I apologize. The latest version of DCU works with FIPS systems. I didn't know that because we uninstalled it everywhere a long time ago. We had been using the powershell method, which stopped working. Now I can go back to using the DCU app.
Installing the latest Dell Command Update Version 3.1.2 on a system with FIPS mode activated results in Error 1920. Service Dell Client Management Service (DellClientManagementService) failed to start. Is there a different version of this tool that can be used by FIPS customers? If not, we need an update that uses FIPS validated cryptographic algorithms. The Event Viewer clearly shows that it's because an insecure cryptographic provider, MD5, is being invoked by the service.          
Dell Command Update and FIPS mode: Error 1920