By Joshua DeLung, EVP, Palladian Partners & VP - Population Health - Altarum, United States
Artificial Intelligence (AI) is revolutionizing operations across various sectors, and U.S. government agencies and the contractors who support them are no exception. From enhancing public services to bolstering national security, AI's integration into federal operations is accelerating. This surge presents a significant opportunity for private industry, particularly government contracting firms, to contribute expertise and support. Investing in staff upskilling to deliver AI solutions is not only beneficial, but also it is essential for firms aiming to remain competitive and relevant in this evolving landscape.
AI Adoption in Government Agencies
Federal agencies are increasingly improving efficiency, decision-making, and service delivery with AI. For instance, the National Conference of State Legislatures reports that both state and federal lawmakers are expanding AI use across agencies, focusing on governance, ethical practices, and inter-agency collaboration. In 2024 alone, over 150 bills related to government AI use were considered, with at least 30 states issuing guidance on state agency AI utilization.
The General Services Administration (GSA) has developed an AI Guide for Government; a comprehensive resource aimed at assisting federal agencies in understanding and implementing AI technologies effectively. This guide underscores the government's commitment to integrating AI into its operations and highlights the need for expertise in deploying these technologies.
The U.S. government has enacted several policies and executive orders to guide AI development and deployment. In October 2023, President Biden issued an Executive Order on Safe, Secure, and Trustworthy Artificial Intelligence, focusing on standards for critical infrastructure, AI-enhanced cybersecurity, and federally funded biological synthesis projects. This order emphasized the need for responsible AI development and the importance of safeguarding national security.
However, in January 2025, President Trump signed a new Executive Order eliminating certain AI policies from the previous administration, aiming to enhance America's global AI dominance. This action reflects the administration's commitment to maintaining the country's leadership in AI innovation. It removes what some considered regulatory barriers to increased AI adoption but potentially shifts more ethical considerations involving AI to the private sector.
Regardless, government is already using AI already in multiple ways that improve outcomes for the American people, and it’s clear that its importance will only increase. For example:
Opportunities for Private Industry
The government's increasing reliance on AI opens numerous avenues for private industry involvement. A bipartisan group of senators introduced legislation in April 2024 (The Future of AI Innovation Act) to enhance U.S. leadership in emerging technologies through increased private sector collaboration. This legislation emphasizes the critical role that consulting firms can play in advancing AI innovation within federal agencies. And according to analysis shared during a recent OrangeSlices AI-hosted Vanguard FedCiv 250 event, about 20% of procurements in 2024 involved AI in some capacity.
The Brookings Institution wrote in its Jan. 16, 2025, article “For AI to make government work better, reduce risk and increase transparency,” that maintaining human oversight in government AI applications is vital.
This presents opportunities for consulting firms to offer services in developing ethical frameworks, risk assessment protocols, and training programs to ensure responsible AI deployment, as well as offering services to keep a ‘human in the loop’ who can tailor generative AI content, fact check, and ensure appropriate disclosures are made to the public about the use of AI. In addition to efficiencies gained through automation and data analysis, firms that offer communications, creative, and digital services are poised to apply AI as a force multiplier to help agencies communicate more quickly, ideate in new ways, and modernize legacy IT applications without starting from scratch.
The Imperative for Upskilling
As AI becomes more integral to government operations, consulting firms must invest in upskilling their workforce to meet the growing demand for AI expertise. Google's recent initiative to educate workers and lawmakers on AI underscores the necessity of AI literacy across all sectors. The company is investing $120 million to develop AI education programs, reflecting the critical need for a workforce proficient in AI technologies.
By enhancing their AI capabilities, consulting firms can position themselves as valuable partners to government agencies seeking to implement AI solutions. This investment not only meets current demands but also prepares firms for future opportunities as AI continues to evolve. Several prominent consulting firms have made significant investments in upskilling their workforce in AI, particularly in the context of government consulting:
Of course, these are just a few prominent examples, but mid-size and smaller firms are also deploying AI solutions internally and for government clients. And others still may not officially have AI projects but are likely using AI tools that have become ‘baked in’ to everyday software like Microsoft Office applications, Adobe Creative Cloud, and others.
However, according to a January 2025 Boston Consulting Group report, less than one-third of companies overall have upskilled at least 25% of their workforce to use AI. While we don’t have specific public sector consulting data, this is a stark benchmark that illustrates the urgency with which firms must get on board to compete in an increasingly AI-driven sector.
Applying Ethical AI to Improve Experiences
Of course, there remains some hesitancy, misinformation, skepticism, and confusion in the public sector when it comes to AI adoption. After all, when the health and safety of the American people – not to mention the taxpayer dollar – is at stake, a great deal of caution is warranted. We as federal consultants shouldn’t be nonchalant about the cost, security and ethical considerations at play when deploying AI. And we also have some work to do to help our customers understand the value of AI and apply it to the right scenarios – we should not sell AI just because it is a buzzword.
Still yet, the integration of AI into U.S. government operations presents a significant opportunity to improve customer experience for Americans as well as one for consulting firms to apply their domain expertise in new ways. By investing in upskilling their staff and developing robust AI capabilities, these firms can position themselves as essential partners in the government's AI journey. Staying informed about evolving policies and actively engaging in public-private partnerships will be crucial for firms aiming to thrive in this dynamic environment.
