How automation, AI can improve government contracting

Elliott Yama, the chief data analyst of Apttus, describes four procurement areas where AI and automation technologies can help.

It’s no secret that government procurement contracts are complex and that public-sector processes are a special breed of inefficiency. To be fair, however, federal, state and local entities must adhere to a very different set of rules, regulatory requirements and statutes that set restrictions on government contracts, than do their private sector counterparts.

From special adherence to rules about spending taxpayer money, to ensuring a certain percentage of work is allocated to minority and women-owned businesses, many public-sector routines are marked by convolution, rigid conformity and excessive administrative burden that can result in contractual delays or inaction.

Despite some of the growing dread that over the next decade artificial intelligence (AI) and bots are prime to usurp a large part of the workforce, in reality these evolving trends can provide tremendous benefits to governments and their laborious contracting processes. A recent study by Harvard Business Review surveyed 500 business executives and found that 60 percent of them say their organization’s future success depends on adopting AI technologies, while more than 30 percent are currently piloting tools powered by AI.

Governments need to take a page out of the private sector’s book, and rather than fear AI and automation, they should embrace it.

Below, we take a look at various ways in which artificial intelligence and technology automation can help ease the public sector’s bureaucratic contractual complexity that hinders action, as well as how to address some of its toughest revenue challenges.

Speed up the completion of manual tasks

Contracts represent the very foundation for every commercial relationship driving an organization, so one way governments can remove roadblocks to efficiency is by modernizing their cumbersome, manually intensive contract management and approval processes. Applying automation can speed up any number of manual tasks spanning the entire contract management lifecycle — from identification of requirements, to creation and approval of critical contracts, to their eventual renewal. Not only do governmental entities benefit from a greatly streamlined process, but with automatic renewals, opportunities for profitability greatly increase.

Federal, state, and local agencies can also automate contracting activities associated with managing General Services Administration’s schedules, blanket purchase agreements, indefinite delivery, indefinite quantity, basic ordering agreements, and all governmentwide acquisition contracts and eliminate some tasks altogether, greatly reducing contract cycle time.

For example, agencies can leverage AI to reduce the time required to reach contract signature through cycle time prediction based on similar agreements, as well as compare predicted cycle times using alternate clauses to negotiate with full visibility to the impact of language choices. Leveraging institutional knowledge embedded in contracts gives staffers back valuable time, allowing them to focus on more creative and strategic work.

Reduces revenue loss, saves taxpayer money

Another benefit of automating government processes results in the optimization of taxpayer money. For example, by automating the archiving of contracts, activities, collaboration, reviewing, auditing, Federal Acquisition Regulations clauses, approving and searching for contracts and related task orders, governments can experience a reduction in revenue loss through automated enforcement of yearly contractual pricing increases.

Identifies potentially risky deal terms

In addition to eliminating mundane tasks in the contract management process, automation and applied AI can also aid the public sector with intelligent risk management. By automatically comparing negotiated wording with agreement templates, for example, public sector organizations can locate key terms and topics that create financial risks in negotiated agreements, quantify and then manage exposure to these risks. Also by leveraging technology with clause recommendation, governments can increase legal productivity with alternate word choice and paragraph suggestions that are proved to streamline negotiations and reduce risk exposure. With smart third-party paper automation technology, governments can also automatically map business terms and clauses in a third-party document to legal playbooks, enabling contract managers to swap language, reconcile drafts and send for approval just as if they had originally produced the contract.

Enforces vendor obligations

AI and automation tools can also help manage, monitor and enforce vendor obligations, as well as make the more stringent government contracting requirements easier for vendors to navigate and meet.

One such example is by providing many public-sector entities a way to track their progress toward the percentage of work allocated to minority and women-owned businesses which they are legally required to work with and employ. Most government agencies, until working with these technologies, haven’t had a way to track that capability. As a result, governments can experience a great improvement in the visibility and reporting of vendor activity, costs and agency trends across all contracts.

By embracing the use automation technology and AI, public sector organizations can better enforce vendor obligations, optimize taxpayer funds, improve risk management and evolve from their traditionally inefficient contract processes to smart, automated contract lifecycle management that allows them to run more quickly and intelligently.

 Elliott Yama is the chief data analyst for Apttus.

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