Introduction

This page provides a comprehensive overview of Executive Order 14173: Ending Illegal Discrimination and Restoring Merit-Based Opportunity, signed on January 21, 2025. It is designed for federal contractors, construction industry professionals, and organizations impacted by federal contracting and workforce policies. The content explains what EO 14173 covers, why it matters now, and how it affects compliance, hiring, and diversity initiatives across the federal contracting landscape.

Executive Order 14173 marks a significant shift in federal policy by revoking prior affirmative action and Diversity, Equity, and Inclusion (DEI) requirements, and emphasizing a merit-based approach to employment and contracting. This order is especially relevant for those in the construction industry and related sectors who must now reassess their hiring, training, and compliance programs to align with new federal standards.

Key Definitions:

• DEI stands for Diversity, Equity, and Inclusion—initiatives aimed at increasing representation and support for historically underrepresented groups.
• DEIA adds Accessibility, expanding DEI to include accessibility for individuals with disabilities.
• Merit-based opportunity refers to employment and contracting decisions based solely on individual qualifications, skills, and performance, without regard to protected characteristics.
• Illegal DEI refers to diversity initiatives that grant preferences, benefits, or burdens based on protected characteristics (such as race or sex) in violation of federal law.

Summary of Legal Relationship:
EO 14173 revokes prior executive orders (such as EO 11246) that mandated affirmative action and DEI requirements for federal contractors. However, it does not change the underlying federal civil rights statutes (like Title VII of the Civil Rights Act). Instead, it shifts enforcement priorities and agency oversight to focus on merit-based standards and prohibits what it defines as “illegal DEI” practices.

With this context, the following sections outline the key takeaways, legal background, policy changes, and practical steps for compliance.

Key Takeaways

• Executive Order 14173, signed January 21, 2025, revokes Executive Order 11246 and reframes federal policy around merit-based opportunity while targeting what the administration calls “illegal DEI.”
• Federal contractors and subcontractors—including construction firms throughout the Ohio Valley region—must reassess affirmative action, DEI initiatives, hiring practices, and training programs for compliance with longstanding civil rights laws and new certification requirements.
• The Order does not change underlying statutes like Title VII of the Civil Rights Act, but it substantially shifts enforcement priorities, agency powers, and oversight of contracting practices.
• EO 14173 revokes race- or sex-based contracting preferences in federal procurement, aligning contracting processes with merit-based standards.
• Companies face increased legal exposure and potential False Claims Act liability tied to contract certifications, making robust documentation and policy audits essential.
• ABC Ohio Valley supports members by tracking developments under EO 14173, offering compliance education, and helping merit-shop contractors align workforce practices with the evolving federal framework.

Transition:
The next section provides an overview of Executive Order 14173, including its scope, definitions, and immediate implications for federal contractors and related organizations.

Overview of Executive Order 14173

Executive Order 14173: Ending Illegal Discrimination and Restoring Merit-Based Opportunity was signed by President Donald Trump on January 21, 2025. This executive order represents a fundamental reversal of affirmative action and DEI (Diversity, Equity, and Inclusion) obligations imposed under Executive Order 11246 and related federal guidance for nearly six decades.

The stated goal is to enforce federal civil rights laws—including Title VII and Title VI—through a strictly merit-based lens, eliminating race- and sex-based preferences the administration characterizes as discriminatory. These civil rights laws are codified in the United States Code, which provides the statutory authority for federal anti-discrimination requirements and enforcement.

The Order applies across executive departments and agencies, directly affecting federal contractors, subcontractors, and grant recipients, and indirectly influencing private sector employers with established DEI programs. For construction-industry professionals, this policy shift will influence how federal construction contracts, federal grants, and funded projects are bid, awarded, and monitored in the years ahead.

Definition Recap:

• DEI stands for Diversity, Equity, and Inclusion.
• DEIA adds Accessibility.
• Merit-based opportunity refers to employment and contracting decisions based solely on individual qualifications and performance.
• Illegal DEI refers to diversity initiatives that grant preferences based on protected characteristics in violation of federal law.

Transition:
To understand the impact of EO 14173, it is important to review the legal and policy foundation that shaped prior federal anti-discrimination and affirmative action requirements.

