White House Memo on U.S. Leadership in AI Signals Opportunities for Government Contractors
The Biden Administration on Oct. 24, 2024, issued a memorandum, "Advancing the United States' Leadership in Artificial Intelligence; Harnessing Artificial Intelligence to Fulfill National Security Objectives; and Fostering the Safety, Security, and Trustworthiness of Artificial Intelligence" (the October 2024 Memo), which outlines a comprehensive strategy for integrating artificial intelligence (AI) into the United States' national security functions.
The October 2024 Memo builds on several predecessor memorandums related to AI issued by the Office of Management and Budget (OMB), including the March 2024 memorandum on "Advancing Governance, Innovation, and Risk Management for Agency Use of Artificial Intelligence" and the September 2024 memorandum on "Advancing the Responsible Acquisition of Artificial Intelligence in Government." These follow the October 2023 Executive Order 14110, "Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence," as well as the Advancing American AI Act. Combined, these signal a robust demand for AI technologies and solutions that align with national security objectives and the availability of a hot market for government contractors specializing in AI development and integration.
This Holland & Knight blog post summarizes the key takeaways for government contracts from the October 2024 Memo.
Opens the Door to New Federal Contracting Opportunities
The October 2024 Memo highlights the public investment that will go into AI in the near and longer terms and specifically names the U.S. Departments of State, Defense, Energy and Commerce, as well as the U.S. Intelligence Community, as making public investments in strategic domestic and foreign AI technologies. As the executive branch mobilizes to comply with the various directives and begins incorporating AI into all facets and functions of the federal bureaucracy, it will begin issuing solicitations and procurements for this technology.
As these procurements (and investments) get underway, government contractors will need to stay abreast of the latest federal policy developments that will dictate how and where the investment will occur. It also opens the door for new players – or nontraditional government contractors – to enter the market. For example, in just a matter of weeks a new administration will take office, and regardless of the upcoming presidential election, the outcome will spur the issuance of updated versions of the National Security Strategy, National Defense Strategy and National Intelligence Strategy, among other strategic documents. These updated strategies will provide insight into how the federal government will go about investing in AI to achieve the nation's strategic aims.
Forthcoming National Defense Authorization Acts (NDAA) and Intelligence Authorization Acts will provide similar insight that, in turn, will inform contractors' business decisions about where and how to allocate resources as they work to develop products and capabilities that will best fit and support the federal government's AI initiatives.
Signals an Intent to Utilize New Procurement Types
The October 2024 Memo also signals an intent for new procurement varieties – or procurements with new twists – for which contractors will need to be prepared. For example, the Energy Department and Intelligence Community are directed to consider the applicability of large-scale AI to their missions when planning for and constructing or renovating computational facilities. This suggests that in the near future contractors with traditional construction capabilities may enhance their business opportunities potential through developing capabilities to be able to build physical infrastructure to support fully integrated AI capabilities. It also opens the door for new players – or nontraditional government contractors – to enter the market. By prioritizing AI, the federal government is essentially creating a demand for innovative solutions and technologies in this space. This demand can serve as a catalyst for companies, including startups and tech firms that may not have previously engaged in government contracting, to develop AI-focused products and services.
Highlights the Need for Government Contractors to Hire Top Talent
The October 2024 Memo also highlights personnel opportunities and challenges contractors will need to prepare for to stay competitive for AI-related procurements. It highlights how the U.S. must attract and retain talent from across the globe that will help ensure American preeminence in AI development and deployment and outlines priorities to streamline visa and other processes to provide candidates efficient legal access to opportunities in the American technology industry. Top talent will seek opportunities with preeminent contractors who, in turn, will need to plan to strategically recruit and retain talent in what is and will continue to be a highly competitive emerging technology field.
Indicates Forthcoming Significant Changes to Compliance Regimes
Finally, these shifts toward adopting and incorporating AI solutions, especially in defense and intelligence, will likely lead to significant changes in compliance regimes. Contractors will need to stay informed of the changes in requirements and simultaneously work to develop capabilities and programs to ensure compliance associated with AI developments. For example, the October 2024 Memo's discussion of exploitation threats posed by strategic competitors highlights how contractors will have to adapt compliance efforts to account for new varieties of internal and external threats and vulnerabilities. Other notable compliance challenges noted in the October 2024 Memo include (among other things) protecting intellectual property and related infrastructure rights within the supply chain and cybersecurity requirements to test, assess and mitigate AI risks.
The October 2024 Memo heralds a new era of federal procurement. Holland & Knight's Government Contracts Group stands ready to assist government contractors in navigating these changes, ensuring they are well-positioned to contribute to and benefit from the U.S.' leadership in AI. Please contact the authors to learn more about and receive support through this rapidly expanding and evolving procurement landscape.