Action Kit: VA IT Modernization & AI Contractor Expectations

Overview

The Department of Veterans Affairs has signaled a significant shift in contractor performance expectations, with IT leadership publicly stating that incumbent contractors must demonstrate advanced AI and modernization capabilities or risk contract termination. Zack Schwartz, a VA IT official, made clear in an interview that the agency is actively challenging existing vendors to keep pace with its modernization and artificial intelligence initiatives. This is not a future policy proposal—it represents the agency's current posture toward contractor evaluation and recompete decisions. Contractors holding VA IT contracts, or pursuing new VA opportunities, must treat AI capability as a competitive differentiator and potential contract retention requirement. The statement suggests VA will use technical refresh cycles and option-year evaluations to assess whether incumbents are delivering innovation commensurate with agency goals. Failure to demonstrate AI integration, modernization expertise, and forward-leaning technical approaches may result in loss of incumbency advantage or outright replacement. This event demands immediate capability assessment and strategic positioning around AI and modernization themes for any contractor in the VA IT ecosystem.

Immediate Actions (This Week)

• [ ] Inventory current VA contracts and task orders — Identify all active VA IT contracts, their option-year schedules, and upcoming performance review milestones; flag any contracts approaching recompete or option-year decision points within the next 12 months.
• [ ] Assess AI and modernization content in active deliverables — Review current technical approaches, monthly status reports, and deliverable documentation to determine whether AI capabilities, cloud modernization, or automation initiatives are explicitly documented and visible to the VA customer.
• [ ] Schedule internal capability gap analysis — Convene technical leadership, capture team, and contracts to evaluate your organization's current AI/ML capabilities, modernization experience, and ability to articulate these in proposal language and past performance narratives.
• [ ] Monitor VA IT procurement channels — Set up daily monitoring of SAM.gov (System for Award Management) for new VA IT solicitations, sources sought notices, and RFI releases that reference AI, modernization, or technology refresh; track whether existing contracts are being rebid earlier than expected.
• [ ] Brief executive leadership on risk exposure — Prepare a summary of VA contract portfolio value at risk, highlighting contracts where AI/modernization themes are absent from current performance narratives or where incumbency may not protect against a technically superior competitor.

Short-Term Actions (30 Days)

• [ ] Develop AI/modernization capability statement — Create a concise, evidence-based narrative of your organization's AI, machine learning, cloud modernization, and automation capabilities, supported by specific project examples, tools/frameworks used, and measurable outcomes; ensure this is ready for insertion into capability briefings and proposal boilerplate.
• [ ] Engage VA customers proactively — Schedule technical interchange meetings or capability briefings with VA program offices and CORs on active contracts to demonstrate AI and modernization initiatives you can bring to their mission; position these as value-adds rather than waiting for formal tasking.
• [ ] Update past performance database — Revise past performance summaries and CPARs to emphasize AI, automation, cloud migration, and modernization elements of completed work; ensure proposal teams can quickly pull AI-relevant case studies for VA opportunities.
• [ ] Identify teaming partners with AI credentials — If internal AI capability is limited, begin discussions with potential teaming partners, subcontractors, or technology providers who can credibly demonstrate AI/ML expertise and are willing to support VA proposals; document these relationships for rapid team formation.
• [ ] Review and refresh proposal win themes — Audit your standard VA proposal themes and technical approach templates to ensure AI, modernization, and innovation are prominent; retire outdated themes focused solely on stability or process compliance.

Long-Term Actions (90+ Days)

• [ ] Invest in AI/ML technical certifications and training — Develop a workforce development plan to upskill existing technical staff in AI/ML frameworks, cloud-native architectures, and DevSecOps practices; pursue relevant certifications (AWS ML, Azure AI, Google Cloud AI) and document training completion for proposal résumés.
• [ ] Build demonstrable AI project portfolio — Initiate internal R&D, IRAD investments, or pro-bono projects that produce tangible AI/automation deliverables (e.g., a working prototype, open-source contribution, or case study); ensure these can be referenced in proposals as evidence of innovation capability even if not yet deployed at VA.
• [ ] Establish strategic partnerships with AI technology providers — Formalize OEM relationships, reseller agreements, or joint venture structures with recognized AI platform vendors or research institutions; position your firm as a credible integrator of cutting-edge AI solutions rather than a traditional IT services provider.
• [ ] Develop VA-specific AI use case library — Research VA mission areas (benefits processing, healthcare delivery, claims adjudication, cybersecurity) and map specific AI/ML use cases to each; create white papers or capability statements showing how AI can solve VA-specific challenges, ready for unsolicited proposal submission or customer engagement.

