Flash Brief: Dismantle DEI Act of 2025

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.

How ready are you for CMMC?

Take our free readiness assessment. 10 questions, instant results, no email required until you want your report.

Check Your CMMC Readiness

Cabrillo Signals Match Engine should be configured to automatically rescore your opportunity pipeline based on this legislative shift. Opportunities with DEI-specific evaluation criteria, past performance requirements, or SOW deliverables will see probability-of-win (Pwin) scores decline as the competitive landscape shifts. The Match Engine's AI-powered rescoring algorithm factors in legislative risk, agency budget volatility, and solicitation language changes to help capture teams prioritize bids with the highest win probability and lowest execution risk. Contractors should run a portfolio-wide rescore immediately to identify which pursuits require repositioning, teaming strategy changes, or no-bid decisions.

Cabrillo Signals Intelligence Hub enables you to create saved searches for follow-on solicitations, contract modifications, and agency guidance related to this event. Configure alerts for: (1) SAM.gov solicitations from the 12 affected agencies that previously included DEI language but now omit it, (2) contract modification notices on the 8 affected IDIQ vehicles, (3) Federal Register notices from DOD, GSA, DOJ, and OMB related to EO 11246 or FAR Part 22, and (4) agency forecast updates that remove or de-scope DEI-related requirements. The Intelligence Hub aggregates these signals into a single dashboard, allowing your BD and capture teams to track legislative impact in real time without manual monitoring of dozens of data sources.

Proposal Studio (Proposal OS) should be updated immediately to remove or rebrand DEI-specific content in your win theme library, past performance database, and compliance matrices. Use Proposal OS's AI-powered content tagging to identify all proposal sections, capability statements, and past performance narratives that reference diversity, equity, inclusion, affirmative action, or related terms. Bulk-edit these assets to emphasize outcomes (retention, engagement, performance) rather than DEI-specific methodologies. Update your compliance matrix templates to flag FAR 52.222-26 and EO 11246 clauses as "under legislative review" so proposal managers can proactively address potential changes in Section L responses.

Proposal Studio Workflow Tracker should be configured to add a new gate in your 9-gate capture process: "Legislative Risk Assessment." For all opportunities in the 12 affected agencies or 8 affected NAICS codes, require capture managers to document: (1) presence of DEI-specific evaluation criteria or SOW requirements, (2) alternative positioning strategies if DEI language is removed, (3) teaming partner exposure to DEI revenue, and (4) contract modification risk for incumbent recompetes. This gate ensures legislative risk is formally assessed before gate reviews (e.g., Gate 4: Bid Decision, Gate 6: Proposal Kickoff) and creates audit-ready documentation for leadership review.

Systems to Configure

1. Cabrillo Signals War Room — Already monitoring this event; configure custom alerts for committee hearing schedules, markup sessions, and floor votes on the Dismantle DEI Act across all eight referred committees.

2. Cabrillo Signals Match Engine — Run immediate portfolio-wide rescore for all opportunities in NAICS 541611, 541612, 541618, 541690, 541512, 541519, 611430, 611710 and agencies DOD, DHS, GSA, DOJ, DOE, DOT, ED, STATE, TREASURY, HHS, DOL, ODNI; flag opportunities with >20% Pwin decline for capture team review.

3. Cabrillo Signals Intelligence Hub — Create saved searches for: (a) SAM.gov solicitations from affected agencies with modified or removed DEI language, (b) contract modifications on OASIS+, ASTRO, Alliant 3, STARS III, 8(a) STARS III, VETS 2, HCaTS, PSS, (c) Federal Register notices from FAR Council, OMB, OFCCP, and (d) agency acquisition forecast updates.

4. Proposal Studio (Proposal OS) — Audit and rebrand all DEI-related content in win theme library, past performance database, and compliance matrices; create alternative positioning templates for "organizational effectiveness" and "talent optimization" service lines.

5. Proposal Studio Workflow Tracker — Add "Legislative Risk Assessment" gate for all opportunities in affected agencies/NAICS codes; require capture managers to document DEI exposure and alternative positioning strategies before Gate 4 (Bid Decision).

