The UK’s Department for Science, Innovation & Technology (DSIT) published the AI Opportunities Action Plan (“AI Action Plan”) last week (see our summary here).  Public procurement has an important role in the government’s AI Action Plan. 

The AI Action Plan says that “government purchasing power can be a huge lever for improving public services, shaping new markets in AI, and boosting the domestic ecosystem. But […] it will require real leadership and radical change, especially in procurement” (emphasis added). The AI Action Plan has attracted over £14 billion in investment in its first week, according to a government press release.

This focus on public procurement was reiterated by tech minister Peter Kyle who stated, “We want to make sure we use the purchasing power of the government to benefit the innovation coming out in this country,” in a press release this week.

In this article, we focus on three key themes:

1. Adopting a “Scan > Pilot > Scale” Approach; 
2. AI-Specific Contractual Considerations; and
3. Driving Public-Private Collaboration

We look at each of these in turn below. 

1. Adopting a “Scan > Pilot > Scale” Approach

The AI Action Plan aims to quickly identify opportunities for AI, speed up procurement processes by reducing red tape, and replicate successful pilots nationwide across the public sector. 

Key points include:

• Strengthening two-way partnerships between the government and AI vendors and startups, including arranging meetings with product development teams to ensure that end-user needs are feeding into and shaping AI development at an early stage. 
• Introducing a “faster, multi-stage gated and scaling AI procurement process”, which strips back bureaucratic hurdles for startups to access initial funding and gradually reintroduces tighter controls as pilots scale up and require greater investment. This seeks to take advantage of new procurement flexibilities, such as the Competitive Flexible Procedure, which will be available under the new Procurement Act 2023 (due to take effect on 24 February 2025).
• Launching “mission-focussed national AI tenders” where bid-winners lead the deployment of AI systems nationwide across de-centralised systems (such as the rollout of AI diagnostic tools to 66 NHS Trusts and Foundation Trusts across England).
• Moving away from commercial frameworks whenever possible to reduce barriers to entry and allow less established AI contractors to win tenders.

2. AI-Specific Contractual Considerations

Alongside the increased public investment in the AI ecosystem, the AI Action Plan recommends that public procurement contracts should pay particular attention to establishing quality standards and setting out requirements and best practices. 

It is likely that AI public procurement contracts will also have an increased focus on “infrastructure interoperability” and standardised software frameworks (including “reusable modular code components, and code-base open-sourcing”) so as to facilitate cross-developer collaboration, broad adoption and scalability. One example of this is the AI Action Plan’s recommendation to develop or procure a core “scalable AI tech stack” to enable the use of language models nationwide. 

In addition, such contracts may include “contemplation” clauses – these require contractors to horizon scan, evaluate and adopt the latest technologies.

3. Driving Public-Private Collaboration

A recurring theme within the AI Action Plan is the drive to capitalise on public-private synergies. As part of this initiative, a new unit, the UK Sovereign AI, will help establish public and private sector partnerships. Procurement, alongside capital investment, will be a major part of the unit’s efforts, including leading public procurement joint ventures with commercial AI partners.

The AI Action Plan has also recommended that government digital infrastructure be made accessible to the private sector via APIs so that innovators can develop AI-driven solutions that increase efficiency in standardised document-heavy areas such as compliance, planning and billing. 

Comment

Zooming out to the wider procurement market, the AI Action Plan has been released shortly before the long-awaited Procurement Act 2023 is due to go live on 24 February 2025. 

The new Act places renewed emphasis on the importance of pre-market engagement for authorities, which can and should be used for authorities to gain a better understanding of the new AI technologies that are available in a rapidly-evolving market.  Without this engagement, authorities will find it difficult to appropriately scope new procurements and help suppliers to put forward optimal solutions. 

The use of the new Competitive Flexible Procedure will also give authorities the ability to tailor a procurement procedure to the particular contract in hand. It is possible to procure pilot contracts that can lead to longer term arrangements if there is careful and considered planning. 

The Act reflects the government’s “[c]ommitment to fixing the systemic blockers that have held previous attempts back” and promises “opportunities to improve public procurement of digital and technology”, as announced in the government’s Blueprint for Modern Digital Government policy paper published this week.

The Government’s Response has indicated more details will be released in the Spring 2025 Spending Review, including a 10-year compute strategy, the selection of a private sector partner to develop a significant AI data centre, the introduction of a process to identify additional AI Growth Zones, and a roadmap for international compute partnerships.

If you would like to discuss how current or future regulations impact what you do with AI, please contact Patrick Parkin, Tom Whittaker, Brian Wong, Lucy Pegler, Martin Cook, Liz Smith or any other member in our Technology team.

This article was written by Jenora Vaswani.