US DoD Artificial Intelligence Growth Opportunities
Safe, Secure, and Trustworthy Artificial Intelligence; Deploying Dual-use Tools
05-Feb-2024
North America
Market Research
This research service focuses on the United States (US) Department of Defense (DoD) artificial intelligence (AI) contracting information for research, development, test, and evaluation (RDT&E); procurement; and services. The analyst has segmented contracting data by military department and overall leading firms. The data and insight provided are calendar (CY) 2023 DoD contracting information.
The study outlines the top contractors and includes a variety of AI products and services. Contract awards data is an estimate drawn from DoD published information and does not include classified information. Contracts are awarded by a variety of organizations within each of the military departments. Segmentation and contracting estimates are made at the analyst’s discretion.
The purpose of this study is to discuss the leading DoD AI contractors and technology areas of interest. The DoD AI market is new and consists mostly of research and development activities. Funding is stable, and AI is being applied to several application areas in DoD. This study will outline and provide commentary regarding participating firms and contracting trends. The main goals are to understand the current state of the DoD AI competitive environment and point out both high-spending areas and opportunities to participate in the DoD AI market.
Author: Brad Curran
The Impact of the Top 3 Strategic Imperatives on the US DoD Artificial Intelligence Industry
Transformative Mega Trends
WHY
- Artificial Intelligence (AI) tools are helping a variety of industries improve efficiency and save money.
- The US DoD is also applying some commercial AI best practices to improve their systems and operations.
- DoD is conducting research and experimentation to work on military-specific AI applications.
Frost Perspective
- Military commanders are hoping to expand the use of AI tools.
- Future AI systems are expected to help improve command and control and sensor data analysis that will help leaders make faster and better decisions.
Internal Challenges
WHY
- The potential for AI is promising but there are technical, ethical, financial, and implementation challenges that must be overcome.
- It is important that policy compliance measures and security risks be considered and monitored when leveraging any new technology.
Frost Perspective
- The DoD has established Task Force Lima and tasked it to coordinate aspects of AI development and make policy recommendations.
- Among the challenges that will be addressed are effective large language model AI applications and recommended oversight procedures.
Industry Convergence
WHY
- AI has helped the DoD improve maintenance functions for several combat systems in a challenging supply chain environment.
- Commercial based technologies such as AI, digital engineering, digital twins, blockchain, and cloud computing are converging to improve efficiency.
Frost Perspective
- These commercial-based information tools will continue to help DoD modernize its infrastructure while improving legacy systems.
- The key for DoD is standards-based technology and close partnerships across DoD and with contractors through consortiums and data sharing.
Purpose and Overview
- Frost & Sullivan estimates that 28 DoD AI contracts awarded for 2023 totaled $1,328.3 million. Palantir was the DoD’s largest AI contractor in 2023, with $425.0 million, or 32.0% of the total.
- The top 10 DoD companies were awarded $1,122.5 million in 2023, 84.5% of all contract value. The Army awarded the highest value of contracts in 2023 at $738.3 million, or 55.6% of all contract value.
- Contract data is an estimate drawn from DoD published information on newly awarded prime contracts of more than $7.5 million and does not include sub-contracts or classified information.
- Contract data for 2023 does not always align year to year because of multi-year and obligated contracts. Analysts used their discretion to determine contract total estimates due to contract segmentation, large multi-year contracts, and alignment of multiple government contracting sources.
Growth Drivers
- There is a perception that near-peer military adversaries are ahead of the United States in the race to develop and implement artificial intelligence (AI) tools. The DoD is addressing this by seeking industry assistance to develop a Bill of Materials (BOM) structure to help integrate algorithms. BOMs are expected to drive the market to be structured like software BOMs, or S-BOMs, so that the supply chain is more secure and innovative.
Information Dominance is a key aspect of DoD planning. The military potential for commercial technology such as “generative” artificial intelligence, is considered very high. Concerns about false information will require continuing testing and experimentation and drive the DoD AI market because operational commanders need advanced tools for decision-making.
