This is part of an ongoing series of Covington blogs on the implementation of Executive Order No. 14110 on the “Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence” (the “AI EO”), issued by President Biden on October 30, 2023.  The first blog summarized the AI EO’s key provisions and related Office of Management and Budget (“OMB”) guidance, and subsequent blogs described the actions taken by various government agencies to implement the AI EO from November 2023 through August 2024.  This blog describes key actions taken to implement the AI EO during September 2024.  It also describes related developments in California related to the goals and concepts set out by the AI EO.  We will discuss developments during September 2024 to implement President Biden’s 2021 Executive Order on Cybersecurity in a separate post. 

Bureau of Industry and Security Proposes Updated Technical Thresholds for Dual-Use Foundation Model Reporting Requirements

On September 9, 2024, the Department of Commerce’s Bureau of Industry and Security (“BIS”) published a Notice of Proposed Rulemaking (“NPRM”) on updated technical thresholds that would trigger reporting requirements for AI models and computing clusters under the AI EO.  Under Section 4.2(a)(i) of the AI EO, certain developers of dual-use foundation models must regularly provide the Federal government with information related to (1) training, developing, or producing dual-use foundation models, (2) the ownership and possession of model weights and physical and cybersecurity measures to protect those models weights, and (3) the results of AI red-team testing based on upcoming AI red-teaming guidance from the U.S. AI Safety Institute’s (“U.S. AISI”) and associated safety measures.  Covington previously covered U.S. AISI’s draft guidance here.

BIS’s proposed rule, which implements Section 4.2(b)’s requirement that the Department of Commerce define and regularly update the technical thresholds for reporting, would require compliance with the AI EO’s reporting requirements for developers of any “dual-use” AI model trained using a quantity of computing power greater than 1026 floating-point operations per second (“FLOPS”).  This threshold is the same as the interim threshold in Section 4.2(b)(i) of the AI EO.  With this said, the proposed rule modifies the AI EO’s initial threshold for large scale “computing clusters” by removing its physical co-location requirement.  Large-scale computing clusters subject to the reporting requirement are instead defined under the proposed rule as “clusters having a set of machines transitively connected by networking of over 300 Gbit/s and having a theoretical maximum performance greater than 10^20 computational operations (e.g., integer or floating-point operations) per second (OP/s) for Al training, without sparsity.”

GAO Releases Report on Agency Implementation of AI EO Management and Talent Requirements

On September 9, 2024, the U.S. Government Accountability Office (“GAO”) released a report detailing its evaluation of the extent to which several agencies have implemented selected AI management and talent requirements from in accordance with the AI EO.  GAO found that each agency had fully implemented the relevant requirements.  The GAO report determined, among other things, that the:

  • Executive Office of the President organized the AI and Technology Talent Task Force and established the White House AI Council. 
  • Office of Management and Budget has convened and chaired the Chief AI Officer council, issued AI guidance and use case instructions to agencies, and established initial plans for AI talent recruitment.
  • Office of Personnel Management has reviewed hiring and workplace flexibility, considered excepted service appointments, coordinated AI hiring action across federal agencies, and issued related pay guidance.
  • Office of Science and Technology Policy and OMB have identified priority mission areas for increasing AI talent, established the types of talent that are the highest priority to recruit and develop, and identified accelerated hiring pathways.
  • General Services Administration finalized and issued its framework to enable consistent prioritization of authorization of critical emerging AI technologies in a secure cloud environment via the FedRAMP (Federal Risk Authorization Management Program) process.  GSA’s prioritization framework included chat interfaces, code-generation and debugging tools, and prompt-based image generators.

Inaugural Meeting of International Network of AI Safety Institutes to be Hosted in San Francisco

On September 18, 2024, the U.S. Commerce and State Departments announced plans to host the inaugural meeting of the International Network of AI Safety Institutes.  The Network, announced in May by U.S. Secretary of Commerce Gina Raimondo, is intended to bring together technical AI experts from each member’s AI safety institute in order to begin advancing global collaboration and knowledge sharing on AI safety.

