Defense AI/ML Spending with Other Transaction Agreements, FY 2019 – 2021

Published: July 13, 2022

Federal Market AnalysisArtificial Intelligence/Machine LearningDefense & AerospaceInformation TechnologyOther Transaction Agreements (OTAs)Spending Trends

Reliance on OTAs for AI/ML programs increased 29% from FY 2019 to 2021 and totaled $546M in the three-year period.

As the federal AI marketplace continues to expand, lead agencies in AI R&D are turning to unconventional procurement methods to help adopt and scale the technology. One of these methods, Other Transaction Agreement (OTAs), allows select agencies to bypass certain acquisition regulations to quickly identify, acquire and operationalize critical and innovative technologies. Increased use of OTAs enables agencies to connect with both traditional and nontraditional vendors and make more room for small businesses to compete.

Each year, Deltek’s Federal Market Analysis team identifies OTA spending in several technology areas such as big data, cloud, blockchain and AI/ML. Analysis of FY 2019 to 2021 OTA obligations reveal increased spending for AI/ML-related programs in the three-year time frame.

Total AI-Related OTA Spending, FY 2019-2021

Observations:

  • DOD led agency OTA spending in the three-year period and totaled $366M, followed by Army ($129M), Air Force ($26M) and Navy ($24).
  • DHS reported $1M in OTA AI spending from FY 2019 to 2021, primarily for programs out of its Science and Technology Directorate.
  • COVID-19-related AI/ML OTA investments totaled $13M in FY 2020 and 2021, with all of the obligations centered at the Air Force Research Laboratory.
  • Projects with highest AI OTA spending from FY 2019-2021:
    • DOD's Avatar Phase 1 ($136M)
    • Air Force's Science and Technology for Autonomous Teammates Air Force Vanguard Program ($37M)
    • Air Force's AI Tools ($29M)
  • Companies that led OTA AI/ML spending in the three-year period include, BAE Systems ($70M), Raytheon ($66M), Lockheed Martin ($40M) and Leidos ($37M).

OTA federal spending trends typically depend on the lifecycle of pilot programs and prototypes, however, continued OTA investment in AI/ML programs is expected as agencies explore the transformative technology. With the formation of DOD’s new Chief Digital and AI Office (CDAO), the defense sector is expected to increase use of OTA on AI initiatives, particularly as the office seeks to create an end-to-end enterprise for DOD data, analytics and AI.   

For additional insight to AI use and expansion in the defense sector, refer to Deltek's Federal Artificial Intelligence Landscape, 2023 report.