A business bidding on a fire and emergency services analysis for the City of Monterey did what a careful one should. Before submitting, it asked for permission to use artificial intelligence (AI).
Here's what it sent, trimmed and with the firm's name removed:
Section VI.A.7 requires the proposer to warrant that services and deliverables will be produced without the use of artificial intelligence systems absent the prior written consent of the City. [The firm] respectfully requests that consent ... for the following limited use:
Purpose. [The firm] may use commercially available generative AI tools as an aid to its consultants for document drafting and editing, formatting, summarizing source documents, and organizing and checking quantitative analysis...
Human oversight. Every analysis, finding, recommendation, and deliverable is directed, reviewed, verified, and approved by the named [firm] consultants, who remain fully responsible for its accuracy and content...
Data protection. [The firm] will not enter City confidential information ... or other non-public data into any AI tool that retains or trains on user data...
Will the City provide written consent for this use? ... If the City does not consent, [the firm] will perform the work without AI tools.
The city's full answer:
The City will review proposed AI usage requests for approval prior to the start of work
That's neither a yes nor a no. It moves the decision to some point before work starts, and the firm still has to price the job.
Monterey has company. We searched the 21,666 questions businesses put to government entities on 656 Requests for Proposal (RFPs) since June, and reviewed the answers to those that mentioned AI. On 29 of those RFPs, across California, Oregon, and Washington, businesses asked some version of the same question: can we use AI when working on this contract? One got a plain yes, from the City of Bellingham, on disclosed design tools. None got a flat no. On 21, the answer was to disclose it or get approval first.
We only counted RFPs where someone asked, so this can't tell you how common these rules are. It does show how they work today, and why they differ.
Government entities are still writing the rules
AI tools have been adopted faster than many government entities have written rules for them. San Mateo County told businesses on one contract that it "does not yet have an AI usage policy." The City of Palm Desert "is currently developing a formal policy." The City of Seattle said, "governance is in development." Others are further along: Sonoma County points businesses to a written policy, and California has generative AI contract provisions dated January 2025.
Cloud computing went through a similar stretch. The federal government made "Cloud First" its policy at the end of 2010, then created a shared security program, FedRAMP, a year later. A similar program for state and local governments, now called GovRAMP, didn't launch until 2021.
AI has no shared rulebook yet. If it follows the cloud computing's path, common rules may come, but probably not in time for your next few bids. For now, the rules are being written and rewritten, and they'll keep changing. That leaves any business bidding today with three risks.
You may have more to disclose than you think
You might not think of the AI features in your everyday software as using AI. A government entity might. On an active architectural and engineering contract, the California Lottery says its rule covers rendering, drafting, and transcription, "even if the features are embedded in common design software." The Lottery's own terms warn: "Failure to report GenAI use in connection with this RFQ may result in disqualification." After award, the Lottery can treat undisclosed use as a material breach.
Not using AI may not get you out of the paperwork, either. The Lottery told one firm that a business that won't use AI still has to submit its AI form. San Francisco Superior Court requires a separate PDF titled "AI Use," even if its only content is one sentence saying you don't use any.
You may have to set your price before you know what's allowed
That's the Monterey problem, and Monterey isn't alone. The Oregon Arts Commission decides what's allowed during contract negotiation, and later changes "will require a contract amendment." Sonoma County reviews AI uses after the contract is executed.
If your price assumes AI will save hours and the approval doesn't come, or comes with limits, that price may no longer work. Clearer answers are easier to plan around. Oregon's Department of Early Learning and Care accepted AI for analysis and drafting if it's reviewed for accuracy, and "prefers that AI is used as an editor versus content creation."
What you learned on your last bid may not apply
The rules differ from one government entity to the next. Asked whether AI use belongs in the proposal, the Oregon Arts Commission said, "Please disclose planned use of generative AI in the Proposal." Sonoma County said inclusion "is not required."
They can change after you've won. On one contract, San Mateo County said it has no AI policy yet, but "one may be established during the contract." And they can sit where you wouldn't think to look. On one Sound Transit contract, a firm found them in the insurance section: professional liability coverage that doesn't bar AI-related claims. Sound Transit called it "a general policy requirement."
Start by writing it down
You can't remove these risks, but you can stop being surprised by them. Start with one page.
List your tools. Include AI features built into software you already use. When a form asks, your answer is already written.
Record what each bid requires. Search the RFP, the attachments, and the sample contract for "AI," "artificial intelligence," and "GenAI." Then note where the language is and what it asks for. If there's a form, use it.
Price the job so it still works if the answer is no. Then build any approval time into your schedule.
If the rules are unclear, name the tool and the task. "Can we use AI?" invites "refer to the RFP." Ask before the question deadline. One firm asked El Dorado County:
Is the use of AI-assisted development tools (GitHub Copilot, Claude Code and similar) permitted in configuring and delivering the solution, provided no County data is entered into them?
The question names the tools, the task, and the condition, which gave the County something specific to answer. It said yes, as long as no County data goes in and the firm meets the County's security requirements.
Send any AI insurance language to your broker before you bid.
The rules will keep changing, so keep your list current and read the AI terms on every bid, even for a government entity you've worked with before.
On RFPGo.ai, the questions businesses asked and the answers they got sit under What others asked on each RFP. Two from this review are still active: the California Lottery's architectural and engineering services, due Nov 9, and San Mateo County's quality assurance testing, due Nov 13. Explore more active RFPs.
How we counted: We searched questions and answers released from June 25 through November 3, 2026. We counted an RFP when a business asked about its own use of AI, not AI features in software a government entity is buying. Nearly all answers focus on delivering the work; only El Dorado County's directly addresses writing the proposal. This isn't legal advice, so follow each RFP's own terms.
