Examining AI-Related Programs in the FY 2025 Defense RDT&E and Procurement Budget

Last month, the White House hosted an event featuring seven applications of AI in government services. The areas included drug development, education, weather forecasting, clean energy, sustainable materials, transportation, and government services. The showcase aligns with the push seen in last year’s AI EO and the finalized OMB Memo in AI innovation.

Though last month’s White House showcase did not feature a defense-related AI application, it is no secret policymakers and federal leaders commonly want to advance AI R&D in each part of the government. Nonetheless, Deltek identified decreasing Defense R&D defense budgets in FY 2025 for AI/ML. Each year, Deltek’s Federal Market Analysis team looks through the released Department of Defense (DOD) Procurement and Research, Development, Testing and Evaluation (RDT&E) budget request and identifies, via keywords, programs related to certain technology sectors such as cloud computing, big data, AI/ML, cybersecurity and more.

The latest budget reveals DOD’s collective request to spend $20.9B in FY 2025 on programs related to artificial intelligence and machine learning. The FY 2025 request is merely $25M over FY 2024, and $2.4B less than the FY 2023 enacted level.

Breaking these numbers further down by budget activity, $19.8B of the FY 2025 request is from the RDT&E account, followed by $917M for Other Procurement, $202M for Procurement and $13M for the Defense Health Program account.

Moreover, the breakdown of the budget by DOD component reveals a decrease across all DOD sectors over the three-year period:

A note about the investments identified as AI/ML in the budget – the numbers shown are for programs that use AI/ML in part or in total. For example, a given investment may contain proposed spending on AI/ML AND other technologies. Therefore, totals reflect the entire investment as available data does not allow Deltek to further parse proposed spending for each technology.

Examining the data more carefully to account for the drops, there is no sign that the number of AI/ML-related programs is lower. In fact, the number of investments increases by FY 2025. Additionally, a look at the top ten programs by planned investment shows a healthy increase in many of the programs from FY 2023 to 2025:

However, each defense component contains one to two investments that faced large drops in budget in the three-year period, driving the overall decrease in totals. At the Army, investment programs with the largest decrease include the Army Missile Defense Systems Integration and the Robotics Development programs. At the Air Force is the Aerospace Vehicles Technologies investment, and at Navy the Automated Test and Re-Test and Warfighter Protection Advanced Technology programs. Defense-wide agencies saw a large decrease in OSD’s General Support to OUSD (Intelligence and Security) investment and MDA’s Advanced Research program.

Again, since AI/ML may only make up a small component of the investment identified, these totals may not mean DOD faces a decrease in overall dollars and priority in AI/ML R&D. In fact, many of the programs with large decreases in the three-year period seem to contain other technologies outside of AI/ML based on the title of the programs. Unfortunately, due to the level of granularity and detail of the reported data, there is no way to know which technologies within the program face the increasing/decreasing portion of the investment.

So, what should contractors take away from this? First, these sums do not represent the full AI/ML budget for any specific defense sector in FY 2025. However, the RDT&E and Procurement budget can also provide information on new and existing DOD R&D work that may lead to a competitive contract. Hence, it is definitely worth taking a look at these programs closely to see what DOD has planned in RDT&E.