AI in Federal Contracting Just Got Real—Here’s What Small Businesses Need to Do
AI is no longer a future concept in federal procurement—it’s here, and it’s rewriting the rulebook. Agencies like DoD, GSA, VA, and DHS are embedding artificial intelligence into every stage of the acquisition process. Whether it’s evaluating your proposal, doing market research, or issuing solicitations, there’s a good chance a machine is involved. For small businesses navigating government contracting opportunities, this shift has big implications—and even bigger opportunities.
AI Is Changing How Proposals Are Evaluated
Here’s what’s happening in plain terms: proposals are now often “machine-read” before a human ever lays eyes on them. AI tools screen for compliance, flag missing sections, enforce formatting rules, and may even auto-reject submissions that don’t follow instructions to the letter. If your proposal doesn’t label the “Staffing Plan” section exactly as the RFP calls for? It could be kicked out before a person ever reads your technical brilliance.
Major agencies are already doing this:
GSA’s Symphony Portal enforces document limits and auto-calculates scores for massive IDIQs like OASIS+.
DoD’s Software Fast Track (SWFT) uses AI to validate software security compliance, replacing months of review with a few days of AI processing.
VA is shopping for an AI platform to help write and score proposals.
DHS is using AI to find new small business vendors and scan CPARS data for performance patterns.
Translation: the rules have changed, and if you’re still writing proposals like it’s 2019, you’re at risk of getting left behind.
Why This Matters to Small Businesses
This tech-driven transformation cuts both ways.
On the challenge side:
Automated compliance scans mean there’s no room for sloppiness. Forgetting a section or using the wrong heading could kill your bid.
Faster evaluations mean you have less time to respond to clarifications or correct mistakes.
Generic, AI-generated content won’t cut it—you still need that human touch, tailored insights, and clear win themes.
But on the opportunity side:
Small teams can now compete with big firms by using the same tools. AI can help you draft boilerplate sections, build compliance matrices, and spot inconsistencies faster than ever.
Automation can boost your proposal throughput. A two-person team with the right tech can respond to more RFPs with less burnout.
Agencies increasingly value vendors who show tech fluency. Being “AI-ready” signals that you’re forward-thinking and efficient.
How to Adapt Your Proposal Strategy for the AI Era
Here are some high-impact changes you can make right now:
Structure your proposals like a machine would read them
Use exact RFP section labels
Match terminology and numbering
Present compliance data in bullet points or tables, not buried in paragraphs
Use controlled vocabulary
Mirror the customer’s exact language (e.g., “CBRN defense,” not “hazmat response”)
Stick to one set of terms throughout your document
Run a pre-submission compliance check—using AI
Tools like Arphie.ai or even ChatGPT can simulate a digital review before the agency’s tools do it for real
Train your team on prompt engineering and AI editing
Draft with AI, but always review and tailor manually
Set internal rules: no AI-generated facts without verification
Don’t forget formatting and accessibility
Make sure text is machine-readable (no image-based PDFs!)
Use standard fonts and heading tags—many of the same practices that help screen readers also help AI tools parse your content
Highlight your AI readiness where relevant
If the solicitation calls for innovation, subtly note that your PM tools or staffing systems are powered by AI (but skip the “we used AI to write this” part)
What Not to Do
Don’t over-rely on AI for strategy—win themes, client understanding, and price-to-value messaging still need the human brain.
Don’t paste sensitive info into free AI tools without checking their data policies—your labor rates shouldn’t end up in a training dataset.
Don’t assume AI-generated text is accurate—hallucinations happen. Always verify every claim.
The Big Picture
AI in procurement isn’t a fad—it’s becoming infrastructure. Just like SAM.gov and NAICS codes, it’s something you now have to account for if you want to stay competitive. The good news? You don’t need a massive budget or tech team to play in this arena. Free tools and low-cost solutions can get you started. The small firms that win in this environment will be the ones that get AI-literate fast, structure their proposals with precision, and use automation to punch above their weight.
Need help getting started? From 8a certification assistance to Government Contract Proposal Writing and SBIR Grant Assistance, there are advisors and consultants who specialize in making small businesses thrive in a tech-evolving procurement world.
Want more on future-proofing your federal contracting business? Check out “The Most Competitive Federal Contracting NAICS Codes of 2024 (and How Small Businesses Can Still Win)” for an insider look at where the money’s flowing and how to align your capabilities.
If you aren't a Squared Compass partner, what are you waiting for? From getting your business set up with specific government set aside programs at both the State and Federal level, to being empowered by a Fractional Capture team to win government contracts, to receiving tailored government contract opportunities Squared Compass delivers immense value which helps propel our partners to success. Schedule a chat with our team today.
