A sweeping new memorandum from the Office of Management and Budget (OMB) directs U.S. federal agencies to aggressively expand their use of artificial intelligence while establishing strict governance and risk management protocols.

Why This Matters:

This is the most comprehensive federal policy to date on the use of artificial intelligence (AI) in government operations. It aims to fast-track AI adoption across agencies by removing bureaucratic barriers, ensuring responsible innovation, and reinforcing public trust. It builds replaces the prior OMB guidance (M-24-10) with a more forceful emphasis on outcomes, accountability, and risk mitigation. It also aligns with the recent Executive Order 14179, Removing Barriers to American Leadership in Artificial Intelligence.

Key strategic reasons this matters:

• Pro-AI and pro-innovation: This is about accelerating the smart use of AI vice previous approaches that were focused on control first, but still includes smart enterprise safeguards and trust controls
• National AI Strategy in Action: This memo implements President Trump’s 2025 Executive Order calling for U.S. leadership in responsible AI development and deployment.
• Accountability and Trust: AI must be used transparently, with risk management proportional to its potential societal impact.
• AI as a Force Multiplier: The policy emphasizes AI’s role in improving public services, cutting costs, and enhancing mission delivery across the federal enterprise.
• Government-Wide Standardization: Introduces consistency for governance, compliance, and data sharing across agencies.

Key Points:

• Three Strategic Pillars: Innovation, governance, and public trust drive the policy framework​
• Chief AI Officers Required: All agencies must designate a Chief AI Officer (CAIO) within 60 days to lead AI governance and innovation efforts​
• AI Use Case Inventories: Agencies must publicly disclose their AI use cases annually, including “high-impact” systems affecting public safety, rights, or critical infrastructure​
• Minimum Risk Practices: Agencies using high-impact AI must implement specific safeguards including pre-deployment testing, independent reviews, human oversight, and public feedback channels​
• New Governance Structures: Each agency must create or designate an AI governance board chaired at the Deputy Secretary level and participate in an interagency Chief AI Officer Council​
• AI Strategy Required: CFO Act agencies must develop and publicly post an AI strategy within 180 days, focused on reducing barriers and responsibly scaling AI adoption​
• Promotes Reuse and Open Source: Agencies are directed to reuse and share AI models, code, and data assets—favoring open-source and domestically developed tools whenever possible​
• Procurement Guidelines Strengthened: New standards push for AI acquisition strategies that retain government data rights, enable interoperability, and avoid vendor lock-in​
• Generative AI Policies Coming: Agencies must develop tailored policies for the use of generative AI technologies like large language models within 270 days​

What’s Next:

Agencies have aggressive timelines ranging from 60 to 365 days to implement various components of the directive. The focus now turns to execution—developing AI strategies, appointing CAIOs, and instituting both internal and external accountability measures.

Recommendations:

• If you are in a firm serving federal missions, this memo provides insights that can help you align your offerings with new procurement requirements, especially around transparency, security, and open-source standards.

For the full directive, see: OMB Memorandum M-25-21: Accelerating Federal Use of AI through Innovation, Governance, and Public Trust

Related Resources:

• Understanding AGI: A Framework for Our AI Future
• National Academies Report on Artificial Intelligence and the Future of Work: Key Takeaways
• Accelerating AGI: Why we should all want it sooner vice later
• Decontrol AI to Accelerate Solutions
• Regulations on Government Use of AI
• Is the US Government Over-Regulating Artificial Intelligence?