These 5 AI businesses Will Make You $1M (Start ASAP)

Artificial intelligence is changing how businesses operate, and the federal government is no exception. Agencies are looking for ways to use AI to improve efficiency, analyze information, automate processes, strengthen decision-making, and deliver services more effectively.

But here's something many entrepreneurs and business owners don't realize: You don't necessarily have to develop your own AI technology to participate in the federal AI market.

There are multiple ways to build a business around government demand for artificial intelligence. You could resell existing AI software, train government employees to use AI tools, help agencies develop AI safety standards, build specialized AI applications, or integrate AI systems into existing government operations.

These are five different business models, and each requires a different combination of technical knowledge, industry experience, business development, and government contracting expertise.

In this video, I break down five AI-related business opportunities based on federal contract award data available as of October 2026. The data discussed includes 84 AI-related contract awards over a three-month period, representing approximately $316 million in obligations and as much as $1.3 billion in potential contract value.

Those numbers demonstrate why businesses should be paying attention to this market. However, it's important to understand the difference between money already obligated and the potential value of a contract. Potential values are not guaranteed revenue, and the overall market does not mean every business can access those dollars.

The real opportunity is learning how agencies buy AI solutions, identifying where your capabilities fit, and positioning your business before a formal solicitation is released.

I've managed more than $82 billion in federal contracts throughout my career, and one lesson has remained consistent: businesses that understand the government's needs and prepare early are in a much better position than those that simply wait for a contract announcement and hope to win.

Let's look at where the opportunities are and how I would approach this market.

Why Government AI Contracting Is a Market Worth Watching

Artificial intelligence is no longer just an emerging technology that government agencies are experimenting with. Agencies are exploring practical ways to incorporate AI into their operations, and that creates demand for products, services, training, research, and technical support.

Think about the number of responsibilities federal agencies manage.

They process enormous amounts of information, maintain complex databases, support employees across multiple locations, manage security requirements, and make decisions that can affect millions of people.

AI has the potential to help with many of these activities.

For example, an agency might want to use AI to analyze medical records, automate administrative processes, improve data analysis, or help employees retrieve information more efficiently. Another agency might need support evaluating AI systems for accuracy, security, reliability, and potential risks.

These aren't all the same requirements. They represent different purchasing needs, which means businesses with different capabilities can potentially participate.

The federal AI market isn't limited to companies building advanced machine learning models. It also includes businesses that provide existing software, technical implementation, employee training, research, testing, consulting, and integration services.

That distinction is important, especially for small businesses.

You don't have to compete with the largest AI developers on every opportunity. You need to understand which part of the market aligns with your expertise and identify the agencies that have a reason to buy what you offer.

The Numbers: What Federal AI Contract Spending Reveals

The contract data discussed in the video provides an interesting snapshot of federal AI procurement activity as of October 2026.

Over a three-month period, the analysis identified:

• 84 AI-related contract awards.

• Approximately $316 million in obligated spending.

• Up to $1.3 billion in potential contract value.

• An average award size of approximately $3.7 million.

• Roughly 40 awards going to small businesses.

These figures are based on the specific dataset and timeframe discussed. They should be treated as a market snapshot rather than a guarantee of future spending or available opportunities.

One detail I find particularly interesting is the small-business participation.

Approximately half of the awards in the analysis went to small businesses. And according to the data presented, only a portion of those awards involved formal small-business set-asides, such as 8(a) or Service-Disabled Veteran-Owned Small Business opportunities.

Why does that matter?

Because it challenges the assumption that a small business must have a special designation to compete in the federal marketplace.

Certifications and set-asides can create valuable opportunities when a company qualifies, but they are not the only way to enter the market.

Small businesses can also compete for open opportunities when they have the required capabilities, relevant experience, and a competitive solution.

The lesson is that you shouldn't automatically eliminate an opportunity simply because it isn't set aside for your business category.

Instead, evaluate the actual requirements, competition, eligibility, and acquisition strategy.

Five AI Business Models You Can Build Around Government Demand

The first thing I would do when researching the federal AI market is break it into smaller business opportunities.

Rather than treating AI as one broad industry, look at the specific products and services agencies are purchasing.

Here are five business models worth exploring.

