Against the backdrop of Executive Order 14398, “Addressing DEI Discrimination by Federal Contractors,” and a new clause implementing the order into all federal contracts, DOJ has recently finalized three settlements signaling its intention to aggressively utilize the False Claims Act (FCA) to target federal contractors for alleged violations of anti-discrimination laws based on their diversity, equity, and inclusion (DEI) policies and programs. Below we briefly summarize the three settlements, identify key takeaways from this emerging enforcement trend, and outline proactive risk mitigation steps that federal contractors may wish to consider.

Recent FCA DEI Settlements

On September 14, 2026, Accenture Federal Services (AFS) plc and Accenture LLP (collectively “Accenture”) agreed to pay the United States $25 million to resolve allegations that Accenture violated the FCA when it failed to comply with federal anti-discrimination laws in connection with its hiring, promotion, and staffing decisions in violation of federal law for the period January 2017 through the date of the settlement. According to the DOJ, these violations were premised on Accenture’s formal and informal DEI policies, including evidence with respect to the following categories of activity:

  • Hiring Practices: “Business unit leaders within AFS received monthly summaries of the specific percentage of each race and sex within the unit, where representation that met or exceeded AFS’ demographic goals was highlighted in green, yellow, or red depending on whether representation was at or above AFS’ goal” which was “designed to, and did, drive change in hiring practices based on race and sex”;
  • Promotion: “[W]hen considering managing director promotions, AFS conducted a separate discussion of candidates who furthered AFS’ race or sex demographic goals to ensure that these candidates received extra visibility with AFS leaders responsible for making promotion decisions”; and
  • Training: AFS ran a “training program, which reserved participation for only certain employees based on race and was designed to boost the career prospects of these employees over others through mentorship and networking.”

The Accenture Settlement follows IBM’s decision in April 2026 to pay DOJ approximately $17 million to resolve similar allegations under the FCA for the period January 1, 2019 through the date of the settlement in the first public resolution under the DOJs “Civil Rights Fraud Initiative.”  This enforcement trend was further established in August 2026, when Deloitte LLP and four affiliates agreed to pay $21.5 million to DOJ—and an additional $3 million to the states of Florida and Indiana—to resolve similar claims arising from alleged conduct between January 1, 2017 and the date of the settlement.  In a potentially significant development the Deloitte settlement arose from a federal qui tam whistleblower action filed by an outside 501(c)(3) organization—rather an insider or third party with direct knowledge of the violations.

Key Takeaways

  • Legacy Conduct is Still Subject to FCA Scrutiny: One critically important point is that all three settlements are retrospective and deal with conduct that in some cases long predates EO 14398 and RFO § 52.222-90. This fact signals that DOJ’s theory rests on an interpretation of longstanding Title VII and FAR 52.222-26 obligations rather than EO 14398 alone.
  • DOJ’s Broad Interpretation of Falsity, Materiality, and Scienter in the Context of DEI. Although some of the hiring, promotion, and training practices outlined in the three settlements as described appears to violate Title VII and federal law prohibiting certain race-based preferences, it is certainly not clear all of it does.  Moreover, even where DOJ establishes an underlying Title VII violation, FCA liability does not automatically follow.  DOJ must still connect the violation to a knowingly false or misleading claim and show that the noncompliance was material to the Government’s payment decision. See Universal Health Services v. United States ex rel. Escobar, 579 U.S. 176, 190-95 (2016).

The factual recitations in the three settlements raise legitimate questions whether the challenged practices were arguably consistent with federal expectations at the time the contracts were initiated and whether the failure to refrain from or disclose such practices were material to the “essence of the bargain,” or would have impacted the Government’s decision to enter into the contracts or permit them to continue. See Kousisis v. United States, 605 U.S. 114 (2025).

  • Settlements as Informal Enforcement Precedent: Because IBM, Deloitte, and Accenture settled without admissions of liability, no court decided whether the challenged practices violated Title VII or whether the relevant certifications and claims satisfied the FCA’s falsity, materiality, and scienter requirements – the core elements of a FCA violation. But as in prior corporate enforcement contexts (e.g., with respect to the Foreign Corrupt Practices Act), the settlements themselves potentially stand as informal precedent for what the DOJ considers to be conduct violating these statutes.
  • Emerging Qui Tam Risks From Outside Advocacy Organizations: The Deloitte settlement further illustrates the growing qui tam risk contractors potentially face in this area. The Deloitte settlement was predicated on a whistleblower action filed by the American Alliance for Equal Rights, a 501(c)(3) nonprofit “dedicated to challenging distinctions made on the basis of race or ethnicity in federal and state courts,” which received $4.3 million of the federal recovery as its relator’s share. FCA scrutiny therefore may originate not only with current or former employees or government-initiated investigations, but also with outside organizations examining public DEI statements and programs.
  • Cooperation + Remediation Credit Can Still Mitigate Exposure: The settlements in all three actions (even Deloitte’s resolution of the qui tam action) explicitly state that the parties were provided cooperation credit under the DOJ’s “Guidelines for Taking Disclosure, Cooperation and Remediation into Account in False Claims Act Matters, Justice Manual Section 4-4.112.” Nevertheless, the total resolution in each case was still relatively substantial.

Risk Mitigation for Government Contractors

These recent settlements outline a clear enforcement trend and highlight that DOJ is committed to achieving tangible results from its Civil Rights Fraud Initiative.  They underscore the importance of reviewing DEI-related employment practices, compensation incentives, professional development programs, public statements, and associated federal contract costs. They also highlight that companies may wish to analyze their historic DEI practices—even where those practices were deemed consistent with the federal standards at the time (or even encouraged)—to assess potential risks and mitigate them. Although statutes of limitation may otherwise place natural limitations on DOJ’s ability to pursue formal claims or charges targeting some historic conduct, it does not foreclose the possibility of investigation or inquiry and historic conduct may be used to establish a common pattern with respect to more recent practices.

Because the governing requirements and enforcement theories continue to evolve, experienced outside counsel, such as Fluet’s False Claim Act and Government Contracts practitioners, can assist in assessing and mitigating these risks.