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Ever to Conquer: The Relentless Pursuit of Public Sector Innovation

Ever to Conquer: The Relentless Pursuit of Public Sector Innovation

RedLeif's PubSec Newsletter

June 25, 2025

Introduction

Welcome to this edition of Ever to Conquer, where we spotlight the transformative initiatives reshaping America's public sector technology landscape. This week brings groundbreaking developments that are accelerating innovation, strengthening security, and modernizing operations across federal and SLED ecosystems.

This edition highlights:

AI & Government Innovation: OpenAI's landmark $200M Defense Department partnership signals a new era of AI integration
Cybersecurity: CISA enhances threat detection while ransomware attacks intensify across critical infrastructure
Procurement & Partnerships: Revolutionary FAR overhaul promises to streamline federal contracting within 180 days
Data Privacy & Protection: Eight new state privacy laws take effect in 2025, creating complex compliance challenges
Government IT Modernization: Legacy system transformation gains momentum with new strategic frameworks
Public Policy: Congressional priorities shift toward AI regulation and digital transformation initiatives

AI and Government Innovation

OpenAI Secures Historic $200M Defense Contract to Transform Military Operations

OpenAI has launched its first major government partnership through a $200 million pilot program with the U.S. Department of Defense's Chief Digital and Artificial Intelligence Office (CDAO) [1] [2]. The contract focuses on transforming administrative operations, from healthcare delivery for service members to program acquisition data analysis and proactive cyber defense capabilities.

Why It Matters: This partnership represents the largest federal AI investment to date, setting precedent for how agencies can leverage frontier AI technologies for mission-critical operations while maintaining security protocols.

Actionable Insights:

For Buyers: Evaluate your agency's administrative pain points and identify high-impact use cases where AI can reduce manual workloads, following the Defense Department's successful pilot model
For Sellers: Position AI solutions that address specific government workflows like acquisition data analysis, healthcare coordination, and cyber defense automation—emphasize measurable time savings and security enhancements

AI.gov Initiative Reveals Trump Administration's AI Strategy

The Trump administration's AI Action Plan was inadvertently disclosed through an early version of AI.gov, a new federal website aimed to "accelerate government innovation with AI" [3]. The website has an apparent launch date of July 4, 2025, and includes comprehensive frameworks for AI deployment across federal agencies.

Why It Matters: This disclosure provides the first glimpse of the administration's comprehensive AI strategy, emphasizing rapid deployment and commercial-first approaches to AI adoption.

Actionable Insights:

For Buyers: Prepare for accelerated AI procurement processes and begin evaluating commercial AI solutions that align with the forthcoming national framework
For Sellers: Position commercial off-the-shelf AI products that can be rapidly deployed and demonstrate clear value propositions for government use cases

SLED Market Embraces AI Despite Budget Constraints

The SLED IT market, valued at $155 billion for 2025, is experiencing slower 2% growth due to reduced stimulus funding, yet AI adoption is accelerating as agencies seek efficiency gains [5]. High-impact IT services including AI, cybersecurity, and cloud computing are driving sustained investment despite tighter budgets.

Why It Matters: Budget pressures are forcing SLED agencies to prioritize AI solutions that deliver immediate operational improvements and cost savings.

Actionable Insights:

For Buyers: Focus AI investments on solutions that demonstrate clear ROI within 12 months, particularly in areas like permitting, licensing, and citizen services
For Sellers: Develop AI products with flexible pricing models and emphasize cost displacement rather than additional spending

Congressional AI Moratorium Debate Intensifies

Congress is considering a 10-year moratorium on state and local AI laws to prevent fragmented regulations from hindering federal IT modernization efforts [6] [7]. The proposal aims to create unified national frameworks while advancing $500 million in federal IT investments.

Why It Matters: Inconsistent state AI regulations could increase compliance costs and limit innovation, potentially undermining federal agencies' ability to adopt the best commercial AI tools available.

Actionable Insights:

For Buyers: Advocate for standardized AI procurement guidelines that enable consistent evaluation and deployment across jurisdictions
For Sellers: Prepare for potential regulatory standardization by developing AI solutions that meet the most stringent current state requirements

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Cybersecurity

CISA Enhances Threat Detection with New Vulnerability Alerts

The Cybersecurity and Infrastructure Security Agency added multiple new vulnerabilities to its Known Exploited Vulnerabilities Catalog, including critical flaws affecting Apple products and TP-Link routers [8] [9]. These vulnerabilities are being actively exploited by malicious cyber actors and pose significant risks to the federal enterprise.