1. Resell Existing AI Software and Licenses

The first opportunity is one of the most straightforward: providing existing AI software and licenses to government agencies.

You don't necessarily need to develop an AI platform from scratch. You could work with an established technology provider and help government customers acquire software that meets their needs.

Government organizations may need AI tools for research, data analysis, productivity, document processing, information retrieval, and other business functions.

The opportunity for a reseller is to connect an existing technology solution with a government customer that needs it.

The video discusses an example involving ChatGPT licenses for the Department of the Treasury, with an award value of approximately $2.1 million.

This illustrates that government agencies may purchase access to existing AI technology rather than develop every solution internally.

But becoming a reseller involves more than finding a product and offering it to an agency.

You need to understand the software, its licensing structure, deployment options, security requirements, and the specific conditions under which it can be used by government customers.

For example, a product that works well in a commercial environment may not automatically meet the security, privacy, data-handling, or authorization requirements of a federal agency.

You also need to understand how the software is purchased. Some agencies may require vendors to have access to an appropriate contract vehicle, while others may use a different procurement approach.

Who should consider this business model?

• IT resellers and technology distributors.

• Software companies with existing AI products.

• Businesses with established relationships in the technology sector.

• Consultants who understand government technology procurement.

• Small businesses interested in partnering with established AI vendors.

The advantage of this model is that you may be able to participate in the AI market without building the underlying technology yourself.

The challenge is differentiating your business and ensuring the solution meets the customer's technical and procurement requirements.

2. Train Government Employees to Use AI Tools

The second opportunity is AI training.

Government agencies may purchase training services to help employees understand and use artificial intelligence effectively.

Think about it: providing employees with access to an AI tool doesn't automatically mean they know how to use it.

Employees need to understand how to write effective prompts, evaluate AI-generated information, recognize limitations, protect sensitive data, and apply the technology to their daily responsibilities.

An agency may need training for administrative staff, analysts, managers, technical personnel, or entire departments.

This creates opportunities for companies that specialize in professional development, technology education, workforce training, and organizational change.

The video highlights a Treasury-related training example involving full-stack AI and data training. The reported award figures range from approximately $139,589 to $1.3 million, depending on the specific award or contract value being discussed.

This is an interesting model because you don't necessarily need to build an AI platform to deliver the service.

You need the right instructional expertise, a strong understanding of the technology, and the ability to design training around the agency's actual needs.

For example, a training company could develop courses covering:

• AI fundamentals and practical applications.

• Prompt engineering and effective use of AI assistants.

• Responsible AI use and human oversight.

• AI-assisted research and data analysis.

• Identifying inaccurate or misleading AI-generated information.

• Data privacy and responsible handling of sensitive information.

• AI applications in specific government functions.

The strongest programs go beyond explaining what AI is. They show employees how to use the technology responsibly in their actual work environment.

Of course, training must reflect the agency's approved tools, policies, and security requirements. You cannot assume employees are permitted to enter government information into any publicly available AI platform.

Who should consider this business model?

• Corporate training companies.

• Technology education providers.

• AI consultants.

• Professional development firms.

• Instructional designers with technical expertise.

• Businesses already providing government workforce training.

If you have experience in training, education, or technology implementation, this may be one of the more accessible ways to explore the federal AI market.

3. Develop AI Safety Standards and Risk Management Solutions

The third opportunity is more specialized, but it addresses one of the most important challenges associated with artificial intelligence: making sure AI systems are safe, reliable, and appropriate for their intended use.

As agencies adopt AI, they need ways to evaluate how these systems behave, how they handle information, and what risks they may introduce.

For example, an AI system could produce inaccurate information, expose sensitive data, generate biased results, or make recommendations that require human review.

Government agencies need processes for identifying and managing these risks.

This creates opportunities for businesses that specialize in AI governance, risk management, cybersecurity, technical evaluation, compliance, and responsible AI practices.

The video discusses an example involving AI standards and risk management, with approximately $1.7 million obligated and a total potential contract value of around $7 million.

This type of work can involve several different services:

• Developing AI governance frameworks.

• Assessing AI systems for potential risks.

• Evaluating model performance and reliability.

• Establishing testing and validation procedures.

