The Wall Street Journal recently reported that the U.S. Department of Justice (DOJ) is using the False Claims Act (FCA) to actively investigate federal contractors to determine if they are still maintaining “illegal” diversity programs. The FCA has traditionally been used to go after companies that fraudulently bill the government for work that wasn’t done or those that improperly inflate the costs of work they did.
Under the administration’s theory of the FCA, contractors who still have “illegal” DEI initiatives would be violating Executive Order (E.O.) 14173, Ending Illegal Discrimination and Restoring Merit-Based Opportunity (January 21, 2025), and would therefore not be abiding by their obligations to the federal government. If DOJ is successful in bringing an FCA action, a targeted company could be liable for damages triple the amount suffered by the government.
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