# Federal Agencies Expand AI Procurement

Federal agencies have significantly increased their investments in artificial intelligence (AI) procurement, with total obligations reaching **$4.1 billion** from fiscal years 2019 through 2025. The Department of Defense (DoD) leads this spending, accounting for **83% of AI procurement obligations**, reflecting a strong focus on defense-related AI capabilities. While many small businesses secure contracts by number, a small group of large vendors such as Palantir and Scale AI receive the majority of funding. Current AI contract governance provisions vary widely across agencies, indicating opportunities for procurement professionals to advocate for clearer performance expectations and accountability frameworks.

- **Why this matters:** Procurement professionals should recognize the growing federal AI market, especially within DoD, and the competitive landscape favoring established large vendors alongside numerous small business contract wins.
- Agencies are encouraged to strengthen contract governance to ensure AI investments translate into measurable public value, creating demand for vendors with strong compliance and accountability capabilities.
- Contractors and industry stakeholders can leverage this trend by aligning proposals with agency priorities on performance metrics and governance standards.
- The concentration of AI procurement in federal hubs such as Washington, D.C., underscores the importance of understanding federal acquisition regulations and interagency collaboration in AI projects.

**Jurisdictions:** federal
**Industries:** Defense & Military, Information Technology
**Topics:** Artificial Intelligence, Regulatory Compliance
**Published:** September 23, 2026

### Government Entities
- Department of Defense (DoD)
- Department of Health and Human Services (HHS)
- Department of Homeland Security (DHS)
- General Services Administration (GSA)
- National Aeronautics and Space Administration (NASA)

### Vendors
- Palantir (awardee)
- Scale AI (awardee)

### Sources
- ["As federal AI spending grows, agencies should use procurement to translate that investment into quantifiable public value creation, complete with clear expectations for performance and accountability," argues @csisfutures experts.

Read more: https://t.co/UhDzn0XejG](https://x.com/CSIS/status/2102820358462062848) - twitter-fed-procurement