On 25 March 2024, the Cabinet Office published Procurement Policy Note (PPN) 02/24: Improving Transparency of AI use in Procurement.  This PPN provides guidance on the use by bidders of Artificial Intelligence in public procurements and in the delivery of government services.  In particular, it highlights the need for greater transparency from bidders regarding use of AI and enhanced due diligence where AI is used 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 invited to consider applying the approach outlined in the PPN.

This is the latest UK Government review of the opportunities for using AI, both within the public sector, and through the procurement of goods and services which include elements of AI within their solutions.  For example, earlier this year DLA Piper contributed to the Government Legal Department’s “FebruAIy”, a month-long focus on AI, focussing on the opportunities and issues.

Key points from the PPN

  1. AI Adoption Risks and Opportunities:
    • There is a recognition that AI systems, tools, and products are rapidly growing and evolving.
    • Increased adoption of AI by the government necessitates identifying and managing associated risks and opportunities in commercial activities.
    • Public bodies should take care ensure appropriate use of AI while considering risks.  This resonates with the generally accepted best practice for “Responsible AI”; echoed loudly in our AI Governance Report AI Governance Report: policy, compliance and business value | DLA Piper
  2. Supplier Use of AI:
    • Suppliers using AI to develop bids can benefit by bidding for more public contracts.  However, while suppliers’ use of AI is not prohibited during the procurement process, precautions are necessary.
    • Steps recommended include:
      • Requiring suppliers to disclose their AI use in tender creation (Annex B to the PPN sets out example text that can be added to procurement documentation).
      • Implementing controls to prevent the use of confidential information as training data for LLMs (for example, confidential tender documents).
      • Conducting additional due diligence to assess suppliers’ capacity and capability where they have used AI to create tender responses.
    • For procurements where the use of AI by suppliers may raise national security concerns, additional risk mitigations may be required in line with normal practice.
  3. Guidance and Support:
    • Commercial teams can access guidance on understanding AI, its appropriate use in public services, and how to procure AI products.
    • References to relevant guidance are provided in Annex A.

PPN 02/24 aligns with the broader vision set by previous AI policies, emphasising responsible AI adoption, transparency, and risk management in procurement processes, including the following:

  1. Guidelines for AI procurement
    • Published in June 2020 by the Office for Artificial Intelligence in collaboration with the World Economic Forum and the Cabinet Office.
    • Sets out guidance for the procurement of AI technology, including steps to address / mitigating challenges that may arise.
  2. The National AI Strategy
    • Published in September 22 2021, the National AI Strategy builds upon the UK’s strengths and marks a significant shift for AI in the country.
    • It recognizes the power of AI to enhance resilience, productivity, growth, and innovation across both private and public sectors.
    • The strategy emphasizes a pro-innovation approach to governing and regulating AI, aiming for a future-proof and proportionate framework.
  3. AI regulation: a pro-innovation approach
    • In March 2023, the UK Government adopted a ‘pro-innovation’ approach to AI regulation, emphasizing safety, security, transparency, fairness, and accountability.

This is the first in a series of blog posts exploring the use of AI in public procurement. In the coming weeks, future posts will explore the use public bodies can make of AI during the procurement process, focussing on the key opportunities, risks and issues.

Blog post by Katherine Hurrell and Mark O’Conor.

For further information contact the authors or your normal AI contacts.

See here for further information and thought leadership regarding AI and public procurement:

Artificial Intelligence: AI Legislation and Legal Insights | DLA Piper

Artificial Intelligence and Data Analytics | DLA Piper

DLA Piper Procurement Act 2024 (dlapiperintelligence.com)

UK Public Procurement Reform Hub | DLA Piper

UK Public Procurement Reform – brochure