INTELLIGENT CONTRACTING

 

 

A NEW LOOK: Ruben Cruz, procurement analyst for the Army Artificial Intelligence Task Force, examines sensors in an autonomous robot built at Carnegie Mellon University in the 1980s. Intelligent contracting would affect government acquisition from requirements development and solicitation to contract award and performance. (Photo by Gary Sheftick, Army News Service)

 

 

New technology and business practices suggest a smarter workload for future federal contracting.

by Vernon Myers, Col., USA (Ret.)

Procurement organizations across the federal government face the same challenges, specifically, the requirement to maintain adequate resources to execute the mission of contracting for goods and services in support of execution organizations. Additionally, budget constraints, inexperienced personnel and unstable requirements further strain the system.

Meanwhile, requiring activities are obligating money faster and resource managers are pulling funds more frequently to meet critical requirements. The ACC Fact Sheet stated in 2017 that the U.S. Army Contracting Command (ACC) and its 6,000 civilian and military personnel executed over 165,000 actions valued at more than $62 billion. Assuming that these trends continue, what new technology do we have available right now or in the near future that could fundamentally transform or disrupt the federal procurement domain? What new innovative business models will shape the way procurement professionals serve customers in the future?

Intelligent contracting is an aspirational, high-level vision of what federal procurement could be in 10 to 20 years. It represents the convergence of three primary and three supporting emerging technologies that may be able to facilitate the entire procurement value chain, from requirements development and solicitation to contract award and performance. The primary technologies are cloud computing, artificial intelligence (AI) and big data, while the supporting technologies are intelligent-agent technology, smart contracts and blockchain. I intend to paint a picture of a new vision for the future of federal procurement based upon the integration of the six emerging technologies that will deliver the innovative intelligent contracting platform.

Innovation is a future vision delivered. As outlined above, the six emerging technologies exist right now, and four of the six are already being used in diverse federal government applications. I’m advocating that we think bigger by harnessing the capacity and creativity of industry and government to move the procurement business model forward into the 21st century. We are on the verge of intelligent contracting, but we must all work together to bring this vision to life.

VISION

I became interested in intelligent-agent technology a few years ago when I entered a contest and developed an idea called the Federal Multi-Agent System. It is a platform that connects all federal executive agencies in a system whereby intelligent agents (an army of Siris or Google Assistants) would execute the millions of daily services required by citizens from the government every day, such as applying for a passport, renewing a driver’s license or paying taxes. Citizens would have the ability to deploy personalized intelligent agents anytime, anywhere and for any legitimate service provided by the government.

I believe that intelligent agents can increase speed and accuracy and decrease the cost of executing contract actions across the federal government, under the direction of AI, operating within a government cloud architecture, using data from millions of historical contract actions, leveraging smart contract technology as the contract instrument and using blockchain to secure the transaction. Let’s look at how these emerging technologies are currently being used and then apply them to the federal procurement space.

PROCUREMENT NOW: WE CAN DO BETTER

Federal procurement is a defined market whereby customers (requiring activities) engage market facilitators (contracting agencies) to initiate agreements with suppliers (government contractors) via a transparent and secure marketplace (beta.sam.gov, which includes the former Federal Business Opportunities) for goods and services to be delivered at specific dates in the future. The current federal procurement business model has served us well over many decades and will continue to do so into the foreseeable future. However, by leveraging these six emerging technologies the method of contract delivery and execution can be made more transparent, more efficient and more cost-effective. What new technology do we have available right now or in the near future that could disrupt the current contracting business model? Since the government is often slow to adopt new technologies, we are most likely a few years away from seeing the convergence of these technologies in the procurement domain; however, it is worth the effort to look at what might be possible.

The next section will cover the vision for the future of procurement that includes the development, integration and deployment of the intelligent contracting platform across the federal government. The end state of this vision will be a relevant, cost-effective and technology-enabled procurement ecosystem that puts the best emerging technologies into the hands of a trained and ready workforce, thus creating value for stakeholders throughout the federal government.

