The Biden administration issued a memorandum on October 24, 2024: “Advancing United States Leadership in Artificial Intelligence; harnessing artificial intelligence to fulfill national security objectives; and promote the safety, security and reliability of artificial intelligence” (de October 2024). 2024 Memo), which outlines a comprehensive strategy for integrating artificial intelligence (AI) into United States national security functions.
The October 2024 Memorandum builds on several previous memoranda 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 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 October 2023 Executive Order 14110, “Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence,” and the Advancing American AI Act. Combined, these indicate 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 blog post from Holland & Knight summarizes the key insights for government contracts from the October 2024 Memo.
Opens the door to new opportunities for federal contracting
The October 2024 Memo highlights the near- and longer-term public investments that will go into AI, and specifically names the US Departments of State, Defense, Energy and Commerce, as well as the US Intelligence Community, as those who make public investments in strategic domestic and foreign AI technologies. As the executive branch mobilizes to comply with the various directives and begins to integrate AI into all facets and functions of the federal bureaucracy, it will begin issuing solicitations and tenders for this technology.
As these procurements (and investments) begin, government contractors will need to stay abreast of the latest federal policy developments that will determine how and where the investments will occur. It also opens the door for new players – or non-traditional government contractors – to enter the market. For example, in just a few weeks a new administration will take office, and regardless of the upcoming presidential election, the outcome will spur the release of updated versions of the National Security Strategy, the National Defense Strategy, and the National Intelligence Strategy, among other strategic documents. These updated strategies will provide insight into how the federal government will invest in AI to achieve the nation’s strategic objectives.
The upcoming National Defense Authorization Acts (NDAA) and Intelligence Authorization Acts will provide similar insight, which will in turn influence contractors’ business decisions about where and how to allocate resources as they work to develop products and capabilities that best fit with and support the federal government. Government AI initiatives.
Signals the intention to use new purchasing types
The October 2024 Memo also signals an intention for new purchasing varieties – or tenders with new twists – for which contractors will have to be prepared. For example, the Energy Department and the Intelligence Community are directed to consider the applicability of large-scale AI to their missions as they plan and build or renovate computing facilities. This suggests that contractors with traditional construction capabilities can increase their business opportunity potential in the near future by developing capabilities to build physical infrastructure to support fully integrated AI capabilities. It also opens the door for new players – or non-traditional government contractors – to enter the market. By prioritizing AI, the federal government is essentially creating a demand for innovative solutions and technologies in this area. This demand could serve as a catalyst for companies, including startups and technology companies that may not have previously dabbled in government contracting, to develop AI-focused products and services.
Emphasizes the need for government contracts to hire top talent
The October 2024 Memo also highlights the workforce opportunities and challenges contractors must prepare for to remain competitive in AI-related procurement. It highlights how the US must attract and retain talent from around the world that will help ensure US preeminence in AI development and deployment, and outlines priorities to streamline visa and other processes to provide candidates with efficient legal access provide opportunities in the American technology industry. Top talent will seek opportunities with leading 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 upcoming significant changes to compliance regimes
Finally, these shifts toward adopting and integrating AI solutions, especially in defense and intelligence, will likely lead to significant changes in compliance regimes. Contractors will need to stay abreast of changes in requirements while working to develop capabilities and programs to ensure compliance with AI developments. For example, the October 2024 Memo’s discussion of exploitation threats from strategic competitors highlights how contractors will need to adapt compliance efforts to account for new types of internal and external threats and vulnerabilities. Other notable compliance challenges mentioned in the October 2024 Memo include 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 ushers in a new era of federal procurement. Holland & Knight’s Government Contracts Group stands ready to help government contractors navigate these changes, ensuring they are well-positioned to contribute to and benefit from America’s leadership in AI. Contact the authors for more information and support in this rapidly growing and evolving procurement landscape.