Policy Foundation and Legal Context

Historical Background

Understanding EO 14173 requires context on how federal anti-discrimination laws have historically operated. Title VII of the Civil Rights Act of 1964 prohibits employment discrimination based on race, color, religion, sex, and national origin. Title VI addresses discrimination in federally funded programs. The Equal Protection Clause of the Fourteenth Amendment applies to government action.

Key Statutes

Below is a summary of the main federal civil rights statutes relevant to EO 14173:

• Title VII of the Civil Rights Act of 1964: Prohibits employment discrimination based on race, color, religion, sex, and national origin.
• Title VI of the Civil Rights Act of 1964: Prohibits discrimination on the basis of race, color, or national origin in programs and activities receiving federal financial assistance.
• Equal Pay Act: Requires equal pay for equal work regardless of sex.
• Age Discrimination in Employment Act (ADEA): Prohibits employment discrimination against individuals 40 years of age or older.
• Americans with Disabilities Act (ADA): Prohibits discrimination against individuals with disabilities in employment and public accommodations.

Executive Orders and Agency Roles

Executive Order 11246, signed by President Lyndon B. Johnson in 1965, required federal contractors to implement affirmative action and prohibited discrimination. Later orders expanded protections to include sexual orientation and gender identity, but federal anti-discrimination policy distinguishes sexual preference from other protected classes, and it is not explicitly included as a protected category under these laws. These protections now cover an estimated 500,000+ contractors annually.

Acronym Glossary (at first mention):

• DEI: Diversity, Equity, and Inclusion
• DEIA: Diversity, Equity, Inclusion, and Accessibility
• OFCCP: Office of Federal Contract Compliance Programs
• FAR: Federal Acquisition Regulation
• VEVRAA: Vietnam Era Veterans’ Readjustment Assistance Act
• ADA: Americans with Disabilities Act

Supreme Court Decisions

EO 14173 now characterizes certain DEI/DEIA policies as constituting illegal discrimination when they use race, sex, or similar protected traits as a basis for preferences, quotas, or set-asides. The Order draws legal justification from recent Supreme Court decisions, including:

• Students for Fair Admissions v. President and Fellows of Harvard College (2023): Struck down race-conscious admissions.
• Adarand Constructors v. Peña (1995): Subjected race-based preferences to strict scrutiny.

Transition:
With this legal background in mind, the next section examines how EO 14173 terminates prior DEI and affirmative action requirements.

Termination of Prior DEI and Affirmative Action Requirements

Revocation of Prior Orders

A core feature of EO 14173 is the revocation of prior executive orders and policies promoting affirmative action and DEI within the federal workforce and procurement system.

The Order revokes:

• Executive Order 11246 and its amendments
• Executive Order 12898, which was intended to address environmental justice in minority and low-income populations
• Executive Order 13583 (federal workforce diversity)
• Executive Order 13672 (sexual orientation and gender identity protections for contractors)

Agency Implementation

Following the Order, Acting Secretary of Labor Vincent Micone issued Secretary’s Order 03-2025, directing the Office of Federal Contract Compliance Programs (OFCCP) to cease enforcement under EO 11246. This effectively suspends traditional affirmative action requirements for federal contractors, with a wind-down period extending to April 21, 2025.

Federal Acquisition Regulation (FAR) clauses tied to affirmative action and DEIA-focused obligations are being rescinded or revised to align with merit-only standards.

Important: Lawful veterans’ preferences under the Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA) and Section 503 protections for individuals with disabilities remain in effect. Randolph-Sheppard Act protections for blind vendors are also expressly preserved.

Transition:
With prior DEI and affirmative action requirements revoked, EO 14173 introduces new policy directives focused on merit-based enforcement and the elimination of “illegal DEI.”

New Policy Directives: Merit-Based Enforcement and “Illegal DEI”

Core Policy Objectives

EO 14173 establishes a new policy objective: to promote individual initiative, excellence, and hard work while terminating illegal discrimination through programs that promote DEI preferences and mandates. A central aim of EO 14173 is to end illegal DEI discrimination by eliminating unlawful preferences based on race or gender.

Agency Instructions

The Order instructs all executive departments and agencies to:

• End race- and sex-based preferences in hiring and promotion
• Cease workforce-balancing efforts based on protected characteristics
• Discontinue DEI programs that allocate opportunities by protected classifications

The term “illegal DEI” appears throughout the Order without a precise statutory definition, leaving agencies discretion to determine which policies cross the line. This ambiguity creates compliance risk.