PROCUREMENT FUTURE: IMAGINE THE POSSIBILITIES

The three primary technologies—cloud computing, AI and big data—must be developed and integrated to provide a robust infrastructure for the intelligent-contracting platform. The government would need to establish a dedicated cloud architecture that could support AI, big data, intelligent agents, smart contracts and blockchain capabilities. The intelligent contracting platform would operate within a cloud computing infrastructure similar to the cloud services provided by Amazon Web Services to the world’s largest commercial enterprises. By initiating a contract with a leading cloud provider to host the cloud computing infrastructure, the government also would have the ability to quickly scale the intelligent contracting concept at a reasonable cost. AI, combined with data from existing government data centers and intelligent agents, will provide an advanced way to automate the procurement process by finding data, analyzing the data, making recommendations and providing predictive analysis to assist humans in making procurement decisions that are in the best interest of the government.

For example after a contracting professional receives a requirements package, the AI will assist by analyzing data from historical contract actions, solicit the requirement through the government marketplace, assist with the receipt and evaluation of proposals and, finally, enable the award of a smart contract. While most of the data needed to launch the intelligent contracting concept already exist in databases across the federal government, the data will need to be sent through a methodical process to clean, organize and package it to allow intelligent agents, smart contracts and blockchain to efficiently use it to execute the intelligent-contracting system functions. By using data the government is already collecting, the intelligent contracting system will be able to feed data to the AI to enable it to, in conjunction with humans, analyze how best to execute each procurement’s acquisition strategy.

The three supporting technologies of intelligent agents, smart contracts and blockchain must be developed and integrated to provide the dynamic operational capability required to facilitate the procurement process. Intelligent agents will work in conjunction with humans, AI and big data to navigate a contract action through the entire procurement process. By using intelligent agents to facilitate procurement, productivity will be increased across organizations, and this self-service capability will be provided to customers in an always-on and available mode.

A smart contract is an output of the intelligent contracting concept that provides a secure contractual instrument that can be used for contract award, performance verification and payment for services rendered. Blockchain is a relatively new technology that has been most associated with Bitcoin and cryptocurrency; however, it has many more potential applications. It is the mechanism that would be used to facilitate contract award, payment and verification of performance or delivery of goods and services. One use case for blockchain is as a tool for awarding and recording transactions, including contract actions. By using blockchain technology, contracting professionals can automate the process of contract award and administration by setting parameters for contract award, payment and performance verification.

The combination of these six emerging technologies and a trained, capable and empowered workforce will ensure that the intelligent contracting system can meet the requirements of the most demanding and dynamic stakeholders in the future. Innovation is the future delivered. How will the government move from the current state to the future vision of the intelligent contracting platform?

BRIDGING STRATEGIES: HOW DO WE GET THERE FROM HERE?

Intelligent contracting is an exciting vision of the future of procurement that uses six emerging technologies—cloud computing, artificial intelligence, big data, intelligent agents, smart contracts and blockchain. This section will cover potential bridging strategies to transition from where we are right now to a future state enabled by the intelligent contracting ecosystem. Although the six emerging technologies are currently used in diverse commercial and governmental applications, implementation concerns and other risks still exist. The process of identifying emerging technologies and developing a big idea is the easy part. The more significant challenge is to figure out how the government will integrate the emerging technologies into a platform that can be fielded and sustained throughout the life cycle of the system. The remainder of this section will discuss key leadership considerations related to cybersecurity risks, new legislation, funding and prioritization and the AI workforce.

If government leaders decided to implement this intelligent-contracting concept, they would need to conduct a thorough risk analysis. One risk that stands out is cybersecurity vulnerability. Identifying and reducing cybersecurity risks would be critical to integrating the six technologies into a system that complies with government cybersecurity requirements and delivers value to stakeholders. After identifying, assessing and mitigating key risks, leaders must gain an understanding of AI-focused legislation that provides authority to fund the AI-enabled intelligent contracting ecosystem.

Government leaders must become knowledgeable and adept at leveraging key AI-focused legislation. In 2017, the Trump administration identified AI as one of its top research and development priorities by emphasizing the requirement for AI project proposals to include an “all-of-government” benefit to gain approval. In 2018, the Modernizing Government Technology Act was signed into law to provide authority to fund IT projects across the federal government valued at up to $250 million. In 2019, the American AI Initiative was created, and the Artificial Intelligence in Government Act was enacted into law.

