and Public Sector Federal Trends Report, a nearly unanimous 89% of agency leaders acknowledge significant hurdles to achieving modernization goals, primarily due to the "three S’s" of speed, skills, and scale.

Although 92% of federal leaders view AI as critical for operational efficiency, actual implementation remains largely stalled. Only 22% of IT systems are considered fully post-transformation, leaving the remainder of the federal landscape burdened by legacy debt. Integrating AI into these outdated environments has proven difficult, with 48% of respondents citing legacy infrastructure as the primary obstacle to scaling emerging technologies agency-wide.

Workforce capability also remains a critical bottleneck. The survey identifies the skills gap as the leading barrier to modernization, outranking both slow procurement processes and escalating cybersecurity threats. Currently, nearly half of federal IT programs require a year or more to move from a pilot phase to full-scale deployment, a timeline that risks falling behind the rapid pace of private-sector technological advancement.

Success in this environment requires more than just procurement; it demands a unified approach to governance and human capital. Paul Donato, EY Americas Government & Public Sector Federal Leader, noted that technology alone cannot close the gap. He emphasized that for agencies to transition from incremental progress to meaningful transformation, they must simultaneously modernize legacy environments and invest in the specialized expertise required to manage AI and secure federal systems.

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