A September 2022 report released by The Brookings Institution (Understanding artificial intelligence spending by the U.S. federal government) determined that the “market for AI is in its very early stages but … is likely to eventually pay off. The report also noted, however, that the market … is “equally likely” to cause the U.S. to fall even further behind China over the next several years.

According to the report, AI-related government contracts appear to be a market that smaller vendors currently dominate. The larger, traditional system integrator companies are participating in the AI market but are still attempting to determine the pathway to ubiquitous AI.

The substantial quantity of comparatively small contracts paints a picture that the federal government continues to be in an experimental phase of determining a use for AI.Nevertheless, the U.S. is not considered a leader in AI development and falls behind China in this arena, according to the report.

The Chinese government is taking the lead in developing AI strategies and projects due to the focus and allocate resources to ensure that China never lags another country in a future-focused area.By contrast, the U.S. has demonstrated a collaborative approach between the federal government, private companies, and higher education institutions.

The analysis revealed that the Department of Defense (DoD) accounts for 53 percent of current AI-related contracts.Health and Human Services (HHS) and NASA are a distant second to the DoD in terms of the number of contracts (with 17 percent each), with the Departments of Commerce and Veterans Affairs as the next largest contract spend at approximately 4 percent each.Read the entire report from The Brookings Institution