Is Salesforce Winning the Public Sector?
Introduction
JETBI is a proud partner of Salesforce, and we are happy with the recent progress achieved by the company. Having conquered most of the corners of the private sector, Salesforce is currently marching towards winning the U.S. public sector. After some market-shaking deals worth over $7 billion in 2026, Salesforce now keeps count of every truck the U.S. Air Force owns and runs the phone lines American veterans call for help. All of this shows that Salesforce’s strategy of aiming at the public sector has already borne fruit. However, it is still quite a bumpy road, full of bureaucratic and financial obstacles, while competitors like Palantir are hunting in the same fields.
The beginning of 2026 has been extremely successful for Salesforce, as it closed three major deals with U.S. military and government institutions. Between January and August 2026, Salesforce won a contract from the U.S. Army worth up to $5.6 billion (Salesforce PR, Jan 2026). It also signed a $1.6 billion deal with the Department of Veterans Affairs, the agency that looks after former soldiers (Salesforce PR, Jul 2026). And, finally, it took over the job of tracking the Air Force's 84,000 vehicles at 389 sites around the world (Washington Technology, Jul 2026).
Additionally, just some weeks ago, the Pentagon cleared Salesforce's artificial intelligence software to run on military systems holding sensitive information. The company claims that no other commercial AI product of its kind has been given that permission (Salesforce PR, Aug 2026).
In the quarter that ended in April 2026, the part of Salesforce that sells to government passed $2 billion in yearly subscription income and grew 23 percent (Salesforce Q1 FY27 earnings). The rest of the company grew 13 percent, demonstrating the enormous potential that government contracts bring to a previously business-focused Salesforce. Now government is the fastest-moving part of their business.
From baby steps to confident march
Salesforce arrived in government quietly and rather carefully, trying one department at a time. First, government agencies bought a few hundred licences here and there for ordinary jobs like tracking citizen complaints. But in 2012 the company announced Government Cloud, which became one of the most important steps towards conquering the public sector.
Ordinary business software, which serves the commercial clients who used to be Salesforce's priority, runs on shared computers in commercial data centres. But the rules applied to federal bodies and institutions are much stricter. The regulations in force require government data to have its own space, tighter security and staff who have been vetted through slow bureaucratic procedures.
So Salesforce Government Cloud became that space for government agencies. In a smart parallel move, Salesforce also hired Vivek Kundra in 2012. Before joining the company, he had been the first Chief Information Officer of the United States and then a fellow at Harvard. The same official who had urged government agencies to move to the cloud was now the face Salesforce used to sell it to them, quite a strategic move by the company.
The next big opportunity for the company arrived unpredictably and turned the tables both for Salesforce's public sector clients and for Salesforce itself. The COVID-19 pandemic hit the planet, and government efficiency turned out to be a decisive factor saving lives. In a time of crisis, Salesforce products integrated into government's systems were doing exactly this. By March 2021 more than 150 agencies and hospitals were running vaccination campaigns on Salesforce software. California had put more than 12 million doses through it. The story people repeated came from Louisville, Kentucky, where a public health doctor said her team built the city's vaccination system "from conception to reality in eight work days" (Salesforce PR, Mar 2021).
But even before the pandemic, Government Cloud earned a High rating under FedRAMP, the federal programme that decides which cloud services agencies may use and for which kind of data (Salesforce PR, Jun 2020). High is the top rating for information that is sensitive without being secret. This recognition basically opened doors that had previously been shut for Salesforce, including, and most importantly, doors to clients like the Pentagon.
Selling AI agents to government agencies
In August 2025 Salesforce began selling Agentforce for Public Sector. A month later the company set up a separate unit for military and intelligence customers, called Missionforce.
The contracts followed rather quickly. In January 2026 the Army signed the $5.6 billion agreement. That number is a spending limit, which means it is the most the Army may spend under the deal over ten years, and the real total depends on how much it orders. In July the Air Force squadron responsible for vehicles moved its entire fleet, worth $13.5 billion, off an ageing system and onto Salesforce. In August the Pentagon issued Salesforce's Agentforce an approval called Impact Level 5. This approval covers unclassified military information that would do serious damage if it leaked. Currently the software runs inside Amazon's government cloud, in a section staffed only by American personnel.
Salesforce's largest civilian customer in the public sector today is the Department of Veterans Affairs. They signed a $1.6 billion agreement in July 2026 that is expected to run for one year, with two possible one-year extensions. It pays for the software behind round-the-clock phone and chat support for veterans. It also puts Slack, the messaging app Salesforce owns, into more than 150 VA hospitals and clinics. The cooperation between the department and Salesforce started earlier and has already proved successful. The department's phone service has handled more than 40.6 million calls from veterans on Salesforce systems.
The military side has a case load of its own. U.S. Army Human Resources Command looks after 9.2 million soldiers and veterans, along with their families. It works through roughly 600,000 cases a year with a staff of more than 3,000. Salesforce promises to deliver automation there and says its software will summarise more than 1,500 cases a day. At full strength, by Salesforce's own assessment, it should handle tens of millions of conversations a month and save the command about $6 million a year.
