Navigating FY25: How AI Companies Can Capitalize on US Government Priorities

Author: Harvey Morrison

The artificial intelligence (AI) sector continues to be a major strategic focal point for the US Government, as highlighted by the White House's October Presidential memorandum titled Advancing the United States’ Leadership in Artificial Intelligence. The memo emphasizes AI as critical to maintaining national security, ensuring ethical AI governance, and advancing US leadership in AI development and application.

For AI companies, this presents a unique opportunity. FY25 shows a growing commitment to integrating AI across federal government agencies, with substantial budgets aimed at infrastructure, national security, ethical development, workforce training, and research and development (R&D). However, seizing these opportunities requires a deep understanding of agency-specific priorities and deployment strategies.

This blog outlines key government priorities for FY25 and provides actionable insights for AI companies looking to successfully align with these initiatives.

The Federal AI Landscape in FY25

The federal government’s AI ambitions are backed by significant resources. Across both the Department of Defense (DoD) and civilian agencies, AI-related budgets for FY25 are increasing compared to FY24. For example:

• Department of Defense (DoD) continues to lead in AI investment with a modest increase in budget allocation for defense-related AI.

• Federal Civilian Agencies propose a $3 billion budget—over $1 billion more than their spending in FY24—signaling growing interest in AI-enhanced civilian services.

While these figures are impressive, it’s essential to recognize that different agencies have distinct strategies for deploying AI. Some, like the DoD and the Department of Energy (DOE), are far along in developing AI infrastructures to support testing and deployment. Others, such as the Department of Justice (DOJ), are just beginning to establish AI program offices and set standards.

For AI companies, understanding these agency nuances and aligning your technology offerings with specific agency priorities is critical to maximizing your return on investment in FY25.

Key Focus Areas from the Presidential Memo

The government’s priorities for AI development and implementation go far beyond creating algorithms or chatbots. Based on the White House memo, here are five primary focus areas for FY25 with opportunities for AI companies to engage.

1. Infrastructure Development

To effectively deploy AI, agencies need robust infrastructures, including organized and secure data, high-performance computing, and cloud systems to support the development and operationalization of AI models.

Many agencies are adopting centralized or shared services approaches, creating enterprise data layers and compute environments. Key initiatives include:

• Department of Veterans Affairs (VA) - Utilizing the AVAIL contract vehicle to provide AI development and testing services.

• DoD - Developing the Joint Common Foundation to serve as a central platform for AI development.

• Department of Energy (DOE) - Building secure data and compute infrastructures to train AI applications.

AI companies specializing in data preparation, cloud infrastructure, and cybersecurity have significant opportunities in supporting these initiatives.

2. National Security Integration

National security remains a high-priority area for AI integration. Government agencies are leveraging AI in various critical operations, including:

• Cybersecurity: DoD, FBI, and DHS are investing in AI to detect and mitigate cyber threats.

• Counterintelligence: Projects by NSA and FBI focus on countering adversarial AI usage.

• Logistics Optimization: AI is being employed to improve supply chain management within DoD’s contested logistics initiatives.

• Autonomous Systems: Programs like DoD's Replicator are expanding the use of autonomous systems to enhance battlefield capabilities.

AI companies operating in these areas can position themselves as valuable partners in advancing national security objectives.

3. Ethical Development of AI

The government aims to lead in ethical AI development, ensuring that AI technologies are deployed safely and responsibly while preserving national competitiveness. Initiatives include:

• NIST AI Standards Coordination: Developing frameworks for trustworthy AI systems.

• AI Risk Management Frameworks: Promoted by FedRAMP to secure cloud-based AI applications.

• National AI Research Resource Pilot: Led by the National Science Foundation (NSF), providing computing power and resources for innovation.

AI companies can align with these efforts by emphasizing transparency, accountability, and ethical AI practices in their technologies.

4. R&D Investments

R&D continues to be a major focus of government AI spending, offering opportunities to establish foundational relationships while shaping the standards for future procurements.

• Agencies like DoD, DOE, and NSF heavily fund R&D projects to drive innovation.

• Many R&D programs fund pilot projects, creating pathways for scaling solutions after proof of concept development.

For AI companies seeking long-term growth, R&D contracts represent valuable opportunities for non-dilutive funding and a chance to influence the future AI landscape.

5. Workforce Development

The government recognizes the need for a workforce capable of effectively utilizing AI. Major workforce training initiatives include:

• GSA: Developing a comprehensive series of AI training programs.

• US Digital Services & OPM: Building educational resources to teach AI applications and enhance adoption.

AI companies can support these initiatives by offering training solutions, certifications, or tools that enhance workforce readiness.

How to Align with FY25 Government Initiatives

For AI companies, success in government markets isn’t a one-size-fits-all approach. To effectively enter and grow within this space, companies need to develop strategies tailored to agency-specific needs, priorities, and budgets. Here’s how to get started:

1. Understand Agency-Specific Priorities: Focus on agencies whose AI needs align with your technology. Review public budget documents and program descriptions to target your efforts.

2. Explore R&D Opportunities: Even if you’re not actively pursuing R&D, these programs can provide invaluable insights and partnerships for future procurements.

3. Highlight Ethical Practices: Demonstrate your commitment to trustworthiness, security, and transparency in AI development.

4. Build Relationships & Partnerships: Lifecycles of government procurements are long—establishing relationships early can provide significant long-term benefits.

5. Leverage Expertise: Partnering with consultants like Marion Square can help ensure your strategies align with government objectives and maximize your odds of success.

Capitalizing on FY25 Opportunities

The US Government’s increasing investment in AI represents an unprecedented opportunity for companies willing to align with its strategic priorities. While the road to adoption may vary between agencies, a deep understanding of priorities such as infrastructure, national security, ethics, R&D, and workforce development can set your company up for success in FY25.

At Marion Square, we specialize in helping AI companies successfully enter and grow within government markets. From understanding budgets to navigating complex compliance processes, our expertise ensures you’re targeting the right opportunities and making the most of your efforts.

If you’re ready to seize the opportunities in FY25 and beyond, contact us today to start building your government market strategy.