• Reviewing data quality and security controls.

• Supporting responsible AI implementation.

• Developing documentation and oversight processes.

One important distinction is that AI safety is not simply about writing a policy document.

A government customer may need a practical framework that explains how an AI system should be evaluated, monitored, documented, and governed throughout its lifecycle.

That requires technical knowledge and an understanding of the operational environment in which the system will be used.

Businesses entering this space should also understand relevant federal policies, standards, agency guidance, and applicable cybersecurity requirements.

Who should consider this business model?

• Cybersecurity companies.

• Risk management consultants.

• AI governance specialists.

• Technology assessment firms.

• Data science and machine learning professionals.

• Compliance and assurance providers.

This niche may be especially relevant for established companies that already work in cybersecurity, technology risk, or regulatory compliance and want to expand into AI-related services.

4. Build and Test Specialized AI Applications

The fourth opportunity is developing and testing AI applications for specific government use cases.

This is where businesses can apply AI to solve a particular operational problem rather than simply providing a general-purpose tool.

Consider an agency that manages millions of records. Employees may spend significant time reviewing documents, extracting information, identifying patterns, and organizing data.

An AI application could help automate parts of that process.

The video discusses a Centers for Medicare and Medicaid Services (CMS) example involving AI research and medical record analysis, with approximately $2.2 million obligated and a potential value of around $4.2 million.

This illustrates how agencies may use AI for specialized applications involving large amounts of information.

Other potential use cases could include:

• Document classification and information extraction.

• Medical record analysis.

• Fraud detection and anomaly identification.

• Predictive maintenance.

• Research and data analysis.

• Processing large collections of government documents.

• Identifying trends across complex datasets.

The important point is that the government doesn't necessarily need another generic AI product.

It may need a solution designed around a specific mission, workflow, or operational challenge.

For businesses developing these applications, understanding the customer's problem is just as important as understanding the technology.

You need to know what information the agency is working with, what the existing process looks like, where the inefficiencies exist, and what a successful solution would accomplish.

You also need to consider data quality, security, model performance, testing, human oversight, and integration with existing systems.

An AI application that produces impressive results in a demonstration may still fail in a real government environment if it cannot operate reliably with the agency's data and infrastructure.

Who should consider this business model?

• AI and machine learning development companies.

• Software engineering firms.

• Data analytics businesses.

• Research and development organizations.

• Specialized technology startups.

• Companies with experience in healthcare, defense, or other government mission areas.

This model can offer substantial opportunities, but it also requires technical depth and the ability to demonstrate that your solution works.

5. Build and Integrate AI Systems Into Government Operations

The fifth business model involves integrating AI into existing government systems and workflows.

This is different from developing a standalone application.

An agency may already have databases, software platforms, reporting systems, and internal processes. It wants to incorporate AI into those environments without disrupting critical operations.

That can require systems integration, workflow automation, data engineering, software development, cybersecurity, and ongoing technical support.

The video discusses a FEMA-related example involving robotic process automation (RPA), AI, and machine learning, with an award value of approximately $3.4 million.

This type of opportunity demonstrates that agencies may need companies to connect technologies and automate processes rather than simply purchase an AI license.

For example, an agency might want to automate repetitive administrative tasks, improve how information moves between systems, or use AI to help employees process large volumes of information.

A systems integration company could assess the existing environment, design the solution, connect the necessary platforms, test the workflows, and support implementation.

This is a more involved business model because the contractor may be responsible for several stages of the project.

Depending on the requirement, that could include:

• Assessing existing systems and infrastructure.

• Designing the integration architecture.

• Connecting AI tools to approved data sources.

• Automating repetitive workflows.

• Implementing security and access controls.

• Testing system performance.

• Training users and supporting deployment.

• Maintaining and improving the solution.

The business needs to understand not only AI but also the systems with which it must work.

That means experience in enterprise software, cloud infrastructure, data management, cybersecurity, and systems engineering can be valuable.

Who should consider this business model?

• IT services companies.

• Systems integrators.

• Cloud and software engineering firms.

• Automation specialists.

• Data engineering businesses.

• Companies with existing federal technology experience.

For established IT companies, AI integration may be a natural extension of services they already provide.

