The Bounty Clause
Your coworker can now get paid to report your company's DEI programs
A What Do You Mean? essay — the What Time Binds series, where we examine the words doing more work than most people think in our civic life.
I wrote a version of this essay seventeen days ago, on the day the executive order dropped.
Thursday, March 26, 2026. I read the White House fact sheet. I read the full text of Executive Order 14398. I opened a document and started writing. I got about three thousand words in: the compliance officer in Northern Virginia, the career fair question, the definition that swallows itself. I thought I had the story.
Then I stopped. Something felt incomplete, maybe because the order was new and the legal analysis was thin. It seemed I was reacting to the headline, and I have spent enough time studying how words work under pressure to know that reacting to headlines is how you end up fighting ghosts.
So I sat on it. I told myself I would come back in two weeks and see what the professionals were saying: the employment attorneys, the compliance firms, the people whose job it is to tell companies what government language actually requires.
I came back this week.
What I found was worse than what I wrote 2 weeks ago.
The question that starts everything
Here is the scene I kept ruminating on.
Thursday afternoon, March 26, 2026. A compliance officer at a defense contractor in Northern Virginia opens her laptop. There is a new executive order, signed that morning. She reads the title: “Addressing DEI Discrimination by Federal Contractors.” She reads the mandatory contract clause her company must adopt by April 25 (at the time, that was 30 days away). She reads it again.
Then she picks up the phone and calls her general counsel.
“We sponsor a table at the Howard University career fair every spring,” she says. “Is that still legal?”
Her general counsel pauses. “I need to read the definition section again.”
They are both educated people. They know what “discrimination” means. They have spent years making sure their company follows federal anti-discrimination law. The problem is that, as of that Thursday, they cannot tell whether their compliance program is now in violation.
That pause, that uncertainty, is where the story usually stops. The headline says “DEI ban.” People take sides. Supporters say it is about restoring merit, and critics say it is about rolling back civil rights. Everyone argues about the politics.
I want to take you somewhere else. I want to show you the machinery underneath, the part that does not make the headlines but does the most damage. Because there are two words buried in the contract clause that changes everything about how this order works. And it seems I am the only one talking about them.
The first word is “discrimination,” but it is not the word you think
Since the Civil Rights Act of 1964, “discrimination” has carried a stable meaning in federal contracting. It meant: treating individuals differently based on race, color, religion, sex, or national origin, in ways that deny them equal opportunity.
Under that definition, companies built diversity programs as tools to prevent discrimination. Executive Order 11246, signed by Lyndon Johnson on September 24, 1965, required federal contractors to take active steps to address employment barriers. The logic was direct: if your workforce looks nothing like the available labor pool, and you cannot explain why, something in your process is filtering people out. Find it. Fix it.
That order stood for sixty years. On January 21, 2025 (Trumps first full day in office), President Trump revoked it through Executive Order 14173, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity.”
The new executive order — EO 14398, signed fifteen months later on March 26, 2026, finishes the job. It defines “racially discriminatory DEI activities” as:
Disparate treatment based on race or ethnicity in the recruitment, employment (e.g., hiring, promotions), contracting (e.g., vendor agreements), program participation, or allocation or deployment of an entity’s resources.
Read “allocation or deployment of an entity’s resources” slowly. A mentoring program for first-generation professionals? An employee resource group? A career fair table at a historically Black university? As the law firm Lexology noted, the order “includes an expanded definition of prohibited DEI activities that could create risk around programs previously considered lawful.”
The word “discrimination” has been turned around. It now points in the opposite direction from where it pointed for six decades. The compliance officer cannot tell exactly where the new line is.
That vagueness matters. But it is the starting point, not the ending point. Because what I found when I came back to this story is that the vagueness is connected to something much more specific and much more dangerous.
The second word is the one that actually matters
When I read the law firm analyses this week, I expected to find arguments about the definition. I did. Every firm flags the vagueness. Every firm warns that the definition of “racially discriminatory DEI activities” is broader than existing civil rights law.
But the word that kept showing up in bold, in red, in capital letters, across Skadden, Arnold & Porter, Winston & Strawn, Jackson Lewis, DLA Piper, and a dozen others, was not “discrimination.”
It was “material.”
(Control “F” each source and look for yourself)
Here is the sentence in the mandatory contract clause, the one every federal contractor must sign by Friday, April 25, 2026:
“The contractor recognizes that compliance with the requirements of this clause are material to the Government’s payment decisions for purposes of section 3729(b)(4) of title 31, United States Code (False Claims Act).”
If you are not a lawyer, that sentence looks like boilerplate. It reads like the fine print nobody reads. It sounds like it belongs in the same category as “I have read and agree to the terms of service.”
