Artificial Intelligence (AI) systems have become a crucial part of the digital economy driving change, and providing new opportunities supported by technological innovation. As these systems begin to play a more important role, the government needs to uncover the risks associated with using artificial intelligence in procurement, and what steps need to be taken to manage these risks effectively.
The Growing Role of AI in Public Procurement
The use of AI systems in public procurement brings a host of new benefits for organisations actively participating in the procurement process. This technology enables teams to collect vast amounts of data and have the ability to resolve complex data-related challenges.
More than this, AI helps to reduce the human hours needed to complete various tasks while dealing with procurement processes. For instance, AI systems have the possibility to deliver cost savings of up to 40 per cent, according to the Oxford College of Procurement & Supply.
In addition to this, the same study suggests that through spending and supplier analysis, organisations will have the ability to reduce cost processing by 40 per cent. This will include automating technical support, which can be replaced by chatbots.
To some capacity, AI systems hold plenty of weight in greatly reducing the time spent on completing important procurement tasks. In another report, researchers found that by utilising artificial intelligence systems around the clock, organisations can reduce their time spent on mundane procurement processes by as much as 60 per cent.
Across the board, artificial intelligence plays an important role in helping businesses automate certain aspects of their procurement strategy. These systems can provide more accurate data collection, resolve complex challenges more efficiently, and help to deliver more tailored solutions.
What is PPN 02/24?
The UK Cabinet Office published the Procurement Policy Note (PPN 02/24). The PPN 02/24 AI public procurement is aimed at helping UK public sector bodies navigate the compliant use of artificial intelligence in public contracts.
The procurement policy note is designed to provide transparency in AI procurement, including the initial awarding process and the duration of the contract. AI compliance in public procurement remains a developing process. These efforts ensure the establishment of a more ethical AI public sector, that can navigate the risks of AI in public procurement decisions more efficiently within central government departments and non departmental public bodies.
There are several key provisions and objectives of PPN 02/24:
- Ensuring suppliers disclose the use of AI in the bidding process.
- Limiting the use of sensitive data to be used for training AI models.
- Applying appropriate measures to ensure due diligence.
- Reduce the risk of AI bias mitigation public procurement tactics.
- Provide more AI compliance in public procurement.
- Allowing for closer relationships between internal customers and delivery teams.
- Establish robustness, accuracy, and clarification to remove ambiguity in contracting.
Ultimately, the PPN ensures transparency and ethical considerations in AI use. Additionally, these considerations give light to the importance of using accurate regulatory oversight to reduce potential risks associated with procurement where there are national security concerns and executive agencies. For commercial teams transparency of AI use in procurement with public sector contracting authorities promotes confidential contracting authority information and minimises the threat of inaccurate or misleading statements.
Key Requirements of PPN 02/24
Contracting authorities need to take into consideration several key requirements for AI use in procurement in public services:
- The requirement to disclose the use of artificial intelligence when responding to tender questions.
- The requirement to disclose any form of artificial intelligence used to respond to a proposed delivery of service.
- Their use of AI in the tender bidding process, including responding to supplier requests.
Guidelines for assessing and mitigating risks associated with AI
The PPN will provide contracting authorities with more accurate insights into the use of artificial intelligence in the procurement process, how they can identify risks associated with the use of AI systems, and how they can mitigate these challenges.
- Promotes a common understanding of the potential AI risks that public contracting authorities may face.
- Supports specific procurement frameworks, including the basis of having more transparent and compliance application support.
- Creates the guidance for an initial risk assessment, and understands the risk of AI about relevant assets of the procurement process.
- Helps to inform relevant stakeholders and public contracting authorities about ongoing risk management, and potential solutions within the procurement lifecycle.
- Ensures that AI systems align with data protection laws and ethical AI standards.
Best Practices for Implementing AI in Procurement
For the most effective outcome, contracting authorities should ensure:
Conduct risk assessments of AI systems: Before starting a bidding process, or completing a request for information, stakeholders should assess the use of AI systems, and whether there are any risks directly associated with these systems.
Ensuring fairness and avoiding bias in AI-driven decision-making: Public sector AI guidelines will provide more equitable AI governance for procurement policies, allowing for the removal of barriers to entry for businesses.
Collaborating with AI experts and ethical advisors: The development of AI governance procurement policies is a universal process that requires collaboration between the public and private sectors.
Conclusion: Balancing Innovation and Public Trust
In light of recent developments surrounding the use of AI systems in procurement, the PPN will become a useful guideline for relevant stakeholders and public contracting authorities. This guideline will provide practical steps and considerations on how to use AI safely and identify the use of AI in tenders.
The PPN has set a new standard to ensure that commercially sensitive information and other private data are not used to train AI models, and to avoid potentially breaching data protection measures.
Finally, the PPN is not a way to limit the use of AI in procurement processes but instead acts as a framework for safe and compliant use. Under this guidance, contracting authorities will deliver more forward-looking solutions for issues that may arise from using AI, but further encourage fairness under existing procurement laws, and create an equitable competitive procurement landscape.