Which Federal Agencies Are Buying AI Solutions?

Once you understand the five business models, the next question is where to look for opportunities.

Not every federal agency has the same AI requirements or purchasing priorities.

Some agencies may focus on research and development. Others may need AI tools for administrative operations, data analysis, cybersecurity, or mission-specific applications.

The contract data discussed in the video identifies the Department of Defense as the leading AI spender during the three-month period analyzed, with approximately $132 million in obligations.

The analysis also highlights several other agencies worth researching.

Department of Defense

The Department of Defense has a broad range of potential AI applications, including intelligence analysis, logistics, cybersecurity, autonomous systems, research, and operational support.

The video specifically identifies Air Force Research Laboratories as a notable sub-agency.

For businesses interested in defense-related AI, I would research the specific organizations and mission areas purchasing these technologies rather than treating the entire Department of Defense as one customer.

The requirements of a research laboratory may be very different from those of an operational command or a support organization.

Department of Health and Human Services

Health and Human Services has opportunities related to healthcare data, medical research, administrative operations, and information management.

The CMS example discussed earlier illustrates how AI can support specialized research and analysis involving healthcare information.

Businesses with experience in healthcare technology, data analytics, and medical information systems may want to investigate this market.

Department of Commerce

Commerce-related opportunities may involve data analysis, research, economic information, and technology-related activities.

Companies should research the individual bureaus and offices to understand where AI applications may align with agency priorities.

Department of Homeland Security

Homeland Security agencies manage complex operational and information environments.

Potential areas of interest may include cybersecurity, data analysis, workflow automation, logistics, and other mission-support applications.

The specific requirements will depend on the component and procurement.

Department of the Treasury

The Treasury examples discussed in the video include AI software licensing and workforce training.

This illustrates two different ways an agency may purchase AI-related products and services.

A business that provides software licenses may pursue a different procurement path from a company that offers employee training, even when both serve the same agency.

The lesson is to research the individual buying organization and its requirements rather than assuming that one AI business model fits every agency.

Why Small Businesses Should Pay Attention to Federal AI Contracts

One of the most encouraging findings in the data is the number of awards going to small businesses.

Approximately 40 of the 84 awards in the three-month analysis went to small businesses.

That is significant because many entrepreneurs assume the federal AI market is dominated entirely by large defense contractors and major technology companies.

Large companies certainly play an important role, especially in complex, enterprise-wide programs. But that doesn't mean small businesses have no place in the market.

A small company may have specialized technical expertise, a focused AI application, a strong training program, or a unique capability that addresses a specific agency requirement.

In fact, specialization can be an advantage.

A smaller company focused on AI governance, healthcare data analysis, or a particular automation use case may be better positioned for a targeted opportunity than a company trying to provide every AI service imaginable.

And remember, not every award requires a formal small-business set-aside.

If an opportunity is open to competition, a qualified small business may be able to compete based on its technical capabilities, experience, pricing, and proposed solution.

That said, you still need to meet the solicitation's requirements. Small-business status alone does not make a company competitive.

The key is understanding what the government needs and showing why your business is qualified to deliver it.

Why Technical Excellence May Matter More Than Being the Lowest-Priced Bidder

Another important point discussed in the video is the way agencies evaluate proposals.

Many businesses approach government contracting assuming the lowest price will always win.

That isn't necessarily true.

Depending on the acquisition, agencies may use evaluation approaches that place significant weight on technical quality, experience, and the overall value of the proposed solution.

One example is the Highest Technically Rated Offeror approach, where the agency evaluates technical proposals and may select the highest-rated offeror that meets the applicable criteria, subject to the stated evaluation and pricing procedures.

This is different from a Lowest Price Technically Acceptable (LPTA) approach, where offers must meet minimum technical requirements and price plays a central role in the selection.

You cannot assume every AI procurement uses one evaluation method. The solicitation tells you how the government intends to evaluate offers.

But the broader lesson is important: don't build your entire competitive strategy around being the cheapest provider.

AI projects can involve complex technical requirements. Agencies may need solutions that are reliable, secure, scalable, and appropriate for their mission.

Your proposal should demonstrate how your solution addresses the problem, what makes your approach technically sound, how you will manage risks, and why your company can perform the work.

