While the team typically focuses on the federal contracting and acquisition landscape, this article shifts perspective to examine the market through the lens of contractor use. Drawing from Deltek’s annual GovCon Clarity Study, the report provides insights from U.S. and Canadian government contractors and A&E firms across key technology areas and acquisition trends.

Adoption Doubles in a Single Year

Artificial intelligence adoption is rapidly accelerating across the federal contracting community, with new survey data showing widespread integration of AI into core business development and operational functions. The percentage of government contractors reporting using AI in some capacity doubled in percentage over last year’s 45% in the 2025 report. Moreover, 92% of respondents reported using Generative AI in the latest findings.

Contractor AI applications span several applications for industry, including IT and cybersecurity operations, risk management, policy compliance, cost analysis and customer service, among others.

Interestingly, last week I wrote on the increasing use of AI by federal agencies within the source selection process. Findings from the report reveal the heightened use of AI for proposal development among contractors as well. In response to a survey question of how AI is being used across a range of business functions, nearly 44% of respondents reported currently using AI for proposal development purposes, while 40% plan to use AI in proposals in the future. This suggests that AI adoption will continue expanding across all stages of the acquisition lifecycle.

Concerns Across the Contractor Spectrum

While AI offers a wide range of benefits for contractors, it also presents notable challenges. Data privacy and security risks top the list of concerns, followed by issues such as auditing AI outputs, ethical considerations, limited resources, unclear return on investment, and a lack of clear federal guidance.

Beyond data privacy and security risks, many of the remaining challenges point to contractor concerns on loss of transparency and control when relying on AI. As the report notes, “For many firms, the challenge isn’t whether to adopt AI, but how to integrate it responsibly into existing operations. Organizations that develop AI governance alongside adoption are able to scale operations more efficiently and with greater confidence.”

In terms of business development, nearly 95% of contractors reported significant concerns with AI use in that area, with the risks of hallucinated or incorrect outputs posing challenges to accuracy and reliability.

Contractors See Real Returns as AI Takes Hold

Nearly all respondents (97%) identified at least one benefit of AI in business development. Top benefits include reduced time to draft, improved ability to identify viable opportunities, and enhanced proposal quality. Contractors are focused on those business development applications of AI that will enhance speed and competitiveness. According to the report, 30% of respondents reported a significant or transformational impact to business development from using AI.

Aside from business development, contractors expect AI to have the greatest impact in areas such as IT and security, as well as finance and financial compliance. In IT and security, 36% believe AI will deliver a return on investment by reducing security incident response times. In finance and financial compliance, 44% of respondents expect AI to decrease manual accounting and reconciliation efforts.

As AI becomes embedded across the contractor ecosystem, the focus is shifting from whether to adopt the technology to how to implement it responsibly and effectively. While concerns around data security, accuracy, and governance remain top of mind, the clear gains in efficiency, competitiveness and decision-making are driving continued investment. With momentum in areas like proposal development, IT security, and financial compliance, AI is poised to play a central role in how contractors compete and deliver in the federal marketplace.

For more insights from industry respondents, download and read Deltek’s 2026 GovCon Clarity report for free here.