With vast troves of data and a mandate to serve constituents effectively, the federal government is ripe for a digital transformation powered by artificial intelligence. While many agencies are exploring AI, the current approach often involves fragmented, proof-of-concept projects that fail to deliver enterprise-wide value. To truly harness AI’s potential, agencies must adopt a new model: the AI factory.
An AI factory isn’t just about implementing a few AI tools; it’s a strategic, holistic methodology for consistently building and deploying AI products at scale. It’s a concept championed by industry leaders — and one that Oracle is actively pioneering with its partners. The core of this approach is a seamless alignment of an agency’s people, processes, technology, and, most importantly, its data to drive continuous innovation.
At Oracle, we’ve seen firsthand how the AI factory model can transform government operations. Our relationship with federal agencies dates back to our founding in 1977, when we became a trusted steward of government data. Since then, we’ve helped manage medical records for millions of veterans, enabled the Treasury to process billions of dollars in daily transactions, and supported nearly 90% of the HR and financial systems that keep the federal government running. This long history has underscored a critical reality: AI is no longer a technological luxury. It is necessary for modernizing legacy systems, strengthening security and privacy and helping agencies do more with fewer resources.
The foundation of any AI factory is infrastructure. Cloud platforms provide a strong backbone, but infrastructure alone isn’t enough. Agencies must centralize and scale their IT resources to create shared environments capable of running sophisticated AI models. Our work with leading frontier model companies demonstrates how to build and manage these high-performance computing environments with systems powerful enough to support the next wave of mission-critical AI.
Yet infrastructure without data is like an engine without fuel. That’s why the second pillar of the AI factory is the data layer: Agencies need unified, well-structured data platforms that bring together siloed datasets and make them “AI-ready.” This goes far beyond storage. It means establishing a secure, accessible data fabric that enables consistent, reliable insights across use cases — from fraud detection to improving citizen services.
The final and most transformative pillar is the alignment of processes and people. An AI factory doesn’t simply deploy technology; it reimagines how agencies pursue their mission. By focusing on the value of solving specific problems, agencies can identify where automation will free employees from repetitive tasks. Take performance reviews as an example. Today, a federal manager may spend days compiling and drafting evaluations. With an AI factory approach, an AI agent can analyze performance data, generate an initial draft and leave room for human oversight. What once consumed hours can now be completed in minutes, giving managers more time to focus on strategy, leadership and mission outcomes.
However, this methodology is not just for administrative tasks; it can be applied to core mission sets. We recently worked with a Department of War organization that manages one of the world’s largest people databases. Despite having a top-level view, individual commanders and units could not access or analyze their specific data, a critical impediment to effective force management. By creating a secure AI factory with agentic layers on top of the data, we empowered individual battalions to access and manage information relevant to their unique populace. What once took months through a cumbersome trouble ticket system now happens in moments. This allows commanders to make quicker, more informed decisions, which enhances readiness and operational efficiency.
The case for building AI factories within federal agencies is clear. They are the framework for moving beyond isolated projects to deliver continuous, enterprise-wide value. By aligning cloud infrastructure, data platforms and mission-critical processes, agencies can embed AI to drive efficiency, strengthen security and fuel innovation. The time has come to abandon ad hoc solutions and embrace a structured approach that empowers public servants and ultimately builds a more effective government.