Why It Matters: The continuous addition of exploited vulnerabilities demonstrates the evolving threat landscape and the need for rapid patch management across government systems.

Actionable Insights:

For Buyers: Implement automated vulnerability scanning and prioritize patching of KEV catalog vulnerabilities within the required timeframes
For Sellers: Develop vulnerability management solutions that integrate with CISA's KEV catalog and provide automated threat intelligence feeds

Linux Security Vulnerabilities Enable Root Access Escalation

Security researchers disclosed two critical Linux vulnerabilities (CVE-2025-6018 and CVE-2025-6019) that can be chained together to allow unprivileged attackers to achieve full root access on targeted systems [10]. Additionally, CISA warned of active exploitation of CVE-2023-0386, a Linux kernel privilege escalation vulnerability.

Why It Matters: Linux systems are widely deployed across government infrastructure, and these vulnerabilities present immediate risks that require urgent patching and mitigation efforts.

Actionable Insights:

For Buyers: Conduct immediate assessments of Linux systems and implement emergency patching procedures for affected systems by the July 8, 2025 deadline
For Sellers: Offer Linux security hardening services and privilege escalation detection capabilities to help agencies protect against these attack vectors

Ransomware Groups Exploit SimpleHelp RMM Software

CISA issued alerts warning that ransomware groups, including DragonForce, are exploiting unpatched versions of SimpleHelp Remote Monitoring and Management software to target utility billing software providers [11]. The attacks follow a broader trend of threat actors leveraging known vulnerabilities to gain access and execute double extortion campaigns.

Why It Matters: Remote management tools are becoming primary attack vectors for ransomware groups, requiring enhanced security measures for all remote access solutions.

Actionable Insights:

For Buyers: Review all remote access tools, implement network segmentation, and establish monitoring for suspicious remote access activities
For Sellers: Develop secure remote access solutions with built-in threat detection and ensure rapid security update capabilities

Oklahoma Bans DeepSeek Due to Security Risks

Governor Stitt banned DeepSeek on all Oklahoma state-owned devices due to security risks, including data collection concerns, regulatory compliance issues, and susceptibility to adversarial manipulation [13]. The decision stems from DeepSeek's extensive data collection stored in China and lack of compliance with state data protection standards.

Why It Matters: State-level AI platform restrictions are creating a complex compliance landscape that affects technology procurement decisions across SLED markets.

Actionable Insights:

For Buyers: Establish approved AI platform lists and implement device-level blocking for prohibited applications
For Sellers: Ensure clear documentation of data handling practices and compliance with emerging state-level security requirements

Procurement and Partnerships

GSA Launches Revolutionary FAR Overhaul Initiative

The General Services Administration is leading a comprehensive Federal Acquisition Regulation overhaul, marking the first-ever comprehensive revision of the FAR [14] [15]. The initiative aims to eliminate unnecessary regulations, focus on commercial solutions, and enhance taxpayer value through streamlined procurement processes within 180 days.

Why It Matters: This represents the most significant procurement reform in decades, potentially transforming how government agencies acquire goods and services while reducing administrative burdens.

Actionable Insights:

For Buyers: Prepare for simplified acquisition processes by reviewing current procurement strategies and identifying opportunities to accelerate commercial solution adoption
For Sellers: Engage in the public comment process, prepare for reduced regulatory complexity, and position commercial off-the-shelf solutions for accelerated government adoption

Executive Order Prioritizes Commercial Solutions in Federal Contracting

Executive Order 14275 establishes government policy to procure commercially available products and services "to the maximum extent practicable" [16]. Contracting officers must now justify non-commercial procurements through detailed market research and price analysis within 60 days.

Why It Matters: The shift toward commercial-first procurement will accelerate acquisition timelines while potentially reducing costs through proven market solutions.

Actionable Insights:

For Buyers: Conduct comprehensive market research to identify commercial alternatives before pursuing custom development
For Sellers: Emphasize commercial product capabilities and demonstrate cost advantages over custom solutions

FAR Council Issues Model Deviation Guidance

The FAR Council is issuing model deviation guidance to kickstart FAR streamlining, with guidance released on a rolling basis by FAR part [17] [18]. The guidance includes mandatory four-year sunset clauses for non-statutory FAR provisions and removes much background context language.

