Federal teams spent the last year testing AI applications, measuring return on investment, and separating hype from reality. They identified where AI delivers results and where it falls short, gaining the experience and resources needed to drive real transformation.  

In the year ahead, we will see this shift from piloting applications to implementing AI solutions that fundamentally reshape how the government serves its citizens. Federal agencies will enter 2026 knowing what works and ready to act, positioning AI to deliver its most significant impact yet on government priorities. 

Three transformations will define this transition by breaking through decades-old modernization barriers, moving from reactive to proactive cybersecurity, and democratizing software development beyond traditional IT departments. Each build on the others to create compounding returns across government operations. 

AI-driven federal modernization at scale  

Modernization has long been a challenging government priority. With AI, agencies can finally achieve it at scale. 

Outdated IT systems and code cost the government hundreds of millions of dollars annually to maintain and operate. Still, the processes required to retire them, including code refactoring, are time-consuming and traditionally have been unable to scale. This is where AI can make long-held modernization goals attainable. 

AI-powered refactoring tools translate between programming generations, automatically converting decades-old COBOL and Fortran systems into modern, maintainable code while preserving critical business logic. These tools also identify security vulnerabilities, ensure compliance, and generate documentation throughout the modernization process. 

Legacy system updates will transform from multi-year projects to months-long sprints. Agencies that adopt AI-driven modernization will complete system updates 10 times faster than traditional approaches, freeing up resources for innovation rather than maintenance. 

Shifting from reactive to proactive security

While we can’t predict the next major cybersecurity incident, we do have the tools to change our approach to security. In the coming year, AI-powered defense systems will become one of the most effective ways to stay ahead of breaches. 

Continuous threat monitoring and automated remediation using AI will predict and prevent attacks before they occur, rather than responding after the damage is done. 

Sophisticated adversaries now have access to AI tools that can exploit vulnerabilities faster than human security teams can patch them. Without AI-powered proactive measures, agencies will struggle to keep pace with well-resourced bad actors. 

Agencies that successfully implement proactive AI security models will achieve measurably lower breach rates and faster threat response times, establishing a new benchmark for government cybersecurity excellence. 

Making everyone a developer

AI is democratizing software development across government, finally realizing the decade-old prediction that ‘everyone can be a developer.’  

This transformation extends software creation across all government roles. Mission specialists, policy experts and administrators can now build applications and automate workflows without traditional programming skills. This exponentially increases government development capacity as subject matter experts translate their domain knowledge into functional software solutions.  

 Human ingenuity drives creative problem-solving while AI handles technical implementation. This shift is accelerating rapidly, with 89% of executives expecting agentic AI to become the industry standard for software development within three years. 

AI-powered development platforms automatically maintain security and compliance standards, enabling agencies to build development capacity across all departments rather than just within IT. 

The compounding impact of AI transformation

Agencies that prioritize human-AI collaboration across modernization, cybersecurity and development will build high-performing teams that combine technical excellence with mission expertise. The combination creates capabilities that neither humans nor AI could achieve independently. 

Success requires viewing these three transformations as interconnected investments that advance together. Each capability strengthens and accelerates the others to deliver secure software faster while maintaining the highest standards of governance. 

The agencies that move first on all three fronts will set the standard for the rest of the government. More importantly, they’ll prove that transformation timelines can be measured in months, not years. 

Bob Stevens is vice president of Americas and public sector at GitLab. 

The post The year AI moves from pilots to practice: Three predictions for government in 2026 first appeared on Federal News Network.