On July 1, Madison AI, a one-year-old Nevada-based technology company began implementing a closed internal AI knowledge assistance system for the Grand Prairie, Texas, city manager’s office, as well as its departments of planning and zoning and procurement. “It’s a great contract,” says Erica Olsen, the company’s CEO and co-founder. “Going through an RFP or contracting process and getting a customer usually takes like four or five months and this happened in four weeks.”

By “reducing the inefficiency in procurement through well-run cooperative purchasing everybody wins,” says Olsen. “We can keep our costs down and don’t have to over-staff to manage a laborious procurement process. And the city wins because our costs are lower.”

Madison AI is one of 76 companies that were recently awarded contracts through an unusual multi-award cooperative contracting RFP, which was focused on artificial intelligence. While awardees were informed in the spring by TxShare, the cooperative contracting arm of the North Central Texas Council of Governments (NCTCOG), the announcement of awardees was just publicized a couple of weeks ago by both NCTCOG and its partner, Civic Marketplace. 

Plans for an open and broad-based AI solicitation were prompted by calls for AI help from NCTCOG members and a group of 50 local CIOs that make up the organization’s Technology Foresight Council. With a challenge-based approach that focused on the outcomes desired by cities, counties and other local governments, the request for proposals brought in a record number of bids for two cooperative contract opportunities one for AI products and services and the other for AI consulting.

Todd Little, NCTCOG’s new executive director and a former county judge, says the RFP is the first of its kind in the country, although he believes there will likely be “other organizations that may follow what we’re doing.” 

The unusual nature of this cooperative contracting solicitation includes the multi-vendor approach. “We need to have multiple options that allow the members to go out and shop for what their needs are,” says Jon Blackman, chief operations manager for the North Central Texas Council of Governments. “It’s finding a solution that really fits them.”

In the words of Mary Frances Coryell, chief revenue officer at Citibot, an awardee that’s headquarter in Charleston, South Carolina, the multi-award nature of the cooperative contract gives cities a way to “work their way through all the noise,” inherent in a complex and potentially confusing world of companies selling artificial intelligence solutions. Citibot’s business, which was centered around search-oriented chatbots when it was founded in 2016, now has a client base of 175 local governments for the AI-powered text, voice and other communication vehicles it offers.

Although there are several other awarded firms that offer relatively similar products to hers, she does not see that as a negative, but describes the cooperative contracts as “super helpful to the market” based on a thoughtful and detailed process that provided solid vetting of the options and was also speedy in contrast to a lot of government procurement experiences in which “the process took so long that ultimately the documentation, products and features were obsolete.”

Procurement assistance, education and partnership

NCTCOG has traditionally had a strong emphasis on listening to the needs of its members, which increasingly include local governments from around the U.S. The expansion in membership has been aided by its partnership with Civic Marketplace, which facilitated input on the development of the AI cooperative contracts and runs a platform for its members that helps them dig for information on cooperative contracts and contractors, and provides interactive ways to communicate easily with other cities. 

Civic Marketplace helped to broaden the outreach to vendors and will be engaged with NCTCOG in following up in how the contracts are used. NCTCOG is a public organization itself and the roots of Civic Marketplace are strongly tied to local government management and performance through co-founder Ron Holifield, a former city manager and the owner and former CEO of Strategic Government Resources (SGR).

“This isn’t just procurement, they’re coupling it with education,” says Tim Rosener, the mayor of the City of Sherwood in Oregon, and a longtime technology expert and practitioner who is a member of the National League of Cities AI advisory council. “It’s an amazing fusion of activity that will be especially beneficial to smaller governments.”

While Civic Marketplace facilitated input to NCTCOG in the development of the contracts, it was TxShare’s job to evaluate the proposals that came in, vetting them for financial stability, security, and legal compliance, and then making the awards, which were also approved by NCTCOG’s executive board in April. 

The contracts with information on the awardees are now posted on both the TxShare cooperative contracting site and available for viewing on the Civic Marketplace platform. Interested readers can follow up on both Artificial Intelligence Solutions for Public Sector Entities and Artificial Intelligence (AI) Consultancy Services. 

Opening up the AI marketplace

“A key aspect of the multi-award process is to intentionally create space for vendors of all sizes,” says Blackman. “This approach provides smaller and medium-sized cities with more accessible and appropriately sealed options to better accommodate their various needs and budgets. It’s not a one-size fits all approach.”

Al Hleileh, co-founder and CEO of Civic Marketplace, calls the creation and distribution of the cooperative contracting RFP “democratized” innovation. “There are so many new entities, new companies doing this,” he says. “This process gives these startups more than a lifeline and it gives local governments a lifeline to get into what is now a critical technology. There are so many things about our day-to-day life that are increasingly powered by AI that it is critical for frontline agencies to be able to capture this.”

Awardees include a handful of big companies, but the majority are small to medium-sized businesses. The goal for both NCTCOG and Civic Marketplace has been to encourage responses from smaller businesses, while always ensuring a fair, open and competitive evaluation and competitive process.

The challenge-based approach

Hleileh describes the approach for both the AI Products and Solutions contract and the AI consulting contract as moving procurement away from a reactive exercise to one in which the focus is on how procurement can help cities achieve what they want. “So, the contracts become “a strategic lever on what outcomes we want to get going forward and how our procurement function can enable us to deliver on those services,” he says. That means that the language used is heavily “outcome-focused rather than spec heavy.” 

In looking at the contract language as it was being put together, Rosener, who is also a strategic advisor to Civic Marketplace, emphasized the need for flexibility for both cooperative contracts. Particularly in the consulting area, he says “each agency that decides to piggyback on the agreement can flex it to what they’re trying to achieve.” 

As Citibot’s Coryell says, “Cities need to look at the underlying reason why they want AI. It’s not just checking a box for a chatbot. You need to look at the underlying question of ‘Why?’ Why are you trying to find a product like this? What are you truly trying to solve?”

(Procurement for the Future articles are supported by Civic Marketplace. Next month, Greenebarrett.com will look at how local governments are using their new AI contracting opportunities.)

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