The UK government is opening £80 million in AI procurement talks with tech firms, drawing on its £500 million sovereign capability fund.

An official notice published late last week says the government wants to help validate new AI capabilities and de-risk investment for the wider market by acting as an early customer.

Future opportunities might include government contracts to develop prototype AI capabilities and the opportunity to establish close relationships with government departments, the notice says.

It suggests a competition for contracts could launch as soon as July 2026, each worth up to £5 million per project, and lasting 12 to 24 months, depending on the scope of the project.

The Department for Science, Innovation & Technology plans to set challenges looking for capabilities in advancing scientific discovery, health and social care, national security and defense, cybersecurity, transport, energy and net zero, and public service delivery.

The market engagement follows the DSIT's promise of £500 million investment in UK AI designed to create jobs and drive economic growth. A new Sovereign AI Unit would act like a venture capital fund within government, investing in UK AI firms.

"AI is the most powerful technology of our lifetime, with the potential to transform every aspect of our lives. It is critical to our economic prosperity and non-negotiable for our national security. That is why we [the UK] must be an AI maker, not just an AI taker."

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Sovereign AI is set to be chaired by Balderton venture capital partner James Wise while Josephine Kant, a former Google employee, is heading up ventures.

In the procurement notice, DSIT says successful bidders will "retain ownership of all background IP and foreground IP created during the project."

They are then free to exploit their IP commercially or sell it to other customers. The government intends to retain usage rights to the foreground IP developed during the project, but will not seek to capture further economic value from it.

The government has already announced an equity investment in Callosum, an AI infrastructure company. Prima Mente, Cosine, Cursive, Doubleword, Twig Bio, and Odyssey are set to follow.

DSIT says companies interested in the first procurement round should make contact by May 16. ®

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