New technology could speed up contract processing

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How much time does your company spend editing its federal contracts for the myriad of regulations that might apply? This vendor claims you can cut that by 90%. For more about the whole topic of contract editing, Dan Broderick is co-founder and CEO of BlackBoiler, and he joined the Federal Drive with Tom Temin with more.

Interview transcript:

Tom Temin: Mr. Broderick, good to have you on.

Dan Broderick: Thanks for having me on Tom. I really appreciate it.

Tom Temin: Honestly, I was unfamiliar with the term contract editing. I know that a lot of federal agencies have contract writing systems, which are pretty arcane and difficult to replicate. But what is contract editing and why do companies need to do it all the time?

Dan Broderick: So contract editing, or negotiation, is the process of coming to agreement on the terms of the contract that’s going to govern the relationship between two parties. And while you can’t always negotiate with the government, there are certain times when you are able to negotiate with the government with like commercial items. But in the supply chain of getting goods and services to the federal government, there are an awful lot of subcontracts in that process for vendors and suppliers and service providers who provide parts of the process that goes into whatever the government’s purchasing. And in that process, there’s an awful lot of contract negotiation where one party provides the other party with the terms of the contract and they need to get to an agreement as to what that contract is going to say. And often with those contracts with the federal government or the federal government is the end purchaser, there are flow downs for federal government regulations, we call far and sometimes defar provisions, and often those are attached at the end of those contracts for the various pieces of legislation that have been passed or requirements for contracting with the federal government.

Tom Temin: So this implies then that companies and the government I guess start out with maybe boilerplate contracts with everything or nothing in them, and each one has to be tailored to the particular contract and negotiation at hand — would that be a fair way to put it?

Dan Broderick: That’s largely correct. My understanding of it is that the government has all of their various contract clauses essentially with the bank and then they put together the clauses for the specific purchase that they’re going to make or services that they’re they’re buying.

Tom Temin: Yeah, sometimes the clause pages at the end run 40-50 pages I understand in some of the really big contracts. And what’s your sense of how much time this takes and what kinds of resources it requires to fit the document to what it is people are negotiating?

Dan Broderick: For the contractor, yeah I think it depends, if you’re the prime contractor, I think it depends upon the type of agreement it is, because there’s often times you can’t negotiate with the government. But if you’re a prime contractor, and you are signing your subcontractors up for delivering their scope of that end product that’s going to the government, that process can take weeks of back and forth between the parties. And what our product does is it learns from how people review and negotiate those things on a repetitive basis. If you’re doing high volume contract negotiation, we’re putting everything into a machine learning loop that learns from previous work product to automate the process of marking those things up in the future for you or responding to the counterparty markups. And we’ve also just released something that can automate the process of marking up the floor and defar flow down provisions. Some of those provisions that come at the end of the contract that you know, incorporate different government regulations. Some of them are required to flow down to subcontractors, so you have to include those in your contracts with your subcontractors. Others are permissive. There’s a thing called the Christian doctrine that talks about what’s already in your contract even if it’s not actually in your subcontract as a subcontractor, but with those permissive ones, there’s oftentimes the opportunity to revise those provisions. The one that comes off the top my head are a lot of times the audit provisions right flowing down an audit provision to a subcontractor, that subcontractor may not want to give the prime contractor audit rights to their books. But I need to give it to the federal government because the federal government has the right to audit it. So you’re gonna mark that up and say, well, we agreed to these terms, but we’re going to give this documentation directly to the government auditors and not give it to the prime contractor.

Tom Temin: And how did you get into this particular area of arcana when it comes to federal contracting?

Dan Broderick: I was a practicing lawyer, I practiced in DC for about seven years. And the last firm I was at was an AM-100 Law Firm here in DC and was the conduit to a client where I would go to their offices twice a week to review and negotiate contracts. And this was a mechanical contractor locally in the DC area. And they would do both private and federal work, but they would give me their largest subcontractor and they would give me a playbook and I would go to their office and I would sit down and just review and negotiate stacks of contracts for them and thought, you know, gosh I’m just doing the same thing over and over and over again. And I thought there had to be a more efficient way to do it. And so that’s when I was connected to my co founder, Jonathan Herr and we went about trying to automate that process. And our research actually suggests that 15 to 20% of whatever companies already review and markup and negotiate in these contracts, they’ve already looked at it, they’ve already seen it, they’ve already marked down language. So that’s just wasted time and wasted effort.

Tom Temin: And is there a difference in the amount of editing that has to be done say between services contracts and product contracts?

Dan Broderick: Yeah, so I would say that services probably have more editing involved than a product like contract. But in terms of the subcontracting space with the contracting directly with the federal government, you know, I’m not exactly, I should know this cause I was a government contracts attorney in a past life, but there are commercial items, exceptions, which you can negotiate with the government, if it’s like a commercially available piece that they basically can go get from various different suppliers, you can negotiate on terms. But I think with the government, I think services are less negotiable.

Tom Temin: So subcontractors then it sounds like tend to cause a lot of the editing requirements and have a lot on their own to begin with.

Dan Broderick: That’s correct. Yes.

Tom Temin: Okay. And the tool that you have, this is a cloud product or something people put on their own servers.

Dan Broderick: Yeah. So that’s a really good question. We’re very aware of the different security postures of companies today. Some people prefer their stuff in the cloud, some people don’t. So we deploy an a method called the Kubernetes and Helm charts so we can deploy in any cloud environment and somebody’s virtual private cloud and we can deploy behind somebody’s firewall. We actually deploy a separate instance of our application every time we give it to a client. So we just kind of pick things up and move them around where people want them.

Tom Temin: And you are a DC company. Was this all programmed in India or did you have people locally that had to do this?

Dan Broderick: That’s a great question. No, most of our engineers come out of DARPA related research, and we’re local. So it’s actually a very difficult problem to solve. And they’ve done a great job implementing cutting edge AI and machine learning technologies to get a system that works really well.

Tom Temin: This is more than simply search and replace, or search and excise types of functions that you have in Word say.

Dan Broderick: Yeah, it’s much more complex than that. The actual process of programmatically editing Word documents is actually fairly complex, because you have to be able to keep track of all the attributes of the Word documents simultaneously as you’re editing it, which is fairly complex. But then once you get the text out of there and able to keep track of all the various pieces, you need to be able to do alignments of pieces of text that you’ve seen in the past and new pieces of text that you’re seeing now. So that comes down to a process called monolingual alignment, where you align different pieces of text from and say what words have similar meanings and then figure out where to put the edits and then how to make those edits read properly in the new tax that you’re inserting into. And all that’s a very complex process and requires a deep deep domain expertise and also really skilled people on the engineering and natural language processing side of things.

Tom Temin: And were you able to test it with, say someone like Lockheed or one of the big contractors.

Dan Broderick: We actually were funded by the National Science Foundation under an SPIRE research grant and we had a partner who gave us access to data.

Tom Temin: Dan Broderick is co founder and CEO of Blackboiler. Thanks so much for joining me.

Dan Broderick: Thank you, Tom. I really appreciate it.