud can take many other forms as well. If you believe that you may have information about any form of procurement fraud and are thinking about serving as a federal whistleblower, you should consult with an experienced attorney promptly.

How to Remain Compliant: Navigating the Post-Affirmative Action Landscape for Federal Contractors

On January 21, 2025, President Trump issued an Executive Order targeting diversity, equity, and inclusion (DEI) and diversity, equity, inclusion, and accessibility (DEIA) programs.1 Among other things, Executive Order 14173 (EO 14173), titled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” revoked Executive Order 11246. We unpacked the key provisions of E.O. 14173 in a previous alert. How will this development impact federal contractors, subcontractors and other companies?
Overview of E.O. 11246
E.O. 11246, now revoked, provided much of the basis for regulations implementing the requirement that federal contractors and subcontractors engage in affirmative action efforts to ensure that contractors and subcontractors refrained from discrimination against any employee or applicant for employment because of race, creed, color, or national origin. EO 11246 also required federal contractors and subcontractors that met specified jurisdictional thresholds to develop written affirmative action plans. These federal contractors and subcontractors, and private employers with at least 100 employees, must also submit workforce data annual report (“EEO-1”) to the Equal Employment Opportunity Commission (the “EEOC”). Thereafter, the government added two additional equal opportunity mandates: Section 503 of the Rehabilitation Act of 1973 (“Section 503”), which covers individuals with disabilities and the Vietnam Era Veterans’ Readjustment Assistance Act of 1974 (“VEVRAA”), which covers protected veterans. Note that VEVRAA requires covered contractors and subcontractors to submit to the EEOC an annual VETS-4212 report, which is a workforce data report specific to protected veterans.
On February 21, 2025 the United States District Court for the District of Maryland enjoined the Trump administration from implementing E.O. 14173 and another Executive Order ending DEI programs within the federal government. (E.O. 14151). As we summarized in a previous alert, the Court found that certain provisions of these two executive orders violate the First and Fifth Amendments to the United States Constitution in that they are unconstitutional content-based and viewpoint-discriminatory restrictions on protected speech (First Amendment) and deny Plaintiffs protection under the Fifth Amendment right to Due Process.
A panel of the United States Court of Appeals for the Fourth Circuit lifted the injunction on March 14. As we wrote in a previous alert, in lifting the injunction the panel noted that the challenged executive orders directed government agencies to take certain actions, and there was not yet a basis to conclude that the agencies would do so in an unconstitutional manner.
What Happened?
On January 24, acting U.S. Department of Labor (DOL) Secretary Vincent Micone released an agency Order directing DOL employees to stop “all investigative and enforcement activity” related to E.O. 11246. Secretary Micone stated that the DOL “no longer has any authority” under the rescinded order. The Order also ordered Section 503 and VEVRAA components of any ongoing review or investigation be held in abeyance pending further guidance.
Additionally, news outlets reported that on February 25, 2025, in response to Trump’s mandate to reduce all agency workforces, acting director of OFCCP, Michael Schloss sent a memo to Secretary Micone detailing Schloss’ plans for a reduction in force at OFCCP.
Undoubtedly, the revocation of E.O. 11246, the planned reduction in force at OFCCP, and a host of other executive orders and agency activities are causing confusion among employers and federal contractors and subcontractors who are perplexed about whether to collect, report, or store demographic data about their employees and prospective employees as required in Section 709(c) of Title VII of the Civil Rights Act of 1964 and implementing regulations (including FAR 22.8). On the one hand, the status of the executive orders issued by President Donald Trump is in flux as courts across the country are addressing challenges raised to the legality of the orders; on the other hand federal contracting and subcontracting entities are confronted with managing the legal and business risks associated with “illegal DEI and DEIA policies.” Federal contracting agencies have also begun to announce Federal Acquisition Regulation (FAR) Class Deviations to FAR 22.8 in order to implement the recent executive orders related to DEI. These FAR Class Deviations will result in modifications to existing and future federal contracts, affecting both federal contractors and subcontractors.
What Should Federal Contractors and Subcontractors Do?
Continue Compliance with Other Federal and State Law
Federal contractors and subcontractors must still fulfill obligations under federal and state laws, like those requiring submission of workforce and/or pay data under applicable federal and state law.
Permissive and Mandatory Steps
Federal contractors may continue to comply with the regulatory scheme implementing E.O. 11246 for 90 days from the date EO 14173 was published. How to determine whether to continue developing and maintaining affirmative action plans through April 21, 2025, is a business decision that should be made on a case-by-case basis.
Additionally, OFCCP still has authority to investigate and enforce claims under Section 503 of the Rehabilitation Act or VEVRAA brought by a federal contractor or subcontractor employee.
Ongoing Affirmative Action Obligations
Federal contractors and subcontractors who were in the process of drafting or implementing affirmative action policies should be mindful that E.O. 14173 did not revoke the federal contractor and subcontractor mandates under Section 503 or VEVRAA to take affirmative action for individuals with disabilities and protected veterans. Accordingly, business with at least 50 employees (or those expecting to grow to that size) and with contracts valued at least $50,000 (for coverage under Section 503, or $150,000 under VEVRAA) should continue with instituting affirmative action plans for individuals with disabilities and protected veterans. As referenced above, however, OFCCP has been directed to hold review and enforcement proceedings in abeyance.
Next Steps
Overall, federal contractors and subcontractors should thoughtfully review their employment policies and practices to ensure that decisions, and records about employment decisions, accurately reflect merit-based employee selection and advancement processes. We also recommend waiting for additional details from the agency and seeking legal counseling before making any changes to your existing policies.
Before making any changes to current candidate or employee data collection practices, federal contractors and subcontractors should review their policies and procedures to determine compliance with both federal and state anti-discrimination laws, as well as for data reporting requirements.

