AI Adoption in Government & the Department of Defense

21 August 2025

6 mins read

Fast Facts on AI Adoption in Government

Governments are adopting AI to improve public service delivery, accountability, and operational efficiency, while addressing risks like bias and the lack of transparency through strong governance.
The U.S. AI Action Plan promotes coordinated deployment via CAIOC, workforce training, standardized procurement, and talent exchanges to scale responsible AI use across agencies.
The Department of Defense is driving adoption through workforce development, virtual proving grounds, AI-enabled automation, and access to resilient compute during national emergencies.
Civilian agencies use AI for claims processing, FOIA automation, fraud detection, and multilingual citizen service, achieving faster service and lower error rates.
Significant barriers to adoption exist, including fragmented procurement, technical debt from legacy systems, inconsistent risk frameworks, and a lack of continuous monitoring and auditing capabilities.

Why Governments Need to Adopt AI Now

The OECD highlights that AI adoption in government can enhance the speed and oversight of public service, enabling more inclusive, responsive services while strengthening accountability. Risks like bias and opacity, however, require mitigation through strong governance and careful implementation.

Unchecked adoption may erode public trust. A 2025 study found that initial efficiency gains can later erode citizens’ perceived control as well as institutional trust. In the US, federal spending on AI reached roughly $4.38 billion in 2022, showing the need for serious investment in AI governance and security.

Without AI, governments risk falling behind the private sector. Unfortunately, many agencies still rely on manual, legacy systems. The UK’s public accounts committee found that 60% of the agencies surveyed faced data quality issues and 70% struggled to recruit digital talent.

Government-Wide Actions in the Plan

The AI Action Plan calls for formalized coordination via the CAIOC. This council ensures federal agencies speak a common language for AI. It proposes a talent-exchange program to rapidly close skill gaps and accelerate safe AI deployment. A central feature in the Action Plan is the AI procurement toolbox managed by the General Services Administration and the Office of Management and Budget. This toolbox streamlines model selection and encourages the reuse of agency AI use cases. The plan sets a target of 100% of federal agencies participating in the CAIOC by FY2026.

DoD-Specific Actions to Drive Adoption

The Department of Defense has created a skill blueprint for widespread training of AI professionals, aligning training programs with strategic needs. The DoD is also establishing an AI & Autonomous Systems Virtual Proving Ground for virtual testing of AI systems before deployment, reducing risk.

To support AI during crises, the DoD has agreements in place for priority compute access, including reserved GPU cluster tiers in secure data centers. These ensure essential AI systems remain operational under strain, vital for mission resilience and agility.

Examples of AI Adoption in Government

Governments globally are integrating AI into public services.

Civilian agency use cases

Benefits processing copilots summarize claims and flag missing documents, reducing days-to-decision.
AI tools classify FOIA requests, auto-redact PII, and assemble release packets, minimizing backlog and error rates.
Virtual agents offer multilingual chat for citizen service, reducing inbound calls and improving customer satisfaction.

Department of Defense use cases

An intelligence analysis copilot integrates reports from disparate sources, enhancing briefing quality.
AI tools detect failure patterns for predictive maintenance, improving mission-readiness.
AI now generates potential courses of action for mission planning, speeding up the process and allowing more scenario exploration.

Barriers to Government Adoption

Government adoption of AI is often slowed by regulatory complexity, legacy systems, data privacy concerns, and a shortage of skilled talent.

Fragmented procurement and legacy systems

These issues perpetuate legacy risk and slow new pilot implementation. MITRE’s 2024 legacy analysis links tech debt to major outages and security exposure, raising integration costs for AI.

Risk posture for high-consequence domains

Defense and healthcare face low tolerances for model error, necessitating standards and secure data centers for national security workloads.

Gaps in continuous monitoring, explainability, and audit trails

Many agencies lack end-to-end audit trails for outputs, hindering trust and effective governance.

Metrics and ROI for Public-Sector AI

Agencies should track outcomes, not just pilot counts. Key performance indicators (KPIs) such as days-to-decision or error rates should be widely adopted. Organizations expanding AI use must tie concrete KPIs to their efforts from the outset.

How Knostic Supports Government & DoD AI Adoption

Knostic is designed for public sector compliance and integrates into various environments. It supports the testing of AI risk before deployment and ensures that sensitive outputs are carefully governed.

FAQ

How is AI being used in the government? AI is employed to speed up processing in benefits, automate FOIA requests, and improve citizen services among other applications.
What is the biggest challenge facing governmental AI adoption? The most significant barrier is governance, including fragmented procurement processes and legacy systems that hinder scalability.
What are the top AI use cases in governments? Benefits processing copilots, FOIA automation tools, and multilingual citizen service agents are key use cases.
What is the DoD AI adoption strategy? The DoD's coordinated plan includes training scale, virtual testing, and strategic human capital development.