The meeting will take place on November 20-21, 2024, in San Francisco.  The initial members of the International Network of AI Safety Institutes are Australia, Canada, the European Union, France, Japan, Kenya, South Korea, Singapore, the United Kingdom, and the United States.

Agencies Publish Plans to Achieve Compliance with OMB AI Guidance

Under Section 3(a)(iii) of OMB Memorandum M-24-10 on “Advancing Governance, Innovation, and Risk Management for Agency Use of Artificial Intelligence” (“OMB AI Memo”), agencies were required to submit and publicly post plans to achieve consistency with the OMB AI Memo’s AI use case inventory requirements, minimum risk management practices, and other agency obligations by September 24, 2024.  As of October 4, by our count, at least 31 federal agencies have published AI compliance plans, including GSA, SEC, EEOC, NASA, and the Departments of Defense, State, Homeland Security, Commerce, and Treasury. 

Although these plans generally contain similar objectives, agencies differ in their plans to assess the risks that may arise from agency AI use cases.  For example, the Department of Treasury’s AI Compliance Plan notes that, while “not required by M-24-10, Treasury will be using additional resources to identify and manage potential risks posed by AI use,” including audit recommendations and potential impacts from supply chain risks in AI software and system environments.

White House Hosts Task Force on AI Datacenter Infrastructure

On September 12, 2024, the White House hosted a roundtable with representatives from AI companies, datacenter operators, and utility companies to discuss strategies to meet clean energy, permitting, and workforce requirements for developing large-scale AI datacenters and power infrastructure needed for advanced AI operations.  After the roundtable, the White House announced that:

  • The White House is launching a new Task Force on AI Datacenter Infrastructure to coordinate policy across government.
  • The Administration will scale up technical assistance to federal, state, and local authorities handling datacenter permitting.
  • The Department of Energy (DOE) is creating an AI datacenter engagement team to leverage programs to support AI data center development.

According to the White House, these actions will enable the construction of more AI datacenters in the U.S.

California Governor Vetoes AI Safety Legislation Modeled on AI EO

On September 29, California Governor Gavin Newsom (D) vetoed the Safe and Secure Innovation for Frontier AI Models Act (SB 1047), an AI safety bill that would have imposed testing, reporting, and security requirements on developers of large AI models.  SB 1047 would have implemented computational thresholds for “covered models” that would have mirrored the AI EO’s thresholds for dual-use foundation model reporting, i.e., AI models trained using more than 1026 FLOPS of computing power (in addition to being valued at more than $100 million).  

Notably, Newsom cited SB 1047’s thresholds as the reason for rejecting the legislation.  In his veto message, Newsom noted that, while “[AI] safety protocols must be adopted,” SB 1047’s cost and computational thresholds “applies stringent standards to even the most basic functions–so long as a large system deploys it,” rather than regulating based on “the system’s actual risks.”  Newsom added that SB 1047 could “give the public a false sense of security about controlling this fast-moving technology” while “[s]maller, specialized models” could be “equally or even more dangerous than the models targeted by SB 1047.”  Covington previously covered Governor Newsom’s veto of SB 1047 here.

Photo of Robert Huffman Robert Huffman

Bob Huffman counsels government contractors on emerging technology issues, including artificial intelligence (AI), cybersecurity, and software supply chain security, that are currently affecting federal and state procurement. His areas of expertise include the Department of Defense (DOD) and other agency acquisition regulations governing…

Bob Huffman counsels government contractors on emerging technology issues, including artificial intelligence (AI), cybersecurity, and software supply chain security, that are currently affecting federal and state procurement. His areas of expertise include the Department of Defense (DOD) and other agency acquisition regulations governing information security and the reporting of cyber incidents, the Cybersecurity Maturity Model Certification (CMMC) program, the requirements for secure software development self-attestations and bills of materials (SBOMs) emanating from the May 2021 Executive Order on Cybersecurity, and the various requirements for responsible AI procurement, safety, and testing currently being implemented under the October 2023 AI Executive Order. 