It is the most consequential sentence in the entire order.
Here is what it means, in plain language: every time your company sends an invoice to the federal government (every progress payment, every milestone billing, every monthly statement), you are now certifying that you are not running any program that could be called a “racially discriminatory DEI activity.” If you are running such a program, and you submit that invoice anyway, you may have just committed fraud against the United States government.
That is what “material” does. It connects a vague definition of discrimination to a very specific, very old, very powerful law. As Winston & Strawn warned, this language “is designed to eliminate one of the most common defenses in FCA cases, the argument that the violated requirement was not material to the government’s decision to pay.”
A 160-year-old law with a bounty attached
The False Claims Act was signed by Abraham Lincoln on March 2, 1863. Its original purpose was to stop defense contractors from selling the Union Army sick mules and defective gunpowder. If a contractor lied to the government about what they were delivering, they owed triple damages.
The law still works essentially the same way. If a contractor knowingly submits a false claim for payment, they owe three times the government’s damages, plus penalties per claim. It is the government’s primary tool for fighting contractor fraud, and it has recovered hundreds of billions of dollars over its lifetime.
But here is the part that changes the game: the False Claims Act has something called a “qui tam” provision. Qui tam comes from a Latin phrase meaning “he who sues on behalf of the king.” In modern English, it means this:
Any private citizen can file a lawsuit on behalf of the federal government alleging that a contractor submitted a false claim. If the case succeeds, that citizen collects between fifteen and thirty percent of the recovery.
Any citizen. A coworker. A former employee. A competitor. Someone who reads your company’s website and notices that you have a supplier diversity program.
The potential payouts are substantial. In large government contracting cases, whistleblower shares can reach into the millions.
And the Department of Justice is actively looking for these cases. At the Federal Bar Association’s Qui Tam Conference in February 2026, a month before this executive order was signed, Deputy Assistant Attorney General Brenna Jenny, who leads the Commercial Litigation Branch in the DOJ’s Civil Division, said her office is prioritizing anti-discrimination False Claims Act cases for expedited review. She said whistleblower reports are already triggering investigations across automotive, defense, pharmaceutical, technology, and telecommunications industries.
In May 2025, the DOJ had already launched its “Civil Rights Fraud Initiative”, explicitly aiming to “utilize the False Claims Act to investigate and, as appropriate, pursue claims against any recipient of federal funds that knowingly violates federal civil rights laws.”
Law firms are already advertising for clients. One firm's website has a page titled "DEI Whistleblower Rewards," telling potential whistleblowers that they may be sitting on "one of the most valuable whistleblower claims in America." Another practice that has litigated three False Claims Act cases to the Supreme Court and recovered over a billion dollars for whistleblower clients lists DEI compliance as a top area of increased enforcement scrutiny in 2026, noting that any organization that certifies compliance to the government while operating otherwise "may face FCA exposure."
Let me say that plainly. The chain works like this:
A vague definition of “discrimination,” one broad enough to cover a career fair table or a mentoring program, gets attached to a mandatory certification clause. The certification clause contains the word “material,” which links compliance to every invoice. Every invoice becomes a potential false claim. And a Civil War-era bounty system pays private citizens to find and report the violations.
Your coworker can now get paid for reporting your company’s HBCU recruitment partnership as government fraud.
How the machine runs without anyone pulling the lever
Here is what I think most people miss about this order, regardless of where they stand on the politics.
The order does not need to be enforced to work.
It works through what I think of as a chain of reasonable fears. Each link in the chain makes perfect sense to the person holding it. Nobody is being irrational. Nobody is panicking. Everyone is doing the math.
The compliance officer’s math: I have a program that could fit the broad definition. My general counsel cannot tell me with certainty that it does not. The definition will not get clearer before the April 25 deadline. If I keep the program and we get audited, my company faces contract termination, debarment, and triple damages under the False Claims Act. If I shut the program down, the cost is one less career fair table.
She shuts it down.
The general counsel’s math: I have twenty programs that touch race in some way, mentoring, recruitment outreach, employee resource groups, and supplier diversity. I can mount a legal defense for each one. But defending even one False Claims Act investigation will cost six figures in legal fees before we get to a ruling. And the definition is vague enough that I cannot guarantee we win. The safer advice is to pause everything and wait for clarity that may never come.
He advises pausing.
The subcontractor’s math: My prime contractor is now required to report me if they know or “reasonably should know” that I am violating the clause. They are going to ask me about my programs. If I have a supplier diversity initiative, I need to explain it in writing to a company that has every incentive to flag me rather than risk their own contract. The safest move is to dismantle my program before anyone asks.
