Protecting AI and Cloud Competition in Defense Act of 2025

Summary

Requires the Department of Defense to design AI-related cloud, data infrastructure, and foundation-model procurements to promote competition, security, resiliency, and protection of government data rights. It defines who counts as a large cloud provider and what qualifies as a foundation model, orders updates to defense procurement rules to stop unauthorized disclosure or use (including using government data to train commercial models), allows penalties for violations, permits limited national-security exemptions, and mandates regular reports to Congress (with a public releasable version) on competition, market concentration, barriers to entry, and exemptions granted.

• Requires DoD procurements for AI-related cloud, data infrastructure, and foundation models to promote competition, security, resiliency, and government data rights.
• Defines 'covered provider' (≥ $50M in contracts in any of prior five fiscal years) and 'foundation model' (≥ 1,000,000,000 parameters or high-risk capabilities).
• Mandates DFARS updates to prevent unauthorized disclosure or use of government data, including banning use of that data to train commercial models unless allowed.
• Authorizes penalties such as fines and contract termination for violations of government data protections.
• Allows component acquisition executives to grant national-security exemptions, subject to notification requirements.
• Requires an initial DoD report to Congress by Jan 15, 2027 and annual reports for four years on competition, barriers to entry, market concentration, and exemptions, with a public releasable version.
• Focuses on changing procurement rules and contractor obligations rather than providing new spending or tax provisions.
• Aims to lower market concentration and open opportunities for smaller providers by structuring procurements to promote competition.