Notification Chain

Chief Growth Officer / VP Business Development — Owns revenue forecast and pipeline health; must immediately assess total contract value (TCV) at risk across active contracts and pipeline opportunities in affected agencies and NAICS codes; brief executive leadership on revenue exposure and mitigation strategy.
Capture Managers (all affected opportunities) — Must revalidate Pwin scores, customer intimacy, and competitive positioning for all opportunities with DEI-specific evaluation criteria or SOW requirements; prepare alternative win themes and teaming strategies; escalate no-bid recommendations for opportunities with >50% DEI-related scope.
Proposal Managers — Must audit all active proposals (RFP response in progress) for DEI-specific content in technical approach, past performance, and management sections; coordinate with capture and legal to rebrand or remove at-risk content before submission.
General Counsel / Contracts Director — Must review all active contracts for DEI-specific deliverables, compliance clauses (FAR 52.222-26, EO 11246), and modification rights; prepare legal analysis of agency authority to modify or terminate contracts if legislation passes; brief executive leadership on compliance risk and contract dispute scenarios.
HR Director / Compliance Officer — Must review firm's own affirmative action plan, EEO-1 reporting, and OFCCP compliance posture; prepare for potential changes to contractor compliance obligations; coordinate with legal on workforce policy updates if OFCCP enforcement authority changes.
Marketing / Communications Director — Must update all external-facing content (website, capability statements, conference materials, social media) to remove or rebrand DEI-specific positioning; coordinate with BD on new messaging framework emphasizing outcomes over DEI-specific methodologies.

First 48-Hour Playbook

Hour 0-4: Immediate Triage

War Room analyst briefs Chief Growth Officer and General Counsel on legislative event, affected agencies, NAICS codes, and contract vehicles.
CGO directs BD team to pull all active contracts and pipeline opportunities in affected segments; create exposure matrix showing TCV at risk by agency, contract vehicle, and DEI-specific scope percentage.
General Counsel initiates contract review for all active task orders with DEI-specific deliverables; identifies contracts with FAR 52.243-1/52.243-2 modification clauses and potential termination for convenience exposure.
Proposal managers halt all proposal submissions in affected agencies pending content audit; flag any proposals due within 72 hours for executive review.

Hour 4-12: Assessment and Analysis

Capture managers revalidate Pwin scores for all opportunities in Match Engine; identify opportunities requiring repositioning, teaming strategy changes, or no-bid decisions.
BD team creates prioritized list of customer engagement actions: (1) incumbent contracts with DEI-specific SOWs requiring proactive COR/KO outreach, (2) pipeline opportunities with RFP release in next 60 days requiring pre-solicitation positioning, (3) teaming partners with high DEI revenue exposure requiring partnership risk assessment.
Marketing/Communications begins content audit of all external-facing materials; creates alternative messaging framework emphasizing "organizational effectiveness," "talent optimization," and "workforce analytics."
HR/Compliance reviews firm's own affirmative action plan and OFCCP compliance posture; prepares internal policy update scenarios if contractor obligations change.

Hour 12-24: Strategic Response

CGO briefs executive leadership on revenue exposure, pipeline impact, and recommended mitigation strategy; obtains approval for repositioning approach and customer engagement plan.
Capture managers begin customer outreach on high-priority incumbent contracts and pipeline opportunities; test alternative positioning messages; gather intelligence on agency-level guidance and policy changes.
Proposal managers complete content audit in Proposal OS; rebrand all DEI-specific win themes, past performance narratives, and compliance matrices; create alternative templates for future proposals.
General Counsel drafts customer communication templates for proactive outreach on active contracts; prepares legal analysis of contract modification scenarios and dispute resolution options.

Hour 24-48: Execution and Monitoring

BD team executes customer engagement plan: schedule calls with CORs, KOs, and program managers on high-priority contracts and opportunities; deliver alternative positioning messages; request early visibility into agency guidance or policy changes.
Capture managers update all opportunity records in Intelligence Hub with customer feedback, repositioning strategy, and revised Pwin scores; escalate no-bid recommendations for opportunities with unmitigable DEI exposure.
Marketing/Communications completes update of all external-facing content; coordinates with BD on new capability statement versions emphasizing outcomes over DEI-specific methodologies.
War Room analyst configures ongoing monitoring in Intelligence Hub: saved searches for committee activity, agency guidance, FAR Council notices, and solicitation language changes; establishes weekly briefing cadence for executive leadership until legislative outcome is determined.

Dismantle DEI Act of 2025

Also in this intelligence package

TL;DR

Key Points

Who Is Affected

Frequently Asked Questions

Q: Does this legislation affect existing contracts, or only future solicitations?

Q: How should contractors reposition DEI-related past performance and capabilities?

Q: Which agencies are most likely to issue guidance first, and what should contractors watch for?

Definitions

Intelligence Response

How ready are you for CMMC?

Systems to Configure

Notification Chain

First 48-Hour Playbook

How ready are you for CMMC?

Continue reading

How ready are you for CMMC?