The Office of Management and Budget (OMB) recently issued Memorandum M-24-18 on the responsible acquisition of artificial intelligence (AI). The memorandum serves as a blueprint for what will be showing up in contracts soon.
In an article published by Wiley, the guidance is described as centering on three main principles: (1) managing AI risk and performance; (2) establishing cross-functional and interagency collaboration to reflect new AI responsibilities; and (3) promoting a competitive AI market through innovative acquisition methods.
The memorandum is directed to federal agencies and will serve as the basis for future regulations, including FAR requirements. Government contractors will start seeing some of these requirements flow down to contracts as early as this year.
The memorandum provides requirements when AI is being acquired for the government, including incident reporting, data management, transparency, testing, AI-based biometrics, and generative AI. Note that the memorandum states that its requirements do not apply to “AI used incidentally by a contractor during performance of a contract.”
In promoting a competitive AI market, the memorandum encourages interoperability and lowers barriers for small businesses and non-traditional partners. It also sees robust competition as a means to encourage companies to strengthen the security and safety of their capabilities which will result in less risky AI systems and services. Innovative acquisition practices are also encouraged, such as:
- “Show, don’t tell” — using oral presentations, prototypes, and other proof of concept approaches.
- Limiting contract duration to more regularly review contractor systems and the needs of the agency.
- Other Transaction Authority (OTA) use and pilot programs rather than rely solely on FAR-based instruments.
We hope that any use of AI to craft the M-24-18-driven contract clauses will also benefit from consultation with contractors to avoid one-size-fits-all clauses that we’ve seen in earlier IT and cybersecurity clauses.
