Non-Discrimination Assessment Services for Federal Contractors

Services for Federal Contractors Certifying that Their Employment Practices Are Merit-Based and Non-Discriminatory, and that They Have No “Illegal” DEI Programs

President Trump’s Executive Order Ending Illegal Discrimination and Restoring Merit-Based Opportunity (EO 14173, Janurary 21, 2025) has left federal government contractors wondering what their obligations are with respect to informing the federal government of their employment practices. The new EO revoked the 60 year-old EO 11246, which means that federal government contractors that have been complying with EO 11246 by maintaining an “affirmative action program” (for minorities and women) no longer are required to do so. Instead, contractors are now being told through the new EO 14173 that they must agree to a term in their contracts with the federal government stating that their “compliance in all respects with all applicable Federal anti-discrimination laws is material to the government’s payment decisions…” and agree to a second term requiring them to certify that they do “not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws.” Under the new EO this certification is subject to whistleblower and other challenges under the False Claims Act.

Resolution Economics’ team of labor economists, statisticians, and industrial psychologists offer a suite of services that can help federal contractors with this certification.

How We Can Help

As its name suggests, the new EO puts an emphasis on “restoring merit-based opportunity.” And it places a heightened standard on contractors to certify their compliance. The federal government has not yet spelled out the specific requirements for implementing the EO. However, as we await guidance for federal contractors, one parallel to look to may be financial audits, where executives are required to certify to the veracity of financial statements. In those situations, having backup data is necessary. Here, too, where federal contractors are being asked to sign certifications about “anti-discrimination” and no “illegal DEI,” analysis and back-up data could be appropriate. Analysis of employment data is essential in order to assess and possibly mitigate risk. Certifying to anti- or non-discrimination and an absence of illegal DEI programs without first studying your company data would expose the company and possibly individuals certifying to significant exposure.

Resolution Economics has a long history of doing high level analysis in the arena of non-discrimination, both in class action litigation, where our firm serves in expert witness capacity, and in proactive analyses on behalf of our clients. As experts in this complex area, ResEcon is uniquely situated to provide high impact and highly relevant non-discrimination analyses to support a certification that a company’s employment decisions reflect no illegal DEI programs.

Our Assessments

Because Federal anti-discrimination laws require that employment decisions be based on job-related and not demographic factors, no analysis should rely merely on a headcount exercise. To meet the standard for analysis conducted when labor economists study allegations of discrimination in Title VII settings, each of the analyses outlined here considers job-related factors. We can tailor these analyses to each company’s specific relevant decision-making factors. Thus, establishment level analysis may be appropriate for some companies, but not for others. Similarly, breaking out by detailed job group will be driven by company specifics. The only way to separate job-related (i.e. merit-based) factors is to control in a statistical model for the job-related factors of each employee, in order to determine if there is a statistically significant relationship between any demographic characteristic and an employment practice. 

Note that an analysis of “non-discrimination” is also essentially an analysis of “illegal DEI.” This is because if an analysis were to find a statistically significant surplus of hires or promotions of one sex or race after taking into account job related factors, such a finding would be consistent with the inference that demographic preferences were applied. If a company wishes to certify that it is not applying preferences in its employment decisions, such an analysis could be essential.

The new Executive Order underscores the federal government’s role in enforcing our civil-rights laws and ending “illegal preferences and discrimination.” The non-discrimination assessments we offer will go a long way to assure federal contractors that they can meet their certifications as contemplated in the new Executive Order.