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Improving Transparency of AI use in Procurement

 |  April 30, 2024

By: Katherine Hurrell & Mark O’Conor (DLA Piper)

On March 25, 2024, the Cabinet Office released Procurement Policy Note (PPN) 02/24: Enhancing Transparency of AI Implementation in Procurement. This note offers guidance on the incorporation of Artificial Intelligence (AI) by bidders in public procurements and government service delivery. It emphasizes the necessity for increased transparency from bidders regarding their AI usage and recommends heightened due diligence when AI is involved in the bidding process. The PPN applies to all Central Government Departments, their Executive Agencies, and Non-Departmental Public Bodies, with other public sector authorities encouraged to adopt the approach outlined in the PPN.

This represents the latest review by the UK Government concerning the potential applications of AI, both within the public sector and in the procurement of goods and services incorporating AI components. For instance, earlier this year, DLA Piper contributed to the Government Legal Department’s “FebruAIy,” a month-long initiative focusing on the opportunities and challenges associated with AI.

Key highlights from the PPN include:

Recognition of AI’s Risks and Opportunities: Acknowledgment of the rapid growth and evolution of AI systems, tools, and products. Increased governmental adoption of AI necessitates the identification and management of associated risks and opportunities in commercial activities. Public bodies are advised to exercise caution in ensuring appropriate AI use while considering potential risks, echoing principles of “Responsible AI” best practices.

Supplier Utilization of AI: Suppliers utilizing AI to develop bids may increase their chances of securing public contracts. However, precautions are essential. Recommended steps include:

  • Mandating suppliers to disclose their AI usage in tender creation (Annex B of the PPN offers example text for inclusion in procurement documentation).
  • Implementing controls to prevent the use of confidential information as training data for Language Model Models (LLMs), such as confidential tender documents.
  • Conducting additional due diligence to assess suppliers’ capacity and capability when AI is employed in tender responses. For procurements where supplier AI usage may raise national security concerns, additional risk mitigations may be necessary, following standard procedures.