Bob also represents contractors in False Claims Act (FCA) litigation and investigations involving cybersecurity and other technology compliance issues, as well more traditional government contracting costs, quality, and regulatory compliance issues. These investigations include significant parallel civil/criminal proceedings growing out of the Department of Justice’s Cyber Fraud Initiative. They also include investigations resulting from False Claims Act qui tam lawsuits and other enforcement proceedings. Bob has represented clients in over a dozen FCA qui tam suits.

Bob also regularly counsels clients on government contracting supply chain compliance issues, including those arising under the Buy American Act/Trade Agreements Act and Section 889 of the FY2019 National Defense Authorization Act. In addition, Bob advises government contractors on rules relating to IP, including government patent rights, technical data rights, rights in computer software, and the rules applicable to IP in the acquisition of commercial products, services, and software. He focuses this aspect of his practice on the overlap of these traditional government contracts IP rules with the IP issues associated with the acquisition of AI services and the data needed to train the large learning models on which those services are based. 

Bob is ranked by Chambers USA for his work in government contracts and he writes extensively in the areas of procurement-related AI, cybersecurity, software security, and supply chain regulation. He also teaches a course at Georgetown Law School that focuses on the technology, supply chain, and national security issues associated with energy and climate change.

Photo of Susan B. Cassidy Susan B. Cassidy

Susan is co-chair of the firm’s Aerospace and Defense Industry Group and is a partner in the firm’s Government Contracts and Cybersecurity Practice Groups. She previously served as in-house counsel for two major defense contractors and advises a broad range of government contractors…

Susan is co-chair of the firm’s Aerospace and Defense Industry Group and is a partner in the firm’s Government Contracts and Cybersecurity Practice Groups. She previously served as in-house counsel for two major defense contractors and advises a broad range of government contractors on compliance with FAR and DFARS requirements, with a special expertise in supply chain, cybersecurity and FedRAMP requirements. She has an active investigations practice and advises contractors when faced with cyber incidents involving government information, as well as representing contractors facing allegations of cyber fraud under the False Claims Act. Susan relies on her expertise and experience with the Defense Department and the Intelligence Community to help her clients navigate the complex regulatory intersection of cybersecurity, national security, and government contracts. She is Chambers rated in both Government Contracts and Government Contracts Cybersecurity. In 2023, Chambers USA quoted sources stating that “Susan’s in-house experience coupled with her deep understanding of the regulatory requirements is the perfect balance to navigate legal and commercial matters.”

Her clients range from new entrants into the federal procurement market to well established defense contractors and she provides compliance advices across a broad spectrum of procurement issues. Susan consistently remains at the forefront of legislative and regulatory changes in the procurement area, and in 2018, the National Law Review selected her as a “Go-to Thought Leader” on the topic of Cybersecurity for Government Contractors.

In her work with global, national, and start-up contractors, Susan advises companies on all aspects of government supply chain issues including:

  • Government cybersecurity requirements, including the Cybersecurity Maturity Model Certification (CMMC), DFARS 7012, and NIST SP 800-171 requirements,
  • Evolving sourcing issues such as Section 889, counterfeit part requirements, Section 5949 and limitations on sourcing from China
  • Federal Acquisition Security Council (FASC) regulations and product exclusions,
  • Controlled unclassified information (CUI) obligations, and
  • M&A government cybersecurity due diligence.

Susan has an active internal investigations practice that assists clients when allegations of non-compliance arise with procurement requirements, such as in the following areas:

  • Procurement fraud and FAR mandatory disclosure requirements,
  • Cyber incidents and data spills involving sensitive government information,
  • Allegations of violations of national security requirements, and
  • Compliance with MIL-SPEC requirements, the Qualified Products List, and other sourcing obligations.

In addition to her counseling and investigatory practice, Susan has considerable litigation experience and has represented clients in bid protests, prime-subcontractor disputes, Administrative Procedure Act cases, and product liability litigation before federal courts, state courts, and administrative agencies.

Susan is a former Public Contract Law Procurement Division Co-Chair, former Co-Chair and current Vice-Chair of the ABA PCL Cybersecurity, Privacy and Emerging Technology Committee.

