Read between the lines of recent federal policies and a clear message to government contractors begins to emerge: The U.S. government isn’t just prioritizing deployment of artificial intelligence in 2026. It wants the contractors to whom it entrusts its project work to do likewise.

That message, gleaned from memoranda issued by the White House Office of Management and Budget, announcements out of the Defense Department’s Chief Digital and Artificial Intelligence Office, statements from the General Services Administration and other recent actions, suggests that when it comes to evaluating government contractors for potential contract awards, the U.S. government in many instances will favor firms that are more mature in their use and governance of AI.

That’s because, in the big picture, firms that are more AI-mature — that employ it with strong governance and oversight — will tend to use and share data to make better decisions and communicate more effectively, so their projects and business run more efficiently and cost-effectively. That in turn translates into lower risk and better value for the procuring agency. Agencies apparently are recognizing the link between AI and contractor value. Based on recent contracting trends along with my own conversations with contracting executives, firms that can demonstrate they use AI-driven tools and processes in key areas like project management, resource utilization, cost modeling and compliance are winning best-value assessments even when they aren’t the cheapest.

To simply dabble in AI is no longer enough. Federal agencies and their contracting officers are putting increased weight on the maturity of a contractor’s AI program, and the added value that contractor can deliver back to the government in specific projects. How, then, can contractors generate extra value using AI in order to be a more attractive partner to federal contracting decision-makers?

Laying the groundwork

Let’s dig deeper into the “why” behind AI. For contractors, it’s not just about winning more government business. Big picture: It’s about running projects and the overall business more efficiently and profitably.

What’s more, being an AI-forward firm isn’t about automating swaths of a workforce out of a job. Rather, AI is an enabler and multiplier of human innovation. It frees people to focus on higher-value work by performing tasks on their behalf. It harnesses the power of data to surface risks, opportunities, trends and potential issues before they escalate into larger problems. Its predictive power promotes anticipatory actions rather than reactive management. The insights it yields, when combined with the collective human experience, institutional knowledge and business acumen inside a firm, leads to better-informed human decision making.

For AI to provide benefits and value both internally and to customers, it requires a solid data foundation underneath it. Clean, connected and governed data is the lifeblood that AI models must have to deliver reliable outputs. If the data used to train those models is incomplete, siloed, flawed or otherwise suspect, the output from AI models will tend to be suspect, too. So in building a solid foundation for AI, a firm would be wise to ensure it has an integrated digital environment in place (with key business systems like enterprise resource planning [ERP], customer relationship management [CRM] and project portfolio management [PPM] connected) to enable data to flow unimpeded. Nowadays, federal contracting officers and primes are evaluating contractors based on the maturity of their AI programs, as well as on the maturity of their data-management programs in terms of hygiene, security and governance.

They’re also looking closely at the guardrails contractors have around their AI program: appropriate oversight, human-in-the-loop practices and governance structures. Transparency, auditability and explainability are paramount, particularly in light of regulations such as the Federal Acquisition Regulations, Defense Federal Acquisition Regulation Supplement, and Cybersecurity Maturity Model Certification. It’s worth considering developing (and keeping up-to-date) an AI capabilities and governance statement that details how and where your firm employs AI, and the structures it uses to oversee its AI capabilities. A firm then can include that statement in the proposals it submits.

AI use cases that create value

Having touched on the why and how behind AI, let’s explore some of the areas where contractors could be employing intelligent automation, predictive engines, autonomous agents, generative AI co-pilots and other capabilities to run their businesses and projects more efficiently. With these approaches in mind, contractors can deliver more value to their federal government customers.

1. Project and program management: AI has a range of viable use cases that create value inside the project management office. On the process management front, for example, it can automate workflows and processes. Predictive scheduling, cost variance forecasting, automated estimate at completion (EAC) updates, and project triage alerts are also areas where AI is proving its value. For example, AI capabilities within an ERP system can alert decision-makers to cost trends and potential overruns, and offer suggestions for how to address them. They also can provide project managers with actionable, up-to-the-minute information on project status, delays, milestones, cost trends, potential budget variances and resource utilization.

Speaking of resources, predictive tools (skills graphs, staffing models, et cetera) can help contractors forecast talent needs and justify salary structures. They also support resource allocation and surge requirements. Ultimately, these tools help optimize the composition of project teams by analyzing project needs across the firm, changing circumstances and peoples’ skills, certifications and performance. It all adds up to better project outcomes and better value back to the government agency customer.

4. Finance and accounting: From indirect rate modeling to anomaly detection in timesheets and cost allowability, AI tools can minimize the financial and accounting risk inside a contract. It can alert teams to issues related to missing, inconsistent or inaccurate data, helping firms avoid compliance issues. Using AI, contractors also can expedite invoicing on the accounts receivable side as well as processes on the accounts payable side to provide clarity to both the customer and internal decision-makers.
5. Compliance: Contractors carry a heavy reporting and compliance burden and live under the constant shadow of an audit. AI is proving valuable as a compliance support tool, with its ability to interpret regulatory language and identify compliance risks like mismatched data or unallowable costs. AI also can create, then confirm compliance with, policies and procedures by analyzing and applying rules, monitoring time and expense entries, gathering and formatting data for specific contractual reporting requirements, and detecting and alerting project managers to data disparities.
6. Business development and capture: AI can help firms uncover and win new business by identifying relevant and winnable opportunities, and through proposal development, harnessing business data tailored to solicitation requirements. Using AI-driven predictive analytics, companies can develop a scoring system and decision matrix to apply to their go or no-go decisions. Firms can also use AI to handle much of the heavy lifting with proposal creation, significantly reducing time-to-draft and proposal-generation costs, while boosting a firm’s proposal capacity substantially. Intelligent modeling capabilities can recommend optimal pricing and rate strategies for a proposal.

As much as the U.S. government is investing to become an AI-forward operation, logic suggests that it would prefer that its contractors be similarly AI-savvy in their use — and governance — of intelligent tools. In the world of government contracting, we’re approaching a point where winning business from the federal government could depend on how well a firm can leverage the AI tools at hand to demonstrate and deliver value.

Steve Karp is chief innovation officer for Unanet.

The post Why Uncle Sam favors AI-forward government contractors — and how contractors can use that to their advantage first appeared on Federal News Network.