Growth Restraints
- According to the DoD’s deputy chief digital and AI officer (CDAO), there are no plans to provide department-wide artificial intelligence direction. The idea is to have each military service and organization to share best practices. A lack of central oversight and coordination may restrain overall AI spending, as Congress may find it inefficient and wasteful.
- Some in Congress want the DoD to coordinate AI research and military applications with the other Five Eyes nations. The idea is to enhance warfighting capabilities and make AI development more efficient. This may not only reduce the amount of money spent with US-based AI researchers but also complicate software export laws and restrain the market.
Competitive Environment
Number of Competitors | 25 companies with new prime contracts awarded |
Competitive Factors | Cost, performance, schedule, support, technology, reliability, contractor relationships, customer relationships |
Leading Competitors | Palantir, ECS Federal, L3 Harris Technologies, Assured Information Security, Rise8 |
Revenue Share of Top 5 Competitors | 64.5% |
Other Notable Competitors | 3M Health Information Systems, Aerovironment, Anduril Industries, Cognility Software, Collaboration AI, Compass Systems, Darkhive, Deloitte, Infoscitec, Matrix Research, McKinsey, Modern Technology Solutions, Open SAN Consulting, Philips Electronics, R-DEX Systems, Sarcos Group, SRI International, Stevens Institute of Technology, Systems & Technology Research, University Southern Ca., Los Angeles |
Why is it Increasingly Difficult to Grow?
The Strategic Imperative 8™
The Impact of the Top 3 Strategic Imperatives on the US DoD Artificial Intelligence Industry
Growth Opportunities Fuel the Growth Pipeline Engine™
Purpose and Overview
Representative Programs
Growth Drivers
Growth Restraints
Contracts by Department
Competitive Environment
Market Share
Market Share Analysis
Representative Artificial Intelligence Contracts
Representative Artificial Intelligence Contracts (continued)
Representative Artificial Intelligence Contracts (continued)
Growth Opportunity 1: Artificial Intelligence Research
Growth Opportunity 1: Artificial Intelligence Research (continued)
Growth Opportunity 2: Artificial Intelligence for Operations Analysis
Growth Opportunity 2: Artificial Intelligence for Operations Analysis (continued)
Growth Opportunity 3: Artificial Intelligence for Predictive Analytics
Growth Opportunity 3: Artificial Intelligence for Predictive Analytics (continued)
Conclusions and Future Outlook
List of Exhibits
Legal Disclaimer

- US DoD Artificial Intelligence Growth Opportunities: Growth Drivers, 2024–2028
- US DoD Artificial Intelligence Growth Opportunities: Growth Restraints, 2024–2028
- US DoD Artificial Intelligence Growth Opportunities: Contracts Awarded by Department, 2023
- US DoD Artificial Intelligence Growth Opportunities: Contract Value and Market Share of Top Participants, 2023
- US DoD Artificial Intelligence Growth Opportunities: Representative Artificial Intelligence Contractors, 2023
Purchase includes:
- Report download
- Growth Dialog™ with our experts
Growth Dialog™
A tailored session with you where we identify the:- Strategic Imperatives
- Growth Opportunities
- Best Practices
- Companies to Action
Impacting your company's future growth potential.
Deliverable Type | Market Research |
---|---|
Author | Brad Curran |
Industries | Aerospace, Defence and Security |
No Index | No |
Is Prebook | No |
Keyword 1 | Defense AI Solutions |
Keyword 2 | US DoD Artificial Intelligence Market Analysis |
Keyword 3 | Defense AI Forecast |
List of Charts and Figures | US DoD Artificial Intelligence Growth Opportunities: Growth Drivers, 2024–2028~ US DoD Artificial Intelligence Growth Opportunities: Growth Restraints, 2024–2028~ US DoD Artificial Intelligence Growth Opportunities: Contracts Awarded by Department, 2023~ US DoD Artificial Intelligence Growth Opportunities: Contract Value and Market Share of Top Participants, 2023~ US DoD Artificial Intelligence Growth Opportunities: Representative Artificial Intelligence Contractors, 2023~ |
Podcast | No |
WIP Number | K9AE-01-00-00-00 |