Prior to joining Covington, Susan served as in-house senior counsel at Northrop Grumman Corporation and Motorola Incorporated.

Photo of Ashden Fein Ashden Fein

Ashden Fein is a vice chair of the firm’s global Cybersecurity practice. He advises clients on cybersecurity and national security matters, including crisis management and incident response, risk management and governance, government and internal investigations, and regulatory compliance.

For cybersecurity matters, Ashden counsels clients…

Ashden Fein is a vice chair of the firm’s global Cybersecurity practice. He advises clients on cybersecurity and national security matters, including crisis management and incident response, risk management and governance, government and internal investigations, and regulatory compliance.

For cybersecurity matters, Ashden counsels clients on preparing for and responding to cyber-based attacks, assessing security controls and practices for the protection of data and systems, developing and implementing cybersecurity risk management and governance programs, and complying with federal and state regulatory requirements. Ashden frequently supports clients as the lead investigator and crisis manager for global cyber and data security incidents, including data breaches involving personal data, advanced persistent threats targeting intellectual property across industries, state-sponsored theft of sensitive U.S. government information, extortion and ransomware, and destructive attacks.

Additionally, Ashden assists clients from across industries with leading internal investigations and responding to government inquiries related to the U.S. national security and insider risks. He also advises aerospace, defense, and intelligence contractors on security compliance under U.S. national security laws and regulations including, among others, the National Industrial Security Program (NISPOM), U.S. government cybersecurity regulations, FedRAMP, and requirements related to supply chain security.

Before joining Covington, Ashden served on active duty in the U.S. Army as a Military Intelligence officer and prosecutor specializing in cybercrime and national security investigations and prosecutions — to include serving as the lead trial lawyer in the prosecution of Private Chelsea (Bradley) Manning for the unlawful disclosure of classified information to Wikileaks.

Ashden currently serves as a Judge Advocate in the
U.S. Army Reserve.

Photo of Nooree Lee Nooree Lee

Nooree advises government contractors and financial investors regarding the regulatory aspects of corporate transactions and restructurings. His experience includes preparing businesses for sale, negotiating deal documents, coordinating large-scale diligence processes, and navigating pre- and post-closing regulatory approvals and integration. He has advised on…

Nooree advises government contractors and financial investors regarding the regulatory aspects of corporate transactions and restructurings. His experience includes preparing businesses for sale, negotiating deal documents, coordinating large-scale diligence processes, and navigating pre- and post-closing regulatory approvals and integration. He has advised on 35+ M&A deals involving government contractors totaling over $30 billion in combined value. This includes Veritas Capital’s acquisition of Cubic Corp. for $2.8 billion; the acquisition of Perspecta Inc. by Veritas Capital portfolio company Peraton for $7.1 billion; and Cameco Corporation’s strategic partnership with Brookfield Renewable Partners to acquire Westinghouse Electric Company for $7.8+ billion.

Nooree also counsels clients navigating the Foreign Military Sales (FMS) program and Foreign Military Financing (FMF) arrangements. Nooree has advised both U.S. and ex-U.S. companies in connection with defense sales to numerous foreign defense ministries, including those of Australia, Israel, Singapore, South Korea, and Taiwan.

Over the past several years, Nooree’s practice has expanded to include advising on the intersection of government procurement and artificial intelligence. Nooree counsels clients on the negotiation of AI-focused procurement and non-procurement agreements with the U.S. government and the rollout of procurement regulations and policy stemming from the Executive Order on Safe, Secure, and Trustworthy Artificial Intelligence.

Nooree maintains an active pro bono practice focusing on appeals of denied industrial security clearance applications and public housing and housing discrimination matters. In addition to his work within the firm, Nooree is an active member of the American Bar Association’s Section of Public Contract Law and has served on the Section Council and the Section’s Diversity Committee. He also served as the firm’s Fellow for the Leadership Council on Legal Diversity program in 2023.

