Improving AI transparency in procurement – Procurement Policy Note 02/24

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The UK's Cabinet Office has published Procurement Policy Note (PPN) 2/24 on Improving Transparency of AI use in Procurement. PPNs provide guidance on best practice for public sector procurement. The PPN is relevant to buying and using AI and, primarily, use of AI in generating tenders, including references to guidance and best practice, and potential procurement disclosure questionnaires to include. Here we summarise the key points:
According to the PPN, it applies to all Central Government Departments, their Executive Agencies and Non-Departmental Public Bodies, and are referred to in this PPN as ‘In-Scope Organisations’. Other public sector contracting authorities may wish to apply the approach set out in this PPN.
The PPN links to guidance and best practice for contracting authorities when procuring AI, including:
The PPN makes clear that suppliers’ use of AI is not prohibited during the commercial process but “steps should be taken to understand the risks associated with the use of AI tools in this context, as would be the case if a bid writer has been used by the bidder.”
Ways to understand that risk include:
- Asking suppliers to disclose their use of AI in the creation of their tender. [The PPN includes example disclosure questions at Annex B, discussed below] Answers to the questions provided in Annex B are intended to be for information only and should not be considered by contracting authorities in the tender evaluation process.
- Putting in place proportionate controls to ensure bidders do not use confidential contracting authority information, or information not already in the public domain as training data for AI systems e.g. using confidential Government tender documents to train AI or Large Language Models to create future tender responses.
- Undertaking appropriate and proportionate due diligence
- If suppliers use AI tools to create tender responses, additional due diligence may be required to ensure suppliers have the appropriate capacity and capability to fulfil the requirements of the contract. Such due diligence should be proportionate to any additional specific risk posed by the use of AI, and could include site visits, clarification questions or supplier presentations.
- Additional due diligence should help to establish the accuracy, robustness and credibility of suppliers’ tenders through the use of clarifications or requesting additional supporting documentation in the same way contracting authorities would approach any uncertainty or ambiguity in tenders.
- Planning for a general increase in activity as suppliers may use AI to streamline or automate their processes and improve their bid writing capability and capacity leading to an increase in clarification questions and tender responses.
- Potentially allowing more time in the procurement to allow for due diligence and an increase in volumes of responses.
- Closer alignment with internal customers and delivery teams to bring greater expertise on the implications and benefits of AI, relative to the subject matter of the contract.
The PPN also notes that additional steps may be required in specific types of contracts:
The PPN states that contracting authorities could add a disclosure question to the Invitation to Tender. This requires suppliers to disclose their use of AI when responding to the tender questions, or as part of their proposed delivery of the service.
The example questions should not be scored or taken into account in tender evaluation, and should be used for information only. Contracting authorities can however continue to ask and evaluate any further relevant questions about use of AI as part of their award process which are specific to their requirements and are compliant with procurement law. Whether, and if so how, any questions are to be scored should be set out in the procurement documents.
The example questions include:
However, a contracting authority must take great care when considering this information not to breach the principle of equal treatment and the duty of good administration. For example, by taking into account any information provided in response to the disclosure questions when scoring the tender. Further, as pointed out by commentators, the question concerning how AI is used to deliver the contract:
…is information that will either relate to the technical specifications, award criteria or performance clauses (or all of them) and there is no meaningful way in which AI could be used to deliver the contract without this having an impact on the assessment and evaluation of the tender
If you have any questions or would otherwise like to discuss any of the issues raised in this article, please contact Tom Whittaker, Brian Wong, David Varney, Liz Smith, or another member of our Technology Team. For the latest updates on AI law, regulation, and governance, see our AI blog at: AI: Burges Salmon blog (burges-salmon.com).