Department of Labor Announces Appointment of New OFCCP Director

On March 24, 2025, the Department of Labor announced the appointment of Catherine Eschbach as Director of OFCCP. Direct Eschbach joins the agency after serving as an appellate lawyer in private practice.
Director Eschbach intends to “oversee [OFCCP’s] transition to its new scope of mission[.]” Notably, in the announcement Director Eschbach states that:
“President Trump made clear in his executive order on eliminating DEI that EO 11246 had facilitated federal contractors adopting DEI practices out of step with the requirements of our Nation’s civil rights laws and that, with the recission of EO 11246, the President mandates federal contractors wind those practices down within 90 days. As director, I’m committed to carrying out President Trump’s executive orders, which will restore a merit-based system to provide all workers with equal opportunity.”
According to reporting from The Wall Street Journal and Bloomberg, following her appointment, Director Eschbach issued an internal email to OFCCP employees outlining her plans for the agency. According to reports, Director Eschbach stated that:

“The reality is, most of what OFCCP had been doing was out of step, if not flat out contradictory, to our country’s laws, and all reform options are on the table[.]”
OFCCP will “examin[e] federal contractors’ previously submitted affirmative action plans to determine whether they indicate the presence of long-standing unlawful discrimination and whether it is appropriate for OFCCP to undertake any investigation and enforcement actions, or refer the matter to other relevant agencies with jurisdiction to investigate and/or initiate enforcement action[.]”
OFCCP will “verify” that contractors have “wound down” the affirmative action programs for women and minorities by April 21, 2025, as required by Executive Order 14173.
OFCCP will “examine the statutory authority” for any investigations and enforcement action under VEVRAA and Section 503 and determine if “new rulemaking is necessary” and whether investigation and enforcement actions are “best housed” within OFCCP;
OFCCP plans to identify “potential civil compliance investigations” of large organizations with assets of $500 million or more, state and local bar and medical associations, and institutions of higher education with endowments over $1 billion in order to “deter DEI programs.” This is consistent with EO 14173, which requires federal agencies to identify up to nine large organization for DEI-related civil investigations.
Consistent with previous OFCCP announcements and “the administration-wide DOGE agenda,” OFCCP will undergo a “rightsizing” to reduce its staff and office presence in light of OFCCP’s “reduced scope of mission.” As we previously reported, OFCCP had already planned to cut its workforce by 90 percent.