Photo of Ryan Burnette Ryan Burnette

Ryan Burnette is a government contracts and technology-focused lawyer that advises on federal contracting compliance requirements and on government and internal investigations that stem from these obligations. Ryan has particular experience with defense and intelligence contracting, as well as with cybersecurity, supply chain…

Ryan Burnette is a government contracts and technology-focused lawyer that advises on federal contracting compliance requirements and on government and internal investigations that stem from these obligations. Ryan has particular experience with defense and intelligence contracting, as well as with cybersecurity, supply chain, artificial intelligence, and software development requirements.

Ryan also advises on Federal Acquisition Regulation (FAR) and Defense Federal Acquisition Regulation Supplement (DFARS) compliance, public policy matters, agency disputes, and government cost accounting, drawing on his prior experience in providing overall direction for the federal contracting system to offer insight on the practical implications of regulations. He has assisted industry clients with the resolution of complex civil and criminal investigations by the Department of Justice, and he regularly speaks and writes on government contracts, cybersecurity, national security, and emerging technology topics.

Ryan is especially experienced with:

  • Government cybersecurity standards, including the Federal Risk and Authorization Management Program (FedRAMP); DFARS 252.204-7012, DFARS 252.204-7020, and other agency cybersecurity requirements; National Institute of Standards and Technology (NIST) publications, such as NIST SP 800-171; and the Cybersecurity Maturity Model Certification (CMMC) program.
  • Software and artificial intelligence (AI) requirements, including federal secure software development frameworks and software security attestations; software bill of materials requirements; and current and forthcoming AI data disclosure, validation, and configuration requirements, including unique requirements that are applicable to the use of large language models (LLMs) and dual use foundation models.
  • Supply chain requirements, including Section 889 of the FY19 National Defense Authorization Act; restrictions on covered semiconductors and printed circuit boards; Information and Communications Technology and Services (ICTS) restrictions; and federal exclusionary authorities, such as matters relating to the Federal Acquisition Security Council (FASC).
  • Information handling, marking, and dissemination requirements, including those relating to Covered Defense Information (CDI) and Controlled Unclassified Information (CUI).
  • Federal Cost Accounting Standards and FAR Part 31 allocation and reimbursement requirements.

Prior to joining Covington, Ryan served in the Office of Federal Procurement Policy in the Executive Office of the President, where he focused on the development and implementation of government-wide contracting regulations and administrative actions affecting more than $400 billion dollars’ worth of goods and services each year.  While in government, Ryan helped develop several contracting-related Executive Orders, and worked with White House and agency officials on regulatory and policy matters affecting contractor disclosure and agency responsibility determinations, labor and employment issues, IT contracting, commercial item acquisitions, performance contracting, schedule contracting and interagency acquisitions, competition requirements, and suspension and debarment, among others.  Additionally, Ryan was selected to serve on a core team that led reform of security processes affecting federal background investigations for cleared federal employees and contractors in the wake of significant issues affecting the program.  These efforts resulted in the establishment of a semi-autonomous U.S. Government agency to conduct and manage background investigations.

Photo of August Gweon August Gweon

August Gweon counsels national and multinational companies on data privacy, cybersecurity, antitrust, and technology policy issues, including issues related to artificial intelligence and other emerging technologies. August leverages his experiences in AI and technology policy to help clients understand complex technology developments, risks…

August Gweon counsels national and multinational companies on data privacy, cybersecurity, antitrust, and technology policy issues, including issues related to artificial intelligence and other emerging technologies. August leverages his experiences in AI and technology policy to help clients understand complex technology developments, risks, and policy trends.

August regularly provides advice to clients on privacy and competition frameworks and AI regulations, with an increasing focus on U.S. state AI legislative developments and trends related to synthetic content, automated decision-making, and generative AI. He also assists clients in assessing federal and state privacy regulations like the California Privacy Rights Act, responding to government inquiries and investigations, and engaging in public policy discussions and rulemaking processes.

Photo of Catherine Wettach Catherine Wettach

Catherine Wettach is an associate in the firm’s Washington, DC office. She is a member of the Government Contracts and White Collar Defense and Investigation Practice Groups.