TL;DR
The Dismantle DEI Act of 2025 has been introduced and referred to eight House committees with jurisdiction over federal agencies, defense, education, workforce, and intelligence operations. This legislation poses a HIGH severity threat to contractors delivering diversity, equity, and inclusion programs, training services, HR consulting, and workforce development across DOD, DHS, GSA, DOJ, DOE, DOT, ED, STATE, TREASURY, HHS, DOL, and ODNI. Contractors holding IDIQ positions on OASIS+, ASTRO, Alliant 3, STARS III, 8(a) STARS III, VETS 2, HCaTS, and PSS should immediately audit active task orders, pipeline opportunities, and compliance obligations tied to Executive Order 11246, FAR Part 22, and OFCCP regulations. The multi-committee referral signals broad legislative intent to eliminate DEI-related contract requirements government-wide.
Key Points
- What happened: The Dismantle DEI Act of 2025 was introduced and referred to eight congressional committees (Oversight, Judiciary, Education and Workforce, Armed Services, Foreign Affairs, Financial Services, Energy and Commerce, Transportation and Infrastructure, and Intelligence), indicating comprehensive legislative action to eliminate diversity, equity, and inclusion programs across federal agencies.
- Who is affected: Contractors in NAICS codes 541611 (Administrative Management Consulting), 541612 (Human Resources Consulting), 541618 (Other Management Consulting), 541690 (Other Scientific and Technical Consulting), 541512 (Computer Systems Design), 541519 (Other Computer Related Services), 611430 (Professional and Management Development Training), and 611710 (Educational Support Services) delivering services to 12 major agencies via 8 major contract vehicles.
- What the timeline is: Committee referral is immediate; markup, amendment, and floor consideration timelines are unknown but typically span 60-180 days for multi-committee bills. Contractors should monitor committee hearing schedules and anticipate agency guidance within 30-90 days if the bill advances.
- What contractors should do NOW: Audit all active contracts and pipeline opportunities for DEI-specific language, deliverables, and compliance requirements; identify revenue exposure by agency and contract vehicle; prepare alternative service offerings (leadership development, organizational effectiveness, talent management) that deliver similar outcomes without DEI branding; and brief capture teams, proposal managers, and legal counsel on potential contract modification or termination scenarios.
Who Is Affected
Market Segments: Human Resources Consulting, Training and Development, Management Consulting, Administrative and Support Services, Professional Services, Diversity and Inclusion Programs, and Workforce Development contractors face direct revenue risk. Firms positioning DEI as a core competency or past performance discriminator will see competitive advantage erode if the legislation passes.
NAICS Codes: 541611, 541612, 541618, 541690 (consulting services), 541512, 541519 (IT services with DEI modules), 611430 (training), and 611710 (educational support) are primary impact zones. Secondary exposure exists for any NAICS code where DEI is embedded in program management, organizational change, or workforce analytics.
Agencies: DOD (largest training and workforce development budget), DHS (workforce diversity initiatives), GSA (government-wide policy implementation), DOJ (Civil Rights Division and OFCCP enforcement), DOE (STEM diversity programs), DOT (transportation equity initiatives), ED (educational equity programs), STATE (diplomatic training), TREASURY (financial inclusion), HHS (health equity), DOL (workforce development and OFCCP), and ODNI (intelligence community diversity programs).
Contract Vehicles: OASIS+ (Pool 1 and unrestricted), ASTRO (mission support and training), Alliant 3 (IT and professional services), STARS III (8(a) and unrestricted), VETS 2 (SDVOSB), HCaTS (health and human services), and PSS (professional services schedules) all carry active task orders with DEI-related SOWs, particularly in management consulting, training, and organizational development domains.
Compliance Surfaces: FAR Part 22 (Application of Labor Laws to Government Acquisitions), Executive Order 11246 (Equal Employment Opportunity), OFCCP regulations (affirmative action and compliance), and Equal Employment Opportunity requirements are the regulatory framework at risk. Contractors with affirmative action plans, EEO-1 reporting obligations, and contract clauses tied to these authorities should prepare for potential regulatory rollback or reinterpretation.
Frequently Asked Questions
Q: Does this legislation affect existing contracts, or only future solicitations?