Relevant past performance, qualified personnel, technical methodology, and a clear understanding of the requirement can all matter.

The objective is to show the government that you understand the problem and have a credible plan to solve it.

The Most Important Part of Government AI Contracting Happens Before the RFP

If there's one procurement strategy I want businesses to understand, it's the importance of early engagement.

Many companies wait until a formal Request for Proposal or Request for Quotation appears before they begin researching an opportunity.

By then, the agency has already completed much of its market research and developed its requirements.

That leaves the business with a limited period to understand the solicitation, prepare a proposal, and submit a competitive response.

I would rather see businesses identify potential opportunities earlier.

One of the most useful ways to do that is through Sources Sought notices.

What Is a Sources Sought Notice?

A Sources Sought notice is generally used by an agency to gather information from the marketplace before deciding how to proceed with a procurement.

The agency may want to know which businesses have the required capabilities, whether small businesses can perform the work, and what solutions are available.

For an AI company, this is an opportunity to communicate its capabilities before a formal solicitation is released.

For example, suppose an agency is researching an AI-powered document analysis solution.

Your company might respond by explaining:

• What your AI technology does.

• Which types of documents or data it can process.

• How the solution addresses the agency's stated problem.

• What security and privacy controls are available.

• What relevant projects your company has completed.

• How your solution could be implemented.

• Whether your company meets applicable small-business criteria.

A strong response should answer the agency's questions directly and provide specific, credible information.

Why Responding Early Can Help

Think about the difference between introducing your capabilities during market research and waiting until the final solicitation.

During market research, the agency is still gathering information about the available solutions and the companies that can provide them.

Your response may help the agency better understand the market and available capabilities.

It may also provide an opportunity to establish awareness of your company with the procurement team.

However, there is an important distinction: responding to a Sources Sought notice does not guarantee a contract award, a future invitation to bid, a small-business set-aside, or a change in the final requirements.

The agency remains responsible for determining its acquisition strategy and conducting the procurement fairly.

Still, early engagement gives your business an opportunity to communicate its capabilities before the formal competition begins.

That is a much more proactive approach than waiting for an RFP and hoping your company is the right fit.

How to Find AI Government Contracts Using SAM.gov

If you want to enter the federal AI market, you need to know how to research actual procurement opportunities.

One of the primary resources I recommend is SAM.gov.

It is the federal government's official platform for registering entities and publishing federal contract opportunities.

Here's how I would approach AI market research.

Step 1: Search Using Multiple AI-Related Keywords

Don't limit your research to the term "artificial intelligence."

Agencies may describe their requirements using different terminology.

Depending on the business model, search terms could include:

• Artificial intelligence.

• Machine learning.

• Generative AI.

• AI integration.

• AI training.

• Data analytics.

• Intelligent automation.

• Robotic process automation.

• AI governance.

• Model evaluation.

• Natural language processing.

• Predictive analytics.

You should also consider industry-specific terms. For example, a healthcare AI company might search for medical data analysis or document processing opportunities.

The objective is to identify relevant requirements, not just notices that contain the letters "AI."

Step 2: Identify the Buying Agency

When you find an opportunity, look at the agency and sub-agency responsible for the requirement.

This helps you understand which organizations are purchasing the service and whether they align with your target market.

If your company specializes in AI training, for example, you may want to research agencies that have previously purchased technology training or workforce development services.

If you build AI applications for healthcare, you may want to investigate relevant healthcare organizations and their procurement histories.

Step 3: Review the Requirements

Read the notice and any supporting documents.

Identify the technical requirements, eligibility criteria, performance location, deadlines, evaluation method, and submission instructions.

Determine whether your company can perform the work and whether you need a partner to address capability gaps.

Don't assume that a contract is a good fit just because the title sounds relevant.

Step 4: Research the Competition

Use USAspending.gov and other available public information to investigate previous awards and contractors.

Look for companies that have performed similar work.

What agencies have they served? What types of solutions have they delivered? Are they established providers? Do they appear to hold relevant contract vehicles?

This research can help you understand the competitive landscape and identify potential partners.

Step 5: Track Opportunities Before They Become Solicitations

Monitor market research notices, Sources Sought announcements, and other early procurement activity.

