AI technologies hold the promise of transforming industries such as national security, agriculture, transportation, healthcare, as well as improve overall government operations. With this promise in mind, the federal government is in the midst of implementing policies, legislation and standards to accelerate AI implementation. While transparency, ethics and responsible AI remain barriers to deployment, trust and understanding in the technology is slowly increasing, as depicted by a growth in AI investments across federal agencies. Deltek’s analysis of AI spending in the last three full fiscal years (FY 2018-2020) reflects a strong development in the public sector marketplace, largely driven by increases in federal programs, policies, leadership and budgets for AI.

Source: Deltek, FPDS

General Observations:

• Total AI contract obligations increased 50% from FY 2018 - 2020 and in fact, AI obligations have grown year-over-year since FY 2016.
• Services outpaced AI products, driven by R&D spending which represented 54% of total obligations form FY 2018 - 2020, denoting an early stage presence in the federal market.
• Though key players in the AI space continue to dominate the market, (i.e. DOD, NASA, MILDEPS, DOT, DHS and HHS), smaller agencies such as USAID, PBGC and OPM reported initial AI spending in the FY 2018 - 2020 period.
• DOD increased AI spending by 58% in the three-year period, with $824M in total obligations.
• Percentage of total AI spending by top ten contractors diminished from FY 2018 to 2020, indicating increased and diversified competition in the federal AI space.
• AI small business obligations grew 177% from FY 2018 to 2020, and totaled $720M in the three years.

Top Obligations by Dollar Value

A sampling of top AI obligations from FY 2018 – 2020 helps to shed light on federal AI requirements:

• $52M to Lockheed Martin at the Missile Defense Agency for an autonomous acquisition and precision tracking in a Homeland Defense Radar
• $44M to Palantir at DOD to test an end-to-end approach to AI for Defense use cases
• $43M to Lockheed Martin at the Federal Aviation Administration towards the ERAM En Route Automation Modernization initiative
• $40M to ECS Federal at DOD towards an R&D effort to develop prototypical state-of-the-art AI hardware and software

COVID-Related AI Obligations

Naturally, AI technologies played several roles in federal agency response to the COVID-19 pandemic. From disease modeling and surveillance, to diagnostics and vaccine development and manufacturing, it is safe to say that AI is poised to improve the future of healthcare, biomedicine and biosecurity. Looking at COVID-related obligations, AI totals $33.5M. Spending is concentrated among three departments: DOD, HHS and VA. Obligations include COVID-19 AI Driven Data Analytics and Advanced Visualization software at DOD for $3M. Additionally, the VA spent $4.7M on a Science Logic AI Operations Solutions, and HHS invested $700K on an R&D effort for the rapid deployment of a machine learning software for COVID-19 Severity Predictions.

Stay tuned. Deltek’s upcoming Federal Artificial Intelligence Landscape, 2022 report, set of publish at the end of August, will contain further insight into the spending trends and influencers driving the federal AI market.