Protecting AI and Cloud Competition in Defense Act of 2025

This bill sets rules for how the Defense Department buys cloud services, data systems, and AI models. It pushes for real competition on every purchase, makes “multi‑cloud” the default when possible (using more than one cloud provider), and keeps the government’s exclusive access and use rights to its own data. It also tells the Pentagon to update its purchasing rules so that government data given to vendors can’t be used to train or improve a company’s commercial AI products without explicit permission. Vendors must keep government data properly protected and separate on their systems, and breaking these rules could lead to fines or losing the contract. Limited exemptions are allowed only for national security needs, with written notice and justification.

The bill also requires a public annual report on competition and market power in the AI space, starting in 2027 and running for four years. The report must list any exemptions granted and include recommendations for action, and a public version has to be posted online and shared on request at no cost.

Key points

• Who is affected: The Defense Department and large providers of cloud, data infrastructure, and foundation AI models that have done at least $50 million in DoD contracts in any of the past five years.
• What changes: Competitive awards for each purchase; preference for multi‑cloud; government keeps exclusive rights to its data; stricter rules on vendor use of DoD data; penalties for violations; limited, justified national‑security exemptions .
• When: Public reporting begins by January 15, 2027, then annually for four years.