Artificial Intelligence (“AI”) headlines are inundating the newsfeeds and minds of investors everywhere and with relatively low retail investor buy-in, the market has not yet hit its peak, leaving comfortable room for upsides. “It remains to be seen how generative AI will impact both corporate profitability and productivity, or expand and shrink competitive moats, but gen[erative] AI targets the largest total addressable market since the smartphone,” DataTrek Research co-founder Jessica Rabe has advised. However, despite interest in AI – or lack thereof – from investors, the federal government (“Government”) is fully bought in. For instance, Scale AI, an AI-focused tech startup, was awarded a $250 million contract by the Department of Defense (“DoD”) in early 2022, representing just a small slice of the Government’s long-term investment plan. As the Brookings Institution noted, the interaction between the Government and AI contractors is in its early stages, but the approach is diverse and wide-ranging. AI is also shifting other areas of Government operations, thanks to strict and extensive requirements and guidelines, contractors may ordinarily find the procurement process laborious and time-consuming. Now, with the rise of AI, automated chatbot responses can answer questions, provide basic guidance, and even analyze past successful bids to help contractors optimize their chances at future bids.

Current accounts surveying Government spending indicate an immature market focused on the development of research rather than a more mature market focused on hardware and software.  The Government is still in an experimental phase of utilizing AI.  The U.S. is following a collaborative approach with the Government, private industry, and academia all playing an active role. While such an approach may eventually yield good outcomes, it may evolve slower than approaches taken by other global players.  A major focus area for U.S. federal spending on AI is within the DoD.  Enhancing the power and direction of the National Artificial Intelligence Initiative Office, which was established by the National Artificial Intelligence Initiative Act of 2020, would prove a meaningful first step in bringing structure to the current chaotic marketplace.

AI and natural language processing technologies are set to revolutionize the way contractors conduct business with the Government by aiding in navigating the procurement process, improving the quality of bids, streamlining contract management, and leveling the playing field for small to medium size businesses. These technologies will promote greater competition and increase opportunities for a wider range of businesses to work with the Government.

Indeed, AI is already being used to transform the Government.  The Bureau of Labor Statistics at the Department of Labor is using AI by automating its coding process, thereby improving the quality and efficiency of coding tasks while relieving employees of tedious, repetitive tasks and saving hundreds of work hours.  Furthermore, the Air Force has been using AI to more efficiently and effectively operate in compliance with complex acquisition regulations in procuring goods and services. Contracting officers can quickly answer difficult questions with the use of AI so that they can focus on creating agreements and benefit from flexibility available in the procurement regulations.

In summary, given the expansive capabilities of this emerging technology, AI is one to watch – for attorneys, investors, and contractors. To learn more about Fluet’s Artificial Intelligence + Machine Learning capabilities, click here.

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