On January 20, President Donald Trump issued an executive order titled “Ending Radical and Wasteful Government DEI Programs and Preferencing.”

The order states that it ends “all discriminatory and illegal preferences, mandates, policies, programs, activities, guidance, regulations, enforcement actions, consent orders, and requirements.” It directs all executive departments and agencies “to terminate all discriminatory and illegal preferences, mandates, policies, programs, activities, guidance, regulations, enforcement actions, consent orders, and requirements.”

The precise impact on Alaska Native Corporations, Tribes, and small business contracting is uncertain. But in evaluating the executive order and its implementation, Alaska Native Corporations and Tribes should consider the following.

• Small Business Subcontracting. The executive order does not directly address this issue. Small business subcontracting goals for the federal government are mandated by Congress. Although the President may set the small business percentage goal at a particular level in any given year, the Small Business Act, 15 USC 644(g)(2), establishes mandatory floors for small business contracting goals. Thus, the federal government will still have statutory small business contracting goals unless Congress changes them.
• Rule of Two. One concern of this executive order as well as others issued by President Trump, will be its impact on the “Rule of Two”: a regulation that requires acquisitions to be set aside for small business concerns whenever there is a reasonable expectation that offers will be received from at least two responsive small business concerns that compete in terms of fair market prices, quality, and delivery. The Rule of Two is not mandated by statute; instead, it is a regulatory implementation of Section 15(a)(1)(C) of the Small Business Act, 15 U.S.C. 644(a)(1)(C), which provides that the SBA shall “assur[e] that a fair proportion of the total purchases and contracts for goods and services of the Government in each industry category . . . are awarded to small business concerns.” Therefore, if the Rule of Two is regarded as advancing “DEI,” the new administration may make changes to its application. For the moment, the latest executive orders do not address the Rule of Two or make any changes to its application.

• 8(a) and DBE Contracting. The 8(a) Program and the DOT’s DBE program used to have, as a regulatory matter, a racial component in the form of a rebuttable presumption of social disadvantage afforded certain races and ethnicities. Those racial presumptions were eliminated by court order in Ultima (with regard to the 8(a) program) and Mid-America.

• • • The 8(a) program and DOT’s DBE program, as well as Alaska Native Corporation participation in the 8(a) program, are statutorily mandated by Congress. This means the new administration cannot simply eliminate the 8(a) or DBE program by executive order.
    • However, there are potential second-order impacts on those programs, based on changing leadership at the SBA and the DOT, which could change the focus or lessen support for these initiatives. The executive orders clearly indicate hostility to disadvantaged business programs, and the agencies will follow the President’s lead. There is, for example, a risk the 8(a) program will be treated as a “discriminatory” mandate and therefore restricted or applied less often.
    • A defense against reduced use of the 8(a) program is that federal agencies often like to use it, due to its  easy application in government procurement actions and its support for local small businesses. Close monitoring of SBA leadership changes and congressional focus on the 8(a) program is appropriate and needed.
  • OFFCP/Compliance Obligations. The biggest immediate impact that government contractors are likely to see is a reduction or elimination of socioeconomic administrative requirements imposed by prior administrations. Two immediate examples:

1. 1. Elimination of Mandatory Affirmative Action Plans. As a result of executive orders, OFCCP (the Office of Federal Contract Compliance Programs) has already issued a memo stating it will immediately cease:

      a) [h]olding Federal contractors and subcontractors responsible for taking “affirmative action”; and b) allowing or encouraging Federal contractors and subcontractors to engage in workforce balancing based on race, color, sex, sexual preference, religion, or national origin.This will likely result in elimination of the requirement to have written affirmative action plans for classes other than disabled individuals and veterans, and to file certain reports with the OFCCP. However, the office did note that contractors must still comply with the requirements regarding affirmative action plans for disabled individuals and veterans.
   2. Elimination of Nondisplacement of Qualified Workers Requirements. One of the executive orders rescinded President Biden’s Executive Order 14055 dated November 18, 2021 (Nondisplacement of Qualified Workers Under Service Contracts). President Biden’s executive order had resulted in a new Federal Acquisition Regulatory (FAR) Council regulation that requires successor contractors on Service Contract Act contracts to offer employment to the predecessor contractor’s employees (29 C.F.R., Part 9). The executive order does not directly address the Nondisplacement of Qualified Workers issue, other than to revoke President Biden’s order. Instead, President Trump directs the “Director of the Domestic Policy Council (DPC) and the Director of the National Economic Council (NEC) [to] review all Federal Government actions taken pursuant to the orders, memoranda, and proclamations listed in section 2 of this order and take necessary steps to rescind, replace, or amend such actions as appropriate.” As such, we can anticipate formal action by the government to rescind 29 C.F.R., Part 9 at some point. Contractors will therefore no longer be required to make offers to employees of the incumbent on SCA contracts, likely sometime later this year.

• Government Contractor Voluntary Affirmative Action/DEI Programs. In addition to directing the OFCCP to stop enforcing affirmative action regulations, the executive orders also bar contractors from engaging in  various activities.

• • • • Broadly, the executive orders state that:

• • • • • • Federal contractors and subcontractors shall not consider race, color, sex, sexual preference, religion, or national origin in ways that violate the Nation’s civil rights laws.
          • Contractors and grant recipients are required to agree they will comply “in all respects with all applicable Federal anti-discrimination laws” as a condition of all future contracts and grant awards. This means they will have to affirm they do not “discriminate” in favor of minority populations.
          • Contractors and grant recipients will be required to certify that they “do[] not operate any programs promoting [diversity, equity, and inclusion] DEI that violate any applicable Federal anti-discrimination laws.”
          • The executive order does “not apply to lawful Federal or private-sector employment and contracting preferences for veterans of the U.S. armed forces or [blind] persons protected by the Randolph-Sheppard Act, 20 U.S.C. 107 et seq.”

• • • • The executive order gives federal contractors ninety (90) days to eliminate their affirmative action programs to the extent they are inconsistent with the executive order’s requirements.

• • • • • • Starting April 21, 2025, contractors “shall not consider race, color, sex, sexual preference, religion, or national origin in ways that violate the Nation’s civil rights laws.”
          • Contractors, subcontractors, and grant recipients are prohibited from maintaining any DEI programs.
      • For contractors, the next immediate steps are to:
        • • Review their affirmative action and DEI programs, as well as other internal programs, to determine whether changes must be made to comply with the executive order in hiring, subcontracting, and other areas
          • Continue to monitor congressional and administrative actions for directives or impacts on the 8(a) and other small business contracting programs
      • And lastly,
        • • Government contractors being audited by OFCCP with respect to their affirmative action plans, or those that have been notified that they will be audited in the future, should consider confirming with OFCCP whether that audit will continue/go forward, or end due to the executive order.

We will continue to monitor the ramifications of this executive order and its potential impact on Alaska Native Corporations, Tribes, and small business contracting.

This article summarizes aspects of the law. This article does not constitute legal advice. For legal advice regarding your situation, you should contact an attorney.

We also acknowledge the contributions of Molly Gunther, one of our Anchorage Law Clerks, in the development and drafting of this article.