Government AI Adoption will move at a pace faster than the Internet and reshape innovation, cybersecurity, procurement and workforce education and development
by Intelliworx
The classic American baseball legend Yogi Berra is credited with having said, “It’s tough to make predictions, especially about the future.”
It’s a snappy quip that captures attention, but it shouldn’t dampen our efforts to try. Predictions force us to question assumptions, correlate trends and stretch our thinking. To that end, predictions for the coming year are a useful thought experiment.
As we did last year, we’ve compiled a list of predictions about government technology for the New Year below. Some of these are our own, some were solicited from credible sources, and we also curated a handful – with attribution – from around the web.
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1. Government cloud spending to rebound in 2026
“After reaching $17.5 billion in FY 2023, federal cloud computing spending dipped to $16.7 billion in FY 2024 due to the end of several large contracts and multiple short-term agreements for cloud-based prototypes. Although headwinds exist, Deltek remains optimistic about federal cloud market growth, projecting that agency demand for vendor-furnished cloud computing goods and services will rise from $19.6 billion in FY 2026 to $21.0 billion in FY 2028.”
– Alex Rossino, Advisory Research Analyst, Deltek, Federal cloud computing market, 2026-2028
2. AI will transform Government innovation, cybersecurity and education
“Artificial intelligence (AI) is positioned to transform numerous sectors, including both Federal and State governments, driving innovation in technology development, bolstering data security, optimizing legacy workflows, and refining both defensive and offensive cyber strategies. Furthermore, AI’s influence will extend to education, prompting the integration of specialized AI-focused curricula designed to cultivate a future workforce proficient in AI applications across government, business, and industry.”
– Laura Hill, Department Chair, Information Technology CWI, College of Western Idaho
* Laura is a former assistant CIO and associate CISO for the U.S. Forest Service
3. AI adoption in government will mirror the Internet’s evolution
AI will be the primary topic of conversation for next year and the foreseeable future. The adoption of AI in government will follow a similar path to the one the Internet took. Over the course of 20 years, the internet grew and morphed out of both necessity and imagination into what it is today. The adoption of AI by the government, at all levels, will be similar but more explosive.
– Rob Hankey, CEO, Intelliworx
4. Governing rules and regulations for AI
If the Internet taught us anything, it’s that rules and regulations tend to lag far behind innovation. We can see this today in data privacy. We have a patchwork of laws governing privacy from various States in the Union, each with different requirements.
This is an enormous compliance burden for businesses, and it grows more challenging every day. We cannot let this happen with AI, or it risks slowing innovation. We have to set governing rules and regulations sooner rather than later.
We should also consider building a review of those laws into the process. This will help avoid unintended consequences, which are broadly inevitable, that might stifle advancements.
– Rob Hankey, CEO, Intelliworx
5. AI literacy will become essential on two levels
Educating civil servants on how to use AI and integrate it into their workflow will be essential, but that’s just the starting point. One key area of focus has to include identifying fact from fiction. Our ability to distinguish truth from hallucination in content generated by AI will be essential.
This is becoming apparent with the incredible video content being made. Even as we write these predictions, it’s becoming increasingly difficult to tell the difference between recorded video and complete fabrications created with generative AI.
The government will also need to continue to research creative new use cases. This will also require education of government employees, lawmakers and the American public. We are still in the very early stages of discovering the possibilities.
– Mark Bates, Chief Product Officer, Intelliworx
6. AI turns experts into a force of nature
Knowledge Domain as Code means treating everything your team knows – decisions, documents, processes, communications – as structured data in a shared workspace that both humans and AI can collaborate and iterate on. It’s your organization’s expertise treated like code, paired with AI that excels at working with codebases.
Most organizations are using AI wrong. The debate about AI slop and the cheapening of intelligence misses the point. AI can’t turn a non-expert into an expert. But it can turn an expert into a force of nature. The superpower isn’t AI doing your work for you – it’s AI holding your entire context while you think. Nothing gets lost. No implication goes untraced. Expertise compounds instead of evaporating.
