Supplier diversity programs did not end in 2026, but the rules around them changed. A new federal contract clause reaches vendor agreements, a court has read that clause narrowly, and the federal transportation program has new eligibility rules. Some state programs are in court too.
This article sums up where things stood in early November 2026, for people who run supplier programs. It is not legal advice. The answers depend on your contracts and your program, so take the specifics to your own counsel.
What changed for federal contractors?
Executive Order 14173, issued in January 2025, asked federal contractors to certify that they do not run DEI programs that break federal anti-discrimination law. On February 6, 2026, the Fourth Circuit lifted a preliminary injunction against parts of that order and said future challenges would need specific allegations that it is being carried out unlawfully.
Executive Order 14398, signed March 26, 2026, went further. It requires a contract clause barring “racially discriminatory DEI activities,” which it defines as “disparate treatment based on race or ethnicity in the recruitment, employment (e.g., hiring, promotions), contracting (e.g., vendor agreements), program participation, or allocation or deployment of an entity’s resources.”
The FAR Council’s April 17 guidance turned that into clause FAR 52.222-90. In short:
- New contracts: agencies were told to use it from April 24, 2026, on contracts over the micro-purchase threshold, including commercial products and services, delivered or performed in the United States.
- Existing contracts: contracting officers were told to make every effort to add it by July 24, 2026.
- Subcontracts: it flows down to subcontracts at any tier, again including commercial products and services.
- Reporting: a contractor must report a subcontractor’s “known or reasonably knowable” conduct that may violate the clause.
- Consequences: a contract can be canceled or suspended, and failing to comply is a listed cause for debarment or suspension.
What did the court say about the clause?
On October 14, 2026, a federal judge in Maryland declined to block the order in National Association of Diversity Officers in Higher Education v. Trump. The court read “disparate treatment” as intentional discrimination, which federal law already bans. It also said the clause applies only to work under the contract in which it appears.
That ruling helps, but it has limits. It was an early decision, and the plaintiffs later dropped the challenge without prejudice, so no final ruling came out of that case. A separate suit by 19 states and the District of Columbia, Maryland v. Hegseth, targets how agencies carried out the order. We did not find a ruling in it when we wrote this.
Neither case tells you whether a particular supplier program complies. Early legal commentary flagged open questions about programs that are open to everyone but aimed at underrepresented groups, and said the same questions apply to supplier and vendor initiatives.
What changed in public programs?
Transportation. The U.S. Department of Transportation’s final rule, effective September 25, 2026, largely keeps its October 2025 interim rule, which removed the presumption of disadvantage based on race or sex. Eligibility now rests on individualized evidence about the applicant. Certifying agencies must finish reevaluating existing firms by December 24, 2026, though an extension is possible. If your list relies on DBE status, some of it may change.
States. Texas shows how fast a state list can move. AP and The Texas Tribune reported that the acting comptroller limited Historically Underutilized Business eligibility to service-disabled veteran owners, and participation fell from more than 15,000 to just under 500. In April a judge temporarily restored the old rules, but only for the six businesses that sued, and a trial was set for November 9.
What has not changed?
The SBA still publishes federal contracting goals: 23% of prime dollars for small businesses and 5% for women-owned small businesses, 5% for service-disabled veteran-owned firms and 3% for HUBZone firms. The SBA’s HUBZone requirements turn on ownership by U.S. citizens, a principal office in a HUBZone and at least 35% of employees living in one. Its list does not include race or sex.
Certification also continues. NMSDC says its 23 regional councils certify more than 15,000 minority-owned businesses, and describes participation as open and voluntary, consistent with applicable law. Some corporate program documents use wording like “inclusive sourcing open to all” or “certified small and diverse,” and count small businesses alongside diverse ones.
What should you ask your lawyers?
- Which of our federal contracts include FAR 52.222-90, and does work under them touch our supplier program?
- Does any purchasing decision treat a supplier better or worse because of the owner’s race or ethnicity, or do we use that data only for outreach and reporting?
- Can any qualified supplier join our events, mentoring and development programs?
- Which of the categories we track rest on race or ethnicity, and which rest on size, location, veteran status or another test?
- Are the certificates on file still current, especially DBE and state ones?
- Who would handle a subcontractor issue that the clause requires us to report?
Where Hubzone Depot fits
Hubzone Depot is an SBA-certified HUBZone and Women-Owned Small Business and a WBENC-certified Women’s Business Enterprise. If you are looking at how small suppliers can reach your buyers, see how our marketplace works inside your procurement system, or read our guide to building a supplier diversity program.
Frequently asked questions
Is supplier diversity illegal now?
No law we reviewed bans supplier diversity as such. Executive Order 14398 targets disparate treatment based on race or ethnicity, including in contracting, and a federal court read that as intentional discrimination. Whether a specific program raises a problem depends on how it works, so ask your counsel.
What is FAR 52.222-90?
It is the federal contract clause that carries out Executive Order 14398. It bars racially discriminatory DEI activities in connection with work under the contract and flows down to subcontracts at any tier.
Does the clause apply to all of a contractor's work?
In its October 14, 2026 ruling, a federal court in Maryland said the clause applies only to work under the contract in which it appears. That was an early ruling in a case the plaintiffs later dropped, so it is not the final word.
What happened to the DBE program?
The U.S. Department of Transportation removed the presumption of disadvantage based on race or sex. Firms now qualify on individualized evidence, and certifying agencies must reevaluate existing firms by December 24, 2026, unless granted an extension.
Is HUBZone based on race or sex?
The SBA's published HUBZone requirements cover ownership by U.S. citizens, a principal office in a HUBZone and at least 35% of employees living in one. Race and sex are not on that list.
