A New Arms Race: How the US Government Is Fueling a $700 Million AI Boom
Since the launch of ChatGPT, the world has witnessed the rapid advancements in artificial intelligence, and the U.S. government is no exception.
In the two years since OpenAI’s groundbreaking chatbot hit the scene, the Department of Defense and Department of Homeland Security have poured over $700 million into AI projects, enlisting hundreds of companies to help develop and test new algorithms and tools.
According to a Fortune analysis, the DoD has awarded roughly $670 million in contracts to 323 companies, a 20% increase from the prior two-year period.
The DHS, meanwhile, has awarded $22 million in contracts to 20 companies—more than triple its previous spending. These government agencies are clearly betting big on AI’s potential to transform national defense and security.
The largest DoD contract since fiscal year 2023 went to ECS, a subsidiary of ASGN Inc., with $117 million earmarked to design and develop AI and machine learning prototypes for the Army. Palantir, the data analytics firm, also received a $91 million contract to test end-to-end AI solutions for defense applications.
However, this is only the beginning. The DoD has an additional 83 active AI contracts with various entities, ranging from $4 million to $60 million each. If those deals all come to fruition, the department could end up spending well over $1 billion on hundreds of AI projects by next year.
The DHS’s largest AI contract, by comparison, is a relatively modest $4 million with marketing firm LMD for “marketing and artificial intelligence services” for the Coast Guard. Two other contracts worth over $3 million each went to tech consultancy Noblis Inc. for AI analytics and support.
While the military has long invested in cutting-edge technologies, the recent surge in AI spending comes as the private sector is also racing to capitalize on the transformative potential of these tools.
Investors and businesses alike are pouring billions into AI startups and initiatives, from self-driving cars to language models that can engage in human-like dialogue.
“The exponential pace of artificial intelligence/machine learning” is keeping the Army busy, according to a $33 million contract with autonomous vehicle firm Morsecorp Inc. And the Air Force is working with software company Mile Two LLC on “artificial intelligence enhanced workflows” in a $15 million deal.
Spokespeople for the DoD and DHS declined to comment on the specifics of their AI programs. But the sheer volume of contracts suggests these agencies see AI as a critical part of the country’s defense and security arsenal going forward.
We will have to wait and see if this spending spree pays off. Integrating AI into complex government systems and ensuring the safety and reliability of these powerful technologies is no simple feat. However, as China and other adversaries race to harness the power of AI, the U.S. government is compelled to fully commit.
As the AI revolution continues to unfold, the business of national defense is about to get a lot more high-tech. For the companies lucky enough to win these lucrative contracts, the future is looking bright. For the rest of us, let’s hope the government can wield this new AI power responsibly.