The Promise of AI in Public Bid Management: A Transaction Cost Perspective. A Qualitative Study on AI Adoption in Public Procurement Bidding.

Sammanfattning

As the global economy experiences increasing pressure, reducing additional transaction costs becomes more valuable. The public procurement market is no exception, as the additional protocols necessary to maximise public benefit and ensure fair competition can lead to suppliers incurring significant expenses. At the same time, recent innovations in generative artificial intelligence technology and the advent of large language models have allowed businesses to streamline many time-consuming processes. The authors of this paper aimed to find out whether and how firms selling to the public sector could use generative AI to reduce their transaction costs in the bidding process, as well as map out potential challenges in doing so. A qualitative research project was conducted, collecting data from various actors involved in bidding processes through semi-structured, in-depth interviews. The findings suggest that the current state of artificial intelligence technology allows for significant efficiency gains in the early phases of the bidding process, namely in the screening and qualification of relevant tenders and as an organisational knowledge management tool. However, the technology at the present moment is not mature enough to create bids on its own. The main challenges of implementing artificial intelligence come from the need for transparency in AI outputs and proper data control systems, as well as obstacles related to employee skills, culture, and trust. Being ahead of the competition is also a source of advantage. The authors find indications of potential long-term secondary effects of widespread AI adoption that create uncertainties about AI impact on transaction costs going forward.