As an HR Professional having worked in the Federal Contracting arena for over 20 years, EO 11246 has been one of the biggest obstacles to having a properly staffed organization with competent and strong individuals in the workplace. Executive Order 11246, although seemingly well-intentioned, created discrimination in order to fight discrimination. The result was individuals being hired only because of their skin color, gender or other status, to check a box, and rarely was there any positive benefit to the organization forced to hire these individuals. Even worse, this set up those hired under Affirmative Action (DEI) for failure as they were not hired based on skill or knowledge but rather just to fit a quota, leaving these individuals with the potential for career failure if they were not able to grow and learn while employed.

The federal contracting landscape experienced a seismic shift on January 21, 2025, when President Trump signed a sweeping executive order that rescinded Executive Order 11246, a policy that had been in place for nearly 60 years. This change marks a significant transition toward a merit-focused approach in federal contracting, bringing several notable benefits for businesses and workers alike.

Historical Context and Evolution

Executive Order 11246, originally signed by President Lyndon Johnson in 1965, established requirements for federal contractors to maintain affirmative action programs and prevent discrimination. While well-intentioned, these requirements evolved into complex compliance mechanisms that many businesses found increasingly burdensome over the decades.

Streamlined Compliance and Reduced Administrative Burden

One of the most immediate positive impacts of the rescission is the reduction in administrative overhead for federal contractors. Federal contractors will no longer need to maintain complex affirmative action programs, which previously required extensive documentation, regular reporting, and costly compliance measures. This streamlining allows businesses to redirect resources toward core operations and job creation.

Specific areas of reduced administrative burden include:

• Elimination of annual affirmative action plan requirements
• Reduced paperwork for workforce demographics tracking
• Simplified hiring documentation processes
• Streamlined federal contractor certification procedures

Enhanced Focus on Merit-Based Hiring

The new framework emphasizes individual merit and qualifications as the primary criteria for employment decisions. The Order aims to restore merit-based opportunity, allowing companies to focus on selecting candidates based on their skills, experience, and potential contribution to the organization. This shift promises to create more efficient and competitive federal contracting workforce.

Benefits of Merit-Based Hiring:

• Increased emphasis on skills and qualifications
• More efficient talent acquisition processes
• Enhanced workforce productivity
• Improved project delivery capabilities

Cost Savings for Small and Medium-Sized Businesses

Small and medium-sized enterprises (SMEs) stand to benefit significantly from this change. Previously, many smaller companies found it challenging to compete for federal contracts due to the substantial resources required to maintain compliance with EO 11246’s requirements. The new framework eliminates these burdensome compliance obligations, potentially opening up federal contracting opportunities to a broader range of businesses.

Financial Impact Analysis:

• Reduced compliance-related staffing costs
• Lower legal consultation expenses
• Decreased administrative overhead
• More competitive bidding capabilities

Implementation and Transition Framework

To ensure a smooth transition, the Order provides federal contractors with a 90-day period to adjust to the new requirements. This grace period allows companies to methodically adapt their hiring and employment practices while maintaining business continuity. The Office of Federal Contract Compliance Programs (OFCCP) has begun issuing guidance to help contractors navigate these changes.

Key Transition Milestones:

• Initial 90-day adaptation period
• Phased elimination of previous requirements
• Updated compliance guidance from OFCCP
• New streamlined certification processes

Maintained Protection Against Discrimination

It’s important to note that the rescission doesn’t leave a void in workplace protections. While the EO eliminates certain compliance requirements, it maintains fundamental protections against discrimination, ensuring that federal contractors still must adhere to basic equal employment opportunity principles. Federal contractors still face other employment-related compliance obligations, maintaining essential workplace protections.

Continuing Protections Include:

• Basic equal employment opportunity requirements
• Anti-discrimination measures
• Fair hiring practices
• Equal pay provisions

Economic Implications and Market Impact

The economic benefits of this change could be substantial. With reduced compliance costs and administrative burdens, federal contractors can potentially offer more competitive pricing on government contracts, ultimately benefiting taxpayers. The streamlined process may also lead to faster project implementations and more efficient use of federal resources.

Market Benefits:

• Increased competition in federal contracting
• Lower barriers to entry for new contractors
• More efficient resource allocation
• Potential cost savings for government projects

Industry Response and Adaptation

The contracting community has begun adapting to these changes, with many companies already reviewing and updating their hiring and employment practices. Industry leaders are developing new best practices that emphasize merit-based decision-making while maintaining inclusive workplace environments.

Adaptation Strategies:

• Updated hiring procedures
• Revised employment policies
• Enhanced skills-based assessment methods
• Streamlined recruitment processes

Looking Forward: The Future of Federal Contracting

As the federal contracting community adapts to these changes, the focus on merit-based hiring and reduced regulatory burden promises to create a more dynamic and efficient marketplace. Companies can now concentrate more on delivering quality work rather than managing complex compliance programs, potentially leading to improved service delivery in federal contracts.

Expected Long-Term Benefits:

• More efficient federal contracting processes
• Enhanced focus on performance and quality
• Increased participation from diverse business sizes
• Improved value for taxpayer dollars

This transition represents a significant positive shift toward a more streamlined, merit-focused federal contracting environment. While some adjustment will be necessary, the reduced administrative burden, combined with maintained protections against discrimination, positions federal contractors for enhanced operational efficiency and competitiveness in the coming years. The success of this new approach will likely be measured by increased participation in federal contracting, improved project outcomes, and more efficient use of government resources.