But Salesforce's most promising clients right now are outside the military. One of them is on the West Coast: the California Department of Motor Vehicles, which handles 60 million transactions a year, including REAL ID. Applying for a REAL ID, the federally approved ID driver's licence Americans need to board a domestic flight, used to take 35 minutes. Thanks to the Salesforce integration, it now takes only seven.
The other example is in the south of the USA, and it shows how a simple solution (honestly, not so simple on the backend) may improve the lives of ordinary people living in a small city. Kyle, Texas, is a small city that switched one of its public service lines, 311, to an AI-powered solution in March 2025. 311 is the number Americans call when a streetlight fails or the rubbish goes uncollected. The line has since taken more than 12,000 requests. Nine callers in ten got their answer on the first try, and the average request is closed inside two and a half days. Before that, as the assistant city manager put it, "a resident of Kyle might have to call multiple numbers to find the right department" (Salesforce News, 2025).
But Salesforce delivers its services not just domestically in the USA. In Britain, the body that handles back-office paperwork for the National Health Service, including £395 billion of NHS money a year, is their client too. They installed a Salesforce help centre in May 2026. Before integrating Salesforce, staff who needed to raise a query used to spend 12 minutes doing it. After integration the speed increased fourfold, and now they spend only three minutes (Salesforce UK PR, May 2026).
Not surprisingly, Forrester, an independent research and advisory firm that analyses technology markets for corporate and government buyers, ranked Salesforce top of its own review of public sector cloud software in early 2026.
It seems the company may look into the future with careful optimism, but…
Why this is harder than it sounds
But there are still many obstacles on the way before Salesforce starts dominating the public sector.
In July 2025 the Government Accountability Office, the auditor that works for the US Congress, examined the eleven most important ageing computer systems in the federal government. They were between 23 and 60 years old (US GAO, Jul 2025). One of them belongs to the Department of Defense and dates from the 1960s. Eight of them run on programming languages that are not in active use anymore. Seven of them were found to have security holes that can only be closed by replacing the system completely.
The other side of the difficulty is money. The federal government spends more than $100 billion a year on technology. However, roughly 80 percent of that money goes on keeping what already exists alive and functional, while the budget for building anything new is far smaller.
Another stone blocking the way to tech modernization of the public sector is regulations. An audit held in June 2026 asked 24 major US federal agencies what prevents them from buying cloud services. Seventeen of them called the guidance they receive from different parts of government the main problem, specifically because the existing regulation often contradicts itself. Fifteen agencies said the purchasing rulebook is out of date. While the business world is going crazy about swarms of AI agents that are ready to replace humans, the existing US purchasing rules describe information technology in language that was used 20 years ago. It sounds impossible, but those rules do not even contain a definition of cloud computing at all. Respondents highlighted other problems too: the difficulty of making several suppliers' systems talk to one another, and a shortage of people who know how to make them work together.
There is one more problem, well known even to the most advanced and tech-savvy businesses. The experience of AI adoption shows that AI agents earn their keep only when they can see everything about a person in one place. But government data tends to be kept apart, including on the dusty shelves of underground archives. Salesforce's own research found 73 percent of public sector workers saying they lack the tools they need (Salesforce Connected Government Report). This placed government last of all industries at using technology to serve people well.
Public sector staff are cautious too. A 2025 survey of 1,400 city employees found only four in ten using AI at all (Granicus survey via Smart Cities Dive). Most of them were unsure whether it would change how the work gets done. There is an appetite for modernization of the existing systems, as state technology bosses put artificial intelligence at the top of their list of priorities for 2026. But they are being asked to pay for new AI systems and to replace 40-year-old ones out of the same budget, raising skepticism and making bold modernization plans unrealistic.
Some of the risks are related less to the characteristics of the public sector itself and more to the dynamism of the changes happening around it. For example, in August 2026, to win military approval from the Pentagon, Salesforce had to switch off the Anthropic models used in its programs, because of the unresolved dispute between Anthropic's leadership and the Department of Defense (DefenseScoop, Aug 2026).
Competitors
There is also tense competition for the government's money. One of Salesforce's biggest rivals in the defence sector is Palantir. It started with software for spies and soldiers and moved towards ordinary business later, while Salesforce's path was the opposite. Palantir's American government revenue reached $687 million in the first three months of 2026, up 84 (!) percent in just a year (Palantir Q1 2026 SEC filing). Analysts who follow both companies call Palantir the early leader in government AI and say Salesforce's agents have "not yet settled somewhere solid where it can deliver tangible results on a large scale" (Salesforce Ben, 2026).
Microsoft competes by already being in the building. An agency that runs its email and documents on Microsoft can add the company's AI assistant with very little paperwork, which is how San Francisco put Copilot on city staff computers. Oracle offers a similar service.
JetBI is not a competitor to Salesforce, as we are their partners. And we know that the company provides the most sophisticated service on the market right now. While this article focuses on the public sector, the same strengths matter for commercial businesses choosing a vendor. A platform trusted enough to run inside the Pentagon and pass FedRAMP High and Impact Level 5 scrutiny is a platform that has already cleared a far higher bar than most commercial security requirements. If you want to try it in your workplace, no matter whether it is in the public or the private sector, shoot us a message. And the scale of government investment Salesforce is making now tends to feed back into the same products commercial clients use every day. And we will help your organization adapt to the fast-changing technological requirements of the 21st century.
