Labor & Employment Law Daily Wrap Up, AGENCY NEWS—Two OMB memos issued to aid federal agencies in efficient acquisition, use of artificial intelligence, (Apr 7, 2025)

By Patricia K. Ruiz, J.D.

The memos cite to Trump administration executive orders promoting the use of AI in the federal government.

A memorandum from the Office of Management and Budget (OMB) provides guidance for the efficient acquisition of artificial intelligence (AI) in government, including agency-level requirements for innovatively acquiring safe and secure AI to improve government efficiency and effectiveness. A second memorandum details requirements for federal agencies in accelerating federal use of AI through innovation, governance, and public trust.

Efficient acquisition of AI. According to the OMB Memorandum M-25-22, federal agencies are charged with innovatively using safe and secure AI to improve the efficiency and effectiveness of the government. In doing so, agencies must procure effective and trustworthy AI capabilities in a timely and cost-effective manner. The OMB focused on three “grounding themes” driving the requirements of the memorandum: (1) ensuring the government and the public benefit from a competitive American AI marketplace, which requires agencies to pay careful attention to vendor sourcing, data portability, and long-term interoperability to avoid significant and costly dependencies on a single vendor and to communicate clear and specific requirements; (2) safeguarding taxpayer dollars by tracking AI performance and managing risk, which requires agencies to ensure the AI systems they procure are fit for purpose and deliver consistent results that preserve public trust; and (3) promoting effective AI acquisition with cross-functional engagement, which calls for robust collaboration and agile engagement from agency officials with varied expertise.

The memo sets forth agency-level requirements, including updating agency policies, maximizing use of American-made AI, protecting privacy, protecting IP rights and use of government data, contributing to a shared repository of best practices, and determining necessary disclosures of AI use in the fulfillment of a government contract. The memorandum also delineates requirements and recommendations for agencies as part of their AI acquisition practices, including identification of requirements, market research and planning, solicitation development, selection and award, contract administration, and contract closeout.

The memorandum rescinds and replaces OMB Memorandum M-24-18, Advancing the Responsible Acquisition of Artificial Intelligence in Government, but does not supersede and should be considered in concert with other more general federal policies that apply to the acquisition of AI.

Federal use of AI. OMB Memorandum M-25-21 directs agencies to provide improved services to the public while maintaining strong safeguards for civil rights, civil liberties, and privacy and provides guidance to agencies on ways to promote human flourishing, economic competitiveness, and national security. The memo instructs agencies to follow the detailed implementation instructions and requirements included in the Appendix of the memorandum. The memo charges agencies with lessening the burden of bureaucratic restrictions and building effective policies and processes for the timely deployment of AI. Agencies are instructed to maximize the value of existing investments, sharing resources within an agency and across government, to ensure speedy deployment and protect taxpayer dollars from duplicative spending.

The memo instructs agencies to cut down on bureaucratic bottlenecks and redefine AI governance as an enabler of effective and safe innovation, establishing clear expectations for their workforce on appropriate AI use and enabling agency heads to delegate responsibilities and accountability for risk acceptance to appropriate agency officials. The memo requires agencies to identify a Chief AI Officer to champion the agency’s AI goals. It also requires agencies to be accountable to the taxpayer and to continue to comply with relevant reporting requirements. The memo instructs agencies to ensure rapid AI innovation is not achieved at the expense of the American people or in violation of their trust by employing risk management practices.

The memorandum rescinds and replaces OMB Memorandum M-24-10, Advancing Governance, Innovation, and Risk Management for Agency Use of Artificial Intelligence.

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