Program Compliance Table

Program Type	Likely Compliant	Higher Risk
Broad safety training	✓
Skills-based apprenticeships	✓
Community outreach recruitment	✓
Race-based hiring quotas		✓
Gender-specific internship slots		✓
Numeric diversity targets		✓

Alternatively, for accessibility:

Likely Compliant:

• Broad safety training
• Skills-based apprenticeships
• Community outreach recruitment

Higher Risk:

• Race-based hiring quotas
• Gender-specific internship slots
• Numeric diversity targets

Neutral programs—like broad-based training or recruitment open to all—are less likely to be targeted. Initiatives setting explicit numeric goals or reserving opportunities by race or sex face heightened scrutiny.

Transition:
With new directives in place, EO 14173 also restructures federal enforcement and oversight mechanisms.

Restructuring Federal Enforcement and Oversight

Agency Realignment

EO 14173 reconfigures which agencies are responsible for enforcing anti-discrimination rules within the federal contracting process. Each agency’s jurisdiction determines the scope of its authority to enforce civil rights laws under the new framework.

Key Changes

• OFCCP redirection: The Office of Federal Contract Compliance Programs (OFCCP) is instructed to stop promoting diversity, affirmative action, and race- or sex-based workforce balancing. Its role shifts to coordination under the Office of the Assistant Secretary for Policy.
• OMB review: The Office of Management and Budget (OMB) must review and revise government-wide processes governing procurement, grants, and agency initiatives to remove DEI mandates.
• Reporting requirements: Agencies must submit implementation plans, enforcement recommendations, and regulatory changes to the White House and the attorney general within 120 days.

This centralization signals a coordinated effort to align federal acquisition, grant award, and contracting practices that are prohibited under the new framework.

Transition:
These enforcement changes have direct implications for federal contractors and subcontractors, especially in industries like construction.

Implications for Federal Contractors and Subcontractors

What Changes

Federal contractors and subcontractors are on the front lines of EO 14173’s implementation, especially in sectors like commercial construction that rely heavily on federal work.

• Affirmative action plans historically required under EO 11246 are no longer enforced in the same manner.
• New or revised contract clauses require contractors to certify compliance with applicable federal anti-discrimination laws.
• Contractors must affirm they are not operating DEI programs that violate federal civil rights protections.
• The order includes provisions intended to encourage federal contractors to comply with civil rights laws and to avoid DEI initiatives that could violate anti-discrimination statutes.

What Stays the Same

• Title VII, Equal Pay Act, ADEA, ADA, and other nondiscrimination statutes remain in force.
• VEVRAA and Section 503 obligations continue for veterans and individuals with disabilities.

Compliance Risks

The risk: Inaccurate certifications could expose companies to contract termination, suspension, debarment, and potential civil compliance investigations under the False Claims Act. Penalties can reach three times damages plus $13,946 per false claim.

Areas to Review:

• Written hiring and promotion policies
• Training content and eligibility criteria
• Scholarship or internship programs
• Affinity-group structures
• Supplier diversity programs tied to race or sex

Transition:
Beyond direct contractors, EO 14173 also impacts federally funded and public-private projects.

Impact on Federally Funded and Public-Private Projects

Scope of Impact

EO 14173 also affects projects funded in whole or in part by federal funds, including transportation, infrastructure, housing, and energy initiatives throughout the Ohio Valley region.

Ambiguity remains regarding how far requirements extend into state or local governments that receive federal pass-through funding. Agencies administering infrastructure programs may update grant terms to require grantees—and their contractors—to certify adherence to EO 14173-compliant nondiscrimination standards. Additionally, the government’s payment decisions for federally funded projects will increasingly depend on compliance with EO 14173’s nondiscrimination requirements.

Regional Contractor Concerns

• Disadvantaged Business Enterprise (DBE) programs on USDOT projects face uncertainty.
• Financial and technical assistance programs may require race-neutral alternatives.
• Mixed-funding arrangements may trigger flow-down certification requirements.

Contractors bidding federally funded state and local projects should watch for updated solicitations, grant conditions, and agency FAQs. ABC Ohio Valley encourages members to collaborate on interpreting evolving guidance affecting highway, public building, and energy projects.

