Artificial Intelligence (AI) continues to emerge as a transformative technology with the potential to reshape federal operations and mission delivery. The White House, federal agencies, and Congress are advancing policies, strategies, and legislation to guide the governance, acquisition, security, and responsible use of AI across the government. Deltek projects that federal spending on AI and AI-related technologies will grow from $2.8B in FY 2026 to $3.9B in FY 2029, representing a 28% increase over the four-year period.

The transition of AI from experimentation to deployment is accelerating as agencies confront workforce constraints, shrinking budgets, compressed timelines, and complex operating environments. However, differences in AI maturity persist across the federal landscape. Agencies that establish strong governance frameworks, improve data readiness, and invest in workforce skills development will be best positioned to implement AI technologies.

Agentic AI and cybersecurity are expected to play an increasingly influential role across the federal government. AI-powered assistants will help automate routine and repetitive tasks, summarize large volumes of information, enhance analytical capabilities, and support more informed decision-making. At the same time, AI is transforming the cybersecurity landscape, serving as both a defensive tool and a weapon against adversaries. Federal agencies must leverage AI to strengthen threat detection, identify vulnerabilities, and accelerate remediation efforts, while remaining vigilant against increasingly sophisticated AI-enabled cyber threats.

Key Findings

• Federal AI Expansion. Increasing AI adoption is a common priority across federal agencies, although progress remains varied based on organizational maturity. Agencies with robust data environments, strong governance frameworks, and an AI-ready workforce are best positioned to succeed in an evolving AI landscape.
• Concept to Implementation. Federal agencies are moving beyond AI experimentation and toward scaled AI deployment, integrating AI capabilities into both core mission operations and enterprise functions.
• Congressional Attention. Artificial intelligence continues to be an active area of legislative attention, reflected in the large volume of AI-focused legislation introduced during 2026.
• AI Enabling Technologies. Federal agencies’ rapid adoption of AI is driving increased investment in supporting technologies, including cloud infrastructure, data management, compute resources, storage, and network capacities.
• Agentic AI and Cybersecurity. Agentic AI and AI in cyber operations are expected to be key areas of technological advancement at federal agencies. The growing role of AI in cybersecurity is driving federal demand for solutions that enhance cyber resilience while addressing the risks posed by increasingly sophisticated AI-enabled threats.
• Defense, Intelligence and Civilian Agency Applications. Defense agencies continue advancing AI capabilities for warfighter support, while civilian agencies focus on productivity, customer experience, and fraud prevention. Agentic AI adoption is expected to expand across the intelligence and national security communities to enable advanced analysis, decision support, and task automation.
• Concentrated Spending Patterns. AI spending remains concentrated, with 97% of prime contract spending in the top 10 federal departments.
• Evolution of AI Opportunities. While AI was once typically acquired as part of broader IT efforts, agencies are increasingly procuring AI capabilities as standalone requirements.
• AI in Acquisition. As agencies embed AI throughout the acquisition lifecycle, federal procurement is both a driver and a beneficiary of AI adoption.

Critical Insight for Vendors

Deltek's Federal Artificial Intelligence (AI) Market, 2026-2029 report analyzes the policies, trends and drivers contributing to federal AI acquisitions.

The report provides:

• Understanding of the policies and legislation propelling federal AI adoption.
• Analysis of the technologies and initiatives enabling federal AI use.
• Assessment of historical spending patterns and contracting trends.
• Contractor-addressable market forecasts across the federal sector and top agencies for the next four years.
• Identification of major AI programs and initiatives at agencies.  
• Recommendations to help contractors navigate a rapidly changing federal AI technology environment.

Deltek's Federal Artificial Intelligence (AI) Market, 2026-2028 report is delivered in PowerPoint® format, including a PowerPoint® Executive Briefing, and an Excel® data workbook.