GSA’s Proposed "American AI" Clause (GSAR 552.239-7001): Deferred Again in MAS Refresh 32 as Industry Pushback Continues
The General Services Administration (GSA) has once again deferred its highly controversial and prescriptive AI procurement clause, GSAR 552.239-7001 (Basic Safeguarding of Artificial Intelligence Systems). Initially slated for inclusion in Multiple Award Schedule (MAS) Refresh 31 in April 2026, the clause was pushed to Refresh 32 following intense pushback from industry associations. In June 2026, GSA's official Advanced Notice for MAS Refresh 32 confirmed that the clause has been dropped from the upcoming mass modification, keeping the federal AI procurement landscape in a state of regulatory limbo.
The Core Controversy: "American AI" and IP Demands
First introduced in March 2026, the draft clause GSAR 552.239-7001 represents the federal government's first major attempt to establish a unified AI acquisition regulation. However, the draft drew immediate and severe criticism from federal contractors, legal experts, and industry trade groups due to its highly restrictive requirements:
- The "American AI" Provision: The clause would require contractors to guarantee that any AI systems used or delivered under the contract are designed, developed, and trained within the United States or designated "trusted" countries. Industry groups argued this would effectively ban many of the world's leading commercial AI products, which rely on global supply chains, international talent, and distributed cloud infrastructure.
- Sweeping IP and Data Ownership Clauses: The draft clause includes provisions that would grant the federal government expansive rights to the underlying data, custom developments, and training datasets of AI systems. Sourcing experts warned that these terms would force commercial AI vendors to choose between walking away from the federal market or risking their proprietary intellectual property.
The June 2026 Postponement (MAS Refresh 32)
Following the close of the extended public comment period in April 2026, GSA spent weeks analyzing the feedback. Rather than forcing a heavily contested clause into the June 2026 release of MAS Refresh 32, GSA ultimately chose to drop the proposed AI clause from the update.
This second deferral highlights the profound difficulty of balancing federal AI safety and sovereign control with the commercial realities of the rapidly evolving AI market. For B2B software founders selling into the federal space, this delay provides a temporary reprieve but underscores that rigid compliance standards around data sovereignty, model training origins, and IP ownership are on the horizon.