How HHS used AI to become a smarter buyer
When the Ebola outbreak struck, each group in the Department of Health and Human Services needing hazmat suits negotiated for its own expedited delivery. "You can imagine how much fun the vendor community had with that," HHS BuySmarter Solutions Architect Ken Thompson said.
Speaking at a Nov. 15, 2018, Federal IT Acquisition Summit, Thompson explained how the agency procurement staff became "smarter buyers than the vendors are sellers." HHS put its purchasing data from 39 separate acquisition offices in a permissioned blockchain, tapped IBM's Watson for data analysis and developed microservices to enable each step of the procurement process -- from mission needs assessment, through issuance of RFP, e-commerce-based purchasing and oversight.
After scanning 18 months' worth of unstructured contracting data from 97,400 contracts across the department units, HHS had data on purchase history including cost, quality, features, distribution, logical unit sizes, etc.
For the horsepower to process the contracts and purchasing data, HHS turned to artificial intelligence. It wanted the system to be able to make like-to-like comparisons among competing vendors' products and services. After analyzing and learning from the data, the system enables acquisition teams to access real-time information on departmentwide pricing and the terms and conditions for 10 categories of purchases.
BuySmarter also allowed HHS to develop an acquisition strategy that outlined how it would spending its procurement dollars over the year and allow for more focus and control on much it could set aside for small business contracts, for example. That information gave HHS a lever to change vendor behavior. Armed with knowledge of price history across agency contracts, the agency could negotiate with vendors for the best prices. The agency is putting this intelligence into an e-commerce ordering platform so buyers can get pre-negotiated prices on products and services.
The BuySmarter initiative was a winner of the 2018 Public Sector Innovation awards.
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