AI and the Federal Procurement Landscape: Opportunities for Emerging Vendors

Artificial intelligence is no longer an experimental add-on in Washington, it is becoming a core layer in how agencies deliver essential services. As Olivia Levine observes in The Quiet Rise of AI in Government, federal agencies are beginning to modernize under pressure from DOGE, retiring workforces, brittle legacy IT, and rising cybersecurity risks.¹

AI is now woven into programs as varied as benefit administration, law enforcement, transportation safety, and emergency management. It offers a potentially more efficient route to sustain mission performance, automating document review, accelerating investigations, predicting equipment failures, or strengthening cyber defenses, when hiring alone cannot keep pace.²

Why the Federal Moment Matters

• Significant Budget Commitments and Contract Vehicles

Federal initiatives such as the Technology Modernization Fund (TMF), the State and These umbrellas already hold billions in obligated funding, with ceilings broad enough to accommodate AI pilots, big data analytic engines, and automation platforms. Large prime integrators seek innovative subcontractors whose AI tools can enhance bids for upcoming task orders. For smaller firms, teaming with a prime can often be the fastest route to bring AI capabilities into essential federal missions, bypassing the long RFI/RFP cycle.

• Workforce and Mission Gaps

The demand for AI is also on the rise. Agencies face a “retirement cliff,” and highly cleared technical talent is becoming scarce. Buyouts, early retirements, and resignations have left leaner teams to handle document-heavy compliance work, fraud detection, or large-scale investigations. AI systems using natural-language search, robotic process automation, computer vision, and predictive analytics could potentially fill these gaps, enabling agencies to maintain service levels even as staff and contractor support decline.⁴

• Resilient Growth for Vendors

Federal contracts, with multi-year with renewal options, create predictable revenue for vendors whose AI solutions become integrated into mission-critical workflows.⁵ Once an agency embeds a machine-learning platform, whether for cyber threat analysis, case triage, or predictive maintenance, switching costs can rise sharply. As a result, a small AI proof-of-concept can evolve into an enterprise license, and task orders under vehicles like SWIFT or CIO-SP4 can extend a product’s reach across multiple bureaus or agencies. Therefore, vendors that invest in compliance readiness and close relationships with contracting officers position themselves to scale steadily.

• Funding Realignment and Contract Volatility

However, the prospective landscape is not all positive. Current federal opportunities also carry risk. As the current congress, administration and OMB continue to re-align priorities, some of the same new AI-focused initiatives—cyber defense, automated permitting, advanced fraud detection could lose funding while other opportunities gain traction, depending on WHERE in the government these opportunities sit. In the current environment, even previously signed agreements may be decoupled from approved budgets if priorities shift. Therefore, vendors must track which missions are accelerating AI adoption and diversify across agencies to hedge against contract churn.

Understanding the Federal Procurement Landscape

Lastly, the opportunity is large, but so are the barriers. Federal acquisition rules (FAR and DFARS), budget scoring, security authorizations, privacy impact assessments, and the congressional appropriations process create long lead times. Even a well-scoped AI pilot may take a full fiscal year to progress from Request for Information (RFI) to award.

Timing is therefore critical. Vendors must align offerings with budget cycles, identify which offices control mission funds, and anticipate re-competitions years in advance. Without expert guidance, promising startups and small–medium companies can easily stall between a proof-of-concept and enterprise deployment of their product or service.

Where Catapult Growth Partners Adds Value

Catapult Growth Partners helps early-stage and mid-sized companies navigate the federal

AI and GovTech market:

• We map funding sources from TMF and agency-specific working-capital funds to mission-driven appropriations and align AI pilots with the right sponsors.

  
  

• We advise on acquisition strategy: whether to pursue Small Business Innovation Research (SBIR), Other Transaction Authority (OTA), GSA Schedules, or task orders under major IDIQ/GWAC vehicles.

  
  

• We support compliance with FedRAMP, cybersecurity mandates, and privacy frameworks so offerings clear the Authority to Operate (ATO) hurdle.

  
  

• We coach leadership teams on building trust with program managers and contracting officers, following the model of firms like Axon, which scaled by embedding themselves in public-safety missions.⁶

Turning Innovation into Federal Impact

AI is reshaping federal operations from real-time situational awareness for homeland security, to predictive maintenance in transportation, to intelligent screening that protects critical infrastructure.⁷ But technology alone is not enough. Success in Washington depends on clear insight into the appropriations process and the cadence of procurement.

With Catapult Growth Partners, innovators gain a partner fluent in federal acquisition and mission priorities, one who can help turn prototypes into enduring programs of record.

Ready to chart your path through the federal AI opportunity?

Contact me at joseph.lestrange@catapultgrowthpartners.com to accelerate adoption, shorten sales cycles, and deliver lasting value to U.S. agencies.

Notes

1. Olivia Levine, The Quiet Rise of AI in Government: Sector Deep Dive Report (July 2025), 1–2.

2. Levine, Quiet Rise, 2.

3. Ibid., 2–3.

4. Ibid., 1–2.

5. Ibid., 5.

6. Ibid., 6.

7. Ibid., 7–8.