Listen to the Deep Dive of this post
GSA Changes to Federal Acquisition Regulations Face Legal Challenge
The General Services Administration (GSA) recently announced significant changes to the Federal Acquisition Regulations (FAR) and procurement practices. These changes, enacted through two key deviations to the FAR, aim to revise merit-based contracting in accordance with Executive Order (EO) 14173. Initially taking effect on February 15, 2025, the revised regulations notably eliminate diversity, equity, and inclusion (DEI) factors from source selection criteria in federal contracting.
EO 14173, titled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,” was signed on January 21, 2025. The EO states its purpose is to “ensure [it ends] illegal preferences and discrimination” and affirms the policy of the United States to “protect the civil rights of all Americans and to promote individual initiative, excellence, and hard work.”
However, the EO has faced legal challenges. A federal judge in Maryland ruled in favor of Baltimore City in their lawsuit against the administration, deeming the EO likely unconstitutionally vague, lacking clear definitions, and potentially discriminatory against certain viewpoints in violation of the First Amendment. U.S. District Judge Adam Abelson granted a preliminary injunction against parts of the EO, specifically those “…from terminating or modifying federal contracts it labels as equity-related.”
GSA officials emphasized that the regulatory changes were designed to “make it easier for industry to sell their products and services to the government,” and encouraged other federal agencies to adopt similar transformations in government contracting practices. They described the changes as “first steps in transforming the FAR into a sensible, common sense guideline,” noting that the current 2,000-page FAR is “burdensome, outdated, and doesn’t allow agencies to buy at the speed of need.”
Under the now-paused guidelines, contracting officers were instructed to immediately amend new and open solicitations and modify existing contracts at the next reasonable opportunity. The changes do not affect existing equal opportunity provisions for veterans and workers with disabilities, nor do they impact generally applicable civil rights laws.
Industry experts anticipated that other federal agencies would likely issue similar deviations, potentially signaling a broader shift in federal procurement practices. This move would represent one of the most significant changes to federal contracting practices in recent years, though its long-term impact on federal procurement and contractor diversity programs remains to be seen. The recent court ruling, however, provides temporary relief for federal contractors and other private employers concerned about potential regulatory action regarding programs classified as “illegal” DEI. The injunction is likely to be appealed, potentially leading to Supreme Court review.
The FAR, a comprehensive set of regulations, governs how the government acquires goods and services through procurement contracts. Originally issued in 1984, the FAR has evolved significantly and is now jointly administered by the Department of Defense, the GSA, and NASA, and is codified in Title 48 of the Code of Federal Regulations.
Tags: Federal Acquisition Regulations (FAR), GSA, procurement, merit-based contracting, Executive Order 14173, diversity, equity, inclusion (DEI), source selection criteria, federal contracting, injunction, legal challenge, contractor diversity, civil rights, Code of Federal Regulations
