What Federal Financial Assistance Recipients Need to Know About Proposed DEI Certifications in SAM

In January 2025, President Trump issued Executive Order (EO) 14173. The EO ordered government agencies, contractors, and other federally funded organizations to stop DEI programs that violate Federal civil rights laws. The General Services Administration (GSA) is proposing to add new certification language regarding unlawful DEI programs in the System for Award Management (SAM) for entities registering for eligibility for federal financial assistance (i.e., grants).

What Does the Proposed Certification Say?

The proposed certification would require the organization to certify that it:

“Will comply with the U.S. Constitution, all Federal laws, and relevant executive orders prohibiting unlawful discrimination on the basis of race or color in the administration of federally funded programs (See Titles VI and VII of the Civil Rights Act of 1964, the Equal Protection Clause of the Fourteenth Amendment, and 2 C.F.R. § 200.303 Internal controls). Federal antidiscrimination laws apply to programs or initiatives that involve discriminatory practices, including those labeled as Diversity, Equity, and Inclusion (DEI) or “diversity, equity, inclusion, and accessibility” (DEIA) programs. Entities that receive federal funds, like all other entities subject to federal antidiscrimination laws, must ensure that their programs and activities comply with federal law and do not discriminate on the basis of race or color. Examples of practices that may violate applicable Federal anti-discrimination laws include:

(i) Granting preferential treatment based on race or color, such as race-based scholarships or programs, preferential hiring or promotion practices, or access to facilities or resources based on race or ethnicity, including through the use of “cultural competence” requirements, “overcoming obstacles” narratives, or “diversity statements;”

(ii) Segregation based on race or color, such as race-based training sessions, segregation in facilities or resources, or implicit segregation through program eligibility;

(iii) Other unlawful use of race or color as criteria, such as race-based “diverse slate” policies in hiring, race-based selection for contracts, or race-based program participation or resource allocation;

(iv) Training programs that stereotype, exclude, or single out individuals based on protected characteristics or create a hostile environment; or

(v) Retaliation by taking adverse actions against employees, participants, or beneficiaries because they engage in protected activities related to opposing DEI practices they reasonably believe violate federal antidiscrimination laws. Protected activities include raising concerns or filing complaints about, or objecting to or refusing to participate in, discriminatory programs, trainings, or policies . . ..”

The certification specifies race-based scholarships and segregation through program eligibility and also cites to the Equal Protection Clause of the U.S. Constitution. This suggests that the proposal is aimed at colleges and universities, and particularly state colleges and universities, who have applied for billions of dollars in grant funds in the past.

Why Is This Certification Problematic?

The proposed certification is problematic for many reasons.

1. The certification goes beyond what EO 14173 requires.  

 EO 14173 requires federal agency heads to include specific terms in every contract or grant award. Contractors and grant recipients must agree “that their compliance in all respects with Federal anti-discrimination laws is material to the government’s payment decision,” and they must certify “that they do not operate any programs promoting DEI that violate Federal anti-discrimination laws.” It says nothing about the U.S. Constitution, the Equal Protection Clause or any of the unlawful DEI examples. 

2. The certification brings risk under the False Claims Act.  

If financial assistance recipients attest to the clause and then operate programs promoting DEI that violate Federal anti-discrimination laws, they are subject to False Claims Act liabilities. There are two implications stemming from False Claims Act violations:

• Civil penalties and damages and
• Potential forfeiture of the government’s payments.

More troubling is the fact that the certification mentions specific types of DEI programs that haven’t previously been seen as violating federal anti-discrimination laws.

3. There is no Federal Acquisition Regulation (FAR) clause incorporating the EO 14173 certification, yet  

The administration floated a FAR clause for federal contracts through an Interim Final Rule on April 15, 2025, but it did not publish the wording. It invited interested parties to meet with the administration and offer thoughts, but the Interim Final Rule implementing EO 14173 remains un-finalized as of March 26, 2026, according to the Office of Management and Budget’s (OMB) Office of Information and Regulatory Affairs (OIRA) website.

Here, the process seems to be happening in reverse.

In the past, when a FAR clause has been added to a SAM attestation list, the SAM clause mimics the provisions in the FAR clause or the enacted law or executive order or incorporates it by referencing the clause. It would not go beyond the language of the law. That’s not the case, here. The examples of unlawful DEI in subparts (i)-(v) above are derived from a July 29, 2025 memorandum from Attorney General Bondi; not a law, not an executive order, not a vetted regulation.

That memorandum explicitly states that the examples are “best practices” for recipients of federal funds and not necessarily a list of illegal practices. Several of the examples in the Attorney General’s memorandum and proposed certification language have generally been viewed as lawful and certainly do not reflect consensus on what DEI initiatives are unlawful. It is concerning that GSA is putting entities wishing to receive federal financial assistance in a position to certify that they are not engaging in unlawful DEI that then uses examples of initiatives that likely are lawful. It puts entities seeking to register for or maintain eligibility for federal financial assistance in a difficult position.

4. This type of certification language may later be adapted for entities seeking eligibility via SAM for federal contracts.  

 Although this proposed certification is only for eligibility for federal financial assistance, and is still only in its proposed phase, the proposal also should raise concerns for current and potential federal contractors because it’s possible that the administration will propose a similar approach in the SAM certification process for contractors if this proposed language winds up getting adopted for federal financial assistance registrants. Then federal contractors, too, will be in the impossible situation of having to certify not only that they do not operate DEI programs that violate Federal anti-discrimination laws but also agree (at least by implication) that the listed examples are in fact unlawful when many of them are not.  

5. The certification clause references only unlawful discrimination on the basis of race or color. By contrast, the EO covers compliance with all Federal anti-discrimination laws, regardless of the category of discrimination (i.e., sex, religion, national origin, disability, age)  

 The GSA has made the perplexing choice to require certification only with regard to discrimination on the basis of race or color. The EO and Federal non-discrimination laws cover several other characteristics, none of which are mentioned in the certification clause, which, troublingly, explicitly limits its scope to discrimination on the basis of race or color.  

Moving Forward Through Uncertainty

As indicated, organizations and individuals can leave public comments on the proposed SAM certification process to make their voices heard until March 30, 2026.

Many organizations are actively evaluating how EO 14173 may affect existing policies and compliance frameworks. Taking a proactive approach can help reduce risk while maintaining readiness for evolving federal requirements. OutSolve continues to monitor changes to the law and federal policies to keep employers up to date. If your organization is preparing for potential changes to SAM certification or reviewing internal policies, OutSolve can help assess risk, improve documentation, and support ongoing compliance efforts. 

OutSolve offers a comprehensive Review-Keep-Fix DEI audit for organizations. For more information about this audit and to see what employers should review, keep, and fix related to their DEI programs, read our latest blog.