Industry, legal experts urge FAR Council to set standards for AI in federal procurement

Industry and legal experts are urging the Federal Acquisition Regulatory Council to adopt rules around the government’s use of artificial intelligence in federal procurement.

In September, the FAR Council released a second set of four proposed rules as part of the Federal Acquisition Regulation overhaul. The council accepted public comments on the proposed rules through Oct. 19.

In the wake of a lawsuit alleging that the Army misused artificial intelligence in bid evaluation, legal experts say now is the time for the FAR Council to address federal agencies’ use of AI during the acquisition process in the FAR.

Currently, there is no specific federal acquisition rule governing how agencies can use AI during bid evaluations — while procurement rules establish who has authority to make decisions, they do not address the extent to which AI can be used. 

In a letter to the FAR Council obtained by Federal News Network, Protorae Law member Alan Chvotkin said while earlier proposed FAR changes may have been better suited for providing guidance on the government’s use of AI throughout the acquisition lifecycle, this is the first FAR case to be released after the Court of Federal Claims ruled that the government’s AI-generated evaluations had to be included in the administrative records, regardless of whether the government relied on them.

In August, TRAX International Corporation asked the U.S. Court of Federal Claims to order the Army to reevaluate the proposals submitted for the White Sands Missile Range mission support services and make a new award decision. The contractor argued that the technical evaluation was distorted by AI hallucinations that weakened its bid.

While the judge ruled that TRAX did not demonstrate that the Army relied too heavily on AI “such that the entire evaluation became arbitrary and capricious,” the court ordered the Army to produce all AI-generated proposal evaluations and include them in the record, despite the Army claiming that the reports were unusable and “never entered into the contract file or [were] utilized in the decision-making process.” 

“There is also a growing body of protest actions at both the Government Accountability Office and the Court of Federal Claims regarding agencies’ use of these AI tools. So, consistent with the overall purpose of the [Revolutionary FAR Overhaul] effort, it is appropriate that the FAR Council include in the FAR guidance to buying agencies in the practices that are to be followed when AI tools are used in the acquisition process,” Chvotkin said in the letter.

Should an agency choose to use AI tools during the acquisition process, Chvotkin said it should disclose which tools it uses and how exactly they will assist in evaluations. A government source selection official should independently verify and adopt or reject any AI-generated recommendation. Agencies should also document the use of AI and the disposition of every AI recommendation in the contract file.

GovSignals, a company that builds AI-native acquisition software, also urged the FAR Council to establish governmentwide standards for federal agencies’ use of AI and automated analytic tools in proposal evaluation, price analysis and contract file documentation. 

“Agencies already employ AI and automated analytic tools in live source selections. Neither the current FAR nor the published revisions specifically address those tools. GovSignals sees the overhaul as an opportunity to give contracting officers a consistent standard for using AI capabilities already available to them and to ensure transparency where used,” GovSignals said in its letter to the FAR Council.

Last year, President Donald Trump charged the Office of Federal Procurement Policy and the FAR Council to overhaul the FAR by only including provisions required by statute and eliminating or revising unnecessary procurement regulations. 

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