Brookings Institution Issues Analysis of Federal AI Spending

A report released by the Brookings Institution shows that the federal government is still in the experimental phase when it comes to artificial intelligence procurement given the large number of small contracts focused on research and development.

Data show that NAICS 54which covers professional, scientific and technical services including research and development, emerged as the most frequently used North American Industry Classification System code for AI-related contracts, Brookings said Thursday.

According to the report, over 95 percent of AI-labeled contract spending is under NAICS 54.

The study revealed that the Department of Defense appears to serve as an incubator for AI-related projects given its spending on the technology. Researchers found that DOD accounts for 53 percent of AI-related contracts within the NAICS 54 code.

The report also called on the government to enhance the authority of the National Artificial Intelligence Initiative Office to coordinate federal interagency AI activities pursuant to the National Artificial Intelligence Initiative Act of 2020 to help bring structure to the fragmented federal AI market.

Gregory Dawson, clinical professor at Arizona State University’s WP Carey School of Business, co-authored the report with Kevin Desouza, nonresident senior fellow for governance studies at the Brookings Institution’s Center for Technology Innovation, and James Denford, professor within the management department at Royal Military College of Canada.

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