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Agencies with federal contracts run a significant risk of financial penalties and being “debarred“ if they don’t comply with Trump’s new executive order, says government contract expert Liza Craig. She breaks down for us the true impact of the decree, and spells out what’s riding on the upcoming US elections.

“Stunned“ is one word agency execs have used to describe President Trump’s executive order forbidding “divisive” diversity training programs. And they should be, according to Liza Craig, a government contract expert within law firm Reed Smith’s global regulatory enforcement group.

Craig characterizes the executive order as “surprising” in how “amazingly sweeping” it is in nature. “Concerning”, given how much effort companies have put into diversity and inclusion training programs. And “challenging” for agencies that have government clients and want to comply.

So, what do agencies need to know?

  • The penalties for non-compliance are significant. Not only can contracts be canceled or terminated, agencies can be debarred from working with the government. “It’s a very harsh sentencing,” says Craig. “It can have a very significant impact on a company and there can be financial penalties associated with it.”

  • There will be a hotline for people who feel agency training programs are in violation. The Department of Labor has been directed, through the Office of Federal Contract Compliance Programs (OFCCP), to establish a hotline and investigate complaints, per the order.

  • The government will be requesting information about your programs. By Oct 22, the director of OFCCP shall publish in the Federal Register a request for information regarding the training, workshops or similar programming provided to employees, per the order. “The OFCCP is going to be responsible for finding out whether or not agencies have violated the executive order,” says Craig. “We would hope there will be more guidance regarding the parameters and what is going to be acceptable. I would imagine this is going to be a moving target.”

  • Language about ’white privilege’ should be redlined. “You’re going to want to talk to your internal and external counsel about your existing training programs. The order has made it clear that certain words will be unacceptable. You will want to match your programs with that language and, where there is overlap, redline terms like ’white privilege’.”

  • ’Unconscious bias’ conversations will likely cease. “It’s probably safe to say that many of us, whether it’s race or not, have unconscious biases that we bring to the table. It’s certainly a powerful tool to talk about those and flush those out. This executive order would seem to suggest that that can no longer be so easily done.”

  • Getting out of a government contract is not easy. “Either party can normally terminate a contract, but it’s much harder for a private contractor to terminate an agreement with the federal government. You’ve got an obligation to perform,” says Craig, who notes that many agreements are three to five years.

What will the impact of the elections likely be?

  • If Trump wins, the language could get sterner. “We may see the tone of this order become more pervasive in terms of speech. We may get some very definitive guidance that makes it much more difficult to administer some of these training programs in the manner that we have seen them administered in the last year.”

  • If Biden wins, the order will likely go away quickly. “I would think that, pretty early on, you would see executive orders like this rescinded.”

  • In the meantime, much more clarity is needed. “It’s not clear to me whether or not teaching a class about inclusivity, and ways to minimize barriers between different races or ethnicities or genders speaking to one another in the workplace, will be deemed unacceptable. There are a lot of gray areas here because the executive order is so broad. This really is going to be challenging to navigate.”

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