How AI and GSA Centralization Could Reshape Government Contracting

Predicting how AI and GSA centralization might transform government contracting

The world of government contracting is changing so much right now. While writing this in the past two days no less than two Executive Orders and three significant announcements from GSA have been released.

It's hard to imagine how things could change even more, but these two trends are big for our industry – AI in procurement and revamp of procurement through a centralized GSA.

Acting GSA Administrator Steven Ehikian has published a Vision and several articles have shared detailed ideas around GSA plans and AI usage guidelines. Ehikian also published an article in GovExec providing a lot of hype for this effort, but not a lot of substance aside from the usual fodder about DEI and recycled paper (?). It's all very high level today, but we should explore how AI and GSA centralization might reshape government contracting, from proposal development to service delivery.

Challenges with government contracting today

Government contracting today is fraught with several high-level challenges that complicate the acquisition process.

Red tape: The different ways every agency and contract manage proposals often leads to inefficiencies, duplicated efforts, and delays in executing contracts. This was the impetus for GWACs, MAS, and IDIQ that GSA is involved with in the first place - but the problem only seems to have grown instead of shrunk as it can still take 18 months to even get on GSA schedules.

Transparency: A lack of visibility in decision-making further fuels dissatisfaction, frequently resulting in an increase in contract protests and extended delays. This hinders the government's ability to meet critical objectives quickly and delays contractor payments. There is also the matter of large company incumbency in many software and tech deals despite better, cheaper options.

Compliance: The growing complexity of regulations creates significant burdens for both contractors and agencies, demanding more resources, time, and expertise to ensure compliance, while also adding another layer of difficulty to an already intricate process. For GSA procurement, many of the more complex compliance requirements don't apply because of the size or type of these contracts. Handling more complex contracts will be a huge challenge for GSA and definitely needs to be addressed if they expand scope significantly.

AI for government agencies

While not officially rebranding to GS.AI or anything like that (CODY is better, I think), the GSA has made a lot of announcements and content about AI. The GSA has established an AI Center of Excellence that serves as a central hub for knowledge, resources, and best practices related to AI within the federal government.

The GSA is also actively using AI internally to enhance its own acquisition processes, including analyzing vendor proposals, categorizing procurement data, and reviewing compliance with regulations. Furthermore, the GSA's Alliant 2 specifically includes AI as a key technology area. This contract vehicle provides a significant pathway for contractors with expertise in AI to offer their services to various government agencies.

In one example worth highlighting, the GSA has launched CODY and will give the tool to the rest of the government to use. This initiative highlights the GSA's commitment to exploring and implementing AI solutions, which could eventually lead to contracting opportunities for businesses specializing in AI development and support.

Impact on small business participation in AI-related contracts

The GSA, along with other federal agencies, is also focused on promoting small business participation in government contracting, including in the rapidly growing field of AI. The GSA's AI CoE aims to improve overall cohesion and competency in AI adoption across the federal government, which could indirectly benefit small businesses by providing greater clarity on AI-related requirements and procurement processes, potentially lowering the barrier to entry for these firms in the AI space.

GSA centralization and its impacts on contracting

President Trump's March 20th Executive Order "Eliminating Waste and Saving Taxpayer Dollars by Consolidating Procurement" set a clear goal to consolidate procurement of $490B in common goods and services through the GSA. This would more than quadruple the current scope of the GSA - while they are also trying to trim headcount to the bare minimum across the government. In short, it would be impossible to do this without transforming the contracting process to look completely different than it does today.

A new procurement landscape

Centralized procurement seeks a more transparent and standardized process but would also come with heightened competition for contractors. Small businesses may face challenges due to the larger scale of consolidated contracts. Contractors not already on GSA schedules will need to prioritize getting listed to ensure their access to lucrative opportunities.

Simply moving all the procurement offices and contracts under the GSA wouldn't really work at the moment. Not only are their pay grade and seniority issues, but the GSA simply couldn't handle many of the different contract types and risk or complexity associated with them. Could GSA help rebuild the ship making industry? Or handle space travel?

It's likely GSA will land short of the goal for $490B, but it IS likely it will expand dramatically. What types of capabilities and systems will they have to implement to get there? Will GSA programs be replaced and modeled after SEWP and other contracting systems? We can only hope.

AI is already revolutionizing contracting

One place to look for signs of the future is where AI is already happening: inside government contractors. According to the GovBrew poll last week (April 9th) over half are already using AI in proposals - and that will likely increase.

And AI for proposals is just one example. AI-powered tools are now capable of automating repetitive tasks, analyzing Requests for Proposals (RFPs), creating compliance matrices, generating customized proposal content, and even reviewing drafts. Additional uses include analyzing past performance for win themes and highlights, or optimizing pricing strategies.

Some other areas of AI improvement:

• Project management

• Resource planning

• Cybersecurity with AI-threat detection and compliance scanning

The impact for small businesses

While GSA centralization poses challenges for smaller contractors, AI adoption presents opportunities to level the playing field. Tools that automate proposal writing, pricing, and compliance processes allow small businesses to compete on equal footing with larger companies.

For smaller businesses, this automation lowers the barriers to entry by reducing costs and time spent on manual tasks, but it also means they will be competing against more small businesses - even if set-aside goals stay similar to where they are today.

Other AI and centralization challenges

Ethical and regulatory considerations

The increasing integration of AI raises questions of transparency, accountability, and algorithmic bias. Contractors must ensure that their AI solutions comply with government-led ethical guidelines, such as those by the National Institute of Standards and Technology (NIST).

Developing AI tools that are fair, unbiased, and transparent will not only align contractors with regulatory standards but also build trust with procurement officials.

Streamlining procurement processes

The intersection of AI and GSA centralization has the potential to streamline traditionally complex procurement processes. By automating repetitive tasks such as proposal review and compliance tracking, both contractors and agencies benefit from reduced administrative burdens.

What remains to be seen is...a lot

All in all, there are many, many challenges in the way of accomplishing a transformation in government procurement using AI and GSA. Only time will tell how this actually plays out beyond high level Executive Orders and vision statements.

Potential ideas: Prepare to adapt again

To succeed under centralized, AI-driven procurement, government contractors would have to proactively align with GSA’s contracting processes and priorities and anticipate upcoming shifts faster. While there is a lot of high-level talk (this article included) about what this means, it will hopefully become clearer and more actionable in the future.

A good idea right now would be to build strong relationships with GSA procurement officials and explore how you can align with preferred contracting vehicles, such as Government-Wide Acquisition Contracts (GWACs).

For small businesses, subcontracting with larger primes presents an excellent opportunity to remain competitive while benefiting from the broader access facilitated by GSA centralization.

What next?

What do you think? Are there more resources you would like to see or a few working groups similar to what is happening at FedRAMP 20x? Should there be a GSA 20x?

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