DOT Advisor: Federal Contracting Must Adapt to Keep Pace With AI

Federal agencies risk falling behind the rapid evolution of artificial intelligence unless they rethink how they buy technology, according to Anil Chaudhry, senior advisor of AI, Autonomy and National Security at the Transportation Department. Chaudhry discussed how agentic AI is accelerating application development, testing and deployment while rapid advances in AI models are challenging traditional multiyear IT contracts. He points to modular contracting, with requirements broken into shorter increments, as one way agencies can better align procurement with the pace of technological change.

Chaudhry also examined how AI is reshaping the acquisition process itself, from enabling contractors to respond to more solicitations to helping agencies conduct administrative reviews. Rather than imposing a governmentwide ceiling on AI use in procurement, he argued agencies should tailor their approaches to their missions while following a straightforward principle: disclose when AI is used. He also discussed the emerging challenge of pricing AI-enabled work as agencies compare traditional labor-intensive teams with approaches that rely more heavily on AI agents.