On October 24, 2024, the White House issued its latest memorandum on the government's use and procurement of Artificial Intelligence (AI): Memorandum on Advancing the United States' Leadership in Artificial Intelligence; Harnessing Artificial Intelligence to Fulfill National Security Objectives; and Fostering the Safety, Security, and Trustworthiness of Artificial Intelligence (the Memorandum). As its name suggests, the Memorandum, which stems from Executive Order (E.O.) 14110, is focused on the government's use and procurement of AI in the national security space. Besides the publicly available Memorandum, there is a classified annex that specifically addresses certain sensitive national security issues, including countering adversary use of AI. 

Relevant to government contractors in the AI and national security space, the Memorandum sets forth the following priorities and directives:

• Attract the world's leading AI talent: The Memorandum directs the Departments of State (DoS), Defense (DoD), and Homeland Security (DHS) to use "all available legal authorities to assist in attracting and rapidly bringing to the [U.S.]" technical experts in the field of AI, and more specifically, semiconductor design and production. To aid in this effort, the Assistant to the President for National Security Affairs, in consultation with certain executive agencies, is directed to determine ways to prioritize and streamline visa applications for these individuals. 
• Construct AI-dedicated computational infrastructure: The Memorandum directs the DoD, Department of Energy (DOE), and Intelligence Community (IC) agencies to consider and include AI mission applications when constructing or renovating their computational facilities. To support this directive, the Memorandum directs the Office of the White House Chief of Staff to coordinate with DOE to "streamline permitting, approvals, and incentives for the construction of AI-enabling infrastructure," including clean energy, power, and fiber lines. Agencies are to invest and incentivize private investment in domestic and foreign AI and AI-adjacent technologies. 
• Protect U.S. AI from foreign intelligence threats: Recognizing the value of U.S. AI-related intellectual property (IP) and the risk of foreign actors stealing this IP, the Memorandum directs certain agencies to identify "critical nodes in the AI supply chain" that are most susceptible to compromise and take "all steps" to reduce the risk of compromise. While not an express directive to government contractors, it is plausible that included within these steps will be a requirement for contractors to make certain representations regarding their AI supply chains or provide certain documentation establishing the security of their AI supply chains.
• Ensure AI safety: The Memorandum directs the Department of Commerce, through the National Institute of Standards and Technology (NIST), to develop a voluntary unclassified pre-deployment safety testing capability for "frontier AI models," which are defined as "general-purpose AI system[s] near the cutting-edge of performance." This testing will assess risks related to cybersecurity, system autonomy, and personal rights and safety. Other agencies are directed to develop a classified equivalent. The Memorandum also directs NIST, through its AI Safety Institute (AISI), to issue guidance to AI developers on how to test, evaluate, and manage risks to safety, security, and trustworthiness, and also to issue benchmarks for assessing an AI systems' capabilities and limitations bearing on national security and public safety. AISI is named as the primary point of contact for communicating risk mitigation recommendations to developers. The Memorandum also directs various agencies to develop tests and evaluations, both classified and unclassified, to assess an AI model's ability to exacerbate certain threats, such as cyber, nuclear, and biological threats. It also directs the Office of the Director of National Intelligence (ODNI) and DoD to develop information-sharing policies for risks stemming from contractor developed or used AI system. 
• Effectively acquire AI: Recognizing the critical role of AI in the U.S.'s national security mission, the Memorandum directs an IC agency working group to propose changes to existing regulations and guidance to the Federal Acquisition Regulation (FAR) Council to improve the IC and DoD's procurement of AI for use on national security systems. In particular, the working group is to propose changes that will:
  • Adopt objective metrics to measure the safety, security, and trustworthiness of AI systems
  • Balance expediting AI procurement with risk mitigation
  • Simplify proposal processes to attract non-traditional or inexperienced government contractors
  • Structure source selections to prioritize competition and best value to the government, such as by including interoperability requirements and emphasizing technical capability when evaluating offers
  • Promote shared use of AI across agencies
  The Memorandum also directs DoD and ODNI to engage with the private sector to stay informed regarding the latest AI capabilities that may impact the national security mission. Contractors should view this as an opportunity to affirmatively engage with these agencies as well either through white papers or free demonstrations. Finally, DoD and ODNI are to implement policies that consolidate the procurement of general-purpose AI systems and infrastructure. 
• Manage AI risk in the national security context: The Memorandum calls for an AI governance and risk management framework titled "Framework to Advance AI Governance and Risk Management in National Security," which is intended to serve as the national security counterpart to Office of Management and Budget (OMB) Memorandum M-24-10. The Framework will detail minimum cybersecurity guidance for agencies that use AI as a component of a national security system. 
• Create an AI National Security Coordination Group: The Memorandum directs the Chief AI Officers (CAIO) from various national security agencies to form an AI National Security Coordination Group to, among other things, develop best practices for identifying and mitigating foreign intelligence risks associated with AI procurement, ensure interoperability between agencies (including data interoperability and data sharing agreements), and develop "an agile process to increase the speed of acquisitions, validation, and delivery of AI capabilities."

Key Takeaways

While the Memorandum is just a first step in addressing the policy goals and directives discussed above, and implementation will likely take some time, companies should keep the following in mind:

• Hiring non-U.S.-citizen employees and bringing them to the U.S. should become easier and faster
• Approvals and permitting for construction and renovation of government computational facilities should become faster and there will be particular focus on contractors' use of clean energy with regard to AI-enabling infrastructure  
• There will be increased focus on AI-supply chain security, which will likely flow down to contractors in the form of attestation requirements or documentation requirements, like software bills of materials (SBOMs)
• Risk and performance management guidelines and pre-deployment safety testing will become available through NIST
• Keep an eye out for future FAR cases related to improving the government's acquisition of AI for national security systems 

If you have any questions regarding the Memorandum or how it may impact your business, please contact one of the attorneys listed below:

Ashley Powers, apowers@milchev.com, 202-626-5564

Scott N. Flesch, sflesch@milchev.com, 202-626-1584

The information contained in this communication is not intended as legal advice or as an opinion on specific facts. This information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. For more information, please contact one of the senders or your existing Miller & Chevalier lawyer contact. The invitation to contact the firm and its lawyers is not to be construed as a solicitation for legal work. Any new lawyer-client relationship will be confirmed in writing.

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