Federal contracts between the Federal Retirement Thrift Investment Board (FRTIB) and investment firms BlackRock and State Street Investment Management require the firms to report on diversity and use of women- and minority-owned brokers, despite President Trump’s executive order banning racially discriminatory DEI activities in federal contracting.
The tension centers on whether the FRTIB’s independent status exempts it from the administration’s anti-DEI directives, even as its contracts include requirements at odds with the president’s policy.
The FRTIB, an independent agency established in 1986, oversees the Thrift Savings Plan (TSP), a retirement program for federal employees and uniformed service members. According to the agency’s official mission statement, it aims to help participants prepare for retirement and is charged by law to act solely in their interest. The board’s contracts with BlackRock and State Street, awarded in 2020, include provisions requiring annual reports on the firms’ use of women/minority-owned brokers, management composition by gender and race, and summaries of their diversity philosophies.
Contract Requirements and DEI Mandates
The contracts specify that BlackRock and State Street must submit regular reports to the FRTIB, including detailed annual disclosures about their diversity practices. These requirements include providing data on the use of women- and minority-owned brokers, management diversity statistics, and a summary of the firm’s diversity philosophy. The agreements are set to expire 120 months from award or at the end of the agreement period, whichever comes first.
These mandates remain in place even after President Trump signed an executive order on March 26 banning “racially discriminatory DEI activities” in federal contracting. The order directs the Office of Management and Budget and other officials to ensure compliance and outlines penalties for violations. The order states, “DEI activities are not only unethical and often illegal, but also cause inefficiencies, waste, and abuse within entities that engage in such practices.”
The executive order is part of a broader push by the administration to roll back diversity, equity, and inclusion requirements in federal agencies and contracting. It instructs agencies to review their procurement policies and ensure that federal funds are not used to support DEI initiatives deemed discriminatory. However, the FRTIB’s contracts, which predate the order, continue to include diversity reporting requirements for its asset managers.
FRTIB’s Unique Status and Policy Gap
The FRTIB’s status as a self-funded federal agency with independent budgetary authority means it does not receive annual congressional appropriations and is not strictly bound by the Federal Acquisition Regulation. As a result, the Trump administration’s executive order does not automatically apply to the FRTIB’s contracts, even though the DEI-related requirements appear to conflict with the administration’s stated policy goals.
The FRTIB’s independence is rooted in its enabling legislation, which was designed to insulate the agency from political and budgetary pressures. This structure allows the board to manage the Thrift Savings Plan for the exclusive benefit of participants, but it also creates a gray area when it comes to compliance with executive branch directives.
Tom Jones, president of the American Accountability Foundation, described the FRTIB as “incredibly impactful” due to its reach among millions of federal employees and retirees. He argued that many TSP participants likely oppose DEI mandates in contracts managing their retirement funds, stating, “They want to just make as much money as [they] can so [they] can retire.”
“They want to just make as much money as [they] can so [they] can retire.”
— Tom Jones, American Accountability Foundation president
Jones suggested the administration should consider expanding the executive order to include the FRTIB or provide guidance to remove the diversity provisions from its contracts. The Office of Management and Budget declined to comment.
Political Scrutiny and Legislative Efforts
BlackRock and State Street have previously faced criticism from Republican lawmakers for promoting environmental, social, and governance (ESG) and DEI policies through their management of federal retirement funds. In June 2021, Sens. Ron Johnson and Pat Toomey wrote to the FRTIB expressing concern that the firms were using their proxy voting power to advance social policy agendas. More recently, Sen. Ted Cruz introduced a bill to prohibit asset managers overseeing federal retirement funds from using those assets to promote ESG and DEI policies. The bill remains in committee and has not received a vote. Bill details.
The FRTIB did not respond to requests for comment regarding the DEI provisions in its contracts. The agency’s strategic plan emphasizes its mission to act in the interest of TSP participants and improve retirement outcomes, but does not address the current controversy over contract mandates.
