Cybersecurity and AI Modernization in the “One Big Beautiful Bill”

As the pace of global cyber threats intensifies and artificial intelligence (AI) transforms every sector of society, the U.S. federal government is taking bold steps to secure its digital infrastructure. The recently introduced “One Big Beautiful Bill” allocates significant funding to modernize federal IT systems, enhance defense cybersecurity capabilities, and responsibly integrate AI technologies across federal and defense agencies.

This legislative package, positioned as a sweeping investment in America’s technological resilience, signals a shift in how national security and government operations will evolve in the years ahead.

Strengthening Federal IT Infrastructure with AI and Cybersecurity Funding

A cornerstone of the bill is a $500 million appropriation dedicated to the Cyber‑Modernization of Federal IT and AI Systems. These funds will be made available through 2034 and are designed to address longstanding weaknesses in federal information systems, while equipping agencies with the tools to thrive in an AI-driven future.

Key Priorities in Federal IT Modernization:

• AI-Powered Resource Management: A dedicated $124 million will fund the deployment of AI within Resource Management Centers, critical hubs responsible for managing energy, transportation, emergency services, and federal supply chains. AI will be tested for its ability to anticipate resource shortages, optimize logistics, and improve disaster response coordination.
• Autonomous Systems for National Defense: The bill sets aside $145 million for the continued development of autonomous capabilities in unmanned aerial and naval systems. This funding supports AI research in autonomy, navigation, and threat detection for U.S. defense platforms. As global adversaries pursue similar technologies, the U.S. is signaling its intention to lead in the secure and ethical deployment of AI for military advantage.
• Cybersecurity Hardening Across Agencies: A significant portion of the remaining funding will be allocated to upgrading legacy IT infrastructure across civilian agencies. This includes:
  • Implementation of Zero Trust Architecture
  • Real-time threat detection and automated incident response
  • Enhanced multi-factor authentication and identity management
  • Compliance alignment with NIST SP 800-53 and 800-171 standards

This modernization effort is not just about efficiency; it is a defensive strategy aimed at mitigating risks from foreign adversaries, ransomware groups, and insider threats. It also reflects a growing consensus that AI and cybersecurity are inseparable in federal IT strategy.

Advancing Defense Cybersecurity Programs

In addition to IT modernization, the bill includes a significant boost for the Department of Defense (DoD), with a total of $150 billion in defense-related investments, a portion of which is directly tied to cybersecurity and emerging technologies.

Highlights of the Defense Cybersecurity Enhancements:

• DARPA Cybersecurity R&D: The bill earmarks $20 million for new DARPA initiatives focused on next-generation cyber defense. These include:
  • Quantum-resistant cryptography
  • AI-powered threat modeling and red-teaming
  • Advanced detection of supply chain compromises and firmware tampering
• AI-Driven Business System Improvements: Approximately $350 million will go toward replacing aging business systems within the DoD. This modernization will include:
  • AI-enabled auditing platforms to enhance financial transparency
  • Predictive maintenance systems to reduce operational downtime
  • Cyber risk scoring and continuous monitoring across all assets
• Zero Trust at Scale: The DoD is also accelerating its adoption of Zero Trust principles, with funding supporting:
  • Microsegmentation of networks
  • Role-based access enforcement
  • Endpoint detection and response (EDR) across all branches

These provisions underscore the Pentagon’s commitment to transforming its digital posture in the face of advanced persistent threats (APTs) and increasing global cyber instability.

A Controversial AI Regulation Clause—Currently Removed

Initially, the “One Big Beautiful Bill” included a provision that would have imposed a 10-year moratorium on state-level AI regulation, effectively centralizing control under federal authorities and limiting states’ ability to pass their own AI laws.

Critics, including bipartisan senators and state attorneys general, voiced strong opposition. They argued that such a moratorium would:

• Undermine consumer protections
• Stall innovation at the state level
• Shield Big Tech from accountability

As a result of this pushback, the Senate overwhelmingly voted 99-1 to strike the AI moratorium from the bill. This move was widely celebrated by digital rights advocates, state governments, and civil society organizations as a victory for transparency in AI governance.

Implications for the Cybersecurity Community

The passage of this bill, with its combined focus on modernization, defense, and the integration of ethical AI, represents a watershed moment for U.S. cybersecurity policy. For cybersecurity professionals, contractors, and technology leaders, the implications are clear:

Federal Agencies: Major investments in secure infrastructure and AI tools will open up contracting opportunities and drive hiring across federal IT roles.

Defense Sector: Enhanced demand for autonomous security tools, cyber threat intelligence, and zero-trust implementation across DoD systems.

The AI Industry: Federal funding encourages ethical AI research and its use in critical infrastructure, but regulation will likely remain fragmented at the state level.

Security Vendors: Strong incentives to align products with NIST and CMMC frameworks to qualify for federal modernization contracts.

Looking Ahead

The cybersecurity and AI provisions in the “One Big Beautiful Bill” mark a proactive stance by the U.S. government to future-proof its operations. While much work remains, particularly in areas such as implementation, procurement integrity, and interagency coordination, this bill provides a blueprint for how federal systems can evolve to meet the demands of a rapidly changing digital landscape.

As cyber threats continue to evolve in complexity, and as AI becomes increasingly embedded in national infrastructure, the message is clear: security, modernization, and ethics must advance together. Please get in touch with us if you have any questions or would like to discuss this bill in more detail.