Federal contractor compliance for D.C. small businesses looks meaningfully different in 2026 than it did even two years ago. The January 2025 executive order revoking Executive Order 11246 eliminated the affirmative action plan and compliance review framework that had governed federal contractor obligations for race, sex, and other protected categories since 1965, while leaving in place statutory frameworks for veterans, individuals with disabilities, prevailing wages, and other contractor obligations that exist independently of executive action. A Washington DC business law attorney advising a federal contractor client in 2026 has to navigate a compliance landscape that has substantially shifted while remaining alert to the statutory obligations that continue and the new certification requirements that have emerged from the executive order changes. The District is home to a meaningful share of the country’s federal contractors and subcontractors, which makes this topic directly relevant for the D.C. small business community.
What Changed in 2025
President Trump’s Executive Order 14173, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,” signed on January 21, 2025, revoked Executive Order 11246 and directed the Office of Federal Contract Compliance Programs (OFCCP) to immediately cease enforcement activity under the rescinded order. Federal contractors were given a 90-day wind-down period through April 21, 2025 to disband race and sex affirmative action programs that had been required under EO 11246.
The Department of Labor subsequently issued Secretary’s Order 03-2025 directing OFCCP to cease and desist all pending investigations, conciliation agreements, complaints, and other enforcement activity under EO 11246. OFCCP also placed Section 503 of the Rehabilitation Act and the Vietnam Era Veterans’ Readjustment Assistance Act enforcement in abeyance temporarily, though Secretary’s Order 08-2025 later lifted that abeyance and allowed OFCCP to resume Section 503 and VEVRAA enforcement.
In July 2025, the Department of Labor published proposed rules to formally rescind the 41 CFR Part 60 regulations that had implemented EO 11246 and to revise Section 503 and VEVRAA regulations. The rulemaking process is ongoing, and final regulations may not yet be in effect. Contractors should monitor the regulatory developments and adjust compliance practices as final rules are issued.
The practical result for D.C. small business federal contractors is that the AAP framework that had required workforce analyses, placement goals, and good-faith effort documentation for race and sex categories is no longer a compliance obligation, but several other federal contractor obligations remain fully in effect.
What Federal Contractor Obligations Remain in Effect
Section 503 of the Rehabilitation Act continues to require federal contractors and subcontractors with at least $15,000 in covered contracts to refrain from discriminating against individuals with disabilities and to take affirmative action to employ and advance qualified individuals with disabilities. Contractors with 50 or more employees and a covered contract of $50,000 or more must develop a written affirmative action program for individuals with disabilities, including the 7 percent utilization goal that has been part of the regulatory framework. Pending final rule changes, contractors should continue to invite applicants and employees to self-identify their disability status and to conduct utilization analyses.
The Vietnam Era Veterans’ Readjustment Assistance Act continues to require federal contractors and subcontractors with covered contracts of $150,000 or more to take affirmative action to employ protected veterans, including disabled veterans, recently separated veterans, active duty wartime or campaign badge veterans, and Armed Forces service medal veterans. Contractors with 50 or more employees and a covered contract of $150,000 or more must develop a written affirmative action program addressing veterans, including hiring benchmarks tied to the national rate of employed protected veterans.
The Davis-Bacon Act and Service Contract Act prevailing wage requirements continue to apply to federal construction contracts (Davis-Bacon) and federal service contracts (Service Contract Act) above applicable thresholds. Compliance involves wage determinations specific to each contract, certified payroll reporting, and employee notification of applicable prevailing wage rates.
E-Verify obligations continue to apply to federal contractors with contracts containing the FAR E-Verify clause. Most federal contracts above the simplified acquisition threshold include the clause, requiring contractors to verify the work eligibility of new hires assigned to the contract through the federal E-Verify system.
Federal Acquisition Regulation (FAR) clauses on equal employment opportunity, equal opportunity for veterans, equal opportunity for workers with disabilities, and similar provisions continue to apply through their statutory bases, even as the EO 11246 implementing FAR clause has been removed.
Specific industry-focused frameworks (the McNamara-O’Hara Service Contract Act, the Walsh-Healey Public Contracts Act, government-wide certifications under the Buy American Act, and similar) remain in effect for relevant contracts.
The New DEI Certification Requirement
Executive Order 14173 also created a new compliance obligation for federal contractors and grantees. New, renewed, or modified federal contracts and grants must now include a term requiring the contractor to certify that the contractor does not operate any programs promoting diversity, equity, and inclusion that violate applicable federal anti-discrimination laws.
The certification is identified as material for purposes of the federal payment decision, which means false certifications are subject to False Claims Act exposure. False Claims Act liability includes treble damages plus per-claim civil penalties, plus the prospect of relator (whistleblower) actions by employees or former employees who allege the certification was false.
The practical implications are significant. D.C. small businesses with federal contracts who maintain DEI programs need to evaluate whether those programs comply with federal anti-discrimination laws as currently interpreted, whether the certification can be made truthfully, and whether the program structures should be adjusted to support a defensible certification.
The interaction between the federal certification requirement and D.C. local law (including the broad protections of the D.C. Human Rights Act) creates a genuinely complex compliance question for D.C.-based federal contractors who operate in a jurisdiction with stronger local anti-discrimination protections than federal law requires.
What D.C. Small Business Federal Contractors Should Be Doing
Several specific compliance steps are warranted for D.C. small businesses that hold or pursue federal contracts.
Audit existing federal contracts and subcontracts to confirm which contractor obligations actually apply to the business. Contracts with the FAR equal opportunity clause continue to impose obligations even as the EO 11246 framework has been revoked.
Review Section 503 and VEVRAA compliance for any business with 50 or more employees that holds covered federal contracts at the relevant thresholds. The AAP requirements for these protected categories continue and OFCCP has resumed enforcement.
Review DEI programs in light of the new certification requirement. Programs that involved race-based or sex-based preferences, hiring goals tied to demographic categories, or similar features warrant careful review against the current federal anti-discrimination framework.
Update compliance documentation to reflect the post-EO 11246 environment. Documentation built around EO 11246 obligations should be archived for the period required by recordkeeping rules, but new compliance documentation should reflect the current framework.
Continue Davis-Bacon, Service Contract Act, E-Verify, and other prevailing wage and verification obligations without change. These frameworks were not affected by EO 14173.
Working with a Washington DC business law attorney such as those at The Mundaca Law Firm, with offices in Washington D.C. and the surrounding region, on a federal contractor compliance audit typically produces stronger compliance posture than relying on outdated guidance from before the 2025 framework changes.
The Short Version
Federal contractor compliance for D.C. small businesses changed substantially after the January 2025 revocation of EO 11246, with race and sex affirmative action obligations eliminated while Section 503 (disability), VEVRAA (veterans), Davis-Bacon, Service Contract Act, E-Verify, and similar statutory frameworks remain in full effect. A new DEI certification requirement creates False Claims Act exposure for federal contractors with programs that may not comply with current federal anti-discrimination law. For D.C. small business federal contractors reviewing compliance in 2026, a Washington DC business law attorney can navigate the substantial shifts and ensure compliance under the current framework.
