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 requires competitive bidding for each purchase, keeps exclusive government rights to all government data, and pushes for systems that work across multiple cloud providers unless that would clearly harm national security. The process must lower barriers for small businesses, use open and modular designs, and support security, interoperability, and auditability throughout . It also tells the Pentagon to update contract rules so that government data given to vendors can’t be used or shared without permission—including a ban on using that data to train or improve a company’s commercial products unless the Defense Department explicitly allows it. Violations can bring fines or even contract termination; limited exemptions are possible only for national security and must be documented .

The bill targets large vendors as well as smaller firms. A “covered provider” includes any cloud, data infrastructure, or AI model company with at least $50 million in Defense contracts in any of the past five years . It also requires a public annual report starting in 2027 on competition, innovation, barriers to entry, and market power in the defense AI space, including a list of any exemptions granted and recommendations for next steps. The report must be posted online and available upon request at no cost .

• Who is affected: Defense Department buyers; cloud, data, and AI model providers (especially those with $50M+ in recent DoD contracts); small businesses seeking to compete .
• What changes: Competitive procurement required; multi-cloud favored; government keeps exclusive rights to government data; strict limits on vendor use of government data; penalties for violations; narrow, documented national-security exemptions .
• When: Annual public reports begin January 15, 2027, and continue for four years .