Introduction
The federal government has introduced comprehensive policies to guide the use and procurement of artificial intelligence (AI) systems, emphasizing compliance [4], innovation [1] [2] [3] [4], and national security [4]. These policies aim to enhance American leadership in AI while ensuring data privacy, public trust [1] [3], and economic competitiveness [4]. Contractors working with AI systems must navigate complex requirements, including intellectual property rights and data management, to align with these directives [5].
Description
Contractors must align AI systems with federal directives [3], particularly for “high impact” use cases that necessitate enhanced compliance measures [3], including pre-deployment testing [3], impact assessments [3], and continuous monitoring [3]. The procurement of American-made AI systems is prioritized [3], providing a competitive advantage to contractors utilizing US-developed tools [3]. In April 2025 [2], the White House Office of Management and Budget (OMB) released two significant policies revising previous guidance on federal agency use and procurement of AI, initiated by an executive order aimed at enhancing American leadership in artificial intelligence [2]. Recent executive orders have significantly reshaped the federal government’s approach to AI regulation [1], emphasizing innovation [1] [3], economic competitiveness [4], and national security while addressing data privacy and public trust.
Navigating complex intellectual property (IP) and data rights clauses in AI contracts is essential for contractors [3], ensuring transparency [3], portability [3], and government access to necessary data while avoiding vendor lock-in [3]. The administration’s policies promote AI use in government operations while ensuring safety and security, significantly impacting contractors involved in AI development and procurement [3]. The OMB has issued memos outlining a new federal strategy for AI use and procurement [1], which emphasizes performance-based contracting and ongoing testing of AI systems to protect contractors’ intellectual property rights [1].
The AI Use Memo emphasizes innovation [3], governance [1] [3] [4], and public trust [1] [3], mandating federal agencies to maximize the use of American AI and appoint an Agency Chief AI Officer to foster innovation [3]. A “high impact” AI category will track use cases requiring heightened due diligence [3], and agencies must conduct AI adoption maturity assessments [3]. Non-compliance with minimum practices for high-impact use cases by April 3, 2026 [3], will lead to discontinuation of AI use [3]. The updated policies streamline procurement processes and reduce reporting burdens [1], fostering a competitive marketplace while safeguarding privacy [1].
The AI Acquisition Memo outlines the approach for federal agencies to acquire AI systems [3], requiring policies that ensure compliance with privacy laws and prevent vendor lock-in through knowledge transfer [3], data and model portability [3], and clear licensing terms [3]. Ongoing testing and monitoring of AI systems during contract performance are also mandated [3]. A key requirement is the formation of cross-functional acquisition teams to assess AI systems’ impacts [1], particularly in high-risk areas [1].
Contractors must identify high-impact AI systems early in the procurement process to comply with additional requirements [3]. Waivers from some high-impact use minimum risk management requirements can be requested from the agency’s Chief AI Officer [3]. The focus on American AI systems provides a competitive edge for contractors with US-developed tools [3]. Proactive development of AI systems that comply with minimum risk management practices and security goals is crucial [3]. Contractors should establish and maintain AI governance policies that include testing [3], assessment [1] [3], and ongoing monitoring [1] [3].
Existing contractors in the high-impact AI category must review their governance policies immediately [3], as agencies have one year to ensure compliance or risk contract cancellation [3]. Early adoption of these measures can provide a competitive advantage as the government introduces more detailed requirements [3]. Contractors should carefully negotiate IP and data rights clauses in AI contracts and consider engaging specialized attorneys due to the complexities involved [3]. The memoranda encourage nontraditional procurement methods [3], such as Other Transaction Authority (OTA) agreements [3], which offer flexibility and streamline contracting processes [3], presenting opportunities for nontraditional contractors [3].
In addition, the General Services Administration (GSA) is tasked with developing a plan within 100 days to assist federal agencies in procuring AI tools [5]. Following this [5], GSA has 200 days to establish an online portal aimed at facilitating knowledge sharing on AI procurement among federal agencies [5]. Agencies are required to update their internal procedures within 270 days to align with new directives [5]. Additionally, within 200 days [1] [4] [5], agencies must implement processes and contractual terms that address the use of government data [5], ensuring clear delineation of ownership and intellectual property rights between the government and contractors [5].
The effectiveness of the new guidance will rely on collaboration between the OMB and federal agencies to ensure compliance with transparency and risk management standards [1]. Federal agencies are encouraged to adopt effective AI solutions [1], signaling increased investment opportunities for managed service providers (MSPs) that support federal clients [1]. MSPs can assist in identifying high-impact AI use cases [1], conducting risk assessments [1], and developing AI strategies [1] [4], as well as reviewing AI-related contract clauses and monitoring AI performance post-deployment [1]. Contractors must ensure their AI systems align with privacy protections mandated by law and federal policy [3], balancing innovation with necessary safeguards [1].
Conclusion
The new federal policies on AI use and procurement present significant opportunities and challenges for contractors. By prioritizing American-made AI systems and emphasizing compliance with privacy and security standards, these policies aim to bolster US leadership in AI. Contractors must adapt to these changes by developing robust governance frameworks and engaging in proactive compliance measures. The evolving landscape offers a competitive edge to those who align early with the directives, fostering innovation while safeguarding national interests.
References
[1] https://nquiringminds.com/ai-legal-news/trump-administration-reshapes-ai-regulation-with-new-executive-orders/
[2] https://www.justsecurity.org/110517/the-just-security-podcast-trumps-ai-strategy-takes-shape/
[3] https://www.jdsupra.com/legalnews/trump-administration-issues-ai-7798633/
[4] https://www.jdsupra.com/legalnews/trump-administration-early-executive-7758216/
[5] https://www.fedmanager.com/news/new-white-house-ai-guidance-focuses-on-american-products-reviewing-risk
