Protecting AI and Cloud Competition in Defense Act of 2025
The Protecting AI and Cloud Competition in Defense Act of 2025 aims to change how the Department of Defense (DoD) purchases cloud computing, data infrastructure, and foundation AI models. The bill would require competitive procurement processes for these technologies, ensure DoD maintains exclusive rights to government data, and promote openness and interoperability through modular open systems and multi-cloud approaches. It also tightens protections around how government data can be used to train or improve the commercial products of providers with significant DoD contracts, and it requires regular public reporting to Congress about competition, innovation, and market concentration in the AI space. If enacted, the bill would affect cloud, data infrastructure, and foundation model providers that have DoD contracts totaling at least $50 million in a five-year window (the “covered providers”). It would drive DoD toward more competition, greater data rights protection, and broader use of multi-cloud architectures, while creating compliance obligations and potential penalties for misuse of government data. The bill also creates a recurring reporting requirement to track market dynamics and exemptions granted for national security reasons.
Key Points
- 1Competitive procurement and open-standards emphasis
- 2- Requires a competitive award process for each procurement of cloud, data infrastructure, or foundation models, and promotes modular open systems, interoperability, auditability, and appropriate allocation of work boundaries to prevent vendor lock-in.
- 3Data rights and use protections
- 4- Requires government-furnished data used for DoD AI products to remain under DoD control and not be used to train or improve the commercial products of covered providers without express authorization. Applies protections to data stored on vendor systems and aligns with DoD data governance principles. Establishes penalties for violations and provides for exemptions in limited cases.
- 5Multi-cloud and entry barriers
- 6- Prioritizes multi-cloud technology to avoid dependence on a single vendor, unless infeasible or dangerous to national security. Includes measures to mitigate barriers to entry for small and nontraditional contractors.
- 7Exemptions for national security
- 8- Component acquisition executives can grant exemptions when necessary for national security, with required notification to the Chief Digital and Artificial Intelligence Officer detailing the provisions exempted, the vendor, program, and justification.
- 9Reporting and transparency
- 10- Requires annual (for five years) reports to Congress assessing competition, innovation, entry barriers, and market concentration in the AI space, including a list of exemptions granted and their purposes. DoD must publish a publicly releasable version of each report.