The American AI Initiative is the United States’ national strategy on artificial intelligence, which focuses the resources of the federal government on AI by emphasizing five key areas:

• Investing in AI research and development (R&D).
• Providing AI R&D experts access to federal data, models and computing resources.
• Building trust by establishing policies for AI development.
• Prioritizing training to help American workers gain AI-relevant skills
• Protecting America’s AI advantage by engaging internationally.

The Artificial Intelligence in Government Act seeks to prioritize cohesion and competency in the federal government’s use of AI by increasing expertise concerning emerging technologies and developing and advancing public sector AI. The law accomplished these broad AI policy directives by requiring the General Services Administration to create an AI Center of Excellence to oversee the rollout of AI technology throughout the federal government. By gaining an understanding of new policy and legislative guidance, leaders will be able to establish a framework to support future funding and prioritization decisions related to AI and the intelligent contracting platform.

Government leaders must clearly understand the funding and prioritization  that drive investment in new technology. For example, in the research study “Opening Government’s Digital Playbook,” the Centre for Public Impact, a London-based think tank, reported that of the $90 billion spent by the federal government on technology, 75 percent was spent on maintaining legacy systems. The Army Modernization Strategy 2019 assumed that the Army budget would most likely remain flat, thus reducing its spending power over time. Although the Army did not project future growth in its budget, it still designated AI as an Army research priority because it would help the service increase the speed and agility with which it responds to current and future threats. While funding and prioritization are important factors, leaders must also consider the engine that powers the new intelligent contracting platform—the workforce.

Government leaders must understand that the intelligent-contracting system will only be as good as the workforce that operates, maintains and sustains it. Change driven by innovation and new technology may create a fear among staff that they will be replaced by computers or by people with more relevant skill sets. How will the implementation of the intelligent contracting platform impact the contracting workforce? What will happen to the thousands of federal workers who have spent years learning a craft that will eventually be facilitated by AI and intelligent agents?

The early answer is that the current workforce will need to be retrained to integrate and work with emerging technologies; however, it’s important to note that these technologies will not replace the contracting workforce. Early research has shown that AI works best in conjunction with humans, and as Michael Luca, Jon Kleinberg and Sendhil Mullainathan noted in the Harvard Business Review in its January–February 2016 issue, even algorithms need to be managed. The bottom line is that there will be a requirement to retrain workers to work in collaboration with AI and other emerging technologies; however, technology will not replace people.

CONCLUSION

Implementation of this intelligent-contracting platform will require the right people with the right expertise, including a workforce that is skilled in the design, development and use of AI in diverse applications. In preparation for this future requirement, the AIGA required the Office of Personnel Management to identify the skills federal workers would need to work with AI and to develop an AI-specific job series based on those skills. Laura Cox, senior staff writer at disruptionhub.com, identified change as the only constant in business, and that the disruptive nature of digital technology will increase the speed of change and impact how organizations operate. Federal contracting agencies will not be excluded. The government should get ahead of the coming changes by harnessing the power of the six emerging technologies and identifying procurement transformation as a top priority for government agencies.

 

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For more information, contact the author at vernon.l.myers2.civ@mail.mil.

VERNON MYERS, Col., USA (Ret.), is the acting deputy executive director at U.S. Army Contracting Command – Orlando, Florida. He is currently pursuing a Doctor of Business Administration with a specialization in innovation and strategy at Capella University. He holds an M.S. in materiel acquisition management from Florida Institute of Technology and a B.S. in business administration from Central State University. He is an avid student and practitioner in the areas of leadership, innovation and creativity and is the author of “The Idea Journal: A Tool for Unleashing Your Urge to Create.” He is an Army Acquisition Corps member, is Level III certified in contracting and in program management, and has earned the Project Management Professional (PMP) certification. His last article in Army AL&T, “What the Customer Sees,” appeared in the April-June 2012 issue, Page 93.

 

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Read the full article in the Fall 2020 issue of Army AL&T magazine.
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