She dismantles it.
The employee’s math: I just read on a law firm’s website that I could collect fifteen to thirty percent of the recovery if I report my company’s DEI programs under the False Claims Act. My company has a Black employee resource group that gets conference room space and a small budget. Is that “allocation or deployment of resources based on race”? I do not know. But the law firm says I should call for a free consultation.
He calls.
Every person in this chain is making a rational decision based on the information available to them. Nobody needs to be racist. Nobody needs to be malicious. The machine runs on reasonable fear, and reasonable fear runs on vague definitions.
This is what I mean when I say the uncertainty is the enforcement mechanism. The order does not need a single prosecution to achieve its goal. It needs the math to work. And the math works right now, today, thirteen days before the first deadline.
The strongest argument for this order and where it breaks
I owe this section to anyone reading who thinks the order is necessary. I have spent years arguing that you have to take the strongest version of the opposing position seriously, and I am not going to stop because this one is personal.
The core claim: some DEI programs crossed the line. Some organizations set demographic targets that functioned as quotas. Some evaluated employees partly on identity characteristics rather than qualifications. Some training programs treated people differently based on their race in ways that created hostile environments. When that happens, it is discrimination under Title VII, and it was illegal before this executive order existed.
That claim has evidence. The Supreme Court found on June 29, 2023, in Students for Fair Admissions v. Harvard, that Harvard’s admissions process violated the Equal Protection Clause. Some corporate DEI programs have been challenged in court for creating hostile environments. The principle that individual merit should drive employment decisions has broad public support across demographic groups. I have discussed this before here.
I take that seriously.
And the executive order still fails on its own terms. Here is why.
If the goal were to eliminate race-based quotas and preference systems that violate Title VII, the order could say that. It could define the prohibited conduct with enough precision that a compliance officer could draw a clear line. It could create a process for getting a binding interpretation. It could distinguish between programs that create racial preferences (already illegal) and programs that expand access to opportunities, legal, effective, and standard practice for decades.
The order does none of this. As Lexology’s analysis noted, “certain activities that may previously have been viewed as compliant with civil rights laws could now be risky” under the expanded definition. Arnold & Porter flagged that the order’s own legal authority, the Federal Property and Administrative Services Act, “faces headwinds” in multiple circuit courts that have read the statute narrowly and may not support regulating contractors’ internal operations at all.
The definition is wide enough to cover mentoring programs, recruitment outreach, and supplier diversity initiatives, activities with documented business value and no legal vulnerability under existing civil rights law. The vagueness forces contractors into a choice: over-comply by dismantling effective programs, or accept risk exposure by maintaining programs that might be flagged.
When you add the False Claims Act bounty to that choice, the math tilts hard toward dismantling. A company that keeps its HBCU partnership faces potential triple damages and a whistleblower lawsuit. A company that shuts it down faces... nothing.
The strongest argument for the order is about eliminating illegal preferences. The order as written eliminates the space for legal, effective, evidence-based talent development. Those are different projects. The vague definition lets them look the same. The word “material” makes the consequences identical.
What this looks like in practice, April 25 and beyond
The first deadline hits in thirteen days. By Friday, April 25, every federal agency must insert the new clause into all contracts, with flow-down to subcontractors at every tier.
By Sunday, May 25, the Federal Acquisition Regulatory Council must issue interim guidance, meaning the clause must be in contracts a full month before the guidance explaining how to interpret it arrives. Winston & Strawn called this “a notable timing gap” that “may create implementation uncertainty in the near term.”
By Friday, July 24, every agency head must report on compliance to the Assistant to the President for Domestic Policy. The Office of Management and Budget will identify “high-risk sectors” for additional scrutiny.
And the DOJ has been directed to ensure “prompt review” of whistleblower lawsuits with a decision on whether to join each case within sixty days.
The practical effect, already visible across the law firm analyses: companies are not waiting for enforcement. They are conducting what attorneys call “DEI health checks,” privileged reviews designed to identify any program that could be characterized as a “racially discriminatory DEI activity” under the broadest possible reading. The advice, nearly universal across the firms I read, is to assume the broadest reading will apply.
Several attorneys noted something else worth paying attention to. The executive order specifically excludes sex-based programs from its definition; it targets only race and ethnicity. And enforcement authority is decentralized across individual contracting agencies rather than a single specialized office. That means different agencies may interpret the same clause differently. A program that passes muster at NASA might draw scrutiny at the Department of Defense. The compliance landscape is vague and variable.
What I want you to notice
I have written this piece without my usual framework language. No four-phase models. No Latin terms for communication breakdowns. No citations to my scoping review.