Why It Matters: Agencies are being directed to begin immediate adoption of draft revisions through FAR deviations, allowing new procurement standards to take hold before formal rulemaking concludes.

Actionable Insights:

For Buyers: Monitor agency implementation of FAR deviations and adapt procurement strategies to align with streamlined processes
For Sellers: Stay informed about evolving FAR requirements and prepare solutions that comply with simplified acquisition frameworks

SLED Procurement Modernization Accelerates

The SLED market faces budget constraints from reduced ARPA stimulus funding, yet modernization efforts continue with focus on efficiency and automation [19] [20]. States are establishing government efficiency departments to optimize spending and leverage technology for cost savings.

Why It Matters: Budget pressures are driving SLED agencies to prioritize solutions that deliver immediate efficiency gains and cost reductions.

Actionable Insights:

For Buyers: Focus on technology investments that demonstrate clear operational efficiency and cost displacement benefits
For Sellers: Develop flexible pricing models and emphasize ROI-focused solutions for budget-conscious SLED customers

K-12 Schools Increase Managed Services Adoption

K-12 educational institutions are increasingly turning to Managed Services Providers to address complex IT infrastructure needs and cybersecurity challenges [21]. The trend is driven by lack of internal IT expertise and sophisticated cyber threats targeting educational institutions.

Why It Matters: Educational institutions require specialized technology support that many cannot provide internally, creating substantial opportunities for managed service providers.

Actionable Insights:

For Buyers: Evaluate managed services for IT functions that exceed internal capabilities, particularly cybersecurity and network management
For Sellers: Develop education-specific managed services offerings that address budget constraints and compliance requirements

Data Privacy & Protection

Eight New State Privacy Laws Create Complex Compliance Landscape

2025 marks a pivotal year for data privacy as eight new state laws take effect, including Delaware's Personal Data Privacy Act, Iowa's Consumer Privacy Act, and Maryland's Online Data Privacy Act [22] [23]. These laws expand consumer rights while imposing stricter data governance obligations on organizations operating across state lines.

Why It Matters: The fragmented regulatory landscape creates unprecedented compliance challenges for government contractors and agencies handling multi-state operations.

Actionable Insights:

For Buyers: Conduct comprehensive data inventory assessments, establish data minimization protocols, and require vendors to demonstrate compliance with applicable state privacy laws
For Sellers: Implement privacy-by-design architectures, develop state-specific compliance frameworks, and provide clear data processing transparency for government customers

New Jersey Implements Comprehensive Data Protection Requirements

The New Jersey Data Privacy Act took effect January 15, 2025, establishing enforceable rights for consumers including access, correction, deletion, and opt-out capabilities [24]. The law applies to nonprofit organizations and includes financial data in its definition of sensitive personal information, distinguishing it from other state laws.

Why It Matters: New Jersey's approach includes broader organizational coverage and stricter data handling requirements that may influence other states' privacy legislation.

Actionable Insights:

For Buyers: Use New Jersey's requirements as a baseline for data protection standards across all operations, regardless of geographic scope
For Sellers: Implement comprehensive data subject rights management systems and prepare for similar requirements in other jurisdictions

Maryland's Restrictive Data Privacy Approach

Maryland's Online Data Privacy Act, effective October 1, 2025, takes a "very restrictive approach" to data processing and sales according to legal experts [23]. The law includes some of the most rigorous consumer protection requirements among new state privacy laws.

Why It Matters: Maryland's stringent approach may serve as a model for federal privacy legislation and could influence procurement standards across government agencies.

Actionable Insights:

For Buyers: Prepare for enhanced data protection requirements that exceed current federal standards
For Sellers: Develop data handling capabilities that meet Maryland's strict requirements to ensure compliance with emerging privacy standards

Federal Data Transfer Restrictions Finalized

The U.S. finalized regulations restricting bulk commercial transfer of Americans' personal data to China, Russia, Iran, North Korea, Venezuela, and Cuba [12]. The rule prohibits genetic data transfers and establishes cybersecurity standards for vendor agreements and investment relationships.

