Your organization enforces a custom organization policy that disables the use of Compute Engine VM...

The most secure and compliant way to manage a policy exception in Google Cloud is through the resource hierarchy using Organization Policies.

Restrictive Baseline: The policy should be applied at the Organization level to enforce the baseline (no external IPs) across the entire company, ensuring minimum policy drift.

Exception and Least Privilege: The regulated unit is placed in its own Folder (isolation). The restrictive policy is then overridden or enforced with an exclusion at this Folder level to grant the exception only where needed. This ensures the exception is applied to the smallest scope necessary, adhering to least privilege.

Extracts:

"Organization Policy is inherited down the resource hierarchy... You can override inherited policies by enforcing a different policy at a lower level." (Source 2.1)

"To implement an exception, the most secure approach is to set the restrictive policy at the highest possible level (e.g., Organization) and override or enforce an exclusion at the lowest possible level (e.g., Project or Folder) where the exception is required." (Source 2.2)

By applying the restriction broadly and granting the exception narrowly at the folder level, you maintain central control and minimize the blast radius of the exception.