Employment Law This Week: Federal Contractors Alert: DEI Restrictions Reinstated by Appeals Court [Podcast, Video]

This week, we’re focused on federal contractors and the effects that the reinstatement of Executive Orders 14151 and 14173 will have on employers.
Federal Contractors Alert: DEI Restrictions Reinstated by Appeals Court
President Trump’s executive orders against diversity, equity, and inclusion (DEI) are back in effect after the U.S. Court of Appeals for the Fourth Circuit stayed a nationwide injunction, posing new compliance challenges for federal contractors.
In this week’s episode, Epstein Becker Green attorneys Nathaniel M. Glasser and Frank C. Morris, Jr., outline the implications for employers, focusing on the False Claims Act, whistleblower risks, and the need for certification of compliance with anti-discrimination laws. Tune in to learn what steps your organization can take to mitigate potential penalties and retaliation claims.
Other Highlights
Whistleblower Challenges and Employer Responses: One-on-One with Alex Barnard Managing whistleblower claims can be particularly challenging when they involve internal experts. Epstein Becker Green’s Alex Barnard shares insights on managing these challenges, distinguishing job duties from legitimate concerns, and investigating claims fairly.

What is DEI Discrimination? The Latest from the EEOC

On March 19, 2025, the Equal Employment Opportunity Commission (EEOC) issued guidance and a Q&A document that provide additional details regarding what constitutes “DEI-Related Discrimination at Work” and what steps employees can take to address it through the administrative process. The guidance confirms that Title VII remains the law of the land, “prohibits discrimination based on protected characteristics such as race and sex,” and does not “provide any ‘diversity interest’ exception” to its antidiscrimination mandate.
DEI-Focused Executive Orders and Court Battles
The Trump administration has put employers – both public and private – on notice that DEI initiatives will be scrutinized and challenged. On January 21, 2025, President Trump signed Executive Order 14173 (the EO) declaring employers’ policies and practices that “use dangerous, demeaning and immoral race- and sex-based preferences under the guise of so-called [DEI]” to be illegal.
The EO applies to federal contractors but also targets private employers as it directs federal agencies to combat DEI initiatives in the private sector. Parts of the EO – most notably its enforcement provision – were enjoined nationwide by a district court judge in Virginia earlier in March. However, on March 14, the Fourth Circuit granted the Trump Administration’s application for stay pending appeal, which reinstated the EO (until further notice).
What is Unlawful DEI?
The EO broadly defined “impermissible DEI” to include (a) illegal discrimination/preferences, and (b) workforce “balancing” based on race, color, sex, sexual preference, religion, or national origin, but did not provide any examples.
In its recent guidance, the EEOC reinforced longstanding Title VII antidiscrimination principles by stating, “DEI initiatives, polices, programs or practices may be unlawful if they involve an employer or other covered entity taking an employment action motivated – in whole or in part – by an employee’s or applicant’s race, sex, or another protected characteristic.” The guidance also provides concrete examples of what the EEOC views as illegal DEI, which include:

Disparate treatment of workers in access to or exclusion from (1) “training (including training characterized as leadership development programs),” (2) “mentoring, sponsorship, or workplace networking/networks,” and/or (3) “[i]nternships (including internships labeled as ‘fellowships’ or ‘summer associate programs’) . . .”
Employer-sponsored (broadly defined) activities that segregate, limit, or classify workers based on a protected class “such as employee clubs or groups . . . Employee Resource Groups (ERG), Business Resource Groups (BRG), or other employee affinity groups . . .”
Separation of workers into groups based on their “protected characteristic[s] when administering DEI or any trainings, workplace programming . . . even if the separate groups receive the same programming content or amount of employer resources.”
Making employment decisions related to employees’ protected characteristics based on the preferences of clients, customers, or coworkers.

The guidance emphasized that Title VII applies to “all members” of a protected class – not just minorities. On that basis, the EEOC clarified that it does not recognize “reverse discrimination” claims and that the EEOC does “not require a higher showing of proof for so-called ‘reverse’ discrimination claims.”
Next Steps:
Given the EEOC’s DEI guidance, employers should:

Review their hiring practices and materials for compliance with Title VII and the guidance.
Assess whether any company-supported employee groups limit membership on the basis of any protected characteristic(s).
Evaluate training programs for compliance with the guidance.
Train managers on the guidance and how to properly document hiring, promotion, and related employment decisions.

