Senators introduce bill to ‘limit Big Tech monopolies’ in DOD cloud and AI procurement

A bipartisan group of lawmakers has put forth new legislation aimed at promoting more competition for the Pentagon’s cloud and artificial intelligence contracts.

The Protecting AI and Cloud Competition in Defense Act, introduced by Sens. Elizabeth Warren, D-Mass., and Eric Schmitt, R-Mo., strives for “meaningful regulation to limit Big Tech monopolies from elbowing out competitors in the AI and cloud computing markets,” according to a press release issued Thursday by Warren’s office.

“Right now, all of our eggs are in one giant Silicon Valley basket. That doesn’t only stifle innovation, but it’s more expensive and it seriously increases our security risks,” Warren said in a statement. “Our new bill will make sure that as the Department of Defense keeps expanding its use of AI and cloud computing tools, it’s making good deals that will keep our information secure and our government resilient.”

Schmitt in a statement said the bipartisan legislation “will encourage resiliency, interoperability, and innovation.”

Both Warren and Schmitt are members of the Senate Armed Services Committee.

The new bill would require a competitive award process for each procurement of cloud computing, data infrastructure and foundation model solutions — and have Uncle Sam maintain exclusive rights to access and use of all government data — when contracting with vendors that have entered into contracts totaling $50 million or more with the Pentagon in any of the five previous fiscal years.

Contracting provisions would have to prioritize “the appropriate role” for the government with respect to intellectual property and data rights and security, interoperability and auditability requirements; include modular open systems approaches and “appropriate work allocation” and technical boundaries; and consider multi-cloud technology “where feasible and advantageous,” according to the text of the legislation.

In a section about data training and use protection, the bill calls for the secretary of defense to direct the Pentagon’s Chief Digital and AI Office (CDAO) to update or promulgate provisions of the Defense Federal Acquisition Regulation Supplement to ensure that government-furnished data “provided for purposes of development and operation of AI products and services to the Department of Defense, is not disclosed or used without proper authorization” by the Pentagon — and that government-furnished data stored on vendor systems “provided for purposes of development and operation of AI products and services” is “appropriately protected from other data on such systems, and is treated in accordance with Department of Defense data decrees and Creating Data Advantage (Open DAGIR) principles.”

Violation of these provisions would be subject to penalties, including fines and contract termination.

However, the legislation would allow for DOD component acquisition executives to issue exemptions if they determine that doing so isn’t “inconsistent with national security.” The acquisition execs would be required to notify the CDAO of the specific provisions exempted, the vendor and program being exempted, and the justification for the move.

The bill also contains reporting requirements.

“Not later than January 15, 2026, and annually thereafter for four years, the Chairman of the Joint Chiefs of Staff, in coordination with the Under Secretary of Defense for Acquisition and Sustainment, shall submit to the congressional defense committees a report assessing the competition, innovation, barriers to entry, and concentrations of market power or market share in the AI space for each period covered by the report. The report shall also include recommendations of appropriate legislative and administrative action,” the legislation states.

The department would be required to post a publicly releasable version of the reports on a DOD website for transparency purposes.

The introduction of the bill comes as the Pentagon is pumping billions of dollars into cloud and AI projects to acquire cutting-edge capabilities for warfighters and new tools to improve the effectiveness and efficiency of back-office functions.

The press release from Warren’s office noted that the department has already awarded a $9 billion cloud program to Google, Oracle, Microsoft and Amazon.

That initiative, known as the Joint Warfighting Cloud Capability (JWCC), has the tech giants competing for task orders. The Pentagon pivoted away from contracting a single vendor for a previous enterprise cloud capability known as the Joint Enterprise Defense Infrastructure (JEDI), and instead sought a multi-vendor acquisition approach. When the JWCC program was awarded in December 2022, Google, Oracle, Microsoft and Amazon were seen as the only vendors that could meet the Pentagon’s security requirements for that effort.

However, more recently the Defense Information Systems Agency has been looking to include more cloud service providers and possibly introduce new contracting mechanisms for the next iteration of the program, dubbed JWCC 2.0.

Meanwhile, the Pentagon has been awarding large contracts to AI vendors such as Palantir, which is headquartered in Silicon Valley, and Anduril.

Major DOD programs are generally open to industry competition under federal acquisition rules.

The press release from Warren’s office stated that the new bill will “ensure that DoD’s new contracts protect competition in the AI and cloud computing markets, instead of giving an unfair advantage to a few big players.”

It’s currently unclear if the legislation will have enough political support to be enacted. It would have to pass both the Senate and the House and be signed into law by the president before the end of the current term of Congress. Next month, a new Congress and administration will enter office.