Artificial Intelligence: Uses and Risks for Small Business Contracting and Innovation Research

What GAO Found

The use of artificial intelligence (AI) could help federal agencies carry out key activities in federal small business contracting and research programs, according to a panel of experts convened by GAO. Examples of such activities include conducting market research, reviewing proposals, and preventing fraud. The Small Business Administration (SBA), which coordinates agencies' Offices of Small and Disadvantaged Business Utilization and oversees agencies' Small Business Innovation Research and Technology Transfer programs, also could use AI to support activities such as analyzing data submitted by agencies and helping to draft annual reports.

But these potential AI uses also carry risks, including inaccurate outputs and data privacy or security concerns, according to experts and literature. Agencies also may face barriers in adopting AI, including lack of staff with technical expertise and a cumbersome process for authorizing new technologies.

Prior to 2025, SBA had a number of AI use cases-specific scenarios in which AI is designed, developed, procured, or used-in various stages of adoption. In March 2025, SBA paused all AI use to review compliance with recent executive orders and reflect updated agency priorities. SBA officials stated that AI use will restart after revised AI policies are implemented. As of April 2026, SBA officials told us that AI policies were still being revised and that the pause remained in effect, except for seven pilot or pre-pilot projects to test the security, value, and performance of different AI capabilities.

SBA has not consistently met requirements for publicly reporting AI use cases. SBA reported its first inventory of its AI use cases in March 2026, but requirements to do so have been in development since 2020. SBA officials said they could not determine why inventories had not been published, citing a lack of documentation and turnover among staff responsible for AI reporting.

Federal Agency AI Use Case Reporting Requirements and SBA Actions

Without policies and procedures for publicly publishing its AI use case inventory, SBA may continue to risk not complying with the Advancing American AI Act. Not reporting AI use cases also hinders transparency and congressional and public oversight of AI use cases.

Why GAO Did This Study

AI has seen significant advancements in recent years, with new capabilities and risks emerging at a rapid pace, and federal agencies have increasingly adopted its use. Small business contracting and innovation grants-areas coordinated or overseen by SBA-have drawn particular interest from industry, academia, and government as an area with potential applications for AI.

GAO was asked to review issues related to federal use of AI in small business contracting and innovation grants. This report discusses the potential use of AI by SBA, agency Offices of Small and Disadvantaged Business Utilization, and Small Business Innovation Research and Technology Transfer programs, as well as SBA's public reporting of its AI use.

To conduct this work, GAO reviewed federal agency documentation and literature on AI and procurement and interviewed officials from SBA, the Department of the Army, the Department of Homeland Security, the Office of Personnel Management, and the National Science Foundation, selected because they had experience using AI relevant to contracting or innovation grants. GAO also convened a panel of experts with specializations in AI technology, federal AI use, and federal procurement.