OFCCP – Changes Happening Now: A New Director and Minimum Wage

On March 24, 2025, the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) announced a new Director—Catherine Eschbach. In the announcement of her appointment, it noted she is expected to transition OFCCP to a new mission scope consistent with Executive Order 14173.
Prior to her appointment, Eschbach worked for Morgan, Lewis & Bockius LLP and focused on “complex constitutional, statutory, and administrative law issues,” including cases that affected OFCCP. Eschbach’s prior experience also includes her service as a judicial clerk to Judge Jennifer Walker Elrod and Judge David Hittner, an appointment to the Grievance Oversight Committee by the Texas Supreme Court, and presidency of the Houston Lawyers Chapter of the Federalist Society. The appointment of a new OFCCP Director is a likely an indicator that federal contractor compliance and the regulation of federal contractors will remain a priority for the new Administration.
In addition to a new OFCCP director, federal contractors also received news about changes to the minimum wage threshold applicable to federal contractors. On March 14, 2025, President Trump issued an executive order rescinding 18 executive orders from the Biden administration, including Executive Order 14026, which had increased the federal contractor minimum wage to $17.75 per hour. This action effectively removes the requirement for federal contractors and subcontractors to pay workers this higher wage.
The federal contractor minimum wage was first established by President Obama in 2014 (Executive Order 13658), setting an initial minimum wage of $10.10 per hour, subject to annual increases. The Biden administration’s 2021 Executive Order 14026 further raised this wage and phased out lower wages for tipped employees. By 2025, the minimum wage under Biden’s order had reached $17.75 per hour.
It is unclear whether contractors must revert to the Obama-era minimum wage of $13.30 per hour or follow the general federal minimum wage of $7.25 per hour (or applicable state laws). The Department of Labor is expected to provide further guidance on this issue.
Employers should work with counsel to stay abreast of legal issues and ensure they are taking appropriate action.

Catherine Eschbach Named OFCCP Director Amid Executive Order 11246 Rollback

On March 24, 2025, the U.S. Department of Labor announced the appointment of Catherine Eschbach as director of the Office of Federal Contract Compliance Programs (OFCCP), signaling a new chapter for the agency following the rescission of Executive Order (EO) 11246, a nearly sixty-year-old executive order that had prohibited employment discrimination by federal contractors.

Quick Hits

Catherine Eschbach has been named director of OFCCP to “oversee its transition to its new scope of mission.”
OFCCP will enforce EO 14173’s revocation of EO 11246, Eschbach said, stating that EO 11246 “had facilitated federal contractors adopting [diversity, equity, and inclusion (DEI)] practices out of step with the requirements” of civil rights laws.
Contractors must unwind their EO 11246 compliance within ninety days of the issuance of EO 14173 (“Ending Illegal Discrimination and Restoring Merit-Based Opportunity”).

In her statement, Eschbach emphasized the administration’s policy shift: “I’m honored to serve as director of the OFCCP under the Trump Administration and oversee its transition to its new scope of mission.”
“President Trump made clear in his executive order on eliminating DEI that EO 11246 had facilitated federal contractors adopting DEI practices out of step with the requirements of our Nation’s civil rights laws and that, with the recission of EO 11246, the President mandates federal contractors wind those practices down within 90 days,” Eschbach said.
The new directive reflects a broader reorientation of OFCCP’s role. Eschbach stated that she was committed to “carrying out President Trump’s executive orders, which will restore a merit-based system to provide all workers with equal opportunity.”
Prior to her appointment, Eschbach worked for six years in Morgan, Lewis & Bockius LLP’s appellate group, focusing on complex constitutional, statutory, and administrative law issues. In that role, she worked to limit the government’s reach, “including issues affecting OFCCP.”
It is unclear if OFCCP still has authority to review DEI activities of federal contractors after the rescission of EO 11246. Federal contractors may want to review their DEI initiatives, EO 11246 affirmative action programs, and broader compliance strategies in light of this leadership change and shifting enforcement priorities.

