Beyond base models: Why vertical AI will define the next decade of federal tech

Artificial Intelligence has moved from the experimental phases and is now reshaping how federal agencies think about procurement, compliance and initiative delivery. From drafting acquisition documents to analyzing massive datasets, AI tools are advancing at a pace once unimaginable. But as adoption accelerates, agencies face a pivotal choice: stick with commoditized base models or invest in vertical AI systems built for government missions.

The answer will shape procurement, program delivery and even national security.

Limits of Commoditized Models

General-purpose models promise versatility, but in practice they fall short where it matters most. These systems, trained on broad internet data, can imitate jargon but rarely grasp the complexity of federal regulations. A model that aces casual conversation may still misinterpret the Federal Acquisition Regulation, which is an error that could derail billion-dollar procurements.

Consider this: improper payments across federal programs totaled more than $200 billion in 2023. Precision and accountability in contracting aren’t just nice to have; they’re mission critical. Commoditized AI, no matter how powerful in theory, often falters where accuracy is non-negotiable.

The Case for Vertical AI

Vertical AI offers a way forward. Unlike generic models, these systems are fine-tuned on procurement data, compliance frameworks and agency workflows, making them fit for mission-critical tasks. Instead of sifting through hundreds of pages of vendor proposals, acquisition officers can use AI to surface key risks, cross-reference past performance and ensure compliance in real time.

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These solutions are not theoretical. The average procurement cycle takes 280–500 days; vertical AI has the potential to cut that timeline dramatically by surfacing the right insights earlier. Emerging platforms already assist in drafting acquisition documents, monitoring contract performance and streamlining the bid process. They empower contracting officers and program managers to focus on strategic decision-making rather than manual review.

Why It Matters to Federal Stakeholders

The decision isn’t academic; it’s about mission success. Agencies face mounting pressure to deliver faster, comply with stricter oversight and do more with fewer resources. Vertical AI is not just a productivity enhancer; it’s a force multiplier.

The procurement community has seen firsthand how general-purpose IT solutions require costly customization to meet government standards. The same lesson applies to AI. Agencies that try to retrofit base models for acquisition will face high integration costs, added security concerns and disappointing performance. By contrast, adopting vertical AI solutions designed for government workflows accelerates deployment and ensures value from day one.

And the market is moving fast, with global AI spending projected to exceed $630 billion annually by 2028. In 2025 alone, federal agencies are set to spend over $3.3 billion on artificial intelligence. Agencies that delay risk falling behind both technologically and operationally.

AI Integration in Motion

The shift is already underway. Agencies are piloting specialized AI tools for acquisition, and vendors are tailoring offerings for compliance-heavy environments and evaluation criteria is evolving. To keep pace, both government buyers and industry partners must move beyond flashy demos and demand proof of accuracy, explainability and secure integration.

Agencies should also demand transparency from vendors. A vertical AI system must demonstrate more than technical accuracy. Systems need to be designed to deliver explainability, compliance with procurement regulations and the ability to integrate securely into existing workflows.

Industry leaders should collaborate with government stakeholders to ensure that vertical AI evolves in alignment with mission needs, rather than as a retrofit of commercial tools.

A Decade Defined by Vertical AI

If the last decade was about migrating to the cloud, the next will be about mastering AI. And not just any AI, the solutions that win contracts and deliver mission impact will be vertical design.

Base models may dominate headlines. But it is vertical AI that will capture contracts, transform procurement and deliver lasting mission impact.

Dave O'Hara joined Rohirrim’s Board of Directors in 2024, bringing extensive experience in finance, go-to-market strategies, M&A, and operations. With a strong financial and strategic background, he has consistently driven innovative solutions throughout his career and holds a pivotal role in shaping the company’s financial strategy, ensuring robust growth and profitability.