AI Forces Agencies to Rethink Federal Procurement

Federal agencies are changing how they buy and deploy AI as rapidly evolving models make traditional acquisition timelines increasingly difficult to sustain, federal officials said at GovCIO Media & Research’s Federal AI Forum in Reston, Virginia.

“When we look at AI acquisition, it’s completely different than buying a tank or a truck or even buying cloud services. It’s just a completely different game,” said Anil Chaudhry, senior advisor of AI at the Transportation Department.

OneGov Streamlines Federal AI Acquisitions

One vehicle for streamlining the procurement of AI systems and technologies is the General Services Administration’s OneGov strategy. The government-wide procurement effort leverages federal agencies’ collective purchasing power to negotiate enterprise-wide software, cloud and AI discounts directly with original equipment manufacturers, explained Birgit Smeltzer, director of the Office of IT Products within GSA’s Federal Acquisition Service.

Smeltzer said OneGov has saved the government $1.6 billion, with about $1.4 billion stemming from limited-time AI offers. She added that the figure may not capture the full impact because some agencies may have used OneGov pricing to negotiate their own contracts outside GSA.

Because many OneGov AI offerings are available for a limited time, GSA is working closely with manufacturers to extend existing offers or put new ones in place.

“We look very much at what makes sense for the government and what may not have taken flight so much, and put some offers out there that work for our agencies,” Smeltzer said.

Some OEMs have already agreed to extend limited-time offers and are looking to provide additional offers through GSA, she added.

Market Forces Impact AI Procurement

As the AI market evolves, Chaudhry noted that agencies are seeing AI model cognition double every seven months. That pace means market research conducted six months earlier “is no longer relevant by the time you write a contract,” he said.

Because of these rapid market shifts and the size and complexity of IT contracting requirements, government-wide acquisition vehicles can help agencies procure emerging technologies more efficiently.

Such contract vehicles can also build greater predictability and stability into the process.

“If I can leverage a government-wide contract or another agency’s vehicle … all I have to worry about is a task order. What I can do then is build, I can work with industry to have firm, fixed price six-month sprints,” Chaudhry said.

Faster Acquisitions Lead to Big Savings

OneGov delivers cost savings to agencies by securing discounts of up to 70% or more, Smeltzer said. An important part of the strategy is simplifying the procurement process to reduce complexity and accelerate technology adoption.

GSA’s AI framework is designed to simplify agency purchasing while eliminating duplicative contracts and redundant reviews.

GSA also has a team of cloud, AI and cybersecurity subject matter experts to help customers “navigate to the right solution they might need through our contract vehicles,” Smeltzer said.

This standardization also supports security and compliance.

“By adopting standardized contract terms, agencies gain consistent expectations around support, patching, access controls, and crucial safeguards for both cloud and AI environments,” Smeltzer said.

AI-Powered Procurement Supporting Rocket Science at NASA

NASA is one example of how agencies are using AI to improve their own procurement processes.

The space agency’s procurement office manages spending that accounts for 85% of NASA’s budget, supporting day-to-day operations and mission needs, said Geoffrey Sage, director of the office’s Enterprise Service and Analysis Division.

“Everything that we do, everything that we touch, we enable the mission day-to-day. … Procurement directly enables that,” Sage said.

Recent staff cuts have affected NASA’s procurement workforce, making AI augmentation increasingly important to supporting the mission, Sage said. The agency is taking a measured approach to implementing AI in its contracting processes.

With security and operational guardrails in place, NASA is beginning to introduce AI to support pre-award activities such as market research and requirements development. The effort is helping streamline and accelerate the agency’s contracting work.

“The faster we can get through market research, the faster I can get my rocket scientists and engineers to actually write good requirements down. … We’ve really opened the aperture for our folks to speed their delivery,” Sage said.