Compliance Checklist

Compliance scope TBD — The Summary does not reference specific regulatory frameworks (NIST 800-171 (NIST Special Publication 800-171), CMMC (Cybersecurity Maturity Model Certification), FedRAMP (Federal Risk and Authorization Management Program), DFARS (Defense Federal Acquisition Regulation Supplement), etc.) tied to this policy shift. However, contractors should anticipate that AI and modernization initiatives at VA will intersect with existing IT security and data protection requirements. Re-evaluate compliance posture when official VA guidance on AI integration standards is published. In the interim:

• [ ] Verify existing VA contracts meet current cybersecurity baselines — Ensure all active VA IT contracts comply with applicable NIST, FISMA, and VA-specific security controls; AI initiatives will not excuse lapses in foundational security compliance.
• [ ] Assess AI/ML solutions for data protection compliance — If proposing AI tools that process VA data (especially PII, PHI, or CUI (Controlled Unclassified Information)), confirm the solution architecture meets federal data protection standards and can operate within VA's accredited environments.
• [ ] Document AI ethics and bias mitigation practices — Prepare to demonstrate responsible AI practices, including bias testing, explainability, and human-in-the-loop controls, as federal agencies increasingly require these for AI deployments.

For broader IT security compliance guidance applicable to VA contracts, see the Secure Operations Guide (/insights/secure-operations-guide) and CMMC Compliance Guide (/insights/cmmc-compliance-guide).

Resources

• VA Office of Information and Technology (OIT) — https://www.va.gov/oit/ (https://www.va.gov/oit/) — Monitor for official AI strategy publications and modernization roadmaps.
• FedScoop original article — https://fedscoop.com/veterans-affairs-ai-it-zack-schwartz/ (https://fedscoop.com/veterans-affairs-ai-it-zack-schwartz/) — Source interview with Zack Schwartz.
• SAM.gov VA opportunities — https://sam.gov/ (https://sam.gov/) — Filter for Department of Veterans Affairs IT solicitations and track AI-related keywords in new postings.

How Cabrillo Club Automates This

Cabrillo Signals War Room has already detected this policy shift and delivered this Action Kit within minutes of the FedScoop publication. The War Room continuously monitors federal IT news, agency leadership interviews, and policy signals—so when a VA official publicly resets contractor expectations, you receive an actionable brief before your competitors even see the headline. This event was flagged as HIGH severity because it directly impacts contract retention and recompete strategy for VA IT incumbents.

Cabrillo Signals Match Engine automatically rescored your VA opportunity pipeline the moment this event was ingested. If you have open VA IT opportunities in your CRM, their match scores have been updated to reflect the new emphasis on AI and modernization—opportunities where your capability statement already highlights AI will score higher, while those relying on legacy technical approaches will be flagged for theme refresh. The Match Engine also cross-references your past performance database: if you have AI-relevant project history, it surfaces those examples for rapid insertion into VA proposals.

Cabrillo Signals Intelligence Hub is now tracking VA IT solicitations for AI and modernization keywords. Use the saved search feature to create an alert for any new VA RFP, sources sought, or RFI that mentions "artificial intelligence," "machine learning," "modernization," or "innovation"—you'll receive a notification within hours of posting, giving you a head start on capture. The Intelligence Hub also correlates this event with your existing VA contract portfolio, flagging contracts approaching option-year decisions or recompete windows where AI capability gaps could threaten incumbency.

Proposal Studio (Proposal OS) helps you respond to this shift immediately. When you start a new VA proposal, Proposal OS pulls AI and modernization win themes from your library, generates compliance matrices that map your AI capabilities to VA evaluation criteria, and drafts technical approaches using your past performance data. If you lack strong AI case studies, the bid/no-bid decision engine will flag the gap and recommend teaming strategies or capability development before you invest in a losing proposal. For ongoing VA contracts, use Proposal OS to generate capability briefing slides and white papers that position your AI expertise to current customers—turning this policy signal into a proactive business development tool.

Explore these features in your Cabrillo Club dashboard to turn this VA policy shift into a competitive advantage. If you haven't yet configured saved searches for VA AI opportunities or updated your win theme library with modernization content, now is the time—your competitors are already moving.

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