Procurement could make or break AI in government

Terry Garton New guidance says procurement is where the potential of AI becomes a reality. Let's talk about what that means and why the purchasing process is so important to ensuring the success of AI implementation in government.

Kathryn Frauscher That's certainly a great question. Thank you very much. We truly believe that flexible and responsible procurement will enable AI to work for the public. Therefore, if you are interested in bringing artificial intelligence to government employees and the populations they serve, it is critical that you pay attention to how you purchase AI and how you implement it.

Terry Garton Please tell us more about your flexible procurement practices. What are you suggesting?

Kathryn Frauscher I'm using a non-technical term to mean that you can tailor your procurement process to what you're buying, and you can make your procurement process short and quick to work for a specific purpose. Experts sometimes call it agile, but I think in the normal world they just call it flexible.

Terry Garton And why is that speed part so important?

Kathryn Frauscher Procurement has a reputation for speed, but in practice it is often quite slow and bureaucratic. However, technology is advancing rapidly. So if you want something quickly, or you want something that can continue to adapt to its environment, you need to make sure your purchasing method and vehicle are quick and flexible as well.

Terry Garton Well, there's a lot of hype and a lot of attention around building custom AI solutions, so the other aspect is speed, and it's not fast. And according to your research, most agencies want to buy off-the-shelf tools. Talk to us about what that means for your procurement team and processes.

Kathryn Frauscher Yes, I would love to do that. That was actually one of the big surprises. We conducted this research project for about a year. And when we looked into it, we also expected that we would find that there are a lot of custom products out there, so-called requests for proposals, where it takes a really long time to buy the technology that you need for a specific purpose. What we found is that most people buy technology through existing platforms or central-level vehicles. That changes the game not only in how you acquire AI technology, but also in what you need to pay attention to along the way.

Terry Garton One of the reasons traditional procurement processes are so slow is because they are highly risk-averse. There are a lot of risks with AI, and we hear all the time about bias, hallucinations, and all kinds of risks. So how can leaders, especially procurement leaders, balance vigilance and risk aversion with the need to move quickly to ensure access to the latest AI technologies?

Kathryn Frauscher Indeed, you yourself said it there. I think the key word is balance. We need to balance vigilance with urgency. What I'm saying is…you can't be too slow to miss things, but you can't be too fast to not be ready. So it's all about the balance of being fast enough to get what you need and slow enough to be ready.

Terry Garton Does that involve a governance role? What are your suggestions?

Kathryn Frauscher absolutely. One of the findings from our research is that being AI-ready and having the necessary governance framework in place is one of the most important things governments can do. And a good governance framework is clear and written in easy-to-understand language. Balance this level of risk between being quick and at the same time being prepared. And I think the important thing is to train your employees based on those frameworks. So don't just put it down on paper, let people know how to use it.

Terry Garton We're specifically talking about buying AI tools, but what if you want to use AI tools in the process of buying them?

Kathryn Frauscher absolutely. We see as much hype about this as we see about anything related to AI. A similar trend is also observed. To be honest, many use cases are still pretty boring right now. So they can help you write the RFP, they can help you get the job done faster, but they don't make the decisions for you. But what I want to tell kids is that being bored is also very important. So we're looking to see how that plays out and how governments can once again leverage AI while ensuring they deliver the best outcomes for their residents.

Terry Garton I'm talking with Kathryn Frauscher. She is the Deputy Executive Director of the Open Contracting Partnership. Kathryn, you were also talking about how procurement teams, IT teams, and project teams often struggle to work together, especially when it comes to AI procurement. What recommendations do you have to improve that relationship?

Kathryn Frauscher Yes, great question. We strongly believe that procurement is a team sport and that purchasing AI technology requires a very strong team. So the biggest advice is to come together early in the whole process and make sure everyone is AI-ready.

Terry Garton What does it mean to be AI ready in that sense?

Kathryn Frauscher Yes, actually one of the biggest requests we heard from our procurement partners was to learn more about AI. We believe that there is still not enough knowledge to make good purchasing decisions. And I think that applies to many government officials as well.

Terry Garton The General Services Administration is trying to centralize some of this. Do you think they are doing a good job of defining AI and the tools available to procurement and IT teams?

Kathryn Frauscher Well, they follow trends. AI central purchasing is definitely something we are seeing all over the world. It has the advantage of providing speed and standards. The key is to ensure that implementation and usage is tailored and effective for each institution, and that each institution has the capacity to leverage AI successfully.

Terry Garton Speaking of not knowing enough about AI, one of the other issues that has come to light is that vendors sometimes overstate the capabilities of their AI products a bit. So, when coaching your procurement team on this, what questions can you ask to cut through the hype and ensure they are getting the real value of understanding what they are buying?

Kathryn Frauscher absolutely. Our guide has some great questions about it. And I think one of the main things that I look for in vendor reps is to show me where it's been successful. I'll try it first. Therefore, we strongly believe in prototypes and demonstrations. Sometimes they have fun names like “Bake Off.” Because once you see it working, you know it's going to give you better results.

Terry Garton Please tell us more about the details of the guide.

Kathryn Frauscher Mr. Guide. Yeah. This guide is based on numerous questions asked by governments around the world, especially procurement teams. Such questions are about the need to buy AI, sometimes out of curiosity, sometimes because we need AI, or because we are being told to buy AI. But how can it work? How do we do that in a way that works for government officials, and perhaps most importantly, residents and citizens? That's the real purpose of this guide. It starts with educating procurement professionals and procurement directors about the fundamentals of AI. Because, like I said, they really wanted to learn more about AI. And we've already talked about how you can be a good team player. How can procurement play this role so that everyone is aligned on goals, use cases, terms, pay and what they get back?

Terry Garton I think there are some really interesting scenarios in there to explain the process to people. Please tell me about one of them.

Kathryn Frauscher Yes, absolutely. We have these paths because it depends not only on what you are trying to achieve with the technology, but also on what kind of vehicle you can afford. We sometimes like to think of it like a car, right? Oh, today we need a minivan or a small car or a bus, but in reality procurement teams are often told to use buses. This guide also has some hacks on what you can do to get there if you're taking the bus but really want to take the jeep.

Terry Garton People seem to find something there that relates in some way to every situation they find themselves in.

Kathryn Frauscher I hope so. We wanted it to be practical rather than theoretical.

Terry Garton Kathryn, we're really at the beginning of people buying AI for government use. If you were to experience yourself five years from now, what do you think would be different and what lessons would you have learned at that point?

Kathryn Frauscher Yes, great question. Honestly, I don't think I know what things will be like in five years. I think AI is changing and evolving at a speed we have never seen before. But I think this also means that procurement processes need to be ready to evolve. As I said at the beginning, the procurement process needs to be flexible so that as AI evolves, you still get what you need and don't get stuck in what was two or three years ago.