On April 3, the Office of Management and Budget (OMB) issued two memoranda (memos) guiding federal agencies in eliminating barriers to federal artificial intelligence (AI) use and procurement. Memorandum M-25-21, "Accelerating Federal Use of AI through Innovation, Governance, and Public Trust" and Memorandum M-25-22, "Driving Efficient Acquisition of Artificial Intelligence in Government," outline a framework for U.S. federal agencies to acquire AI systems efficiently and responsibly. M-25-22 is designed to further the directives of Executive Order 14179, "Removing Barriers to American Leadership in Artificial Intelligence" (Jan. 31, 2025). According to the White House, the OMB memos "fundamentally shift perspectives and direction ... focusing now on utilizing emerging technologies to modernize the Federal Government." Key pillars of modernization include the following:
- Promoting Competition: Agencies are encouraged to foster competition in AI procurement to drive innovation, reduce costs, and avoid reliance on single vendors.
- Performance Monitoring: Agencies must track AI performance, using metrics to assess cost, scalability, and effectiveness, ensuring systems deliver value and meet objectives. Performance monitoring should take the form of an "AI adoption maturity assessment" to better track both progress and needs. Agencies are also encouraged to prioritize obtaining documentation that facilitates transparency and explainability as a means of tracking performance and effectiveness.
- Collaboration: Cross-functional teams of technical, policy, and procurement experts should align AI acquisitions with agency goals while addressing legal, ethical, and security concerns.
- Compliance: AI systems must adhere to legal, ethical, and regulatory standards, supporting transparency, fairness, and public trust. This includes establishing policies and processes to satisfy privacy laws and regulations when acquiring AI systems that handle personally identifiable information (PII). In addition, agencies must address intellectual property (IP) rights and the use of government data by establishing clear contractual terms defining data ownership and IP rights between agencies and contractors.
- Cost Efficiency: Agencies should ensure AI systems are cost-effective, scalable, and aligned with (a) long-term strategic goals, (b) avoiding redundant efforts, and (c) maximizing taxpayer value.
- Workforce Development: Agencies are encouraged to build internal AI capabilities, invest in employee training, and foster a government-wide approach to AI procurement.
The OMB memos create a strategic framework for responsible and efficient acquisition of AI technologies in the federal sector. Despite the Trump administration's efforts to cultivate an environment of AI de-regulation, the OMB memos demonstrate that AI performance and cost-effectiveness must be balanced against risks presented to personal privacy and IP rights. Businesses looking to offer AI services and technologies to the government may benefit from assessing how AI use and development aligns with existing standards, such as the NIST AI Risk Management Framework.
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