The FAR’s DEI Clause Reaches Federal Leases and Concessions

On June 25, 2026, the U.S. General Services Administration (GSA) published a notice in the Federal Register that confirms that the government’s diversity, equity, and inclusion (DEI) contract clause reaches well beyond traditional contractors. Any GSA contractor, including companies that lease space to federal agencies or operate concessions on federal property, now fall within its scope, and noncompliance can carry suspension, debarment, or False Claims Act risks.

As a reminder, Section 3 of Executive Order (EO) 14398, “Addressing DEI Discrimination by Federal Contractors,” requires executive departments and agencies, including independent establishments subject to the Federal Property and Administrative Services Act (FPASA), to ensure, in particular, that “contracts and contract-like instruments” include a model clause. That clause contains compliance obligations including providing access to books and records, reporting known or reasonably knowable subcontractor conduct that may violate the clause, reporting filed litigation about conduct that may violate the clause, and more.

The clause is also easy to misread. It applies to agreements above the micro-purchase threshold (currently $15,000) with U.S. performance, flows down to subcontracts at any tier, and carries suspension and debarment as other consequences of noncompliance. Substantively, it prohibits disparate treatment based on race or ethnicity across five domains: recruitment; employment, such as hiring and promotion; contracting, such as vendor agreements; program participation; and the allocation or deployment of resources. A program need not be branded as a diversity initiative to fall within scope, and the clause’s notion of “disparate treatment” is not tied to established frameworks under Title VII of the Civil Rights Act of 1964, so a prior privileged assessment conducted under traditional discrimination standards may not answer the question the clause now poses. The clause also affords the government broad access to a contractor’s books, records, and accounts to ascertain compliance, and contractors should assume that information furnished to a contracting officer could be reviewed by other federal enforcement agencies.

HR Q&A: Understanding Disparate Impact vs. Disparate Treatment in Hiring

For federal procurement contracts, the Federal Acquisition Regulatory (FAR) Council implemented this executive order and clause via deviation on April 17, 2026 (Federal Acquisition Regulation (FAR) 52.222-90).

Now, the GSA notice seeks clearance, under the Paperwork Reduction Act, for a new information collection that will require certain GSA contractors to furnish the information needed to demonstrate compliance with EO 14398. The collection covers GSA’s non-FAR-based agreements, which the agency describes as “contract-like instruments” and identifies as including leases of real property, concession contracts, and outleases.

The notable feature in this GSA notice is confirmation of the expansive scope. Attention to EO 14398 has so far centered on procurement contracts and FAR 52.222-90. But this notice is separate. It is agency confirmation of the broader scope: “all non-FAR based-contracts.” Specifically, GSA reads the clause to cover lessors, concessionaires, and outlease holders, many of which have not historically considered themselves federal contractors. Leases are a logical starting point for the agency: GSA maintains a public Inventory of Owned and Leased Properties identifying its lessors, a readily available population of counterparties. Affected organizations should not assume that leases mark the limit of the clause’s reach, or that falling outside this particular collection means falling outside the clause.

The GSA notice also estimates 31,384 contracts would be subject to its information collection requirements, with one percent or 314 requiring annual responses. In determining the scope of the information requested, GSA seeks to “mirror the FAR usage of OMB Control # 9000-0034, Examination of Records by Comptroller General and Contract Audit.” That collection requirement, for example, allows the contracting officers “to examine and audit all records and other evidence sufficient to reflect properly all costs claimed to have been incurred or anticipated to be incurred directly or indirectly in performance of a contract” and to interviews of “any current employee regarding such transactions.” GSA estimates that its contracting officers will need sixteen hours to review the information submitted for each response.

Toolkit: SHRM’s BEAM Toolkit for I&D

Next Steps

Affected organizations, particularly those whose government relationships run through leases, concessions, or outleases, may wish to consider the following:

• Confirming coverage. Organizations may want to determine whether the clause applies to existing instruments and whether it has been, or is expected to be, incorporated by modification.
• Privileged review. Consider an attorney-client privileged review of programs and initiatives across the five domains, together with privileged statistical analyses of hiring, promotion, compensation, performance, and discipline outcomes. A privileged posture allows an organization to identify and address genuine exposure while controlling whether and how sensitive analyses are later disclosed.
• Avoiding overcorrection. The objective is an accurate, defensible assessment of conduct. Eliminating lawful, race-neutral programs out of an abundance of caution may create separate legal risks.
• Commenting. The notice invites public comment for sixty days after publication. Organizations that believe GSA has understated the burden, or that its assumptions do not reflect the realities of leasing and concession arrangements, have until Aug. 24, 2026, to submit comments before the deadline.

Cameron W. Ellis is of counsel with Ogletree Deakins in Atlanta. T. Scott Kelly is an attorney with Ogletree Deakins in Birmingham, Ala. © 2026 Ogletree Deakins. All rights reserved. Reposted with permission.