Protest hits GSA’s $1-a-year agreements with OpenAI and Anthropic

The General Services Administration has reaped a lot of attention from the enterprise agreements they have signed with artificial intelligence providers like OpenAI, Anthropic and Google.

GSA’s arrangements with OpenAI and Anthropic set a price of $1-a-year per agency for access to their flagship AI products. The pact with Google announced today (Thursday) sets the price at 47 cents for a year for access to Gemini.

Each of these agreements are part of OneGov, GSA’s initiative for centralized software buys.

On the surface, these agreements seem to be worthy of applause. But Nicolas Chaillan, CEO of Ask Sage and a former Air Force chief software officer, believes they are not when going below the surface.

Ask Sage helps organizations navigate different layers of the AI ecosystem.

The company filed a pair of protests on Friday at the Government Accountability Office that object to the agreements GSA signed with OpenAI and Anthropic.

Chaillan claims those agreements do not meet federal security requirements, violate commercial item pricing requirements, circumvent competition requirements, are inconsistent with the OneGov strategy and will lead to vendor lock-in.

“The federal government has never done contracts like this before and for good reason,” he told Washington Technology. “For one thing, these are one-year deals with no clear understanding of year two, three, four or five.”

Chaillan also alleges the agreements violate the Federal Acquisition Regulation portions that govern pricing terms and require the government to pay commercial prices for commercial products. The pricing needs to be based on an established catalog or market prices.

“Obviously, the government has the right to negotiate volume discounts, but I don’t know how these got past legal reviews at GSA,” he said.

According to Chaillan, the products being offered on these deals are commercial versions that have neither passed security requirements for the Defense Department nor gone through the FedRAMP process.

In its protest, Ask Sage says the ChatGPT Enterprise service that is part of OneGov operates on OpenAI’s public cloud infrastructure without federal security authorizations.

OpenAI is not listed on the FedRAMP marketplace, but said in January it is working toward FedRAMP Moderate and High accreditations.

“Without FedRAMP authorization, agencies cannot conduct proper risk assessments or ensure adequate security controls are in place,” according to the protest filing.

Ask Sage claims the Open AI and Anthropic offerings covered under the OneGov agreements do not meet International Traffic in Arms Regulations requirements.

“This limitation effectively excludes the Department of Defense and numerous other agencies from utilizing the service for their mission-critical AI requirements,” according to the protest.

The products in question also do not comply with requirements for handling controlled unclassified information and that “further restricts the service’s utility across the federal enterprise, as agencies cannot process CUI through non-compliant systems without violating federal information security regulations,” the protest states.

Another key aspect of Ask Sage’s protest centers on GSA’s OneGov strategy, which prioritizes direct agreements with original equipment manufacturers.

GSA did not sign the contracts directly with OpenAI and Anthropic, but with the reseller Carahsoft.

“By channeling this significant offering through a large business reseller rather than directly with the OEM, GSA has failed to comply with its own strategic initiatives,” Ask Sage says in its protest.

Chaillan said that while OpenAI and Anthropic are giving access to their user interfaces for the $1 cost, agencies will have to pay the regular fees to access the secure AI models.

“GSA is misleading government agencies and government employees by making it look like it is the federal version of the models,” Chaillan said.

“What this looks like is a press release meant to pat the administration and the GSA team on the back for allegedly negotiating a great deal for the government,” he added. “But it can’t be used in any meaningful way.”

GSA officials did not respond to a request for comment on the protests.

Ask Sage filed its protests on Aug. 15 and Government Accountability Office decisions are due Nov. 24.