Pursuing government contracts demands procurement specialists spend weeks methodically combing through databases and documents, all while racing against unforgiving deadlines.
Today, that scene is rapidly changing as artificial intelligence transforms this traditionally manual process, offering new tools that can slash proposal writing time by up to 70%.
The adoption of AI is reshaping how companies develop their government bids, said Joe Schurman, a partner and principal at PricewaterhouseCoopers (PwC) who leads AI services for the company’s aerospace and defense sector and co-leads the firm’s U.S. space program.
From identifying opportunities to drafting complex technical responses, he says, AI is streamlining nearly every aspect of the government contracting process.
PwC, in April 2023, announced a $1 billion investment to expand and scale its global AI offerings. It has created specific AI solutions for aerospace and defense, including flight sciences and engineering design AI and PartsGPTs. “But AI for proposal writing is the most often requested application in our practice,” Schurman told SpaceNews.
These aren’t your typical chatbots. The newer generation of AI tools is specifically designed to navigate the complex world of government contracting, where security protocols are strict and the stakes are high, as a single proposal can make or break a company’s fiscal year.
Beyond basic automation
The technology goes far beyond simple document processing. Modern AI systems can scan vast databases of government solicitations on SAM.gov (the official U.S. government procurement portal) to identify contracts that align with a company’s capabilities. They can break down complex Requests for Proposals (RFPs) into manageable tasks, and even help draft proposals highlighting a company’s strengths — all while ensuring compliance with stringent government regulations.
For niche contractors in the space industry, for example, AI’s ability to precisely target relevant opportunities eliminates countless hours of manual searching through federal databases, says Schurman. “It can be difficult for a commercial space company to figure out what Space Force contract to bid on,” he explained. “This technology helps them avoid wasting time chasing mismatched opportunities and focus specifically on their sweet spot.”
Transforming the proposal process
The traditional response process to government RFPs has long been resource-intensive. Teams of writers, subject matter experts and compliance officers typically spend weeks parsing through hundreds of pages of requirements, ensuring every specification is met and every question answered. Some RFPs can have deadlines as short as 30 days, putting pressure on companies to deliver comprehensive proposals quickly.
“Now they cut the time down by at least 60 to 70% in removing those remedial tasks, and then leveraging these tools as accelerators to help them respond,” Schurman said. The AI systems can automatically summarize entire RFPs, break them down into actionable items, and automate proposal responses.
One particularly powerful application is the ability to process massive government regulation documents. In discussions with a satellite provider, for example, PwC provided a proof of concept leveraging generative AI to better understand NASA’s certification requirements, Schurman said AI not only broke down the gigantic set of documents but also helped prioritize which requirements needed to be completed first.
Human element remains critical
Despite the efficiency gains, industry experts emphasize that AI isn’t replacing human expertise. “Our stance as a firm is that AI is not a replacement tool. It’s an acceleration tool,” Schurman said. “You want your company’s individuals and experts with that level of intellect and passion for the project to infuse their human-based creativity into a proposal response, but leverage generative AI services to remove the human-latent steps from the process.”
This view is echoed by Sean Williams, co-founder and CEO of AutogenAI, a London-based startup that is expanding its AI-powered proposal writing services in the United States.
“Humans are much better at understanding logical context and the nuance of an argument,” Williams said in an interview. “The AI generates ideas, but humans structure the response.”
Security compliance
One of the biggest challenges in bringing AI into government contracting has been ensuring data security compliance. Commercial AI tools like ChatGPT are not permitted on the secure government cloud environments required for defense contractors. So any AI tools have to be built on authorized platforms.
Schurman said PwC’s solution leverages Microsoft Azure OpenAI, one of the platforms approved for handling DoD proposal data that adheres to strict Pentagon and International Traffic in Arms Regulations (ITAR) security standards.
Amazon Web Services, Google Cloud and Oracle Cloud also have recently been authorized to host sensitive DoD workloads.
Cloud systems must meet DoD security requirements, known as “impact levels,” which range from level 2 for public information to level 5 for highly sensitive mission-critical data. “To have these capabilities finally operating at DoD impact levels 4 and 5, and even at classified level, it’s awesome,” Schurman said. “You’re going to see some huge breakthroughs.”
The demand for AI-powered proposal development and writing tools has attracted some venture investment. AutogenAI’s recent $39.5 million Series B funding round, co-led by Salesforce Ventures and Spark Capital, brings its total venture investments to $65.3 million.
It’s becoming clear that this technology is poised to transform the time-consuming and highly complex bidding process, said Nowi Kallen, managing director of AI at Salesforce Ventures.
The military’s perspective
The military itself is cautiously embracing AI in its procurement processes. Col. Heather Bogstie, who oversees space systems integration at the Space Force’s Space Systems Command, points to the Department of the Air Force’s recent rollout of NIPR-GPT, a generative AI program for use on the not-classified internet protocol router (NIPR) secure military network.
“It allows for more adoption and advocacy for using AI, and takes a lot of the stigma away,” Bogstie said during the recent MilSat Symposium in Mountain View, California.
The military aims to eventually use AI to evaluate industry proposals, which is currently an entirely manual process. “We would like to see more of it being used in the acquisition life cycle to help us with source selections, tech evaluations, proposals, RFPs, things of that nature so that we can speed up our business day-to-day jobs,” Bogstie added.
AI learns government lexicon
Some companies are already seeing benefits from AI adoption. Aalyria, a space communications technology firm spun out from Google’s parent company Alphabet, uses large language models to tailor proposals to specific agencies’ technical vernacular.
“In our industry, there’s often like 10 different jargon words to say the same thing,” explained Brian Barritt, Aalyria’s chief technology officer. “We’re finding AI is really helpful to support proposal response by training it on past writings and having it respond in the right language that the government expects.”
The company has developed a system that can be trained on previously written proposals and agency-specific terminology, ensuring new submissions match the expected language and format. This attention to linguistic detail can be crucial in government contracting, where precise terminology can make the difference between winning and losing a bid.
Future prospects and challenges
There is still no concrete data on whether AI-assisted proposals win more contracts, said Williams, of AutogenAI. However, early feedback suggests that the technology is delivering results. “It’s probably going to take us another 12 months of this to get the government procurements coming through, where we start to have a hard evidence base,” he said, “But the early signs, the early anecdotal data, are very positive.”
The technology continues to evolve rapidly. PwC’s Schurman, however, emphasizes the continued importance of human oversight.
AI hallucinations are common, he explained. “So there always needs to be a human to handshake the AI, to meet the required levels of quality and compliance. The relationship between AI and humans, especially in aerospace and defense, is a delicate one. The balance of responsibility will shift as all relationships do. What we want to avoid is a one-sided one.”
As more companies adopt these tools and the technology matures, he predicts the government contracting landscape may look very different in the future. AI can accelerate and enhance the proposal process, but human judgment remains essential in the business of government contracts.
This article first appeared in the November 2024 issue of SpaceNews Magazine.
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