Build a pipeline that tracks the agency, requirement, expected timing, potential value, competition, and next action.

This helps you move from reactive bidding to a more deliberate business development process.

Don't Overlook Government Contract Vehicles

Another challenge businesses may encounter in the federal AI market is access to contract vehicles.

Some agencies purchase technology and professional services through established acquisition vehicles, including Government-Wide Acquisition Contracts (GWACs) and Federal Supply Schedules.

These vehicles provide an established way for agencies to acquire certain products and services from approved contractors.

Depending on the procurement, an agency may choose a contract vehicle that limits competition to companies already holding a position on that vehicle.

That can create a barrier for new businesses.

For example, a small AI company may have an excellent product but lack access to the contract vehicle through which an agency intends to purchase that type of solution.

This doesn't mean the business has no options, but it does mean the company needs to understand how its target customers buy.

Some possible approaches include:

• Investigating relevant contract vehicles and their requirements.

• Partnering with an established contract holder when appropriate.

• Pursuing open-market opportunities where eligible.

• Exploring subcontracting opportunities.

• Building a strategy to qualify for future contract vehicle competitions.

The important thing is to identify these requirements early.

Don't spend months pursuing an opportunity only to discover that your company cannot access the procurement channel the agency intends to use.

My Four-Step Framework for Winning Government AI Contracts

Understanding the market is important, but you also need a repeatable process for turning research into actual business opportunities.

The framework I recommend is simple:

Position. Target. Qualify. Pursue.

These four steps help businesses organize their government contracting strategy and avoid wasting time on opportunities that don't fit.

1. Position: Understand Your Place in the AI Market

Before pursuing government contracts, determine what your business actually offers.

Are you selling AI software? Providing training? Developing specialized applications? Supporting AI governance? Integrating systems?

Be specific.

Then identify the government problems your solution can address.

For example, saying, "We provide AI solutions to government agencies," is too broad.

A stronger position might be, "We help federal healthcare organizations automate document analysis using secure AI-enabled workflows."

That tells a potential customer more about what you do and the problem you solve.

Your positioning should reflect your actual capabilities. Don't claim experience, certifications, security authorizations, or technical features that your company cannot demonstrate.

2. Target: Identify the Right Agencies and Buyers

Once your business is positioned, identify the agencies most likely to need your services.

Use federal spending data, procurement notices, historical awards, and publicly available agency information.

Look for patterns.

Which agencies are purchasing similar products or services? Which sub-agencies have relevant programs? What types of contractors are receiving awards?

The goal is to narrow your focus.

You don't need to pursue every federal agency. You need to identify the organizations whose requirements align with your capabilities.

A focused strategy makes it easier to understand the customer, monitor opportunities, and develop relevant business relationships.

3. Qualify: Build Your Pipeline and Engage Early

Not every opportunity deserves a proposal.

Before committing resources, evaluate whether your company can meet the requirements and compete effectively.

Consider:

• Technical capability.

• Eligibility.

• Relevant past performance.

• Required certifications or authorizations.

• Contract vehicle access.

• Competition.

• Pricing and delivery capacity.

• The agency's actual need.

This is also where early engagement becomes important.

Monitor Sources Sought notices and other market research announcements. Respond when your company has relevant capabilities and can provide useful information.

You should also establish a pipeline that tracks opportunities from early research through formal solicitation and award.

This helps you prioritize the opportunities that deserve your attention.

4. Pursue: Develop a Competitive Proposal

When a suitable solicitation is released, your company needs to prepare a proposal that responds directly to the government's requirements.

Start by breaking down the solicitation.

Identify every mandatory instruction, technical requirement, evaluation factor, and submission deadline.

Develop a compliance matrix so that each requirement has a corresponding response and supporting evidence.

Your proposal should explain:

• Your understanding of the agency's problem.

• Your proposed technical approach.

• Why your solution is appropriate.

• The qualifications of your team.

• Relevant past performance.

• How you will manage implementation and risk.

• How you will meet the contract requirements.

• Your pricing and assumptions.

For AI-related contracts, don't rely on impressive technology descriptions alone.

