US DoD Artificial Intelligence Growth Opportunities

Aerospace, Defence and SecurityUS DoD Artificial Intelligence Growth Opportunities

Safe, Secure, and Trustworthy Artificial Intelligence; Deploying Dual-use Tools

RELEASE DATE
05-Feb-2024
REGION
North America
Deliverable Type
Market Research
Research Code: K9AE-01-00-00-00
SKU: AE_2024_557
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$2,450.00
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SKU
AE_2024_557

US DoD Artificial Intelligence Growth Opportunities
Published on: 05-Feb-2024 | SKU: AE_2024_557

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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 Competitors25 companies with new prime contracts awarded
Competitive FactorsCost, performance, schedule, support, technology, reliability, contractor relationships, customer relationships
Leading CompetitorsPalantir, ECS Federal, L3 Harris Technologies, Assured Information Security, Rise8
Revenue Share of Top 5 Competitors64.5%
Other Notable Competitors3M 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

List of 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
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Impacting your company's future growth potential.

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
More Information
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