Why It Matters: These restrictions fundamentally change how government agencies evaluate vendors and manage data sharing relationships with international partners.

Actionable Insights:

For Buyers: Review all vendor relationships for data transfer risks and implement strict data localization requirements
For Sellers: Ensure complete data sovereignty and provide detailed documentation of data handling practices and international operations

Government IT Modernization

Federal IT Modernization Accelerates with Cloud-First Strategies

Federal agencies spend over $100 billion annually on IT, with 80% dedicated to maintaining legacy systems [26]. The House Subcommittee on Cybersecurity, Information Technology, and Government Innovation highlighted that modernization efforts are gaining momentum through cloud-first strategies and AI integration initiatives.

Why It Matters: Legacy system dependencies create security vulnerabilities and operational inefficiencies that require immediate attention and significant investment.

Actionable Insights:

For Buyers: Prioritize high-impact legacy system replacements, implement phased modernization approaches, and establish clear ROI metrics for modernization investments
For Sellers: Position cloud-native solutions that can integrate with existing systems, provide migration services, and demonstrate measurable cost savings over legacy maintenance

Hybrid Cloud Architecture Emerges as Government Default

IT leaders predict hybrid cloud architecture will become the default approach for government agencies, balancing public cloud agility with on-premises security and compliance requirements [28]. This approach enables rapid service delivery while maintaining data sovereignty and regulatory compliance.

Why It Matters: Hybrid cloud strategies address government-specific requirements while providing the flexibility and scalability needed for modern operations.

Actionable Insights:

For Buyers: Develop hybrid cloud strategies that optimize workload placement, implement consistent security policies across environments, and establish clear data governance frameworks
For Sellers: Create hybrid cloud solutions that provide seamless integration between public and private environments, ensure compliance with government security requirements

State IT Modernization Focuses on Efficiency and AI

States are navigating budget uncertainty through IT modernization initiatives that emphasize AI-powered automation, digital transformation, and efficiency improvements [29]. Twenty-one states have established government efficiency departments to optimize technology spending and operations.

Why It Matters: Budget constraints are driving state governments to prioritize technology solutions that deliver immediate operational benefits and cost savings.

Actionable Insights:

For Buyers: Focus modernization investments on solutions that demonstrate measurable efficiency gains and cost reductions
For Sellers: Develop AI-powered solutions for citizen services, automated workflows, and operational optimization

Executive Orders Drive Federal Agency Transformation

Recent executive orders are reshaping federal procurement, data transfer policies, and agency operations [32]. These orders direct administrative actions, set policy priorities, and address national concerns through coordinated government-wide initiatives.

Why It Matters: Executive orders provide immediate policy direction that can significantly impact agency operations and procurement priorities.

Actionable Insights:

For Buyers: Align agency operations with executive order priorities and prepare for rapid policy implementation requirements
For Sellers: Monitor executive order announcements and adapt solutions to support new policy requirements and operational mandates

Technology Policy Conferences Address Government Challenges

Major policy conferences are focusing on building resilience through collaboration between governance, corporate, and civil society actors [33] [34]. These events address critical challenges including socio-political polarization, cyber insecurity, and the need for evidence-based policy solutions.

Why It Matters: Policy collaboration forums provide opportunities for public and private sector leaders to develop coordinated approaches to complex challenges.

Actionable Insights:

For Buyers: Participate in policy discussions to influence technology standards and procurement frameworks
For Sellers: Engage in policy conferences to understand government priorities and build relationships with key decision makers

Closing

The pace of transformation in America's public sector technology landscape continues to accelerate, driven by unprecedented investments in AI, cybersecurity, and modernization initiatives. From OpenAI's groundbreaking Defense Department partnership to comprehensive FAR reform, the opportunities for meaningful collaboration between government buyers and industry sellers have never been greater.

As we navigate new privacy regulations, cybersecurity mandates, and procurement reforms, success will depend on our collective ability to embrace innovation while maintaining the security and accountability that citizens deserve. The stories in this edition demonstrate that when public and private sector partners work together with shared purpose, we can overcome any challenge and achieve extraordinary results.

Your Voice Matters: Ever to Conquer thrives on your insights and experiences. Share your success stories, challenges, and innovative solutions that are advancing public sector technology. Send your feedback to [email protected].

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