In December, the US Department of Health and Human Services received the go-ahead or "authority to operate" (ATO), a procurement system that exploits blockchain and artificial intelligence. The system will be used to provide pricing information for the supply.
The project extracts data from 100,000 contracts representing approximately $ 24.8 billion in annual spending in five separate legacy contract writing systems in the department. It then analyzes the prices paid and the conditions on those contracts. In turn, these data will be used as input for new purchases.
"We believe there are significant savings and significant price negotiating power that will come with full visibility of the prices paid and the terms and conditions," said Jose Arrieta, deputy assistant secretary of acquisition, speaking at Federal News Network. He gave an example as an analogy of how a consumer might say to a retailer who can get it elsewhere cheaper and request a price comparison.
When the government makes a strategic purchase, it can take a long time, even months, to gather all the data of the market research and analyze it. Now the data is updated in real time and can be immediately available and used for both planning and negotiation.
Blockchain is used as a level that refers to all the contractual data in the department. All data is stored in a standardized format or in taxonomy and the blockchain contains a chronological record of data in that taxonomy.
In addition to the blockchain layer, they added automation of the robotic process and machine learning. This is used to clean data when data is extracted from legacy contract systems. Then it uses natural language processing to analyze terms and conditions and price information in contracts.
The goal is to get real-time data for users by March 2019. Once the data begins to flow through the next step, you need to get feedback from the teams on how to provide better analysis.
Other blockchain purchase initiatives
Procurement is extensive, so there are several blockchain initiatives. In terms of public procurement, the Asian Development Bank has published a document that explores the possibility of creating an international platform that serves as a global database of suppliers that allow cross-border offers.
Accenture is working with Siam Commercial Bank in Thailand with a blockchain solution to digitize procurement practices. In turn, the documents are integrated into a proxy-to-pay solution.
Contracts are essential for supply. Deutsche Bahn is testing a block contract solution. And several blockchain projects are working on smart "legal" contracts, including the Accord consortium, which aims to standardize and automate the bargaining process.