DoD Issues New SBIR Contracts for AI and Machine Learning
Despite congressional gridlock on reauthorization, the Department of Defense continues to issue SBIR contracts for AI-powered military applications. Recent awards include a contract for predicting mission outcomes with machine learning (POMML). The Army also awarded Phase II contracts for using AI to find energetic defects and topology errors in munitions via visual processing and computed tomography.
The Small Business Innovation Research program, a key funding vehicle for the Pentagon's tech development, is being reauthorized for five years under the "Small Business Innovation and Economic Security Act." This development resolves a months-long gridlock that saw the program's authority expire on September 30, 2025, temporarily halting new funding opportunities and pausing some defense projects. These AI-focused contracts align with the Department of War's new "AI-first" agenda, a strategy outlined in a series of January 2026 memos. The plan emphasizes rapid experimentation with commercial AI models, the removal of bureaucratic barriers, and a focus on accelerating AI talent hiring to achieve military dominance. The Army's use of AI for munitions inspection aims to replace the current costly and subjective "200% visual inspection" process performed by two independent inspectors. By leveraging AI with X-ray technology and advanced algorithms, the goal is to create a more reliable, accurate, and repeatable method for detecting explosive hazards in metallic ammunition scrap, a critical step for safety and recycling. All new AI capabilities are being developed under the DoD's Responsible AI (RAI) Strategy and Implementation Pathway. This framework, managed by the Chief Digital and Artificial Intelligence Office (CDAO), is designed to ensure AI is equitable, traceable, and reliable by operationalizing the department's five core ethical principles for artificial intelligence. To streamline the procurement of these technologies, the General Services Administration is championing the OneGov initiative. This acquisition reform strategy aims to consolidate the government's buying power for technology, starting with software, to reduce duplicative contracts, standardize pricing, and accelerate the adoption of cutting-edge AI tools across federal agencies. While the DoD represents 72% of the federal government's AI spending, its growth in this area was only 1% between FY 2022 and 2024. In contrast, civilian agency AI spending grew by 20% in the same period, with small businesses capturing 35% of all federal AI contract obligations, amounting to $740 million in FY 2024.
