How federal agencies are using AI to solve what’s next

What role will artificial intelligence (AI) take in the federal government?

Imagine standing at the water’s edge, where the ocean meets the shore. As you shield your eyes and gaze into the distance, you can see far beyond your current location. This is similar to the power of AI — on the brink of new possibilities, with seemingly endless opportunities ahead.

As AI technology advances, its reach will continue to expand and revolutionize in both the private and public sectors. The development of AI capabilities has already impacted federal agencies in waves.

Among U.S. federal, state, and local government respondents in a survey by Ernst & Young LLP, 51% reported using an AI application daily or several times a week. In fact, “federal agencies show a higher frequency of near-daily AI usage at 64%, in contrast to state and local agencies,” according to the report.

That number will likely rise, as new U.S. policies on federal agency AI use and procurement were released by the White House. “This administration is focused on encouraging and promoting American AI innovation and global leadership, which starts with utilizing these emerging technologies within the Federal Government,” said Lynne Parker, Principal Deputy Director of the White House OSTP.

Across federal agencies, AI is enhancing efficiency, automating administrative tasks, and improving data analysis. Let’s dive into the current state of AI and federal use cases, the benefits, challenges, and guidelines of adoption, and the ways SHI can facilitate your AI implementation.

How is AI used in federal agencies?

Federal agencies are increasingly adopting AI to streamline operations and improve service delivery. For instance, the Internal Revenue Service (IRS) and the Social Security Administration (SSA) employ AI-driven chatbots to enhance citizen interactions, while the Department of Veterans Affairs uses predictive analytics to foster cross-agency collaboration.

“The U.S. Departments of Agriculture and Transportation as well as the Environmental Protection Agency use machine learning to map satellite imagery of crops and vegetation, analyze regulatory comments from the public, predict flight delays, and even for driving autonomous vehicles,” according to the National Conference of State Legislatures (NCSL). “The Department of Defense has been using machine learning for many years to help with predictive maintenance and military logistics.”

Much like AI’s boundless potential, the use cases are wide-ranging. The Department of State uses AI for foreign policy analysis, analyzing large datasets to identify political trends and help diplomats make informed decisions.

The Department of Health and Human Services (HHS) and the IRS leverage AI to discover fraudulent activities by analyzing patterns for insights, improving the accuracy and efficiency of fraud detection. Additionally, the Federal Emergency Management Agency (FEMA) uses AI to help predict natural disasters and optimize resource allocation by examining weather patterns and historical data.

The push and pull: AI adoption

The dynamic, ever-changing nature of AI brings both advantages and challenges. Federal agencies must navigate the ebb and flow of transformation, presenting new opportunities and potential consequences.

AI positively impacts federal departments by enhancing productivity, operational efficiency, and mission-enabling processes like financial management and human resources. It also supports knowledge management and back-office functions, which are essential for improved service delivery to the public.

EY Pulse Survey participants who incorporated AI into their workflow reported time savings and improved efficiency as the top benefits (71%), followed by a creativity boost (62%) and more time to focus on complex tasks (61%). “Civilian federal employees are the most likely (80%) to highlight time savings as the key benefit and are the most likely to cite all possible benefits of AI use in the workplace.”

Streamlining workflows helps automate repetitive processes and tasks. “Take the U.S. Army. Through piloting generative AI in acquisition processes, they’ve automated contract drafting and data analysis, significantly reducing administrative workload,” according to Forbes.

Challenges to navigate

Although AI holds great promise, federal adoption presents several challenges to tackle, from ethical considerations to technology infrastructure development.

Many face a slow adoption rate due to lengthy procurement cycles and critical concerns, such as addressing AI bias and ensuring the protection of public rights and safety. Agencies need robust governance frameworks to manage AI’s rapid growth and mitigate risks. Organizations must also invest in technology infrastructure to support the responsible and ethical implementation of AI. Responsible AI (RAI) encompasses the safe and ethical development and deployment of AI technologies, enabling trust, fairness, security, and legal compliance.

Establishing clear frameworks is essential to guide safe AI use, ensure alignment with agency needs, and protect sensitive information. Investing in AI training and upskilling is also vital; federal employees need to be adept in the latest AI technologies, which can help drive internal adoption. Additionally, fostering interagency collaboration and partnerships with universities and research institutions can advance AI research and leverage external expertise.

AI guidelines and deadlines

From a policy framework, the Office of Management and Budget (OMB) recently released two key memoranda regarding AI policy for federal agencies. The new AI guidelines are intended to shift U.S. AI policy to promote a “forward-leaning, pro-innovation, and pro-competition mindset.” While the guidelines do not directly impose restrictions on private industries, in many cases, the requirements are still likely to significantly impact the private sector through their incorporation into federal contracts.

Accelerating Federal Use of AI through Innovation, Governance, and Public Trust (M-25-21): This memorandum emphasizes fostering AI innovation, enhancing governance, and promoting responsible AI use within federal agencies. It includes guidelines for AI adoption, risk management, and public trust.

Driving Efficient Acquisition of Artificial Intelligence in Government (M-25-22): This memorandum aims to streamline the procurement processes for AI technologies, making it easier for federal agencies to adopt and integrate AI solutions. It focuses on removing bureaucratic barriers and ensuring efficient and cost-effective AI procurement.

OMB laid out four deadlines in total, two of which are for the General Services Administration (GSA) and two are for all agencies.

Within 100 days, GSA must develop a plan to release a public guide that helps agencies buy AI tools. Then, they have 200 days to create an online knowledge sharing portal for federal use, such as sample solicitations, standard contract clauses, and negotiated costs for common AI systems and other relevant documents.

Agencies have two main deadlines. One falls within 270 days, when an agency must update existing internal procedures on acquisition, where necessary, to comply with the memo. This includes reviewing planned acquisitions involving an AI system or service and providing feedback on AI performance and risk management practices. It also means convening a cross-functional team to help with the coordination and decision-making processes associated with the acquisition of AI, and ensuring the use of contract terms for intellectual property (IP) rights.

In 200 days, agencies must have processes and contractual terms in place to address the use of government data and clearly delineate the respective ownership and IP rights of the government and the contractor. OMB says agencies should give careful consideration of respective IP licensing rights, especially as an agency procures an AI system or service where agency information is used to train, fine-tune, and develop the AI system.

The OMB goes further by noting specific types of contracts to use when buying AI tools and capabilities. In this case, agencies should focus on statements of objectives and performance-based contracts with incentives, instead of firm, fixed price types of contracts.

How SHI can help you transform with AI

SHI can support your AI journey, guiding organizations across all industries for 35 years and onward. We provide advanced technology solutions and services tailored to federal agencies. With a wide range of federal procurement contracts that offer flexibility and customization, including GSA Multiple Award Schedule (MAS), your agency unlocks easier access to mission-critical IT.

Simplify your journey further with our AI Executive Review, including AI briefings, assessments, workshops, and more, backed by vendor-neutral guidance. Leveraging over 300 AI use cases, reference architectures, and blueprints, our AI-certified experts enable you to achieve faster deployment and reduced costs.

Experience your AI acceleration firsthand, without the risk, in SHI’s AI & Cyber Labs. In an actual enterprise environment, you can identify and validate high-impact AI use cases, and stress-test leading solutions against your real-world workflows, data, and security needs.

AI is already a transformative force, moving across all sectors. To fully harness its benefits and overcome its challenges, enlist the support of a trusted AI partner to solve what’s next. Connect with one of SHI’s experts to start imagining, experimenting, and adopting AI technologies today.