The AI contracting community is abuzz with the March 6th GSA release of a proposed clause in Schedule solicitations and contracts for AI capabilities. GSAR 552.239.7001 titled, “Basic Safeguarding of Artificial Intelligence Systems,” represents a comprehensive set of provisions in AI systems proposed for federal contracting to date. If approved, the clause will be incorporated into the GSA Multiple Award Schedule (MAS) of supplies and services.

GSA’s original intent of incorporating the clause into the upcoming MAS Refresh 31, which is set for the March/April period, will now be considered for MAS Refresh 32 upon request by industry for an extension of the comment period of the proposed requirements. GSA made the announcement last week on its Interact site.

Here is a summary of the elements within the clause:

• The federal government retains full ownership of all government data and custom developments, (defined as “any design of or modifications, customizations, configurations, or enhancements to AI Systems…”) granting contractors only limited rights to use that data and only during contract performance.
• Any intellectual property rights contractors acquire in government data or derivatives are automatically transferred to the government, while contractors retain ownership of underlying AI systems and base models.
• The government receives an irrevocable, royalty free, non-exclusive license to use contracted AI systems for any lawful government purpose, independent of contractor policies.
• Government data may not be used to train, improve, or enhance AI models outside the specific scope and duration authorized by the contract.
• Contractors must implement strict safeguards for government data, including secure deletion of all government data and custom developments at contract completion.
• All custom AI developments must be dedicated exclusively to the government and treated as confidential government information.
• The government retains ownership of all feedback provided on AI systems or custom developments.
• Contractors may only deploy “American AI Systems,” defined as AI systems developed and produced entirely in the United States, with non-U.S. manufactured, developed or controlled components prohibited.
• AI systems must support human oversight, intervention, and traceability to ensure accountability and control.
• Contractors must report AI-related incidents within 72 hours, including filing a CISA report and preserving all relevant logs and artifacts.
• The clause requires extensive documentation, including compliance evidence, bias testing methodologies, and disclosures of known system limitations.
• Contractors must ensure use of open and standard data formats and APIs for all data outputs, custom development and AI systems.
• The government maintains broad evaluation and remediation authority, including the ability to conduct automated assessments at any time using its own benchmarks to ensure unbiased, trustworthiness and safe outputs.

Taken together, the requirements in the clause heavily favor the federal government in AI systems acquisitions under the GSA Schedule. Some may even argue that parts of the proposed requirements stem from the federal government’s current disagreement with AI provider, Anthropic. Nonetheless, the clause generates a set of barriers and compliance costs for prime contractors, regardless of size.

Ironically, this somewhat negates the Trump Administration’s usual stance to empower U.S. AI innovation, most recently emphasized in the President’s National AI Legislative Framework.

Breaking it Down for Small Businesses

The impact of the proposed AI clause on federal contractors is written about extensively by legal experts such as Holland & Knight, Venable LLP, and Sheppard, Mullin, Richter & Hampton LLP.  However, when viewed through a small business lens, approval of the draft clause in its current form could have the most significant impact on that segment of the federal contracting community.  These include:

• Restricted vendor options to U.S.-only AI components and manufacturing, potentially driving cost for parts.
• Required compliance documentation and the requirement to disclose past performance of AI systems within 30 days of award may place a constraint on compliance staff.
• Government strict retention of data ownership and custom developments may prevent small businesses relying on that data to train, improve and evolve their AI tools and solutions.
• Small businesses using a commercial AI platform with frequent vendor updates may find it difficult to keep up with change management notifications requirements within the clause.

Given the implications of the proposed clause, industry stakeholders have unsurprisingly requested an extension of the comment period. Accordingly, GSA has extended the public comment deadline from March 20, 2026, to April 3, 2026.