Federal Government Spending on AI is Accelerating 

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The adoption of AI by the US federal government is accelerating, with defense agencies leading the way and services suppliers benefitting. (Credit: Getty Images) 

By AI Trends Staff  

AI is a major priority for US federal agencies and its adoption is accelerating, in part due to urgency following the COVID pandemic but also rooted in the long-term IT and R&D strategic plans.   

This is a key finding of the Federal Artificial Intelligence Landscape, 2022 report from the Federal Market Analysis team of Deltek, a global provider of enterprise software with a project focus. The report examines the major considerations around budget, policy, acquisition and workforce issues that influence federal AI priorities.   

Christine Fritsch, principal research analyst, federal market analysis, Deltek

“That research has found that as government mission requirements grow, federal agencies are seeking ways to maximize the use of the vast data sets they collect and store,” stated Christine Fritsch, principal research analyst, federal market analysis at Deltek, author of the account on Deltek’s report in Federal Times.  

The report describes how AI and machine learning technologies are enabling agencies to improve the effectiveness of missions, stretch workforce capacity, combat waste, fraud, and abuse, and drive operating efficiencies. The maturation of AI technology, a growing list of AI use cases and applications, and the growth in commercial solutions, have all contributed to pushing AI beyond the R&D work at scientific agencies such as NASA and the Department of Energy to a broader pool of agencies, the report found. 

“Barriers to the broader deployment of AI technology still remain, such as questions about transparency, ethics, and responsible AI,” Fritsch stated. “But trust and understanding in the technology is steadily beginning to increase.”  

She cited three key findings of the report: 

Federal AI spending is accelerating. Federal spending on AI rose to nearly $1 billion in FY 2020, up 50% from FY 2018, making it one of the fastest growing emerging technology investment areas. 

The presence of small businesses is growing. Although federal customers spend more with large businesses, AI-related small business obligations grew 177% from $129 million in FY 2018 to $357 million in FY 2020.  

Legislation and policy are driving a focus on AI. Legislation and executive branch policies are key drivers of federal AI investment. Recognizing the need for US competitiveness in AI, Congress, the White House and agencies have all developed directives to encourage the implementation of AI and machine learning capabilities.  

Elsewhere, the Deltek report found:   

  • The Department of Defense is spending nearly twice what the civilian sector is spending on AI. Fiscal 2022 requested funding for AI/ML-related R&D, Test and Evaluation (RDT&E) for Defense Agencies, Navy, Air Force and Army are $1.4B, $900M, $880M and $844M respectively. 
  • Total AI contract obligations in fiscal 2020 were $919 million across the federal government, a 50% increase over fiscal 2018 spending of $613 million.  
  • Purchasing of AI-related services reached $1.9 billion, increasing nearly 70% from 2018 to 2020.    
  • Lockheed Martin was the top AI government contractor from 2018 to 2020, with $343 million in business. Second was ECS Federal with $151 million; followed by KBR with $103 million; Alion Science & Technology with $90 million; Jacobs Engineering with $64 million; Palantir with $62 million; SAIC with $51 million; Accenture with $28 million; IBM with $17 million; and Network Management Resource with $17 million.  
  • The total AI contract obligations by the top 10 contractors fell from 56% in fiscal 2018 to 36% in fiscal 2020, indicating increased competition from small- and medium-sized companies.  

National AI Initiative Act Underway  

Also providing a push is the National AI Initiative Act, passed in 2020, which provides a framework for coordinating AI research and policy across federal departments. The bill creates the National AI Initiative Office and a network of institutes at the National Science Foundation, and departments of Energy and Commerce to encourage focused AI research related to mission-driven applications.  

The Biden Administration in June announced with the NSF and White House Office of Science and Technology Policy (OSTP) the formation of the national AI Research Resource Task Force, as reported in a press release from the NSF. The task force will serve as a federal advisory committee to help develop an implementation roadmap for the National AI Research Resource, a shared research infrastructure providing AI researchers and students across all scientific disciplines with access to computational resources, high-quality data, educational tools and user support.  

Eric Lander, Science Advisor to the President and OSTP Director

“America’s economic prosperity hinges on foundational investments in our technological leadership,” stated Eric Lander, Science Advisor to the President and OSTP Director. “The National AI Research Resource will expand access to the resources and tools that fuel AI research and development, opening opportunities for bright minds from across America to pursue the next breakthroughs in science and technology.”  

Beyond the federal, and also state governments, local governments are also extending their use of AI. A study in The Journal of Open Innovation examined the use of digital technologies to meet the challenges of urban environments.  

“AI is an integral part of a smart city structure that provides the required efficiencies and automation ability in the delivery of local infrastructures, services and amenities,” stated the report, whose lead author is Tan Yigitcanlar, professor of urban studies and planning, Queensland University of Technology, Australia.  

The most common AI applications in local governments were found to be: AI-based knowledge management software; AI process automation systems; chatbots/virtual agents; predictive analytics and data visualization; identity analytics; cognitive robotics and autonomous systems; recommendation systems; intelligent digital assistants; speech analytics, and cognitive security analytics and threat intelligence.  

The report authors found promising examples of responsible practices around AI, including: AI-driven transportation analytics and decision-making systems to address urban traffic problems; and autonomous shuttle buses currently being used as first- and last-mile solutions to increase public transport patronage, and/or to provide transport service to disadvantaged populations in cities.  

“Today, AI is not only becoming an integral part of local government operations and services, but is also impacting and shaping the future of our cities and societies,” stated the report authors.   

Read the source articles and information in the Federal Artificial Intelligence Landscape 2022 report from the Federal Market Analysis team of Deltek; in Federal Times, in a press release from the National Science Foundation, and in The Journal of Open Innovation.