Articles Logan Wamsley May 19, 2026
A report from EY suggests federal agencies are under mounting pressure to modernize aging IT and adopt AI, but skills gaps, slow procurement, cybersecurity risk, and weak governance are keeping many legacy systems in place.
Federal Agencies in the U.S. are facing heavy pressure to modernize their technical processes and infrastructures. But according to the 2026 EY Government and Public Sector (GPS) Federal Trends Report, major hurdles are slowing progress.
The survey of more than 100 U.S. federal agency leaders found that 81% of respondents gave their agency an “A” or “B” rating regarding their performance in critical areas such as updating their IT systems, while only 22% said a majority of their IT systems are fully post-transformation. Additionally, only 26% acknowledged that their systems remain largely legacy-based. The most commonly cited barrier preventing full transformation is the workforce skills gap (44%), followed by slow procurement (32%) and escalating cybersecurity threats (32%).
The report highlights the importance of AI in agency modernization strategies, with 88% of respondents citing it as a critical tool for driving modernization, and 92% citing it as a tool for improving efficiencies. However, respondents also cited difficulties integrating with legacy IT systems (48%) and workforce-based limitations in skills and training (44%), as well as a general lack of AI governance, with only 38% reporting a comprehensive AI strategy in place.