The bill text and committee referral do not specify retroactive application, but if enacted, agencies will likely issue class deviations or policy memoranda directing contracting officers to modify or de-scope DEI-related deliverables in active contracts. Contractors should review FAR 52.243-1 (Changes—Fixed-Price) and FAR 52.243-2 (Changes—Cost-Reimbursement) clauses to understand modification rights. Historical precedent (e.g., Executive Order 13950 in 2020, later rescinded) shows agencies can suspend performance on DEI task orders pending legal review, creating cash flow and resource allocation disruptions even before formal contract modifications.
Q: How should contractors reposition DEI-related past performance and capabilities?
Rebrand DEI capabilities under neutral, outcomes-focused terminology: "organizational effectiveness," "talent optimization," "leadership development," "workforce analytics," "employee engagement," and "performance management." Emphasize quantifiable outcomes (retention rates, promotion velocity, employee satisfaction scores, productivity metrics) rather than diversity-specific KPIs. Update capability statements, past performance narratives, and proposal content libraries to remove DEI-specific language while preserving the underlying service delivery model. This allows pivoting to adjacent markets (change management, organizational development, HR transformation) without abandoning core competencies.
Q: Which agencies are most likely to issue guidance first, and what should contractors watch for?
DOD (via OUSD(P&R) and Defense Acquisition University), GSA (via Office of Government-wide Policy), and DOJ (via OFCCP) are the most likely early movers. Watch for: (1) agency-level policy memoranda suspending DEI-related task order awards, (2) FAR Council advance notices of proposed rulemaking (ANPRMs) to remove or modify FAR Part 22 clauses, (3) OFCCP enforcement guidance changes, and (4) OMB memoranda directing agencies to review and report on DEI-related contract spending. Contractors should monitor the Federal Register, agency acquisition forecast updates, and SAM.gov solicitation amendments for language changes in Sections C (Description/Specifications), H (Special Contract Requirements), and L (Instructions to Offerors).
Definitions
- Dismantle DEI Act of 2025: Proposed legislation referred to eight House committees with jurisdiction over federal agencies, aimed at eliminating diversity, equity, and inclusion programs, policies, and contract requirements across the executive branch. The multi-committee referral indicates intent to address DEI initiatives in defense, intelligence, education, workforce, transportation, energy, financial services, and foreign affairs domains.
- Committee Referral: The procedural step where introduced legislation is assigned to one or more congressional committees with subject matter jurisdiction. Multi-committee referrals (as in this case, eight committees) indicate complex, cross-cutting policy changes requiring coordination across multiple agency and regulatory domains. Each committee may hold hearings, markup sessions, and votes before the bill advances to the House floor.
- OFCCP (Office of Federal Contract Compliance Programs): DOL agency responsible for enforcing Executive Order 11246, which requires federal contractors to implement affirmative action programs and maintain non-discrimination policies. OFCCP conducts compliance reviews, investigates complaints, and can debar contractors from federal contracting for violations. Legislative changes to EO 11246 or OFCCP's enforcement authority would fundamentally alter contractor compliance obligations.
- FAR Part 22: Federal Acquisition Regulation section governing the application of labor laws to government acquisitions, including equal employment opportunity, affirmative action, and non-discrimination requirements. Contains mandatory contract clauses (e.g., 52.222-26, Equal Opportunity) that flow down to subcontractors. Changes to FAR Part 22 would require FAR Council rulemaking, public comment, and OMB approval.
- Class Deviation: A temporary waiver or modification of FAR requirements issued by an agency head (or designee) that applies to multiple contracts or a class of contracts. Agencies use class deviations to implement policy changes quickly while formal FAR amendments proceed through the rulemaking process. Contractors should monitor agency-specific deviation notices for early signals of policy shifts.
Intelligence Response
Cabrillo Signals War Room has already detected this legislative event and delivered this flash briefing within hours of committee referral. The platform continuously monitors congressional activity, agency policy memoranda, FAR Council notices, and OMB directives to identify regulatory and legislative changes that impact contractor revenue, compliance posture, and competitive positioning. For high-severity events like the Dismantle DEI Act, War Room automatically cross-references affected NAICS codes, agencies, and contract vehicles against your firm's active contracts, pipeline opportunities, and capability portfolio to quantify exposure and prioritize response actions.