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Federal Contractors and Private Employers Urged to Review Hiring, Pay, and Promotion Practices
Washington, D.C. — February 2026
Federal contractors and grant recipients are facing a sharpened enforcement landscape following remarks by Brenna Jenny, Deputy Assistant Attorney General for the Commercial Litigation Branch of the U.S. Department of Justice (DOJ), at the Federal Bar Association's 2026 Qui Tam Conference.
Jenny made clear that robust False Claims Act (FCA) enforcement is now "the new normal," and that DOJ will continue using the FCA as a "flexible tool" to pursue emerging enforcement priorities, including illegal discrimination in federal contracting.
Importantly, she clarified that DOJ's focus is not on diversity, equity, and inclusion (DEI) programs in name alone, but rather on practices that result in unlawful discrimination based on race, sex, or other protected characteristics.
From Contract Compliance to FCA Liability
The DOJ's enforcement theory is straightforward but powerful:
If a contractor signs a federal award or subaward certifying compliance with federal antidiscrimination laws, while engaging in discriminatory practices, that certification may constitute a false claim under the False Claims Act.
Under this theory, compliance with Title VII, the Americans with Disabilities Act, the Age Discrimination in Employment Act, Section 503 of the Rehabilitation Act, and other federal antidiscrimination statutes is considered material to the government's payment decisions.
Because the FCA allows for treble damages and per-claim penalties, exposure can multiply quickly across invoices, task orders, or contract modifications.
Jenny emphasized that government contracting is not simply about delivering goods and services, it is about partnering with the federal government. Compliance with federal law, including antidiscrimination laws, is therefore central to eligibility for payment.
What DOJ Is Scrutinizing
Based on Jenny's remarks and related DOJ guidance, enforcement attention is likely to focus on practices that may pressure or steer employment decisions based on protected characteristics rather than merit.
Examples highlighted in commentary surrounding the conference include:
- Demographic goals tied to compensation or bonuses
- Hiring or promotion metrics linked to protected characteristics
- Performance evaluations requiring personal DEI-related objectives
- Executive development or mentorship programs restricted by race or sex
- Different qualification standards applied to candidates based on protected status
- "Diverse slate" practices implemented in a way that results in preferential treatment
Jenny stressed that promoting diversity is not unlawful in itself. The line is crossed when decision-making is based on race, sex, or other protected characteristics rather than neutral, performance-based criteria.
Continued Payment Is Not a Defense
Contractors should not assume that the government's continued payment of invoices shields them from liability. Jenny reiterated that continued payment does not necessarily establish materiality or approval.
Likewise, arguments that "everyone in the industry does it" will not insulate companies from scrutiny and may actually increase enforcement interest if systemic noncompliance is suspected.
Data Mining and Whistleblowers
DOJ's enforcement environment is increasingly data-driven. Jenny noted significant increases in Civil Investigative Demands (CIDs) and qui tam filings, with analytics playing a growing role in identifying outlier patterns.
This means enforcement may begin with statistical anomalies, such as hiring or compensation patterns, before a whistleblower complaint is even filed.
Download our Compliance Checklist to assess your risk exposure, identify blind spots, and ensure your policies, training, analytics, and compensation practices are structured for both compliance and competitiveness.
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