The coming divide isn’t AI-adopters vs. skeptics. It’s teams who structure their knowledge for human-led, AI collaboration vs. teams where expertise stays locked in heads, inboxes, and scattered drives.
– Mike Howlett, CISSP, CIO & CISO, Intelliworx
7. Business will fill regulatory voids if the government doesn’t
“As governments debate, companies act. Apple sets privacy norms. OpenAI shapes AI ethics. Amazon defines logistics. Consumers trust these institutions more than elected officials, and companies step into the vacuum. The question of who actually governs the rules we live by becomes harder to answer. Corporate influence moves from strong to dominant, and the implications reach far beyond business.”
– Jessica Kriegel, Chief Strategy Officer, Culture Partners, LinkedIn Pulse
8. Modernization becomes key to fighting inefficiencies
The federal government’s process for retiring civil servants is still largely performed manually. The Office of Personnel Management (OPM) is reportedly running more than 100 different systems to manage human resources. Manufacturers must apply for permits from a dozen different federal agencies before breaking ground.
Such disparity in infrastructure adds cost and eats up time. It’s very inefficient and arguably prone to fraud. The advent and current implementation of AI technologies is making this even more apparent. In 2026, we anticipate a reinvigorated focus on modernization, including maturity, consolidation of platforms, interoperability, and finally, authentication.
– Mark Bates, Chief Product Officer, Intelliworx
9. Trust is the key to AI integration
“The AI trust gap is one of the biggest tech-related challenges governments will face in 2026. As AI tools become more common in government, the challenge won’t just be adopting them; it’ll be ensuring transparency, fairness, and resident trust in how they’re used. Ethical governance of AI will become as important as the tech itself.”
Debbie Brannan, Client Success Director, PayIt, 2026 government technology trend predictions
10. Blending AI with “human judgment, empathy, and accountability”
“AI is changing how government agencies deliver services, manage talent, and make decisions. But technology alone isn’t the only answer, and we can’t lose sight of what makes public service unique – human judgment, empathy, and accountability. In 2026, we’ll need to continue the focus on blending AI with human expertise to create smarter, more responsive systems.”
– Mika Cross, CEO, Strategy at Work, as published in a commentary for Cornerstone, Lessons learned, future impact: A year-end reflection for a more agile, resilient government workforce
11. Budget pressures push government to adopt an enterprise model
“Every CIO surveyed is actively pursuing IT cost-cutting measures, and 80% are under formal savings mandates. Leaders are embracing system consolidation, AI-driven automation, and enterprise licensing to maximize returns, but they warn that every dollar must deliver against both mission and modernization goals.
Despite hurdles, CIOs see momentum in adopting an enterprise approach, with nine out of 10 saying adopting an enterprise mindset is good for federal IT. As one CIO explained, “More and more, we’re moving to enterprise services and enterprise contracts. As we do that, we realize true cost avoidance – and that money gets plowed back into the mission.”
Still, CIOs say structural reforms are necessary. Top recommendations include modernizing funding mechanisms like the Technology Modernization Fund (TMF), granting CIOs greater authority, and investing in governmentwide infrastructure modernization and data management alongside AI. Without those changes, leaders caution, the federal government risks losing momentum just as AI is poised to deliver mission-changing impact.”
– MeriTalk, “Tech Tonic: FY26 Federal CIO Forecast,” CIOs to Feds: Fix the Pipes or Forget the Prompts
12. “Back to first principles” instead of ATOs
“Meanwhile, on authority to operate (ATO), [federal CIO Greg] Barbaccia said the administration is looking to go ‘back to first principles’ to change the process, hinting at potential work with Congress.
The ATO process, as it stands, is used to plan for and manage risks of a technology in government before implementing it. Part of that process relies on security controls outlined by the Commerce Department’s National Institute of Standards and Technology.
