Article by Cameron Bishop: “…The US General services Administration built the first federal procurement blockchain proof of concept about six months ago. The procurement blockchain was built to demonstrate how the distributed ledger technology can modernize federal procurement. The pilot project made them realize that blockchain, when combined with artificial intelligence and robotics, provides the foundational architecture for widespread automation.
The proof of concept, which was built in seven weeks, automated the procurement process. More importantly, it reduced the average contract award time from 100 days to less than 10 days. Complex tasks such as financial review was automated through the use of blockchain. It also eliminated human error, bias and subjectivity from the process. A smart contract deployed in the blockchain automatically calculated the financial health score from the offerors’ balance sheets and income statements. The entire process was standardized using commercial and government practices.
Furthermore, the use of blockchain ledger ensured that vendors were kept abreast of the developments. Vendors received alerts on a real-time basis as the offers progress through the workflow. This made the process transparent, while preserving the privacy of each transaction. The success of this pilot project is expected to bring a drastic change in the federal procurement process.
While a blockchain can be public, permissioned, and private, federal agencies may opt for a private blockchain to facilitate procurement transactions among pre-screened vendors with digital identity certificates.
The Federal Acquisition Regulation (FAR) provides guidelines to ensure integrity, openness and fairness in federal procurement. The blockchain technology will enforce those policies through a system of procedural trust embedded into the platform.
By using blockchain technology, the federal procurement process can be more transparent, efficient, faster, and less vulnerable to fraud and abuse. More importantly, by design, a blockchain preserves the integrity of the assets and transactions between multiple parties within the value chain. Additionally, blockchain will avoid unnecessary litigations, while promoting competition in a healthy manner. It will also provide an organization with unique insights into the procurement value chain unavailable previously….(More)”.