Explain how the solution will work in the agency's environment, how it will be tested, what safeguards are in place, and how human oversight will be handled when appropriate.

The government needs to understand not only what your technology can do but also whether your company can deliver it reliably.

How to Choose the Right AI Business Model

With five different opportunities available, how do you decide which one makes the most sense?

I would start with your existing capabilities rather than trying to enter the most technically complex category.

If you already operate a software distribution company, AI licensing may be a natural extension.

If you have a background in workforce development or technology education, AI training could be a better fit.

If your company specializes in cybersecurity, compliance, or risk management, AI safety and governance may align with your expertise.

If you have a software engineering or data science team, specialized AI application development may be worth exploring.

And if you already provide enterprise IT services, systems integration may be the most logical direction.

You should also evaluate the investment required.

Some business models require substantial engineering resources, specialized personnel, or technical infrastructure. Others may rely more heavily on existing expertise, partnerships, and service delivery capabilities.

Here is a simplified comparison:

The best opportunity isn't necessarily the one with the largest contract value.

It's the one where your business has a credible competitive advantage and can deliver the work successfully.

A Practical 90-Day Plan to Enter the Government AI Market

If I were helping a company enter the federal AI market today, I wouldn't start by telling it to submit as many proposals as possible.

I would focus the first 90 days on building a foundation.

Days 1–30: Research and Position Your Business

Start by identifying your AI capabilities and the government problems they can solve.

Choose one of the five business models and define your target customer.

Research historical spending on USAspending.gov and review relevant opportunities on SAM.gov.

Identify agencies that have purchased similar solutions and examine the companies that received those awards.

By the end of this phase, you should have a clear market position and an initial list of target agencies.

Days 31–60: Identify Opportunities and Build Relationships

Develop a pipeline of relevant procurement activity.

Monitor Sources Sought notices, Requests for Information, and other market research announcements.

Research the agencies and contracting organizations associated with your target market.

Prepare a capability statement that clearly explains your technical strengths, relevant experience, and the problems you solve.

Where appropriate, respond to early market research notices with accurate, specific information about your company's capabilities.

You should also investigate potential teaming partners and contract vehicle access if those are relevant to your target opportunities.

Days 61–90: Qualify and Prepare to Pursue

Evaluate the opportunities in your pipeline.

Determine which ones fit your technical capabilities, eligibility, experience, and available resources.

Identify gaps that need to be addressed before you bid.

Develop a proposal preparation process, including a compliance matrix, technical writing approach, pricing review, and internal quality control.

You may not have a contract award within 90 days. Federal procurement timelines can be lengthy, and opportunities may take months or longer to move from early market research to award.

The objective is to build a stronger foundation and position your company to pursue the right opportunities as they develop.

Final Thoughts: The AI Opportunity Is Bigger Than Building AI Software

When people hear about government AI contracts, they often assume the opportunity is limited to major technology companies developing advanced artificial intelligence platforms.

But the federal AI market is much broader.

Agencies need software licenses, employee training, AI governance, specialized applications, research, testing, and systems integration.

That creates opportunities for different types of businesses, including software companies, IT providers, training organizations, cybersecurity firms, consultants, and specialized technology developers.

The contract data discussed in this video provides a snapshot of growing federal interest in AI. But spending figures alone won't tell you which opportunity is right for your company.

You need to understand the agencies, the procurement process, the technical requirements, and the competition.

More importantly, you need to stop thinking about government contracting as something that begins when an RFP is released.

The companies that prepare early are often better positioned to understand the market, communicate their capabilities, and make informed decisions about which opportunities to pursue.

That's why I emphasize the four-step framework: Position, Target, Qualify, and Pursue.

Position your business around a real government need. Target the agencies that buy what you offer. Qualify opportunities before investing resources. Then pursue the ones where you have a credible chance to compete.

The federal government is buying AI solutions, but the opportunity isn't just for the companies building the technology. It's also for the businesses that know how to train, evaluate, implement, integrate, and support it.

If you're serious about entering the federal AI market, start by identifying where your existing capabilities fit. Then learn how to navigate the procurement process and build a strategy around the agencies that need what you provide.

Don't wait for the perfect contract to appear. Prepare your business before the opportunity reaches the bidding stage.

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