Attorney General Bonta Sues Trump Administration Over Unlawful, Confusing New Requirements for Federal Contractors

OAKLAND - California Attorney General Rob Bonta today co-led a coalition of 20 attorneys general in suing the Trump Administration over the addition of new terms to federal contracts that - in the name of purging "diversity, equity, and inclusion" (DEI) - impose unclear and confusing requirements on federal contractors and subcontractors. These terms depart from antidiscrimination policies that contractors have followed for many decades. The Trump Administration is also threatening severe penalties on federal contractors that do not comply, yet fails to provide adequate notice of what is prohibited. In a lawsuit filed in the U.S. District Court for the District of Maryland, Attorney General Bonta and the coalition challenge the federal agencies' unlawful, confusing, and ambiguous requirements.

"The Trump Administration keeps moving the goal posts, most recently imposing vague, confusing, and unsupported new conditions on billions of dollars in federal contracts," said Attorney General Bonta. "It is not doing so for the sake of efficiency or good government - and it is certainly not doing so out of concern for preventing racial discrimination. Instead, this appears to be yet another attack on lawful diversity, equity, and inclusion initiatives. We're going to court - again - to protect the interests of our state and put a stop to the Trump Administration's latest unlawfulness."

In implementing Executive Order No. 14398, federal agencies took shortcuts around regular procedures designed to promote good government. For example, the agencies failed to invite comments from the public as required by law. Largely because of these shortcuts, contractors have no clear guidance on what the new contract terms require in practice, or whether or how the new requirements differ from existing laws that already prohibit racial discrimination. Contractors that fail to comply can face severe penalties, including cancellation of their contracts, exclusion from all future federal contracts, and meritless lawsuits under the False Claims Act. The vague and confusing contract terms impose needless costs on contractors and threaten to chill lawful efforts to prevent, detect, and remedy discrimination.

California and its agencies regularly contract with the federal government, and the coalition states collectively hold existing federal contracts worth billions of dollars. Federal agencies began adding the new terms into contracts in April 2026 and have been directed to modify existing contracts by July 24, 2026. The federal government estimates the order could affect as many as 640,000 contracts and subcontracts nationwide, including more than 160,000 contracts with over 34,000 unique vendors. In California, several billion dollars in federal contracts with state agencies are impacted.

In the lawsuit, the coalition alleges that the federal agencies effectuating the executive order and its implementing actions violated the Administrative Procedure Act by failing to provide notice to the public or accept comments as required by federal procurement law, exceeding their legal authority, and neglecting to adequately explain or justify the new requirements. The coalition asks the court to hold the agencies' actions unlawful and enjoin the agencies from imposing the new contract terms.

Attorney General Bonta is co-leading the lawsuit alongside the attorneys general of Maryland and Illinois. Joining them are the attorneys general of Colorado, Connecticut, the District of Columbia, Hawaiʻi, Maine, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, Oregon, Rhode Island, Vermont, Virginia, Washington, and Wisconsin.