As the adoption of artificial intelligence (AI) becomes increasingly widespread, governments around the world are taking a leading role in setting standards for its responsible use. In particular, the U.S. Federal Office of Management and Budget (OMB) has issued guidance aimed at ensuring that AI procurement adheres to principles of trustworthiness, accountability, and transparency. Many governments have recognized this leadership and are implementing their own guidelines, ensuring that AI tools meet these high standards within public sector agencies and across the broader supply chain. These guidelines are setting a new bar for how AI is integrated responsibly, and the ripple effect is likely to impact private sector vendors and the market as a whole. 

The OMB’s Latest AI Procurement Guidance  

The OMB’s guidance, M-24-18, represents a milestone in how governments approach AI acquisition. Released in October 2024, this memorandum is designed to help federal agencies procure AI technologies that are trustworthy, ethical, and aligned with core public values. The guidance emphasizes several key principles for AI procurement: 

• Transparency: Agencies must ensure that AI tools are explainable and that decisions made by these tools can be understood by humans. 

• Fairness and Non-Discrimination: AI systems should be free from biases that could lead to unequal treatment or outcomes. 

• Accountability: Agencies must be able to audit AI systems to ensure that they function as intended and can be held accountable for their actions. 

• Security and Privacy: AI tools must protect the privacy of individuals and be secure against malicious attacks. 

These principles are part of a broader government effort to ensure that AI technologies are deployed responsibly, protecting citizens while allowing innovation to flourish. As Kiran Ahuja, Director of the U.S. Office of Personnel Management, noted, “The guidance provided by the OMB sets a strong foundation for how the federal government approaches AI, ensuring that these technologies serve the public good and uphold democratic values.” 

The Global Response: Adoption of AI Procurement Guidelines 

Governments outside the U.S. have recognized the importance of setting high standards for AI procurement and have looked to the OMB’s guidance as a model. Countries in Europe, Asia, and beyond are following suit, with many developing their own guidelines that reflect similar priorities of transparency, fairness, and accountability. 

Key examples include: 

• The European Union: Through its proposed Artificial Intelligence Act, the EU has sought to establish a comprehensive framework for regulating AI across the continent. The legislation shares common goals with the OMB guidance, particularly in ensuring transparency and minimizing bias in AI systems. Member states are encouraged to adopt procurement standards that align with these principles. 

• Canada: Canada’s Directive on Automated Decision-Making requires government agencies to evaluate the impact of AI systems on individuals and communities before they are implemented. This is particularly important for ensuring that AI tools do not exacerbate existing social inequalities or introduce new biases. 

• Australia: The Australian government has released an AI Ethics Framework, which, while voluntary, encourages public sector agencies to follow ethical guidelines when procuring AI systems. This framework draws heavily on international standards and best practices, including those set by the OMB. 

These governments are uniquely positioned to lead by example, setting a higher bar for responsible AI development and deployment. Because public sector agencies do not face the same competitive pressures as private companies, they are better able to prioritize ethical considerations over cost-cutting or time-to-market concerns. 

The Trickling Down Effect: Vendors and the AI Supply Chain 

One of the most significant aspects of the OMB’s AI procurement guidance is its impact beyond the public sector. Vendors who supply AI technologies to government agencies are required to ensure that their products meet these high ethical standards. This responsibility does not end with the direct supplier; it extends throughout the entire AI supply chain. 

Subcontractors and sub-processors must also adhere to these standards, creating a trickle-down effect that encourages more responsible AI development at every level. This compliance requirement ensures that: 

• Vendors are proactive in assessing the ethical implications of their AI tools. 

• Subcontractors are held to the same standards as primary vendors, ensuring consistency across the AI supply chain. 

• Third-party AI tools integrated into government systems are trustworthy, secure, and aligned with the principles of transparency and accountability. 

This approach creates a market-driven incentive for AI vendors to prioritize ethical AI development. By requiring their vendors and partners to adhere to these standards, government agencies are driving a broader shift toward responsible AI in the private sector. As Raylene Yung, Director of Technology Modernization Fund at the U.S. General Services Administration, pointed out, “By setting clear and high standards for AI procurement, we are encouraging innovation that is not only technically sophisticated but also aligned with our values as a society.” 

Complementing Legislative Efforts 

The OMB’s AI procurement guidelines are not meant to stand alone. They are part of a broader strategy to ensure that AI technologies are developed and deployed responsibly. While regulatory efforts such as the EU’s AI Act or the U.S. National AI Initiative play a crucial role in shaping the legal framework around AI, procurement guidelines offer a more immediate, practical approach. 

Through procurement, governments can drive change quickly by signaling to the market what types of AI systems are acceptable and which are not. As Dan Chenok, Executive Director of the IBM Center for The Business of Government, has remarked, “Procurement can be one of the most powerful tools that governments have at their disposal for promoting responsible AI development. By choosing to work only with vendors who meet these high standards, governments can push the entire AI industry toward greater accountability.” 

In this way, procurement guidelines complement legislative efforts by providing a more flexible, market-driven approach to responsible AI. Rather than waiting for legislation to catch up with technology, governments can take immediate action to ensure that the AI tools they use are safe, ethical, and trustworthy. 

A New Era of Responsible AI Procurement 

Governments, led by the U.S. Federal Office of Management and Budget, are setting a new standard for AI procurement that emphasizes trustworthiness, fairness, and accountability. By adopting these guidelines, governments around the world are not only ensuring that their own AI systems are held to high ethical standards, but they are also driving change throughout the broader AI supply chain. Vendors and subcontractors are now required to adhere to these standards, creating a ripple effect that is transforming the AI market. 

This approach represents a significant shift toward a more responsible, values-driven AI ecosystem. As governments continue to refine their procurement guidelines and as legislative efforts around AI regulation move forward, the impact of these standards will only grow. In time, responsible AI procurement may become the norm across both the public and private sectors, ushering in a new era of innovation that is as ethical as it is advanced.