Thinking about using AI to gain an edge on your competitors in government contracting? You may want to check that solicitation again. The federal government has started introducing AI-specific contract clauses that don’t just regulate AI vendors, they regulate any contractor using AI in the performance of federal work. This includes using AI tools for analytics, software development, cybersecurity, document review, coding, or even internal decision-making.
What the New AI Clause Requires of Prime Contractors
In March 2026, the General Services Administration (GSA) proposed “Basic Safeguarding of Artificial Intelligence Systems” clause (GSAR 552.239-7001). The clause is intended to be included in solicitations and contracts involving AI capabilities during performance, as well as all new and existing Multiple Award Schedule (MAS) contracts. MAS holders will have 60 days to accept the new clause or risk losing access to the schedule.
Under the proposed clause, prime contractors must disclose the AI systems they use and provide insight into how those systems function, but that’s not where it ends.
- The system must be “American,” meaning developed and produced in the U.S.
- Remember those T&Cs you agreed to when adopting your AI system? If they conflict with government policies, the government clause controls.
- Contractors are responsible for the compliance of their service providers (yes, requirements flow upward).
- The government receives broad rights in data inputs, outputs, and “custom developments,” which differs from the current principle of standard government data rights in data produced exclusively at government expense.
- Contractors and service providers are prohibited from using government data to train or improve AI models, inform business decisions, or retain data beyond contract scope.
- … and more, so be sure to read the full text.
These requirements represent a significant expansion of compliance obligations tied directly to how AI is developed, deployed, and managed.
The Quiet Reality: Flowdown is Coming
Even where the clause does not explicitly say “flow this down,” the structure and requirements make it unavoidable. The prime is responsible for any AI systems used in performance, including those provided by subcontractors or vendors. That means if a subcontractor uses noncompliant AI, the prime is also noncompliant.
Subcontractors, take note: expect your contracts to include AI representations and certifications, required toolchains, and audit rights.
How Subcontractors Can Get Ahead of It
Subcontractors will start seeing AI-specific clauses from primes soon enough. In order to get ahead of it, begin by taking inventory of each AI tool used in contract performance. Identify where it is developed and what data it touches.
Next, analyze whether your AI tools are compatible with government requirements. For instance, if the tool is produced outside the U.S. or limits government-use rights, it likely won’t be acceptable. Be prepared to share your findings and discuss solutions with your prime.
It is also important to check your current government certifications to ensure they accurately reflect how your organization is using AI. Many companies have added AI capabilities to support existing contracts. Compare those representations and certifications against the proposed GSA requirements to identify gaps and prioritize the highest-risk areas.
Conclusion
AI is no longer just a capability you bring to a contract for a competitive edge. It is now a regulated component of contract performance.
How will this affect FAR/DFARS provisions? That remains unclearbut expect future FAR/DFARS clauses to reflect similar requirements.
Organizations that begin aligning their AI use with these expectations now will be better positioned as these requirements evolve.
Contractors that treat this as a compliance exercise will lag behind those who treat it as a strategic shift.