Algorithms and Acquisition: What Federal Contractors Need to Know About AI

In this episode of FedBiz'5, host Bobby Testa dives into one of the biggest shifts in government contracting: the rise of Artificial Intelligence (AI) in federal procurement. With more than 200 active AI use cases across federal agencies—from the DoD's Project Maven to the IRS's chatbot—AI is no longer emerging. It's operational, funded, and rapidly expanding.

Bobby breaks down five critical insights government contractors need to understand right now if they want to stay ahead in this evolving space. This episode isn't about theory—it's about real agency usage, real budgets, real compliance expectations, and real market strategies that help small to mid-sized contractors show up and compete.

You’ll learn:

• How AI is currently being used across federal agencies
• Where AI-related opportunities are growing (hint: DoD, VA, NIH)
• What regulatory expectations you need to prepare for (yes, FAR clauses are coming)
• How to position your AI capabilities in SAM.gov, DSBS, and capability statements
• Why early outreach—RFIs, Industry Days, OSDBUs, and teaming—is more important than ever

Whether your company offers AI tools, supports infrastructure, provides training, or consults on ethical compliance, this episode will show you how to align with what agencies are actually buying.

We also explore how tools like FedBiz365 can uncover pre-solicitation activity, highlight AI-related trends, and help you build a smart, targeted strategy based on real data—not guesswork.

And of course, Bobby keeps it real (and funny) as always, because what’s a discussion about AI and federal procurement without a little commentary on IRS hold music, fantasy football algorithms, and black-box buzzwords?

🎯 The question isn’t “Are agencies using AI?” It’s “Are they using yours?”

Need help getting visible in the AI procurement space? FedBiz Specialists are just a phone call away. From optimizing your SAM profile to building a winning capability statement to launching marketing campaigns that connect you with decision-makers—FedBiz Access is here to help.

📞 Call 888-299-4498 or visit FedBizAccess.com to schedule a complimentary consultation today.

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Stay proactive. Stay visible. And if your AI becomes sentient, definitely tell legal.

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Transcript

Intro: My name is Bobby, and I work with small businesses in the Government Marketplace. You're listening to FedBiz'5. Get informed, get connected and get results on everything government contracting.

Welcome back to the FedBiz'5, where we unpack the latest in federal contracting with concise insights and just enough wit to keep it interesting. It's me, your favorite GovCon host, Bobby Testa, and today we are going to do a cannonball into the fast-growing pool of AI and government procurement. That's right, AI is no longer just the stuff of sci-fi and Netflix thrillers. It's now helping federal agencies fight fraud, sort your mail, protect national security, and yes, it's even answering calls at the IRS. Now we're talking about AI as a $2 trillion tech trend now sitting at the head table of the Federal Acquisition buffet. So grab your capability statements, and let's break down five need-to-know insights that keep your business smarter than a chatbot with clearance.

Now let's start with the obvious. AI is no longer just an emerging technology in the federal procurement space. It's here, it's operational, and it has a badge. The Government Accountability Office reports over 200 active applications across federal agencies, that's everything from the DoD project Maven, which helps analyze drone footage faster than a teenager scrolling TikTok, to the IRS chatbot, which somehow manages to answer questions with less attitude than a live rep, to even USPS using AI to sort your mail, which, frankly, might be the most impressive feat of all, considering my handwriting. Even NIH is using AI to predict disease outbreaks because apparently we needed another reason to read WebMD and panic. Bottom line, agencies aren't testing AI, they're using it. And if your company is offering AI solutions or even adjacent capabilities, it is time to get loud.

Next let's talk about the budget between the CHIPS and Science Act, multiple executive orders and the AI in Government Act. Uncle Sam has made one thing clear. He's spending big on smart tech. Now the FY 25 budget is packed with AI investments, especially in agencies like the DoD, VA and NIH. Here's the kicker, it's not just about building the next Terminator style bot. Agencies are buying AI-enabled tools like chatbots, predictive analytics and image recognition, also integration and training services, cloud and data infrastructure that supports machine learning, even ethical advisory services. Yes, the government wants its robots to play nice. And for small to mid-sized contractors, opportunity's knocking loudly. Large primes are actively looking for nimble, specialized partners. If you've got something unique, go show it off. Just don't call it disruptive innovation. That term has been through enough.

