The Opportunity for AI in Government Contracts  

By: Saema Jaffer 

Views expressed are the author’s own and not those of any public sector organisation. 

The public sector’s interest in AI is accelerating, with the Prime Minister announcing that he will be throwing the full weight of Whitehall behind the AI industry to deliver “much bolder” and “more human” public services. The Procurement Act 2023 reinforces this direction by modernising how government buyers engage with suppliers, promoting real opportunities for companies that integrate AI into broader service, product, and construction offers. 

For suppliers, success in government procurement depends on demonstrating clear public benefit, addressing AI-related risks, and differentiating from competitors. This guide outlines a strategic, three-step approach to positioning AI-enhanced solutions for government contracts. 

Step One: Demonstrate Public Benefit 

At the earliest stage of a procurement process, you’ll find market engagement activities hosted by government buyers on the Find a Tender Service. To support AI driven solution to government challenges, you’ll see more buyers using output-based specifications instead of prescriptive tenders, allowing you to define how best to meet objectives. At this stage, your aim is to demonstrate how your offer can deliver tangible benefits for the public.  

A useful starting point is explaining how your proposal aligns with public sector priorities such as efficiency gains, cost savings, service accessibility, or data-driven decision-making. For instance, in a construction project, AI might optimise predictive maintenance, reducing costs and delays. Incorporating  government strategies (e.g., the National Procurement Policy Statement) as part of your offer will also help to show that you are aligned with national objectives. 

If AI is a component of your wider solution, frame it as an enabler of measurable benefits, rather than a bolt-on component, so that your buyers can justify AI investments to internal stakeholders. For instance, if your AI-enhanced system improves NHS estate management within a larger facilities service contract, provide data on expected cost reductions, maintenance efficiencies, or sustainability gains. 

If you’re looking to engage with government at an even earlier stage, consider taking part in the AI Security Institute’s industry days, where researchers and developers are invited to suggest future requirements and novel capabilities. 

Once you establish clear public value, the next priority is mitigating AI-related concerns, and showing you’ll meet minimum requirements. 

Step Two: Address AI-Specific Risks and Compliance 

Public sector projects incorporating AI face heightened scrutiny, particularly in areas such as health, justice, and infrastructure services. Even if AI is just one component of your solution, buyers will focus on risk areas including, data protection, bias and transparency. 

When you get to tender stage, government buyers will scrutinise how your solution handles data, especially if AI-driven elements process personal or operational information. As a minimum, you’ll need to show compliance with GDPR and cybersecurity best practices. 

Government buyers will also likely want assurance that AI models within your solution do not perpetuate discrimination. Be prepared to explain how you have incorporated bias audits and representative training data, especially if AI influences hiring, public safety, or resource distribution.  

It’s worth noting that AI “black boxes” are a red flag in public procurement. Demonstrate how AI-driven processes within your solution provide explainable outputs, with decision-making that can be audited and understood by non-technical stakeholders.  

Once you’ve resolved your buyers’ key concerns, your next area of focus is to stand out at tender or negotiation stage. 

Step Three: Stand Out in a Competitive Marketplace 

In a crowded field, you can stand out by highlighting longer-term value through adaptability, and knowledge transfer. 

Buyers will be looking to adapt to evolving risks. You can help them to deliver this by giving them a roadmap for continuous learning and model updates that allow incremental improvements without needing a total overhaul. 

Government buyers will also appreciate suppliers who help upskill internal teams and bridge the gap between existing knowledge and future opportunities. Depending on the contract length, your offer could start with training programmes for delivery teams, all the way through to co-development opportunities where buyers can collaborate on refining AI-driven features. 

The Future of Public Procurement and AI  

AI has the potential to enhance a wide range of public sector procurement projects. By focusing on public benefit, compliance, and differentiation, suppliers incorporating AI into their wider offer can establish themselves as strategic partners in shaping the future of government services.