As federal agencies increase their investment in artificial intelligence, spending on AI and related technologies is anticipated to grow by 15%, rising from $2.7 billion in 2026 to $3.1 billion by 2028. This shift occurs amidst ongoing scrutiny of the Department of Government Efficiency (DGE), which has faced allegations of overstating savings that were intended to reach $1 trillion by October 2025. Despite these claims, actual federal expenditures on technology have risen, with agencies spending $126 billion on IT contracts in 2024, an increase from $120 billion in 2023.
Last year, the federal workforce saw a significant reduction, with over 317,000 employees leaving due to layoffs, retirements, and buyouts. Remaining staff are now tasked with increased workloads as the government aims for enhanced efficiency. The Office of Personnel Management, led by Director Scott Kupor, has stressed the importance of addressing technology skill gaps to remain competitive in an AI-driven environment.
To support this transition, several agencies are launching internal learning platforms or collaborating with educational providers like LinkedIn Learning and Coursera to equip employees with essential skills for utilizing AI effectively. The Government Accountability Office noted a nearly twofold increase in AI use cases among 11 agencies in 2024, marking a significant shift toward recognizing AI's potential in improving public sector operations.