Tech Industry Warns GSA AI Contracting Rules Could Block Vendor Access
Major technology companies are pushing back against a General Services Administration proposal that would require AI vendors to grant the federal government broad licensing rights to their systems. The draft guidance, issued last month, would force vendors to hand over "irrevocable, royalty-free, non-exclusive" licenses for any lawful government use during contract periods.
The Alliance for Digital Innovation, whose members include Amazon Web Services, Google, Salesforce, Zscaler, and Palantir, told GSA the policy conflicts with federal acquisition rules and would effectively require vendors to build separate government-only versions of their products.
The Core Problem: Commercial vs. Government Products
The licensing clause would force contractors to "build and maintain a parallel, Government-only product distinct from their commercial product," ADI said in comments submitted to GSA. This approach risks turning standard commercial procurements into expensive, custom development efforts.
Multiple provisions in the draft create compliance burdens "that are difficult, if not impossible to reconcile" with how commercial AI products are built and delivered, ADI warned. The requirements would disproportionately harm smaller and emerging AI firms that lack resources to modify their offerings for government use.
The Software & Information Industry Association (SIIA), representing Amazon, Anthropic, Google, and Oracle, said the rules risk making "the most advanced AI solutions no longer accessible to the federal government."
IP Rights and Data Governance Conflicts
Both industry groups flagged conflicts between GSA's proposal and the Federal Acquisition Regulation (FAR). The clause raises concerns over intellectual property protection, data governance, and supply chain restrictions.
SIIA said the limited room for negotiation would force companies to abandon core commercial protections, potentially undermining their AI products' viability. These restrictions are "incompatible with the shared infrastructure and global innovation models essential to modern commercial AI operations," SIIA said.
Evaluation Standards Present Operational Challenges
Beyond licensing, the proposal would require AI systems to prioritize "historical accuracy, scientific inquiry, and objectivity" while remaining neutral and nonpartisan. Systems would face automated federal evaluations for bias, truthfulness, safety, and ideological content.
ADI flagged several problems with these requirements. Terms like "ideological dogmas" remain undefined, and strict truthfulness standards don't reflect how generative AI actually works-these systems produce probabilistic outputs, not absolute facts.
ADI recommended shifting to a "reasonable efforts" framework. SIIA proposed a different approach: upfront benchmarking of models against government standards, followed by shared results and joint improvements.
What Industry Groups Are Asking For
ADI urged GSA to align guidelines with the National Institute of Standards and Technology (NIST) AI Risk Management Framework, clarify evaluation criteria, and limit vendor liability for system performance.
"ADI and its member companies stand ready to engage in further dialogue to develop workable solutions that protect Government interests while preserving Contractors' ability to deliver innovative, high quality AI services at scale," the group said.
SIIA said it "remains committed to working with the GSA to develop a framework that ensures AI systems are secure and trustworthy while remaining firmly rooted in the commercial-first mandate that has historically driven American technological leadership."
The Policy's Origins
GSA issued the proposed guidelines after a dispute between the Department of Defense and Anthropic. The AI company declined to loosen safeguards that prohibit use of its technology for fully autonomous weapons systems or mass domestic surveillance.
President Donald Trump barred federal agencies from using Anthropic AI tools in response, and GSA issued its proposal shortly afterwards.
For more on how AI policy affects government operations, see AI for Government and Generative AI and LLM.
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