Transition:
EO 14173’s influence extends beyond federal contracts, aiming to shape private sector practices as well.

Encouraging the Private Sector to End “Illegal DEI”

Strategic Enforcement Plan

EO 14173 extends beyond federal contracting by directing agencies to influence private sector practices even without direct federal ties.

The Order instructs the attorney general, working with agency heads, to develop a proposed strategic enforcement plan to end what it calls illegal DEI discrimination in the broader economy. This plan will:

• Identify critical and influential institutions for potential civil compliance investigations.
• Target publicly traded corporations and large nonprofits.
• Recommend regulatory, investigative, and litigation strategies to deter DEI programs from using discriminatory and illegal preferences.
• Specifically target discriminatory DEI practitioners whose policies or actions violate civil rights laws.

Law enforcement agencies and community organizations may also see increased scrutiny. This signals expanded DOJ interest in corporate DEI programs, which may prompt employers to scale back or redesign initiatives perceived as preference-based.

Transition:
Educational institutions and workforce pipelines are also subject to new guidance under EO 14173.

Guidance for Educational Institutions and Workforce Pipelines

Federal Guidance

EO 14173 connects employment and contracting practices to educational pipelines where federal funds support schools, colleges, and workforce programs.

The attorney general and Secretary of Education are directed to issue sub-regulatory guidance to:

• State and local educational agencies
• Local educational agencies receiving federal assistance
• Federally funded institution programs under the Higher Education Act

This guidance pushes institutions toward race-neutral admissions and programming consistent with SFFA v. Harvard, while also clarifying that the guidance will prohibit persons teaching employment or contracting practices that endorse illegal discrimination. It still prohibits persons from teaching discriminatory practices or intentional discrimination based on race, sex, or national origin.

Construction Workforce Development

For construction workforce development, federally funded training and apprenticeship partnerships may be reviewed to ensure they do not reserve opportunities by race or sex. ABC Ohio Valley members partnering with schools or community colleges on workforce pipelines should monitor how programs frame eligibility, outreach, and selection to remain aligned with equitable decision-making standards under EO 14173.

Transition:
The next section outlines the scope, limits, and protections preserved under EO 14173.

Scope, Limits, and Protections Under Executive Order 14173

Preserved Protections

EO 14173 contains provisions outlining what it does not change, providing important guardrails:

• Lawful federal veterans’ preferences in hiring, promotion, and contracting
• Randolph-Sheppard Act protections for blind vendors on federal property
• Equal employment opportunity principles under existing civil rights statutes
• Protections for the national security workforce remain unaffected by EO 14173

Speech Protections

• The Order does not limit First Amendment-protected speech by state or local governments, federal contractors, or federally funded institutions
• Academic discussions about unlawful practices remain protected

Standard Provisions

• Implementation must be consistent with existing law and appropriations
• The Order does not diminish legal authority of agencies
• No private right of action is created against the federal government
• Severability clauses protect remaining provisions if any section is invalidated

Transition:
Despite these guardrails, EO 14173 introduces new compliance risks and legal ambiguities for organizations.

Compliance Risk, Legal Ambiguity, and Enforcement Trends

Ambiguity and Enforcement

EO 14173 introduces significant legal uncertainty by failing to clearly define which DEI efforts constitute illegal discrimination, leaving organizations unsure about which practices may violate civil rights laws.

This ambiguity may prompt agencies and DOJ to take an expansive view of what counts as preferential, potentially investigating:

• Hiring goals and leadership diversity targets
• Supplier diversity programs based on race or sex
• Affinity groups with preferential access to opportunities
• Internship or scholarship set-asides

Market and Legal Response

• Market response: Public companies have already begun revising DEI disclosures, scaling back explicit race- or gender-based goals, and updating SEC filings to account for enforcement actions and litigation risks.
• Legal challenges: Several federal lawsuits have been filed challenging EO 14173 on separation-of-powers and First Amendment grounds. Additional litigation from civil rights and higher education organizations is expected.

Until courts and agencies provide clarity, employers should assume heightened scrutiny and align programs with race-neutral, merit-based formulations consistent with civil rights protections, ensuring equal protection for all persons.

Transition:
The following section provides practical steps for construction contractors and merit-shop employers to comply with EO 14173.

