Multiple Contractors Well-Positioned to Benefit From Washington’s AI Investments

With the federal government looking poised to spend much more on AI going forward, federal contractors that specialize in the technology should prosper in the medium-to-long term. Moreover, a number of the firms looking to significantly ramp up the extent to which they offer AI services to federal agencies may also perform quite well over the next two to three years.

According to one report, the Biden administration’s October 24 memorandum on AI will result in the federal government “incorporating AI into all facets and functions of the federal bureaucracy.”  And the memo specifically directs the State Department, the Pentagon, and the intelligence agencies to invest in the technology. Also ordered to invest in the technology are the Department of Energy and the Department of Commerce.

Meanwhile, a previous executive order, issued in August, directs all federal agencies other than the Pentagon and intelligence departments to outline by December 16 the ways in which they will use AI.

IT systems integrator Accenture (ACN) is one firm that looks well-positioned to benefit significantly from Washington’s foray into AI.  Accenture’s Federal Services unit has over 15,000 employees, serves all Cabinet-level departments, and has 60+ clients globally. Also impressively, the unit has multiple, huge partners in the private sector, including Amazon (AMZN), Google (GOOG,GOOGL), Salesforce (CRM), ServiceNow (NOW), and Microsoft (MSFT).

And in April, Accenture, in partnership with Google, unveiled a Data & Artificial Intelligence Center of Excellence.  Given the mission of helping federal agencies use technology to improve the level of their services, the center is utilizing Google Cloud generative AI technologies. The center also “supports sensitive and classified workloads” and helps agencies comply with federal regulations.

Accenture also outlined many other ways in which AI can be used to help federal agencies. For example, the technology can be used to rapidly obtain information from long text passages, make computer coding easier, automatically communicate with customers, create content, and “Enable conversational interaction with enterprise data.”

Meanwhile. Federal IT contractor CACI International (CACI) appears to be intensifying the extent to which it utilizes AI. In February, the firm appointed Nicholas Waguespack as its VP, AI. In a LinkedIn post, Waguespack  reported that he was “Looking forward to exciting work as we integrate AI/ML into the various aspects of this great company.”

Additionally, on the company’s fiscal first quarter earnings call, held on Oct. 24, CEO John Mengucci reported that the firm was developing and implementing networks that enable AI. Mengucci also pointed out that CACI had completed the acquisition of Applied Insight in October. He noted that Applied Insight had increased CACI’s exposure to AI, both in terms of “customers” and “capabilities.”  He indicated that many of Applied’s customers are in “the intelligence community.”

According to CACI’s website, its AI offerings “streamline operations, reduce human error, and optimize resource allocation.”