Federal Contractor Minimum Wage Executive Order Revoked

On March 14, 2025, President Donald Trump issued an executive order rescinding several policies from the previous administration, including Executive Order 14026, which had increased the minimum wage for federal contractors.
Background on Executive Order 14026
Signed on April 27, 2021, by then-President Joe Biden, Executive Order 14026 mandated that federal contractors pay a minimum wage of $15 per hour. This policy aimed to improve the livelihoods of workers on federal contracts and was set to adjust annually with inflation. By January 1, 2025, the minimum wage under this order had risen to $17.75 per hour.
Implications of the Rescission
The revocation of Executive Order 14026 means that federal contractors are no longer required to adhere to the previously mandated minimum wage rates. Instead, they will revert to using wage determinations provided under existing laws such as the Service Contract Act and the Davis-Bacon Act. This change could lead to variations in wages across different federal contracts, depending on the specific stipulations of each agreement.
Conclusion
The rescission of Executive Order 14026 marks a significant shift in federal labor policy, reflecting the current administration’s priorities. As this policy change unfolds, its full impact on the federal contracting landscape and the workforce involved remains to be seen.

New Executive Order Rescinds the $17.75 Per Hour Federal Contractor Minimum Wage

On March 14, 2025, President Trump issued an Executive Order rescinding eighteen (18) prior executive orders and actions, including Executive Order 14026’s substantial increase to the minimum wage for federal government contractors and subcontractors. The March 14 Executive Order puts to rest continuing legal uncertainty about the status of the increased minimum wage under Executive Order 14026, which had been invalidated by the U.S. Court of Appeals for the Ninth Circuit but upheld by the Fifth and Tenth Circuits.
Executive Order 14026, issued in 2021, set forth a $15.00 per hour minimum wage, which has since increased to $17.75 per hour with adjustments for inflation. The $17.75 minimum wage is higher than the minimum wage applicable under any state’s law and is more than double the general federal minimum wage of $7.25 per hour. Executive Order 14026 built upon the prior Executive Order 13658, issued in 2014, which provided for a $10.10 per hour minimum wage that subsequently increased to $11.25 per hour for inflation.
Importantly, the March 14 Executive Order did not rescind Executive Order 13658. Accordingly, the lower minimum wage set forth in the 2014 order, as adjusted, presumably remains in effect. In addition, the Department of Labor’s regulations implementing Executive Order 14026 (which have not yet been rescinded) were issued separately and in addition to those implementing Executive Order 13658. Therefore, the Department of Labor could rescind the newer regulations (14026) while leaving the prior version (13658) in place.
Until further regulatory action is taken, the rescission of Executive Order 14026 leaves another area of uncertainty about contractors’ obligations. Contracts subject to Executive Order 14026 may include the implementing FAR clause requiring payment of the increased minimum wage. It is unclear how or when agencies will take action to modify contracts incorporating Executive Order 14026’s minimum wage, or whether they will implement substitute language referencing the Executive Order 13658 minimum wage.
Contractors should closely review the applicable terms in any federal contracts with legal counsel in order to assess how their obligations may be affected by the new executive order. In addition, contractors seeking to change wages in response to Executive Order 14026’s rescission will need to review collective bargaining and state wage law requirements to avoid missteps in doing so.

Trump Revokes Biden Federal Contractor Minimum Wage Mandate: What to Expect Next

Takeaways

President Trump has rescinded President Biden’s 2021 executive order increasing the minimum wage for employees of federal contractors.
The minimum wage is now $13.30 per hour for federal contractors covered by President Obama’s 2014 executive order, which remains in effect.
Trump’s action does not formally revoke a Department of Labor rule implementing Biden’s wage mandate. However, there is no longer a basis for enforcing the rule.

BREAKING NEWS: OFCCP to Revisit Previously Submitted Contractor Files

The Wall Street Journal is reporting newly appointed OFCCP Director Catherine Eschbach announced to OFCCP staff that the Agency will review federal contractor affirmative action plans previously submitted to the Agency for evidence of discriminatory employment practices. The report quotes Director Eschbach’s email to staffers in which she states
…most of what OFCCP had been doing was out of step, if not flat out contradictory, to our country’s laws, and all reform options are on the table.”

It is unclear at this time what form these reviews will take or which contractors may be under review.
Importantly, the plans under review were submitted to OFCCP under the prior Executive Order 11246 and before the current administration’s recent issuance of Executive Order 14173, revoking EO11246.
This is a developing story so stay turned for further details.