By: Jeff Sommes
New Jersey Attorney General Jennifer Davenport has joined a coalition of 20 state attorneys general in filing a lawsuit against the Trump Administration, challenging new federal contracting requirements that the states argue are vague, unlawful, and could increase costs for taxpayers.
According to a statement released by the New Jersey Attorney General’s Office, the lawsuit was filed in the U.S. District Court for the District of Maryland and targets the implementation of President Donald Trump’s Executive Order No. 14398, which seeks to eliminate what the administration describes as “diversity, equity, and inclusion” (DEI) activities from federal contracting.
The coalition argues that federal agencies rushed to impose the new requirements without following established procedures, including failing to seek public input before adding the new language to federal contracts.
“Once again, the Trump Administration is making it more difficult to do business with the State and to efficiently deliver government services,” Attorney General Davenport said.
“If left unchecked, this latest demand will result in the squandering of limited state resources and drive up costs, all in service of the Administration’s ideological war on diversity.”
The executive order, issued on March 26, 2026, directs federal agencies to include new contract provisions that prohibit contractors, including state agencies, from engaging in certain DEI-related activities.
However, the lawsuit contends that the administration has not clearly defined what activities are prohibited, creating uncertainty for contractors across the country.
State officials argue that contractors who fail to comply could face significant consequences, including contract termination, disqualification from future federal contracts, and potential liability under the False Claims Act.
According to the lawsuit, federal agencies began incorporating the new provisions into contracts in April and have been instructed to modify existing agreements by July 24, 2026.
Federal estimates indicate the policy could impact approximately 640,000 contracts and subcontracts nationwide, involving more than 34,000 vendors.
New Jersey officials noted that state agencies maintain numerous contracts with the federal government, while the states participating in the lawsuit collectively hold federal agreements worth billions of dollars.
The coalition is asking the court to block enforcement of the new contract provisions and declare the agencies’ actions unlawful while the case moves forward through the judicial process.