IBM Center for The Business of Government 2023 Government Procurement and Acquisition: Opportunities and Challenges Presented by Artificial Intelligence and Machine Learning Mohammad Ahmadi Pardee RAND Graduate SchoolDr. Justin B. Bullock University of Washington Government Procurement and Acquisition: Opportunities and Challenges Presented by Artificial Intelligence and Machine Learning Mohammad Ahmadi Pardee RAND Graduate School Dr. Justin B. Bullock University of Washington JULY 20233 Government Procurement and acquisition: oPPortunities and challen Ges Presented by artificial intelli Gence and machine learnin G www.businessofgovernment.org TABLE OF CONTENTS Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8 Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10 AI Use Cases in U.S. Government . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 Procurement Challenges and AI Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12 Procurement Challenge 1: Requirements Definition . . . . . . . . . . . . . . . . . . . . . . .12 Procurement Challenge 2: Competition and Pricing . . . . . . . . . . . . . . . . . . . . . . .15 Procurement Challenge 3: Contractor Oversight . . . . . . . . . . . . . . . . . . . . . . . . .18 Procurement Challenge 4: Federal Procurement Data . . . . . . . . . . . . . . . . . . . . .19 Procurement Challenge 5: Acquisition Workforce . . . . . . . . . . . . . . . . . . . . . . . . .19 Managing the Use of AI for Overcoming Procurement and Acquisition Challenges . . . . .21 A Relevant Process Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31 About the Authors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32 Key Contact Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33 Recent Reports from the IBM Center for The Business of Government . . . . . . . . . . . . . .344Government Procurement and acquisition: oPPortunities and challen Ges Presented by a rtificial i ntelli G ence and m achine l earnin G IBM Center for The Business of Government DANIEL J . CHENOK FOREWORD On behalf of the IBM Center for The Business of Government, we are pleased to release a new report, Using AI to Improve Government Procurement: Challenges and Opportunities, by Justin Bullock at the University of Washington and Mohammed Ahmadi at the Pardee Rand Graduate School. The federal government spends more than $500 billion in the acquisition of goods and services annually . However, agencies face enduring challenges in modernizing the procurement process to support mission achievement, including requirements definition, competition, pricing, contractor oversight, federal pro - curement data, acquisition workforce, and small business participation . This new report addresses using AI to transform public procurement, analyzing challenges and recommending ways to capitalize on opportunities . The report makes recommendations about how to use AI to transform public procurement, which can increase speed, efficiency, and effectiveness in acquiring goods and services that serve public needs by fostering facilitating intelligent automation across the federal acquisition system . This report builds on multiple Center reports focused on using A