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

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:

Scope

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.

Guidance and Best Practice

The PPN links to guidance and best practice for contracting authorities when procuring AI, including:

1. Assessing if artificial intelligence is the right solution
2. Guidelines for AI Procurement
3. A guide to using artificial intelligence in the public sector
4. Generative AI Framework for HMG
5. Managing your artificial intelligence project
6. Artificial intelligence in public services
7. Data Ethics Framework
8. Understanding Artificial Intelligence Ethics and Safety

Risks of using AI in bid writing

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:

• AI is also increasingly used to deliver “non-AI” services.  Where this is likely, commercial teams may wish to require suppliers to declare this and provide additional details. This will allow further consideration to be made around additional due diligence or contractual arrangements to manage the impact of AI as part of the service delivery. 
• In certain procurements where there are national security concerns in relation to use of AI by suppliers, there may be additional considerations and risk mitigations that are required. In such instances, commercial teams should engage with their Information Assurance and Security colleagues, before launching the procurement, to ensure proportionate risk mitigations are implemented.

Example AI Disclosure Questions

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:

1. Have you used AI or machine learning tools, including large language models, to assist in any part of your tender submission? This may include using these tools to support the drafting of responses to Award questions.
2. Please detail any instances where AI or machine learning tools, including large language models have been used to generate written content, or support your bid submission.
3. Are AI or machine learning technologies used as part of the products/services you intend to provide to [Insert Contracting Authority Name]?

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).