AI in procurement: Second wave applications

Just two years ago, artificial intelligence (AI) was largely spoken of aspirationally—confined to venture capital pitches and the secretive engineering bullpens of the world’s biggest tech companies or young upstarts like the now-famous OpenAI. ChatGPT launched in November 2022 and was followed by an avalanche of AI innovations.

If you want a sense of the overall business impact of AI, look at Nvidia—historically a graphics processing company for video gaming. It turns out their GPUs are well-suited for AI applications. In November 2022, their market cap was $406 billion. Two years later, they are the second-largest company in the world with a market cap of $3.43 trillion, hot on Apple’s trail.

The initial wave of excitement about AI in procurement saw professionals imagining automated bid creation for agencies, while suppliers dreamed of simplifying the expensive and time-consuming bid response process. However, these early applications were limited in utility.

Early document authoring applications offered only a glimpse of AI’s potential for process automation and data insight discovery. Today, we are witnessing a second wave of AI applications for government procurement—not just speeding up how our industry works but fundamentally changing it.

AI-driven scope drafting and supplier research

The first step beyond simple prompting within an app like ChatGPT has been the integration of AI into existing products and workflows. Several eProcurement companies have launched tools to support scope drafting directly in-app.

For example, OpenGov has introduced its AI-Powered Scope Drafting tool. This tool can take a brief prompt like “Community Engagement Consulting Services for the Department of Public Works” and generate a draft set of project requirements. This empowers buyers to harness AI within their existing procurement technology stack.

OpenGov has also launched an AI supplier search feature. It takes an agency’s scope of work and matches it to supplier offerings detailed on websites, generating both local and national supplier lists. This tool, when combined with Procurated’s supplier scores (displayed directly in OpenGov Procurement), marks a significant leap forward in supplier discovery and vetting.

AI-driven proactive contract performance management

Another area where AI is transforming the status quo is proactive contract performance management. Traditionally, contract managers relied on periodic supplier meetings, anecdotal end-user feedback and scorecards (sometimes hand-written on index cards) to monitor supplier performance. These manual processes often led to performance issues going unaddressed—or worse, unnoticed.

AI-powered platforms like Procurated's Canary are revolutionizing contract performance management. Canary collects and consolidates feedback from agency end-users, leveraging AI to produce digestible summaries of performance metrics down to the agency level for contract managers.

Launched less than a year ago, Canary is now used to manage supplier performance in more than 25% of U.S. states. Procurated also is experimenting with AI to standardize performance data from scorecards and other information silos, enabling contract managers to access historic performance trends seamlessly within their workflows. Addition forthcoming AI functionality includes using AI to identify contract issues proactively and automatically and flag them directly to contract managers.

Other notable solutions in this space include Appian Contract Management and Icertis Contract Intelligence, both of which use AI to analyze contracts, automate processes, and ensure compliance.

AI in pre-RFP opportunity identification

AI also is unlocking new opportunities for identifying contracting possibilities during the pre-award stage, giving proactive suppliers a competitive edge.

Just this month, Cloverleaf AI announced its seed funding round as it launched a new AI platform that alerts government contractors to opportunities before RFPs are even released. Major government projects are often preceded by public meetings, hearings, and forums. Cloverleaf’s Vocal Fingerprinting tool monitors these meetings, tracking the positions of key government officials on specific projects. The company also uses this data to build its Opportunity Database, which it claims captures more than 100,000 monthly government opportunities before they reach the RFP stage.

A similar feature set has been rolled out by GovSpend in the form of their new Meeting Intelligence tools. Competition in this space will serve to drive greater functionality as government suppliers get used to introducing AI into their workflows.

Get ready to ride the wave

Two years ago, Taylor Swift had just released Midnights. Netflix’s “Wednesday” had just premiered. Two years can feel like two weeks, but in that time, AI has fundamentally transformed the public procurement landscape. We can be certain that the next wave of AI advancements in our industry will be just as transformative.