On September 4, 2020, under an order from the President of the United States, the director of Office of Management and Budget (OMB), Russell Vought, issued a memorandum titled Training in the Federal Government that stated, in part “The President has directed me to ensure that Federal agencies cease and desist from using taxpayer dollars to fund these divisive, un-American propaganda training sessions. The sessions described in the memorandum as “divisive and un-American propaganda” focused on training on the subject matter of diversity, equity and inclusion (DE&I).  Shortly after the memorandum was issued, as promised by the OMB, the President issued an Executive Order  (EO) on September 22, 2020 that outlined the directive and rationale as to why any diversity training that focuses on, according to the order, “critical race theory”, “white privilege” or that the United States is “inherently racist or evil” shall stop.

The message from the administration was clear, and the effect was immediate.  With the issuance of the memorandum, there was an elevated and collective concern across not only federal agencies, but also in private and public sectors, who were recipients of federal funding.  Agencies, businesses and contractors who received federal monies understood that, per the EO, the risk for non-compliance was  “[A] contract may be canceled, terminated, or suspended in whole or in part and the contractor may be declared ineligible for further Government contracts in accordance with procedures authorized in Executive Order 11246, and such other sanctions may be imposed and remedies invoked as provided by any rules, regulations, or orders the Secretary of Labor has issued or adopted.”

The pronounced steep and detrimental consequences created a chilling effect. Regardless of the commitment to diversity across agencies and the desire to provide training on the subject, no one wanted to risk violating the EO and losing federal funding now and in the future.  As a result, the EO produced a ripple effect of swift responses from across all sectors, public agencies and private entities, of confusion, trepidation and questions that prompted entities to cancel or postpone any trainings on DE&I or any related subject areas.

While the EO was effective immediately, it also provided for two additional time frames for agencies and entities to meet compliance requirement.  First, the EO stated that “[T]he requirements for federal contractors and subcontractors will apply to contracts entered into 60 days after the date of the executive order—November 21, 2020.”   Second, the EO gave those agencies and entities that fell under its purview, ninety days to provide a status report on compliance, stating that “Within 90 days of the date of this order, each agency shall report to OMB all spending in Fiscal Year 2020 on Federal employee training programs relating to diversity or inclusion, whether conducted internally or by contractors.”

While dates for report submission and compliance outlined in the EO seemed fast-approaching in September, the injection of the Presidential election in November has changed the landscape and predictably, what may be to come.  It is highly probable, if not a foregone conclusion, that the EO will be swiftly dismantled and rendered moot after the new Presidential administration takes office on January 20, 2021.   While a formal statement by President-Elect Joe Biden on the EO has not yet been issued, the EO was referenced during the first presidential debate, and in response to the President’s statement that ”propaganda trainings” were “teaching people that our country is a horrible place, it’s a racist place.” Biden responded, “No one is doing that.”

Thus, the question that now looms for federal agencies and entities that are currently engaged in federal contracts is what must be done now and what can permissibly and reasonably be tabled until after January 20, 2021.  Barring an extension being granted by the Department of Labor, compliance with the EO is expected since it is and remains in effect.  However, it may not be ambitious but prudent for agencies and entities to look to reschedule those DE&I trainings they hastily cancelled just weeks ago.