I did that on purpose, because I want anyone reading this, regardless of whether you have ever heard of my work, regardless of your politics, regardless of whether you think DEI programs are essential or excessive, to see the machinery.
Here is what I want you to notice:
The word “discrimination” changed direction, and the sentence it lives in did not change shape. That is how meaning capture works. The container looks the same. The contents are opposite. And the people reading the sentence cannot tell, in the moment, that anything moved.
The word “material” did more work than any other word in the entire executive order. It connected a policy position to a fraud statute. It converted a compliance question into a financial weapon. And it activated a bounty system that turns private citizens into enforcers. Most people who have opinions about this order have never read the sentence it lives in.
The vagueness is the product. A precise order would prohibit specific conduct and allow everything else. A vague order prohibits a category so broad that the safest response is to eliminate everything in it. The compliance officer cannot tell whether her career fair table is legal. That uncertainty is what makes her shut it down. A clear rule would not produce that result. The ambiguity is doing the work.
The bounty changes the incentive structure for everyone. Before this order, a coworker who disagreed with your company’s mentoring program could complain to HR. Now, that coworker can file a qui tam lawsuit and potentially collect millions. That does not mean every coworker will. It means every person who runs a program knows that every coworker could. The possibility reshapes behavior before a single suit is filed.
Programs will disappear before anyone is charged. That is the design. The order works through pre-enforcement chilling. By the time a court examines whether the definition is constitutional, (Arnold & Porter has identified real vulnerabilities in its legal authority) the career fair tables will already be gone. The mentoring programs will already be dissolved. The supplier diversity pipelines will already be dismantled. Winning the legal argument in 2028 does not rebuild what was abandoned in 2026.
The question underneath
I started this essay on March 26, 2026, with a compliance officer who could not tell whether recruiting at Howard University was still legal. I came back this week expecting to find that the attorneys had answered her question.
They have not. Every law firm analysis I read, from the largest firms in the country, firms that represent the companies making these decisions, says the same thing in different words: the definition is broader than existing law, the boundaries are unclear, and the enforcement risk is real.
What they have answered is a different question. They have mapped the enforcement machinery. And what that machinery reveals is that the order does not need to answer the compliance officer’s question to work. It needs the question to stay unanswered. An answered question is a line you can stand on. An unanswered question is a space you retreat from.
This is true regardless of what you think about DEI. If you believe diversity programs have gone too far, you should still want the rules to be clear, because vague rules give the government power that outlasts any single policy position. The next administration can use the same machinery for opposite purposes. If you believe diversity programs are essential, you need to understand the mechanism that is dismantling them, because the mechanism is not the headline. The mechanism is a single word in a contract clause that most people will never read.
I teach people how to ask a specific question when the words in the room are carrying more than one meaning: What do you mean?
The compliance officer in Northern Virginia needs to ask that question. Her general counsel needs to ask it. The contracting agencies inserting the clause need to ask it. The DOJ officials reviewing whistleblower claims need to ask it.
Nobody built a place for that question to land.
Thirteen days from now, Friday, April 25, 2026, the clause goes into every federal contract in the country. The word “discrimination” will mean what it has meant for sixty years, and what it has meant for seventeen days, at the same time, in the same sentence, and nobody signing the contract will be able to tell which meaning counts.
The career fair table at Howard University is a real thing that helps real people get real jobs at real companies. Whether it survives the next thirteen days depends entirely on whether the person making the decision can tell what “discrimination” means.
Right now, she cannot. And that is the point.
I wrote the first version of this on Thursday, March 26, 2026, the day Executive Order 14398 was signed. I did not publish it because I wanted to see what the legal professionals would find when they read the fine print. What they found was the word “material,” and what “material” activates is a bounty system most Americans have never heard of. The mechanism matters more than the headline. It always does.
Jerry W. Washington, Ed.D., is the founder of What Time Binds and the creator of the Meaning Repair as Cognitive Infrastructure (MRCI) framework. He is a retired Marine Corps Master Sergeant, a USC Rossier School of Education graduate, and an instructor at UCI Division of Continuing Education.
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Previous What Do You Mean? entries: What Do You Mean, “Rally Around the Flag”? | Version Control for Democracy | The Inverse Problem
Two words. I am not a lawyer but having read and reviewed many contracts, it takes only one word to change the meaning and enforcement of one. But this is an Alice in Wonderland level legal rabbit hole we have jumped into that seems to violate laws already in place. Not executive orders but actual laws. As you noted, the damage is already done and will take years if not decades to unwind. Thank you for this excellent overview of the depths of hatred project 2025 and this administration have sunk.