Practical Steps for Construction Contractors and Merit-Shop Employers

Merit-shop contractors are well-positioned philosophically under EO 14173, but still face new procedural and documentation requirements.

Immediate action items:

1. Inventory DEI-related policies: Identify any training, mentorship, scholarship, internship, affinity group, or outreach initiative with explicit race- or gender-based preferences or quotas. This review is important not only for construction firms but also for other organizations, such as medical associations, which may be subject to federal oversight and investigations regarding compliance with civil rights laws under EO 14173.
2. Revise objectives and metrics: Focus on equal opportunity, skills development, and pipeline expansion without making protected status a condition of participation.
3. Update compliance programs: Ensure accurate federal contract certifications with input from counsel familiar with government contracts, labor law, and False Claims Act exposure.
4. Document everything: Maintain records supporting certifications, including policy audits, training materials, revision rationales, and internal legal reviews.
5. Monitor guidance: Track FAR updates, agency FAQs, and grant terms affecting infrastructure projects.

ABC Ohio Valley offers resources—policy alerts, compliance webinars, safety training, and workforce development programs—to help members maintain legally compliant, merit-based operations.

Transition:
Looking ahead, organizations should prepare for ongoing policy evolution and strategic planning in response to EO 14173.

Looking Ahead: Policy Evolution and Strategic Planning

EO 14173 represents a larger federal shift away from race-conscious policies toward formally merit-based frameworks, with ripple effects across employment, education, and procurement affecting the federal workforce and contractors alike. Law enforcement communities are also affected by this shift, as they must ensure compliance with civil rights laws and uphold non-discriminatory practices in line with broader federal policies.

Strategic recommendations:

• Build flexible compliance frameworks adaptable to changing lawful federal policies
• Incorporate EO 14173 considerations into governance, ESG, and human-capital strategies
• Ensure board-level awareness of DEI-related enforcement and reputational risk
• Stay connected with industry associations tracking the government’s payment decisions and enforcement priorities

ABC Ohio Valley remains committed to helping merit-shop contractors interpret federal policy shifts, protect their businesses, and invest in safe, skilled workforce development aligned with equal protection principles.

Frequently Asked Questions

Does Executive Order 14173 prohibit all DEI programs?

EO 14173 does not ban every DEI effort but targets programs granting preferences, benefits, or burdens based explicitly on protected traits such as race, sex, or national origin. Neutral initiatives—such as broad safety training, apprenticeship outreach, or skills-development programs open to all—can generally continue if they avoid eligibility criteria based on protected class. Employers should reframe DEI goals around opportunity, safety, and workforce quality rather than numeric diversity targets.

How does EO 14173 affect small and mid-sized contractors that do not hold prime federal contracts?

Subcontractors and lower-tier vendors on federal or federally assisted projects may still be bound by prime contract clauses incorporating EO 14173-compliant certifications. State and local public owners that receive federal grants may pass down similar requirements. Smaller firms should review upstream contract terms carefully and seek clarification from primes or counsel when DEI-related certifications appear in their agency’s jurisdiction documents.

Can contractors still set goals to increase workforce diversity?

Contractors can pursue broader applicant pools through race-neutral means—recruiting at various schools, community outreach, and partnering with community organizations—but should avoid goals that function as quotas based on protected characteristics. Metrics can track outcomes for internal evaluation, but linking employment decisions to numeric race- or sex-based targets increases legal risk. Document that all hiring, promotion, and layoff decisions are based on job-related qualifications and legitimate business needs.

What specific documentation should contractors maintain under EO 14173?

Maintain written policies demonstrating nondiscrimination and merit-based criteria for hiring, promotion, training, and discipline. Keep records supporting contract or grant award certifications, including policy audits, training logs, and internal legal reviews. Record revisions made to workforce policies in response to EO 14173—including dates and rationale—to demonstrate proactive alignment with financial assistance procedures and evolving federal expectations.

How can ABC Ohio Valley help members navigate EO 14173?

ABC Ohio Valley provides legislative and regulatory updates, member briefings, and educational programs focused on EO 14173 and federal compliance issues. The association offers workforce development, safety, and apprenticeship resources designed around merit-shop principles that align with the Order’s requirements. Members can engage with ABC Ohio Valley events, legal updates, and peer networks to share best practices and stay ahead of enforcement actions affecting construction contractors in the region.