Virginia Gov. Terry McAuliffe (D) has issued an executive order banning state contracts with outfits that discriminate against gay and transgender people. (Steve Helber/Associated Press)

Gov. Terry McAuliffe on Thursday issued an executive order banning state contracts with firms that discriminate on the basis of sexual orientation or gender identity.

The policy applies to all executive branch contracts, including those to build roads and highways, but not to those entered into by the legislature or the courts.

McAuliffe (D) said his 61st executive order builds upon his very first, signed on the day he took office three years ago this month.

“As my first act as Governor, I signed Executive Order 1 to ban discrimination in the state workforce based on sexual orientation, take divisive social issue battles off the table and help build an open and welcoming economy,” McAuliffe said in a written statement. “Starting today, the Commonwealth of Virginia will not do business with entities that discriminate based on sexual orientation or gender identity. Virginia is home to the best state workforce in the country and this policy will ensure there is no question that all Virginians are to receive the full benefits of their citizenship, without regard to their sexual orientation or gender identity.”

Attorney General Mark R. Herring (D) stood with McAuliffe as he unveiled the new policy at an event in Charlottesville.

“If we are going to have the economic future we want, we have to send a clear and inclusive message about what and whom we value, and the kind of respect and opportunities that talented people will find in Virginia,” Herring said.

The order drew criticism from House Speaker William J. Howell (R-Stafford).

“Virginia has historically been a leader in the fight for religious liberty. Thomas Jefferson authored the Virginia Statute of Religious Freedom that served as the basis for the First Amendment in the Bill of Rights,” he said in a written statement. “That is why it is unfortunate that Governor McAuliffe wants to harm religious liberty by discriminating against individuals, businesses, and faith-based charities that provide critical services to the Commonwealth and its citizens. Instead of focusing on improving Virginia’s declining economic climate, the Governor is choosing to focus on divisive issues that play to his base.”

The conservative Family Foundation of Virginia blasted McAuliffe’s move as an “act of blatant religious bigotry.”

“This unconstitutional act of intimidation and bullying of businesses and charities that are operated by people of faith, from Christians to Jews to Muslims, is not only unnecessary but dangerous,” said Victoria Cobb, the group’s president. “It is also in direct violation of the Virginia Constitution that states, ‘the right to be free from any governmental discrimination upon the basis of religious conviction . . . shall not be abridged.’ ”

McAuliffe said that his order brings the executive branch in line with federal procurement policy, which already prohibits federal contractors from discrimination based on sexual orientation and gender identity.

It applies only to new contracts valued over $10,000. Subcontractors whose work reaches that threshold would also be subject to the rule.

One exception: The order states that “certain private child-placing agencies . . . may also be exempted.” Under a “conscience clause” added to the books in 2012, the state government may not deny contracts to adoption agencies that, for religious reasons, refuse to place children with certain people, such as those who are gay.

McAuliffe made his announcement just days after one of the General Assembly’s most vocal conservatives introduced a bill to regulate transgender people’s use of restrooms in schools, at highway rest stops and in other government buildings. Few people — including the bill’s sponsor, Del. Robert G. Marshall (R-Prince William) — expect it to advance.

[Virginia lawmaker proposes a bill to restrict public bathroom use by transgender people ]

Democrats instantly turned the bill — similar to a new law that has caused controversy and economic losses in neighboring North Carolina — into fodder in this year’s race for governor.

“If Republicans continue to prioritize divisive and discriminatory social issues while driving businesses away from Virginia, their electoral destiny will mirror Pat McCrory’s,” said Virginia Democratic Party spokeswoman Emily Bolton, referring to the North Carolina Republican who lost in November.