But Barbaccia described that process currently as a box-checking exercise that’s disconnected from ‘reality in the field that it supports.’”
– Greg Barbaccia, U.S. Federal CIO, Executive Office of the President, as published in an interview with FedScoop, Tech talent, authority to operate among federal CIO’s 2026 priorities
13. Less consulting and customization on big tech
“Governments increasingly want to spend less on big technology that requires heavy consulting and customized solutions. The key will be using technology to accelerate analysis and workflow to enable government employees to do more with less. The fusion of industry knowledge, frictionless technology and workforce enablement will be key.””
– Ben Stuart, Vice President, US Public Sector, SAS, Government AI predictions for 2026?? Good luck…
14. Agentic AI triggers a diplomatic crisis
“Government use of agentic AI will trigger a breach with diplomatic fallout. As Anthropic has recently reported, criminals are already exploiting automated capabilities, including AI. Next year, we expect this to go further, with at least one state-linked agentic AI operation crossing a diplomatic line and forcing a political response from the global community — from sanctions to formal protests.
Security and risk leaders must prepare for the potential of such attacks by adopting Forrester’s Agentic AI Guardrails For Information Security (AEGIS) Framework to ensure the auditability and security of their defensive and offensive agentic systems. To put it simply, put auditability, containment, and testing for agentic AI under a single control framework before an adversary tests it for you.”
– Sam Higgins, VP, Principal Analyst, Forrester, Predictions 2026: Tech nationalism will reshape public-sector AI, security, and procurement
15. AI agents as government tech unfractured
“AI agents – autonomous, adaptive systems capable of perceiving, reasoning, planning and acting across data environments. Unlike traditional AI models that provide insights or automate discrete tasks, AI agents can take initiative, interact with other systems, and continuously adapt to mission needs.
These systems depend on seamless access to 100% of mission-relevant data, not just data in a single environment. Without that foundation – data that’s unified, governed and accessible across hybrid infrastructures – AI agents remain constrained tools rather than autonomous actors. In short, they represent a move from static tools to dynamic, mission-aligned infrastructure.”
– Dario Perez, vice president, Federal Civilian and SLED, Cloudera, adopted from his commentary published in the Federal News Network, AI agents: The next layer of federal digital infrastructure
16. Potential for a “glut” of data centers
“The race to build massive data centers has accelerated at unprecedented speed. Driven by large language model development, cloud expansion and national-level competitiveness, construction has outpaced even optimistic demand models. As efficiency improves and organizations shift from training to inference, pockets of overcapacity may emerge.
Some regions may face underutilized facilities, wasted infrastructure investment, and public frustration over land, water and energy usage. During the dramatic growth spurt in cellular technologies, each carrier began building its own towers until it made more sense to co-locate them. Might this apply to data centers, too?
The lesson for 2026: capacity planning must become smarter, more sustainable and more collaborative across the public and private sectors.
– Alan R. Shark, senior fellow, Center for Digital Government, and associate professor, Schar School for Policy and Government at George Mason University, 2026 AI outlook: 10 predictions for the New Year
17. Budget constraints put renewed focus on ROI
“For workforce and economic development leaders, 2026 is going to be the year of outcomes: outcomes-focused data, decisions, and programs. After a year of upheaval and limited funding, the federal, state, and philanthropic grants that emerge in 2026 will flow to organizations and agencies that prove ROI for learners, workers, and their communities and are aligned to local industry demand.
This will be exhibited in the rollout of Workforce Pell, which mandates stringent accountability metrics to participating in short-term or non-degreed credential programs. This is just one reason why building the right data infrastructure is so vital.”
– Josh Wright, Head of Growth, Public Sector, Lightcast, What does 2025 tell us about 2026?
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Intelliworx has been providing purpose-built software to the federal government for 20 years and currently serves 40+ federal government agencies. The company is a certified service-disabled veteran-owned small business (SDVOSB) and is FedRAMP-authorized.
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