The federal government has threatened False Claims Act (FCA) enforcement targeting DEI programs. I speculated in January that 2026 could be the year the DOJ followed through on those threats. Now, IBM has become the first company to settle an FCA claim arising from its DEI programs. The company agrees to pay the government $17 million in restitution as a result. The government’s arguments are summed up in the Settlement Agreement:
“The United States contends that it has certain civil claims against IBM arising from what the United States contends was IBM’s knowing submission of false claims and knowingly making false statements to the United States as follows: as a federal contractor, IBM was required to comply with anti-discrimination requirements as set forth in Title VII of the Civil Rights Act of 1964, as incorporated into its federal contracts, and the Federal Acquisition Regulation, including at FAR clause 52.222-26.
The United States contends IBM certified compliance in its federal contracts with these requirements while knowingly maintaining practices described below that the United States contends discriminated against employees during employment and applicants for employment because of race, color, national origin, or sex, and failed to treat employees during employment without regard to race, color, national origin, or sex.”
Government contractors are required to certify that they abide by civil rights laws to receive federal contracts. The DOJ contends that DEI programs unlawfully discriminate in violation of these laws. Rather than bringing a discrimination case through the EEOC, the DOJ is arguing that contractors with DEI programs are liable under the FCA.
This FCA enforcement action may be the first of many. Now that the DOJ has a win under its belt, other federal contractors may be targeted. This settlement marks a win for the DOJ, in its continued attempts to crack down on DEI in the private sector.
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