Now if you thought AI would somehow dodge regulation, adorable, because as agencies get smarter with tech, they're also getting stricter about how the tech operates. Translation, your AI solution needs to be more than a demo video and buzzwords. You'll need to:

• handle data like it's classified because it might be
• make your AI explainable—if your algorithm's answer to “why” is just “because,” you're in trouble
• prove your tech plays well with others, especially frameworks like FedRAMP, CMMC and NIST SP 800-53
• also show a little human touch. Literally, many contracts now require human-in-the-loop functionality, meaning someone with a pulse should be able to intervene if things go sideways
• also prepare for new AI-related FAR clauses, because they're coming, and they'll probably be dense enough to make your legal team cry

Here's your cheat sheet. Make your AI transparent, secure and responsibly managed. In other words, the opposite of a black box and hopefully nothing like your fantasy football league scoring algorithm.

Now you might have the smartest AI solution in town, but if agencies cannot find you, it's like hiding Wi-Fi in a bunker. Your SAM and DSBS profiles should clearly show off your AI capabilities. No jargon marathons, just smart, accessible descriptions of what you offer and how it helps. Same with your capability statement. If algorithmic innovation is in your first sentence, but nowhere do you say what problem you solve, you are doing it wrong. Now, if you're wondering how to know which agencies are buying AI, where those opportunities are surfacing, or who your competitors are, this is where tools like FedBiz365 quietly earn their keep. It's not about selling. It's about seeing. With platforms like that, contractors like yourself can track pre-solicitation activity, spot expiring contracts, identify AI-adjacent trends, and yes, even see which contracting officers are sniffing around the AI buffet before it gets crowded. It's the difference between throwing darts in the dark and showing up with a strategy and a flashlight.

So yes, AI is reshaping the game, but this is still federal contracting, and in federal contracting, relationships matter more than your algorithm's F1 score. Want to be part of the AI conversation? Start showing up before the RFP. That means:

• responding to Sources Sought and RFIs
• attending Industry Days
• building connections with agency innovation offices and tech-forward contracting officers
• getting involved in pilot programs or working groups

Also don't overlook strategic teaming. Many primes are looking for subcontractors with AI chops, but they won't find you unless you make the first move. AI may be advanced, but your outreach strategy should be simple: be proactive, be relevant, and be clear about how you solve problems.

AI isn't some distant future concept anymore. It's not floating in the ether next to blockchain buzz or NFT regret. It's here. It's scanning emails. It's reviewing videos. It's even making sure your tax questions get semi-coherent responses at 2 a.m.
 The question isn't if agencies are using AI, it's whether they're using yours.

So let's do a quick recap:

• AI is deeply embedded across federal agencies
• Budgets are real and growing, especially in defense, health and logistics
• Compliance isn't optional, but it is navigable
• Visibility is everything
• Showing up early beats showing up flashy every time

Well, that's it for this episode of the FedBiz'5. If you're breaking into AI, expanding your tech offering, or just want to know where the money's moving, start smarter and start sooner. And maybe start with a tool like FedBiz365 that helps you actually connect the dots instead of playing the guessing game. Until next time, stay proactive, stay visible, and if your AI system ever becomes sentient, please remember to loop in legal. See you next time.

Outro: Thank you for listening to the FedBiz'5, where you get informed, get connected and get results on everything government contracting. Today's podcast is made courtesy of FedBiz Access. Government Contracting Made Simple. Visit them at FedBizAccess.com, where you can find all the FedBiz'5 podcasts, related blogs, government contracting news and, of course, information on the various products and services that can assist your business in becoming visible to the government buyers. FedBiz Access can be reached by calling them at 888-299-4498.